TCR_Public/010306.MBX          T R O U B L E D   C O M P A N Y   R E P O R T E R

                Tuesday, March 6, 2001, Vol. 5, No. 45


BRIDGE INFORMATION: Paying Pre-Petition Tax Obligations
BRIDGE INFORMATION: Planning To Put Assets Up For Sale
CERPLEX GROUP: Creditors' Meeting Set for March 13
CRIIMI MAE: Asks For 30-Day Extension of Plan's Effective Date
CROWN VANTAGE: Completes Sale of Specialty Business To KPS

CYBERCASH: Selling Operating Assets to Network 1 Under Chapter 11
CYBERCASH: Case Summary & List Of 20 Largest Unsecured Creditors
DAMARK INTERNATIONAL: Says Closing ClickShip Will Cost $10-$12MM
EMPIRE GOLD: Lack Of Funds Raises Going Concern Doubts
eTOYS: Sells BabyCenter to Johnson & Johnson For $10MM In Cash

FARMERS COOPERATIVE: Planning to Sell Assets To AGP Grain Coop
FLOORING AMERICA: Court Appoints Trustee in Chapter 11 Case
FRUIT OF THE LOOM: Releases Q4 Results & Restructuring Update
GO-RACHELS.COM: Pursuing Plan To Improve Financial Performance
GRAND UNION: Completes Asset Sale to C&S Wholesale Grocers

GROOVEPORT: Online Music Provider Shuts Down & Looks For Buyer
HARNISCHFEGER: Equity Committee Retains Coal Market Expert
ICG COMMUNICATIONS: Committee Hiring Wachtell as Lead Counsel
INTEGRATED HEALTH: Bates, Campbell & Amerimed Move To Lift Stay
INTEGRATED SPATIAL: Needs at Least $1.5 Mil to Fund Operations

J.C. PENNEY: Embarking on a Clutter Elimination Plan?
KATY INDUSTRIES: Discussing Potential Asset Sale With Buyer
LERNOUT & HAUSPIE: Employing Brown Rudnick as Corporate Counsel
LIBERTY HOUSE: Emerges From Bankruptcy
LOEWEN GROUP: Resolves Pulaski Funeral Disputes With McKinneys

LTV CORP.: Peoples Energy Presses for Assumption of Contract
MONTGOMERY WARD: Kimco Venture Wins Lease Designation Rights
OWENS CORNING: Court Okays Employment Of Real Estate Brokers
PG&E CORPORATION: Closes $1 Billion Loan Deal to Restructure Debt
RCN CORP.: Moody's Cuts Senior Bank Debt to B2 & Notes to Caa2

ROYCE BIOMEDICAL: Has No Credit, Bank Financing or Liquidity
RSL COMM.: Suspends Interest Payment on 9-1/8% and 12-7/8% Notes
SELECT SWITCH: Court Confirms Chapter 11 Plan
SERVICE MERCHANDISE: Wants To Terminate Existing Pension Plan
TBS INTERNATIONAL: April 9 Administrative Claims Bar Date Set

U.S. MEDIA: Hearing to Convert or Dismiss Scheduled for March 13
U.S. INDUSTRIES: Fitch Lowers Senior Note Rating to BBB-
U.S. INTERACTIVE: Caught in Bankruptcy Fight Over Bonuses
VANGUARD AIRLINES: Hambrecht Trust Adds to 53.1% Equity Stake
WASHINGTON GROUP: Billion-Dollar Credit Agreement Now in Default

WASHINGTON GROUP: Moody's Junks Debt Ratings
WHEELING-PITTSBURGH: Noteholders Tap Zolfo as Financial Advisor


BRIDGE INFORMATION: Paying Pre-Petition Tax Obligations
Bridge Information Systems, Inc. owes various Taxing Authorities
for prepetition Sales and Use Tax obligations. Pursuant to 11
U.S.C. Sec. 507(a)(8), these claims are entitled to priority over
many other claims against the Debtors' estates. To confirm a plan
of reorganization, 11 U.S.C. Sec. 1129(a)(9)(C) requires full
payment of these Tax Claims. Not paying these Tax Claims would
lead to the Taxing Authorities taking aggressive collection
action, the Debtors believe, and withholding of the payment of
the Taxes likely would cause taxing authorities to take
precipitous action, including a marked increase in state audits
and a flurry of lien filings or lift stay motions. Prompt
and regular payment of the Taxes will avoid this unnecessary
governmental action.

Accordingly, the Debtors sought and obtained Judge McDonald's
permission, in their sole discretion, to pay any prepetition tax
claim, without prejudice to their right to contest the amount of
tax owed to any particular Taxing Authority. The Debtors do not
provide any estimates of their pre-petition liabilities on
account of Tax-Related Claims. (Bridge Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

BRIDGE INFORMATION: Planning To Put Assets Up For Sale
An attorney for Bridge Information Systems Inc. told a bankruptcy
judge that the company is on the sales block, according to Dow
Jones. Gregory D. Willard, a St. Louis attorney with Bryan Cave
LLP, made the announcement in the U.S. Bankruptcy Court for the
Eastern District of Missouri during a hearing on Wednesday.  No
motion was filed Wednesday concerning a sale, Willard anticipates
a motion concerning a sale will be filed by mid-March.  He
expects a hearing on that motion to be held in mid-April.
Assuming Judge McDonald approves the motion at that time, a sale
could be consummated anytime after that. Bridge decided to pursue
a possible sale in order to maximize value for its creditors. "I
told the judge that these businesses aren't getting healthier by
being in chapter 11, and therefore a prompt transaction needs to
be pursued," Willard said. "We think that it's a better way to
proceed rather than attempting a sale in a chapter 11 plan."

It's still possible that Bridge will emerge from bankruptcy as an
independent business. However, Welsh Carson Anderson & Stowe,
Bridge's largest shareholder, has said it would like to make a
bid for the company and Bridge wouldn't be surprised if other
bidders emerged. Bridge filed for voluntary bankruptcy on Feb.
15. That move came after Highland Capital Management LP, one of
Bridge's creditors, filed an involuntary bankruptcy petition on
Feb. 1. The petition was aimed at forcing Bridge into bankruptcy
court proceedings. (ABI World, March 2, 2001)

CERPLEX GROUP: Creditors' Meeting Set for March 13
A bankruptcy case concerning The Cerplex Group, Inc. was
originally filed under Chapter 11 on June 20, 2000 and was
converted to a Chapter 7 case on February 6, 2001.  A meeting of
creditors is set for March 13, 2001, 1:30 PM, 844 King St.,
Wilmington, DE.  Proofs of claim must be received by the
bankruptcy clerk's office by June 11, 2001.

CRIIMI MAE: Asks For 30-Day Extension of Plan's Effective Date
CRIIMI MAE Inc. (NYSE: CMM) asked the bankruptcy court in
Greenbelt, Maryland to extend by 30 days the March 15, 2001 date
by which the company's confirmed reorganization plan would become

In a motion filed Friday, CRIIMI MAE said that all of the parties
to the company's reorganization plan have stated that they are
continuing to work toward completing the exit financing, and that
few open issues remain to be finalized. According to the motion,
although CRIIMI MAE has worked diligently to complete the
financing documents prior to March 15, it has met with difficulty
in getting its secured creditors to finalize the transaction in a
timely manner.

While CRIIMI MAE's priority is to quickly exit bankruptcy, the
company does continue to accumulate additional funds. "Every
month that the Debtors remain in bankruptcy, approximately $3.0
million on average accumulates which would otherwise be used to
pay increased borrowing costs and to pay down creditors,"
according to the motion.

The company's motion requests that all parties be required to
attend a status conference before the bankruptcy court on March
30, 2001 to report on the progress being made toward the
effective date.

CROWN VANTAGE: Completes Sale of Specialty Business To KPS
Crown Vantage Inc. (OTC Bulletin Board: CVANQ) and its wholly
owned subsidiary Crown Paper Co. disclosed that Crown Paper has
completed the sale of substantially all of the specialty,
packaging, text and cover papers business of Crown Paper,
including the name "Curtis Papers, Inc.", to a wholly owned
subsidiary of KPS Special Situations Fund, LLC. KPS intends to
rename the subsidiary "Curtis Papers, Inc."

As previously announced, Crown Paper and KPS had entered into a
definitive asset purchase agreement on December 27, 2000,
relating to the sale of these assets. Crown Paper continues to
own and operate its integrated mill located in St. Francisville,

Crown Vantage and Crown Paper remain in Chapter 11 bankruptcy.

Crown Vantage is a leading manufacturer of value-added papers for
printing, publishing and specialty packaging. The Company's
diverse products are tailored for the special needs of target
markets. End users include specialty magazines and catalogs,
financial printing and corporate communications, packaging and
product labels and coffee filters.  For more information, visit

CYBERCASH: Selling Operating Assets to Network 1 Under Chapter 11
CyberCash, Inc. (Nasdaq: CYCH), a leading provider of electronic
payment technologies and services, announced that due to
CyberCash's inability to raise the financing necessary to
consummate the company's previously announced merger with Network
1 Financial, the companies have terminated their agreement and
entered into an asset purchase agreement under which Network 1
Financial will acquire all of CyberCash's operating assets. The
transaction will be consummated under a Chapter 11 bankruptcy
proceeding in a case commenced in Delaware.

CyberCash will continue to support its existing customer base of
more than 27,500 Internet merchants and more than 100,000
software users with the same high quality customer service it has
always provided throughout the transition period. CyberCash will
also maintain all normal business functions including marketing
and sales activities designed to generate new business, partner
marketing programs, and completing scheduled enhancements to its
industry leading Internet payment processing service.

Dan Lynch, CyberCash's Chief Executive Officer, explained
"CyberCash made tremendous strides over the past few quarters
refining its business plan, stabilizing its capital structure and
conceiving a strategy to enter acquiring settlement services with
Network 1 Financial. The Network 1 merger was the culmination of
months of hard work and was key to our getting profitable.

Unfortunately, the financial markets have dried up and we have
been held up just short of the finish line, without the funds to
close and execute the plan. We are making this move now to ensure
that CyberCash's obligations can be satisfied and to maximize any
residual value for the company's stockholders."

Mr. Lynch continued, "Operationally, CyberCash has sufficient
funds to continue to operate and merchants processing
transactions through CyberCash's Internet payment service will
experience no interruptions. All of CyberCash's sales and
customer support functions will continue as usual."

Consummation of the transaction is subject to numerous conditions
as well as approval by the bankruptcy court. The parties hope to
close the transaction in early April.

CYBERCASH: Case Summary & List Of 20 Largest Unsecured Creditors
Debtor: CyberCash, Inc.
         2100 Reston Parkway
         Reston, VA 20191

Type of Business: Provides electronic payment technologies and

Chapter 11 Petition Date: March 2, 2001

Court: District Of Delaware

Bankruptcy Case No.: 01-00622

Debtor's Counsel: Robert J. Dehney, Esq.
                   Morris, Nichols, Arsht & Tunnel
                   1201 North Market Street
                   P.O. Box 1347
                   Wilmington, DE 19899-1347

Total Assets: $33,804,000

Total Debts: $10,444,000

Debtor's 20 Largest Unsecured Creditors:

Entity                        Nature of Claim     Claim Amount
------                        ---------------     ------------
Robinson Lerner & Montgomery    Trade               $224,764

County Of Fairfax               Trade               $146,682

Corporate Software & Tech       Trade               $144,487

SprintParanet Inc.              Trade               $117,459

MCI Worldcom Communications     Trade               $111,217

AT&T (All)                      Trade               $105,952

Stornet                         Trade                $89,332

Tory Corporate RE Advisors      Trade                $89,290

The Vantive Corporation         Trade                $81,000

PSINET Transaction Solutions    Trade                $77,589

Bowne Of New York City, Inc.    Trade                $54,747

Xerox Corp. (GS-26F-1001B)      Trade                $49,174

GE Capital                      Trade                $41,786

First Annapolis Capital         Trade                $41,279

HNC Software Inc.               Trade                $40,000

AccountTemps (Virginia)         Trade                $39,560

XYAN                            Trade                $32,368

The NASDAQ Stock Market, Inc.   Trade                $26,625

C.S.S.E., Inc.                  Trade                $25,000

BEA Systems, Inc.               Trade                $24,000

DAMARK INTERNATIONAL: Says Closing ClickShip Will Cost $10-$12MM
Damark International Inc. said that it could not find a buyer for
its ClickShip subsidiary, and would spend between $10 million and
$12 million to close down the operation over the next 24 months,
according to

Damark also said that its main lender, Bank of America, would not
advance funds for the closure of ClickShip, and said it may face
some liquidity problems due to the shutdown.

Damark said it has sold $14.2 million of senior convertible
securities to private investors, $10 million of which was funded
to the company yesterday and $4.2 million of which has been
placed in escrow pending satisfaction of certain conditions.

George S. Richards, Damark's president, said he expects the
company to be able to negotiate adequate funding from another
major financial institution, but said lack of financing from Bank
of America could create "a potential liquidity issue." (ABI
World, March 2, 2001)

EMPIRE GOLD: Lack Of Funds Raises Going Concern Doubts
At a Board of Directors' meeting held on November 15, 2000,
Empire Gold Inc. appointed Peet Nienaber Inc. - Chartered
Accountants of Vancouver BC as auditors of the company, effective
January 1, 1998. KPMG -Chartered Accountants of Toronto, Canada,
were dismissed by the directors at the same meeting.

The former accountant's report, dated June 12, 1998, for the year
ended December 31, 1997, contained a qualification as to the
uncertainty that the company will continue as a going concern.

The uncertainty arose because at December 31, 1997 the company
had an accumulated deficit of $47,905,306 and a working capital
deficiency of $162,035. The company also required additional
capital to proceed with its exploration program. These matters
raised substantial doubt about the company's ability to continue
as a going concern.

At March 31, 2000, the company has an accumulated deficit of
$48,088,212 and a working capital deficiency of $218,481.

Furthermore, additional funds will be required to proceed with
the company's exploration program. The ability of the company to
raise sufficient funds to operate in the ordinary course of
business and proceed with the exploration plan, raise substantial
doubt about the company's ability to continue as a going concern.

eTOYS: Sells BabyCenter to Johnson & Johnson For $10MM In Cash
Johnson & Johnson (NYSE: JNJ) has acquired BabyCenter, Inc., from
eToys, Inc. (Nasdaq: ETYS). (,serving expectant and
new mothers and fathers, is the largest and best-known online
parenting resource. The BabyCenter family of Web sites also
includes ( (

"BabyCenter and Johnson & Johnson share a commitment to help
parents raise healthy kids," said Mari Baker, General Manager of
BabyCenter. "This acquisition provides BabyCenter with the
ability to continue to grow and expand our services to the
millions of parents who rely on BabyCenter in the United States
and abroad."

"Johnson & Johnson was attracted to the superior content and
personalized relationship that BabyCenter, as the leading online
parenting brand, has created with millions of parents from
conception through childhood," said Christian Koffmann, Worldwide
Chairman, Consumer and Personal Care Group, Johnson & Johnson.

BabyCenter's advertising business and all other site activity,
including thousands of health and parenting articles, weekly e-
mail newsletters, and its vibrant online community, will continue
to operate independently. The BabyCenter Store was not a part of
the transaction, and will be temporarily closed.

Throughout its three-year history, BabyCenter has received
numerous awards for its Web site and services. It was ranked as
the Web site with the highest customer loyalty according to the
first-ever Dialscore(TM) study.

BabyCenter will be part of Johnson & Johnson Consumer Companies,
Inc. It will remain based in San Francisco, CA. BabyCenter
expects to retain and add to the current staff.

The purchase was an all cash transaction valued at approximately
$10 million.

eToys Inc., whose shares have fallen to 9 cents in the stock
market, is saddled with about $280 million in debts, ABI World
reports. It has also disclosed last week that it would soon file
for bankruptcy.

Johnson & Johnson, with approximately 98,500 employees, is the
world's most comprehensive and broadly-based manufacturer of
health care products, as well as a provider of related services,
for the consumer, pharmaceutical and professional markets.
Johnson & Johnson has 194 operating companies in 51 countries
around the world, selling products in more than 175 countries.

FARMERS COOPERATIVE: Planning to Sell Assets To AGP Grain Coop
The Farmers Cooperative Association has been negotiating with AGP
Grain Cooperative to sell substantially all the debtor's assets.
AGP is a subsidiary of Ag Processing, Inc. AGP, Inc. is a farmer-
owned cooperative engaged in the procurement, processing,
marketing and transportation of grains and grain products.

In general terms, the purchase price is comprised of the two main
categories: $4.5 million for the Hard Assets and the Inventory
Items valued a at the lower of cost or current market prices as
of the closing date, except for grain and petroleum, which will
be valued at market prices at closing. Any grain in excess of the
debtor's storage obligations will be valued at market prices at
closing. Debtor will retain chemicals not considered current or
marketable. The debtor and AGP anticipate a closing date of March
31, 2001.

The debtor has determined that the sale of substantially all of
the debtor's assets will result in the best, most efficient and
most expedient distribution to creditors. The sale will greatly
aid the debtor in proposing a confirmable plan.

FLOORING AMERICA: Court Appoints Trustee in Chapter 11 Case
Upon the request of Flooring America Inc. and its official
unsecured creditors' committee, a court has appointed a chapter
11 Trustee to finish liquidating the floor covering distribution
network operator. Having already liquidated its operating assets,
including its retail stores and franchise operations, as well as
substantially all its real estate holdings, Flooring America only
has miscellaneous real estate holdings and accounts receivable
remaining. The company must also collect other amounts owed to it
such as rebate claims against vendors, and it must investigate
potential claims. (ABI World, March 2, 2001)

FRUIT OF THE LOOM: Releases Q4 Results & Restructuring Update
Fruit of the Loom, Ltd. (OTC Bulletin Board: FTLAQ), one of the
world's leading manufacturers and marketers of basic family
apparel, reported operating results for its fourth quarter. The
Company's operating results reflect significant manufacturing and
cost improvements made in 2000 versus 1999.

The Company reported sales of $332.5 million for its fourth
quarter ended December 30, 2000 compared to $416.0 million for
the fourth quarter of 1999. Lower sales volume was primarily due
to the elimination of non-core product lines and other
unprofitable products. The Company's intimate apparel and
increasingly competitive Activewear business experienced lower
sales during the quarter primarily due to the elimination of
certain lower volume styles. This continuing reduction in product
offerings was consistent with the Company's operating focus on
more profitable, higher volume products. Net earnings for the
fourth quarter of 2000 reached $27.5 million ($.38 per share)
compared to a net loss of $398.5 million ($5.96 per share) for
the fourth quarter of 1999. The fourth quarter of 2000 included
an income tax provision credit of $116.2 million.

For the year ended December 30, 2000, the Company reported sales
of $1,549.8 million compared to $1,784.8 million in 1999.
Consistent with the fourth quarter, the lower sales volume was
primarily due to the elimination of the Company's non-core Gitano
jeanswear business and other unprofitable products. Sales were
negatively affected during 2000 due to a weaker retail market and
a more competitive Activewear market. However, the Company
regained the leadership share of the mass merchant men's and
boys' underwear market as share increased from 43.5% to 45.1%
during 2000. Loss from continuing operations for the year ended
December 30, 2000 was $103.6 million ($1.55 per share) compared
to a loss from continuing operations of $491.1 million ($7.25 per
share) in 1999. Including discontinued operations, the net loss
for the year ended December 30, 2000 was $126.4 million ($1.89
per share) compared to a net loss of $576.2 million ($8.50 per
share) in 1999.

The Company reported an operating loss (including one-time
consolidation costs of $77.0 million) from continuing operations
before interest expense in the fourth quarter ended December 30,
2000 of $13.5 million compared to an operating loss from
continuing operations before interest expense (including one-time
special charges) of $218.6 million during the corresponding
period in 1999. This improvement of $205.1 million reflects
improved cost controls, more productive and efficient operations,
improved inventory and logistic management and lower selling,
general and administrative expenses. The operating loss from
continuing operations in the fourth quarter of 2000 includes
$77.0 million in consolidation costs principally related to the
closure of certain of the Company's higher cost production
facilities. This consolidation of facilities was driven by
significant improvements in operating efficiencies as well as the
impact of the elimination of non-core unprofitable businesses.
The loss from continuing operations in the fourth quarter of 1999
includes $69.1 million of special charges representing costs
related to the impairment of certain European manufacturing
facilities, severance, a debt guarantee and other asset write-
downs and reserves.

                    Restructuring Update

Chief Executive Officer Dennis Bookshester commented, "The
Company continues to focus on a strategy of becoming the low cost
producer and marketer of high volume basic apparel. We have
improved product quality, dramatically reduced manufacturing
costs and increased customer satisfaction. While we have made
significant progress in improving our operations, the
increasingly competitive environment of the markets in which we
compete, particularly Activewear, will require us to maintain
this as our long-term strategic focus. At the same time, we
continue to focus on reducing selling, general and administrative
expenses to drive our overall cost competitiveness."

Actual production costs incurred in 2000 were substantially lower
than those incurred in 1999 (in excess of $200 million) and
operating performance exceeded plan. Selling, general and
administrative expenses for the year ended December 30, 2000 were
approximately $90 million lower than in 1999. Excluding
consolidation costs in 2000 and special charges in 1999, selling,
general and administrative expenses, as a percentage of net
sales, decreased from 16.4% in 1999 to 11.6% in 2000.

Mr. Bookshester added, "Our top priorities continue to include
reducing manufacturing and operating costs, increasing sales and
market share in our core businesses and maintaining excellent
customer service and satisfaction. The contributions made by our
employees in all these areas remain central to the Company's
improved performance."

The borrowing availability under the debtor-in-possession credit
facility (DIP) exceeds $255 million, and there was no usage of
the revolver component of the DIP as of February 28, 2001. In
addition, the Company paid $40 million in December which reduced
the DIP term loan balance to $100 million. Management believes
that the size of the DIP and available cash provide the Company
adequate financial flexibility and liquidity to pay its suppliers
and meet customer expectations. Fruit of the Loom filed a
voluntary petition under Chapter 11 of the U.S. Bankruptcy Code
on December 29, 1999 and is currently working through its
restructuring in bankruptcy proceedings.

GO-RACHELS.COM: Pursuing Plan To Improve Financial Performance
The viability of GO-RACHELS.COM CORP. as a going concern is in
question.  The company incurred net losses of $3,423,352 and
$1,893,215 in 1998 and 1999, respectively, and as of December 31,
1999, had an accumulated deficit of $11,282,038.

The company also has a material uncertainty regarding a
stockholder dispute and is subject to several outstanding
judgments. These conditions, among others, raise substantial
doubt about the company's ability to continue as a going concern.

The company's continuation as a going concern is dependent upon
its ability to generate sufficient operating cash flows and
obtain additional financing or refinancing to meet its

The Company, through its subsidiary Rachel's Gourmet Snacks,
Inc., manufactures, markets, and distributes healthier "Home
Style" gourmet potato chips which are cholesterol free, and are
relatively low in sodium and fat, under the "Rachel's Made From
the Heart" label. Through its subsidiary, Triple-C-Inc., a
Canadian corporation, it distributes confectionery and specialty
snacks. The company expanded its current line of products to
include bagel chips, rye chips, pretzels, and other confectionery
and specialty snacks in the second half of calendar year 2000,
and intends to continue this expansion in the first half of
calendar year 2001.

The company remains optimistic about the future, but its
prospects must be considered and evaluated in light of the risks,
operating and capital expenditures required, and uncertainty of
economic conditions that may impact its operations. To achieve
and sustain profitability and to remain viable, the company must
successfully introduce and market additional new products, meet
the demands of its customers, respond quickly to changes in its
market, and control expenses and cash usage, as well as continue
to attract additional capital investments. The company is
pursuing plans to improve sales, reduce operating expenses, and
obtain financing through debt and equity placements; however,
there is no assurance that the company can raise additional
financing. As stated above, the company also has a material
uncertainty regarding a stockholder dispute and several
outstanding judgments and a potential default on its line of
credit facility. These conditions, among others, raise
substantial doubt about the company's ability to continue as a
going concern.

GRAND UNION: Completes Asset Sale to C&S Wholesale Grocers
The Grand Union Company (OTC BB: GUCO) announced that it has
completed the sale of substantially all of its assets and
business to GU Markets, LLC, an affiliate of C&S Wholesale
Grocers, Inc., and other third party purchasers.

Virtually all of the locations that will remain retail
supermarkets have either already re-opened for business or will
do so after a very short renovation period.

Included in the assets acquired by GU Markets are approximately
170 of Grand Union's operating locations, the Company's
distribution center in Montgomery, New York, and certain other
non-operating locations. Of the 170 locations acquired,
approximately 45 locations are expected to be immediately
transferred to third party purchasers, including six to Pathmark,
19 to Shaws and 20 to Tops. The remaining locations being
purchased by GU Markets and other third party purchasers will
continue to operate under the Grand Union name for various
transition periods, which are expected to last up to 90 days.
Following the transition period, it is anticipated that GU
Markets will operate approximately 30 retail food operations.

During the transition period, liquidation sales will be conducted
to sell the inventory at approximately 40 locations, which will
either close for renovations or will be sold by GU Markets to
non-food retail operators. It is anticipated that the transition
period also will be utilized to permit the orderly transfer of:

      - 5 locations to Hannaford;

     - 42 locations to Stop & Shop;

     - approximately 30 locations to other retail food operators;

     - approximately 15 locations to operators of other types of
       retail establishments.

Grand Union will retain 16 locations and seek alternative buyers
prior to the effective date of the lease rejections. GU Markets
will hold liquidation sales at those locations.

Grand Union filed a voluntary chapter 11 petition in the U.S.
Bankruptcy Court in Newark, New Jersey on October 3, 2000, with
the stated intention to facilitate the planned sale of the
Company and provide for additional funding during the sale

GROOVEPORT: Online Music Provider Shuts Down & Looks For Buyer
After failing to close a badly needed round of venture capital,
online music provider GroovePort has shut down operations,
according to

GroovePort allows subscribers to listen to songs from the
company's library of music as well as several Internet radio
stations. The streaming audio service is for listening only. The
company does not act as a distributor and downloading is not
allowed. Users can access songs for a small monthly subscription

In its short history, the company formed partnerships with some
30 record labels including Pyramid Records, Aware Records, and
Daemon Records. The company, which was part of the Greenmachine
incubator on Mean Street, once employed 15 workers. Executives
hoped to close a $10 million first round of financing in January.
The company is looking for a buyer and is in talks with several
hardware companies. (ABI World, March 2,2001)

HARNISCHFEGER: Equity Committee Retains Coal Market Expert
The Equity Committee sought and obtained the Court's approval to
retain Energy Ventures through the completion of the plan
confirmation proceedings, nunc pro tunc to January 5, 2001, for
providing the Equity Committee and the Court with coal-related
macroeconomic expert testimony regarding the macroeconomic
climate for coal demand, production and related mining activity.
The Equity Committee intends to call Mr. Schwartz as an expert
witness in the confirmation hearing.

The Equity Committee believes that Energy's testimony is
essential because it is expected to support an enterprise
valuation of Harnischfeger Industries, Inc. by Goldin that
Shareholders are entitled to receive a distribution under a plan
of reorganization in light of the change in the outlook for coal
production over the past year because of a growing energy crisis
in the United States and around the world. Specifically, Goldin,
in its preliminary valuation, made certain modifications to the
Debtors' projections regarding Joy Technologies Inc. to reflect a
change in the coal market. Goldin also made certain modifications
to the technical assumptions in the Debtors' valuation in
relation to the economic climate.

Energy Ventures will be paid at its regular hourly rate of $230
per hour for Mr. Schwartz and $165 per hour for Ralph Barbaro,
subject to fee applications filed pursuant to the administrative
fee order in the cases.

The Equity Committee represents that this cost for the essential
function that Mr. Schwartz will serve is very low in comparison
with that of the Plan proponents' experts. The Equity Committee
points out that the professional fees in the cases are expected
to approach $30,000,000. (Harnischfeger Bankruptcy News, Issue
No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900)

ICG COMMUNICATIONS: Committee Hiring Wachtell as Lead Counsel
Co-chairs W. R. Huff Asset Management Co., LLC, and Cerberus
Capital Management L.P., of the Official Committee of Unsecured
Creditors in ICG Communications, Inc.'s Chapter 11 cases
requested that Judge Walsh approve and authorize employment of
the New York law firm of Wachtell, Lipton, Rosen & Katz.

The professional services which Wachtell expects to render the
Committee are:

      (a) Advising and representing the Committee with respect to
          proposals and pleadings submitted by the Debtors or
          others to the Court or the Committee;

      (b) Representing the Committee with respect to any plans of
          reorganization or disposition of assets proposed in
          these cases;

      (c) Attending hearings, drafting pleadings, and generally
          advocating positions which further the positions of the
          creditors represented by the Committee;

      (d) Assisting in the examination of the Debtors' affairs and
          review of the Debtors' operations;

      (e) Advising the Committee with respect to the progress of
          the Chapter 11 proceedings; and

      (f) Performing such other professional services as are in
          the interests of those represented by the Committee.

Compensation will be payable to Wachtell on an hourly basis. The
firm's hourly rates currently range from $85 to $125 for
paralegals, $130 to $395 for associates, and $400 to $750 for
members. These hourly rates are subject to periodic adjustments
to reflect economic and other conditions.

Wachtell received $100,000 by the Debtors prior to the Petition
Date for Wachtell's prepetition representation. To the extent
that any balance remains, it will be applied to postpetition

Chaim J. Fortgang, Esq., a partner of Wachtell, told Judge Walsh
that Wachtell was retained as special reorganization counsel by
an informal committee of the holders of the Debtors' prepetition
notes and was released from that representation prior to its
retention by the Committee. These services, which primarily
consisted of analyzing and negotiating certain matters relating
to the Debtors' proposed DIP financing and purchase facilities,
redounded to the benefit of all of the Debtors' creditors and
would have been performed by Wachtell on behalf of the Committee
if the Committee were in existence prior to the Petition Date.

In the interests of full disclosure, Mr. Fortgang advised that
Wachtell has represented, represents, and will represent in the
future certain creditors of the Debtors on unrelated financial
restructuring, litigation, corporate and other matters. These
creditors include members of the Debtors' secured credit facility
and holders of the Debtors' discount notes. Specifically, the
firm represents The Chase Manhattan Bank, the agent and a lender
under the Debtors' DIP facility, in unrelated matters; Morgan
Stanley Dean Witter, the underwriter of the Debtors' discount
notes and a prepetition lender, in unrelated matters as
underwriter and placement agent; Wells Fargo & Company, the
indenture trustee for the discount notes, in unrelated
restructuring, corporate and other matters; affiliates of Bank
One N.A., First Union National Bank, and Bank of America, members
of the Committee and prepetition secured lenders, in unrelated
matters; AT&T Corporation, the parent of Liberty Media
Corporation, a major equity holder of the Debtors, including
representation of AT&T in connection with the proposed spin-off
of Liberty shares, but Wachtell did not represent Liberty in its
purchase of equity in the Debtors; Wasserstein Perella & Company,
a financial and restructuring advisor to the Debtors, including
the sale of Wasserstein to Dresdner Bank AG in September of 2000;
Gleacher & Co., a former financial advisor to the Debtors,
including the negotiation of Gleacher's engagement by the
Debtors, and Mr. Fortgang further disclosed that the partners in
Wachtell are investors in a private investment fund managed by an
affiliate of Gleacher, which fund purchased an equity interest in
the Debtors in April 2000, but repurchased by Gleacher or one or
more affiliates before the commencement of these Chapter 11
cases, and Wachtell also represented J. Shelby Bryan, former
Chairman of the Board and Chief Executive Officer of the Debtors;
but all of these, except as specified, were in matters unrelated
to the scope of this proposed employment.

Patricia A. Staiano, the United States Trustee, through her
counsel made a narrow objection to this Application, pointing out
to Judge Walsh that the Official Committee was not appointed
until fifteen days after the Petition Day, so that employment of
Wachtell retroactively beyond the date of the Committee's
creation is inappropriate. The U.S. Trustee told Judge Walsh that
any services rendered prior to the date of the Committee's
creation and rendered to certain creditors were rendered on
behalf of those creditors rather than in furtherance of the
Committee's fiduciary responsibility to act on behalf of all
unsecured creditors of whatever kind or nature. Otherwise, the
U.S. Trustee has no objection to this employment, and suggests
that Wachtell may request reimbursement of its fees prior to the
Committee's formation if it can show some substantial
contribution to these estates. (ICG Communications Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-

INTEGRATED HEALTH: Bates, Campbell & Amerimed Move To Lift Stay
In August, 1998, before being voluntarily dissolved, American
Oxygen Services of Tennessee, Inc. entered into an Agreement for
Sale and Purchase of Assets with Integrated Health Services
Acquisition XXVII, Inc. and IHS pursuant to which American Oxygen
sold its business and assets to IHS Acquisition for $1,980,827 to
be paid by the issuance of unregistered stock of IHS. Based upon
a formula in the Agreement for calculating the number of IHS
shares that were to be issued at closing, IHS delivered 61,061 of
IHS Shares to American Oxygen. After that, American Oxygen was
voluntarily dissolved, and the IHS Shares were distributed to the
sole shareholders of American Oxygen -- Timothy O. Bates, Michael
Campbell and Amerimed Healthcare, Inc. Shortly after that, the
value of the stock began to precipitously plummet.

Pursuant to the Agreement, Bates, Campbell and Amerimed (the
Claimants) filed a request for arbitration with the American
Arbitration Association in Orlando, Florida, naming IHS as
respondent. An amended complaint was filed in the Florida Action
in November 1999 to add as a respondent Mark A. Kovinsky, the
present or former Senior VIce President of IHS.

The allegations against Mr. Kovinsky were that Mr. Kovinsky, who
signed the Agreement on behalf of IHS and IHS Acquisition, knew
or should have known that the representations and warranties in
the Agreement were untrue and that he failed to disclose material
facts necessary so that the statements made to the Claimants
would not be misleading. The amended complaint asserts claims of
unjust enrichment against Kovinsky under the federal securities
laws, Florida security laws, as well as state law. Mr. Kovinsky
objected to personal jurisdiction over him in Florida. At the
time of the filing of the IHS bankruptcy petition, Mr. Kovinsky's
objection to personal jurisdiction was being briefed. Because of
the commencement of the IHS chapter 11 cases, no further action
has been taken in the Florida Action.

By their motion in the IHS cases, the Claimants asked the
Bankruptcy Court to grant relief from the automatic stay to allow
them to pursue the pending action against Mr. Kovinsky.

                The Debtors' Objection

The Debtors objected to the Claimants' motion on the grounds that
the requested lifting of the automatic stay will prejudice the
Debtors: (a) to the extent that the insurance proceeds sought by
the movants are property of the Debtors' bankruptcy estates; (b)
because the movants have failed to show that they will be
prejudiced by not having the stay lifted at this time; (c)
because the proper time for the Debtors to deal with all of the
movants' claims will be during the Debtors' claims administration

The Debtors told Judge Walrath that the National Union Policy
which provides coverage to the Debtors' officers and directors,
provides $35,000,000 of coverage that is an aggregate of both D&O
claims and corporate liability claims. There is no doubt, the
Debtors contend, that the proceeds of the National Union Policy
are property of the Debtors' estates.

Moreover, the Debtors note that the Arbitration Proceeding cannot
continue without the Debtors' involvement, whether through
discovery or otherwise and its continuation will indeed prejudice
the Debtors.

The Debtors told the Court that they have only recently begun to
analyze the 12,000-plus proofs of claims which were filed in the
IHS cases. Accordingly, the Debtors believe it would be premature
for the Court to allow the movants access to the proceeds of the
National Union Policy to the detriment of the Debtors and other

Accordingly, the Debtors asked the Court to deny the movants'
motion. (Integrated Health Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

INTEGRATED SPATIAL: Needs at Least $1.5 Mil to Fund Operations
As a result of recurring losses from operations over several
years, negative cash flows and certain other factors, the report
of Integrated Spatial Information Systems Inc.'s independent
certified public accountants, BDO Seidman, LLP, for the fiscal
year ended September 30, 2000 includes a qualification statement
in the audit opinion expressing substantial doubt about the
company's ability to continue as a going concern.

Management believes that it has the capacity to address immediate
needs for cash and liquidity through an aggressive approach on a
number of fronts. Operations are not currently profitable,
although the company's subsidiary operation when viewed on a
stand-alone basis has experienced breakeven or better levels of
profitability since June 30, 2000.

Integrated requires additional funds to bring current its
accounts payable, to satisfy obligations to a former officer as a
result of an arbitration award, to repay its operating subsidiary
for funds advanced in the normal conduct of business and for
working capital for the fiscal year 2001. The subsidiary
organization requires funds in excess of the amounts due from the
parent organization to provide working capital for operations and
growth of its business.

The minimum level of funding that is required to meet the
aforementioned funding requirements for the parent organization
is approximately $1.5 million. Management intends to raise
approximately $2.5 million through a rights offering during the
first half of calendar year 2001 to company shareholders and
certain other qualified investors. Sums in excess of the $1.5
million will provide additional working capital for the company's
subsidiary. In addition, management will seek additional and
extended lines of credit.

Presently, there is a working capital deficit of approximately
$1,244,843 versus working capital of $124,864 a year prior.
Operating revenue for the first quarter of FY 2001 amounted to
$1,649,022 and resulted entirely from the operating subsidiary,
PlanGraphics, Inc., geographic information systems activities.
This level of current quarter revenue reflects a decrease of 9%
from the same period of the prior year.

Net loss attributable to common stockholders amounted to $369,252
for the current period, an increase of $94,677 over the prior
quarter resulted principally from the first quarter increase in
expenses related to corporate affairs and being public.

J.C. PENNEY: Embarking on a Clutter Elimination Plan?
J. C. Penney Company, Inc. (NYSE: JCP) released preliminary sales
for the four weeks ended February 24, 2001. Total sales decreased
0.8% to $2.314 billion from $2.332 billing in the comparable 2000
period. Department store sales for February decreased 3.8% to
$858 million from $892 million in the 2000 period. On a
comparable store basis, that is stores open at least a year,
sales decreased 2.1% versus the same period last year. Catalog
sales for February decreased 10.7% versus the prior year period,
primarily due to the planned elimination of several sale and
specialty catalogs. E-commerce sales, which are included in
Catalog sales, were $22 million in February, compared to $14
million in last year's period. Total drugstore sales for the
February period increased 5.0% to $1.088 billion from $1.036
billion in the 2000 period. On a comparable store basis, sales
increased 12.0% with an 18.6% increase in pharmacy sales and a
1.2% increase in front-end sales. JCPenney Direct Marketing
Services sales for the February period decreased 3.1% versus last
year's February period.

Friday, the Company said it expects same-store sales to decline
in the first half of 2001 due to the slowing U.S. economy and the
use of its new centralized merchandising operations.

"These conditions make us cautious with respect to sales during
the first half of the year and more positive as we move into the
second half," Chief Financial Officer Robert Cavanaugh told
retail analysts on Friday at a meeting held at its Plano, Texas
headquarters, according to a report circulated by Reuters, adding
that Cavanaugh indicated sales at stores open at least a year are
expected to fall in the low single-digits on a percentage basis
in the first half of 2001, before rebounding in the second half.

To revive the business, Reuters relates, the company is making
changes to its merchandise mix, has centralized purchasing and
merchandising operations, is remodeling some stores, and plans a
significant boost in advertising. Bloomberg News adds that Penney
is planning to cut the number of items in its stores by 15%,
focusing on fewer goods that yield better profit margins . . .
and "to eliminate clutter from its stores."

J. C. Penney Company, Inc. is America's fifth-largest retailer,
employing more than 270,000 associates. The Company operates
approximately 1,075 JC Penney department stores in all 50 states,
Puerto Rico, and Mexico. In addition, the Company operates
approximately 50 Renner department stores in Brazil. Eckerd
operates approximately 2,650 drugstores throughout the Southeast,
Sunbelt, and Northeast regions of the U.S. JCPenney Catalog,
including e-commerce, is the nation's largest catalog merchant of
general merchandise. J. C. Penney Direct Marketing Services, Inc.
markets insurance products and membership services to various
credit card customers by direct response solicitations primarily
in the United States and Canada.

KATY INDUSTRIES: Discussing Potential Asset Sale With Buyer
Katy Industries, Inc. (NYSE: KT) says it's holding discussions
with a potential purchaser of a substantial equity position in
the company.

Under the transaction as presently under consideration, the
purchaser would buy a minority of the Company's outstanding
common shares at a premium to the current market price, and would
also invest directly in the Company through the purchase of
nonvoting convertible preferred stock. The transaction would be
subject to shareholder approval and restructuring of the
Company's existing bank debt. Katy said that there could be no
assurance that an agreement for the transaction would be reached
or, if reached, would be completed. Katy said that it did not
intend to comment further unless agreement is reached or
discussions terminate.

On November 6, 2000, Katy announced that it was exploring
strategic alternatives, including the possible sale of the
Company, and that it was engaged in discussions with one
potential purchaser relating to the possible sale of the Company.
Those discussions have been superseded by discussions with the
same potential purchaser relating to the transaction referred to

Katy Industries, Inc. is a diversified corporation with interests
primarily in Electrical/Electronics and Maintenance Products.

LERNOUT & HAUSPIE: Employing Brown Rudnick as Corporate Counsel
Daniel P. Hart, Senior Vice President and General Counsel of
Lernout & Hauspie Speech Products N.V. and Dictaphone Corp. asked
Judge Wizmur to authorize the Debtors to employ, retroactively to
the Petition Date, the Massachusetts law firm of Brown, Rudnick,
Freed & Gesmer, P.C., as their special counsel for general
corporate and securities matters, and local law issues that may
arise in Connecticut and Massachusetts during the pendency of
these Chapter 11 proceedings.

The professional services to be rendered by the Firm include
representation of the Debtors in:

      (a) General corporate matters;

      (b) Securities matters, including periodic filings with the
          Securities and Exchange Commission;

      (c) Employee benefit plan matters, including pre-petition
          matters on which the firm was working when these cases
          were commenced;

      (d) Matters for which local counsel may be necessary in
          Massachusetts and Connecticut (including, possibly in
          connection with pending securities class action
          litigation and employment law matters);

      (e) Potential sales of assets with which the firm has
          substantial background knowledge; and

      (f) Such other matters as the Debtors may request from time
          to time.

The Debtors agreed to compensate the firm for services rendered
based on its hourly rates charged which are as follows:

                Partners              $300 to $600
                Associates            $125 to $325
                Paralegals            $ 75 to $185

The firm told Judge Wizmur that the law does not require a
special counsel to be a "disinterested person". It is enough that
the special counsel does not represent or hold any interest
adverse to the Debtors or to the estate with respect to the
matter in which the special attorney is to be employed.

Lawrence M. Levy, a member of Brown, Rudnick, on behalf of the
firm, disclosed that the Debtors owe the firm an unpaid claim,
estimated on Debtors' list of twenty largest creditors to be
about $1,500,000.00, for unpaid prepetition legal fees. In
addition, the firm has represented Lernout & Hauspie Speech
Products since 1991, has acted as LHSP's principal United States
counsel for corporate and securities matters, and has assisted
LHSP in its acquisitions of Dictaphone and Dragon Systems, and
with SEC filing obligations after that.

Mr. Levy further disclosed that prior to the commencement of
these cases the firm has assisted Bryan Cave, proposed special
counsel for the Debtors, in connection with the SEC
investigation, and has worked with Leoff Claeys Vereke, the
Debtors' Belgian counsel, and Milbank Tweed, lead counsel for the
Debtors, in connection with prefiling negotiations with the
Debtors' prepetition lenders. The firm has represented Jo Lernout
and Pol Hauspie, L&H's founders and significant shareholders and
former officers, and companies they control, such as Oldco N.V.
and L&H Investment Company N.V. The firm also briefly represented
Flanders Language Valley Fund C.V.A., a venture capital fund
initially organized by Messrs. Lernout and Hauspie. The firm has
also represented other Lernout and Hauspie ventures, such as
SailTrust VZM.

The firm has also represented certain creditors in these cases,
such as Finova Capital, Fremont Financial, Fortis Health, which
may be an affiliate of Fortis Bank N.V., Deutsche Bank
Securities, Inc., an affiliate of Deutsche Bank, State Street
Bank & Trust, a trustee under the indenture governing
Dictaphone's bonds, and is acting as local counsel for Patton
Boggs in a litigation matter in Massachusetts.

Certain firm attorneys own shares in LHSP and FLV Fund. Mr. Levy
himself owns an option to hold 90,000 shares out of the
approximately 142 million shares outstanding. Various other
members and employees may hold shares in LHSP or the FLV Fund,
but Mr. Levy assures Judge Wizmur that none of these holdings are
significant. Mr. Levy swore that to the best of his knowledge,
neither he nor any member of the firm holds or represents any
interest materially adverse to the debtors' estates or of any
class of creditors or equity security holders in respect to the
specific services for which the firm would be retained as special
counsel. (L&H/Dictaphone Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

LIBERTY HOUSE: Emerges From Bankruptcy
It took almost three years, but the Liberty House bankruptcy saga
ended Thursday when the store's reorganization plan went into
effect and the Hawaiian company announced it emergence from
bankruptcy, according to

As a result, vendors and others owed less than $5,000 will
receive 100-percent of what's due plus interest within 30 days.
Other creditors will receive a cash payment worth 40 percent of
what they're owed and a note worth 50 percent payable over five
years. Company president John Monahan said that Liberty House has
also been extended a $40 million line of credit. He said that the
store now makes enough money to pay off its operating expenses
every month. (ABI World, March 2, 2001)

LOEWEN GROUP: Resolves Pulaski Funeral Disputes With McKinneys
The Loewen Group, Inc. sought and obtained the Court's authority
for Loewen Group International, Inc. (LGII) and Pulaski Funeral
Home, Inc. (PFH) to enter into a Settlement Agreement with Jerry
and Elizabeth McKinney and Citizens National Bank to resolve
controversy in connection with the McKinneys' management of PFH
which was acquired by Loewen in 1995 by purchasing all the
outstanding stock of PFH from Mr. McKinney.

At approximately the time of the acquisition, LGII and Mr.
McKinney also entered into a non-competition agreement, a
management agreement pursuant to which Mr. McKinney served as
manager of PFH, and related documents.

Following LGII's acquisition of PFH, LGII and the McKinneys had
several disputes relating to Mr. McKinney's management and
operation of PFH. Among other matters, LGII concluded that Mr.
McKinney had committed certain legal and ethical violations,
including the taking of certain funds belonging to PFH, while
acting as manager of PFH. Consequently, the Debtors fired Mr.
McKinney from his position with PFH. Mr. McKinney has asserted he
still is owed amounts under the Share Purchase Agreement and the
Non-Competition Agreement.

Shortly after that, the McKinneys filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code in the Kentucky
Bankruptcy Court. The McKinneys' proposed plan of reorganization
has been confirmed by the Kentucky Bankruptcy Court.

Following the McKinneys' Chapter 11 filing, LGII and the
McKinneys remained unable to resolve their disputes. LGII filed
certain proofs of claim in the McKinneys' Chapter 11 case. In
addition, LGII and PFH filed Adversary Proceeding No. 98-60 17 in
the Kentucky Bankruptcy Court seeking, among other things:

      (a) a declaration that the debt of the McKinneys due to the
          Plaintiffs was not discharged in the McKinneys'

      (b) the recoupment of certain funds received and expended by
          the McKinneys; and

      (c) the cancellation of certain contractual rights and
          payment rights, stemming primarily from the McKinneys'
          alleged breaches of contract.

Mr. McKinney filed proofs of claim numbers 2843 and 7659 in
Loewen's chapter 11 cases for amounts allegedly due under the
Share Purchase Agreement and Non-Competition Agreement.

To resolve all outstanding disputes between the parties,
including the Claims, LGII, PFH and the McKinneys have agreed to
enter into the McKinney Settlement Agreement. The McKinneys have
obtained approval from the Kentucky Bankruptcy Court to enter
into this Settlement Agreement in connection with their plan of
reorganization. The Kentucky Bankruptcy Court directed the
Plaintiffs to request that the Delaware Bankruptcy Court approve
the McKinney Settlement Agreement.

Pursuant to the McKinney Settlement Agreement, the Debtors, the
McKinneys and Citizens National Bank of Somerset have agreed

      (1) In full and complete satisfaction of all their claims
against the Debtors, the McKinneys will be entitled to all funds
currently held in the Citizens National Bank Escrow Account
titled "Benny Ham For Pulaski Funeral Home, Inc." relating to
rental payments for the lease of the Pulaski Funeral Home. (As of
August 31, 2000, the funds in the Citizens National Bank Escrow
Account totaled $71,180.

      (2) In full and complete satisfaction of all their claims
against the McKinneys, LGII and PFH will be entitled to all funds
held in the escrow account "Benny Ham For Dinsmore and Schohl
[sic] Jerry McKinney Escrow Account," established by Dinsmore &
Shohl (the Dinsmore & Shohl Escrow Account) at the time of the
sale of PFH to LGII. (As of August 31, 2000, the funds in the
Dinsmore & Shohi Escrow Account totaled $51,887.87.)

      (3) The McKinneys, PFH and Citizens National Bank of
Somerset agree to dismiss all claims they may have against each
other with prejudice.

      (4) The McKinneys and LGII will withdraw all proofs of
claim, including the Claims, filed in the respective bankruptcy

      (5) The real estate that is the subject of the lease to
Pulaski Funeral Home, Inc. will be transferred back to Mr.

      (6) The McKinneys will cooperate as reasonably necessary
with the Debtors to accomplish the transfer of all PFH assets to
a new owner, including confirming that the Lease is in good
standing and not subject to default.

      (7) Any disagreement between the text of this Motion and the
McKinney Settlement Agreement will be resolved in favor of the
McKinney Settlement Agreement. (Loewen Bankruptcy News, Issue No.
33; Bankruptcy Creditors' Service, Inc., 609/392-0900)

LTV CORP.: Peoples Energy Presses for Assumption of Contract
Peoples Energy Services Corporation, a manager and broker of
power services, including gas and electric services, in Chicago,
Illinois, appearing through Marc B. Merklin and Rebecca A. Kucera
of the firm of Brouse McDowell of Akron, Ohio, asked that Judge
Bodoh compel Welded Tube Co. of America to assume or reject the
Natural Gas Agreement dated January 5, 1998, and the Base Power
Sale and Purchase Agreement dated December 6, 2000.

The Gas Agreement expires by its own terms on July 31, 2001, and
as of the Petition Date the debtors owed Peoples the amount of
$188,236.10 for gas provided to the Debtors prior to the Petition
Date. Based on the historical data of The LTV Corporation
The LTV Corporation's account, the Debtor's projected
postpetition annual gas usage through July, 2001, is
approximately $688,886.85.

LTV-Copperweld Regal Tube and Peoples are parties to the Power
Agreement. Performance under this agreement had not yet begun at
the Petition Date, but the term of the Agreement is scheduled to
run through June, 2001. Based upon the historical data of the
Debtor's account, Peoples believes that the Debtor's projected
postpetition annual electric usage through June 2001 is
approximately $309,593.

Under both agreements, Peoples is obligated to manage all power
and gas requirements delivered to the Debtors, and the Debtors
are obligated to pay all monthly charges. Under the terms of the
agreement, if the Debtors fail to make payments when due, Peoples
may terminate the agreement on 10 days' written notice. Under
both these agreements, the Debtors receive a negotiated and below
market rate for their electric and natural gas requirements that
is lower than the tariff rates regularly charged by the regulated
utility company. Peoples' brokering services are described as
"competitive". Peoples does not enjoy monopoly status, and is not
a public utility so it does not enjoy the privileges of
termination of service within twenty days of the Petition if it
is not paid. However, in the Debtors' utility motion the Debtors
identified Peoples Energy Corporation, the parent of Peoples
Energy Services, as a utility. If Peoples is a utility, it is
entitled to seek further assurance of future payment under the
Court's prior Order.

Peoples told Judge Bodoh it believes there is a reasonable and
"substantial doubt" that the Debtor can fully perform through the
expiration of the respective agreements, so that Peoples would be
greatly prejudiced if it is required to continue to provide its
management and brokering services through the expiration of the
existing agreements without full payment. Moreover, if the
governing agreements are rejected by the Debtors, they may freely
obtain its postpetition services from the regulated utility
companies and negotiate with other non-regulated brokers of power
and gas services. Given the prospective harm to Peoples and the
short duration of the existing contracts, failure to set an early
date for assumption or rejection may result in the Debtors'
obtaining all of the benefits of performance of the contract by
Peoples, without Peoples receiving the protection to which it is
entitled by the Bankruptcy Code. (LTV Bankruptcy News, Issue No.
4; Bankruptcy Creditors' Service, Inc., 609/392-00900)

MONTGOMERY WARD: Kimco Venture Wins Lease Designation Rights
Kimco Realty Corp. (NYSE: KIM), in a joint venture with Simon
Property Group (NYSE: SPG) and the Schottenstein Group, has been
awarded asset designation rights for all of the real estate
property interests of the bankrupt estate of Montgomery Ward LLC
and its affiliates.

These property interests consist of 250 former Montgomery Ward
retail locations and other operating real estate assets; in
total, the designation rights include 315 separate fee simple and
leasehold property interests. These designation rights enable the
venture to direct the ultimate disposition of the fee and
leasehold positions held by the bankrupt estate. The venture has
agreed to purchase the designation rights for an initial purchase
price of $60.5 million that may ultimately exceed $435.5 million
under the terms of the asset purchase agreement.

The designation rights commenced simultaneously with the approval
of the US Bankruptcy Court in Delaware, which was received
Thursday, and will expire on February 26, 2002 for the leasehold
positions and on December 31, 2004 for the fee owned locations.
During the marketing period Kimco and its partners will be
responsible for all carrying costs associated with operating the
properties until a site is designated to a user.

Due to the nature of the agreement, the timing and extent of the
impact that this transaction will have on funds from operations
cannot yet be determined.

Kimco, a publicly traded real estate investment trust, has
specialized in shopping center acquisitions, development and
management for more than 30 years. Kimco currently owns and
operates the nation's largest portfolio of neighborhood and
community shopping centers, with interests in 495 properties
comprising approximately 66 million square feet of leaseable
space located throughout 41 states.

OWENS CORNING: Court Okays Employment Of Real Estate Brokers
Prior to the Petition Date, Owens Corning routinely employed
numerous real estate brokers as part its ongoing business
operations, which are conducted at hundreds of leased and owned
facilities throughout the nation. The Debtors employ brokers on a
transaction-by-transaction basis. In general, brokers are paid a
commission equal to a percentage of he transaction value. Sales
commissions are based on sales price, and lease commissions are
based on rental stream. Commissions vary from 4% to 6% of
transaction value, which translates into commissions ranging from
$10,000 to $2,000,000.

The Debtors anticipate that the brokers will provide both
customary, ordinary course services to the Debtors, as well as
services that relate more directly to the Debtors' Chapter 11
cases. For example, the Debtors anticipate using brokers to find
suitable tenants to assume various unneeded leases, or to find
replacement properties for leases that the Debtors ultimately

Given the burden to the Debtors' estates of seeking judicial
review and approval for individual brokerage agreements, the
Debtors proposed to employ and compensate each broker under
procedures comparable to those previously approved by the Court
in the order authorizing the Debtors to employ and compensate
other professionals in the ordinary course of its business.

The Debtors proposed to employ:

      The Staubach Company
      Great Lakes Region Corporate Services
      1001 lakeside Avenue E, Suite 1717
      Cleveland, Ohio 44114
      Attn: Mr. E. Donald Bain

      Insignia/ESG, Inc.
      311 South Wacker Drive, Suite 400
      Chicago, Illinois 60606
      Attn: Mr. Thomas H. Wenkstern

      CB Richard Ellis, inc.
      233 North Michigan Avenue, Suite 2200
      Chicago, Illinois 60601-6787
      Attn: Gary J. Beban

      Fischer Company
      13355 Noel Road, Suite 2400
      Dallas, Texas 75240
      Attn: Ted Uzelac

      Anderson & Layman
      9 North 3rd Street
      Newark, Ohio 43055
      Attn: Steve Layman

      Cushman & Wakefield
      455 North Cityfront Plaza Dr., Ste. 2800
      Chicago, Illinois 60611
      Attn: Jane Endres

      Grubb & Ellis Company
      Corporate Services Group
      2215 Sanders Road, Suite 400
      North Brook, Illinois 60062
      Attn: Steven Scruggs

      Two Logan Square
      Philadelphia, Pennsylvania 19103-2759
      Attn: Mr. Caleb Fox

      Colliers International
      Corporate Headquarters
      1960 The Alameda, Suite 100
      San Jose, California 95126
      Attn: Mr. Phil Dixon

      Dillin Corporation
      139 West Indiana Avenue
      Perrysburg, Ohio 43551-1578
      Attn: Mr. Larry Dillin

The Debtors proposed that they be permitted to pay each broker
100% of its fees and disbursements incurred upon submission to,
and approval by, the Debtors of an appropriate invoice setting
out in reasonable detail the nature of the services rendered and
disbursements actually incurred by the broker without the need
for the real estate broker to submit individual fee applications.
The Debtors will not, however, pay any broker more than $1.5
million for any single transaction without prior approval by the
Court. In order to provide sufficient information to parties in
interest regarding compensation to real estate brokers, the
Debtors proposed to include all fees paid to brokers on the
periodic reports of professional fees required under the
ordinary-course professionals order. The Debtors also requested
that the brokers be excused from submitting separate retention
applications and affidavits. The Debtors recognize the importance
of providing information regarding brokers to the Court, the
United States Trustee, and other parties in interest, so the
Debtors proposed that each broker be required to file with the
Court and serve on the United States Trustee and the Committees a
declaration and disclosure statement within 30 days of the later
of (a) the entry of an order granting this relief, or (b) the
broker's first postpetition engagement by the Debtors. The U. S.
Trustee and the Committees will then have 20 days from the date
of service of such a declaration to object to the retention of
the broker. If no objection is submitted within this time period,
the broker's retention will be deemed approved by the Court
without further notice or a hearing.

By this Motion, the Debtors do not seek to retain real estate
brokers that provide only services which are unrelated to these
Chapter 11 cases. These brokers are not, the Debtors assured
Judge Walrath, "professional persons" requiring formal
applications for employment and compensation. The Debtors will
continue to employ these types of brokers in the ordinary course
of their businesses. However, the Debtors proposed that the same
procedure for filing and objecting to declarations be followed
whenever a broker is employed in the ordinary course of the
Debtors' businesses.

By her Order, Judge Walrath approved the employment of the real
estate brokers on the terms stated in the Application. (Owens
Corning Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PG&E CORPORATION: Closes $1 Billion Loan Deal to Restructure Debt
PG&E Corporation (NYSE: PCG) closed a $1 billion loan agreement
with GE Capital Structured Finance Group, as Lender and Co-
Arranger, and Lehman Brothers as Lender, Administrative Agent,
Lead Arranger, and Book Manager, to restructure the Corporation's
debt and pay obligations on which it has defaulted.

The loans, secured by the Corporation's equity interest in its
PG&E National Energy Group, LLC, have enabled the Corporation to
pay its outstanding debt obligations on which the Corporation has
defaulted or would default in the near future. The obligations
that have been paid include: $501 million in payments to
commercial paper holders, $434 million in borrowings under a
revolving credit agreement, and $116 million owed to PG&E
Corporation common shareholders for the defaulted fourth-quarter
2000 dividend.

The agreement also provides the lenders with options that,
depending on certain factors, would allow them to acquire between
2 percent and 3 percent of the shares of PG&E National Energy
Group, Inc. The term of the loan agreement is two years with an
option by PG&E Corporation to extend it for an additional year.
"The defaults created the risk that the Corporation might face a
bankruptcy in the near future," said Chairman, CEO and President
Robert D. Glynn, Jr., "and bankruptcy of the Corporation would
benefit no one."

Glynn emphasized that the financing would be repaid with PG&E
Corporation shareholder dollars only. "Unlike the Utility's costs
of procuring wholesale electricity for utility customers, this
financing is a general corporate obligation of PG&E Corporation,
and it will be repaid entirely with shareholder dollars," he
said. "It has no impact on the rates the Utility's customers pay
now or in the future."

As required by the loan agreement, the funds were used to repay
substantially all outstanding debt, and the Corporation's fourth-
quarter 2000 common stock dividend, on which the Corporation
defaulted in January when it was due to be paid. The
Corporation's Board of Directors declared the dividend in October
of 2000. The payment became an outstanding obligation after the
record date on December 15, 2000, and the failure to pay it
represented a default, which the lenders required the Corporation
to pay with the proceeds of the loan, as part of the agreement.

The loan agreement prohibits the Corporation from declaring or
paying future common stock dividends until the loans are repaid.
Dividend payments will be resumed when the Board of Directors
determines that it is in the best interest of the Corporation to
do so.

PG&E Corporation markets energy services and products throughout
North America through its National Energy Group. PG&E
Corporation's businesses also include Pacific Gas and Electric
Company, the Northern and Central California utility that
delivers natural gas and electricity to one in every 20

RCN CORP.: Moody's Cuts Senior Bank Debt to B2 & Notes to Caa2
Moody's Investors Service lowered the debt ratings for RCN
Corporation (RCN), as follows:

      * $1 billion of senior secured bank credit facilities to B2
        from B1, and

      * the combined $2.025 billion (face amount) of senior
        unsecured notes to Caa2 from B3

Meanwhile, the company's senior implied rating is placed at B3,
and RCN's senior unsecured issuer rating is at Caa2.

Approximately $3.0 billion of debt securities are affected, while
the outlook for all ratings remains negative. Accordingly, the
rating actions conclude the agency's  review of the company's
debt ratings, which began December 29, 2000.

Moody's states that the downgrades principally reflect the
company's inability to perform in accordance with its
expectations, including those assumptions on which the ratings
were originally predicated in 1997, as well as those as revised
by management more recently.

Moody's specifically noted that the pace of network construction
and subscriber additions has been considerably slower and
materially more costly than anticipated, notwithstanding the
company's market expansion to the west coast and mid-west
geographical regions since the original business plan was
evaluated. Reportedly, the company's former strategy of acquiring
regional Internet service providers as a market entree and lead-
in to migrating subscribers to these services onto RCN's own
network, and the enhanced economics that would ensue therefrom,
have also been largely unsuccessful. Finally, the rating agency
thinks that that management has been spread too thin, and that
past mis-steps in execution - although they are being addressed -
may ultimately hinder the company's long-term success, Moody's

Communications company RCN Corporation is constructing network
and marketing video, voice and data services mainly to
residential households located in high-density northeast, west
coast and midwest markets in competition with leading incumbent
service providers. The company is located in Princeton, New

ROYCE BIOMEDICAL: Has No Credit, Bank Financing or Liquidity
Royce Biomedical Inc. has experienced significant losses over the
past five years, including $34,251 in the current period and has
an accumulated deficit of $2,433,250 at December 31, 2000. The
company's continued existence as a going concern is dependent
upon its ability to continue to obtain adequate financing
arrangements and to achieve and maintain profitable operations.

The company does not have any available credit, bank financing or
other external sources of liquidity. Due to historical operating
losses, its operations have not been a source of liquidity. In
order to obtain capital, the company may need to sell additional
shares of its common stock or borrow funds from private lenders.

During the twelve months ending December 31, 2001 the company
will need approximately $4,000,000 in additional capital for the
acquisition of a pharmaceutical manufacturing facility that will
allow the company to manufacture H. Pylori test kits in China. In
addition, if during the twelve months ending December 31, 2001
the company suffers additional losses, it will need to obtain
additional capital in order to continue operations. There can be
no assurance that the company will be successful in obtaining
additional funding.

RSL COMM.: Suspends Interest Payment on 9-1/8% and 12-7/8% Notes
RSL Communications PLC stated that, as part of its efforts to
preserve cash, it is suspending the regular semiannual interest
payments due on March 1, totaling approximately $22 million, to
holders of its 9-1/8% notes (maturing March 1, 2008), 12-7/8%
U.S. dollar denominated notes (maturing March 1, 2010) and 12-
7/8% Euro denominated notes (maturing March 1, 2010). The
indentures governing such notes provide for a 30 day grace

The Company said that it has been working cooperatively with an
unofficial committee representing holders of its outstanding
notes, including the foregoing notes. The committee has advised
RSL COM that it will continue to work with the Company with a
view toward the formulation of a consensual restructuring of the
Company's note obligations. The Company has also made a decision
to indefinitely defer the payment of interest and the repayment
of principal on the $100 million loan extended to the Company
late last year by Ronald S. Lauder, Chairman of RSL COM.

RSL COM is evaluating all of its strategic alternatives,
including actively pursuing the sale of numerous subsidiaries. In
that regard, the Company is in various stages of negotiations
with potential buyers for all or part of a number of its
subsidiaries. RSL COM has closed on the sale of its prepaid
calling card business in the USA and most of the residential
mobile customer base in the UK. As announced in early January,
the Company closed on the sale of its investment in Telegate AG,
yielding gross proceeds of nearly EUR 300 million.

As previously announced, the Board of Directors of RSL COM has
retained the investment banking firm of Dresdner Kleinwort
Wasserstein to advise the Company with respect to its strategic
alternatives and to assist it in executing a plan to sell assets.
The Board of Directors has also appointed Keith Maib as Chief
Restructuring Officer. Mr. Maib has extensive experience in
complex operational and financial restructurings. Mr. Maib said:
"Over the past several months, we have worked closely and
cooperatively with an unofficial group of noteholders to address
and resolve many of the issues facing the Company. The most
important issue is cash resources, and the action today is
consistent with our goal to maintain adequate levels of cash flow
to support operations while we seek to refocus the business."

RSL Communications is a facilities based communications company
that provides a broad range of data/Internet, voice and value-
added product and service solutions to customers in selected
markets around the globe. RSL COM is headquartered in Hamilton,
Bermuda with executive offices in New York City.

SELECT SWITCH: Court Confirms Chapter 11 Plan
The US Bankruptcy Court for the Central District of California
issued a notice on February 16, 2001, confirming a Chapter 11
plan of reorganization.

SERVICE MERCHANDISE: Wants To Terminate Existing Pension Plan
As authorized by the Court pursuant to the Pension Plan Order,
Service Merchandise Company, Inc. amended its Pension Plan,
implementing the cessation of the accrual of benefits under the
Pension Plan effective September 30, 1999.

The Debtors' actuarial advisors have determined that the Pension
Plan is presently fully funded. However, the interest rates that
impact the solvency of the Pension Plan fluctuate from year to
year. As a result, the Pension Plan's status is subject to

In the exercise of their business judgment, the Debtors have
determined to terminate the Pension Plan and take advantage of
the current funding status of the Plan, rather than risk adverse
changes in prevailing interest rates. The Debtors believe that
the proposed relief is also well justified because it will likely
enable the Debtors to make full distributions to eligible
participants under the Pension Plan. Moreover, the Debtors
believe that under ERISA, they are allowed to terminate the
Pension Plan and to commence making distributions so long as they
comply with certain requirements of ERISA and the Internal
Revenue Code. The Debtors make it clear that they do not ask the
Court to modify or alter these requirements in any way but are
seeking the Court's permission to perform an act they otherwise
would be entitled to perform outside of the context of their
chapter 11 cases.

In particular, the Debtors intend to give notice to all eligible
participants under ERISA and the Internal Revenue Code of their
intention to terminate the Pension Plan. In accordance with
applicable nonbankruptcy law, the Pension Plan assets will be
reinvested pending the implementation of the termination process
to protect the assets from further interest rate fluctuations.
After seeking an appropriate determination letter from the
Pension Benefit Guaranty Corporation and the Internal Revenue
Service and other relevant authorities and after giving eligible
participants appropriate notice, the Debtors will commence
distributions under the Pension Plan.

In addition, the Debtors estimate that there may be surplus
assets available to the Debtors after the distributions are
complete. Accordingly, the Debtors also request authority to use
the surplus in the ordinary course of business, including, but
not limited to, using the surplus to fund a defined contribution
plan for current and future employees.

With this, the Debtors sought the Court's authority, pursuant to
11 U.S.C. sections 105 and 363(b) to take all steps necessary and
appropriate to effectuate the termination of the Service
Merchandise Company, Inc. Restated Retirement Plan in accordance
with the provisions of the Employee Retirement Income Security
Act of 1974, as amended and to implement the procedures for
distributions. The Debtors believe that the relief requested
is in the best interests of the estates and reflects the Debtors'
exercise of sound business judgment. (Service Merchandise
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

TBS INTERNATIONAL: April 9 Administrative Claims Bar Date Set
On October 12, 2000 the U.S. Bankruptcy Court for the Southern
District of New York entered an order confirming the Third
Amended Joint Plan of Reorganization of TBS International Limited
and the affiliated debtors. On February 8, 2001, the Bankruptcy
Court entered an order approving certain modifications to the
plan, and confirming the plan, as modified. On February 8, 2001,
the plan was substantially consummated and became effective.

Holders of administrative expense claims shall file and serve a
request for payment of such claims on each of the following
entities no later than 5:00 PM, Eastern Time, on April 9, 2001.

Attorneys for the debtors are James P. Ricciardi, PC and Rosalie
W. Gray, Gison, Dunn & Crutcher LLP, New York, NY.

U.S. MEDIA: Hearing to Convert or Dismiss Scheduled for March 13
On motion of the US Trustee for the Southern District of New
York, a hearing will be held before the Honorable Arthur J.
Gonzalez at the U.S. Bankruptcy Court, Southern District of New
York at the above address on March 13, 2001 at 9:30 AM for an
order converting the Chapter 11 case, U.S. Media Holdings, Inc.,
to a case under Chapter 7 of the Bankruptcy Code, or in the
alternative dismissing this Chapter 11 case and such other and
further relief as may be deemed just and proper.

U.S. INDUSTRIES: Fitch Lowers Senior Note Rating to BBB-
U.S. Industries, Inc.'s (USI) $375 million senior notes are
downgraded to 'BBB-' from 'BBB' and commercial paper program is
lowered to 'F3' from 'F2'. Both ratings have been placed on
Rating Watch Negative. These actions follow the company's
announcement that the anticipated spin-off of its lighting and
industrial tools businesses and other debt repayment activities
will not be completed within the time period previously

The delay in completing the spin-off of these businesses and
monetizing the Strategic Industries seller notes has resulted in
higher debt levels and weaker credit protection measures than
previously anticipated. With regard to proposed asset sales,
future debt reduction remains uncertain. Also of concern is the
weakness experienced in certain of USI's business lines and the
impact a continued economic slowdown could have on the company's
operating results.

USI announced that on April 30, 2001, its unsecured revolving
credit facilities will become secured with the company's senior
notes remaining pari passu, sharing equally in the security with
the revolving facilities. The Rating Watch Negative status is
expected to be resolved following the resolution of the company's
new capital structure and further debt reducing activities. The
company's operating performance will also be considered.

U.S. INTERACTIVE: Caught in Bankruptcy Fight Over Bonuses
U.S. Interactive Inc. is caught up in a bankruptcy court wrangle
over bonuses promised to employees who stuck around to shut down
the former King of Prussia, Pa. corporate headquarters, according

The failed web consultancy has been in chapter 11 bankruptcy
since January and was recently kicked off the Nasdaq and hit with
the first of an expected onslaught of shareholder suits. U.S.
Interactive filed bankruptcy after announcing it was shutting
down Pennsylvania operations and retreating to the California
stronghold of SoftPlus Inc., a rival it bought but could not pay

Mohan Uttarwar, who resigned as Chief Executive Officer of U.S.
Interactive at the time of the filing, had been CEO at SoftPlus.
After he took over in the fall, U.S. Interactive made various
representations about the fate of the Pennsylvania-based
workforce in filings with the Securities and Exchange Commission.
At one point, the company said it would pay $1.5 million to
people considered essential to the firm's future. Now a federal
judge in Wilmington has to decide whether to give the nod to
bonuses promised to senior staffers persuaded to hang on for the
last hurrah. About $875,000 is sitting in escrow, earmarked for
the bonuses. (ABI World, March 2, 2001)

VANGUARD AIRLINES: Hambrecht Trust Adds to 53.1% Equity Stake
The Hambrecht 1980 Revocable Trust beneficially owns 17,439,275
shares of the common stock of Vanguard Airlines, Inc., exercising
sole voting and dispositive power over such shares. The amount
held represents 53.1% of the outstanding common stock of the

The Hambrecht 1980 Revocable Trust is a California revocable
trust. The trustee of the trust is William R. Hambrecht, whose
occupation is investing in public and private companies. Mr.
Hambrecht is regularly engaged in the business of investing in
publicly-held and private companies.

On February 13, 2001, the Trust arranged for the issuance of an
irrevocable letter of credit in the amount of $2,000,000 in favor
of a commercial bank for the account of the Vanguard. In exchange
for the arrangement of the issuance of the letter of credit, the
Trust received a warrant to purchase 2,000,000 shares of common
stock of Vanguard.

Mr. Hambrecht acquired the securities to increase the Trust's
equity interest in the airline.

WASHINGTON GROUP: Billion-Dollar Credit Agreement Now in Default
Washington Group International, Inc. (NYSE:WNG) (formerly
Morrison Knudsen Corporation) faces severe near-term liquidity
problems. The company is in default under certain covenants in
its senior credit facilities with its banks. In addition, the
company currently is unable to secure performance bonds necessary
to obtain certain new projects. The company will request waivers
from its lenders and attempt to restore its bonding capacity;
however, no assurance can be given that it will be able to obtain
waivers or that it will improve its liquidity and financial
condition to a level necessary to obtain bonding capacity.

Washington attributes its liquidity problems to a delay in
resolving purchase price adjustments in connection with its
acquisition of Raytheon Engineers & Constructors (RE&C) and due
to substantial cost overruns and negative cash flows associated
with certain RE&C projects acquired.

Prior to its acquisition of the RE&C businesses, Washington had
uncollateralized revolving credit facilities providing an
aggregate borrowing capacity of $325,000,000, of which
$99,900,000 was outstanding at June 2, 2000. On July 7, 2000, in
order to finance the RE&C acquisition, refinance existing
revolving credit facilities, fund working capital requirements
and pay related fees and expenses, Washington:

      (1) obtained new senior secured credit facilities, providing
          for an aggregate of $1,000,000,000 of term loans and
          revolving borrowing capacity and

      (2) issued and sold $300,000 aggregate principal amount of
          senior notes due July 1, 2010.

The New $1,000,000,000 Credit Agreement, dated as of July 7, 2000
among MORRISON KNUDSEN CORPORATION, the Lenders named therein,
BOSTON, as Administrative Agent, Collateral Agent and an Issuing
Bank and as Arranger and BANK OF AMERICA, N.A. and U.S. BANK
NATIONAL ASSOCIATION, as Documentation Agents, provided the
Company with access to:

      (a) two senior secured term loan facilities in an aggregate
          principal amount of up to $500,000,000 including a
          $100,000,000 multi-draw Tranche A term loan facility
          that matures July 7, 2005 and a $400,000,000 Tranche B
          term loan facility that matures July 7, 2007, and

      (b) a five-year $500,000,000 senior secured revolving credit
          facility, all of which is available in the form of
          letters of credit.

Initial borrowings under the New Credit Facilities totaled
$400,000,000  representing the full amount available under the
Tranche B term loan facility. On October 5, 2000, Washington
terminated the Tranche A term loan facility due to its
determination that near term borrowing capacity is sufficient and
to eliminate ongoing related commitment fees. The Company's
obligations under the Credit Agreement are secured by pledges,
guarantees and other collateral.

The Senior Notes are unsecured senior obligations that mature on
July 1, 2010. Interest on the Senior Notes is payable
semiannually in arrears on January 1 and July 1, commencing
January 1, 2001. The Senior Notes were sold in a private offering

      Credit Suisse First Boston Corporation..... $ 225,000,000
      BMO Nesbitt Burns Corp.....................    60,000,000
      U.S. Bancorp Libra, a division of U.S.
         Bancorp Investments, Inc................    15,000,000
                Total............................ $ 300,000,000

Under a registration rights agreement for the benefit of the
holders of the Senior Notes, Washington Group is required to
offer to exchange the Senior Notes for new Senior Notes that are
registered under the Securities Act of 1933. The Senior Notes
provide for additional interest to the extent and for the period
that the registration process is not completed within the
specified periods. The Senior Notes accrued interest at a rate of
11% per annum through September 20, 2000, and currently accrue
interest at 11.5% per annum. They will continue at that rate
until Washington fully complies with the registration
requirements of the registration rights agreement, subject to a
further increase in interest rate of .5% per annum from and after
December 20, 2000, until the registration process is completed.
At that time, the Senior Notes will again accrue interest at the
annual rate of 11%. The Senior Notes rank equally with existing
and future senior unsecured indebtedness. The Senior Notes
effectively rank junior to all secured indebtedness and to all
liabilities of the subsidiaries that are not guarantors of the
Senior Notes. The Senior Notes rank senior to any future
subordinated indebtedness. The Senior Notes are guaranteed on a
senior basis by:

      * Centennial Engineering, Inc.
      * Morrison Knudsen Corporation
      * Morrison Knudsen Corporation (Montana)
      * Montana Morrison Knudsen International, Inc.
      * Morrison Knudsen Leasing Corporation
      * Morrison Knudsen LLC
      * National Projects, Inc.
      * Pomeroy Corporation
      * Washington Contractors Group, Inc.

and these RE&C subsidiaries:

      * Asia Badger, Inc.
      * Badger Energy, Inc.
      * Energy Overseas International, Inc.
      * Raytheon-Catalytic, Inc.
      * Raytheon Constructors, Inc.
      * Raytheon Constructors International, Inc.
      * Raytheon Demilitarization Company
      * Raytheon-Ebasco Overseas Ltd.
      * Raytheon Engineers & Constructors, Inc.
      * Raytheon Engineers & Constructors, Midwest, Inc.
      * Raytheon Engineers & Constructors UK Ltd.
      * Rust Constructors, Inc.
      * United Engineers Far East, Ltd.
      * United Engineers International, Inc.
      * United Mid-East, Inc.

The indenture under which the Senior Notes were issued contains
affirmative, restrictive and financial covenants and specifies
events of default which are typical for an indenture governing an
issue of high-yield senior unsecured notes. Among the covenants
are those limiting Washington's ability (and certain of its
subsidiaries) to incur debt or liens, provide guarantees, make
investments and pay dividends or repurchase shares.

                          * * *

Because of the additional time needed to focus on its near-term
liquidity position and to reflect the impact of its current
situation in its financial statements and related disclosures,
the company also announced that it will delay its fourth quarter
and fiscal 2000 earnings announcement until Friday, March 16,

Washington Group expects a significant cash payment from Raytheon
Company when Raytheon complies with its contractual obligations
under the acquisition agreement.

"The purchase price adjustment should have been determined by
now," said Dennis R. Washington, Chairman and Chief Executive
Officer. "And if it had, we simply wouldn't be in this position.
Several RE&C projects had serious undisclosed problems and were
in trouble before we acquired RE&C, and were it not for those
contracts our business would be strong." Under the acquisition
agreement, performance on these contracts is the responsibility
of Washington Group, but performance guarantees by Raytheon
Company to the project owners remain in place on most of the
troubled RE&C projects.

On July 7, 2000, Washington Group paid Raytheon Company
approximately $53 million and assumed liabilities then estimated
to be $450 million to acquire RE&C. The purchase price was based
on a Raytheon-prepared preliminary April 30, 2000 balance sheet
and remains subject to a cash adjustment, based on an audited
version of that financial statement.

The parties agreed that Raytheon would prepare and deliver the
audited balance sheet of the RE&C businesses by January 14, 2001,
and Raytheon has failed to do so. The acquisition agreement
provides for a dispute resolution process to resolve any
disagreements between the parties once the audited balance sheet
has been prepared. Despite Washington Group's efforts to complete
the process in a timely manner, the adjustments to the purchase
price remain unresolved and Washington Group has not received the
cash payment it expects under the contract.

As previously reported, as of September 1, 2000, the company
reduced RE&C assets and increased liabilities by approximately
$700 million from amounts originally estimated.

Washington Group's viability is dependent upon resolution of its
near-term liquidity problems. Washington Group is currently in
discussions with its lenders, surety companies and other parties
to attempt to solve its near-term liquidity problems. It is
considering all alternatives to increase liquidity, including
various measures to conserve cash, the incurrence of additional
debt, the issuance of additional equity and the sale of all or a
portion of its assets. Given the near-term nature of its
liquidity problems, however, Washington Group's alternatives are
limited and there is no assurance that Washington Group will be
able to obtain additional funds. If Washington Group is unable to
obtain additional sources of cash, it may, among other
alternatives, seek protection from its creditors under the United
States Bankruptcy Code.

David S. Kurtz, Esq., and Jeffrey W. Linstrom, Esq., (formerly at
Jones, Day, Reavis & Pogue and now at Skadden, Arps, Slate,
Meagher & Flom) guided Morrison Knudsen through its prepackaged
chapter 11 proceeding in 1996 before The Honorable Peter J. Walsh
in the U.S. Bankruptcy Court for the District of Delaware (Bankr.
Case No. 96-1006).  Anthony W. Clark, Esq., at Skadden Arps,
served as Special Counsel to MK's Board of Directors.  Leon C.
Marcus, Esq., at Marcus Montgomery P.C., represented an
Unofficial Committee of Equity Security Holders.  That band of
interest holders attempted to derail MK's pre-petition merger
deal with Washington Construction Group, Inc., and subject MK to
a post-petition auction process.  The Unofficial Committee was
unable to persuade Judge Walsh to find that MK's impaired
creditors were recovering a greater than 100% return and hold
that the distribution of warrants to MK shareholders under
Debtors' Plan was not fair and equitable within the meaning of 11
U.S.C. Sec. 1129(b)(2)(C).

Since emergence from chapter 11, Robert A. Yolles, Esq., in Jones
Day's Chicago office has provided legal services for the Company
on various occasions. PricewaterhouseCoopers LLP serves as
Washington Group's auditors and accountants. Kris F. Heinzelman,
Esq., at Cravath, Swaine & Moore, serves as counsel to CSFBC in
connection with the registration of the Senior Notes. United
States Trust Company of New York serves as the Intenture Trustee
for the 11% Senior Note issue.

Washington Group International, Inc. is an international
engineering and construction firm with more than 39,000 employees
at work in 43 states and more than 35 countries.

WASHINGTON GROUP: Moody's Junks Debt Ratings
Moody's Investors Service cut the debt ratings of Washington
Group International, Inc. and left the ratings under review for
possible further downgrade. Approximately 1.3 billion of debt are
affected. Said ratings are as follows:

      * Senior secured bank credit facility lowered to Caa1 from

      * senior unsecured notes lowered to Caa3 from Ba2,

      * senior implied rating lowered to Caa1 from Ba1, and

      * senior unsecured issuer rating lowered to Caa3 from Ba2.

According to Moody's, the downgrades follow the company's recent
announcement that it is in default under certain covenants in its
senior credit facilities and is facing severe near-term liquidity
problems due to substantial cost overruns and negative cash flows
associated with certain projects acquired through the Raytheon
Engineers & Constructors (RE&C) acquisition, and ongoing disputes
regarding purchase price adjustments with Raytheon relating to
this acquisition.

Moody's has noted that the company's debt structure included
approximately $400 million outstanding under its bank credit
facility as of September 1, 2000, and about $300 million of
senior unsecured notes. Its maturity profile is said to be modest
with only $4.0 million of scheduled maturities due each year
through 2005. Accordingly, the company's bank credit facilities
benefit from a pledge of substantially all of the tangible and
intangible assets of the company. However, because of the
apparent erosion of the balance sheet since September 1, and the
cost overruns incurred on various contracts, the potential
recovery for secured creditors could be impaired, Moody's states.
The rating agency also adds that the effective subordinated
position of the unsecured creditors would likely result in a
substantial reduction in their recovery potential.

The ongoing rating review will assess the company's ability to
secure needed waivers and amendments from its bank group, the
ongoing negotiations with Raytheon regarding purchase price
adjustments, and the company's ability to maintain adequate
liquidity for its operations, Moody's relates. The review will
also consider the ongoing effect of the current situation on
potential recovery values for all creditors, according to

WHEELING-PITTSBURGH: Noteholders Tap Zolfo as Financial Advisor
The Official Committee of Unsecured Noteholders of Wheeling-
Pittsburgh Steel Corporation and the related Debtors, and the
Official Committee of Unsecured Trade Creditors for these
Debtors, jointly asked Judge Bodoh for his approval and
authorization of the employment by them of the New York
accounting firm of Zolfo Cooper LLC as their bankruptcy
consultants and special financial advisors.

All the services that Zolfo Cooper will provide to the Committees
will be: (i) at the request of the Noteholders' Committee, Trade
Committee or both, (ii) appropriately directed by the
Noteholders' Committee, Trade Committee or both, so as to avoid
duplicative efforts among the professionals retained in the case,
and (iii) performed in accordance with applicable standards of
the accounting profession. It is presently anticipated that Zolfo
Cooper will provide the following services:

      (a) Monitor the Debtors' cash flow and operating
performance, including:

          (1) Comparing actual financial and operating results to

          (2) Evaluating the adequacy of financial and operating

          (3) Tracking the status of the Debtors'/Debtors'
              professionals' progress relative to developing and
              implementing programs such as preparation of a
              business plan, identifying and disposing of
              nonproductive assets, and other such activities; and

          (4) Preparing periodic presentations to one or both of
              the Committees summarizing findings and observations
              resulting from Zolfo Cooper's monitoring activities;

      (b) Analyze and comment on operating and cash flow
projections, business plans, operating results, financial
statements, other documents and information provided by the
Debtors/Debtors' professionals, and other information and data
pursuant to one or both of the Committees' requests;

      (c) Understand and monitor the Debtors' process to sell,
merge, acquire or dispose of assets, business units or companies
and advise the Committees with respect to the Debtors'

      (d) Advise the Committees concerning interfacing with the
Debtors, other constituencies and their respective professionals;

      (e) Prepare for and attend meetings of the Committees and
subcommittees thereof;

      (f) Analyze claims and perform investigations of potential
preferential transfers, fraudulent conveyances, related-party
transactions and such other transactions as may be requested by
the Committees;

      (g) Testify before the Bankruptcy Court or other forum as

      (h) Analyze and advise the Committees about the Debtors'
proposed plan of reorganization, the underlying business plan,
including the related assumptions and rationale, and the related
disclosure statement and any proposed sale of assets under
Section 363 of the Bankruptcy Code;

      (i) Assist the Committees in negotiating and, if
appropriate, drafting a plan of reorganization; and

      (j) Provide other services as requested by the Committees.

Zolfo Cooper has indicated to the Committees that its decision to
accept this engagement to advise and assist the Committees is
contingent upon its ability to be retained in accordance with its
customary terms and conditions of employment and compensated for
its services and reimbursed for the out-of-pocket expenses it
incurs in accordance with its customary billing practices. Zolfo
Cooper's fees are based upon the actual hours expended at the
firm's standard hourly rates which are in effect when the
services are rendered. Zolfo Cooper's current hourly rates in
effect as of January 1, 2001 are:

      Principals/members             $450-595
      Professional Staff             $125-440
      Support Staff                  $ 75-100

Kevin M. Golmont, a member of Zolfo Cooper, told Judge Bodoh that
staff professionals do not have titles; the title member at Zolfo
Cooper is a legal distinction, not a distinction of professional
proficiency. Mr. Golmont is the member who will be responsible
for this engagement.

Mr. Golmont assured Judge Bodoh that Zolfo Cooper neither holds
nor represents any interest adverse to the Committees on the
employment for which approval is sought. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


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

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 Go 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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.  Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.

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

                      *** End of Transmission ***