TCR_Public/010412.MBX          T R O U B L E D   C O M P A N Y   R E P O R T E R

             Thursday, April 12, 2001, Vol. 5, No. 72


AMERICAN PAD: Seeks To Extend Exclusive Period To June 30
ARMSTRONG: Moves To Modify Stay To Continue Unimat Arbitration
AZTEC TECHNOLOGY: Shares Face Delisting From The Nasdaq Market
BEAR STEARNS: Two Asset-backed Certificates Down to CCC And D
BPC REORGANIZATION: Exclusive Period Extended To April 23

CD WAREHOUSE: Shares Kicked Off Nasdaq List, Now Trade on OTCBB
CONVERGENT COMMUNICATIONS: Receives Notice of Default From Cisco
CORRECTIONS CORP.: Raises $65.7MM From Agecroft Properties Sale
CRITICAL PATH: Closing Offices, Cutting 450 Jobs To Reduce Costs
D.I.Y. HOME: Shutting Down Three Ohio Locations To Reduce Debt

EDISON FUNDING: Fitch Takes Dim View of Senior Debt Obligations
FRUIT OF THE LOOM: Seeks To Exercise Remedies Against Mr. Farley
GENESIS HEALTH: Court Okays Retention Program For 5 Executives
HARNISCHFEGER: Settles Wausau Insurance Program Claims
HEALTHCENTRAL: Plans to Appeal Nasdaq's Move To Delist Shares

IBJ WHITEHALL: Fitch Slashes Individual Rating to 'D'
ICG COMMUNICATIONS: Rejecting Eight More Real Property Leases
IGI INC.: May File For Bankruptcy If Unable To Restructure Debt
IMPERIAL SUGAR: Harris Trust Objects To Wasserstein's Fees
INT'L MENU: Southbridge Files Involuntary Petition in Canada

KANA COMMUNICATIONS: Merging With Broadbase Software To Buy Cash
LAIDLAW, INC.: Losses & Debt Restructuring Talks Continue
LASIK VISION: Says Follow-up Care Is Available For Patients
LASON INC.: Bank Group Agrees To Amend Existing Credit Facility
LEXON TECHNOLOGIES: Defaults on Miller Capital Bridge Loan

LOEWEN GROUP: Resolves Mortgage Issues with Juanita Knauff
MEMORIAL HEALTHCARE: Moody's Places Credit Ratings On Watch
MORRIS MATERIAL: Bankruptcy Filing Negatively Impacting Sales
MORTGAGE CLEARING: Removed from S&P's "Select Servicer List"
NANTUCKET CBO: Moody's Puts Senior Notes on Credit Watch

NBC INTERNET: Shuts Down After Posting $245MM Net Loss In 2000
OXFORD HEALTH: Stockholders' Meeting Set For May 16 In Trumbull
PACIFIC GAS: Obtains Approval To Use Existing Bank Accounts
PACIFIC GAS: Court Grants Authority to Refund Customer Deposits
PAULA INSURANCE: S&P Cuts Financial Strength Rating To 'CCCpi'

PROCEEDO COMMERCE: Now Owned By ProcureITright
SERVICE MERCHANDISE: Enters Into 3 Year, $35MM CIT Vendor Line
STORE OF KNOWLEDGE: Educational Products Retailer Goes Bankrupt
STRUCTURED ASSET: Fitch Cuts Mortgage Certificate To CCC
W.R. GRACE: Hires Blackstone As Financial Advisor

WORLD KITCHEN: Names James Sharman As New Supply Chain VP


AMERICAN PAD: Seeks To Extend Exclusive Period To June 30
American Pad & Paper Company and its debtor affiliates sought
and obtained a court order extending the exclusive periods
during which only the debtors may file a plan of reorganization
and solicit acceptances thereof. Since the entry of the most
recent Extension Order, the debtors and their key management
employees have been continuously involved in the process of
winding down the debtors' operations and performing post-closing
work related to the sales of the debtors' various businesses the
last of which closed on November 2, 2000.

The debtors have also been engaged in effecting an organized
wind down of their operations, administering the many claims
filed against their estates, attempting to liquidate their
remaining assets and developing a strategy for litigation that
has been commenced by and against the debtors. The debtors
have approximately six employees remaining. The debtors need
additional time to develop, negotiate and propose a liquidating
plan of reorganization.

Accordingly the debtors requested that the exclusive periods in
which the debtors may proffer a plan and seek acceptance of the
plan be extended through and including June 30, 2001 and August
31, 2001, respectively.

ARMSTRONG: Moves To Modify Stay To Continue Unimat Arbitration
In August 1998, Armstrong Holdings, Inc. entered into a
Wholesaler Agreement with Unimat, S.S., an Argentinean
distributor of flooring products, under which the Debtors agreed
to supply Unimat with flooring products. On or about January 13,
2000, the Debtors commenced arbitration proceedings pursuant to
UNCITRAL arbitration rules, saying that Unimat failed to make
timely payments and meet their purchasing targets under the
agreement. The Debtors are seeking damages in the approximate
amount of $750,000. Unimat, on the other hand, served its
counterclaim on or about April 10, 2000, saying that the Debtors
breached their agreement by wrongfully distributing the flooring
products in Argentina. Unimat sought damages for more than $2.4

By agreement of the parties, the matter was submitted for
arbitration before Michael J. Hollering, Esq. A hearing was
conducted in September, 2000 and the evidentiary record was
closed on or about October 26, 2000.

Although the arbitrator's decision was supposed to be received
within thirty days from the date the record was closed, or no
later than November 25, 2000, because there were some scheduling
conflicts, the parties agreed that the decision would not be due
until December 29, 2000. The pendency of these cases has led to
further delay in the issuance of the arbitrator's decision.

Deborah Spivak of the firm Richard Layton & Finger, P.A.,
representing the Debtors, asked Judge Farnan to allow the
modification of the automatic stay, for the sole purpose of
allowing the arbitrator to enter an arbitration award. Ms.
Spivak said that what the Code prohibits is only actions brought
against the Debtors; not actions brought by the Debtors that
would redound to the benefit of the bankruptcy estate if the
action is successful.

Therefore, the Debtors believe that the automatic stay does not
operate with respect to the breach of contract claims which the
Debtors themselves instituted. On the other hand, with respect
to Unimat's efforts to enforce any judgment or award against the
Debtors, the Debtors said that the automatic stay should remain
in effect. Any judgment or award obtained by Unimat against the
Debtors shall represent a pre-petition unsecured claim against
the Debtors.

Ms. Spivak said that the Debtors have a very strong breach of
contract claim against Unimat. Additionally, Ms. Spivak believes
that the Debtors have a strong defense against Unimat's
allegations. Thus, the Debtors are confident that the
arbitration award would likely be in their favour and will
ultimately redound to the benefit of the Debtors' estate, upon
relief from the stay to pursue the matter. (Armstrong Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-

AZTEC TECHNOLOGY: Shares Face Delisting From The Nasdaq Market
Aztec Technology Partners, Inc. (Nasdaq: AZTC), a leading
provider of e-Solutions and e-Integration products and services,
said today that The Nasdaq Stock Market, Inc. staff has
determined that Aztec does not comply with the net tangible
assets/market capitalization/net income requirement for
continued listing set forth in Marketplace Rule 4310(c)(2)(B),
and that its common shares are subject to delisting from the
Nasdaq SmallCap Market. This determination, as well as the
Nasdaq staff's earlier determination that the company's common
shares do not meet Nasdaq's minimum bid requirement, will be
considered at the company's hearing on April 12, 2001.

Aztec Technology Partners is a single-source provider of e-
Solutions and e-Integration products and services for middle
market and Fortune 1000 companies across a broad range of
industries. Aztec helps clients throughout the U.S. gain
competitive advantages by exploiting the power of intranet,
Internet and extranet technologies. Further information on Aztec
is available at

BEAR STEARNS: Two Asset-backed Certificates Down to CCC And D
Fitch lowered its ratings on the following Bear Stearns Mortgage
Securities Inc. asset- backed certificates:

      -- BSMSI 1996-9, class B-4 ($1,093,909 outstanding), rated
         'BB' Rating Watch Negative, is downgraded to 'CCC'.

      -- BSMSI 1996-9, class B-5 ($195,769 outstanding), rated
         'CCC' is downgraded to 'D'.

This action is the result of a review of the level of losses
incurred to date and the current high delinquencies relative to
the applicable credit support levels.

As of the March 25, 2001 distribution, BSMSI 1996-9 remittance
information indicates that 5.07% of the pool is over 90 days
delinquent (including bankruptcies, foreclosures and REO), and
cumulative losses are $1,485,114 or 0.77% of the initial pool.
Class B-4 currently has 0.44% of credit support, and class B-5
has no credit support remaining.

BPC REORGANIZATION: Exclusive Period Extended To April 23
By order of the U.S. Bankruptcy Court, District of Delaware,
entered on March 19, 2001, BPC Reorganization Corp. was granted
an extension of the debtor's exclusive period and acceptance
period through and including April 23, 2001 and June 22, 2001,

CD WAREHOUSE: Shares Kicked Off Nasdaq List, Now Trade on OTCBB
CD Warehouse, Inc. (OTC Bulletin Board: CDWI) was informed at
the close of business on April 9, 2001, by Nasdaq that, despite
the Company's appeal, the Company common stock was delisted from
Nasdaq Stock Market effective with the open of business on
Tuesday, April 10, 2001. The Company's common stock will be
trading on the OTC Bulletin Board under the symbol "CDWI"
effective April 10, 2001.

CD Warehouse, Inc. franchises and operates retail music stores
in 37 states, the District of Columbia, England, France,
Guatemala, Canada and Venezuela under the names "CD Warehouse",
"Disc Go Round", "CD Exchange" and "Music Trader". CD Warehouse
stores buy, sell and trade pre-owned CDs, DVDs and games with
their customers, as well as sell a full complement of new
release CDs. Company information is available at

CONVERGENT COMMUNICATIONS: Receives Notice of Default From Cisco
Convergent Communications, Inc. reported that its wholly-owned
subsidiary, Convergent Communications Services, Inc. (CCSI)
received notification from Cisco Systems Capital Corporation,
indicating Cisco's belief that events of default have occurred
under the terms of its vendor credit agreement with CCSI.
Although no obligations have been accelerated, Cisco indicated
that it was presently evaluating all available courses of

CORRECTIONS CORP.: Raises $65.7MM From Agecroft Properties Sale
Corrections Corporation of America (NYSE:CXW) completed the sale
of its interest in its Agecroft prison facility located in
Salford, England to an affiliate of Abbey National Treasury
Services, a London-based banking institution. The sale, which
was completed through the sale of all of the stock of Agecroft
Properties, Inc., a wholly-owned subsidiary of CCA, generated
cash proceeds to CCA of approximately $65.7 million, after the
payment of certain closing costs and tax withholding. The
proceeds from the sale were used to immediately pay down a like
portion of amounts outstanding under CCA's senior credit
facility. Under the terms of the senior credit facility, the
Agecroft transaction was required to be completed on or before
April 30, 2001, the expiration of the applicable grace period
under the facility.

"We are pleased to have completed the Agecroft transaction under
the terms of our credit facility and pay down an additional
portion of our outstanding debt," stated Irving E. Lingo, Jr.,
chief financial officer of CCA. "This is another important step
in CCA's efforts to restructure its indebtedness in a manner
that will rationalize our capital structure and allow us to seek
more attractive refinancing terms for our permanent debt."

On April 2, 2001, CCA filed for an extension with the U.S.
Securities and Exchange Commission to the filing deadline for
its Annual Report on Form 10-K for the year ended December 31,
2000 in connection with its efforts to complete the Agecroft
transaction. CCA intends to file the Form 10-K with the
Commission as soon as is practicable, but in no event later than
April 17, 2001.

                       About the Company

CCA is the world's largest provider of detention and corrections
services to governmental agencies, with approximately 61,000
beds in 65 facilities under contract for management in the
United States and Puerto Rico. CCA's full range of services
includes design, construction, ownership, renovation and
management of new or existing jails and prisons, as well as long
distance inmate transportation services.

CRITICAL PATH: Closing Offices, Cutting 450 Jobs To Reduce Costs
Critical Path, Inc., a leading global provider of Internet
communication infrastructure, announced its strategic plan to
put the company back on the path to profitability. Critical Path
has organized its management team to speed implementation of the
strategic plan by streamlining personnel and focusing the
company on its core products.

"Today marks a new beginning for Critical Path," said David
Hayden, Critical Path's founder and Executive Chair. "We offer
the best products in our market space that enable businesses to
take advantage of the growth of Internet and wireless

"The last weeks have been difficult for Critical Path, but now
we have turned the corner with the implementation of a
reorganization designed to reduce costs and focus the company on
its core products," he said.

Hayden outlined Critical Path's three-part strategic plan:

      -- First, Critical Path is reorganizing around its
fundamental, core business products for the purpose of building
long-term value: Developing, producing and providing the best
commercial e-mail carrier services in the world. In particular,
the company's new leadership will refocus on core products and
jettison products that are not central to the company's long-
term growth strategy. At Critical Path's core will be the
company's Internet Messaging Infrastructure platform, including
mail, calendar, address book, file storage, management services,
directory and meta-directory, and access services supporting
wireline and wireless users.

      -- Second, Critical Path is reducing costs by closing
redundant offices, phasing out non-essential services, and
reducing personnel who are not involved in Critical Path's core
business. The company will lay off approximately 450 employees
in this process.

      -- Third, to speed implementation of the strategic plan,
Critical Path has appointed Bill McGlashan as Interim Chief
Operating Officer and Amy Rao as Interim Vice President for
Sales. McGlashan and Rao will work with Critical Path founder
David Hayden and Chief Financial Officer Larry Reinhold to carry
out the strategic plan as quickly as possible. Former executives
affected by the lay-offs include, Diana Whitehead, President,
and Mari Tangredi, Executive Vice President of Business
Development, Sales and Professional Services.

Bill McGlashan is the CEO of the Vectis Group, a world-wide
technology investment company. Amy Rao is the CEO of Integrated
Archive Systems, a systems integrator and managed services
company she founded in 1994.

D.I.Y. HOME: Shutting Down Three Ohio Locations To Reduce Debt
D.I.Y. Home Warehouse, Inc. (OTC Bulletin Board: DIYH) announced
that it will close its Brook Park, Medina and Mentor, Ohio
locations. Liquidation sales at all three locations are
scheduled to begin later this week and are expected to be
completed during the month of July.

The Company is closing the Mentor store to facilitate an
advantageous assignment of its lease rights to a third-party.
The difficult decision to close the Brook Park and Medina
locations was based on the stores' disappointing sales and
profitability levels as well as increased levels of interest in
the real estate of these two locations. Proceeds from the lease
assignment as well as from the liquidated inventories will be
used to reduce the outstanding balance on the Company's
revolving credit facility.

D.I.Y. Home Warehouse, Inc. continues to operate six warehouse
format home centers in the Northeast Ohio marketplace which sell
products to do-it- yourself home repair and remodeling customers
and contractors.

EDISON FUNDING: Fitch Takes Dim View of Senior Debt Obligations
Fitch has changed Edison Funding Co.'s (EFC) Watch Status to
Negative from Evolving following similar actions taken by Fitch
for Southern California Edison Co. (SCE) and Edison
International (EIX). The senior debt rating for EFC remains
'CC'. EFC's commercial paper rating also remains at 'C'.

Reflecting developments in the past week, the Rating Watch
status of securities of SCE and EIX were changed from Evolving
to Negative.

Fitch believes that Pacific Gas and Electric Co.'s bankruptcy
filing could complicate SCE's likelihood of accomplishing a sale
of its transmission assets to the State of California.

Consequently, Fitch lowered SCE's senior secured debt rating and
changed the Rating Watch to Negative from Evolving.

Edison Funding Co. is an indirect, wholly-owned, non-regulated
subsidiary of Edison International. EFC invests in the
infrastructure sector - mostly energy related - and affordable
housing where many of the investments are tax-advantaged.

EFC's focus is in large-scale power generation, with leveraged
lease and limited partnership investments in cogeneration,
hydroelectric, nuclear and waste-to-energy projects.

EFC has selectively invested in transportation-related assets
and has global infrastructure finance programs in Latin America,
Asia, and Europe.

FRUIT OF THE LOOM: Seeks To Exercise Remedies Against Mr. Farley
On October 27, 2000, the Farley lenders commenced an action in
New York Supreme Court entitled Bank of America, N.A. v. William
F. Farley, Index No. 001604685. The suit was against Mr. Farley
to enforce his obligations to the Farley lenders. On December 8,
2000, the action was removed to the U.S. District Court for the
Southern District of New York. The Farley lenders asserted that
Mr. Farley is in default under the loan agreements and sought
repayment of the loan for $60,000,000. The case is currently

Fruit of the Loom, Ltd. asserted that Mr. Farley has not paid
the guarantee fee due in 1999, 2000 or 2001. Fruit of the Loom
began paying interest on the Farley loan in the first quarter of
2000, which included interest that was outstanding from the
fourth quarter of 1999. Through February 8, 2001, total payments
made by Fruit of the Loom on account of the Farley loan
aggregated $5,917,579. In addition, the unpaid guarantee fees
owed to Fruit of the Loom by Mr. Farley, through December 31,
2000 aggregated $1,625,000. On May 16, 2000, Fruit of the
Loom sent a demand letter to Mr. Farley regarding his
reimbursement obligation.

The Court directed Mr. Farley to produce documents and submit to
an oral examination, to which Mr. Farley objected. Between June
and September 2000, Mr. Farley produced approximately 3,000
documents in response to Fruit of the Loom's Rule 2004 request.
Fruit of the Loom deposed Mr. Farley over a three-day period on
September 13-15, 2000. The creditors committee also deposed Mr.
Farley. The investigation remains open.

Fruit of the Loom commenced adversary proceedings to exercise
remedies against Mr. Farley for his reimbursement obligation.
Mr. Farley responded by filing a complaint seeking a declaratory
judgment regarding his rights under the loan documents. The
parties have filed answers, counterclaims and answers to the
counterclaims in these adversary proceedings.

On September 7, 2000, the reference for all three adversary
proceedings involving Fruit of the Loom and Mr. Farley was
withdrawn to the U.S. District Court for the district of
Delaware and was assigned to Chief Judge Robinson, effective
September 27, 2000. Discovery has commenced with respect t all
of the adversary proceedings.

On the effective date of plan confirmation, Fruit of the Loom
will assign absolutely to the Farley lenders all of its rights,
claims and collateral interests against Mr. Farley, his
affiliates and the assets arising under or in connection with
Mr. Farley's reimbursement obligations. It will include all
collateral pledged. After the effective date, the lenders shall
have the right to pursue all such assigned claims and related
collateral without further order of the Court. (Fruit of the
Loom Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

GENESIS HEALTH: Court Okays Retention Program For 5 Executives
Genesis Health Ventures, Inc. & The Multicare Companies, Inc.'s
Motion to Implement Key Employee Retention Program involves the
Debtors' five Senior Executives:

      (1) Michael R. Walker, founder of the Debtors, and the
          Debtors' Chairman of the Board of Directors and Chief
          Executive Officer,

      (2) Richard C. Howard, the Debtors' Vice Chairman,

      (3) David C. Barr, the Debtors' Vice Chairman, and

      (4) George V. Hager, the Debtors' Executive Vice President
          and Chief Financial Officer, (and collectively with
          Walker, Howard, and Barr, the Executives), and also

      (5) Marc D. Rubinger, the Debtors' Chief Information
          Officer, subject to the discretion of Walker.

The Debtors sought and obtained the Court's approval for an
Executive Retention Program for the four Senior Executives and
to provide similar treatment with respect to the promissory note
held by, and deferred compensation obligations owing to, Marc D.
Rubinger, the Debtors' Chief Information Officer, subject to the
discretion of Walker.

The Debtors told the Court that the Senior Executives were not
included in the Initial Retention Program, which was directed
towards nonexecutive, management-level employees, because they
did not want negotiations concerning their own status to delay
the Initial Retention Program, recognizing that retention of
management level employees was essential to the restructuring
process at the early stages. These Senior Executives possessed a
strong sense of commitment to the Debtors and focused solely on
the critical task and responsibilities of managing the Debtors
through the early stages of the chapter 11 cases. They,
therefore, put themselves at personal risk for the benefit of
the Debtors, the Debtors told the Judge.

Now that the early stages of the chapter 11 cases are complete,
the Debtors have undertaken the requisite analyses to develop an
appropriate retention proposal for the Executives and have
discussed the proposal extensively with their senior lenders and
the Committee.

Among the Executives, Walker and Howard have been employed by
the Debtors since 1985; Barr joined the Debtors in 1988; and
Hager has been employed by the Debtors since 1992.

The current employment agreements between GHV and each
respective Executive are each dated August 12, 1998. Pursuant to
the Employment Agreements, the term of employment for Walker is
five years, with successive one-year extensions thereafter, and
the terms of employment for Howard, Barr, and Hager are for
three years, with successive one-year extensions thereafter.
Walker's annual salary is $750,000; Howard's and Barr's annual
salary is $500,000; and Hager's annual salary is $350,000.

In addition, under the Employment Agreements, the Executives are
entitled to payments upon termination of their employment if
such termination is by the Executive for "Good Reason" or by the
Debtors for reasons other than for "Cause," "Death," or
"Disability," as such terms are defined in the Employment
Agreements. The Termination Payment for each Executive would be
three times his total salary and average incentive pay.

The Debtors have also established employment benefit programs
for the Executives, including, for the last several years,
deferred compensation programs. Pursuant to the most recent
deferred compensation agreements, the Elective Deferred
Compensation Agreement (the EDCA) between Walker and GHV, dated
June 6, 2000 , and the Genesis Health Ventures, Inc. Deferred
Compensation Plan for Howard, Barr, Hager, and Rubinger,
effective April 1, 2000, (the Deferred Compensation Plan, and
together with the EDCA, the Deferred Compensation Agreements),
the Executives may elect to defer a portion of their income and
specify the circumstances under which such amounts will be paid.

The amount of deferred compensation owing to each of the
Executives as of March 2, 2001 are:

      -- $ 1,118,007 owed to Walker;
      -- $ 214,476 owed to Howard;
      -- $ 364,610 owed to Barr; and
      -- $ 117,962 owed to Hager.

The amount of deferred compensation obligations owed to Rubinger
will be approximately $ 20,385.

The vast majority of these funds represent compensation payments
from previous years that would have been paid to the Executives
in the absence of the deferred compensation programs.

In the case of Walker, Howard, and Barr, the Debtors funded the
liabilities attributable to the deferred compensation by paying
premiums in respect of "split dollar" life insurance policies
for the Executives. Each of the policies is owned by a separate
trust established for the respective Executive. However, the
Debtors are entitled to receive the cash surrender value under
each policy upon the death of the insured Executive or
termination of the policy. Further, the Debtors have the right
to cause the policies to be terminated. The cash surrender value
of the policies in the aggregate exceeds the amount of deferred
compensation owed to the Executives.

As a condition to continued employment, the Debtors' Board of
Directors required each of the Executives and Rubinger to
purchase a substantial amount of GHV's common stock based on and
exceeding the Executive's annual salary. In connection
therewith, Howard, Barr, Hager, and Rubinger borrowed funds from
the Debtors for such stock purchases and executed promissory
notes in favor of the Debtors. The respective outstanding
amounts under the Notes, including principal and interest, are:

      Howard -- $ 871,483;
      Barr -- $ 1,100,088; and
      Hager -- $ 853,133.

The amount of Rubinger's note is approximately $ 673,509.

Walker purchased GHV stock in the amount of $ 2,700,955 without
borrowing funds from the Debtors.

                The Executive Retention Program

This consists of three components:

      (A) severance protection,

      (B) incentive compensation payment tied to the emergence of
          the Debtors from chapter 11, and

      (C) the release of certain obligations by the Executives to
          the Debtors along with the assumption of certain
          obligations by the Debtors to the Executives (the
          "Executive Retention Program").

(A) Severance Protection

     Each of the Executives will be entitled to a severance
payment equal to three times his base salary in the event he
terminates his employment for Good Reason or is terminated by
the Debtors for reasons other than Cause, Death, or Disability.
Accordingly,  the Executives will receive, in the event of a
qualifying termination, the severance pay in the following

           Walker - $ 2,250,000;
           Howard - $ 1,500,000;
           Barr - $ 1,500,000; and
           Hager - $ 1,050,000.

The Debtors told the Court that these amounts are substantially
less than the Termination Payments that the Executives would
have received under their Employment Agreements because the
Severance Protection excludes an amount equal to three times the
Executives average annual incentive pay from the calculation of
the amount of Severance Protection.

The Severance Protection to each Executive will be in lieu of
the Debtors' obligation to make the Termination Payments as
defined in each of the Executives' respective Employment

The Severance Protection will remain in effect until such time
as the respective Employment Agreement is assumed or the
respective Executive enters into a new employment agreement with
the Debtors.

An Executive receiving severance pay in accordance with
Severance Protection will be subject to a two-year noncompete
obligation following his termination of employment.

(B) Incentive Compensation

     On the Effective Date of the Debtors' chapter 11 plan of
reorganization, and subject to adjustments, the Executives will
receive cash incentive payments in the following amounts:

      Walker $l,125,000 (150% of annual base salary)
      Howard $500,000 (100% of annual base salary)
      Barr $500,000 (100% of annual base salary)
      Hager $350,000 (l0O%of annual base salary)

The Incentive Compensation will be

      (i) increased by 5% for each full month that the Effective
Date occurs before August 31,2001 (up to a maximum increase of
15%) or

     (ii) decreased by one of the following percentages, based on
the number of full months that the Effective Date occurs after
August 31, 2001:

               7.5% for one month;
                15% for two months;
                20% for three months;
                25% for four months; or
                30% for five or more months.

(C) Release of Notes and Assumption of Deferred Compensation

     The Debtors will release Howard, Barr, and Hager from their
obligations under the Notes and will assume their obligations to
the Executives under the Deferred Compensation Agreements
pursuant to section 365 of the Bankruptcy Code.

The Debtors will assume the Deferred Compensation Agreements on
the Effective Date and will release each Executive from his
respective obligations under the Notes on the first anniversary
of the Effective Date, provided however, that in the event of an
involuntary termination of the employment of any of the
Executives, the Debtors will release that Executive from his
obligations under his Note and assume the respective Deferred
Compensation Agreement at the time of such termination.

In addition, at the discretion of Walker, the Debtors will
provide similar treatment for the promissory note of, and
deferred compensation obligations to, Rubinger.

The Debtors will compensate Howard, Barr, Hager and, if his note
is released, Rubinger, to the extent such Executives owe federal
and state income taxes on account of any cancellation of
indebtedness income resulting from the release of the Notes.

The Debtors estimate that the approximate maximum amounts of
such "gross-up" payments are as follows:

           Howard -- $ 708,722;
             Barr -- $ 894,632;
            Hager -- $ 693,799; and
         Rubinger -- $ 547,722?

The Debtors estimate that the aggregate cash payments under the
Executive Retention Program is approximately $2,475,000 to the
Executives and up to approximately $2,844,875 to fund the gross-
up payments. In the event of the termination of all of the
Executives, the aggregate payments under the Severance
Protection would be $6,300,000.

The Debtors represent that the Executive Retention Program is
necessary to ensure that the Executives will continue to provide
essential management services during the Debtors' chapter 11
cases. This, the Debtors believe, is critical to the Debtors'
ongoing operations and reorganization efforts.

Moreover, the Debtors have determined that the costs associated
with adoption of the Executive Retention Program are more than
justified by the benefits that are expected to be realized,
considering the costs associated with resignations and
replacements, the difficulty in finding replacements and the
likely higher salaries this will incur, the detriment that the
departures of the employees could lead to, and the contribution
that these valuable employees make to the company.

Notably, the Debtors said, the assumption of the Deferred
Compensation Agreements will not cause the Debtors to expend any
additional funds from their current cash flow. On an aggregate
basis, the Debtors have already funded the deferred compensation
obligations through the split-dollar life insurance policies for
three of the Executives. In effect, the Debtors note, those
policies already exist as a reserve for payment of the deferred
compensation obligations.

The Debtors also told Judge Wizmur that the senior bank holders
support the implementation of the Retention Program.

By this Motion, pursuant to sections 105(a), 363(b)(1), and 365
of the Bankruptcy Code, the Debtors sought and obtained the
Court's authority to implement the Executive Retention Program
and specifically, the authority to (i) make the payments
described above to the Executives, (ii) release Howard, Barr,
and Hager from their obligations under the Notes, and (iii)
assume the Deferred Compensation Agreements. Upon the Debtor's
request in the motion, Judge Wizmur alao authorized the Debtors
to provide similar treatment with respect to the promissory note
held by, and deferred compensation obligations owing to,
Rubinger, subject to the discretion of Walker.
(Genesis/Multicare Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

HARNISCHFEGER: Settles Wausau Insurance Program Claims
Employers Mutual Liability Insurance Company of Wisconsin,
Employers Insurance of Wausau, a Mutual Company, and Wausau
Underwriters Insurance Company (collectively Wausau) provide an
insurance program to certain of the Harnischfeger Industries,
Inc. Debtors that includes (a) insurance policies, (b) bonds,
(c) contracts for workers compensation services, (d) laboratory
work and (e) group medical benefits contracts that are, subject
to audits, dividend plans, retrospective ratings plans,
deductibles, billed and unbilled, and other adjustments or
billings to be determined in the future.

In connection with sums related to insurance coverage litigation
that may be subject to upward adjustment in the future, as well
as past due amounts owed by the Debtors, Wausau has filed Claims
each in the amount of $3,044,967.04 plus a contingent and
unliquidated amount:

      (A) Claim No. 9591 against Harnischfeger Industries, Inc.;

      (B) Claim No. 11195 against Hamischfeger Corporation;

      (C) Claim No. 9597 against Beloit; and

      (D) 56 proofs of claim against the other Debtors.

The Debtors and Wausau sought and obtained the Court's approval
of their agreement and Stipulation which provides that:

      (1) Claim No.9591, Claim No. 11195, and Claim No. 9597 are
unaffected by the Stipulation;

      (2) the Additional Wausau Claims are withdrawn with
prejudice; and

      (3) that portion of the Wausau Claims relating to workers'
compensation under the Insurance Program will have the same
rights and benefits and be subject to the same conditions as
those specified in the Debtors' Motion for Order (a) Authorizing
(i) Assumption of Workers' Compensation Programs and (ii)
Payment of Workers' Compensation Claims in the Ordinary Course
and (b) Expunging Related Proofs of Claim.

The Debtors reserve the right to object to the Wausau Claims on
any grounds in the future. (Harnischfeger Bankruptcy News, Issue
No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900)

HEALTHCENTRAL: Plans to Appeal Nasdaq's Move To Delist Shares
HealthCentral (Nasdaq:HCEN), a leading online provider of
healthcare e-commerce and healthcare content announced that its
Board of Directors has voted to file a proxy statement for its
Annual Stockholders meeting scheduled for June 20, 2001 that
includes a recommendation to the Company's stockholders of a
proposal to effect a 1-for-50 reverse stock split of the
Company's common stock. The Company intends to submit the
proposal to the HealthCentral stockholders for approval at the
annual stockholders' meeting scheduled for June 20, 2001.

HealthCentral has received a letter from Nasdaq stating that the
Company's stock faces delisting on April 17, 2001, pursuant to
Rule 4310(c)(8)(B), as a result of the Company's failure to
maintain a minimum bid price of $1.00 for the requisite period
as required by Rule 4450(a)(5). The letter also states that the
Company may appeal Nasdaq's determination regarding delisting,
and that a hearing request will stay the delisting of the
Company's stock pending Nasdaq's decision. HealthCentral intends
to request such a hearing with Nasdaq.

There are currently 50,661,038 shares of common stock
outstanding as of March 31, 2001. The reverse stock split will
require the approval of holders of a majority of the total
shares of stock outstanding as of the record date for the annual

"We felt that this action would benefit our stockholders by
improving HealthCentral's appeal to a broader range of
investors, and would allow the possibility of maintaining our
Nasdaq National Market listing," said C. Fred Toney,
HealthCentral's President and CEO. "We believe it will
eventually assist in increasing stockholder value."

                    About HealthCentral

HealthCentral (Nasdaq:HCEN) is a leading provider of healthcare
e-commerce to consumers through WebRx(SM), a network of sites
representing the consolidation of,, and Its e-
commerce site, WebRx(SM) (, features more than
25,000 products. WebRx(SM) features one of the largest on-line
selections of vitamins, a Vision Center and a Comfort Living
department ( with products such as
maternity products, baby care products, ergonomic chairs, water
purifiers and an extensive line of allergy control products. ( provides health-
related information and commentary by experts such as Dr. Dean
Edell. ( provides both patient-focused
and professional-focused prescription drug information

IBJ WHITEHALL: Fitch Slashes Individual Rating to 'D'
Fitch, the international rating agency, has downgraded the
individual rating of IBJ Whitehall to 'D' from 'C/D' due to the
significant deterioration in the company's asset quality and its
impact on earnings performance and capital levels.

Fitch's rating action towards IBJ Whitehall's individual rating
is tempered by rating agency's expectation that the parent
company, Industrial Bank of Japan, Ltd, which is a part of the
Mizuho Financial Group, will continue to provide capital and
funding support for the company.

The long-term and short-term ratings are unaffected by this
action given the implied support of its parent and thus

The deterioration in IBJ Whitehall's loan book, largely its C&I
portfolio, has caused the company to substantially increase

The higher provisioning has impaired earnings causing the
company to realize a net loss for 2000. Additionally, Fitch
expect to see continued writedowns in coming quarters that will
further hamper earnings performance.

IBJ Whitehall's mounting losses have also caused a considerable
decline in capital ratios and the worsening of the company's
financial condition may cause some of its funding sources to
become more limited.

Nonetheless, Fitch expects the parent to keep IBJ Whitehall's
capital levels in excess of 'well-capitalized' regulatory
standards and to maintain its current level of funding.

Ratings Downgraded:

      -- Individual rating to 'D' from 'C/D'.

Ratings Affirmed:

      -- Senior long-term 'A-';
      -- Senior short-term 'F1';
      -- Uninsured deposit long-term 'A-';
      -- Uninsured deposit short-term 'F1';
      -- Support '3'.

ICG COMMUNICATIONS: Rejecting Eight More Real Property Leases
Patricia A. Widdon of the firm of Skadden Arps Slate Meagher &
Flom LLP of Wilmington, asked, on behalf of ICG Communications,
Inc., that Judge Walsh permit the rejection of eight additional
leases of real property. These are described as microwave,
warehouse and office sites not necessary to the Debtors' ongoing
businesses, but under which the Debtors remain currently

The Debtors argued that the rent and other expenses due under
these leases constitute an unnecessary drain on their cash flow.
The rent and expenses for these leases total approximately
$91,867.48 per month. Rejecting these leases permits the Debtors
to minimize unnecessary administrative expenses. Moreover, the
Debtors told Judge Walsh that they cannot obtain any value for
these leases by assignment to third parties, and therefore seek
authority to reject them all. The Debtors have concurrently
notified each landlord or contracting party by letter stating
that the premises are abandoned and returning the keys.

The leased properties and leases are:

Site               Notice Address              Leasing Entity
----               --------------              --------------

2100 Westend       Loews national Hotel Corp.  ICG Telecom Group
Nashville, TN      Eakin & Smith Real Estate
                    2100 West End Ave., Ste. 590
                    Nashville, TN 37203

102 Essex Street   Slavitt & Cowen PA          ICG NetAhead
Harrison, NY       17 Academy Street
                    Newark, NY 07102

900 Lake Street    STA Development Corp.       ICG NetAhead
Suite 5201         Attn: GLC Property Manager
Minneapolis, MN    1313 S. E. Fifth St.
                    Minneapolis, MN

3355 Richmond Rd.    Equity Beachwood Ltd      ICG Telecom
Bldg. B, Suite 225   Partnership Group
Beachwood, OH 23200  c/o Equity Planning Holdings Co.
                      Chagrin Bldg.
                      Bldg. 1, Ste. 102
                      Beachwood, OH 44122

7375 Woodward Ave.   Woodlo, LLC               ICG NetAhead
Suite 100            25200 Telegraph Rd.,
Detroit MI           Ste. 410
                      Southfield, MI 48034

707 Wilshire Bldg.   Equitable Real Estate     ICG Telecom Group
Suite 1500           Investment Management Inc.
Los Angeles, CA      3414 Peachtree Rd., NE
                      Atlanta, GA

Mt. Diablo           Knox La Rue               ICG Telecom Group
North Peak           2171 Ralph Ave.
Mt Diablo, CA        Stockton, CA

Mt. San Bruno        Watson Communications     ICG Telecom Group
San Mateo County CA  System
                      707 Sky Valley Drive
                      Vallejo, CA

After consideration of the Debtors' business argument, Judge
Walsh granted the Motion and authorized rejection of all eight
additional leases. However, Judge Walsh also ordered the Debtor
to make any postpetition payments due under the leases, to the
extent such payments are required by the Bankruptcy Code, within
ten business days of his Order. (ICG Communications Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-

IGI INC.: May File For Bankruptcy If Unable To Restructure Debt
IGI Inc. had a net loss of $11,437,000, or $1.12 per share, in
2000, as compared to a net loss of $1,584,000, or $.17 per
share, in 1999. The increase in the net loss compared to the
prior year, was primarily due to the loss from discontinued
operations, an extraordinary charge for early extinguishment of
debt, decreased revenues and increased cost of sales for the
Companion Pet Products division, and the establishment of an
additional valuation allowance for deferred taxes.

Total revenues for 2000 were $19,252,000, which represents a
decrease of $1,281,000, or 6%, from revenues of $20,533,000 in
1999. The decreased revenues were due to lower product sales for
the Consumer Products division and the Companion Pet Products
division, offset partially by higher licensing revenues.
Total Consumer Products revenues for 2000 decreased 6% to
$6,552,000, compared to 1999 revenues of $6,938,000. Licensing
and royalty income of $2,453,000 in 2000 increased by $584,000
compared to 1999, primarily as a result of increased licensing
revenues from Johnson & Johnson and Fujisawa.

Consumer product sales of $4,099,000 in 2000 decreased by
$970,000 compared to 1999, primarily as a result of decreased
sales to Estee Lauder.

Companion Pet Products revenues for 2000 amounted to
$12,700,000, a decrease of $895,000, or 7%, compared to 1999.
This decrease was primarily attributable to decreased product
sales due to product recalls and removal of the affected
products from the product line.

Cost of sales increased by $1,767,000, or 20%, in 2000 as
compared to 1999. As a percentage of revenues, cost of sales
increased from 43% in 1999 to 55% in 2000. The resulting
decrease in gross profit from 57% in 1999 to 45% in 2000 is the
result of unusual charges of $884,000 for consulting and other
related costs for Companion Pet Products documentation,
procedural and regulatory compliance issues, $160,000 for
hazardous waste removal and $796,000 for Companion Pet Product
recall and inventory related reserves.

The Company remains highly leveraged and access to additional
funding sources is limited. The Company's available borrowings
under the revolving line of credit facility are dependent on the
level of qualifying accounts receivable and inventory.
Unfavorable product sales performance since April 1, 2000 has
limited the available borrowing capacity of the Company under
the revolving line of credit facility. If the Company's
operating results deteriorate or product sales do not improve or
the Company is not successful in renegotiating its financial
covenants or meeting its financial obligations, a default could
result under the Company's loan agreements and any such default,
if not resolved, could lead to curtailment of certain of its
business operations, sale of certain assets or the commencement
of bankruptcy or insolvency proceedings by the Company or its
creditors. As of December 31, 2000, the Company had available
borrowings under the revolving line of credit facility of
$866,000. The Company's operating activities used $4.1 million
of cash during 2000.

IMPERIAL SUGAR: Harris Trust Objects To Wasserstein's Fees
Harris Trust and Savings Banks made a limited objection to
Imperial Sugar Company's application for the retention of
Wasserstein Perella as financial advisors to these estates.
Stephanie A. Fox, at Klehr, Harrison, Harvey, Branzburg & Ellers
LLP, in Delaware, acting for Harris Trust, reasoned with Judge
Robinson that a close examination of the Debtors' motion under
applicable law on compensation of estate officers is appropriate
in this case, where the role to be played by Wasserstein Perella
is not clear. She further argued that a commitment to a bonus
formula for an investment banker to assist the Debtors is
unnecessary. Harris Trust submitted that the vast majority of
the work described in the application was performed by
Wasserstein Perella prepetition, without any indication to
Harris Trust that such would result in a contingent payment
postpetition. The "clean-up" assignment for which Wasserstein
Perella is to be retained by the Debtors does not warrant the
proposed bonuses.

                      Monthly Advisory Fees

Ms. Fox informed Judge Robinson that in and by itself, Harry
Trust does not find as objectionable the concept of a monthly
advisory fee. However, it is Harris Trust's position that
$150,000 as a monthly advisory fee is too high for the work to
be performed, and that any payments permitted should be interim
payments subject to final review of the appropriateness of the
monthly advisory fee at the conclusion of the Debtors'
bankruptcy cases. This final review is warranted since, at this
time, it is impossible to know whether the work to be performed
by Wasserstein Perella in the Debtors' bankruptcy case will
benefit the estate to a magnitude that will justify such fees.
Final review of the monthly advisory fee, or any other payment,
is not part of the proposed Order with respect to the Debtors'
motion. The Debtors' motion simply stated that Wasserstein
Perella will present concurrent time records in order to provide
the Court with evidence of work performed, with these time
records intended to demonstrate, at the end of the bankruptcy
proceedings, the ultimate benefit Wasserstein Perella has
conferred on the estate.

Harris Trust believes that if, as requested in the Debtors'
motion, the Court approves the monthly advisory fee, the Court
may not be in a position to conduct an inquiry into the fees'
reasonableness and benefit to the estate. Harris Trust objected
to the entry of an order providing for the payment of the
$150,000 monthly advisory fee to Wasserstein Perella and to the
payment of such fees unless it is subject to final Court review
as to the reasonableness of the payment.

                     Payment of Contingent Fees

The Debtors' motion seeks approval of contingent fees described
in the engagement letter, namely, a restructuring transaction
fee, financing transaction fee, and a sale transaction fee. Ms.
Fox declared that a number of courts view such bonus agreements
with a jaundiced eye. In the Debtors' case, these contingent
fees are neither necessary nor reasonable because the vast
majority of the work to be required of Wasserstein Perella have
been performed prepetition and compensation for these services
have been made.

That these fees are automatically payable to Wasserstein Perella
is objectionable, Harris Trust submitted. The modification to
the Debtors' capital structure embodied in the Plan is hardly of
such a complex nature that would justify the payment of a
percentage fee of millions of dollars upon plan approval as a
restructuring transaction. The prepetition lenders basically
agreed to a stretch-out of the prepetition obligations. The
conversion of the senior subordinated debt to equity was a
foregone conclusion. Neither step appear to justify a contingent
payment of three or four million dollars in excess of the fees
already received for this effort. Harris Trust does not close
the door to the appropriateness of a contingent payment on plan
confirmation, should future events warrant such. However, such a
payment must be authorized under the provisions of the
Bankruptcy Code on compensation for officers, and upon the
demonstration of a real benefit to the estate. At this time, it
is impossible to conclude that the fee structure proposed by
Wasserstein Perella will be appropriate under any set of

Harris Trust cites the Court to the instance of the Debtors'
motion for authority to sell assets associated with the Diamond
Crystal Nutritional Products Business. According to that motion,
Credit Suisse First Boston provided investment banking
assistance regarding the marketing of those assets. The Debtors'
motion provides for the payment of a fee to Credit Suisse. In
Wasserstein Perella's case, the terms of the engagement letter
are broad enough to permit Wasserstein Perella to argue that it
too would be entitled to some fee in connection with the
transaction. In fact, Harris Trust believes that Wasserstein
Perella is not entitled to fee, as it had no role in the
Nutritional Products Business sale.

Ms. Fox argued that the Wasserstein Perella's role in any future
sales or financing transaction must be examined with respect to
the benefit to the estate. Harris Trusts objected to provisions
of the Debtors' motion and the engagement letter which would
approve contingent payments at this time regardless of the
circumstances. Success fees like the contingent fees
contemplated by the engagement letter should be designed to
reward extraordinary effort and not simply to pay for services a
professional was hired to do in the first place. The contingent
fees in the engagement letter are not designed to reward
exceptional performance, extraordinary results, or an unexpected
benefit to the Debtors' creditors. The mere confirmation of a
plan in the Debtors' bankruptcy cases, or approval of a sale or
financing, will be no guaranty that Wasserstein Perella has made
an unusual contribution. Assisting with respect to the Plan is
one of the tasks which Wasserstein has been retained to
accomplish and for which it has been and will be compensated
with a monthly advisory fee. If circumstances support the award
of a contingent fee because of a restructuring, sales or
financing transaction, such can be brought before the Court for
consideration and examination as to reasonableness and benefit
to the estate.

                          The Indemnity

Harris Trust contended that in the draft Order accompanying the
Debtors' motion, language modifying the indemnification
provisions of the engagement letter are included. Harris Trust
supports these additional language, which provide that
Wasserstein Perella irrevocably and unconditionally submits to
the exclusive jurisdiction of the Bankruptcy Court over any
suit, action or proceeding arising out of or related to the
engagement letter and over the approval of its requests for any
fees and expenses, including any request for indemnification,
contribution or reimbursement, accruing through confirmation of
a reorganization plan or, in the event that no plan is
confirmed, fees and expenses accruing prior to the last date of
Wasserstein Perella's employment pursuant to the engagement
letter, as modified by the Court's Order.

Ms. Fox confided to Judge Robinson that, while Harris Trust does
not object to the Debtors' retention of Wasserstein Perella
under the terms of the engagement letter and the Debtors'
motion, there should be a clear understanding that Wasserstein
Perella will be working in conjunction with the creditors to
assist the creditors in obtaining the highest recovery possible.
At the point that Wasserstein Perella ceases to provide a
service to creditors and represents an unnecessary expense,
Harris Trust reserves the right to object to the continuation
of the retention. (Imperial Sugar Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

INT'L MENU: Southbridge Files Involuntary Petition in Canada
International Menu Solutions Corporation (OTC Bulletin Board:
MENU) announced that on April 5, 2001 its banker, the Bank of
Nova Scotia, sought and obtained the appointment of an Interim
Receiver from the Ontario Superior Court of Justice over all of
the assets, property and undertakings of International Menu
Solutions Inc. (IMSI), the operating subsidiaries of IMSI and
over the shares of Huxtable's Kitchens Inc., which are owned by

In addition, Southbridge Investment Partnership No. 1, a secured
debt holder of IMSI, petitioned MENU's Canadian subsidiaries
into bankruptcy. Concurrent with these actions, the Ontario
Superior Court of Justice approved the sale of substantially all
of the assets of IMSI and its subsidiaries, and the shares of
Huxtable's Kitchens Inc. by the Interim Receiver to
International Menu Partnership (whose name was subsequently
changed to HMR Foods Partnership), an affiliate of Southbridge
Investment Partnership No. 1.

On April 6, 2001 the Interim Receiver, under the direction of
the Court, concluded the sale transactions such that the
businesses operated by the subsidiaries will be continuing
without interruption under the ownership of HMR Foods

The only asset in the name of MENU itself directly affected by
the foregoing proceedings are the shares of Huxtable's Kitchens
Inc. There was no bankruptcy action taken against MENU or
Huxtable's Kitchens Inc., but as a result of these proceedings,
MENU has been left with no business activities and no
substantial assets.

MENU confirms that, while it did not consent to or approve of
any sale, given its financial position, it did not oppose the
Bank's application.

In addition, MENU announced that it has accepted the
resignations of the officers of MENU and IMSI. MENU also
accepted the resignations of Victor Fradkin and Michael Steele
from its Boards of Directors of MENU and IMSI.

KANA COMMUNICATIONS: Merging With Broadbase Software To Buy Cash
Software maker Kana Communications Inc. said it would merge with
Broadbase Software Inc., according to Reuters. Analysts said
that the $75.8 million stock deal is aimed at helping Kana turn
a profit before its cash runs out. "The bottom line is that they
bought cash," said Gartner senior research analyst Esteban
Kolsky. "It was a really good move on their part." The Redwood
City, Calif.-based Kana said last week that it had $20 million
remaining to fund operations. As part of the merger, the company
will pick up Broadbase's cache of about $130 million. (ABI
World, April 10, 2001)

LAIDLAW, INC.: Losses & Debt Restructuring Talks Continue
Laidlaw Inc. (TSE:LDM; OTC:LDWIF) has reported consolidated
revenue from its continuing school, inter-city, travel services
and public transit bus operations increased 3.1% during its
second fiscal quarter ended February 28, 2001. Consolidated
revenue for the quarter - the most difficult for bus operations
due to winter weather - was $751.9 million compared with $729.3
million for the same period in 2000. Revenue gains of 6.5% were
generated in the inter-city, travel services and public transit
segment. Improvements resulted principally from higher ticket
prices and increased passenger loads in Greyhound Lines'
operations in both the United States and Canada.

Education Services' revenue was essentially flat. Gains made as
a result of increased pricing and route additions were offset by
operating-day reductions due to a year-over-year change in the
school calendar, inclement weather and the exit from under-
performing contracts. The decline in the value of the Canadian
dollar had a slight dampening effect on revenue in both

Commenting on the quarter's results, John R. Grainger, president
& CEO of Laidlaw Inc. said, "We have been able to increase
consolidated revenue but have been unsuccessful in increasing
operating income as a result of sharply increased insurance
claims cost and jumps in the cost of energy. Last year the
company benefited from fuel hedges and lower-than-normal
insurance claims cost experience. Management, at all levels, is
working to further conserve energy and placing an even greater
emphasis on the company's safe operating standards.

"The process of restructuring Laidlaw Inc.'s debt is progressing
with the co-operation of its lenders and bondholders. Our
employees have continued to deliver service with their usual
enthusiasm and customers have demonstrated their support with
both renewals and awards of new contracts. I am confident that
with our unrestricted cash on hand of approximately $184
million, an increase of $57 million in the quarter, our
continuing cash generation, and credit facilities in-place, we
have more than adequate funds to meet all foreseeable
requirements." Mr. Grainger concluded.

Income before interest, taxes and amortization (IBITA) for the
quarter was $21.6 million compared with $49.1 million for the
same period in fiscal 2000. Approximately 70% of the decline in
IBITA is a result of increased insurance claims cost. Other
components of the decline are primarily accounted for by
increases in the cost of energy-diesel fuel and utilities
and by additional driver wages and benefits.

Income before interest, taxes, depreciation and amortization
(IBITDA) from continuing operations was $82.6 million compared
with $107.5 million for the same quarter in fiscal 2000. Capital
spending for replacement and expansion was reduced to $22.1
million compared with $40.1 million.

A loss, from continuing operations, for the period of $74.3
million or $0.23 per share is principally attributable to
increased interest costs of $71.3 million compared with $43.3
million for the same fiscal 2000 period and to $16.3 million of
restructuring expenses incurred as the company continues its
efforts to negotiate a consensual restructuring of its bank
and public debt. No such restructuring-related costs were
incurred in the comparable fiscal 2000 period. The loss from
continuing operations for the same quarter, last year, was
$625.9 million or $1.92 per share occasioned principally by
losses and provisions related to the company's write-down of
its 44% equity interest in Safety-Kleen Corp.

                     EDUCATION SERVICES

Quarterly IBITA from the company's school bus operations was
$25.8 million compared with $45.4 million for the same period in
fiscal 2000. Increased insurance claims cost, fuel, wages, and
lost contribution margin due to operating-day reductions, were
all factors in the decline.


IBITA for the quarter was a $4.2 million loss compared with $3.7
million of income in last year's fiscal period. The difference
results from increased insurance claims cost, higher fuel costs
and additional drivers' wage and benefit costs. Increased fuel
costs were mitigated by Greyhound Lines' ability to vary ticket
pricing in response to market conditions.

                       SIX-MONTH RESULTS

For the six months ended February 28, 2001, revenue from
continuing operations, increased 5% to $1.570 billion from the
$1.497 billion reported for the same period in fiscal 2000.
IBITA has declined to $101.2 million from $146.1 million, a
result of the increased operating costs associated with
insurance claims, fuel, driver wages and benefits and inclement
winter weather.

IBITDA, from continuing operations, was $223.5 million compared
with $262.8 million for the prior-year period.

The loss, from continuing operations, for the period was $90.0
million or $0.28 per share compared with a loss of $573.0
million or $1.75 per share for the same fiscal 2000 period,
principally related to the write-down and provisions taken in
regard to Safety-Kleen in February of 2000.

                     HEALTHCARE OPERATIONS

For the six months ended February 28, 2001, IBITDA from the
company's healthcare operations (classified as "discontinued"
for accounting purposes) was $65.1 million compared with the
$63.6 million achieved in last year's first half, indicating a
new stability in the segment's performance. Both EmCare and
American Medical Response have significantly improved their cash
collection rates; patient volumes have been strong and business
development programs are producing new contracts. Capital
expenditures were decreased to $7.0 million from the $9.5
million in the prior year's six-month period.

Laidlaw Inc. is a holding company for North America's largest
providers of school and intercity bus transportation, municipal
transit, patient transportation and emergency department
management services. All dollar amounts are in U.S. dollars.

LASIK VISION: Says Follow-up Care Is Available For Patients
Patients who had laser vision correction surgery over the past
year, performed by either Icon or Lasik Vision, can be assured
they will receive follow-up care.

After Lasik Vision Corp. filed bankruptcy and shut down 24 North
American clinics, including their clinic in Bellevue, many
patients have been left without prepaid surgery procedures being
performed, or without adequate provisions for follow-up care.

Post-operative care is essential to reduce chances of permanent
side effects such as problems with glare, wrinkling or haloes,
and patients need to see an experienced LASIK doctor after
surgery to assure health of their eyes.

"I want patients to know that our office is available to see any
Lasik Vision or Icon patients and will not leave them out in the
cold," says Stephen G. Phillips, MD, Medical Director of Sound
Eye and Laser, and an experienced LASIK surgeon. "In the Seattle
area, they can contact my office to arrange either routine post-
op or emergency follow-up care."

For names and phone numbers of ophthalmologists across
Washington state who perform laser vision correction procedures
and postoperative care, contact the Washington Academy of Eye
Physicians and Surgeons at 206/441-9762.

LASON INC.: Bank Group Agrees To Amend Existing Credit Facility
Lason, Inc. (OTCBB:LSON) signed a definitive agreement with its
bank group, whose agent is Bank One, Michigan, to amend its
existing bank credit facility.

Terms of the amendment include a mechanism to improve the
Company's working capital position, reduce its liability to its
earnout creditors, and significantly de-leverage its balance
sheet. This amendment to the original credit facility is in
place through January 2002. The Company intends, prior to
January 2002, to enter into further negotiations with the bank
group with regards to its credit facility.

"We are pleased that we were able to structure an amendment with
the bank group that addresses the needs of all affected parties,
the Company, its earnout creditors, and the bank group," stated
Ronald D. Risher, Executive Vice President and Chief Financial
Officer of Lason. "This agreement provides us with the resources
necessary to continue our re-structuring, improve our working
capital position and meet our obligations while continuing to
provide superior service to our customers and, we believe, shows
the confidence of the bank group in the current Lason management

                         About the Company

LASON is a leading provider of integrated information management
services, transforming data into effective business
communication, through capturing, transforming and activating
critical documents. LASON has operations in the United States,
Canada, Mexico, India, Mauritius and the Caribbean. The company
currently has over 85 multi-functional imaging centers and
operates over 60 facility management sites located on customers'
premises. LASON is available on the World Wide Web at

LEXON TECHNOLOGIES: Defaults on Miller Capital Bridge Loan
LEXON Technologies, Inc. has defaulted on a Bridge Loan
Agreement with Miller Capital Corporation as agent for Miller
Capital Corporation, Dickerson Wright, Jock A. Patton, and
Stephen A. McConnell.

The company entered into this agreement on August 10, 1999 when
it borrowed $750,000 for operations of the company. The note was
restructured in early 2000 with a $150,000 payment and interest
of 12%.

Interest payments were made through August 2000 and repayment
was scheduled to begin in August 2000. Extensions have been
granted by transferring 2,150,000 shares of the company's stock,
representing 14% of the outstanding shares, to the lenders over
the past 7 months, in addition to a payment of $25,000 made in
December 2000.

The extensions expired last Tuesday after an unsuccessful
attempt to renegotiate the debt.

Kenneth J. Eaken, the company's Chairman, said that operations
of the company would continue while the company continues to
negotiate with the creditor.

Under the terms of the Bridge Loan Agreement, all of the assets
of the company are secured by the creditor. If the creditor
moves forward to claim the assets as provided under the terms of
the agreement, it is unlikely that the company can continue its
operations in its present form.

Headquartered in Downers Grove, Ill., LEXON Technologies, Inc.,
is an Internet-based provider of innovative, geo-referenceable
content and data, and offers specific content solutions to
institutional, governmental, corporate and public consumers
through advanced software applications.

Through its wholly owned subsidiary, Chicago Map Corporation,
the company creates geographic digital map technology, including
digital data integration and referencing, GPS (Global
Positioning System) navigation systems, and mobile asset
monitoring/tracking for a variety of markets.

LOEWEN GROUP: Resolves Mortgage Issues with Juanita Knauff
The Loewen Group, Inc. objected to Juanita Knauff's motion for
relief from the automatic stay on the ground that the movant is
an oversecured creditor whose significant equity cushion
provides her with substantial adequate protection and the motion
should be denied in the absence of tenable support for the
requested relief. The Debtors contended that evidence
demonstrates that the value of just a portion of the Property is
more than three times the amounts owed to Ms. Knauff. Further,
the Property is not depreciating but properly maintained and
even improved, the Debtors argued.

The parties subsequently wish to resolve the matter by way of a
Stipulation and Order with Judge Walsh's stamp of approval.

The Stipulation and Order records that pursuant to the Asset
Purchase Agreement between Loewen Group Acquisition Group and
Juanita Knauff dated February 13, 1998, Knauff Funeral Home,
Inc., as the nominee of Loewen Group Acquisition Corp.,
purchased the assets of the funeral home businesses owned
by Juanita Knauff for $2,400,000. In connection with this, KFH
delivered a non-interest bearing Promissory Note in the original
principal amount of $400,000, payable to the order of Ms.
Knauff. The Promissory Note obligates KFH to make an annual
principal amount of $400,000 to Ms. Knauff on February 13 of
each of the years of 1999 through 2008. In addition, LGAC
entered into a guaranty, pursuant to which it guaranteed the
payments to be made to Ms. Knauff under the Promissory Note. In
order to secure the payment obligations under the Promissory
Note, KFH executed a mortgage on the Property in favor of Ms.

The Stipulation and Order provides, among other things, that:

      (1) The hearing on the Motion is continued indefinitely and
Ms. Knauff may reschedule a hearing on the Motion upon 30 days'
written notice to counsel to the Debtors;

      (2) The Debtor will

          (a) pay all applicable postpetition real property taxes
              that accrue with respect to the Property;

          (b) continue to insure the Property against casualty
              risks in accordance with paragraph 2 of the
              Mortgage; and

          (c) provide the Movant with evidence of such insurance
              coverage upon request.

It is also stated in the Stipulation and Order that, on the
Petition Date, the outstanding principal balance under the
Promissory Note was $360,000.  (Loewen Bankruptcy News, Issue
No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900)

MEMORIAL HEALTHCARE: Moody's Places Credit Ratings On Watch
Two consecutive years of losses and close to 30% decline in
operating cash flow prompted Moody's Investors Service to put
Memorial Healthcare Center on the Rating Watchlist, which will
likely result in a downgrade soon.

An unaudited 2000 financial statements of the hospital show that
it experienced a 27% decline in its operating cash flow. The
statement also revealed a $1.6 million (60%) increase in losses
from affiliates. In addition, Moody's noted a $5 million
increase in debt load in the fourth quarter last year.

"Our rating decision will follow a review of those factors
behind the fiscal year 2000 results and our review of the fiscal
year 2001 budget. Our assessment will incorporate management's
plans for improving the organization's operating performance and
a review of future capital and debt plans. We expect to complete
this review within ninety days," Moody's said.

Memorial Healthcare Center is a 130-bed acute care hospital
located in Owosso, Michigan. It reported 5,858 admissions in
fiscal year 1999.

MORRIS MATERIAL: Bankruptcy Filing Negatively Impacting Sales
Morris Material Handling Inc. is an international provider of
"through-the-air" material handling products and services used
in most manufacturing industries. The Company's original
equipment operations design and manufacture a comprehensive line
of industrial cranes, hoists and component products. Through its
aftermarket operations, the Company provides a variety of
related products and services, including replacement parts,
repair and maintenance services and product modernizations. In
recent years, the Company has shifted its orientation from an
original equipment-focused United States manufacturer to an
international full service provider with a significant emphasis
on the high margin aftermarket business. The Company's revenues
are derived principally from the sale of industrial overhead
cranes, component products and aftermarket products and

Morris Material Handling Inc.'s net sales in 2000 decreased
$26.1 million or 8.9% to $268.1 million from $294.2 million in
1999. Generally, sales in 2000 were negatively impacted by the
Company's filing voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code as well as a slowdown in
the market. More specifically, the decrease in net sales was
primarily caused by the following: (i) a decrease of $4.6
million in engineered cranes sales in the United States due to a
slowdown in new orders during the year; (ii) a $2.8 million
decrease in South African engineered cranes where a large
project was performed during the prior fiscal year; (iii) a
$10.6 million decrease in standard crane sales; (iv) a $5.3
million decrease in hoist sales in the United States and the
United Kingdom which was partially offset by a $2.7 million
increase in hoists for southeast Asia as that market begins to
show renewed activity; (v) a $4.0 million decrease in sales of
modernizations in the United States as a result of no large
projects performed during fiscal year 2000 similar to those in
fiscal year 1999; and (vi) a $2.3 million decrease in service
sales in Australia due to a reclassification of machine sales
previously reported as service sales. These decreases were
partially offset by a $3.3 million increase in service sales in
the United States.

The net loss experienced by the Company in fiscal year 2000 was
$36,939 as compared to a net gain of $3,445 in fiscal 1999.

MORTGAGE CLEARING: Removed from S&P's "Select Servicer List"
Standard & Poor's removed Mortgage Clearing Corp. from the April
2001 version of its Select Servicer List.  Within residential
servicing, Mortgage Clearing is no longer a select Residential
Loan Servicer.

Standard & Poor's admits servicers to the Select Servicer List
based on a comprehensive assessment of firms' operational
capabilities for servicing commercial mortgage, residential
mortgage, or asset-backed portfolios.

As part of this assessment, Standard & Poor's Servicer
Evaluation Group reviews each firm's strengths, weaknesses,
opportunities, and limitations within the industry, pertaining
to its specific product type.

Standard & Poor's performs an in-depth analysis of a firm's
management and organization, entire servicing process, and
financial position.

To be included in and remain on the Select Servicer List, a firm
must meet the criteria for attaining at least an "Average"
ranking with an outlook of "Stable."

Inclusion in the list reflects that a firm is, at the very
least, performing its duties in an effective and controlled
manner, and is in general compliance with investor, regulatory,
or agency requirements.

NANTUCKET CBO: Moody's Puts Senior Notes on Credit Watch
Due to deterioration in credit quality and several defaults in
the collateral pool, Moody's Investors Service took actions on
the senior secured and second priority notes issued by Nantucket
CBO, Limited.

The affected tranches were the U.S. $57,000,000 Senior Secured
Notes, and U.S. $15,000,000 Second Priority Notes. Both classes
were put on watch for possible downgrade.

NBC INTERNET: Shuts Down After Posting $245MM Net Loss In 2000
NBC announced that it will shut down its Internet subsidiary,
NBC Internet (NBCi), and has acknowledged that any hopes of it
becoming profitable vaporized along with the online advertising
market, according to the Associated Press. NBC is purchasing the
outstanding assets of the portal for an estimated $138 million,
or $2.19 a share. Senior executives at NBC and NBCi said they
weighed alternatives for the subsidiary since January, including
a sale, a merger with another company, or liquidation.

"The sharp declines in the Internet advertising market convinced
us that it didn't make sense to pursue a portal strategy," NBC's
chief financial officer Mark Begor said. "We wanted to find a
way to maximize shareholder value and wind down the business in
the best way possible." NBCi has been losing large amounts of
money for a while now. In the quarter ending in December, it
posted a net loss of $245 million on revenues of $31 million.
Excluding asset write-downs or restructuring charges, it would
have lost $47 million for the quarter. "There's no question that
we'll dramatically reduce the scope of the operations and sell
some assets," said Will Lansing, NBCi's chief executive.

NBC has been trying to turn around its Internet subsidiary for
some time. NBCi was founded in 1999 as a joint venture with the
direct-marketing company and CNET's portal,
It operated as a until last fall, when it was renamed
NBCi. (ABI World, April 10, 2001)

OXFORD HEALTH: Stockholders' Meeting Set For May 16 In Trumbull
The 2001 Annual Meeting of Stockholders of Oxford Health Plans,
Inc. will be held on May 16, 2001, at 10:00 a.m. local time, at
the Trumbull Marriott, 180 Hawley Lane, Trumbull, Connecticut
06611, for the following purposes:

      (1) To elect three Directors to serve as Class I Directors
of the Company for a term ending at the 2004 Annual Meeting and
one Director to serve as a Class II Director of the Company for
a term ending at the 2002 Annual Meeting;

      (2) To approve the Oxford Health Plans, Inc. 2001
Management Incentive Compensation Plan;

      (3) To act on a shareholder proposal requesting that the
Company establish a nominating committee comprised solely of
independent directors; and

      (4) To transact such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Only holders of record of outstanding shares of the Company's
common stock, par value $.01 per share, at the close of business
on March 23, 2001, will be entitled to notice of, and to vote
at, the Meeting or any adjournment or postponement thereof.

PACIFIC GAS: Obtains Approval To Use Existing Bank Accounts
Pacific Gas and Electric Company reminded the Court that the
Office of the United States Trustee has established certain
operating guidelines for debtors- in-possession in order to
supervise the administration of chapter 11 cases. These
guidelines require chapter 11 debtors to, among other things:
(a) close all existing bank accounts and open new debtor-in-
possession bank accounts; (b) establish one debtor-in-
possession account for all estate monies required for the
payment of taxes, including payroll taxes; and (c) maintain a
separate debtor-in-possession account for cash collateral.

Kent M. Harvey, PG&E's Senior Vice President-Chief Financial
Officer, Controller and Treasurer, told the Court that the U.S.
Trustee's guidelines won't work in this chapter 11 case. PG&E
uses 35 bank accounts through which the company manages cash
receipts, disbursements, investments for their corporate
enterprise. The Debtor routinely deposits, withdraws and
otherwise transfers funds to, from and between such accounts by
various methods including check, wire transfer, automated
clearing house transfer and electronic funds transfer. In
addition, the Debtor generates thousands of accounts payable and
payroll checks per month from the Bank Accounts, along with
various wire transfers.

The Debtor sought a waiver of the United States Trustee's
requirement that the Bank Accounts be closed and that new
postpetition bank accounts be opened. If the Guidelines were
enforced in this case, these requirements would cause enormous
and unnecessary disruption in the Debtor's businesses and would
significantly impair their efforts to reorganize.

Mr. Harvey explained that the Debtor's Bank Accounts are part of
a carefully constructed and highly automated Cash Management
System that ensures the Debtor's ability to efficiently monitor
and control all of their cash receipts and disbursements.

Consequently, closing the existing Bank Accounts and opening new
accounts inevitably would result in delays in payments to
administrative creditors and employees, severely impeding the
Debtor's ability to ensure as smooth a transition into chapter
11 as possible and, in turn, jeopardizing the Debtor's efforts
to successfully confirm a reorganization plan. Additionally,
requiring the Debtor to replace its Bank Accounts would impose a
daunting administrative burden. Finally, because the Debtor's
disbursement systems are integrated with their banks to allow
for automatic bank reconciliations, replacing the Bank Accounts
would require systemic changes which would be difficult to

Accordingly, the Debtor requested that its pre-petition Bank
Accounts be deemed to be debtor-in-possession accounts, and that
the Company be permitted to maintain and continue use, in the
same manner and with the same account numbers, styles and
document forms as those employed prepetition, be authorized,
subject to a prohibition against honoring prepetition checks
without specific authorization from this Court.

Recognizing the need for relief from the U.S. Trustee's
Guidelines in a billion-dollar chapter 11 case, and noting that
in other cases of this size, courts have routinely recognized
that the strict enforcement of bank account closing requirements
does not serve the rehabilitative purposes of chapter 11, Judge
Montali granted the Debtor's Motion in all respects. To the
extent that any funds in any PG&E Bank Account are subject to a
valid right of set-off by any Bank, Judge Montali directed, that
Bank will be granted an administrative priority in an amount
equal to the extent the Debtor uses those funds. Additionally,
Judge Montali held at the First Day Hearing, all rights of these
Banks to assert an entitlement to a replacement lien to the
extent any funds are used are fully preserved. (Pacific Gas
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

PACIFIC GAS: Court Grants Authority to Refund Customer Deposits
Pacific Gas and Electric Company received approval from the U.S.
Bankruptcy Court for the Northern District of California on
various motions which allow the utility to fulfill its
obligations to customers without disruption.

The court granted the utility the authority to issue refunds of
security deposits to residential customers who were required to
make such deposits, as those deposits become eligible for refund
through the utility's existing deposit refund policy. This will
allow the utility to issue refunds totaling approximately $5.3
million to more than 27,000 residential customers whose deposits
are eligible for refund, either in the form of a credit or a
direct payment by check. The court also authorized the utility
to issue future refunds to residential customers as those
refunds become eligible through the normal course of business.
Based on historical averages, the utility refunds approximately
$1.7 million in residential customer deposits per month.

The court also granted the utility the authority to issue
refunds of security deposits to non-residential customers, as
those deposits become eligible for refund through the utility's
existing deposit refund policy. This will allow the utility to
issue refunds to non-residential customers whose deposits are
eligible for refund, and future refunds as they become eligible
through the normal course of business. Based on historical
averages, the utility refunds approximately $1.8 million in non-
residential customer deposits per month.

The court also granted the utility the authority to issue
refunds of mainline extension service deposits to individual
residential customers. These deposits are usually required of
customers when engineering and construction work is needed to
develop bare lots or add new loads to existing service.

PAULA INSURANCE: S&P Cuts Financial Strength Rating To 'CCCpi'
Standard & Poor's lowered its financial strength rating on PAULA
Insurance Co. to triple-'Cpi' from single-'Bpi'.

The rating action reflects the company's deteriorating surplus,
unfavorable recent reserve development, sustained high leverage
and continued marginal operating performance.

Based in Pasadena, Calif., PAULA Insurance predominately writes
workers' compensation insurance for agribusiness located
throughout the major growing areas of California, Arizona,
Oregon, Alaska, Idaho, Texas, Florida, New Mexico, and Nevada,
with more than 60% of its revenue stemming from California.
Its products are distributed primarily through agencies. The
company, which began business in 1975, is a member of PAULA
Insurance Group and is owned by PAULA Financial.

Major Rating Factors:

      -- At year-end 2000, surplus levels declined 48.7% from
1999, and 42.0% from 1998 to 1999. This two-year decline in
surplus of $35.0 million from 1998 is due primarily to a
substantial bolstering of loss reserves to cover losses in
California on accident years 1998 and prior. The California
workers' compensation market has been extremely volatile in
recent years and has generally led to poor pricing and above-
average losses.

      -- The company's reserve development ratio has been highly
unfavorable in the last two years. The one-year loss development
in 2000 was 73.2% of surplus, while the 1999 one-year
development was 34.5% of surplus.

      -- The company was considered highly leveraged in 2000 with
its net premiums written to surplus at 6.1 times. The company
did, however, enter into two quota-share reinsurance agreements
with Insurance Corp. of Hannover (single-'A' financial strength
rating) and Everest Reinsurance Co. (double-'A-' financial
strength rating), where it may cede up to 75% of policy-year
2001 earned premiums.

      -- Operating performance has been marginal, with net losses
of $15.7 million, $19.5 million, and $7.2 million for 2000,
1999, and 1998, respectively.

Although the company is a member of PAULA Insurance Group, the
rating does not include additional credit for implied group

Ratings with a 'pi' subscript are insurer financial strength
ratings based on an analysis of an insurer's published financial
information and additional information in the public domain.

PROCEEDO COMMERCE: Now Owned By ProcureITright
ProcureITright, which is controlled by the Kinnevik Group,
acquired Proceedo Commerce, which delivers Internet based e-
procurement solutions to large and medium sized companies in the
Nordic region.

Proceedo Commerce AB's Board of Directors submitted a filing for
bankruptcy at March 27. Investor Growth Capital was the single
largest owner of Proceedo together with its founders.

Following the acquisition Proceedo will become a subsidiary of
ProcureITright, which is an international professional services
firm within strategic procurement consulting, total or partial
procurement outsourcing as well as support in complex
negotiation processes. Proceedo's competence within electronic
procurement solutions and portals is the missing link within
ProcureITright's total service offering portfolio within
procurement solutions and services.

Bruce Grant, CEO of XSource Corporation, which holds
ProcureITright AB commented, "Proceedo will fulfill an important
role for ProcureITright's strategy in strengthening the
procurement function for its international client base.
Proceedo's unique competence within e-procurement consulting and
the already developed and well functioning e-procurement system
will give ProcureITrights' clients an even stronger competitive

Mattias Jonsson, President of Proceedo said, "We are very
pleased at the speed with which the Kinnevik Group has acted, so
ensuring that we can continue to serve our current customers
without disruption. We see the Kinnevik Group as a very good
owner that will give us both financing and commercial backing.
Furthermore now we have an opportunity to continue to strengthen
our leading position in the Nordic region."

procureITright is a global provider of procurement professional
services designed to maximize the financial value of a client's
enterprise. With offices in Boston, London, New York and
Stockholm procureITright provides expertise with global
experience and knowledge and at the same time with the attention
and flexibility of a local procurement organization. The service
portfolio includes the following services: procurement strategy
& organization, supplier base restructuring, supporting complex
negotiations, contract management and total/partial outsourcing
of the procurement function.

Proceedo Commerce AB is the leading company in the field of
internet-based purchasing solutions, marketplaces and services
in the Nordic region. Its customers are large and medium-sized
companies which invest in business-to-business e-commerce.
Proceedo wants to create maximum profitability for customers in
their purchasing work through better purchasing conditions and a
more effective purchasing process. Proceedo has operations in
Stockholm and Helsinki.

XSource Corporation is a managerial strategic investment company
with headquarters in New York within the Kinnevik Group. XSource
Corporation controls 14 professional services and software
companies in the telecommunications, IT and media space.

SERVICE MERCHANDISE: Enters Into 3 Year, $35MM CIT Vendor Line
Service Merchandise Company, Inc. sought and obtained the
Court's authority to enter into three year, $35 million
committed vendor line with The CIT Group/Commercial Service,

The Debtors told the Judge that against the backdrop of a more
challenging retail industry with tightened credit markets and
liquidity strains on many retailers, they have been able to
retain their strong liquidity position relative to their current
merchandise assortment through proactive efforts to maintain
vendor support. In a business environment that has become more
difficult than before, the Debtors believe that the CIT Line can
enhance their key vendor relationships throughout the 2001
retail cycle, as vendors will be more likely to extend trade
terms to the Debtors given CIT's credit support.

Actually, on or about December 1998, the Debtors entered into a
Prior Letter Agreement which contemplated a $50 million
unsecured vendor line on a non-superpriority basis. However,
this was subject to, among other things, the filing of a chapter
11 petition by the Debtors on or before January 9, 1999. As this
did not happen, the financial arrangements contemplated under
the Prior Letter Agreement accordingly were not implemented.

The current CIT Line establishes a $35 million revolving,
unsecured vendor line of credit for the benefit of

      (a) its factored clients (other than those clients which
may be designated to Service Merchandise by CIT in writing from
time to time) who sell goods to Service Merchandise (the CIT
Factored Clients); and

      (b) other vendors with respect to other single invoice
and/or series of invoices transactions (the Other Vendors) who
sell goods to SMCO, as may be proposed by SMCO to CIT from time
to time.

Subject to the terms, provisions, conditions and limitations
under the CIT Line, CIT would approve and assume the credit risk
on sales by such

      (a) CIT Factored Clients to Service, all in accordance
with, and subject to, the factoring arrangements between CIT and
such CIT Factored Clients and

      (b) Other Vendors to Service Merchandise with respect to
the purchase of accounts receivable (which may be on a
discounting or maturity basis and may provide for a commission
to CIT of up to 1.5% as set forth in the Commitment Letter).

The CIT Line, which will be on a nonsuperpriority claim basis,
will be subject to terms which are substantially similar to the
Prior Letter Agreement:

      (1) The aggregate dollar amount of all CIT credit approved
sales to Service (whether by CIT Factored Clients and/or Other
Vendors) with respect to transactions occurring on and after the
effective date of the committed line and relating to goods to be
delivered on and after such effective date shall not exceed
$35,000,000 in the aggregate at any time;

      (2) The CIT Line will become effective and available for
use provided the Financing Agreement (defined in the Commitment
Letter to mean the Debtors' current postpetition financing
together with any amendments, modifications, renewals,
extensions, and/or re placements thereof) is then in full force
and effect and without any declaration of an Event of Default
that has not been cured or waived as of the effective date of
the CIT Line;

      (3) The CIT Line shall expire with respect to sales made
after the date occurring at the earliest of

          (a) the third anniversary of the effective date of the
              CIT Line;

          (b) Thirty calendar days after the occurrence of an
              Event of Default under the Financing Agreement that
              has not been cured or waived in writing prior to
              the expiration of such thirty-day period and CIT
              can provide conclusive evidence that it has
              incurred actual losses with respect to the CIT Line
              equivalent to 75% of the "Liquidated Damages
              Amount"; or

          (c) on the date that the Financing Agreement

      (4) The approval of any sale and the assumption of the
credit risk under the CIT Line shall be subject to:

          (a) such sales being on standard industry selling
              terms, but in no event shall the terms of the sale
              exceed 60 days;

          (b) no more than $7,500,000 outstanding under the CIT
              Line (other than amounts disputed by the Debtors in
              good faith) being past due more than 15 business

          (c) undrawn availability under the Financing Agreement
              of at least $25,000,000;

          (d) full releases by the Debtors, and approval of such
              releases by the Court, of CIT and the CIT
              Representatives from liability arising on or before
              the filing date relating solely to the transactions
              that are the subject of the Prior Letter Agreement;

          (e) execution of a Single Customer Credit Approved
              Receivables Purchasing Agreement between another
              Vendor and CIT with respect to the Debtors'
              purchases from Other Vendors; and

          (f) availability under the CIT Line, and in the event
              of insufficient availability to approve all of the
              orders, CIT will notify the Debtors and approve
              that portion of such orders as the Debtors may
              reasonably request;

      (5) In the event that CIT fails to perform any of its
obligations under the Commitment Letter and such failure to
perform continues for ten business days after written notice or
occurs on more than three occasions during the term of this
agreement, CIT shall have no further obligation to the Debtors
except to immediately pay to the Debtors a Liquidated Damages
Amount equivalent to the amounts not paid under the Prior Letter
Agreement, as supplemented in writing from time to time prior to
January 10, 1999.

      (6) The Debtors agree to provide CIT with the periodic
financial reporting package distributed to the lenders under the
Financing Agreement not more frequently than on a monthly basis
which information CIT acknowledges constitutes material non-
public information and shall be kept confidential by CIT.

The Debtors have determined, in their business judgment, that
the terms of the Commitment Letter, including the release of
liability under the Prior Letter Agreement, are fair and
reasonable and that the execution, delivery and performance of
the Commitment Letter is in the best interest of the Debtors'
estates. (Service Merchandise Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

STORE OF KNOWLEDGE: Educational Products Retailer Goes Bankrupt
Store of Knowledge, which operates three stores in Pittsburgh
with public television station WQED, has filed for chapter 11
bankruptcy protection, according to the Pittsburgh Post-Gazette.
The educational products company sought court protection from
creditors on March 28 in California and closed 21 of its 91
stores on April 1. The three Pittsburgh stores remained opened
while employees said they did not know whether the stores would
close or remain open. George Hazimanolis, WQED spokesman, said
the station was notified by e-mail of the bankruptcy filing and
was told that the company would no longer honor discounts for
PBS and National Public Radio members. It has also stopped
accepting discount and gift coupons and gift certificates and
has put merchandise on sale. (ABI World, April 10, 2001)

STRUCTURED ASSET: Fitch Cuts Mortgage Certificate To CCC
Fitch lowered its ratings on the following Structured Asset
Mortgage Investments mortgage pass-through certificates:

      -- SAMI 1999-4, class B-4 ($1,449,961 outstanding), rated
         'BB', placed on Rating Watch-Negative.

      -- SAMI 1999-4, class B-5 ($966,706 outstanding),
         downgraded to 'CCC' from 'B'.

This action is the result of a review of the level of losses
incurred to date and the current high delinquencies relative to
the applicable credit support levels.

As of the March 25, 2001, distribution, SAMI 1999-4 remittance
information indicates that 5.77% of the pool is over 90 days
delinquent (including bankruptcies, foreclosures and REO), and
cumulative losses are $522,269 or 0.21% of the initial pool.
Class B-4 currently has 0.85% of credit support, and class B-5
has 0.36% credit support remaining.

W.R. GRACE: Hires Blackstone As Financial Advisor
W. R. Grace & Co. asked the Court for permission to employ The
Blackstone Group L.P. as their financial advisors in the course
of their chapter 11 cases to:

      (a) assist in the evaluation of the Debtors' businesses and

      (b) assist in the development of the Debtors' long-term
business plan;

      (c) analyze the Debtors' financial liquidity and financing

      (d) assist in the estimation of asbestos claims including
the preparation of an estimation model for payments and costs
and the analyses of payment and funding scenarios;

      (e) evaluate the Debtors' debt capacity and alternative
capital structures;

      (f) develop valuation, debt capacity and recovery analyses
in connection with developing and negotiating a potential

      (g) analyze various restructuring scenarios and the
potential impact of these scenarios on the value of the Debtors
and the recoveries of those stakeholders impacted by the

      (h) develop a negotiation strategy and assisting in
negotiations with the Debtors' creditors and other interested
parties with respect to plan of reorganization issues;

      (i) value securities offered by the Debtors in connection
with a Restructuring;

      (j) make presentations to the Debtors' board of directors,
creditor groups and other parties in interest, as appropriate;

      (k) provide expert testimony, as requested; and

      (l) provide such other advisory services as are customarily
provided in connection with the analysis and negotiation of a
Restructuring, as requested and mutually agreed upon by the
Debtors and Blackstone.

The Debtors agree to pay Blackstone:

      (1) a $175,000 Monthly Advisory Fee; and

      (2) a $5,000,000 Restructuring Fee promptly upon the
completion of a Successful Restructuring.

The Debtors agree, in short, to indemnify Blackstone for all
claims arising and relating to the Financial Advisory Services,
except those which primarily resulted from Backstone's bad
faith, gross negligence or willful misconduct. The Debtors tell
Judge Newsome that the indemnification procedures proposed in
these chapter 11 cases are modeled after indemnification
procedures approved by the Delaware Court in In re United Artist
Theatre Company, et al., Case No. 00-03514 (SLR) (Bankr. D. Del.
Sept. 7, 2000); In re Ameriserve Food Distribution, Inc., Case
No. 00-0358 (PJW) (Bankr. D. Del. May 9, 2000); and In re Planet
Hollywood International, Inc., Case No. 99-3612 (JJF) (Bankr. D.
Del. Dec. 17, 1999).

Pamela D. Zilly, a Senior Managing Director of Blackstone, leads
the engagement from Blackstone's New York office. Ms. Zilly
disclosed that Blackstone was hired on February 1, 2001. Ms.
Zilly assured the Court that Blackstone is disinterested within
the meaning of 11 U.S.C. Sec. 101(14), disclosing five
particular items out of an abundance of caution:

      (a) American International Group (AIG) is a provider of
letters of credit, insurance and surety bonds to certain of the
Debtors. AIG owns a 7% passive, non-voting limited partnership
interest in Blackstone and its affiliated companies. In
addition, AIG has agreed to invest an estimated $1.2 billion as
a limited partner in future private equity, real estate, and
other funds that Blackstone sponsors.

      (b) Blackstone is currently acting as the financial advisor
to The Babcock & Wilcox Company in respect of its ongoing
chapter 11 reorganization that is currently under the
jurisdiction of the United States Bankruptcy Court for the
Eastern District of Louisiana.

      (c) An affiliate of Blackstone has in the past conducted
informal discussions with the Debtors regarding possible
transactions, none of which were consummated.

      (d) Blackstone has a large and diverse financial advisory
practice. Accordingly, Blackstone and certain of its members and
employees may have in the past represented, may currently
represent, and likely in the future will represent, in matters
wholly unrelated to the Debtors' cases, creditors of the Debtors
and other parties-in-interests. As a result of its
investigations, Blackstone has identified certain entities that
Blackstone previously has worked for, or currently is working
with, in connection with other transactions unrelated to the
Debtors or the Chapter 11 Cases. These parties include Bank of
America Illinois, Bank of Nova Scotia, The Chase Manhattan Bank,
N.A, Citibank, N, A., Credit Suisse First Boston, and Wachovia
Bank & Trust Company, N.A. Blackstone has not represented, does
not represent and will not represent any such entity's separate
interest in the Chapter 11 Cases nor have any relationship with
any such entity which would be adverse to the Debtors as to the
matter as on which Blackstone is to be employed. Blackstone does
not represent any entity in connection with the Chapter 11 Cases
nor does it believe that any relationship it may have with any
entity that will interfere with or impair Blackstone's
representation of the Debtors in the Chapter 11 Cases.

      (e) Affiliates of Blackstone serve as general partners for
and manage a number of investment vehicles (collectively, the
"Blackstone Funds"). The investors in the Blackstone Funds are
principally unrelated third parties but also include affiliates
of Blackstone and various of its officers and employees,
including Employees working on the Chapter 11 Cases. In
addition, certain of the Employees, including Employees working
on the Chapter 11 Cases, are limited partners in the Blackstone
Funds. In their capacity as limited partners, these Employees
have personal investments in the Blackstone Funds, but have no
control over investment decisions or over business decisions
made at the Blackstone Funds. Among other things, the Blackstone
Funds are (a) active direct investors in a number of portfolio
companies and (b) passive investors in other funds
(collectively, the "Investment Funds") managed by a number of
non- traditional money managers, all of which are similar to
investments in mutual funds. As would be the case with respect
to a mutual fund investment, neither Blackstone, its affiliates,
the Blackstone Funds nor the Employees have any control over the
investments made by the Investment Funds in which the Blackstone
Funds are invested, including investment purchases, investment
divestitures and the timing of such activities. Blackstone
maintains a strict separation between its Employees assigned to
the Chapter 11 Cases and the Employees assigned to the
Blackstone Funds. To avoid any appearance of impropriety where
the Blackstone Funds may receive information about such
Investment Funds' investing in companies in which Blackstone is
acting as an advisor, Blackstone maintains internal procedures
designed to preclude the dissemination of such information to
the Employees who are providing such advisory services. No
Employee working on the Chapter 11 Cases receives information
concerning the individual investments of Investment Funds in
which the Blackstone Funds are invested. Likewise, in accordance
with U.S. securities law, no confidential information concerning
the Debtors is permitted to be communicated to the Employees
working for the Blackstone Funds. It is possible that companies
owned, in whole or in part, by the Blackstone Funds or which may
have had discussions regarding a possible investment or
transaction in connection with the Blackstone Funds may have a
relationship with the Debtors. These relationships are unrelated
to the Financial Advisory Services Blackstone intends to provide
in the Chapter 11 Cases. Blackstone maintains that these
relationships are subject to the internal confidentiality
procedures outlined immediately above and thus have no
meaningful bearing on Blackstone's ability to advise the
Debtors. (W.R. Grace Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

WORLD KITCHEN: Names James Sharman As New Supply Chain VP
World Kitchen, Inc. appointed James A. Sharman to the position
of Senior Vice President, Supply Chain Operations, effectively
immediately. Mr. Sharman will report to Steven G. Lamb,
president and CEO.

In this new position, Mr. Sharman will be responsible for
leading performance improvement initiatives at World Kitchen
designed to enhance customer satisfaction and shareholder value.
His responsibilities include ensuring that the company's
previously announced restructuring program meets all of its key
objectives. This program, announced on April 3, 2001, is aimed
at improving the cost structure of the organization through
consolidation of manufacturing capacity, outsourcing of certain
operations, and reduction in inventories and distribution costs.

James Sharman, 42, joins World Kitchen with more than 20 years
of operations, supply chain management, and general management
experience. Most recently he served as Chief Executive Officer
of Rubicon Technology, a Chicago-based manufacturer and
distributor of high-quality synthetic crystal for the
communications, semi-conductor, opto-electronic and optical

Prior to that Mr. Sharman served as Senior Vice President ,
Supply Chain Management for CNH Global N.V. (NYSE: CNH), a
company created in November 1999 from the merger of Case
Corporation and New Holland N.V. CNH is a global leader in
agricultural and construction equipment with many well-known
brands and products sold through independent retailers in over
150 countries. While at CNH, Mr. Sharman successfully led the
restructuring and rationalization of the merged $12 billion Case
and New Holland supply chain and developed and implemented the
company's e-commerce business strategy.

Mr. Sharman, was named to his post with CNH at its inception,
having held the position of Vice President and General Manager,
Latin America with Case from 1998. Earlier with Case he had been
Vice President, Supply Chain Management from 1995.

"Jim is a valuable addition to our team," said Mr. Lamb. "He
brings tremendous experience in order fulfillment, supply chain
strategy and general management, as well as strong skills in
financial control and process management. I'm confident of his
ability to lead the change management initiatives that will
transform World Kitchen into a company that delights its
customers, shareholders and financial stakeholders with product
innovation and supply chain excellence."

Mr. Sharman began his business career in 1992 as a Manager of
Manufacturing and Reliability Services with International Paper,
after earning his M.B.A degree from Duke University. He held a
variety of operations, manufacturing and engineering management
positions with the company until joining Case Corporation in
1995. He earned a B.S. degree at the United States Military
Academy at West Point, N.Y. in 1982 and served as an Army
officer from 1982 to 1992 in Europe and the United States.
World Kitchen's principal products are glass, glass ceramic and
metal cookware, bakeware, kitchenware, tabletop products and
cutlery sold under well-known brands including CorningWare,
Pyrex, Corelle, Visions, Revere, EKCO, Baker's Secret, Chicago
Cutlery, Regent Sheffield, OXO and Grilla Gear. World Kitchen
has been an affiliate of Borden, Inc. and a member of the Borden
Family of Companies since April 1998.

World Kitchen currently employs approximately 5,200 people and
has major manufacturing and distribution operations in the
United States, Canada, United Kingdom, South America and Asia-
Pacific regions. Additional information can be found at


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, Larri-Nil Veloso, Aileen Quijano and Peter A. Chapman,

Copyright 2001.  All rights reserved.  ISSN: 1520-9474.

This material is copyrighted and any commercial use, resale or
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