TCR_Public/010420.MBX          T R O U B L E D   C O M P A N Y   R E P O R T E R

              Friday, April 20, 2001, Vol. 5, No. 78


AMERICAN HOMEPATIENT: Debt Restructuring Talks Continue
ARMSTRONG: Judge Okays Womble's Employment As Litigation Counsel
ASHFORD.COM: Receives Notice Of Non-Compliance From Nasdaq
BRADLEES STORES: Intends To File Chapter 11 Plan By April 25

CKE RESTAURANTS: Senior Lenders Give Waiver of Covenant Defaults
CLASSIC COMM.: Seeks To Restructure Senior Credit Facility
COSTUME COLLECTION: Taps Remarketing For 6-Week Liquidation Sale
CRESCENT SERVICES: Berens to Acquire Broadband Network Provider
eGLOBE INC.: Files Voluntary Chapter 11 Petition in Wilmington

eGLOBE INC.: Case Summary & 20 Largest Unsecured Creditors
FINOVA GROUP: Hires Ernst & Young As Auditors And Advisors
FUSION NETWORKS: Lays-Off Employees And Halts Operations
GENESIS HEALTH: Multicare Sells Pennsylvania Facility For $1.8M
ICG COMM.: Resolves Contract Disputes With Microsoft Network

INTASYS CORP.: Needs More Funds to Continue As A Going Concern
INTERNET LAW: Cootes Files Complaint Alleging Breach of Contract
LEINER HEALTH: Lender Grants Further Waiver Extension To June 15
LERNOUT & HAUSPIE: Exclusive Period Extended To June 27
LTV CORPORATION: Court Approves Proposed Postpetition Financing

MARCHFIRST: Selling Some East Coast Operations to Epic Software
MICROLOG CORPORATION: Nasdaq Intends to Halt Trading Of Shares
MONARCH DENTAL: Plans To Appeal Nasdaq's Move To Delist Shares
MONTGOMERY WARD: Taps CONSOR & Newmark to Sell Trademarks
MURDOCK COMMUNICATIONS: Seeks More Funds To Sustain Operations

OWENS CORNING: Assumes Telecommunications Agreement With MCI
PACIFIC GAS: Honoring Non-Residential Customer Deposits
PRECEPT BUSINESS: Sells Various Subsidiaries & Other Assets
RAYTECH CORPORATION: Emerges From Chapter 11 Bankruptcy
SHUTTLE AMERICA: Files For Chapter 11 Bankruptcy Protection

SOFTWARE LOGISTICS: Files For Chapter 11 in Oakland, California
US DIAGNOSTIC: May File For Bankruptcy If Unable To Cure Debts
VENCOR INC.: Settles Walter F. Beran's Claims
W.R. GRACE: Obtains Approval To Draw $50 Mil Under DIP Facility
WEBFAMILY VENTURES: Internet Site Shuts Down Today

WESTPOINT STEVENS: Fitch Affirms BB- Senior Note Rating
WINSTAR COMMUNICATIONS: Files Chapter 11 Petition in Wilmington
WINSTAR COMM.: Case Summary & 20 Largest Unsecured Creditors
WINSTAR COMM.: BCSI Initiates Case-Specific Newsletter Coverage
WINSTAR: Files $10 Billion Suit Against Lucent Technologies

BOOK REVIEW: TAKEOVER: The New Wall Street Warriors:
              The Men, The Money, The Impact


Advanced Aerodynamics & Structures Inc. (OTCBB:AASI) announced
its common stock, previously traded on the Nasdaq National
Market, has commenced trading Wednesday on the OTC Bulletin

The company said it intends to appeal the delisting to Nasdaq's
Listing and Hearing Review Council within the next 15 days.
Nasdaq's decision to delist the company is based on the bid
price of the company's common stock closing below $1.00 for 30
consecutive trading days, as well as not meeting Nasdaq's net
tangible assets requirements.

AASI Aircraft currently has 188 JETCRUZER 500 aircraft orders,
representing a backlog of US$226 million. The JETCRUZER 500 is a
high-speed single engine, corporate propjet aircraft that can
accommodate first-class seating for six people, including the

Powered by a Pratt & Whitney propjet engine, the JETCRUZER 500
will cruise near jet speeds of 345 miles per hour at altitudes
of up to 30,000 feet.

AMERICAN HOMEPATIENT: Debt Restructuring Talks Continue
American HomePatient, Inc. (OTC:AHOM) reported that it has filed
its annual report on Form 10-K with the Securities and Exchange
Commission for the twelve months ended December 31, 2000. The
Company previously reported on April 2, 2001 that it anticipated
filing its Form 10-K after the scheduled due date as a result of
ongoing negotiations with its lender group.

As previously reported, the Company is in default under its
credit facility as a result of breaching several financial
covenants contained in the credit agreement and failing to make
a scheduled principal payment due March 15, 2001. The lenders
have the right to demand the immediate payment of all
indebtedness outstanding under the credit agreement as a result
of the defaults. The Company is currently in negotiations with
its lenders to cure these defaults. The Company has classified
the related outstanding debt as a current liability as of
December 31, 2000 since no final agreement with the lenders has
been reached. Of this amount, $275.6 million had been classified
as long term debt in the preliminary financial statements
released by the Company on April 2, 2001. Should the lenders
demand payment of the applicable debt, there is no commitment as
to how any such demand would be satisfied by the Company. As
such, the opinion of the Company's auditors on the Company's
financial statements references the Company's ability to
continue as a going concern.

Negotiations between the Company and its lenders are continuing,
and management is hopeful that an agreement will be reached in
the near future which will cure the current defaults.

As previously disclosed, the Company has been under
investigation by the Office of Inspector General relating to
claims for payment from Medicare. The Company has been engaged
in discussions with the government concerning the investigation
and settlement of these matters. The Company previously has not
recorded a reserve in its financial statements for this matter,
and the preliminary financial statements released on April 2,
2001 did not reflect this reserve. However, based upon recent
negotiations, the Company has recorded a reserve as of December
31, 2000 in the amount of $7.5 million in anticipation of a
settlement. There can be no assurances, however, that a
settlement will be reached or regarding the amount, terms,
scope, or timing of any such settlement. A settlement likely
will result in a default under the credit facility.

ARMSTRONG: Judge Okays Womble's Employment As Litigation Counsel
While Judge Farnan approved Armstrong Holdings, Inc.'s
application to employ Womble Carlyle as litigation counsel, he
expressly requires that no fees shall be paid by the Debtors to
Womble Carlyle for any services provided to Michael D. Lockhart
or any other member of the Board of Directors of Armstrong for
matters not related to the Debtors, and further requires that
all fees accrued for services performed by Womble Carlyle for
any of the Debtors' non-debtor affiliates and which are sought
to be paid by the Debtors shall be identified separately in the
fee application submitted by Womble Carlyle to the Court.
(Armstrong Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

ASHFORD.COM: Receives Notice Of Non-Compliance From Nasdaq
---------------------------------------------------------- (Nasdaq: ASFD), the world's leading e-commerce
destination offering luxury goods to individuals and corporate
clients, received a letter from the Nasdaq National Market
indicating that the company no longer complies with the $1.00
minimum bid price requirement stated in Marketplace Rule 4450
(a)(5). has until July 9, 2001, ninety calendar days, to
regain compliance with this rule, which would require the
company's stock to achieve a bid price $1.00 or more for a
minimum of 10 consecutive days during that period. If fails to meet this requirement, it will become
subject to delisting from the Nasdaq National Market, at which
time the company can appeal the delisting to a Nasdaq Listing
Qualifications Panel.

                     About is the world's leading e-commerce destination
offering luxury goods to individual and corporate clients. The
company's e-commerce site, located at,
offers a vast selection of more than 20,000 styles of diamonds,
new and vintage watches, jewelry, fragrances, leather
accessories, ties, scarves, sunglasses, writing instruments,
home and lifestyle products, fine art and corporate gifts from
more than 400 leading brands. Dedicated to creating an
exceptional shopping experience, provides next-day
delivery, attractive gift packaging, and a 30-day money-back
guarantee on all merchandise. The company also offers the Protection Plus(SM) policy, which provides
outstanding product warranties, customer privacy, and site
security. is headquartered in Houston, Texas.

BRADLEES STORES: Intends To File Chapter 11 Plan By April 25
Bradlees Stores Inc. expects to file its liquidating chapter 11
plan by April 25, but it will have through June 25 to file a
disclosure statement related to the plan. Following a hearing on
April 11, Judge Burton R. Lifland of the U.S. Bankruptcy Court
in Manhattan granted the liquidating retailer's request for a
60-day extension of the exclusive period during which it may
file a disclosure statement, and a 90-day extension of the
exclusive period during which it may solicit plan votes. The
initial periods during which Bradlees has the exclusive right to
file a plan and solicit plan votes were set to expire on April
25 and June 25. (ABI World, April 18, 2001)

CKE RESTAURANTS: Senior Lenders Give Waiver of Covenant Defaults
CKE Restaurants, Inc. (NYSE: CKR) has amended its senior credit
facility effective April 13, 2001. The amendment, among other
things, includes an extension of the waivers of non-compliance
with certain of the financial covenants associated with this
credit facility through January 31, 2002.

Other significant points of the amendment are as follows:

     -- The maturity has been shortened to February 1, 2002.

     -- Interest rates will increase on July 1, 2001 and October
        1, 2001, depending on certain repayment thresholds.  If
        such thresholds are not met, it will not constitute an
        event of default.

     -- The Company must still meet certain minimum EBITDA
        requirements, although compliance with all other
        financial covenants has been waived through January 31,

     -- Capital expenditures are limited to $55 million for the
        fiscal year 2002 and may not exceed $20 million in any
        one quarter.

Andrew F. Puzder, CKE's president and chief executive officer
said, "This amendment and waiver is important to our debt
reduction program as we work toward complete refinancing of this
credit facility as soon as reasonably practicable."

CKE Restaurants, Inc., through its subsidiaries, franchisees and
licensees, operates more than 3,700 quick-service restaurants,
including 980 Carl's Jr. restaurants located in 13 Western
states and Mexico; 2,657 Hardee's restaurants in 32 states and
11 foreign countries; and 125 Taco Bueno restaurants in Texas
and Oklahoma.

CLASSIC COMM.: Seeks To Restructure Senior Credit Facility
Classic Communications, Inc. (NASDAQ: CLSC) announced financial
results for the three months and the year ended December 31,

Pro forma (after giving effect to the Company's Star and Buford
acquisitions) revenues for the 12-month period ended December
31, 2000 increased approximately 0.7% to $185.5 million,
compared to $184.3 million at year end 1999. Pro Forma Adjusted
EBITDA declined $4.2 million or 5.4% to $73.4 million at year
end 2000.

Pro forma revenues for the three months ended December 31, 2000
decreased $0.6 million to $45.8 million, compared to the pro
forma revenue in the same period in 1999. The Pro Forma Adjusted
EBITDA decreased approximately $2.0 million to $17.3 million for
the fourth quarter 2000, compared to $19.3 million for the
fourth quarter 1999.

The Company also announced that it has filed its Annual Report
on Form 10-K for the year ended December 31, 2000. Copies of the
filing can be obtained at the Company's website at

The Company disclosed in the Form 10-K that its fixed charges
requirements and capital expenditure plan will require the
Company to obtain additional financing or complete certain asset
transactions to be able to generate sufficient funds to service
its obligations and continue its current business plan. The
Company also disclosed that it expects that it will need to
reset its financial covenants and obtain certain covenant
default waivers under its senior credit facility to avoid a
financial covenant default. Consequently, the Company is
diligently working to arrange up to a maximum of $148.5 million
of new senior financing and is also in the process of
negotiating with its senior lending group to obtain both an
amendment and certain waivers to the current senior credit

Primarily as a result of the Company's current liquidity
position and its inability to obtain certain amendments and
waivers to its senior credit facility prior to filing the Form
10-K, the Company's independent accountants, in conjunction with
its year-end audit, issued an audit opinion with respect to the
Company's 2000 financial statements which includes a
qualification that raises substantial doubts about the Company's
ability to continue as a going concern.

As previously announced, the Company and/or certain of its
affiliates, (including Brera Classic, LLC and its affiliates)
may, from time to time, make purchases of the Company's common
stock and debt previously issued by Classic Cable, a wholly-
owned subsidiary of Classic. These purchases, if made, will be
completed through open-market and privately negotiated
transactions. The Company may, in connection with, or separate
from, these potential purchases and the new senior financing,
consider offering to exchange or restructure Classic Cable's
debentures for new securities of the Company and/or Classic,
depending upon the state of the financial markets, the terms of
the new senior financing and its existing debt as well as the
financial condition of the Company. There can be no assurances
as to whether any such purchases will be made, or the timing or
amount of any such purchases, or whether the Company or its
affiliates will pursue any exchange or restructuring

                 Operating Results in 2000

James Kofalt, the newly appointed Chairman of the Board of
Classic, said, "The fourth quarter and the full year 2000
operating results were disappointing, but we believe we are
addressing the issues critical to positioning the Company to
move forward. Throughout 2000 and in 2001, we have continued to
aggressively pursue our strategy of maximizing new revenue
opportunities through the successful deployment of digital video
in our larger markets and, more recently, in our mid-sized
markets. At the same time, we have continued to streamline and
optimize our operations. We have undertaken a series of major
initiatives designed to improve customer service and eliminate
certain redundant costs. We expect 2001 to be a transitional
year for us as we complete some of these initiatives, and we
look forward to improved growth prospects thereafter."

Detailing the Company's stepped-up introduction of digital
services and improvements to its digital and basic product
offerings, Dale Bennett, President and Chief Operating Officer
of Classic, said, "In August 2000, we accelerated the rollout of
digital cable, compressing two years' of system launch activity
into less than a year. We also repackaged and simplified the
digital product offering that has been enthusiastically received
by our customers. During the fourth quarter, the number of
digital subscribers nearly doubled to more than 22,000. At the
end of 2000, digital services were available to 524,900 homes,
significantly exceeding our target of 400,000. Moreover, we
continued to increase the pace of our digital installations
throughout the year. Installations averaged more than 850 per
week during the fourth quarter, compared to 500 digital installs
per week in September 2000. "

Mr. Bennett added, "As part of our ongoing efforts to streamline
and improve our operations, we have strengthened our back office
and customer service functions by consolidating to one billing
system and migrating all of our call center activity to a new
state-of-the-art facility in Tyler, Texas. We also have
eliminated redundant layers of field management and closed the
Austin corporate office, consolidating all corporate-level
activities at our Tyler location."

                First Quarter 2001 Guidance

The Company announced for the three month period ending March
31, 2001, it expects revenues and adjusted EBITDA to be
substantially consistent with the fourth quarter historical
operating results in 2000. Basic subscribers decreased to
approximately 375,000 during the quarter. The loss of
approximately 10,000 basic subscribers is partially attributable
to an average monthly basic rate increase of 6.7%, which was
implemented across the Company's systems during the first
quarter. By the end of the quarter, the Company had completed
digital launches in systems passing 622,259 homes, with the pace
of digital installations continuing to accelerate at more than
1,000 installs per week during the month of March. It reported
digital subscribers grew to nearly 31,400 at quarter's end,
contributing approximately $1.2 million in revenue for the
quarter. Capital expenditures for the quarter are expected to
total $14 million.

Classic Communications, Inc., based in Tyler, Texas, has
approximately 375,000 subscribers in non-metropolitan markets in
Texas, Kansas, Oklahoma, Nebraska, Missouri, Arkansas,
Louisiana, Colorado, Ohio and New Mexico. Classic trades on the
NASDAQ under the trading symbol "CLSC."

COSTUME COLLECTION: Taps Remarketing For 6-Week Liquidation Sale
Costume Collection, the complete rental and made-to-order
costume company for the entertainment business, is closing its
doors and making its entire collection available to the public
beginning today, April 20.

Due to the expected writers' and actors' strikes, it is closing
its doors after 17 years in North Hollywood. Its 20,000-square-
foot warehouse will be open to consumers for a six-week
liquidation sale. Remarketing Associates, the auction and
liquidation company, is handling the sale. Remarketing
Associates has managed several entertainment-oriented auctions
including Ellis Props and Hollywood Central Props.

The Costume Collection carries civilian clothing and accessories
from the 1920s to present day. The inventory includes evening
gowns, wedding dresses, tuxedos, sportswear, Hawaiian shirts,
uniforms, and a large array of colorful, fun clothing and
accessories from the sixties and seventies.

High-profile items will be available via a live auction through at noon daily beginning April 20.

WHEN:  The sale begins on April 20, 2001.
        (Sale will continue for three to six weeks.)

WHERE: Costume Collection is located at 7119 Fair Ave., North
        Hollywood, Calif. Fair Avenue is off Sherman Way, between
        Lankershim and Vineland avenues in the San Fernando

CRESCENT SERVICES: Berens to Acquire Broadband Network Provider
Berens Industries, Inc. (OTC Bulletin Board: BEII) signed a
Letter of Intent to purchase the business operations of Crescent
Services Corporation, d/b/a Crescent Broadband, currently in
Chapter 11 reorganization for $150,000. The transaction will be
financed by the sale of new convertible preferred stock in the
approximate amount of $1.2 million, of which $600,000 has been
committed. As part of the reorganization, Yolana Partnership,
Ltd, the largest shareholder of BEII, will return 7 million
shares of stock to treasury in consideration of BEII canceling
subscription receivables of $450,000. There will be no initial
dilution to BEII shareholders, however assuming conversion of
all preferred shares into common, the new investors could
control up to 90% of BEII. There will be an approximate 5-1
reverse share split of BEII as part of the transaction.

"BEII is diversifying its operations by acquiring 400 commercial
accounts generating approximately $85,000 in monthly revenues
and all of Crescent's hi- speed connectivity equipment which has
a book value of approximately $800,000. BEII will acquire a
company with a revenue stream for substantially less than book
value as well as the nucleus, management team and capital to
grow. The new capital infusion will enable us to ramp up
Crescent's operations and continue to develop Artmovement,"
stated Marc Berens, CEO.

For the three months ended March 31, 2001, Crescent generated
approximately $400,000 in revenues with a small loss and expects
revenues of approximately $2-3 million for the full fiscal year
ending December 31, 2001. Crescent was founded in 1998 and
experienced rapid but uncontrolled growth in its first two and
one half years achieving $2.8 million in revenues and losses of
$4.6 million for the fiscal year ended December 31, 2000.
Crescent has total assets of approximately $2.4 million.

Crescent is owned by an affiliate of BEII. BEII subleased the
majority of its office space to Crescent in December to reduce
costs for both companies. Closing is expected to occur by May
15, 2001 and is subject to Bankruptcy Court approval
Crescent is a broadband network service provider (NSP), focused
on the small business (one-100 employees), mid-tier business
(100-1000 employees) and Multi-tenant Unit (MTU) markets.

Crescent installs Fixed Wireless Broadband (point-to-point and
point-to-multipoint) local networks, connecting enterprises to
the Internet at speeds ranging from 364 Kbps to 44 Mbps.
Crescent intends to expand its network by acquiring and rolling-
up small providers over the next two years. Crescent is
positioned to deploy additional products and services to its
customer base, further converging the vendor/customer
relationship. This approach greatly reduces the ratio of
customer acquisition costs to the lifetime revenues produced by
that customer, as well as increasing overall return on
investment for technology and infrastructure deployment.

Crescent's business plan is to acquire the customers of small
and financially distressed ISPs who do not have the
infrastructure to provide high-speed Internet access or are
limited to one provider, like Northpoint Communications, Inc.
Crescent had made a large capital investment in equipment to
provide high-speed connectivity and currently utilizes less than
10% of its capacity. "The beauty of this acquisition is that
Crescent has the infrastructure in place to provide high-speed
access from multiple providers such as; Rhythms, Global
Crossing, Qwest, Verio, IP Communications and Level 3 to more
than 60,000 potential commercial subscribers. A small ISP cannot
afford the monthly access charges to provide DSL, nor can they
justify the enormous capital investment. Under a reseller
agreement with Crescent, any ISP can be connected to multiple
providers guaranteeing no downtime at a fraction of the cost.

Crescent becomes a utility; the more bandwidth we need to sell,
the more we purchase from our suppliers. We charge a profit
margin and do not anticipate any major additional capital costs
for the foreseeable future. Crescent is currently contacting the
approximate 6,000 ISP's nationwide, offering the Crescent
alternative. We anticipate positive results from our marketing
efforts," stated Manfred Sternberg, Chairman of Crescent.

                About Berens Industries, Inc.

Through its wholly owned subsidiaries, Artmovement and BEII.Net,
Berens Industries is pioneering the development of streaming
application servers that are deployable as rent-based solutions
hosted and co-marketed by leaders in the Application Service
Provider (ASP) industry. BEII's product lines provide bundled
packages of managed servers, global connectivity, scaleable
bandwidth, applications, and transactional systems-everything
required of eCommerce. These streaming application servers
provide "tenant" licensing for businesses and "landlord"
licensing for Web developers and ASP hosts. BEII's ongoing
research and development is being conducted in collaboration
with leading ASPs and software developers to deliver streaming
application servers that bind relational databases and
transactional systems with interactive streaming media.

eGLOBE INC.: Files Voluntary Chapter 11 Petition in Wilmington
eGlobe, Inc. (OTC Bulletin Board: EGLO) filed a voluntary
petition for relief, for itself and 16 U.S. subsidiaries, under
Chapter 11 of the United States Bankruptcy Code with the United
States Bankruptcy Court for the District of Delaware in
Wilmington, Delaware. The Company's operations outside the U.S.
are not included in the petition.

During this process, eGlobe plans to continue operating its
Latin American IP and satellite business, its VOIP and enhanced
service operations in the Asia Pacific region, its OASIS call
center and its Vogo networks business. eGlobe has arranged for
debtor in possession financing, which it believes will allow it
to continue to explore strategic alternatives with respect to
its business and properties.

                          About eGlobe

eGlobe is a global provider of enhanced Internet services for
the world's telephone companies and Internet Service Providers.
eGlobe's services include: Voice over IP, voice portal, unified
messaging services and customer support. eGlobe provides its
services principally to large national telephone companies, to
ISPs and portals.

eGLOBE INC.: Case Summary & 20 Largest Unsecured Creditors
Lead Debtor: eGlobe, Inc.
              1140 Connecticut Avenue, NW, Suite 801
              Washington, DC 10036

Debtor affiliates filing separate chapter 11 petitions:

              Vogo Networks, LLC
              iGlobe, Inc.
              eGlobe/Coast, Inc.
              eGlobe/Oasis, Inc.
              eGlobe/Oasis Reservations, LLC
              Oasis Reservations Services, Inc.
              Service 800, Inc.
              eGlobe No. 1, LLC
              Telekey, Inc.
              Trans Global Communications, Inc.
              T.G.C Calling Card, Inc.
              Trans Global Marketing Association, Inc.
              Colotel Services, Inc.
              Executive Telecard, Inc.
              Interactive Media Works
              IDX International, Inc.

Type of Business: Supplier of enhanced communication services,
                   including internet voice and fax, postpaid and
                   prepaid calling card services among others

Chapter 11 Petition Date: April 18, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-01478 through 01-01494

Debtors' Counsel: Robert S. Brady, Esq.
                   Michael R. Nestor, Esq.
                   Edmon L. Morton, Esq.
                   Joseph A Malfitano, Esq.
                   Young, Conaway, Stargatt & Taylor LLP
                   P.O. Box 391
                   Wilmington, DE 19899-0391
                   (302) 571-6690

Total Assets: $99,475,000

Total Debts: $89,717,000

Consolidated List of Debtors' 20 Largest Unsecured Creditors:

Entity                             Claim Amount
------                             ------------
AT&T                               $18,243,603
32 Avenue of the Americas
New York, NY 10013-2412
Ph: 800-348-8288
Fax: 781-828-8813

MCI Worldcom/MFS Telecom            $9,176,181
6929 North Lakewood Avenue
Tulsa, OK 74117
Contact: Richard Wood
Ph: 918-590-2769
Fax: 918-562-2769

ALBACOM                             $2,571,815
Via Lucidide
20134 Milano, Italy
Contact: Sede di Milano
Ph: 39-275-2921
Fax: 39-275-292-778

Global Crossing                     $2,457,641
180 South Clinton Avenue
Rochester, NY 14646
Contact: Darin Woodward
Ph: 716-777-2763
Fax: 716-232-8702

Telecom Egypt                       $2,420,252
26 Ramsis Street
Cairo, Arab Republic of Egypt
Contact: Eng. Azza Torky
Fax: 011-202-579-4455

Hogan & Hartson                     $1,893,540
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Contact: Steve Kaufman
Ph: 202-637-5600
Fax: 202-637-5910

US West/Qwest                       $1,621,070
1801 California Street
Denver, CO 80202
Ph: 303-992-1400
Fax: 303-992-1724

TELIA                               $1,442,268
Marbackagatan 19
S-123 86 Farsta, Sweden
Ph: 46-8-713-3608
Fax: 46-8-605-9524

Nortel Networks                     $1,359,221
8200 Dixie Road
Suite 100
Brampton, Ontario LT 5P6
Ph: 905-863-0000
Fax: 615-432-4877

Sprint                              $1,095,215
5420 LBJ Freeway
Dallas, TX 75240
Ph: 972-405-5000
Fax: 972-405-5055

Telecom Eirann/Eircom UK              $865,855
South Quay Plaza II
183 Marsh Wall
London, UK E14 9SH
Ph: 44-207-517-6000
Fax: 44-207-517-6001

Startec                               $682,942
10411 Motor City Drive
Suite 301
Bethesda, MD 20817
Ph: 301-365-8959
Fax: 301-365-8757

Stonehenge Telecom                    $669,959
485 North Keller Road
Suite 450
Maitland, Florida 32751
Contact: Lance Zingale
Ph: 877-476-3866
Fax: 407-737-8322

Pacific Gateway Exchange              $607,624
Pacific Gateway
c/o Bank of America
P.O. Box 60000
San Francisco, CA 94160
Contact: Peter Paladino
Ph: 650-401-3325
Fax: 650-401-3334

Atlas Telecom UK                      $605,520
3 Culford Gardens
Suite 12
London, UK SW3 2SX
Contact: Michelle Snow
Ph: 305-423-4900
Fax: 305-423-4901

Cable Wireless                        $570,819
8219 Leesburg Pike
Vienna, VA 22812
Contact: Lisa Bresser
Ph: 703-790-5300
Fax: 703-905-4208

Otelo/Mannesman Ipulsys               $516,717
Challenger House
42 Alder Street
London E11En
Ph: 44-207-539-6000
Fax: 44-207-539-6060

TELEDANMARK                           $443,884
Accounts & Finance
Sletvej 30 A 233
DK-8310 Tranbjerg J
Contact; Thomas Berg Petersen
Ph: 011-454334-2520
Fax: 45-4352-2173

BELGACOM                              $243,141

World Access TelComs Group            $177,053

FINOVA GROUP: Hires Ernst & Young As Auditors And Advisors
The FINOVA Group, Inc. desire to employ and retain Ernst & Young
as their auditors and accounting in their chapter 11 cases, nunc
pro tunc to the Petition Date. The Debtors told the Court they
require knowledgeable consultants to render these essential
professional services.

Ernst & Young is one of the nation's leading professional
services firms providing accounting, tax and other services. In
addition, the firm has extensive experience in bankruptcy
proceedings under chapter 11 of the Bankruptcy Code. As the
Debtors' prepetition auditors, Ernst & Young is also familiar
with the Debtors' businesses and financial affairs. Ernst &
Young has worked closely with the Debtors' management and has
become well acquainted with the Debtors' accounting systems and
financial reporting procedures.

Accordingly, the Debtors believe that Ernst & Young is
particularly well qualified for the type of services required by
the Debtors.

The Debtors anticipate that Ernst & Young will render general
auditing and accounting services to them as needed throughout
the course of the Finova chapter 11 cases. Specifically, it is
anticipated that Ernst & Young will perform, among others:

      (a) An audit and report on the Debtors' consolidated
          financial statements for the year ending December 31,

      (b) Quarterly reviews of the FINOVA Group Inc.;

      (c) An audit of F1NOVA Realty Capital of Greater Florida;

      (d) An audit of certain employee benefit plans
          (specifically, the 401(k), ESOP and Defined Benefit

      (e) An audit of the Debtors' European Financial Group;

      (f) The preparation of an SAS 70 report for FINOVA
          Portfolio Services, Inc.

The Debtors proposed to pay Ernst & Young its ordinary and
customary hourly rates in effect on the date the services are
being rendered and to reimburse Ernst & Young for all reasonable
out-of-pocket expenses. The hourly rates of Ernst & Young's
professionals are subject to change from time to time in
accordance with Ernst & Young's established billing practices
and procedures. The Debtors submit that such rates are
reasonable and should be approved by the Court at this time,
subject to a determination of actual amounts to be paid to Ernst
& Young upon application for allowance of compensation. As the
Debtors understand, Ernst & Young's professionals will maintain
detailed records of time and any actual and necessary expenses
incurred in connection with the rendering of their services by
category and nature of the services rendered.

Mr. Paul J. Heran, a partner in Ernst & Young advises in his
declaration in support of the application that the hourly rates

                                   Accounting and
                                   Auditing Services
      Partners and Principals          $400-$600
      Senior Managers                  $340-$460
      Managers                         $245-$340
      Seniors                          $175-$235
      Staff                            $120-$165

According to Ernst & Young's billing records, the Debtors made
payments to Ernst & Young aggregating $2,959,935 during the 90
days immediately preceding the Petition Date, and and as of the
Petition Date, Ernst & Young is not owed any amount in respect
of its prepetition services.

Mr. Heran revealed that certain professions associated with the
Debtors' cases have provided and are still providing services to
Ernst & Young:

      * Skadden, Arps, Slate, Meagher & Flom (the Debtors'
        special advisory counsel);
      * Deloitte & Touche LLP (former auditors of the Debtors);
      * Richards, Layton & Finger, P.A. (counsel to the Debtors);
      * Bryan Cave (counsel to the Debtors in matters unrelated
        to the chapter 11 cases).

In addition, the following professionals associated with the
Debtors provided services in the past:

      * Gibson, Dunn & Crutcher LLP (counsel to Debtors)
      * LeBoeuf, Lamb, Green & MacRae (counsel to the Debtors in
         matters unrelated to the chapter 11 cases).

Mr. Heran also told the Court that Jay Alix & Associates and
Ernst & Young were parties to an alliance agreement executed in
August 1999 which provided for joint marketing efforts by the
two firms of their respective services to actual and potential

Mr. Heran further revealed that in a putative class action
against The Finova Group Inc. and Finova Capital Corporation,
commenced in September 2000 in the District Court of Arizona,
the lead plaintiff, Louisiana School Employees Retirement System
(LSRS) has executed a tolling agreement with LSRS whereby if
LSRS commences an action against Ernst & Young prior to May 31,
2001, the action will be deemed to have been filed as of
February 21, 2001.

Chase Manhattan Bank and Bank One, which are parties in interest
in the Debtors' chapter 11 cases, are banks that participate in
Ernst & Young's Revolving Credit Program.

Mr. Heran noted that the Debtors have many creditors and other
parties in interest, and accordingly, Ernst & Young may have
rendered in the past, may render presently, or may render in the
future, accounting and auditing, tax, management consulting,
corporate finance, and/or other services to certain of these
creditors or parties in interest. Nevertheless, Mr. Heran
assured that Ernst & Young will not accept any engagement that
would require Ernst & Young to represent an interest adverse to
the Debtors in connection with the matters with which Ernst &
Young is to be engaged in these chapter 11 cases.

Mr. Heran submitted that to the best of his knowledge,
information and belief, Ernst & Young is a "disinterested
person" as defined in section 101(14) of the Bankruptcy Code and
as required by section 327(a) of the Bankruptcy Code.

Accordingly, the Debtors asked the Court to approve, pursuant to
sections 327(a) and 328(a) of title 11 of the Bankruptcy Code
and Rule 2014(a) of the Bankruptcy Rules, the employment of
Ernst & Young, LLP as auditors and accounting advisors for the
Debtors in these chapter 11 cases, nunc pro tunc to the date on
which the Debtors commenced their chapter 11 cases. (Finova
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

FUSION NETWORKS: Lays-Off Employees And Halts Operations
Fusion Networks Holdings (Nasdaq:FUSN) disclosed that most of
its remaining employees at its Miami, Florida headquarters have
been layed off or have resigned and that the company has ceased
all operations other than efforts to conclude a strategic
transaction or secure additional capital. The company said its
decision was based on difficult capital market conditions, which
had delayed funding needed to consummate the company's proposed
acquisition of Full Moon Interactive.

In light of the company's inability to consummate a needed
financing and acquisition of Full Moon, the company intends to
abandon its appeal of the pending delisting of its common stock
from Nasdaq and has notified Nasdaq of that fact. Accordingly,
its is anticipated that the company's common stock will be
delisted from Nasdaq by the end of this week.

The company continues to work with its financial advisors to
explore a range of strategic alternatives, which may include a
capital infusion, merger, asset sale or another comparable
transaction or financial restructuring. If the company is not
successful in those efforts, the company anticipates that it
will pursue appropriate avenues under applicable federal or
state bankruptcy or insolvency provisions.

The company also announced the resignation of Felipe Santos as a
member of the Board of Directors.

GENESIS HEALTH: Multicare Sells Pennsylvania Facility For $1.8M
The Multicare Companies, Inc. sought and obtained the Court's
authority to sell a Facility owned by debtor HNCA, Inc. (the
Seller) to Sugar Creek Rest, Inc. (the Buyer) for approximately
$1,811,388 in case, free and clear of claims, liens or

The Facility, known as Buchanan Commons (formerly known as
Hillcrest Nursing and Rehabilitation Center), is a 121-bed
facility located in Grove City, Pennsylvania. The Facility is
encumbered by a duly perfected mortgage currently held by the
United States Department of Housing and Urban Development (HUD)
to secure a mortgage note dated November 3, 1982 in the initial
principal amount of $2,763,000 made by Seller's predecessor in
interest to BMFC, Inc. as subsequently amended. The annual debt
payment is $270,000 ($16,278 interest plus $6,222 Principal each
month). As of the petition date, the outstanding amount owed to
HUD on account of the Note was $2,186,778.66 inclusive of
principal and interest.

The net proceeds of the Sale will be used to pay down the
Seller's obligations to HUD under the Note.

The Debtors have determined to divest themselves of their
ownership interest in the Facility because the Facility does not
produce operating income sufficient to meet current principal
and interest payments payable under the Note. In addition, the
Facility has experienced a material diminution in operating
income in recent years, caused by a total census/occupancy rate
that recently has been below acceptable levels and continues to
decline. EBITDA for the fiscal years ended September 30, 1999
and September 30, 2000 and for the annualized quarter ended
December 31, 2000 were $459,946, $6,425 and $(82,316)
respectively. The Debtors do not anticipate any improvement in
the short to medium term, given an excess supply of nursing beds
in the geographic region in which the Facility operates.

The sale of the Facility will enable the Debtors to avoid
accruing additional administrative expenses in connection with
operation of the Facility. The Debtors believe the sale is in
the best interests of the Seller, the other Debtors, their
respective estates and creditors, and the residents of the
Facility. (Genesis/Multicare Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

ICG COMM.: Resolves Contract Disputes With Microsoft Network
ICG NetAhead, Inc. of the ICG Communications, Inc. Debtors, and
The Microsoft Network LLC entered into a contract in 1999 under
which the Debtors were to provide MSN with dial-up access
service. Specifically, in accordance with the contract, the
Debtors connected and routed MSN's data traffic directly across
the Debtors' telecommunications network. Subsequent to the entry
into the agreement, MSN alleged that the Debtors failed to
comply with material terms of the contract, including delivery
and functionality of service provisions and reporting
requirements. As a result MSN refused to pay the Debtors'
invoices. In response, the Debtors disputed the allegations,
believing that MSN failed to comply with the payment provisions
of the contract and owed the Debtors over $21 million for
services rendered.

To resolve this dispute and dispose of the MSN contract, the
parties have agreed that:

      (a) Cash payment: In full satisfaction of the remaining
balance due under the MSN contract, MSN will, within thirty days
after this Court enters an order approving this Motion, pay ICG
NetAhead $6,000,000 by wire t5ransfer, certified check, or
similar readily available funds.

      (b) Termination of contract: The Debtors and MSN mutually
agree to terminate the MSN contract and each of the parties'
respective obligations under the contract;

      (c) Release by MSN: MSN shall release, acquit and forever
discharge the Debtors, and the Debtors' officers, directors,
employees, agents, successors, predecessors, assigns,
affiliates, executors, legal representatives, and trustees from
any and all manner of suits, claims, demands, debts, sums of
money, responsibilities, liabilities, causes of action, costs,
expenses, or compensations arising from or relating to the MSN

      (d) Release by Debtors: Except with respect to the cash
payment, the Debtors release, acquit and forever discharge MSN,
and MSN's officers, directors, employees, agents, successors,
predecessors, assigns, affiliates (including, without
limitation, Microsoft Corporation), executors, legal
representatives, and trustees from any and all manner of suits,
claims, demands, debts, sums of money, responsibilities,
liabilities, causes of action, costs, expenses, or compensations
arising from or relating to the MSN contract;

      (e) New contract: Upon termination of the MSN contract, MSN
and the Debtors will enter into a new contract governing the
terms and conditions of their relationship going forward. The
Debtors believe that entering into such an agreement constitutes
an ordinary course of business transaction and thus that
judicial approval of the agreement is not required. As a result,
the terms of the new agreement are not disclosed.

The Debtors argued that, if the right to payment under the MSN
contract were litigated, MSN would likely argue that the Debtors
failed to comply with material terms of the contract, and that
such failure was a breach. The Debtors believe they have valid
defenses to this argument; however, the Debtors realize that any
litigation over these issues would be fact-intensive, require
significant discovery, and be expensive and time-consuming. The
Debtors' management can ill afford to be devoting resources and
energies to litigating these issues at this critical stage in
the Debtors' reorganization effort.

Rather than risk the uncertainty of litigation on these issues,
the Debtors have decided that it is prudent to settle MSN's
claims on the terms set forth in this settlement. This
settlement allows the estates to receive a substantial,
immediate benefit in the form of a $6 million cash payment on
claims of uncertain future value. If the right to payment is
aggressively litigated, the end result would likely be similar
to the result achieved by the proposed settlement, but at a much
higher cost to the Debtors' estates. Accordingly, any potential
litigation would only further deplete the assets of the estates
with no appreciable gain to the estates.

The proposed settlement is in the best interest of creditors
because it saves administrative expenses, including attorneys'
fees, provides a significant and immediate tangible benefit,
reduces uncertainty for the estate, and avoids a potential
adverse judgment at trial. Moreover, entering into the proposed
settlement avoids the disruption and diversion of critical
resources at this important stage of these reorganization
efforts. In addition, because the proposed termination of the
MSN contract is in the best interests of the Debtors, their
estates, creditors and other parties in interest, termination of
the MSN contract represents a reasonable business judgment on
the part of the debtors and is thus appropriate for approval by
the Court. (ICG Communications Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

INTASYS CORP.: Needs More Funds to Continue As A Going Concern
Intasys Corporation (NASDAQ:INTA) reported its financial results
for the year ended December 31, 2000.

Sales for the year ending December 31, 2000, increased to
US$14,431,554 compared with US$5,023,822 for the previous year,
an increase of 187%. Our investment technology sector
contributed for a full year in 2000 with total sales of
US$7,672,270 compared with US$474,486 for the previous year,
representing one month of operation since was only
acquired at the end of November 1999. The billing sector had
sales of US$6,759,284 compared to US$4,549,336 for the previous
year, an increase of 49%.

Intasys reported a loss before amortization and write-down of
goodwill of US$15,809,678 for 2000 (US$0.59 per share), as
compared to US$7,525,786 (US$0.47 per share) in 1999. The year
2000 loss before amortization and write-down of goodwill
included significant non-recurring items for a total of
US$6,728,341, such as US$784,637 of capital asset write-down,
US$1,029,167 of restructuring charges, US$898,550 loss on equity
disposal of a subsidiary and finally, US$4,015,987 of unrealized
loss on marketable securities and investments. Some of these
non-recurring items in 2000 are a reflection of market
conditions and others are a management decision to significantly
reduce ongoing corporate expenses. In 1999, there were only
US$646,192 of non-recurring items. The billing sector costs were
lower than last year (US$10,484,405 in 2000 vs US$12,439,255 in
1999) despite a sales increase of US$2,209,948. The investment
sector reported twelve months of operation in 2000 for
compared with one month in 1999.

The net loss for 2000 was US$32,236,492 (US$1.20 per share) as
compared to US$7,864,673 (US$0.50 per share) in 1999. The
increase in loss is largely due to amortization of goodwill for
2000, which was at US$7,727,455 representing the goodwill
related to the acquisition of amortized over a 3 year
period and an additional goodwill write-down of US$8,586,073 to
reflect goodwill at the estimated net recoverable amount. This
adjustment is a result of general market conditions and specific
ones related to the industry. The 1999 amortization of
goodwill was only US$338,887 representing one month's expense.

As at December 31, 2000, the Company had cash and cash
equivalents of US$3,775,206 and marketable securities available
for sale of US$2,139,940, no long-term debt and shareholders
equity of approximately US$16.8 million (US$0.62 per share).
The Corporation's auditors, in accordance with U.S. reporting
standards, have included an explanatory note to the auditors'
report on the Corporation's financial statements. The note
identifies that the Corporation has, as of December 31, 2000,
working capital of US$5,898,756 but nevertheless casts doubt on
the Corporation's ability to continue as a going concern.
Management has undertaken to significantly reduce costs through
a series of actions including, but not limited to, lowering
headcount and reducing operating costs. In addition, management
is investigating possible financing alternatives for its

Although there is no assurance that the Company will be
successful in these actions, management is confident that it
will be able to secure the necessary financing and improvement
in operating cash flow to enable it to continue as a going
concern. Accordingly, the financial statements do not reflect
adjustments to the carrying value of assets and liabilities, the
reported revenue and expenses and balance sheet classifications
used that would be necessary if the going concern assumption
were not appropriate. Such adjustments could be material.

Steve Saviuk, Chairman and CEO of Intasys, commented, "The year
2000 will not soon be forgotten. Intasys faced a number of
challenges this year as it expanded beyond its core operating
companies and placed increasing emphasis on its technology
incubator. The rationalization of the financial markets and the
belief that shareholder value is best created by focusing on our
core businesses has lead to the winding down of our incubator
operations and development of a long-term liquidation plan for
our existing investments in this division. We have also
undertaken an aggressive cost cutting program to relieve the
overhead burden on our operating companies.

Intasys has always believed that its companies need to develop
solid, fundamental business models that build sustainable
revenue growth and profitability. Intasys' management team has
the patience and experience to understand that short term
profits are often elusive in early stage businesses that must
invest to build distribution and brand recognition while
maintaining a technological edge.

With the potential of its core businesses and a smaller,
aggressive and talented management team, we believe that Intasys
has tremendous opportunities in the future." About Intasys

Intasys Corporation provides strategic investment capital and
management assistance to companies in the new media and
telecommunications sectors. Intasys has also acquired positions
in such dynamic companies as Inc., TECE, Inc.,
interWAVE Communications International, Ltd., LTRIM Technologies
Inc., Inc., ESP Media Inc. and Tri-Link Technologies
Inc. The Company is also a global provider of wireless,
Internet-compatible billing and customer information systems.

INTERNET LAW: Cootes Files Complaint Alleging Breach of Contract
Cootes Drive LLC announced that on April 13, 2001 it filed a
motion in New York Federal Court to amend its complaint against
Internet Law Library, Inc. (NASDAQ: ELAW).

The proposed new pleading sets forth several new material
developments. Specifically, Cootes Drive alleges that, since
filing its original complaint, Cootes Drive has served a notice
of redemption of all of its preferred shares of Internet Law
Library stock in the amount of $2,214,011.60, which amount
Internet Law Library has failed and refused to pay, in breach of
the agreements between the parties.

The new allegations also include Internet Law Library's default
on a $500,000 promissory note in favor of Cootes Drive since the
filing of the complaint.

Cootes Drive's proposed amendment also contains allegations that
Internet Law Library defrauded Cootes Drive by failing to
disclose material information with respect to the background of
a key officer at Internet Law Library.

The new pleading further alleges that Internet Law Library has
not disclosed to the investing public: (1) Cootes Drive's call
of the promissory note on March 1, 2001, (2) Internet Law
Library's failure to honor the promissory note and its
obligation to pay more than half a million dollars, (3) Cootes
Drive's issuance of the notice of redemption on March 15, 2001,
(4) Internet Law Library's failure to honor the outstanding
demand for $2,214,011 set forth in the notice of redemption, and
(5) the liquidated damages that that continue to accrue against
Internet law Library as result of its contractual breaches
The proposed Second Amended Complaint would amend Cootes Drive's
current pleading (Case No. 01 Civ. 0877 (RLC)), which was filed
in February 2001 in connection with Internet Law Library's
failure to deliver shares of common stock despite contractual
agreements requiring the Company to do so.

LEINER HEALTH: Lender Grants Further Waiver Extension To June 15
Leiner Health Products Inc. announced as expected the execution
of the waiver extension from its lenders that extends the
previously announced waiver to June 15, 2001. The Company said
that this extension will enable it to complete its Fiscal Year
2002 business plan.

Robert Kaminski, Chief Executive Officer, said, "The execution
of the waiver is a positive development and one that recognizes
the progress we have made in reengineering our Company so that
it is positioned for future growth and success."

As previously announced, Leiner received an extension of the
waiver from its lenders through April 12, 2001. Leiner entered
into the original waiver agreement with its lenders on February
14, 2001 under which the lenders agreed to waive events of
default under its amended credit agreement for a limited time
period. The original waiver was a result of the Company
reporting that as of December 31, 2000, the Company was not in
compliance with certain financial covenants of the amended
credit agreement that require, among other things, the Company
to comply with certain financial ratios and tests. The Company
has not missed a scheduled interest payment and expects to meet
all of its payment obligations on a current basis. The Company
underscored that it believes that cash flow from operating
activities, combined with its current cash availability, will be
sufficient to fund the Company's currently anticipated working
capital requirements.

Pursuant to the terms of the extension and the amended waiver
letter, the Company (i) paid the lenders a $375,000 waiver fee,
(ii) paid approximately US$2,200,000 and Cdn$350,000 which
represents accrued interest on its outstanding senior loans
through April 30, 2001, to the lenders and deposited
approximately US$4,300,000 and Cdn$650,000, which represents
interest that will accrue on its outstanding senior loans from
May 1, 2001 through June 30, 2001, in escrow with the lenders,
(iii) agreed to provide cash collateral to those lenders that
issued a $1,600,000 letter of credit at the request of the
Company, (iv) agreed to make during the Waiver Period,
concurrently with the receipt of any antitrust litigation
proceeds, prepayments on outstanding senior loans equal to the
amount of such proceeds and a corresponding reduction in its
revolving loan commitment amount, (v) agreed that the one
percent increase in the applicable margin shall be effective
through June 15, 2001, and (vi) paid counsel to the lenders

Leiner Health Products Inc., headquartered in Carson,
California, is one of America's leading vitamin, mineral,
nutritional supplement and OTC pharmaceutical manufacturers. The
Company markets more than 500 products under several brand
names, including Natures OriginTM, YourLife(R) and Pharmacist
Formula(R). For more information about Leiner Health Products,

LERNOUT & HAUSPIE: Exclusive Period Extended To June 27
Lernout & Hauspie Speech Products N.V. and Dictaphone Corp. are
convinced that the initial 120-day period provided by bankruptcy
law does not afford them a realistic opportunity to stabilize
their business, formulate a business plan and craft a feasible
reorganization plan. By motion, the Debtors asked Judge Wizmur
to extend the period during which only the Debtors may file a
plan and solicit acceptances. Specifically, the Debtors
requested for an extension of (i) the filing period within which
only the Debtors may file a reorganization plan, through and
including June 27, 2001, and (ii) the Solicitation Period,
within which only the Debtors may solicit acceptances of their
proposed reorganization plan, through and including August 27,

           Size and Complexity of Bankruptcy Cases

Gregory W. Werkheiser, at Morris, Nichols, Arsht & Tunnell, in
Delaware, reminded Judge Wizmur that size and complexity of a
bankruptcy case are common grounds for extending the exclusivity
periods. He asserted that the Debtors consist of several
multinational corporations whose businesses operate in several
countries around the world. In addition to the complex nature of
the Debtors' cases, there are several thousand creditors, and as
of the Petition Date, more than $1 billion in potential claims
against the Debtors.

              Debtors' Diligence in their Cases

The Debtors asserted that they have sought bankruptcy relief
under exigent circumstances, and with their professionals, have
had to immediately face complicated and intricate issues
requiring considerable time and expertise, such as, cross-border
transactions, US and Belgian regulatory proceedings, a related
Concordat proceeding in the Ieper Commercial Court, incessant
media exposure and motions for relief from stay relating to
volatile litigations. In addition, since bankruptcy filing, the
Debtors and their professionals have expended tremendous amounts
of effort and time in preparing the Debtors' schedules and
statements postpetition because, unlike other Debtors,
prepetition planning did not exist in the Debtors' cases.

The Debtors cited the following examples, in support of their
assertion that they have made substantial progress toward
stabilizing operations, as a precondition to a long-term
business plan's development:

      (a) Revamp of the Debtors' executive management team,
leading to the appointment of Mr. Philippe Bodson, as Chief
Executive Officer, and Mr. Thomas Denys as General Counsel, with
the Debtors in search of candidates to fill other senior
executive positions;

      (b) Acquisition of DIP Financing;

      (c) Analysis of executory contracts and unexpired leases,
with the Debtors filing a motion for extension of the statutory
periods for assumption and rejection of non-residential real
property leases through and including June 29, 2001;

      (d) Addressing employees issues, with the Court granting
Debtors' Petition Date Motion to pay certain prepetition
employee obligations, and with the Debtors in the process of
developing an Employee Retention Program, for which program the
Debtors seek Court approval;

      (e) Filing of schedule of assets and liabilities, the
Debtors however, have not yet sought the establishment of a bar
date for the proofs of claim filing;

      (f) Meeting with Creditors' Committees and lenders to
discuss a myriad of business, legal and administrative matters
relating to the bankruptcy cases and answering questions and
preparing reports for these creditor constituencies; and

      (g) Bringing and responding to, in administering their
cases, various motions, seeking, among other things, to compel
the Debtors to assume or reject specific contracts or leases,
for relief from stay and for various substantive relief and for
administrative matters.

                       Reorganization Process

Mr. Werkheiser claimed that, like most bankruptcy cases that do
not involve a pre-packaged or pre-negotiated reorganization
plan, the Debtors will have at least four critical phases (i)
the initial stabilization phase, (ii) the business assessment
phase, (iii) the reorganization plan's formulation and
negotiation phase, and (iv) the plan's confirmation phase. The
Debtors are in the process of completing the first phase and
continues to work toward the business assessment phase's

                     Initial Stabilization Phase

The Debtors stated that, in the initial stage, and as a result
of the emergent circumstances that led to the commencement of
the cases, and the attendant publicity, they have expended a
substantial amount of time stabilizing their business by, among
other things, reassuring their customers and employees that the
Debtors would continue to conduct business as usual. In
addition, the Debtors are working to maintain and/or establish
relationships with vendors who have been concerned about their
prepetition financial exposure and, have been reticent to incur
any additional financial exposure by continuing to deal with a
bankruptcy debtor. In this regard, the Debtors, since the
Petition Date, expended great effort on securing a long-term DIP
Facility. The first phase has been arduous, time-consuming and
initially, has prevented the Debtors from focusing on other
important tasks, to which only recently, they have been able to
turn their attention.

                     Business Assessment Phase

The Debtors confided that, with stabilization under way, the
Debtors' management has been able to turn its focus to the
business assessment phase. Given that the speech software
environment is extremely competitive, the Debtors submitted that
to stay competitive, they have to re-evaluate and test their
business strategy. This assessment involves analyzing and
evaluating all aspects of how the Debtors operate, as well as
vendors' and customers' preferences. The Debtors believe that
these and other tasks must be completed before they can
formulate their long-term business plan, which plan, must in
turn, be fully developed and tested for the Debtors to being
negotiating and formulating their reorganization plan.

The Debtors said they have begun the development of their long-
term business plan, which may entail potential sale of assets or
business lines and a critical assessment of the Debtors' current
business model, including expansion or consolidation of some
aspects of their business operations. The Debtors anticipate
that their new long-term business plan will optimize and focus
their product offerings to their customers to improve sales
productivity and reduce overhead. The Debtors envision the
business assessment phase to culminate in the development of a
sound and workable long-term business plan, a detailed program
defining the Debtors' strategies, how to implement these
strategies and the projected operating and financial results to
be achieved.

                Development and Negotiation Phase

The Debtors believe that, once a long-business plan has been
completed, the difficult tasks of reconciling claims against the
Debtors and the formulation and negotiation of a reorganization
plan will follow, which will be difficult in the Debtors' cases
because of the Debtor L&H's pending Belgian Concordat
proceeding. The Debtors submit that coordination between the two
proceedings will take effort and may be very time-consuming. In
addition, the Debtors submit that the claims reconciliation
process would entail review and analysis of all claims against
them. This process will require working with the claims agent
to the Debtors.

The reorganization plan will be drawn upon all the information
generated during the bankruptcy process, including the estimated
aggregate of allowed claims, valuation of the Debtors'
businesses, economic development, operating performance,
interest rates, and other considerations, which factors are
uncertain and will require assumptions. The precise articulation
of these assumptions and factors may create significant
differences in form, currency and amount of recovery available
to each creditor and equity constituency, which as a result, may
require extensive and complex negotiations between and among all
interested constituencies regarding these assumptions and
related issues affecting likely distributions under any
reorganization plan.

                      Confirmation Phase

The Debtors and their representative would have to draft
voluminous documentation for the plan, disclosure statements and
all related exhibits, following the negotiation of a
reorganization plan, the principal economic terms of which have
been agreed upon by the principal constituencies in the case and
coordinated with the Concordat proceedings. The Debtors
anticipate that the provisions of these documents will be
subject of extensive discussion and negotiation by, and among
the Debtors' many constituencies. The Debtors will have to
obtain Court approval of the disclosure statements, solicit
acceptances of the plan from interested parties, and seek Court
confirmation of the plan.

           Propriety and Necessity of Relief Requested

The Debtors claimed that, at a critical juncture of
reorganization, in a competitive speech software environment,
all their progress could quickly evaporate, if the Exclusive
Periods are not extended. The purpose of the exclusive periods,
the Debtors add, is to provide debtors with a full and fair
opportunity to propose a plan of reorganization without the
disruption that would be caused by other parties-in-interest
filing plans.

The Debtors are of the belief, that they cannot formulate a
meaningful, feasible and hopefully consensual reorganization
plan within the short period given to them. The Debtors have
determined to seek a 3-months extension because it is not
realistic to believe that the Debtors could file a feasible plan
before the end of June 2001.

       Debtors' Good Faith in Requesting for Extension

Considering that courts have denied extension of exclusive
periods where continuation of exclusivity would merely give the
debtor unfair bargaining leverage over creditor constituencies,
Mr. Werkheiser assured the Court that the Debtors are not using
exclusivity to pressure the creditors. He insists that, given
only a few months have passed since bankruptcy filing, the
Debtors' reorganization is proceeding according to plan. The
Debtors' request for an extension of the exclusive periods is
not a negotiation tactic, but instead a reflection of the fact
that it is not yet ripe for the formulation and confirmation of
a viable reorganization plan.

Mr. Werkheiser elaborated that the Debtors have recognized the
need to deal with all parties-in-interest in their cases. The
Debtors and their professionals have consistently conferred with
these constituencies on all major substantive and administrative
matters in these cases, often changing their positions in
deference to the views of the creditor constituencies and the US
Trustee. He guaranteed that the Debtors have no intention of not
continuing this exchange of views, if the Debtors' request is

In the absence of any opposition, Judge Wizmur granted the
extensions as requested. (L&H/Dictaphone Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)

LTV CORPORATION: Court Approves Proposed Postpetition Financing
Judge William T. Bodoh entered his Order approving The LTV
Corporation's postpetition financing package and granting the
security interests and superpriority liens to secure amounts
borrowed post-petition.  This relief includes authorization for
the Debtors to obtain from a syndicate of lenders that includes
Abelco Finance LLC, as a lender and as the collateral agent for
the lenders, The CIT Group/Business Credit Inc., as a lender and
as the administrative agent for the lenders, and Abbey National
Treasury Service plc, as a lender and as the syndication agent
for the lenders, cash advances in an aggregate principal amount
of up to $100,000,000 on a term loan and a revolving basis,
inclusive of a $20 million subfacility for letters of credit,
to, among other things, fund ongoing working capital and general
corporate needs of the Debtors, pay the fees, costs, expenses
and disbursements of professionals retained by the Debtors and
any statutory committees appo8inted in these cases, and to pay
the costs and expenses of members of the Committees as approved
by the Court, and bankruptcy-related charges, all as allowed by
the Court, including fees by the United States Trustee and the
Clerk, and to pay the fees and expenses, including, without
limitation, reasonable attorney's fees and expenses, owed to the
lenders under the DIP loan agreement. (LTV Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-00900)

MARCHFIRST: Selling Some East Coast Operations to Epic Software
marchFIRST, Inc. (Nasdaq: MRCH), which filed for relief under
Chapter 11 of the Federal Bankruptcy Code on April 12, 2001,
entered into an agreement to sell the assets of its New York,
New Jersey and Boston offices to Epic Software & Services, Inc.,
subject to Bankruptcy Court approval. The consideration to be
received by marchFIRST includes cash at closing, the assumption
of certain liabilities and future cash payments based on
collection of accounts receivable and revenue generated over the
next five years.

As previously disclosed, marchFIRST continues to be in active
discussions for the sale of other domestic and foreign business
units. As it also said, any cash proceeds received by marchFIRST
from the foregoing transactions or otherwise are to be
distributed to creditors and, if creditors have been fully paid,
to holders of marchFIRST's preferred stock and then holders of
its common stock. However, as previously indicated, at this time
it is unlikely that any proceeds will remain for distribution to
holders of marchFIRST's common stock. marchFIRST continues to
work closely with creditors to recover on all available assets
and maximize their value.

MICROLOG CORPORATION: Nasdaq Intends to Halt Trading Of Shares
Microlog Corporation (Nasdaq:MLOG) has received notification
from Nasdaq that it has not maintained a minimum stock bid price
of $1.00 over the previous 90 days as required by Nasdaq
Marketplace Rule 4310(c)(4), and the Company's securities are
proposed to be delisted from the Nasdaq SmallCap Market.
The Company announced that it is appealing the Nasdaq decision
by requesting a formal hearing, and that the delisting would be
stayed pending the outcome of the appeal.

John Mears, President and CEO, stated "I continue to believe
that our securities are undervalued for many reasons, including
the condition of the market. We will seek to have Nasdaq reverse
its decision or at least grant us additional time. However, we
believe that the delisting, if implemented following the appeal,
will not affect the viability of our business, nor will it mean
that the stock will cease to be traded in the over-the-counter
market. The management team continues to have a positive outlook
about the business and its potential."

Microlog Corporation is an interactive communications software
company that provides leading-edge Web-based customer
interaction management products and services for businesses
seeking to better serve their customers.

Microlog offers uniQue(R), an integrated suite of products and
services that blend with existing corporate applications and
infrastructure to accomplish both automated response functions
(IVR, e-mail, and Web), as well as intelligent interactions
between customers and contact center agents.

MONARCH DENTAL: Plans To Appeal Nasdaq's Move To Delist Shares
Monarch Dental Corporation (Nasdaq: MDDS) said that The Nasdaq
Stock Market, Inc. has advised it that it has failed to remain
eligible for continued listing on The Nasdaq SmallCap Market
because its common stock has not maintained a $1.00 minimum bid
price. Monarch Dental also announced that it has requested a
hearing to contest delisting as permitted by applicable Nasdaq
procedures. Monarch Dental expects that the delisting will be
postponed until the hearing, which it expects will be scheduled
during May 2001. In the event that Monarch Dental's common stock
ceases to be listed either before or after such a hearing,
Monarch Dental does not expect that its common stock will be
listed or quoted on any securities exchange or securities
quotation system, although market makers in Monarch Dental's
stock may elect to report trades in Monarch Dental's common
stock on the OTC Bulletin Board.

Monarch Dental Corporation currently manages 189 dental offices
serving 20 markets in 14 states.

MONTGOMERY WARD: Taps CONSOR & Newmark to Sell Trademarks
CONSOR(sm) and Newmark Retail Financial Advisors have jointly
announced that they have been appointed by Montgomery Ward, LLC
to complete an orderly sale of its trademarks, service marks and
brand assets.

The appointment, which was approved by the U.S. Bankruptcy
Court, District of Delaware, goes into effect immediately and
encompasses all of the company's intellectual property including
Montgomery Ward Core Brands, Catalog Brands and Lechmere; its
Auto Express, Electric Avenue, Gold 'n Gems and Northwest Blue
Concept Brands; and such Private Label Brands as Hill & Archer,
Ship 'n Shore, Color Connections, Pure Luxury and Home

"CONSOR is considered the industry leader in the valuation of
intellectual property, and Newmark enjoys comparable pre-
eminence in the marketing and sale of such assets and is a
respected financial advisor to national retailers," said Karl
Taylor, Senior Vice President and CIO of Montgomery Ward, LLC
"and we are confident that this team offers the best opportunity
to enhance the value of the Montgomery Ward, LLC Estate."
For further information on the Montgomery Ward intellectual
property, please contact Sherri White at Newmark Retail
Financial Advisors (212-372-2261) or Weston Anson at CONSOR

CONSOR(sm) is one of the world's leading intellectual asset
management firms and full-service licensing agencies, using our
proprietary methodologies, unique data resources and
unparalleled experiences in the valuation, management, licensing
and leverage of our clients' trademarks, patents, information
technology and all other intellectual assets. Headquartered in
La Jolla, California, CONSOR(sm) operates offices in New York
and London and has worked with many of the world's best-known
corporations and brands, in both financial restructuring and
deal-making environments.

Newmark Retail Financial Advisors LLC is a national financial
advisory firm specializing in providing services to retailers,
investors, lenders and creditors in the consumer, retailing and
apparel industry. Newmark provides comprehensive expertise in
mergers & acquisitions, deployment of capital, business
assessment, restructuring and bankruptcy and the sale or
acquisition of intellectual property, real estate, inventory,
receivables and other assets. The Newmark Retail Group has over
50 professionals and staff and is an affiliate of Newmark &
Company that has over 500 employees and has owned and affiliated
offices nationally.

MURDOCK COMMUNICATIONS: Seeks More Funds To Sustain Operations
Murdock Communications Corporation (OTC Bulletin Board: MURC and
MURCW) reported results for the fourth quarter and fiscal year
ended December 31, 2000. The Company reported revenues of $8.4
million and a net loss of $4.4 million attributable to common
shareholders, or $0.41 per share for the year ended December 31,
2000 compared with revenues of $27.5 million and a net loss of
$18.6 million attributable to common shareholders, or $1.79 per
share for the prior year.

For the fourth quarter ended December 31, 2000, the Company
reported revenues of $1.9 million and a net loss of $2.7
million, or $0.22 per share compared with revenues of $7.0
million and a net loss of $16.0 million, or $1.53 per share for
the prior year period.

Fourth quarter results included a $1.6 million charge for the
write-down of the Company's investment in Actel, a $1.2 million
charge for impairment of assets primarily relating to the
goodwill recorded in the PIC segment, and a $500,000 charge for
the write-down of the Company's investment in the AcNet
entities, as circumstances indicate the carrying value of these
assets may not be recoverable. Fourth quarter results also
included a $894,000 credit for USF Fees and a $722,000
extraordinary gain on the extinguishment of debt. Actel, based
in Mobil, Ala., is a facilities-based competitive local exchange
carrier of advanced voice and data communications to small and
medium sized enterprises in the Southeastern United States.
Actel filed for bankruptcy under Chapter 11 on April 11, 2001.
Prior year results included significant charges which are
described in the Company's Form 10-KSB filing for the year ended
December 31, 1999.

Revenues for the fourth quarter and fiscal year ended December
31, 2000 declined significantly from the prior periods primarily
due to the loss of all or a significant portion of business of
two of PIC's principal customers and due to the effective
closing of the MTS segment in early 2000.

The Company's current strategic direction is to continue to
negotiate with its creditors to restructure indebtedness and to
attempt to obtain financing to fund operations. If the Company
is successful in completing further improvements to its
financial condition, the Company may seek other strategic
alternatives, including attempting to use the Company's public
shell as a merger vehicle. If the Company is unsuccessful in
this strategy, the Company may not be able to continue as a
going concern.

OWENS CORNING: Assumes Telecommunications Agreement With MCI
Owens Corning sought Judge Fitzgerald's authority to assume a
telecommunications services agreement, as amended, between Owens
Corning and MCI. The MCI agreement provides for
telecommunications and other related services under a
predesignated set of rate schedules. As a result of postpetition
negotiations between Owens Corning and MCI, the parties intend
to enter into an amendment to the MCI agreement. Under the
amendment, MCI will provide services to Owens Corning under a
revised rate schedule, which revised rates are more favorable to
Owens Coring than the original rates.

Under this agreement, MCI provides international, interstate,
intrastate, and local telecommunication services. The term of
the contract is 48 months from August 1999. During each contract
year, Owens' usage charges must equal or exceed $4,000,000. At
the end of each consecutive three monthly periods, Owens is to
receive a credit equal to $2,400. If in any contract year Owens'
usage charges for MCI's services are less than the applicable
annual minimum, then Owens must pay all accrued but unpaid usage
and other chares, and an underutilization charge equal to the
difference between the applicable annual minimum and Owens'
usage charges for the services during that year.

Under the amendment, Owens' rates for interstate outbound voice
service, including interstate card service, are:

      Origination     Local       Dedicated     Switched
      -----------     -----       ---------     --------
       Local          $0.0250     $0.0260       $0.0365
       Dedicated      $0.0270     $0.0270       $0.0332
       Switched       $0.0440     $0.0440       $0.0603

There is an interstate card surcharge per call of $0.10 in lieu
of the standard tariffed surcharge.

Under the amendment, Owens' rates for interstate inbound voice
service are:
      Origination      Local      Dedicated      Switched
      -----------      -----      ---------      --------
       Local           $0.0250    $0.0270        $0.0440
       Switched        $0.0265    $0.0332        $0.0603

The postalized rate for dedicated calls for Canada are decreased
from $0.1650 to $0.1050.

Dedicated access service on a monthly fixed rate for each access
loop is:

              Access type       Monthly rate
              -----------       ------------
               Voice DSO           $150
               Voice DSI           $300
               Frame DSO           $111
               Frame DSI           $222

The Voice DSI rate applies to no more than 75. Any voice DSI's
above 75 will be charged at a higher rate described as the
standard tariff rate.

Although Owens admits it has an outstanding prepetition balance
under the MCI agreement totaling $629,002.79, Owens is entitled
to reduce this amount by $291,092.40 to account for prepetition
credits owed by MCI to Owens Corning. The Debtors estimate that
the $337,910.39 balance, which is the cure amount due on
assumption of this agreement, will be recouped in six to eight
months as a result of the lower rates provided by amendment.

Owens told Judge Fitzgerald that this assumption is in the best
interests of this estate and its creditors, and is an exercise
in the Debtors' sound business judgment. As a result of the
amendment to the MCI agreement, MCI will provide the same
services that Owens Corning enjoyed prepetition, but at the
revised rates which will result in a substantial savings to
Owens Corning when compared with the original rates. The costs
associated with the assumption of the MCI agreement, and payment
of the cure amount are thus more than justified by the benefits
that Owens Corning expects to realize under the amended MCI

After consideration of the benefits the estate will receive,
Judge Fitzgerald authorized Owens Corning to assume the MCI
agreement as amended. (Owens Corning Bankruptcy News, Issue No.
11; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PACIFIC GAS: Honoring Non-Residential Customer Deposits
Upon receipt of an application for non-residential utility
service, Katheryn Fong, Vice President of Customer Revenue
Transactions, explained, Pacific Gas and Electric Company
conducts an investigation of the applicant's credit
history, a process which may include examination of reports
published by Dun & Bradstreet and Standard & Poor, as well as
any audited financial statements submitted by the applicant. If
the investigation reveals that the customer represents a credit
risk, the Debtor requires the customer to establish credit
through one of a variety of means, including the payment of a
security deposit. In addition, as with residential customers,
the Debtor requires non-residential customers who fail to pay
bills within five days of receiving a notice of discontinuance
of service for nonpayment to reestablish credit by submitting a
security deposit in accordance with Rule 7 of PG&E's Tariff
Schedule. The Debtor also requires non-residential customers to
reestablish credit when the conditions of their service or the
basis on which their credit was originally established
materially change. Non-residential customers required to
establish credit through the payment of a deposit pay twice the
maximum monthly bill at the customer's address, as estimated by

The Debtor refunds these deposits if: (1) the customer has
maintained a similar type of service for two years and did not
have more than two past due bills within the past 12 months; or
(2) the customer discontinues service without reestablishing
PG&E service at another location. Once the Debtor determines
that the customer is entitled to a refund, the deposit is first
used to satisfy the customer's outstanding bill or credited to
the customer's open account. If the customer has closed its
account and the deposit exceeds the amount of the outstanding
bill, the Debtor refunds the remainder in the form of a direct
payment by check. The Debtor is required to pay interest on all
deposits, unless service is discontinued for non-payment of

The Debtor collected approximately $45.7 million in customer
deposits in 2000, $20.9 million of which were paid by non-
residential customers. The Debtor refunded $31.2 million to
approximately 222,180 residential and commercial customers in
2000, either in the form of a credit to the customer's account
or direct payment by check.

At the Petition Date, the Debtor held approximately $66.7
million in non-residential customer deposits. Approximately
$43.8 million of this amount was due to be refunded to
approximately 48,971 non-residential customers, either in the
form of a credit or a direct payment by check. Approximately 4%
of the non-residential refunds are owed to customers who are
moving out of PG&E's service area or changing utility service
providers. In addition to these pre-petition obligations, some
of the non-residential customer deposits received before the
Petition Date will become refundable to customers prior to
confirmation of the Debtor's reorganization plan. Past
experience suggests that the Debtor will be required to refund
approximately $1.8 million in non-residential customer deposits
per month under its deposit refund policy as incorporated into
its existing tariff. The average refund amount is expected to be
$1,145 per non-residential customer.

Accordingly, the Debtor asked the Court for authority to honor
non-residential customer refund obligations.

James L. Lopes, Esq., at Howard, Rice, Nemerovski, Canady, Falk
& Rabkin, puts a recoupment theory before Judge Mondali for his

Like setoff, Mr. Lopes explained, recoupment is an equitable
doctrine that allows claimants to net out mutual obligations.
Newbery Corp. v. Fireman's Fund Ins. Co., 95 F.3d 1392, 1398
(9th Cir. 1996). The primary difference between the doctrines of
setoff and recoupment is that recoupment applies only to demands
arising from the "same transaction," whereas setoff is a form of
cross action that nets out claims arising from different
transactions. See id. at 1398-99; 5 Collier on Bankruptcy, par.
553.10 (15th ed. 2000).

Although setoff in the bankruptcy context is subject to the
limitations set out in 11 U.S.C. Sec. 553, recoupment is not.
See, e.g., Newbery, 95 F.3d at 1399-1400; 5 Collier on
Bankruptcy at par. 553.10. The rationale behind the difference
in treatment for setoff and recoupment is that "when the
creditor's claim arises from the same transaction as the
debtor's claim, it is essentially a defense to the debtor's
claim against the creditor rather than a mutual obligation, and
application of the limitations on setoff in bankruptcy would be
inequitable." Newbery, 95 F.3d at 1400 (citation omitted); see
also In re Harmon, 188 B.R. 421, 425 (B.A.P. 9th Cir. 1995)
(quoting In re Hiler, 99 B.R. 238, 243 (Bankr. D.N.J. 1989));
("'The doctrine of recoupment can clearly be distinguished from
setoff in a bankruptcy setting. It has no greater effect than a
defense to a claim, and hence should not be subject to the
limitations on setoff.'").

In deciding whether claims satisfy the "same transaction"
requirement, the Ninth Circuit applies the liberal "logical
relationship" test. Newbery, 95 F.3d at 1401 (applying the test
as laid out by the Supreme Court in an analogous context in
Moore v. New York Cotton Exchange, 270 U.S. 593 (1926)). Under
this test, "'[t]ransaction' is a word of flexible meaning. It
may comprehend a series of many occurrences, depending not so
much upon the immediateness of their connection as upon their
logical relationship." Newbery, 95 F.3d at 1402 (quoting Moore,
270 U.S. at 610); see also In re TLC Hospitals, Inc., 224 F.3d
1008, 1012 (9th Cir. 2000) ("Although the 'logical relationship'
concept is not to be applied so loosely that multiple
occurrences in any continuous commercial relationship would
constitute one transaction, we conclude that the distinctive
Medicare system of estimated payments and later adjustments does
qualify as a single transaction for purposes of recoupment").

Mr. Lopes pointed to Court decisions holding that utility
deposits arise out of the same transaction as utility service
contracts and are subject to recoupment. See, e.g., In re
McMahon, 129 F.3d 93, 97 (2d Cir. 1997) ("the deposit plainly
arose out of a single electricity contract between the debtor
and [the utility]"); In re Public Service Co., 107 B.R. at 445
(electric utility deposits part of a single electricity
contract); Brooks Shoe Mfg. Co. v. United Tel. Co., 39 B.R. 980,
982 (E.D. Pa. 1984) (deposit paid to telephone company arose out
of same transaction as the telephone service contract); but see
In re Cole, 104 B.R. 736, 740 (Bankr. D. Md. 1989) (treating
deposit as setoff); In re Village Craftsman, Inc., 160 B.R. 740,
746 (Bankr. D.N.J. 1993) (same; analyzing whether deposit arose
out of "exactly the same transaction" rather than whether
deposit and utility contract shared a "logical relation").

In re Public Service Co. of N.H., 107 B.R. 441 (Bankr. D.N.H.
1989) is virtually identical to the case at hand. In Public
Service, the State of New Hampshire filed a motion on behalf the
debtor-utility's commercial customers seeking an order requiring
the utility to refund non-residential deposits as recoupment. In
granting the requested relief, the Court held that "[t]here is
little question that the deposits are part of a single
electricity contract that each non-residential customer had with
[the debtor utility]." Public Service, 107 B.R. at 445. The
deposits were therefore subject to recoupment.

The Public Service court also noted two additional reasons why
recoupment should be allowed in the context of a utility
bankruptcy. First, the court found that utility customers differ
from the typical general creditor:

The commercial user deposits here in question were not
voluntary payments extended to the debtor on the basis of a
risk assessment as to dealing with the debtor on an unsecured
credit basis, . . . but instead were payments compelled by a
regulated monopoly electric utility company acting under a
tariff approved by the New Hampshire Public Utilities
Commission. . . . No other alternatives were available to
such depositors and in no sense could they be deemed to have
acted 'voluntarily' . . . . This factor clearly distinguishes
these customer-depositors from the other 'general creditors'
in this estate . . . . (Public Service, 107 B.R. at 446)

Second, "as a practical matter," no matter the reorganization
plan, either the reorganized utility or an acquiring entity
would continue to provide electric service to its customers and
would continue to require and refund deposits. Id. at 447. "[N]o
good purpose is served in withholding such payments to protect
against any alternative result that may occur by virtue of
reorganization." Id.

Similarly, in this chapter 11 case, PG&E customers entitled to a
refund would be able to recover the deposits as recoupment.
First, the deposit not only enjoys a "logical relationship" to
the electric service contract, but is part and parcel of that
contract. The deposits therefore satisfy the requirements of the
recoupment doctrine. Second, the Debtor's customers furnish
deposits under compulsion, in exchange for a basic necessity and
with the understanding that the money will be preserved and
returned to them with interest. Equity supports the finding that
the deposits are recoverable under a "recoupment plus" theory.
Finally, as a practical matter, the Debtor will in all
likelihood emerge from this reorganization with its deposit
refund policies intact. No good purpose would be served by
delaying payment of these refunds to those customers who qualify
for but do not receive refunds prior to the Petition Date.
(Pacific Gas Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PRECEPT BUSINESS: Sells Various Subsidiaries & Other Assets
Precept Business Services, Inc. (OTC Bulletin Board: PBSI)
announced that it has sold a number of its subsidiaries with
Bankruptcy Court approval.

     Those transactions include:

     (1)  Precept-Creative to four different groups of employees.

     (2)  Precept-Southern Systems a portion to a group of
          employees and a portion to American Business Forms.

     (3)  Inventory in Greensboro, North Carolina to American
          Business Forms.

The Company is in negotiations to sell the remainder of the
Transportation Division and expects these sales to close by late
May 2001.

RAYTECH CORPORATION: Emerges From Chapter 11 Bankruptcy
Raytech Corporation (NYSE: RAY) reported that the Confirmation
of the Corporation's Second Amended Plan of Reorganization
became effective on April 18, 2001. The United States Bankruptcy
Court for the District of Connecticut had confirmed the Plan on
August 31, 2000, but the effectiveness of the Plan had been
delayed pending the occurrence of conditions precedent. The
conditions were all met on this date, and the Plan became

The Plan provides for allowed general unsecured claims,
including asbestos-related personal injury allowed claims
estimated to be $6.76 billion and environmental allowed claims
of $432 million to be exchanged for 90% of the common stock of
the Corporation, as well as certain other consideration, with
existing equity holders in the Corporation retaining their
shares equivalent to 10% of the common stock of the Corporation.
In accordance with the Plan, all present and future asbestos-
related personal injury claims are assumed and will be resolved
by an independently administered claims trust ("P.I. Trust"). A
channeling injunction has been ordered by the Court pursuant to
Section 524(g) of the Bankruptcy Code, which permanently stays,
enjoins and restrains any current or future asbestos-related
claims against the Corporation, thereby channeling such claims
to the P.I. Trust for resolution.

The Plan provides for the classification and treatment of all
claims against, and equity interests in the Corporation in
exchange for and in complete satisfaction, discharge and release
of all such claims and equity interests.

Accordingly, the Corporation has emerged from bankruptcy under
its confirmed and effective Plan. The Corporation intends to
file its Form 8-K on April 20, 2001.

Raytech Corporation is a global manufacturer of energy
absorption and power transmission products, as well as custom
engineered components.

SHUTTLE AMERICA: Files For Chapter 11 Bankruptcy Protection
According to documents obtained by, the
regional air carrier Shuttle America, Inc. filed for Chapter 11
on April 16. All flights will continue during the reorganization
period, and the carrier hopes to shore up its financial position
by forging a code-sharing agreement with a major airline,
President David Hackett said. (New Generation Research, April
18, 2001)

SOFTWARE LOGISTICS: Files For Chapter 11 in Oakland, California
Software Logistics Corp., a supplier to several high-profile
technology companies, filed for a voluntary chapter 11 petition
on March 23 in the U.S. Bankruptcy Court in Oakland, Calif.,
according to Dow Jones. The privately held Fremont, Calif.-based
company, which does business as iLogistix, handles some key
fulfillment operations for Adobe Systems Inc., Compaq Computer
Corp., Hewlett-Packard Co. and Microsoft Corp., among others.
Several customers said iLogistix's operations continue
uninterrupted despite the bankruptcy petition and they are
continuing to work with the troubled vendor. Last Friday, Adobe
said that it could face product shortages and is pursuing
alternatives because of the bankruptcy filing of its sole U.S.
manufacturer. (ABI World, April 18, 2001)

US DIAGNOSTIC: May File For Bankruptcy If Unable To Cure Debts
US Diagnostic Inc. (OTCBB:USDL) reported its financial results
for the year ended December 31, 2000. For the quarter ended
December 31, 2000, the Company generated a loss from continuing
operations before extraordinary item of $7.1 million as compared
to $3.4 million loss for the quarter ended December 31, 1999.
Loss from discontinued operations for the quarter ended December
31, 2000 was $11.4 million, and included a net loss on
disposition of discontinued operations of $2.3 million, net of
income taxes. Loss from discontinued operations for the three
months ended December 31, 1999 was $0.8 million, and included a
net gain on disposition of discontinued operations of $0.6
million, net of income taxes. Net loss was $18.5 million or
$0.83 loss per common share (basic and diluted) for the quarter
ended December 31, 2000 as compared to a net loss of $4.2
million or $0.18 loss per common share (basic and diluted) for
the quarter ended December 31, 1999.

For the year ended December 31, 2000, the Company reported a
loss from continuing operations before extraordinary item of
$18.8 million as compared to $12.0 million for the year ended
December 31, 1999. Loss from discontinued operations for the
year ended December 31, 2000 was $13.8 million, and included a
net loss on disposition of discontinued operations of $1.9
million, net of income taxes. Income from discontinued
operations for the year ended December 31, 1999 was $1.2
million, and included a net gain on disposition of discontinued
operations of $2.3 million, net of income taxes. Net loss for
the year ended December 31, 2000 was $32.6 million or $1.44 loss
per common share (basic and diluted). For the year ended
December 31, 1999 the net loss was $8.2 million or $0.36 loss
per common share (basic and diluted).

As previously announced, the Company has engaged Imperial
Capital, LLC as its investment banker and Greenberg Traurig, LLC
as its legal counsel to review its strategic alternatives and to
advise it regarding a debt restructuring. Based on its current
estimates, the Company anticipates that, absent the sale of
additional centers or the availability of additional short term
liquidity, its current cash and cash generated from operations
will be insufficient to meet its anticipated cash needs;
however, if its principal repayments can be appropriately
restructured, the Company believes that its cash flow will be
sufficient to permit it to complete the sale of the remaining
centers over time, although there can be no assurance in this

As previously reported, the Company has committed certain
defaults under its 9% Subordinated Convertible Debentures,
including the failure to make an interest payment that was due
March 31, 2001. If this default remains uncured for 30 days, the
Debenture holders would be entitled to accelerate maturity of
the Debentures. A default on the Debentures would also allow
other debt holders to accelerate their debt instruments. Also,
the Company is in default of other covenants under the

Unless the Company can successfully restructure its
indebtedness, sell additional imaging centers or otherwise
obtain liquidity in the short term, the failure to make the
payments described above and other payments that are due, the
related defaults and potential cross defaults, the lack of
working capital and the inability to incur additional debt will
have a material adverse effect on the Company's ability to
maintain its operations, as well as its financial condition.
Moreover, if these matters cannot be resolved successfully, the
Company would be required to pursue other options, which could
include seeking a reorganization under the federal bankruptcy

For financial statement purposes, the assets, liabilities and
results of operations (except for cash flows) of the imaging
centers have been segregated from those of continuing operations
and are presented in the Company's consolidated financial
statements as discontinued operations. The accompanying
consolidated statements of operations for the quarter and the
year ended December 31, 1999 have been reclassified to reflect
this presentation.

The continuing operations include the applicable components of
the balance sheets and results of operations of four cost
centers (the corporate headquarters, the billing office, the
regional operational center and the MIS department) plus the
retained, net estimated realizable value of receivables of the
imaging centers that were closed or sold during 2000. The
discontinued operations include the assets, liabilities and
results of operations of all imaging centers, including, for the
period to the date of disposition, those that have been sold or
closed during 2000.

US Diagnostic Inc. is an independent provider of radiology
services with locations in 10 states and owns, operates or
manages 41 fixed site diagnostic imaging facilities.

VENCOR INC.: Settles Walter F. Beran's Claims
Walter F. Beran filed two proofs of claims in Vencor, Inc.'s
chapter 11 proceedings:

      (1) a proof of claim in the amount of $150,460 (as amended
or supplemented by all additional proofs of claim, the
Compensation Claim) with respect to the payments allegedly due
him from the Debtors under the Amended Hillhaven Corporation
Board Of Directors Retirement Plan, dated February 27, 1995, and

      (2) a proof of claim in the unliquidated amount, as
amended, with respect to the alleged indemnification obligations
to him from the Debtors relating to the same alleged liability,
the Indemnification Claim).

Pursuant to the Plan, the Debtors (1) may elect to assume the
Hillhaven Plan and (2) will not assume the indemnification
obligations alleged in the Indemnification Claim.

Consistent with these provisions in the Plan, the Debtors sought
and obtained the Court's approval of their settlement agreement
with Mr. Beran.

The Settlement Agreement in relevant part provides that the
Compensation Claim will be deemed allowed subject to the
treatment pursuant to the Plan upon Vencor's assumption of the
Hillhaven Plan, and all payments owed to Beran under the
Hillhaven Plan will be made in accordance with the terms of the
Hilihaven Plan.

With respect to the Indemnification Claim, the Settlement
Agreement in relevant part provides that the Claim will be
deemed allowed and Beran's rights against the Debtors with
respect to any alleged indemnification, contribution, and/or
other similar relief would be preserved subject to the following

      (a) Debtors shall use their commercially reasonable efforts
to continue and maintain Beran's present rights to insurance
coverage under any so-called directors' and officers' policy (a
D&O Policy), and will afford Beran the same treatment afforded
all ex-officers and directors respecting renewal or acquisition
of insurance coverage; and

      (b) any and all obligations of the Debtors to provide
indemnification, contribution and/or other similar relief to
Beran, including, without limitation, all obligations in respect
of the Indemnification Claim, will be satisfied only through
payments made or funded under any available present or future
D&O Policy.

The Debtors believe that the Settlement Agreement represents a
fair and reasonable resolution of Beran Claims, and is in the
best interest of the estate. (Vencor Bankruptcy News, Issue No.
27; Bankruptcy Creditors' Service, Inc., 609/392-0900)

W.R. GRACE: Obtains Approval To Draw $50 Mil Under DIP Facility
Prior to the Petition Date, W. R. Grace & Co. obtained working
capital financing under three facilities:

      (A) a fully-drawn 364-Day Credit Agreement by and among
Grace-Conn, Bank of America, N.T. & S.A., as Documentation
Agent, Chase Manhattan Bank, as Administrative Agent for the
Banks therein, and Chase Securities, Inc., as Book Manager;

      (B) a fully-drawn 5-Year Credit Agreement, by and among
Grace, Grace-Conn, Chase Manhattan Bank, as Administrative
Agent, and Chase Securities, Inc., as Arranger; and

      (C) an $80,000,000 Receivables Securitization Facility
under which Grace-Conn would sell certain of its receivables
generated by Davison and Performance to Grace Receivables
Purchasing, Inc., a special purpose subsidiary of Grace-Conn.
Grace Receivables, in turn, would sell an undivided interest in
the receivables it purchased from Grace-Conn to Blue Ridge Asset
Funding Corporation, an affiliate of Wachovia Bank.

The filing of the chapter 11 petitions throws these three
financing facilities into default. Without additional financing,
the Debtors will be unable to pay employees, maintain business
relationships with vendors and suppliers, purchase new
inventory, ship and distribute materials throughout the
manufacturing process, and otherwise finance their operations.
In short, without new financing, W.R. Grace will be out of

Prior to the Petition Date, the Debtors contacted Bank of
America, The Chase Manhattan Bank, Goldman Sachs Credit
Partners, L.P., and Deutsche Banc Alex Brown, soliciting debtor-
in-possession financing proposals. BofA returned a term sheet
offering the lowest-cost financing, the largest facility and the
greatest financial and operational flexibility.

By this Motion:

      (1) the Debtors sought and obtained interim authority to
borrow up to $50,000,000 from the DIP Lenders to immediately
pay-down the Receivables Securitization Facility; and

      (2) the Debtors ask for final approval of a Post-Petition
Loan and Security Agreement dated as of April 1, 2001.

Until April 3, 2003, BofA commits to lend up to $250,000,000 to
W.R. Grace & Co., and each of its Debtor-affiliates, as joint
and several borrowers and obligors. The DIP Facility provides
the Debtors with a $100,000,000 revolving credit facility and
backing for up to $150,000,000 of letters of credit.

At any given time, the maximum Availability to the Debtors under
the DIP Facility is computed as:

      (A) the lesser of:

          (1) the $250,000,000 Maximum Revolver Amount or

          (2) the Borrowing Base, which is equal to:

              (a) the sum of:

                  (A) 85% of Net Eligible Receivables; plus

                  (B) 60% of Eligible Inventory; plus

                  (C) the lesser of:

                      (1) $125,000,000; and

                      (2) 50% of the Appraised Value of Eligible
                          Fixed Assets; plus

                  (D) 40% of the cost of Eligible In-Transit
                      Inventory; minus

              (b) Reserves established by BofA from time-to-time.


      (B) a reserve in the amount of Carve-out and other Reserves


      (C) Aggregate Revolver Outstandings, which is the sum of:

          (1) the unpaid balance of Revolving Loans;

          (2) the aggregate amount of Pending Revolving Loans;

          (3) 100% of the aggregate undrawn face amount of all
              L/Cs; and

          (4) the aggregate amount of any unpaid L/C
              reimbursement obligations.

The Debtors must use the facility to immediately pay-down and
ultimately cash-out the Receivables Securitization Facility and
may use up to $15,000,000 to provide financing to non-debtor

Interest on amounts borrowed and letters of credit issued will
accrue, at the Debtors' option, (A) BofA's Prime Rate or (B) the
one-month, two-month, three-month or six-month LIBOR rate based
on the Lenders' Exposure, plus an Applicable Margin:

                                       Loan Rate   Loan Rate
                               L/C     Prime       LIBOR
      Lenders' Exposure        Rate    Plus        Plus
      -----------------        ----    ---------   ---------
      Less than $125,000,000   2.00%     0.00%       2.00%
      More than $125,000,000   2,25%     0.25%       2.25%

In the event of any default, these interest rates increase by

BofA will collect a variety of Fees from the Debtors:

      (x) a $1,375,000 Facility Fee;

      (y) a $1,250,000 Syndication Fee; and

      (z) a 150,000 Administration Fee

For every dollar not borrowed, the Debtors will pay a 0.375% per
annum Unused Line Fee. If BofA needs to conduct any Field Exams,
it will charge $750 per person per day. The Debtors will pay all
fees and expenses incurred by Latham & Watkins (David S. Heller,
Esq., and Jeffrey G. Moran, Esq., in Chicago), BofA's legal

The Debtors' borrowings under the DIP Facility will be accorded
a super-priority pursuant to 11 U.S.C. Sec. 364(c)(1), subject
to a $7,500,000 Carve-Out for fees billed by professionals
retained by the Debtors, any Creditors' Committees, and any
successor chapter 11 or 7 trustee, and fees payable to the Court
Clerk and the U.S. Trustee. Pursuant to 11 U.S.C. Secs.
364(c)(2) and (3), Borrowings will be secured by (a) first liens
on (i) all of the Debtors' unencumbered property, except stock
interests in the Debtors' foreign subsidiaries, (ii) recoveries
by the Debtors on account of avoidance actions pursued under
chapter 5 of the Bankruptcy Code, and (iii) approximately $450
million of life insurance policies owned by or assigned to the
Debtors and (b) junior liens on all property subject to a
Permitted Lien.

A Change of Control, meaning acquisition of 30% of the Company's
stock, will trigger a default under the DIP Facility, as will
conversion of the Debtors' chapter 11 cases, appointment of a
Trustee or appointment of an Examiner with expanded powers. The
Debtors' cases may be dismissed, provided, however, that the
order of dismissal requires repayment of all DIP Facility

The DIP Facility contemplates that W.R. Grace may acquire other
businesses or operating divisions of other businesses, provided
that, after giving effect to that acquisition or purchase, the
Debtors' Availability under the DIP Facility is no less than

The Debtors covenant with the DIP Lenders that Consolidated
EBITDAR will be no less than the amount indicated for each
Fiscal Quarter, commencing with the 2001 Fiscal Year:

          Fiscal Quarter          Minimum EBITDA
          --------------          ---------------
          First Fiscal Quarter      $20,000,000
          Second Fiscal Quarter     $35,000,000
          Third Fiscal Quarter      $35,000,000
          Fourth Fiscal Quarter     $30,000,000

and EBITDAR will be no less than $120,000,000 for the 12
calendar months ending on March 31, 2001 and for the 12 calendar
months ending on the last day of each calendar month thereafter.

BofA indicates that it intends to syndicate the DIP Facility.
The DIP Credit Agreement provides that Eligible Assignees are
limited to financial institutions with more than $1,000,000,000
in assets, except in the event of a default, in which case the
universe of Eligible Assignees expands to "any Person reasonably
acceptable to [BofA] that is not a direct competitor of Company
or any of its consolidated Subsidiaries." BofA collects a $3,500
processing fee to handle each assignment of a participation.

At the First Day Hearing, Judge Newsome granted the Debtors
interim authority to draw up to $50,000,000 under the DIP
Facility.  Any objections to the entry of a Final DIP Financing
Order must be filed no later than April 18, 2001, at 4:00 p.m.
EST. In the event no timely objections are filed, the Motion is
granted. If an objection is filed, Judge Newsome will convene a
telephonic hearing at his convenience. (W.R. Grace Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-

WEBFAMILY VENTURES: Internet Site Shuts Down Today
WebFamily Ventures, the company that makes baby pictures
available on the Internet, planned to shut down its web site
today, Friday, according to Company president
and CEO sent an e-mail to customers informing them of the
shutdown. "The market downturn of the last 12 months made it
increasingly difficult to cover the costs of operating the
WebFamilies site," the e-mail said. "We apologize for any
inconvenience this may cause you."

The privately held company, launched in 1999, set up computers
and digital cameras in hospital maternity wards nationwide. More
than 80 installations had been done by early March. New mothers
and their families used the gear to take photos and create web
sites on which the photos were posted. The Denver-based
WebFamilies didn't charge fees to people who used the equipment,
but instead planned to make money from the sale of prints to
friends and family members. As of last month, the company had
raised $5.2 million and expected to raise an additional $5.8
million in a funding round that would close at the end of April.
(ABI World, April 18, 2001)

WESTPOINT STEVENS: Fitch Affirms BB- Senior Note Rating
Fitch has affirmed its `BB-` rating of WestPoint Stevens' $1
billion of senior notes.

The rating was changed from `BB' to `BB-` in December of 2000
reflecting the deterioration in WestPoint's operations and
credit measures over the course of the year. The Rating Outlook
remains Negative given the expectation that it will take some
time for the company to restore its credit profile.

There was a significant increase in leverage in 2000 as
WestPoint's operations softened while its debt levels increased
to finance share repurchases and a $100 million special
dividend. Adjusted debt/EBITDAR increased from 4.9 times (x) in
1999 to 5.8x in 2000. This would have caused a covenant
violation at year-end. However, the company received an
amendment to its bank facility in return for a significant
increase in the borrowing rate and tighter covenants.

WestPoint's operations should begin to improve in the second
half of 2001 despite the weakened retail environment due to
increased revenues from a number of new licenses and savings
from a restructuring program. At the same time, the amended bank
agreement strictly limits capital spending and share
repurchases, which will free up cash flow for debt reduction.
The size of the bank facility steps down $200 million over the
next 30 months, with the first reduction of $25 million
occurring in August 2001. This will force WestPoint to continue
to deleverage over the next several years, though it will also
constrain financial flexibility. The Negative Rating Outlook
will remain in place until the company's business stabilizes and
there is meaningful progress in reducing leverage.

WestPoint Stevens is a leading player in the domestic bed linen
and bath towel markets. Its key brands include its flagship
Martex as well as Ralph Lauren, which it licenses. The company
also has a chain of 57 retail outlet stores.

WINSTAR COMMUNICATIONS: Files Chapter 11 Petition in Wilmington
Winstar Communications Inc. (NASDAQ: WCII), along with certain
of its subsidiaries, has voluntarily filed for protection under
Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Delaware. The Company intends to
utilize the Chapter 11 process to restructure its balance sheet,
while continuing to provide service to its 30,000 business
customers and maximizing the value of its extensive broadband
network and comprehensive set of broadband services.

The Company emphasized that this Chapter 11 filing will not
impact day-to-day operations with regard to its employees,
customers and general business operations. The Company has
arranged for debtor-in-possession (DIP) financing with an
initial commitment of $75 million, from a consortium of banks
comprised of CIBC, Citicorp, Credit Suisse First Boston, The
Bank of New York and The Chase Manhattan Bank. This commitment
may be increased to as much as $300 million upon the
satisfaction of certain conditions.

William J. Rouhana, Jr., chairman and chief executive officer of
Winstar said, "We expect to emerge from the Chapter 11 process
with a new balance sheet that has significantly less debt,
thereby dramatically lowering our interest payments and
providing us with more operating flexibility. Winstar has the
most widely available end-to-end broadband network for
businesses. The Company has more than 30,000 business customers
- employing more than 1 million people - that produced an annual
revenue stream of more than $700 million in year 2000. During
the restructuring process, we will focus on maximizing the
untapped potential of the 140,000 addressable businesses in the
4,800 buildings that are directly connected to our already
existing, domestic built-out broadband network."

Rouhana concluded, "While this was a very difficult decision to
make, given the current circumstances, we determined that we
needed to take decisive action for our employees, customers and
creditors, to maximize the value of our business."

Nathan Kantor, president and chief operating officer of Winstar
added, "We have been building our broadband network for more
than seven years, making us one of the most experienced and
established companies in our sector. We are confident that
focusing on the potential of our existing network, coupled with
a more efficient organization, will allow Winstar to emerge from
this process as a stronger company."

WINSTAR COMM.: Case Summary & 20 Largest Unsecured Creditors
Lead Debtor: Winstar Communications, Inc.
              685 Third Avenue
              New York, NY 10017

Debtor affiliates filing separate chapter 11 petitions:

              WCI Capital Corp.
              Winstar Equipment Corp.
              Winstar Equipment II Corp.
              Winstar Credit Corp.
              Winstar Wireless Fiber Corp.
              Winstar LMDS, LLC
              Winstar New Media Company, Inc.
              At Your Office Inc.
              SportsFan Radio Network, Inc.
              Winstar Interactive Ventures I Inc.
              Winstar Interactive Media Sales Inc.
              Office.Com Inc.
              Winstar Wireless, Inc.
              Winstar Broadband Acquisition 2000, LLC
              Winstar Midcom Acquisition Corp.
              Winstar Network Expansion, LLC
              WWI License, Holding, Inc.
              Winstar Government Solutions, LLC
              WVF-CSCI, LLC
              WVF-DL 1, LLC
              WVF-CPQ1, LLC
              WVF-1, LLC
              WCF-LU2, LLC
              Winstar Wireless of Delaware, LLC
              Winstar Wireless of Georgia, LLC
              Winstar Wireless of Indiana, LLC
              Winstar Wireless of New Jersey, LLC
              Winstar Wireless of New York, LLC
              Winstar Wireless of Pennsylvania, LLC
              Winstar Wireless of Virginia, LLC
              Winstar Wireless of West Virginia, LLC
              Winstar International Inc.

Type of Business: Broadband service company

Chapter 11 Petition Date: April 18, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-01430 through 01-01462

Debtors' Counsel: Pauline K. Morgan, Esq.
                   Young, Conaway, Stargatt & Taylor LLP
                   Rodney Sq.North, P.O. Box 391
                   Wilmington, DE 19899-0391
                   (302) 571-6600

Total Assets: $4,975,437,068

Total Debts: $4,994,467,530

Debtors' Consolidated List of 20 Largest Unsecured Creditors:

Entity                        Nature of Claim     Claim Amount
------                        ---------------     ------------
United States Trust Company   Bonds               $930,210,000
of New York, as trustee for
holders of 14.75% Senior
Discount Notes due 2010
Contact: Peggy Ciesmelewski
Corporate Trust Officer
114 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

United States Trust Company   Bonds               $639,034,000
of New York, as trustee for
holders of 12.75% Senior
Notes due 2010
Contact: Peggy Ciesmelewski
Corporate Trust Officer
14 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

United States Trust Company   Bonds               $325,000,000
of New York, as trustee for
holders of 12.50% Senior
Notes due 2008
Contact: Peggy Ciesmelewski
Corporate Trust Officer
114 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

United States Trust Company   Bonds               $200,000,000
of New York, as trustee for
holders of 12.75% Senior
Euro Notes due 2010
Contact: Peggy Ciesmelewski
Corporate Trust Officer
114 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

Digital Microwave Corp.       Trade                $20,000,000
Contact: Kevin McCarthy
170 Rose Orchard Way
San Jose, CA 95134
Tel: (410) 729-3439
Fax: (410) 729-3460

WorldCom                      Trade                $18,000,000
130 E. Randolph Street
Chicago, IL 60601
Tel: (312) 946-0060

Metromedia Fiber Network      Trade                $10,200,000
Contact: Diana Sicolese
360 Hamilton Avenue
White Plains, NY 10601
Tel: (914)421-6700
Fax: (914)421-6777

Advance Fiber Communications  Trade                $10,000,000
Contact: Isabel Munoz
1465 McDowell Street
Petaluma, CA 94954
Tel: (800)690-2324
Fax: (707)791-7871

United States Trust Company   Bonds                 $8,733,000
of New York, as trustee for
holders of 14.0% Senior
Discount Notes due 2005
Contact: Peggy Ciesmelewski
Corporate Trust Officer
114 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

Siemens Information & Comm    Trade                 $8,413,000
Networks, Inc.
Contact: Neil Holcomb
DEPT CH 10246
Palatine, IL 60055
Tel: (703)627-9709
Fax: (703)262-3032

Hugh O'Kane Electric Co., LLC Trade                 $7,500,000
Contact: Mike Nappi
88 White Street
New York, NY 10013
Tel: (212)431-6007
Fax: (212)966-9361

Williams Communications Inc.  Trade                 $7,400,000
One Williams Center, Suite 26-5
Tulsa, OK 74172
Tel: (918)573-2000
Fax: (918) 573-6578

United States Trust Company   Bonds                 $7,216,000
of New York, as trustee for
holders of 10.0% Senior
Discount Notes due 2008
Contact: Peggy Ciesmelewski
Corporate Trust Officer
114 W. 47th Street 25th Floor
New York, NY 10036-1532
Tel: (212)852-1674
Fax (212)852-1626

Ceragon                       Trade                 $7,000,000
Contact: Scott Sweetland
777 Corporate Drive
Mahwah, NJ 07430
Tel: (603)886-8503
Fax: (603)886-8523

SBC Communications, Inc.      Trade                 $5,200,000
175 E. Houston
San Antonia, TX 78205
Tel: (210)821-4105
Fax: (210)351-2071

P-Com, Inc.                   Trade                 $5,000,000
Contact Sunny Taylor
3175 South Winchester Blvd.
Campbell, CA 95008
Tel: (703)736-2030
Fax: (703)736-2001

Verizon Communications, Inc.  Trade                 $4,200,000
Contact: Marian M. Howell
2980 Fairview Park
Falls Church, VA 22042
Tel: (703)645-1233

Level 8                       Trade                 $3,753,000
8000 Regency Parkway
Cary, NC 27511
Tel: (919)380-5000
Fax: (919)469-1910

Oracle Corporation            Trade                 $3,000,000
Contact: Daniel Solario
1910 Oracle Way
Reston, VA 20190
Tel: (703) 364-2832
Fax; (703) 318-6344

Compaq                        Trade                 $2,000,000
Contact: Tammy Sachs
5012 West 79th Street
Indianapolis, IN 46278
Tel: (800) 535-2563
Fax: (317)228-3525

WINSTAR COMM.: BCSI Initiates Case-Specific Newsletter Coverage
For additional background information about Winstar
Communications, Inc., and its debtor-affiliates, including, Inc., pick-up a free copy of the first
issue of WINSTAR BANKRUPTCY NEWS, published by Bankruptcy
Creditors' Service, Inc., at:

WINSTAR: Files $10 Billion Suit Against Lucent Technologies
Winstar Communications Inc. (NASDAQ: WCII) filed a lawsuit
against Lucent Technologies in the U.S. Bankruptcy Court for the
District of Delaware. The lawsuit seeks $10 billion in damages
for Lucent's breach of its obligations under its strategic
partnership agreement with Winstar. In addition, Winstar is
seeking immediate injunctive relief requiring Lucent to
specifically perform its contractual obligations, including the
payment of more than $90 million, which Lucent failed to pay to
Winstar on March 30, 2001, in breach of its agreement.

Winstar's legal filing alleges that "Lucent represented that it
had the expertise, personnel and financial wherewithal to
undertake its obligations under the Supply Agreement ... Little
more than two years into the five-year agreement, Lucent has
shown its promises were hollow."

The complaint and supporting materials further allege that
Lucent has been under close scrutiny by analysts regarding its
vendor financing. Lucent has publicly confirmed that in order to
conserve cash, Lucent is actively managing its vendor-financing
portfolio. As Lucent has publicly stated: "We actively manage
our vendor-financing portfolio to minimize the impact on
Lucent's cash requirements." Lucent breached its agreement with
Winstar and injured Winstar's ability to complete its broadband
network. Lucent's breach of its contract with Winstar has forced
the Company to seek protection under the U.S. Bankruptcy Code.

Winstar emphasized that this lawsuit was filed to recover the
damages to its business for its shareholders and bondholders.
The Company stressed that its ability to emerge from the Chapter
11 process as a successful operating entity is not contingent on
the receipt of any damage award in this lawsuit.

BOOK REVIEW: TAKEOVER: The New Wall Street Warriors:
              The Men, The Money, The Impact
Author: Moira Johnston
Publisher: Beard Books
Soft cover: 395 pages
List Price: $34.95
Review by Gail Owens Hoelscher

Takeover is a well-researched, evenhanded account of three 1980s
corporate takeover wars: Crown Zellerbach, TWA, and Unocal.
The author selected these three as examples of the leveraged
buyouts, proxy fights, tender offers, and negotiated mergers
that characterize the era.  The cases demonstrate how the fate
of corporations intertwine, with Texaco, Getty, CBS, Revlon,
Household, and Union Carbide also playing roles.

Takeover is also a precautionary tale. The author characterizes
the takeover phenomenon as a social issue, and studies its
mindset and place in the continuum of U.S. business history. Ms.
Johnston paints in broad strokes, lamenting the clash the
takeover wars represent between "two conflicting elements in our
national character: the capitalist, who has marched to the beat
of Adam Smith's free trade theories since the nation's founding;
and the humanist, marching to nonmaterialist values, who tries
to buffer the poor from the law of the jungle with benevolent
social programs."

What made these megadeals feasible was the convergence of
several dynamics.  First, the existence of many companies with
stock prices below the appraised value of their underlying
assets.  Second, the recent emergence of institutional
investors, who owned large blocks of stock and whose jobs
depended on quick profits.  These institutional investors jumped
on opportunities of tender offers, sometimes giving the
entrepreneur a controlling share of its target's stock.  Third,
risk arbitragers bought up stock as soon as a bid was announced,
driving stock prices up further.  And finally, junk bonds
attracted larger sums of money than ever could have been
attained through traditional channels.

Johnston scrutinizes the players themselves, lawyers and
investment bankers, proxy fighters and arbitragers,
entrepreneurs, money managers and financial analysts, seeking to
find what drives them, and likening them to mercenaries in a
wild bloodless war of greed and power. She admires them as
individualists in the true American mold, as exemplifying the
ultimate American dream, rediscovering the founding principles
of hard work, risk, and the rewards of enterprise.  She believes
they act in defiance of the "code of gray caution lived by post
World-War corporate man [that] falls pitifully short of a full-
blown experience of life."  But, she questions their disregard
for the long-term consequences of their actions on companies,
employees, communities, the economy, society as a whole, and
even national security.

Takeover speaks to laymen and professionals as well, with a
style that combines technical description and delightful
readability.  Here's a description of Nicholas Brady of Dillon
Reed:  "He is tall and elegant, with a lean, patrician face and
a gracious manner that lets him serve wax paper-wrapped roast
beef sandwiches at his boardroom table as if it were a champagne
hunt breakfast."

Ms. Johnston's extensive research yields brilliant quotes.  Here
is Skadden Arp's Morris Kramer, on Texaco's victory in acquiring
Getty:  "You've put the peg in the last hole.  You've put in
sixty days.  You're too tired to celebrate. We did have
champagne.  But you don't really celebrate.  As soon as the deal
is over, you go on to another deal."  And Ivan Boesky's closing
remarks in a speech to UC Berkeley business school students:
"Greed is all right by the way.  I want you to know that I think
greed is healthy.  You can be greedy and still feel good about

Moira Johnston is an investigative journalist whose books and
articles have covered q wide array of topics.  Her work has
appeared in the New York Times Magazine, Vanity Fair, National
Geographic, and Esquire.  She is the author of The Last Nine
Minutes:  The Story of Flight 781," an investigation of the
Paris air diasaster of 1974.  She also collaborated with Trevor
Rees-Jones, Princess Diana's bodyguard, in The Bodyguard's


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

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

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Go to order any title today.

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


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Aileen Quijano and Peter A. Chapman, Editors.

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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