TCR_Public/010503.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

               Thursday, May 3, 2001, Vol. 5, No. 87

                            Headlines

ARMSTRONG HOLDINGS: Claimants Tap Ashby Geddes as Local Counsel
ATLANTIC GULF: Case Summary & 20 Largest Unsecured Creditors
BLUESTAR BATTERY: May Liquidate Assets Due To Cash Shortfall
BOYD GAMING: Fitch Affirms Senior Secured Bank Debt At BB
CONVERSE INC.: Completes Asset Sale To Footwear Acquisition

DANKA BUSINESS: Extends Securities Exchange Offer to May 31
FACTORY CARD: Avalon Group Objects to Exclusivity Extension
FORREST COILE: Architectural Firm Files For Bankruptcy
FRUIT OF THE LOOM: Union Inks Lease Deals With Comdisco & Ricoh
GENEVA STEEL: Bargaining Talks With Steelworkers Go On To May 31

HARNISCHFEGER: Exclusive Solicitation Period Extended To June 7
HOOKMEDIA: Files for Chapter 11 Bankruptcy Protection
ICG COMMUNICATIONS: Hires Zolfo Cooper As Bankruptcy Consultant
IMC GLOBAL: Fitch Rates New Senior Unsecured Notes 'BB'
IMC HOME: S&P Slashes Rating On Class B Notes To D From CCC

IMPERIAL SUGAR: Hormel Acquires Diamond Crystal For $65MM Cash
iNTELEFILM CORPORATION: NASDAQ Intends To Delist Shares On May 8
KENTUCKY ELECTRIC: Defaults on Bank Loan Financial Covenant
LET'S TALK: Exits Chapter 11 Bankruptcy
MARINER POST-ACUTE: Calif. GranCare Facility Fetches $1,005,000

MATTHEWS STUDIO: Selling New York Operation For $12.65 Mil Cash
MERRILL CORP.: Moody's Junks Senior Subordinated Note Rating
MICROAGE INC.: ScanSource Wins Bid For Pinacor CTI Assets
MOE GINSBURG: NYC Men's Apparel Store Declares Bankruptcy
MONEY'S FINANCIAL: Disclosure Statement Hearing Is On May 18

NATIONAL ENERGY: Taps KPMG To Replace Ernst & Young As Auditors
NORTHWESTERN STEEL: Proposes Employee Retention & Severance Plan
PACIFIC GAS: Puget Asks For Stay Relief To Continue Litigation
PILLOWTEX CORPORATION: Hires Tex-Mach As Exclusive Sales Agent
SAFETY-KLEEN: Rejecting Various Burdensome Leases & Contracts

SOURCE MEDIA: Misses $5.3 Million Interest Payment On Debt
SUN HEALTHCARE: Retains Cushman as Real Estate Brokers
SYMONS INTERNATIONAL: Schedules Shareholders Meeting On May 30
TALK CITY: Shares Kicked Off Nasdaq Market, Now Trading On OTCBB
TERMOEMCALI: S&P Affirms CCC Foreign Currency Rating on Bonds

TITANIUM METALS: Plans To Resume Payment Of Dividends On June 1
TITANIUM METALS: Resolves Purchase & Supply Disputes With Boeing
US DIAGNOSTIC: Discloses Further Board Member Changes
VISION METALS: Delaware Court Fixes June 15 Bar Date
VLASIC FOODS: Trade Debt Holders Move For Their Own Committee

W.R. GRACE: Paying Shipping And Warehousing Claims
WINSTAR COMMUNICATIONS: Court Grants More Time To File Schedules

                            *********

ARMSTRONG HOLDINGS: Claimants Tap Ashby Geddes as Local Counsel
---------------------------------------------------------------
The Asbestos Claimants' Committee in Armstrong Holdings, Inc.'s
chapter 11 cases, seeks Judge Farnan's approval of its intended
retention of Ashby & Geddes as its local, Delaware counsel, as
of the Petition Date. The Asbestos Claimants' Committee
anticipates Ashby & Geddes will render professional services
including, but not limited to:

      (a) Providing legal advice regarding the rules and
practices of the Bankruptcy Court applicable to the Asbestos
Claimants' Committee's powers and duties as an official
committee appointed under bankruptcy law;

      (b) Providing legal advice regarding the rules and
practices of the Bankruptcy Court applicable to any disclosure
statement and plan filed in the bankruptcy case, and with
respect to the process for approving or disapproving disclosure
statements and confirming or denying confirmation of a plan;

      (c) Preparing and reviewing applications, motions,
complaints, answers, orders, agreements and other legal papers
filed on behalf of the Asbestos Claimants' Committee for
compliance with the rules and practices of the Bankruptcy Court;

      (d) Appearing in Court to present necessary motions,
applications and pleadings and otherwise protecting the
interests of the Asbestos Claimants' Committee and the Debtors'
asbestos-related, personal injury creditors;

      (e) Investigating, instituting and prosecuting causes of
action on behalf of the Asbestos Claimants' Committee and/or the
Debtors' estates; and

      (f) Performing such other legal services for the Asbestos
Claimants' Committee as the Asbestos Claimants' Committee
believes may be necessary and proper in the proceedings.

The Asbestos Claimants' Committee guaranteed that, while it is
also seeking to retain the law firm of Caplin & Drysdale
Chartered, as its lead counsel, Ashby & Geddes and Caplin &
Drysdale will work together to ensure that there will be no
unnecessary duplication of effort on behalf of, or services
rendered to, the Asbestos Claimants' Committee.

Subject to the Court's approval and in accordance with
bankruptcy law, the Asbestos Claimants' Committee requested that
Ashby & Geddes be compensated on an hourly basis plus reimbursed
for the actual, necessary expenses it incurs. The hourly rates
applicable to the attorneys and paralegals proposed to represent
the Asbestos Claimants' Committee are:

      Professional             Position         Rate
      ------------             --------         ----
      William P. Bowden        Partner          $325 per hour
      Phillip Trainer          Partner          $300 per hour
      Christopher S. Sontchi   Partner          $285 per hour
      Matthew G. Zaleski, III  Associate        $250 per hour
      Gregory A. Taylor        Associate        $155 per hour
      Cathie J. Boyer          Paralegal        $120 per hour
      Benjamin W. Keenan       Paralegal        $100 per hour

The Asbestos Claimants' Committee explained that the listing is
not exclusive, and other professionals at Ashby & Geddes may
perform services for the Asbestos Claimants' Committee.

William P. Bowden, a member of the firm Ashby & Geddes, assured
Judge Farnan that Ashby & Geddes does not labor under any
conflict of interest with the Debtors, their creditors or any
other party-in- interest, and that the firm is a "disinterested
person" within the terms meaning under bankruptcy law. He
disclosed the following representations:

                     Former Representations

      (1) Chase Manhattan Bank, a lender under the Debtor
Armstrong's $450 million Revolving Credit Agreement, in an
adversary proceeding commenced in the bankruptcy proceedings of
Lomas Financial Corp.;

      (2) Bank One Corp., which may be an affiliate of Banc One
Capital Markets, an underwriter of the Debtors, in the
bankruptcy proceedings of Just For Feet, Inc.;

      (3) Wachovia Bank, N.A., which (i) issued a letter of
credit in connection with the issuance of $10 million City of
Somerset, Kentucky Industrial Building Revenue Bonds - 1989
Series, (ii) is a lender to Armstrong under the $450 million
Revolving Credit Agreement, and (iii) may have an interest in
the $270 million 8.43% Series A Guaranteed Serial ESOP Notes due
1989-2001, or the 9% Series B Guaranteed Serial ESOP Notes due
2001-2004, issued in connection with Armstrong's Employee Stock
Ownership Plan dated June 20, 1989, as Delaware counsel in the
bankruptcy proceedings of the Loewen Group;

      (4) (a) America International Group and/or certain of its
affiliates which may be affiliates of AIG Life Insurance
Company, an insurer of the Debtors, as Delaware counsel in the
bankruptcy proceedings of, (i) Montgomery Ward, (ii) SC New
Haven, and (iii) Cobra Industries;

          (b) American International Group in (i) Aubrey Rogers
Agency, Inc. v. AIG Life Insurance Company, (ii) Continental
Casualty Co. v. American Home Assurance Co., and National Union
Fire Insurance Co. of Pittsburgh, PA, (iii) Anthony Montis v.
Delaware American Life Insurance Co., (iv) American Life
Insurance Co. v. Parra, (v) JAS Securities, LLP v. American
International Group, Inc., and (vi) Collins v. AIG, in
Delaware's Chancery Court;

      (5) Fleet Capital Corp, which may hold or assert a secured
claim against the Debtors, in the bankruptcy proceedings of
Favorite Brands International, Inc.;

      (6) Exxon Co., which may be an affiliate of Exxon/Mobil
Chemical Co., a creditor of the Debtors, in the bankruptcy
proceedings of Grant Geophysical, et al., Presidio Oil, et al.,
and WRS Corp., et al.;

      (7) First Union National Bank, a lender of Armstrong under
the $450 million Revolving Credit Agreement, in connection with
Philip Services' bankruptcy proceedings;

      (8) Ferro Corp., the Debtors' creditor, in the bankruptcy
proceedings of Anchor Glass Container Corp., et al.;

      (9) Connecticut General Life Insurance Co., which may have
an interest in the $270 million 8.43% Series A Guaranteed Serial
ESOP Notes due 1989-2001 or the 9% Series B Guaranteed Serial
ESOP Notes due 2001-2004 issued by the Debtor Armstrong in
connection with the Employee Stock Ownership Plan dated June 20,
1989, as Delaware counsel in Camelot Music, et al.'s bankruptcy
proceedings;

     (10) Dow Corning Corp., as Delaware counsel in a patent
infringement action pending in the District of Delaware, where
Ashby & Geddes is advised that an officer or director of
Armstrong is or was an officer or director of Dow Corning Corp.
within the past three years;

     (11) Advised J&W Seligman & Co., which owns more than 5% of
the Debtor Armstrong's outstanding common stock, in connection
with an action pending in the Southern District of New York;

     (12) Waste Management, Inc., in connection with the
acquisition of a waste disposal business in, or around
Wilmington, Delaware, where Ashby & Geddes is advised that an
officer or director of Armstrong is, or was an officer or direct
of Waste Management within the last 3 years;

     (13) IBM Credit Corp. which may hold or assert a secured
claim against the Debtors, as Delaware counsel, in the
bankruptcy proceedings of (i) Worldwide Direct, Inc., (ii)
Hechinger Investment Company, (iii) Planet Hollywood
International, Inc., (iv) Montgomery Ward Holding Corp., and (v)
Sun TV and Appliances, Inc.; and

     (14) Advised Morgan Stanley, which holds more than 5% of the
Debtor Armstrong's outstanding common stock, in connection with
the Digex, Inc. shareholders litigation.

                     Current Representations

      (1) Chase Manhattan Bank, N.A., a participant and Agent for
the Debtors' $450 million Revolving Credit Agreement, as
Delaware counsel in the Chase Manhattan Bank. V. Irridium Africa
Corp., litigation;

      (2) Wachovia Bank, as Delaware counsel in the bankruptcy
proceedings of Harnischfeger Industries;

      (3) Union Pacific Corp., in the bankruptcy proceedings of
Safety-Kleen Corp., where Ashby & Geddes is advised that, an
officer or director of Armstrong is, or was an officer or
director of Union Pacific Railroad, which may be an affiliate of
Union Pacific Corp., within the past three years;

      (4) Deutsche Bank Canada, which may be an affiliate of
Deutsche Bank AG, a lender under the Debtor Armstrong's $450
million Revolving Credit Agreement, as Delaware counsel in The
Loewen Group bankruptcy proceedings;

      (5) National Union Fire Insurance Co. of Pittsburgh, PA,
which may be an AIG Life Insurance Co. affiliate, an insurer of
the Debtors, as Delaware counsel in an adversary proceeding
commenced in the bankruptcy proceedings of Fruehauf Trailer
Corp., and in the bankruptcy proceedings of Trans World
Airlines, Inc.;

      (6) Fleet Capital Corp., in the bankruptcy proceedings of,
(i) General Cinemas Theatres, Inc., (ii) Unidigital, Inc., (iii)
American Eco Holding Corp., (iv) Glenoit Corp., (v) Crown
Simplimatic Inc., and (vi) Sun Healthcare Group, Inc.;

      (7) Fleet Business Credit Corp., an affiliate of Fleet
Capital Corp., in the bankruptcy proceedings of (i) AmeriServe
Food Distribution, Inc., (ii) Clark Material Handling Co., (iii)
Dimac Corp., and (iv) Cambridge Industries;

      (8) Banc One Leasing Corp., an equipment lessor, which may
be an affiliate of Bank One Capital Markets, in the bankruptcy
proceedings of, (i) Safety-Kleen Corp., (ii) Allied Digital
Technologies Corp., (iii) Master Graphics, Inc., (iv) Trism,
Inc., and (v) Cherrydale Farms, a/k/a CDF Candy;

      (9) First Union Commercial Corp., an equipment lessor,
which may be an affiliate of First Union National Bank, in
Oneita Industries' bankruptcy proceedings;

     (10) Bank One Trust Co., which may be an affiliate of Bank
One Capital Markets, as Delaware counsel in the bankruptcy
proceedings of Purina Mills;

     (11) Chase Manhattan Trust Co., N.A., the current Indenture
Trustee for the $8.5 million Clinton County Industrial
Development Authority Industrial Revenue Bonds - 1985 Series, as
Delaware counsel in the bankruptcy proceedings of Integrated
Health Services, Inc.;

     (12) The Asbestos Claimants' Committee, as Delaware counsel
in the bankruptcy proceedings of Owens Corning, where Ashby &
Geddes is advised that Owens Corning, Inc., is a party to one of
more license agreements with Armstrong, and that Owens Corning
Fibreglass Corp., is a creditor of the Debtors;

     (13) Borden Chemical, Inc., which may be an affiliate of
Borden Chemicals and Plastics, a creditor of the Debtors, in the
Zerby v. Allied Signal, Inc., litigation;

     (14) IDS Life Insurance Co., which may have an interest in
the $270 million 8.43% Series A Guaranteed Serial ESOP Notes due
1989-2001, or the 9% Series B Guaranteed Serial ESOP Notes due
2001-2004;

     (15) Cargill, Inc., in the bankruptcy proceedings of, (i)
AmeriServe Food Distribution, (ii) NutraMax Products, Inc., and
(iii) Favorite Brands International, where Ashby & Geddes is
advised that an officer or director of the Debtor Armstrong is,
or was an officer or director of Cargill Inc., within the past 3
years;

     (16) AIG Life Insurance Co., one of the Debtor's insurance
providers, in the litigation of Mentis v. Delaware American Life
Insurance Co.;

     (17) IBM Corp., in the litigation of Applied Card Systems,
Inc. v. IBM Corp., et al.;

     (18) Merill Lynch, a creditor of the Debtors in connection
with an Installment Note issued by the Debtor Armstrong and due
December 9, 2013, as Delaware counsel in the bankruptcy
proceedings of PHP Healthcare. (Armstrong Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)


ATLANTIC GULF: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Atlantic Gulf Communities Corporation
              13790 NW 4th Street, Suite 113
              Fort Lauderdale, FL 33325

Debtor affiliates filing separate chapter 11 petitions:

              AGC-SP, Inc.
              West Bay Holding Corporation
              Spring Valley Holding Company

Type of Business: Planned community development and asset
                   management company

Chapter 11 Petition Date: May 1, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-01594 through 01-01597

Debtors' Counsel: Michael Lastowski, Esq.
                   Duane, Morris & Hecksher LLP
                   1100 North Market Street
                   Suite 1200
                   Wilmington, DE 19801-1246
                   (302) 657-4942

                        and

                   Mitchell A. Selder, Esq.
                   Kramer Levin Naftalis & Frankel LLP
                   919 Third Avenue
                   New York, NY 10022
                   (212) 715-9100

Total Assets: $148,546,000

Total Liabilities: $170,251,000

Consolidated List of Debtors' 20 Largest Unsecured Creditors:

Entity                        Nature of Claim     Claim Amount
------                        ---------------     ------------
John Laguardia                Judgment             $349,000
6073 Masters Blvd.
Orlando, FL 32819-4303
(407)876-7748

Broad River LLC               Consultant           $138,514

American Stock Transfer       Transfer Agent       $114,763

William G. Peacher            Severance             $51,692

Ernst & Young LLP- Atlanta    Auditor               $55,600

IBM-Atlanta                   Lease Returned        $54,000

Deutsche Bank Securities Inc. Financial Analysis    $45,518

Baptist Hospital              Self Insured Medical  $18,586

American Metro/Study-Houston  Market Analysis       $14,000

Bernal, O.A. & Vasquez C.G.   C/R Refund             $6,961

Mohamed, Mohamed, M.          C/R Refund             $6,758

Brinks, Kirk Robert           Severance              $6,346

Zuena, Joseph M.              Severance              $6,346

Vasquez, Jorge & L.           C/R Refund             $5,922

Lee, Chien-Te                 C/R Refund             $5,718

Bloomer, Sharon L.            Severance              $5,423

Liu, Tzu-I                    C/R Refund             $5,300

Lin Heather                   C/R Refund             $5,082

Totti, Norma B.               C/R Refund             $4,810

Lin, Hsiao-Wen                C/R Refund             $3,936


BLUESTAR BATTERY: May Liquidate Assets Due To Cash Shortfall
------------------------------------------------------------
BlueStar Battery Systems International warned that it could be
forced to liquidate its assets after failing to raise an
infusion of new capital from investors, according to The News &
Observer. BlueStar blamed "very poor market conditions" for its
inability to raise cash from investors. The Raleigh, N.C.-based
company put its Canadian operations through the equivalent of a
bankruptcy reorganization last fall, which wiped out $30.5
million of its debt. Aside from reorganizing its Canadian
business, last year BlueStar sold its manufacturing business and
retail operations, liquidated a California subsidiary and sold
off much of its Canadian business. The company plans to sell or
liquidate its remaining Canadian operations. The company
provides BlueStar-brand automotive batteries and related
products such as alternators to retail outlets that sell and
install those products. (ABI World, May 1, 2001)


BOYD GAMING: Fitch Affirms Senior Secured Bank Debt At BB
---------------------------------------------------------
Fitch has affirmed the rating on Boyd Gaming's (NYSE:BYD) senior
secured bank credit agreement at 'BB'.

At the same time, the ratings on BYD's senior notes are affirmed
at 'BB-' and the senior subordinated notes at 'B'. This rating
action follows the company's announcement that it has entered
into a definitive agreement to acquire the Delta Downs Racetrack
for $115 million-$125 million. The transaction is subject to
certain regulatory approvals. The Rating Outlook is Stable.

The affirmation is based on the company's diversified property
portfolio, a strong customer focus as well as a favorable track
record with respect to integrating acquisitions. The ratings
also incorporate the strategic land-based location of the
property, which will be the closest casino currently available
to the Southeast Texas market, including Houston, and the solid
cash flow potential of the casino.

Concerns are centered upon the company's relatively high debt
levels in relation to cash flows. In particular, pro forma for
the acquisition, debt-to- last twelve month (LTM)- EBITDA is
expected to increase to 5.9 times (x) (assuming a $125 purchase
price and including $30 million in capital expenditures)
compared to 5.1x for LTM ended March 31, 2001. Over the near
term, credit statistics are expected to remain at the low end of
the rating range. However, Fitch expects solid incremental cash
flow from the acquired property as well as improved performance
at existing properties to reduce debt-to-EBITDA in the range of
4.5x-5x over the next 12-18 months. Additional credit concerns
include improving, but weaker than expected, results at BYD's
two Sam's Town casinos, which are attempting to regain market
share following property renovations. Moreover, BYD is subject
to construction risk pertaining to the company's joint venture
project, the Borgata, in Atlantic City. In addition, BYD must
fund an additional $75 million for the Borgata project between
the third quarter of 2001 and the first quarter of 2002,
limiting financial flexibility at the current rating category.

While BYD is expected to fund the acquisition and associated
capital expenditures by increasing the current secured bank line
from $700 million to approximately $800 million (current
availability of $150 million), BYD would need to amend the
company's current senior secured covenant and receive bank
approval. However, Fitch expects BYD to term out a portion of
the bank debt with a long-term note issuance in the near term.


CONVERSE INC.: Completes Asset Sale To Footwear Acquisition
-----------------------------------------------------------
Converse Inc. (OTC BB:CVEO) announced that the sale of
substantially all of its assets to Footwear Acquisition, Inc.
was accomplished as scheduled on April 30, 2001. As previously
disclosed, the sale price was $117,500,000, subject to
adjustments. Over the next several weeks, closing levels of
inventory and accounts receivable will be calculated, and the
final sale price will be determined.

Proceeds of the sale will be used to repay amounts outstanding
under the Company's debtor in possession financing facility. The
remaining proceeds will be utilized to fund the ongoing expenses
of the Company's Chapter 11 case and to fund creditor
distributions. Creditor claims substantially exceed available
proceeds, but there has been no determination of any amount
payable to unsecured creditors or the timing of any such
payment. No distribution to stockholders is expected.

Because the sale included the name Converse and all other
intellectual property, the Company plans to change its name to
CVE Corporation.


DANKA BUSINESS: Extends Securities Exchange Offer to May 31
-----------------------------------------------------------
Danka Business Systems PLC (Nasdaq:DANKY) announced the
extension of its pending exchange offer for all $200 million of
its outstanding 6.75% convertible subordinated notes due April
1, 2002 (CUSIP Nos. G2652NAA7, 236277AA7, and 236277AB5).

The expiration date for the exchange offer has been extended
from 5:00 p.m., New York City time, on April 30, 2001 to 5:00
p.m., New York City time, on May 31, 2001, subject to
satisfaction or waiver of certain conditions and unless
extended. The Company said all other terms of the offer remain
unchanged.

The Company announced that as of 5:00 p.m., New York City time,
on April 30, 2001, it had received tenders from holders of a
total of $145,452,000 in aggregate principal amount of the 6.75%
convertible subordinated notes, representing approximately 73%
of the outstanding notes. Of the notes tendered pursuant to the
exchange offer, $85,738,000 in principal amount has been
tendered for the limited cash option, $815,000 in principal
amount has been tendered for the new 9% note option, and
$58,899,000 in principal amount has been tendered for the new
10% note option.

Danka's Chief Executive Officer, Lang Lowrey, commented, The
bond exchange process is one of many facets of our financial
restructuring plan. Typically, in like situations, this aspect
of the process is completed in close coordination with the other
parts of the overall transaction. In Danka's case, it will be
important that we finalize commitments from our senior lenders
and announce the closing date of the DSI sale before we expect
to complete the exchange offer. We are very pleased with the
progress we have made to date.

The exchange offer is subject to certain conditions, including
participation by holders of at least 95% of the 6.75%
convertible subordinated notes, the refinancing of Danka's
existing senior bank debt, and the sale of Danka's outsourcing
division, Danka Services International (DSI). The Company
anticipates that it will close the exchange offer, the
refinancing of the senior bank debt, and the sale of DSI on or
before June 30, 2001. The complete terms of the exchange offer
are contained in the amended registration statement for the
exchange offer filed on April 17, 2001.

The limited cash option has been over-subscribed. Therefore,
holders choosing the limited cash option should expect to
receive new 9% notes for a portion of the notes that they tender
for cash.

Banc of America Securities LLC is the exclusive dealer manager
for the exchange offer. D.F. King & Co., Inc. is the information
agent and HSBC Bank USA is the exchange agent. Additional
information concerning the terms and conditions of the offer may
be obtained by contacting Banc of America Securities LLC at
(888) 292-0070.

Danka Business Systems PLC, headquartered in London, England and
St. Petersburg, Florida, is one of the world's largest
independent suppliers, based on revenues, of office imaging
equipment and related services, parts and supplies. Danka
provides office products and services in approximately 30
countries around the world.

Danka Services International, the outsourcing division of Danka
Business Systems PLC, provides on- and off-site document
management services, including the management of central
reprographics departments, the placement and maintenance of
photocopiers, print-on-demand operations and document archiving
and retrieval services.


FACTORY CARD: Avalon Group Objects to Exclusivity Extension
-----------------------------------------------------------
Avalon Group, Ltd. objected to the motion of Factory Card Outlet
Corp, et al. seeking a further extension of their exclusive
periods. The debtors engaged Avalon to provide them with certain
financial advisory services.

Avalon claimed that the comprehensive plan of reorganization
that the debtor now contemplates is a "Transaction" as described
in Avalon's engagement letter. Consequently, Avalon argued that
the ultimate consummation of the plan entitles Avalon to earn
and be paid a fee as provided in the engagement letter.

Avalon stated that the extensions of exclusivity will
substantially prejudice Avalon's rights and interests and
therefore should be denied.

The hearing to consider approval of the joint disclosure
statement is set for May 17, 2001 before the Honorable Peter J
Walsh, District of Delaware.

Richard P. Krasnow of Weil, Gotshal & Manges LLP and Daniel J.
DeFranceschi and Michael J. Merchant of Richards, Layton &
Finger, PA are attorneys for the debtors.


FORREST COILE: Architectural Firm Files For Bankruptcy
------------------------------------------------------
Forrest Coile Associates, which is best known for the design of
The Virginia Living Museum, Riverside Regional Medical Center
and the Midtown Community Center, has filed for chapter 11
bankruptcy protection, according to the Daily Press. Company
CEO, Duane DeBlasio, said that the company's problems were a
result of losing some key people to retirement and having
several "key projects" shelved by clients. The Newport News,
Va.-based company, originally founded in 1932 as Williams, Coile
& Pipino, has estimated assets of about $50,000 and between 50
to 99 creditors. It has liabilities between $1 million and $10
million. (ABI World, May 1, 2001)


FRUIT OF THE LOOM: Union Inks Lease Deals With Comdisco & Ricoh
---------------------------------------------------------------
Union Underwear, the subsidiary of Fruit of the Loom, Ltd.,
asked and received permission from Judge Walsh, pursuant to
sections 105(a) and 363(b)(1), to enter into two lease
agreements.

The first is with Comdisco Inc. Union will lease certain
computer equipment, including related repair and technical
services. The services and equipment are necessary for replacing
and expanding components of Fruit of the Loom's information
management and storage systems. The term of the Comdisco
agreement is twelve quarters, equivalent to three years. The
aggregate three-year rent to be paid by Union is $3,972,000,
based on twelve quarterly payments of $331,000. The equipment
and related services have an original cost of approximately
$2,700,000. The agreement requires Union to provide a letter of
credit in the amount of $3,000,000 in favor of Comdisco. Union's
performance will be guaranteed by Fruit of the Loom, Ltd., the
ultimate parent corporation and debtor-in-possession.

An agreement with Ricoh involves duplicating equipment,
including related repair and technical services, which are
necessary for the replacement of leased copying equipment
throughout Fruit of the Loom's domestic offices. The new
equipment will yield monthly cost savings of approximately
$10,000. The agreement is for thirty-six months. The estimated
aggregate rent to be paid by Union is $994,000. The equipment
and related services have an original cost of approximately
$1,000,000. Fruit of the Loom will make thirty-six monthly rent
payments, which are determined based on a guaranteed minimum
number of copies, plus a cost-per-copy charge for additional
copies.

Union stated that the provisions in the agreement are consistent
with those provided by the lessors generally. The agreements
were negotiated in good faith. The agreements will provide
equipment that is critical to information systems capacity and
duplication capability, allowing Debtor to operate more
efficiently.

Ms. Stickles told the Judge that execution and performance of
the agreements would be in the ordinary course of business and,
therefore, authorized under section 363(c)(1). However, in an
abundance of caution and at the specific request of both
Comdisco and Ricoh, Union sought the Court's approval of the
transactions. (Fruit of the Loom Bankruptcy News, Issue No. 27;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


GENEVA STEEL: Bargaining Talks With Steelworkers Go On To May 31
----------------------------------------------------------------
Geneva Steel Holding Corp. has extended its collective
bargaining agreement with United Steelworkers Local 2701 until
May 31, which was set to expire Tuesday, according to Dow Jones.
The extension allows the recently-emerged company more time to
resolve issues related to a new bargaining agreement. Geneva,
which makes steel plate, pipe, and hot-rolled coil, promised to
meet regularly with union representatives. (ABI World, May 1,
2001)


HARNISCHFEGER: Exclusive Solicitation Period Extended To June 7
---------------------------------------------------------------
Harnischfeger Industries, Inc. sought and obtained the Court's
approval, pursuant to section 1121(d) of the Bankruptcy Code,
further extending the period during which they have the
exclusive right to solicit acceptances of the Plan to June 7,
2001.

The Debtors reminded Judge Walsh that the Court moved the
confirmation hearing, from the original date of March 5, 2001 to
April 3, 2001. Subsequently, the Court set an unexpected
briefing schedule on April 10, 2001. The confirmation hearing
began on April 3, 2001 and continued on April 10, 2001. Both of
these hearing dates were used to address the Equity Committee's
objection to the Plan. At the conclusion of the April 10, 2001
hearing, the Court requested that the Debtors and the Equity
Committee file post-hearing briefs, findings of fact and
conclusions of law regarding the Equity Committee's Objection to
the Plan no later than April 30, 2001, after which time the
Court will render its decision. A third day of the confirmation
hearing was scheduled for April 17, 2001.

In light of the present scheduling, a confirmation order may not
be entered until sometime in May, 2001. Therefore, the Exclusive
Solicitation Period must be extended to accommodate this
schedule change, the Debtors observed.

Otherwise, the Debtors noted, all the progress that they have
made will be for naught and this would defeat the purpose of
section 1121 of the Bankruptcy Code of affording the Debtors a
meaningful and reasonable opportunity to confirm a cohesive plan
of reorganization. Moreover, extension of the Exclusive
Solicitation Period will not bar the Debtors' creditors or other
parties in interest, the Debtors told Judge Walsh.

Therefore, the Debtors asserted that, in affording them the
opportunity in seeking confirmation of the Joint Plan, which is
one of the last steps in the process to emerge from chapter 11,
the extension of the period is in the best interest of the
estates. (Harnischfeger Bankruptcy News, Issue No. 41;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


HOOKMEDIA: Files for Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Boston-based HookMedia, an Internet media planner, filed for
chapter 11 bankruptcy protection in order to buy time to
finalize a recently negotiated asset sale with Media Contacts,
according to Bostoninternet.com. The company will ask the
bankruptcy court to approve the deal by the end of the month.
HookMedia, which filed for protection after one of its largest
clients drastically cut its business with the firm, plans to
continue operations while the matter is in court. (ABI World,
May 2001)


ICG COMMUNICATIONS: Hires Zolfo Cooper As Bankruptcy Consultant
---------------------------------------------------------------
Judge Walsh approved ICG Communications, Inc.'s application to
employ Zolfo Cooper as their bankruptcy consultant and special
financial advisor, effective as of the Petition Date. However,
Judge Walsh ordered that all of Zolfo's fees and expenses in
these cases are subject to approval by the Bankruptcy Court
under a "reasonableness" standard upon proper application by
Zolfo in accordance with the Bankruptcy Code, Rules, the Local
Rules of the Court, and any other applicable orders, and with
the express reservation of the rights of all parties in
interest; however, approval of the reasonableness of Zolfo's
fees and expenses shall not be evaluated solely on hourly-based
criteria. (ICG Communications Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


IMC GLOBAL: Fitch Rates New Senior Unsecured Notes 'BB'
-------------------------------------------------------
Fitch has assigned a rating of `BB+' to IMC Global's senior
secured notes and senior secured credit facility and a rating of
`BB' to IMC Global's new senior unsecured notes and outstanding
senior unsecured notes.

The senior secured debt ratings apply to the company's $500
million senior secured credit facility and certain outstanding
bonds. In conjunction with the assignment of ratings to IMC
Global, Fitch has lowered the rating on Phosphate Resource
Partners to `BB+' from `BBB-'. The Rating Outlook is Stable for
both IMC Global and Phosphate Resource Partners.

The one-notch differential between IMC Global's senior secured
credit facility and its unsecured notes is based on the working
capital and certain fixed assets pledged under the company's
credit facility. The credit facility has been secured as
permitted under the outstanding senior note indentures; however,
the Phosphate Resource Partners notes and certain other IMC
Global notes, totaling approximately $230 million, contain
provisions that allow noteholders to share equally and ratably
in the security granted to the senior secured credit facility.

The ratings are supported by IMC Global's leading world cost
position in phosphate and potash production, cash flow generated
during the current weak pricing environment, and assets
available for sale to meet required capital expenditure and debt
service requirements over the next two years, at which time
demand-supply fundamentals in the phosphate business are likely
to show a significant improvement. Near-term cost pressures
should subside as natural gas and ammonia prices decline
together and access to lower-cost sulfur becomes available in
2002 through a new sulfur-remelter joint venture with CF
Industries and Cargill.

Credit protection measures, particularly EBITDA-to-interest
coverage and debt-to-EBITDA, are expected to remain cyclically
weak through 2001 as phosphate markets remain weak in the wake
of reduced Chinese and Indian imports of finished phosphate
products, particularly diammonium phosphate (DAP). Short-term,
Chinese imports of DAP could remain weak until China finalizes
its entry into the World Trade Organization and finalizes the
associated trade agreements that cover fertilizer import quotas.
On balance, the North American phosphate industry is better
positioned than the North American nitrogen industry, but a
recovery in the near term will still depend in large part on
world trade patterns.

Total debt at 2000 year-end was just under $2.5 billion. The
current $1 billion refinancing includes $500 million of senior
unsecured notes and a $500 million senior secured credit
facility, the proceeds of which will be used to refinance a $200
million maturity, the existing credit facility, and the existing
receivables facility. Salt and chemical asset sales should allow
significant reduction in debt levels but will not have much
impact on EBITDA-to-interest coverage or debt-to-EBITDA credit
statistics, mainly because any debt reduction from asset sales
would be offset by EBITDA that would go away. With or without
asset sales, EBITDA-to-interest is expected to remain between
2.0 times (x) and 3.0x through the current downturn in the
phosphate business before improving to between 3.0x and 4.0x in
the first year of a turnaround in phosphate markets. Debt-to-
EBITDA levels are expected to approximate 5.0x in 2001, with any
significant improvement based on an improvement in phosphate
world trade. Free cash flows before the effects of working
capital are expected to be close to zero until the phosphate
business improves, at which time free cash flow will increase in
a meaningful way.


IMC HOME: S&P Slashes Rating On Class B Notes To D From CCC
-----------------------------------------------------------
Standard & Poor's lowered its rating on IMC Home Equity Loan
Trust 1997-5's class B notes to 'D' from triple-'C'.
Concurrently, ratings are affirmed on all other classes.

The lowered ratings on the class B notes reflect a $44,434
principal write-down reported in the March 20, 2001
distribution. The write-down resulted from realized losses to
the secured residential mortgage collateral having fully
depleted loss protection for class B and thus permanently
eroding approximately $44,434 of the class B principal. Standard
& Poor's projects that the class B notes could potentially
experience principal write-downs totaling approximately $13
million by April 2002.

The affirmed ratings on all other classes of series 1997-5 notes
reflect current and projected credit support percentages, which
are higher than credit support percentage levels at closing.
The series 1997-5 issue structure employs excess interest cash
flow, overcollateralization, and shifting interest senior
subordination to protect the certificates from losses. The
overcollateralization balance is currently zero with no near-
term expectation for growth. Monthly excess interest is now
being fully directed to cover losses, and net losses have
outpaced monthly excess interest cash flow in each of the last
12 months. The class B notes are the most junior class of notes
in the issue structure and do not have subordinate loss
protection.

The 1997-5 notes are backed by a combination of first- and
second-lien, fixed- and adjustable-rate, subprime, residential
home equity mortgage loans originated or acquired by IMC
Mortgage Co. (formerly Industry Mortgage Co. L.P.). The total
delinquency rate in the IMC 1997-5 mortgage pool is
approximately 19.34%, with approximately 14.17% accounting for
seriously delinquent loan volume. Cumulative losses equal
approximately 4.84% of the initial bonded amount, Standard &
Poor's said.


IMPERIAL SUGAR: Hormel Acquires Diamond Crystal For $65MM Cash
--------------------------------------------------------------
Hormel Foods Corporation (NYSE: HRL) announced completion of its
purchase of the assets of Diamond Crystal Brands nutritional
products (DCBNP), headquartered in Savannah, Ga. The transaction
is valued at approximately $65 million in cash.

Hormel Foods announced on Feb. 21, 2001, the definitive
agreement to acquire the assets of DCBNP, a division of Imperial
Sugar Company. Hormel Foods will merge the assets of DCBNP into
its Hormel HealthLabs subsidiary, which acquired the business
and production facility of Cliffdale Farms in December 2000,
making it one of the industry leaders in nutritionally enhanced
food products.

DCBNP sells a variety of nutritionally enhanced products to
foodservice customers, primarily hospitals and nursing homes.
The company's product line has more than 170 items that provide
a high level of nutrients in good-tasting, visually appealing,
economical and easy-to-use formulations.

This acquisition strengthens Hormel HealthLabs' position in the
nutritionally enhanced food products market, said Joel W.
Johnson, chairman of the board, president and chief executive
office of Hormel Foods. A rapidly growing aging population is
providing an opportunity for the Hormel HealthLabs team to
develop new products in order to address their medical and
nutritional needs. This acquisition helps us expand our
leadership role.

                About Hormel HealthLabs

Hormel HealthLabs markets flavorful foods for people with
special dietary needs, such as dysphagia, bowel problems,
malnutrition and diabetes. Products are marketed to hospitals,
nursing homes and other health facilities. Originally known as
American Institutional Products (AIP), the business was acquired
in 1994 and the headquarters subsequently relocated to Austin,
Minn. In December 2000, Hormel HealthLabs acquired the business
and production facility of Cliffdale Farms, located in
Quakertown, Pa.


iNTELEFILM CORPORATION: NASDAQ Intends To Delist Shares On May 8
----------------------------------------------------------------
iNTELEFILM Corporation (Nasdaq:FILM) received notice from Nasdaq
that its shares will be delisted from the Nasdaq National Market
at the opening of business on May 8, 2001, due to non-compliance
with the minimum net tangible worth requirement. However,
iNTELEFILM has requested an oral hearing before a Nasdaq Listing
Qualification Panel to contest the delisting of its shares from
the Nasdaq Market. This hearing request stays the delisting
pending the panel's decision.

If iNTELEFILM shares do not continue to be listed on the Nasdaq
Stock Market, trading, if any, would be conducted in the over-
the-counter market in the so-called pink sheets or on the OTC
Bulletin Board, which was established for securities that do not
meet the Nasdaq Stock Market listing requirements. Consequently,
selling iNTELEFILM shares would be more difficult because
smaller quantities of shares could be bought and sold,
transactions could be delayed, and security analyst and news
media coverage of iNTELEFILM may be reduced.

These factors could result in lower prices and larger spreads in
the bid and ask prices for iNTELEFILM shares. There can be no
assurance that iNTELEFILM shares will continue to be listed on
the Nasdaq Stock Market.


KENTUCKY ELECTRIC: Defaults on Bank Loan Financial Covenant
-----------------------------------------------------------
Kentucky Electric Steel, Inc. (NASDAQ:KESI) announced the
results for its fiscal 2001 second quarter. Net sales for the
fiscal quarter ended March 31, 2001 of $21.4 million, although
32% above last quarter, were down 27.4% from fiscal 2000 second
quarter net sales of $29.5 million. Shipments of 53,000 tons for
the second quarter of fiscal 2001 were down 23% and the average
selling price was down 5.9% from the comparable quarter in
fiscal 2000. The Company reported a net loss of $(1,407,000), or
$(.35) per share in the second quarter of fiscal 2001 compared
to net income of $362,000, or $.09 per share in the second
quarter of fiscal 2000. The net loss for the second quarter of
fiscal 2001 included pretax special charges totaling $(472,000)
consisting of a bad debt provision related to a major customer
which filed bankruptcy, a workforce reduction charge, and income
from a claim settlement pertaining the Company's purchase of
electrodes for the years 1992 to 1997.

For the six months ended March 31, 2001 net sales were $37.6
million, down 35.7% from fiscal 2000 first six months net sales
of $58.5 million. Shipments of 93,700 tons for the first six
months of fiscal 2001 were down 33% and the average selling
price was down 4.4% from the first six months of fiscal 2000.
The Company reported a net loss of $(2,631,000), or $(.65) per
share for the six months ended March 31, 2001 compared to a net
loss of $(258,000), or $(.06) per share for the comparable
period of fiscal 2000.

Charles C. Hanebuth, President and Chief Executive Officer of
Kentucky Electric Steel, Inc. commented, "Operating results for
the quarter and six months ended March 31, 2001 continue to be
adversely impacted by soft market conditions, industry inventory
reductions, high import levels, and lower selling prices. Also
manufacturing costs per ton increased, reflecting lower
production levels and higher energy costs partially offset by
lower raw material costs."

Commenting on the workforce restructuring process, Mr. Hanebuth
indicated, In our continuing efforts to reduce costs and improve
our competitiveness, we began a process in the second fiscal
quarter of restructuring our salaried and hourly workforce.
While this is a difficult endeavor, upon completion of this
process in the fourth quarter of fiscal 2001, we expect to
realize significant employment cost savings and improve our
competitive position in the marketplace.

Commenting on the current market conditions, Mr. Hanebuth
stated, "Our sales continue to be negatively impacted by soft
market conditions and high levels of steel imports. Although
year-to-year comparisons are unfavorable, on the positive side,
second quarter shipments were up significantly from the prior
quarter. While we are cautiously optimistic that demand for our
products will strengthen in the latter part of the year, the
next quarter should be difficult as shipment and production
levels will likely remain depressed."

The Company has a $24.5 million unsecured revolving credit
facility , pursuant to which $12.6 million is currently
outstanding, as well as $16.7 million outstanding under an
unsecured term loan and lease obligations totaling $7.8 million
with various financial institutions. Each of these financing
arrangements contains a covenant requiring the Company to
maintain a fixed charge coverage ratio of 2:1 for the four
fiscal quarters ended March 31, 2001. As of such date,
the Company failed to meet the fixed charge coverage ratio
covenant. The Company is not in default in the payment of any
amounts under such financing arrangements. The Company is in
negotiations with other financial institutions, as well as
continuing negotiations with its current financial institutions,
regarding its financing requirements. There can be no assurance,
however, that the Company will be successful in negotiating
terms which will enable it to extend or continue its
relationship with its current financial institutions,
each of which has a right to declare a default and exercise its
rights and remedies under its agreements with the Company, or
obtaining acceptable replacement financing. The Company has $5.6
million in unencumbered cash at March 31, 2001 which should
provide us with financial flexibility during the negotiations.

Kentucky Electric Steel, Inc. is a publicly held company which
operates a specialty steel mini-mill manufacturing special
quality steel bar flats for the leaf-spring suspension, cold
drawn bar conversion, truck trailer support beam, and steel
service center markets. Kentucky Electric Steel, Inc.'s common
stock (NASDAQ:KESI) is traded on the NASDAQ National Market.


LET'S TALK: Exits Chapter 11 Bankruptcy
---------------------------------------
Let's Talk Cellular & Wireless, Inc. (OTC:LTCW), one of the
nation's largest specialty cellular and wireless retailers, said
it has consummated its Chapter 11 Plan of Reorganization, which
had previously been approved by the United States Bankruptcy
Court for the District of Delaware on April 19, 2001, and has
emerged from Chapter 11 protection.

Under the Plan, substantially all of Let's Talk Cellular &
Wireless's nationwide distribution network has been transferred
to a subsidiary of Nextel Communications, Inc. (Nasdaq:NXTL) and
will be operated under the Nextel banner on a going-forward
basis. Let's Talk Cellular & Wireless received $33.6 million in
cash, subject to certain potential adjustments which may be made
over the next 90 days, for the operations associated with
approximately 200 Let's Talk Cellular & Wireless stores where
Nextel currently operates. In connection with the consummation
of the Plan, Let's Talk Cellular & Wireless also announced that
it had received Bankruptcy Court approval to sell, in four
separate transactions, its Puerto Rico and upstate New York
retail outlets and its paging business for aggregate proceeds of
approximately $2.7 million. Let's Talk Cellular & Wireless
expects these separate transactions to close imminently. Under
the Plan, which won the approval of over 90% of Let's Talk
Cellular & Wireless's creditors, all proceeds from the Nextel
transaction, the Puerto Rico, upstate New York and paging
business sales, and the disposition of Let's Talk Cellular &
Wireless's remaining assets will be distributed first to the
company's senior secured lenders, lead by The Chase Manhattan
Bank, and then to the company's other creditors. Let's Talk
Cellular & Wireless currently anticipates that total
distributions under the Plan will be approximately $45 million.

Due to the extraordinary efforts of our employees, Let's Talk
Cellular & Wireless was able to return the Company to positive
EBITDA results which, among other things, led to the Nextel
transaction, said Let's Talk Cellular & Wireless CEO and founder
Brett Beveridge. The Nextel deal, together with the other
transactions under the Plan, produces the best possible results
for all of our constituencies consistent with our overriding
goal of maximizing value through the chapter 11 process.

Let's Talk Cellular & Wireless was one of the nation's largest
independent specialty retailers of cellular and wireless
products, services and accessories in the United States. The
Company owned and operated 233 stores in 21 states, the District
of Columbia and Puerto Rico. In its most recently filed U.S.
Trustee operating report, the Company reported consolidated net
sales for the 9 month period ending February 28, 2001 of
approximately $65.7 Million.


MARINER POST-ACUTE: Calif. GranCare Facility Fetches $1,005,000
---------------------------------------------------------------
Mariner Post-Acute Network, Inc.'s wholly owned subsidiary
GranCare of Northern California, Inc. and the other MPAN Debtors
sought and obtained the Court's approval of:

      (1) the Asset Purchase Agreement, dated as of March 14,
2001 by and between MEK Sacramento, LLC as a "good faith"
purchaser and GranCare as seller, with respect to the sale of
the Norwood Pines Alzheimer Center;

      (2) the sale of the Facility and its related assets, free
and clear of liens, claims, encumbrances, and other interests
and exempt from Transfer Taxes;

      (3) the rejection of certain executory contracts related to
the Facility;

      (4) the assumption and assignment to the Buyer of the
Medicare Provider Agreement between GranCare and the Health Care
Financing Administration (HCFA) and the Medicaid Provider
Agreement between GranCare and the California Department of
Health Services (the California DHS) relating to the Facility.

The Purchase Agreement provides that, in exchange for the
Assets, the Buyer shall pay to GranCare approximately $1,005,000
in cash, subject to certain adjustments and prorations. After
such adjustments and prorations are made, GranCare estimates
that its net proceeds will be approximately $800,000.

The Facility, located at 500 Jessie Avenue, Sacramento,
California, 95838, is a 161-bed licensed skilled nursing
facility inclusive of 53 beds for which the relevant licenses
are currently in a state of suspension. The Facility, which
specializes in providing care to patients with psychiatric
disorders and Alzheimer's Disease, is the only facility of its
kind in the Debtors' facility portfolio. For the year ended
September 30, 2000, the Facility produced operating losses of
approximately $348,420, before interest, taxes, depreciation,
and amortization. The average occupancy of the Facility during
the same period was approximately 77.2%. Losses have continued
into the current fiscal year, and for the three-month period
ended December 31, 2000, the Facility produced operating losses
of approximately $122,900 before interest, taxes, depreciation,
and amortization.

Adding to the Facility's profitability problems is GranCare's
inability to utilize 53 of the 161 licensed beds. Significant
structural damage, which resulted from flooding, recently
rendered an entire section of the Facility essentially unusable
and led GranCare to request a suspension of its license as to
the 53 beds affected. GranCare estimates that the Facility
currently requires capital expenditures in the approximate
amount of $1 million in order to render the entire Facility
usable again.

The Purchase Agreement provides for GranCare's sale and
assignment to the Buyer all of GranCare's right, title, and
interest in and to the Assets including:

      (1) The Prepaids relating to the Facility not to exceed
$10,000 in the aggregate, including, without limitation, prepaid
deposits with respect to licenses, suppliers, and utilities;

      (2) The Inventory, including all inventories of products,
linens, housekeeping, janitorial, office and medical supplies
located at, or held by GranCare exclusively for the Facility;

      (3) The Real Property consisting of the Facility and all
right, title, and interest in and to all easements, privileges,
and appurtenances and improvements;

      (4) The Other Assets, including all tangible personal
property and equipment located at, and held by GranCare, for use
at the Facility;

      (5) The Permits, including all licenses, Medicare and
Medicaid provider agreements, relating to the Facility, to the
extent transferable or assignable; and

      (6) The going concern of the business conducted at the
Facility, including the name of the business and the current
telephone and fax numbers.

Prior to entering into the Purchase Agreement, GranCare listed
the Facility with Marcus & Millichap (the Broker). After
actively marketing the Facility for several months, the Broker
ultimately received three offers, one for $4,451,324, one for
$1,325,000, and the offer made by the Buyer. However, two
bidders were ultimately unable to obtain financing to purchase
the package, or even the individual Facility under the offered
terms. The Buyer's offer was accepted because it was the best
offer GranCare received for which the proposed buyer could
obtain financing. The Buyer is interested in purchasing the
Facility because the Buyer currently owns five other skilled
nursing facilities in California, and the Facility will provide
a satisfactory complement to its real estate portfolio.

                   Assumption And Assignment Of
           The Medicare and Medicaid Provider Agreements

As part of the sale, GranCare will assume and assign to the
Buyer the Medicare Provider Agreement between GranCare and HCFA
relating to the Facility, on terms which have been previously
approved by HCFA and the Court with respect to sales of similar
facilities.

GranCare will also assume and assign to the Buyer the Medicaid
Provider Agreement between GranCare and the California DHS
relating to the Facility, on terms similar to those applied to
the assumption and assignment of the Medicare Provider
Agreement. GranCare will seek the approval of HCFA and the
California DHS with respect to this Sale.

Any claim of Medicare, the applicable fiscal intermediary, the
Department of Health and Human Services (HHS), or any other
party against the Debtors under the Medicare Provider Agreement
arising prior to the Petition Date, as well as any claim of the
California DHS, will continue to be treated as a prepetition
claim with the same rights, status, and priority as if such
Medicare Provider Agreement had been rejected, so that such
claims will not become or be treated as administrative claims,
and will not be offset against any of the Debtors' claims
arising after the Petition Date. Instead, HCFA will be allowed
to offset all such claims (to the extent valid, and without
prejudice to the Debtor's right to dispute such claim) against
any prepetition underpayment claim of the Debtors arising with
respect to the Debtors' "prudent buyer" claim against Medicare,
even if the claim and debt are not "mutual," as ordinarily
required by 11 U.S.C. Section 553, and without further order of
the Court; provided, however, that to the extent HCFA's or
California DHS' claim is not satisfied in full via exercise of
the offset right, the United States shall have an administrative
expense claim pursuant to 11 U.S.C. Section 507(b) for any such
deficiency against GranCare's estate, which will in no event
exceed $50,000 with respect to the Faciliiy.

The rights accorded the United States under the Sale Order will
constitute "cure" under 11 U.S.C. Section 365 so that the Buyer
will not have successor liability for any claim against any
Debtors under the Medicare Provider Agreement arising prior to
the effective date of the assignment of such Medicare Provider
Agreement to the Buyer.

                Rejection of the Service Contracts

Because GranCare intends to sell all of the Assets associated
with the Facility and cease doing business at the Facility, the
service contracts related to the Facility will be unnecessary
and burdensome to GranCare's estate upon the Closing of the
Sale. Accordingly, GranCare and the Buyer have agreed that
GranCare is not and will not be obligated to assume or assign to
the Buyer the Service Contracts, and that the Service Contracts
will instead be deemed rejected effective as of the Closing
Date.

The Debtors believe that the transaction is appropriate and is
in the best interests of GranCare's estate for at least the
following reason. (Mariner Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


MATTHEWS STUDIO: Selling New York Operation For $12.65 Mil Cash
---------------------------------------------------------------
Matthews Studio Equipment Group disclosed that Four Star
Lighting Inc., the company's subsidiary, signed an asset
purchase agreement with Four Star Acquisition Company LLC. The
subsidiary, which rents theatrical and industrial lighting
equipment, will sell its New York operation for $12.65 million,
payable in cash on closing. The transaction is expected to close
by June 8. Matthews Studio, a theatrical equipment supplier,
filed for bankruptcy in April 2000. (ABI World, May 1, 2001)


MERRILL CORP.: Moody's Junks Senior Subordinated Note Rating
------------------------------------------------------------
Moody's Investors Service said it cut the rating of Merrill
Corporation's $135 million 12% senior subordinated notes, due
2009, to Caa2 from B3. The rating agency also lowered the rating
of the $247 million secured credit facility at Merrill
Communications LLC to B3 from B1. The senior unsecured issuer
rating is Caa1 and the senior implied rating is B3.

Accordingly, all ratings were placed on review for possible
downgrade on February 22, 2001 and continue under review for
possible further downgrade. Approximately $410.0 million of debt
securities are affected.

Moody's stated that the ratings action reflects the company's
non-payment of bond interest due May 1, 2001, as a result of a
payment blockage notice sent by the lenders to the trustee under
the indenture governing the company's subordinated notes. The
ratings also reflect the company's impaired financial condition
resulting from sustained softness in domestic financial
transactions and general economic downturn. Moody's said it
continues to review ratings due to its concerns regarding the
uncertain outcome of negotiations with the company's senior
lenders regarding financial covenant breaches and subsequent
debt restructuring.

Merrill Corporation is a diversified communications and document
services company providing a broad range of integrated printing
services to the financial, legal and corporate industries. It is
headquartered in St. Paul, Minnesota,


MICROAGE INC.: ScanSource Wins Bid For Pinacor CTI Assets
---------------------------------------------------------
MicroAge Inc. announced the U.S. Bankruptcy Court approved an
agreement to sell certain CTI assets of Pinacor Inc. to
ScanScource Inc., a technology distributor based in Greenville,
S.C.

ScanSource emerged as the successful bidder in a court auction
to sell the assets of Pinacor through competitive bidding
procedures under Section 363 of the U.S. Bankruptcy Code. The
agreement was approved by the court Tuesday, and the sale is
expected to close within 10 to 15 days.

ScanSource's final bid for Pinacor CTI assets was $21 million,
subject to adjustments at closing, for which the company will
acquire substantially all of the CTI assets of Pinacor Inc.
Pinacor is a voice and data communications distributor, based in
Tempe.

The sale of the Pinacor business to ScanSource will allow
customers to continue to be served, said MicroAge Inc. Chairman
and Chief Executive Officer Jeffrey D. McKeever. At the same
time, MicroAge creditors will receive what we believe is a
better recovery in the company's voluntary Chapter 11 case.
On April 13, 2000, MicroAge and certain of its subsidiaries
commenced a voluntary Chapter 11 proceeding. Pinacor Inc. was
one of the named subsidiaries in the proceeding.

                    About MicroAge Inc.

MicroAge Inc. delivers technology to businesses through
one-on-one relationships supported via electronic commerce and
the Internet. The corporation is comprised of information
technology companies that deliver technology solutions through
ISO 9001-certified, multi-vendor integration services and
distributed computing solutions to organizations and computer
resellers.


MOE GINSBURG: NYC Men's Apparel Store Declares Bankruptcy
---------------------------------------------------------
New York City men's clothing store Moe Ginsburg said it would
file for bankruptcy Tuesday, according to the Daily News. Store
operator Paul Ginsburg, Moe's son, insisted that the bankruptcy
filing does not mean that the company will no longer exist. "We
don't intend to go out of business." Ginsburg said that the
store's falter is due to the "casualization" of the marketplace,
which has considerably impacted the tailored men's clothing
industry, he said. Last year the store did about $20 million in
business. More recent numbers weren't available. (ABI World, May
1, 2001)


MONEY'S FINANCIAL: Disclosure Statement Hearing Is On May 18
------------------------------------------------------------
A hearing will be held on May 18, 2001 at 11:30 AM to consider
the adequacy of the information contained in the Disclosure
statement with respect to Money's Financial LLC's plan of
liquidation.

The plan contemplates, but does not specifically require that
the debtors' non-operating assets will be liquidated and the
debtor's operating farms will continue to be operated. It is
possible that some or all of the operating farms may, either
before or after the Effective Date, be sold to a third party
purchaser, which may be Money's Mushrooms. The only specific
condition to confirmation of the plan is that there be enough
available cash to fund the distribution to the debtors'
administrative, priority and general unsecured creditors. BNS
has committed to ensuring that such cash is available.

The debtors are also seeking approval of the sale and marketing
procedures for sale of the debtors' non-operating farm assets in
Jackson, Ohio. The purchase price is $884,000 and the buyer is
Walter H. Luhrman. The initial purchase price offered by any
competing bidder shall have a fair market value of at least the
sum of $984,000.


NATIONAL ENERGY: Taps KPMG To Replace Ernst & Young As Auditors
---------------------------------------------------------------
On April 23, 2001, National Energy Group Inc.'s Audit Committee
recommended to the Company's Board of Directors that the Company
not renew its engagement with Ernst & Young LLP as the Company's
independent auditors and to appoint KPMG LLP, 200 Crescent
Court, Suite 300, Dallas, TX 75201, to be principal independent
auditors of the Company and to audit its consolidated financial
statements for the fiscal year ending December 31, 2001. The
Company's Board of Directors accepted the recommendation of the
Audit Committee on April 23, 2001. The Audit Committee and the
Board of Directors based their decisions on competitive bids
submitted by three firms. The dismissal of Ernst & Young was
effective as of April 23, 2001.

As of April 26, 2001, KPMG LLP is in the process of its standard
prospective client evaluation procedures and has not accepted
the engagement.


NORTHWESTERN STEEL: Proposes Employee Retention & Severance Plan
----------------------------------------------------------------
Northwestern Steel & Wire Company seeks entry of an order
authorizing the implementation by Northwestern of an Employee
Retention and Severance Plan consisting of a retention payment
component and a severance component.

The Retention Plan proposes to grant benefits to a maximum of 22
individuals, who would receive a bonus, in the form of a lump
sum payment, of 25% to 114% of their base salary for continuing
their employment with the debtor. The maximum aggregate payout
under the retention component of the Retention Plan is estimated
by the debtor to be approximately $1.4 million.

The severance component of the Retention Plan would cover the
same key personnel as the retention component. If the debtor
terminated the employment of any of the individuals covered by
the Retention Plan, the affected employee would receive a lump
sum payment of 20% to 200% of his or her base salary as
compensation for such termination. While the maximum aggregate
payout possible under the severance component is $1.63 million,
the Retention Plan specifies that any severance payment made to
an employee under the Retention Plan will be reduced by the
amount of any retention payment previously received.

The debtor believes that such payments are necessary since any
departures would severely hamper its reorganization efforts. And
the Retention Plan endeavors to create incentive for such
employees to remain with Northwestern throughout the
reorganization process.


PACIFIC GAS: Puget Asks For Stay Relief To Continue Litigation
--------------------------------------------------------------
Puget Sound Energy, Inc., f/k/a Puget Sound Power & Light
Company, entered into a Capacity and Energy Exchange Agreement
with Pacific Gas and Electric Company in 1991. Under the
perpetual agreement, Puget sold its excess summer season power
to PG&E and PG&E sold its excess winter season power to Puget,
capitalizing on the differences in the utilities' customers'
power demands at different times of the year. Puget receives
roughly 5.5% of its annual power needs from PG&E. That so-called
"firm energy" commitment is important to Puget for its long-
range business planning and making decisions about whether it
needs to build new generating facilities or enter into new long-
term power supply contracts.

Puget and PG&E's relationship hit a bump in the road on January
11, 2001, when day-after-day from then and into February, PG&E
"repeatedly, and unpredictably, failed to deliver energy in
accordance with Puget's scheduling notices," Kenneth J. Finicle,
a Day Trader for Puget Sound Energy contends. Mr. Finicle has
compiled database records by the dozen documenting each of
PG&E's delivery failures hour-by-hour.

Screaming that PG&E didn't provide adequate notice of those
failures and that notice failure deprived Puget of material and
substantial benefits under the Exchange Agreement, Puget
dispatched a team of lawyers led by Ronald L. Berenstein, Esq.,
at Perkins Coie LLP and Arthur W. Harrigan, Jr., Esq., at
Danielson Harrigan & Tollefson LLP, to file suit against PG&E in
the United States District Court for the Western District of
Washington. That suit, captioned Puget Sound Energy, Inc. v.
Pacific Gas and Electric Company, Case No. C01-0417 (W.D. Wash.,
Seattle), asked for a declaration that the Exchange Contract
terminated. Puget's District Court Complaint outlined its case:
PG&E didn't perform, Puget argued, can't perform, and won't
perform. Pressing its case forward, Puget filed a Motion for
Summary Judgment telling the District Court that PG&E has
admitted it is insolvent and this fact by itself is sufficient
to find that the Exchange Agreement is terminated. Before Judge
John C. Coughenour has an opportunity to hear argument on that
pre-trial motion, PG&E filed for protection under chapter 11.
Unless and until Judge Montali grants relief from the automatic
stay imposed under the Bankruptcy Code, Judge Coughenour can't
allow Puget's suit to proceed.

Alan D. Smith, Esq., one of Perkins Coie's bankruptcy
professionals, now comes to Judge Montali in the Bankruptcy
Court asking for relief from the automatic stay. Cause exists
for lifting the stay, Mr. Smith argued, because:

      (1) Puget has to plan for its Winter 2001 and January and
February 2002 power needs and it needs to have those plans
wrapped-up by July 1. If it doesn't, homeowners in Northwestern
states will be cold;

      (2) Puget needs to send its excess summer season power to
someone who will return power in the winter months. This isn't a
money issue, Puget explains, because money can't run an electric
heater. Moreover, electrical power is not fungible.

Mr. Smith told Judge Montali that if he'll look at the facts in
the light of the factors described in In re Curtis, 40 B.R. 795
(Bankr. D. Utah 1984); In re Sonnax Industries, Inc., 907 F.2d
1280 (2d Cir. 1990); and In re Hakim, 212 B.R. 632, 639-40 n. 18
(Bankr. N.D. Calif. 1997), it will be clear the Puget is
entitled to relief from the automatic stay and the District
Court litigation should be allowed to proceed. (Pacific Gas
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


PILLOWTEX CORPORATION: Hires Tex-Mach As Exclusive Sales Agent
--------------------------------------------------------------
Pillowtex Corporation plans to dispose of various unnecessary
and unproductive miscellaneous assets. Accordingly, the Debtors
sought and obtained permission to hire Tex-Mach, Inc., as their
exclusive sales agent in connection with the disposition of
their miscellaneous assets.

The Debtors told Judge Robinson that they entered into an
exclusive sales agreement with Tex-Mach providing that:

      (a) The sales agreement will commence upon Court approval,
and unless terminated by the Debtors earlier, will terminate as
of the date a reorganization plan/s is confirmed by the Court;

      (b) Tex-Mach and the Debtors will jointly compile an
initial list of miscellaneous assets to be sold by Tex-Mach
under the sales agreement. Miscellaneous assets may be added to
the list at any time by mutual consent of the Debtors and Tex-
Mach;

      (c) Tex-Mach and the Debtors will review market values and
establish high and low figures for each miscellaneous asset to
be sold. Tex-Mach will have the right to market each
miscellaneous asset at a price between the high and low figure
without further consultation with the Debtors, but no sale will
be consummated until that sale is deemed approved by the Court
in accordance with the asset sales order or otherwise Court-
approved;

      (d) Approval and closing process will be as follows:

          (1) Tex-Mach will send to the Debtors a copy of any
              purchase order or contract entered into, showing
              the proposed purchaser's name, the full description
              of the items proposed to be purchased, the lot
              numbers and the proposed purchase price,

          (2) on receipt of that purchase order or contract, the
              Debtors will have the proposed sale properly
              noticed in accordance with the asset sales order,

          (3) once the proposed sale is deemed approved in
              accordance with the procedures of the asset sales
              order or otherwise approved by the Court, the
              Debtors will release the miscellaneous asset to the
              purchaser's rigger at the proper time,

          (4) miscellaneous asset's final removal is contingent
              upon the Debtors' receipt of the purchase price,
              and

          (5) title will remain with the Debtors until the
              asset's purchase price is paid in full;

      (e) All sales will be made on an "As Is, Mill Floor" basis
and removal will be the purchaser's responsibility;

      (f) Tex-Mach will not be held responsible for any liens or
indebtedness against the miscellaneous assets at the time of
sale;

      (g) Security and insurance are the Debtors' responsibility
until the miscellaneous assets are removed from the mill
property by a designated rigger, who must provide proof of
adequate insurance before commencing work;

      (h) The Debtors shall have the right to terminate the sales
agreement with or without cause upon 60-days written notice to
Tex-Mach. If the Debtors terminate the sales agreement, Tex-Mach
will furnish the Debtors with a list of prospective purchasers
with whom Tex-Mach has finalized negotiations, and the Debtors
will follow the procedures set forth in the sales agreement,
with Tex-Mach entitled to its commission for any those sales;
and

      (i) The Debtors agree to indemnify Tex-Mach from and
against any and all liability and responsibility for damages
arising out of, or relating to any item sold by Tex-Mach for the
Debtors in accordance with the agreement, whether arising in
contract, warranty, tort or otherwise, including reasonable
attorney's fees, but Tex-Mach shall be responsible for and shall
indemnify the Debtors from and against any damage allegedly
caused by Tex-Mach's negligence or intentional
misrepresentation. The Debtors agree to maintain liability
insurance in an amount not less than $1,000,000, naming Tex-Mach
as an additional insured in that policy.

The sales agreement, subject to Court approval provides that,
Tex-Mach will earn a commission upon each miscellaneous asset's
sale based upon the total price of the sales contract:

                Contract Price      Commission
                --------------      ----------
                $0 to $5,000           15%
                $5,000 to $10,000      12.5%
                Over $10,000           10%

Costs of appraisals and advertising and other selling expenses
will be Tex-Mach's responsibility. The commission is due and
will be paid by the Debtors at the time of closing for each
miscellaneous asset.

William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht &
Tunnell, in Delaware, emphasized that no retainer has been paid
to Tex-Mach for its services under the sales agreement or any
other agreement. Due to the nature of its services and the fact
that Tex-Mach will not be compensated unless and until the
miscellaneous asset's sale is consummated, the Debtors proposed
that Tex-Mach be paid its commission in accordance with the
sales agreement at the time it is due and without further Court
order.

Andrew J. Falatok, president of Tex-Mach, Inc., assured Judge
Robinson that, Tex-Mach (i) does not have any connection with
the Debtors, their creditors, the US Trustee or any other party-
in-interest, their respective professionals, and (ii) is not and
has not been employed by any entity other than the debtors in
matters related to the Debtors' bankruptcy cases. While Tex-Mach
has rendered prepetition services for the Debtors, the Debtors
have paid Tex-Mach's commissions totaling $378,293, and do not
owe any amount for those services. After the petition date, Tex-
Mach occasionally assisted the Debtors with the identification
and appraisal of leased and owned production equipment in
various facilities and was paid by the Debtors a total of
$60,000. From time to time, Tex-Mach has provided, and will
likely continue to provide services to some of the Debtors'
creditors and other adverse parties in matters unrelated to the
bankruptcy cases.

Mr. Falatok noted that Tex-Mach's personnel may have business
associations with the Debtors' creditor in unrelated matters to
the bankruptcy proceedings. In the ordinary course of its
business, Tex-Mach may have engaged counsel or other
professionals in unrelated matters, professionals who now
represent, or may in the future represent, creditors or other
interested parties. With about 40 employees, Mr. Falatok
guarantees that, while it is possible for some Tex-Mach
employees to hold interests in mutual funds or other investment
vehicles that may own the Debtors' securities, neither Tex-Mach
nor any professional staff who will provide services to the
Debtors, (i) is related to the Debtors, their creditors, the US
Trustee, anyone employed in the US Trustee's office or any other
party-in-interest, or (ii) has any connection with or holds or
represents any interest adverse to the Debtors, their estates,
their creditors or any other party-in-interest or their
professionals in the matters for which Tex-Mach is to be
retained.

Mr. Falatok maintained that Tex-Mach is a disinterested person,
as defined by bankruptcy law. He discloses to Judge Robinson
that Tex-Mach performs or has previously performed services in
matters unrelated to the Debtors' bankruptcy cases for (a)
American & Efird, Inc.; (b) Belding Hausman, Inc.; (c)
Candlewick Yarns; (d) Chiquola Industrial Products Group; (e)
CMI Industries, Inc.; (f) E.I. Dupont Co.; (g) Excel Home
Fashions, Inc.; (h) HDK Industries, Inc.; (i) Hamrick Mills,
Inc.; (j) Mastercraft Fabrics LLC; (k) Mount Vernon Mills, Inc.;
(l) National Spinning Co; (m) Parkdale Mills, Inc.; (n) R.L.
Stowe, Inc.; and (o) Rieter Corp. (Pillowtex Bankruptcy News,
Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)


SAFETY-KLEEN: Rejecting Various Burdensome Leases & Contracts
-------------------------------------------------------------
In an effort to reduce postpetition administrative costs and in
the exercise of business judgment, Safety-Kleen Corp. has
determined that it is in the best interest of the estates, their
creditors, and all parties-in-interest for the Debtors to reject
the following leases/contracts.

                  One Commerce Green Lease

Under an April 26, 1990 Lease, Safety-Kleen Services, Inc., as
ultimate successor to USPCI, Inc. leases from One Commerce
Green, a 21,997 feet of real property located at 515 West Greens
Road, Houston, Texas.

Safety-Kleen Services has relocated to another site the
operations currently conducted at the Greens Road Property.
Following such relocation, Safety-Kleen Services will no longer
need the Greens Road property.

By rejecting the OCG lease, Safety-Kleen Services will avoid
incurring further unnecessary administrative expense obligations
with no corresponding benefit to its estate. The Debtors believe
that rejection of the One Commerce Green Lease is in the best
interest of Safety-Kleen Services, the Debtors, their estates,
creditors and all parties-in- interest. Accordingly, the Debtors
request that the Court authorize Safety-Kleen Services to reject
this lease, effective as of the last date of the Debtor's
occupancy.

                     David J. Kaiser Lease

Pursuant to an October 21, 1976 Lease, Safety-Kleen Systems,
Inc., successor to Safety-Kleen Corp., leases from David J.
Kaiser approximately 5,000 square feet of real property located
at 72 Sicker Road, Latham, New York.

The Debtors contended that Safety-Kleen Systems no longer
occupies or uses the Latham Property. By rejecting the Kaiser
Lease, Safety-Kleen Systems will avoid incurring further
unnecessary administrative expense obligations with no
corresponding benefit to its estate. According to the Debtors,
rejection of the Kaiser Lease is in the best interests of
Systems, the Debtors, their estates, their creditors and all
other parties-in-interest. They requested that the Court
authorize Safety-Kleen Systems to reject the Kaiser Lease
effective as of March 15, 2001.

                       GE Capital Lease

Pursuant to a lease dated June 3, 1997, the Debtor Safety-Kleen
Corporation, as successor to Laidlaw Environmental Services,
Inc., leases from GE Capital as successor to Discovery Office
Systems, copier equipment consisting of a MITA DC 3060 copier, a
MITA AS1110 sorter, a MITA AD54 duplex machine, a MITA RADF6
feeder and a MITA DC4090CAB cabinet.

The Debtor does not now, and will not in the future, use the
copier and equipment. By rejecting the GE Capital Lease, the
Debtor will avoid incurring further unnecessary administrative
expense obligations with no corresponding benefit to its estate.
Rejection of the GE Capital Lease is in the best interests of
the Debtor Safety-Kleen Corp., the Debtors, their estates, their
creditors and all parties-in-interest. The Debtors requested
that the Court authorize Safety-Kleen Corporation to reject the
GE Capital Lease, effective as of March 15, 2001.

Gregg M. Galardi, at Skadden, Arps, Slate, Meagher & Flom LLP in
Delaware, on behalf of the Debtors, requested Judge Walsh to
require any party asserting a rejection damages claim relating
to the rejection of any of these contracts/leases to file a
proof of claim for rejection damages no later than 30 days after
entry of an order authoring the rejection or forever be barred
from doing so. (Safety-Kleen Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


SOURCE MEDIA: Misses $5.3 Million Interest Payment On Debt
----------------------------------------------------------
Source Media, Inc. (OTC Bulletin Board: SRCM), a leading
provider of interactive digital cable TV applications and audio
text applications for all digital media platforms, has not made
the approximately $5.3 million interest payment on its 12%
Senior Secured Notes due May 1, 2001. The indenture governing
the Notes provides the Company a 30-day period to make the
payment before an Event of Default occurs with respect to the
Notes. The Company has engaged UBS Warburg as its exclusive
financial advisor in analyzing its strategic alternatives and
will continue to review all available options during the 30-day
period and thereafter.

Source Media is a leader in the development, production and
distribution of new media content. Source Media's interactive TV
business is conducted through SourceSuite LLC, a 50/50 joint
venture with Insight Communications, which is managed by Source
Media. SourceSuite's products are SourceGuide, an interactive
program guide and LocalSource, a local interactive programming
service. Source Media's IT Network is the leading creator of
private label audio and text content. This content is designed
for universal distribution and access across all platforms,
including voice portals, wireless and wireline telephone,
Internet and digital cable television. For further information,
please visit our website at www.sourcemedia.com.


SUN HEALTHCARE: Retains Cushman as Real Estate Brokers
------------------------------------------------------
In connection with the rendition of healthcare services, the Sun
Healthcare Group, Inc. Debtors are also owners of various real
estate properties. In 1999, the Debtors erected a 180,000 square
feet, six-story commercial office building in Albuquerque, New
Mexico. The building was constructed at a time when the Debtors
anticipated heightened growth in their businesses. Currently,
the property is vacant. The Debtors have determined that
continued retention of the Property is not essential to their
reorganization. Accordingly, the Debtors have decided to sell
the Property.

After the decision was made to sell the Property, the Debtors
contacted several real estate brokerage firms to begin marketing
efforts. These various brokers advised that such marketing
efforts will include, among other things, preparing professional
brochures for distribution to potential investors, and
contacting and negotiating with potential purchasers on behalf
of the Debtors.

Accordingly, in connection with the sale of the Property, the
Debtors have decided to retain Cushman to serve as real estate
brokers in view of the firm's broad experience in representing
clients in negotiating the sale of land, commercial buildings
and other real estate transactions. Moreover, the commission
charged by Cushman is similar to rates charged by other brokers
in the industry. To the best of the Debtors' knowledge, neither
Cushman nor any of Cushman's employees holds or represents an
interest adverse to the Debtors' estates, and neither Cushman
nor any of Cushman's employees has any connection with the
Debtors, their creditors or other parties in interest, or their
respective attorneys or accountants, except as otherwise stated
in the Chuoke Affidavit.

Pursuant to the Broker Agreement, which is subject to Court
approval, the Debtors agreed to give Cushman the sole and
exclusive right to sell the Property for a period of 270 days
and to pay Cushman a commission equal to 2.0 % of the total
sales price at the closing of the sale. Further, the Debtors
will reimburse Cushinan for all out of pocket expenses
reasonably incurred in the preparation of the offering materials
and in the marketing of the Property. Up to $17,500 of those
expenses will be applied against the commissions due Cushman
upon the sale of the Property.

Accordingly, the Debtors sought entry of an order, pursuant to
sections 327 and 328 of the Bankruptcy Code, authorizing their
employment of Cushman & Wakefield of Texas, Inc. as real estate
brokers in connection with the Debtors' sale of a certain parcel
of real estate located in Albuquerque, New Mexico. (Sun
Healthcare Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


SYMONS INTERNATIONAL: Schedules Shareholders Meeting On May 30
--------------------------------------------------------------
The annual meeting of shareholders of Symons International
Group, Inc. will be held at the Company's offices, 4720 Kingsway
Drive, Indianapolis, Indiana on Wednesday, May 30, 2001, at
10:00 a.m., Indianapolis time.

The annual meeting will be held for the following purposes:

      (1) Election of Directors. Election of directors for terms
          to expire in  2004.

      (2) Appointment of Auditors. Ratification of appointment of
          BDO Seidman, LLP, independent auditors, as auditors for
          the Company for 2001.

      (3) Other Business. Such other matters as may properly come
          before the meeting.

Shareholders of record as of the close of business on April 23,
2001 are entitled to vote at the meeting.


TALK CITY: Shares Kicked Off Nasdaq Market, Now Trading On OTCBB
----------------------------------------------------------------
Talk City Marketing Group (OTC Bulletin Board: TCTY) --
http://www.tcmg.com-- a leading provider of online relationship
marketing services, announced that its common stock, previously
traded on the Nasdaq National Market, commenced trading on the
OTC Bulletin Board. The company expects the move from Nasdaq to
the OTC Bulletin Board to have no impact on its day-to-day
operations.

We have taken a number of proactive measures to refocus our
business to a virtually 100% fee-based marketing services model.
With over $8 Million in services revenue in 2000 and a strong
cash position, this effort has been successful and we expect
this announcement to have no effect on the continued and future
success of the company, said Peter Friedman, Chairman and CEO,
Talk City Marketing Group. Despite a significant softening in
the overall economy, we have added a number of leading customers
to our client roster, including Kodak, the Internal Revenue
Service, Cisco Systems and GM. We believe that this focus and
recent cost-cutting initiatives, combined with our targeted
sales efforts, will allow us to emerge from the economic
slowdown in a strong position and continue to provide value to
clients, partners, employees and shareholders.

Following the appeal by the Company to the Nasdaq Listing
Qualifications Panel with respect to the delisting of its common
stock from the Nasdaq National Market, the Company received
notification from Nasdaq indicating continued non-compliance of
Talk City's common shares with the required $1 minimum bid
price.

                About Talk City Marketing Group

Talk City Marketing Group (www.tcmg.com) is the leading provider
of online relationship marketing services that help Fortune 1000
companies reduce their costs, increase their revenues and
strengthen customer relationships. Talk City Marketing Group's
services enable marketers to target, acquire, and retain high-
value customers. These services also help companies developing
and launching new products and services, by reducing time to
market while improving overall product functionality and
quality. Talk City's partners include Cox Interactive Media, The
Hearst Corporation, Microsoft's WebTV Network, The National
Broadcasting Company (NBC) and The Starbucks Coffee Company.
Talk City Marketing Group is headquartered in Campbell,
California, and can be found on the Web at www.tcmg.com.


TERMOEMCALI: S&P Affirms CCC Foreign Currency Rating on Bonds
-------------------------------------------------------------
Standard & Poor's affirmed its triple-'C' foreign currency
rating on TermoEmcali Funding Corp.'s US$165 million senior-
secured bonds due 2014. Standard & Poor's also affirmed its
triple-'C' foreign and local currency ratings on Empresas
Municipales de Cali S.A.'s (Emcali). The outlook is negative.

The ratings have been removed from CreditWatch with developing
implications where they were placed in April 2000. The
TermoEmcali project is dependent upon the rating of Emcali and
the CreditWatch placement reflected Standard & Poor's
expectations that the Superintendency of Public Services, a
Colombian federal agency, would address the financial crisis at
Emcali in a timely manner; however, after more than a full year
of managing the process, a definitive plan to address Emcali's
financial situation has not been made public. Therefore, the
outlook is negative because Standard & Poor's concludes that
bondholders face increasing risks as the process of resolving
Emcali's financial problems drags on.

The rating affirmations follow the news that TermoEmcali
management plans to grant a waiver to Emcali for noncompliance
with certain obligations under the Fiducia. Standard & Poor's
concludes that granting this waiver will not materially affect
the economics of the project, nor in and of itself, have an
effect on TermoEmcali's triple-'C' rating. Under the Fiducia,
Emcali is required to maintain a LOC equal to three months of
capacity and energy payments. TermoEmcali can draw upon this LOC
after an account has become 90 days past due. The amount
required by the Fiducia is now US$12.4 million, but the actual
LOC is for US$11.3 million. The US$800,000 increase is due to
the increase in capacity payments under the power purchase
agreement (PPA). TermoEmcali plans to grant Emcali a 60-day
waiver that can be revoked if Emcali is out of compliance with
any of its other obligations under the Fiducia and can be
extended by TermoEmcali if deemed prudent. To date, Emcali has
honored its payment obligations under the PPA, albeit by making
late payments. Under the PPA Emcali has 60 days from the receipt
of an invoice to remit payment. TermoEmcali's issuance of a
notice of default triggers a 30-day period to cure the failure
to pay the invoice. This 90-day billing cycle has occurred since
the commencement of commercial operations, and is expected to
continue until Emcali's financial crisis is resolved.

TermoEmcali has sufficient liquidity in the form of an undrawn
six-month debt service reserve, the pledged US$11.3 million LOC,
and certain bank accounts pledged by Emcali, representing less
that two months of capacity and energy payments.

The delay in the decision to resolve the financial debacle at
Emcali is centered on the opposing views of the federal
government of Colombia and city government of Cali. The federal
government, through the Superintendencia favors privatizing a
portion of the company, but the city would like the federal
government to infuse capital into Emcali and leave the company
in the hands of the city. The two sides have been working
towards an amiable resolution to the problem over the past 13
months, without much success. The problem is compounded by the
fact that there are 14 other, smaller electric distribution
companies in Colombia that are under the control of the
Superintendencia, with problems similar to Emcali. Therefore,
the decision made at Emcali could set a precedent for the
others. TermoEmcali bondholders benefit from the fact that they
must agree prior to any sale of Emcali's assets that the new
entity is not materially less creditworthy than Emcali. Further,
the bondholders can preclude the transfer of any of Emcali's
substantial assets; however, because of Emcali's precarious
financial situation, the longer the status quo continues, the
greater the potential for Emcali to default on the payments
under the PPA.

TermoEmcali is a 234 MW combined-cycle facility owned by
TermoEmcali I S.C.A. E.S.P. The owners of the project company
include Emcali, subsidiaries of InterGen (InterGen is owned by
subsidiaries of Bechtel Enterprises and Royal Dutch Shell), and
Corporacion Financiera del Pacifico, a local Cali business
group. The project's rating reflects the uncertainty about the
cash flow stream that will come from the sale of capacity and
energy to Emcali.

Emcali is a diversified, municipally owned utility providing
electricity, water, sewage, and local landline telephone service
to a population of about 2 million located in and around the
city of Cali.

                     OUTLOOK: NEGATIVE

The negative outlook anticipates a continued weakening of
Emcali's liquidity and ability to honor its payment obligations
to TermoEmcali, Standard & Poor's said.


TITANIUM METALS: Plans To Resume Payment Of Dividends On June 1
---------------------------------------------------------------
Titanium Metals Corporation ("TIMET") (NYSE: TIE) intends to
resume payment of dividends on its Convertible Preferred
Securities with the next scheduled payment on June 1, 2001. The
Company also intends to pay the aggregate amount of dividends
that have previously been deferred on or before the same date.
TIMET, headquartered in Denver, Colorado, is a leading worldwide
integrated producer of titanium metal products. Information on
TIMET is available on the World Wide Web at http://www.timet.com


TITANIUM METALS: Resolves Purchase & Supply Disputes With Boeing
----------------------------------------------------------------
Titanium Metals Corporation ("TIMET")(NYSE: TIE), has reached a
settlement of the litigation between TIMET and The Boeing
Company relating to the parties' 1997 long-term titanium
purchase and supply agreement.

TIMET will receive a cash payment under the settlement. The
parties have also entered into an amended long-term agreement
that, among other things, provides Boeing with the right to
purchase up to 7.5 million pounds of titanium products annually
from TIMET through 2007. Under a separate agreement, TIMET will
establish and hold titanium buffer stock for Boeing at TIMET's
facilities.

J. Landis Martin, Chairman and CEO of TIMET, stated, "We see
this settlement as a positive result for both sides and are very
pleased to have been able to get our differences under the prior
agreement resolved. This new agreement allows TIMET to continue
as a major supplier of titanium products to Boeing for
commercial airplanes, a role TIMET is very proud to hold. We
look forward to a strong and mutually advantageous partnership
moving ahead."

TIMET expects to report pre-tax income of approximately $60
million to $65 million in the second quarter of 2001 in
connection with this settlement, including the cash settlement
net of associated legal, profit sharing, and other costs.

TIMET, headquartered in Denver, Colorado, is a leading worldwide
integrated producer of titanium metal products. Information on
TIMET is available on the World Wide Web at http://www.timet.com


US DIAGNOSTIC: Discloses Further Board Member Changes
-----------------------------------------------------
US Diagnostic Inc. (OTCBB:USDL) announced that it has added
Warren G. Lichtenstein to its Board of Directors and that C.
Keith Hartley has resigned as director.

Mr. Lichtenstein is the managing member of Steel Partners, LLC,
the general partner of the Company's largest shareholder, Steel
Partners II, L.P.

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.


VISION METALS: Delaware Court Fixes June 15 Bar Date
----------------------------------------------------
On April 11, 2001, the U.S. Bankruptcy Court, District of
Delaware entered an order fixing June 15, 2001 as the last date
for filing proofs of claim in the Chapter 11 cases of Vision
Metals, Inc. and Vision Metals Holding, Inc.

Attorneys for the debtors are Neil B. Glassman and Steven M.
Yoder for The Bayard Firm and Salvatore A. Barbatano for Foley &
Lardner, Detroit Michigan and Donald A. Workman and Lori V.
Vaughan Of Foley & Lardner, Tampa, Florida.


VLASIC FOODS: Trade Debt Holders Move For Their Own Committee
-------------------------------------------------------------
While an Official Unsecured Creditors Committee, consisting of
Lincoln Graphics, Detroit Edison, Putnam, Times Square
Capital/Connecticut Life, Gramercy Capital Advisors, The Bank of
New York and Equitable Insurance Company of New York, has been
formed in Vlasic Foods International, Inc.'s bankruptcy cases to
protect the interests of the unsecured creditors, Cooper Perskie
April Niedelman Wagenheim & Levenson, P.A., requested Judge
Walrath to appoint a separate Trade Debt Holders Committee.

Advocating for a separate and independent committee for trade
debt holders, Lincoln Graphics, Detroit Edison, Oregon Potato
Co., and Barry Callebut USA, Inc. explained that, in the
existing Creditors Committee, only Lincoln Graphics and Detroit
Edison are holders of unsecured trade debt, while the remaining
five committee members are holders of subordinated bonds. This
composition and set-up is a cauldron brewing with conflict of
interest, which Lincoln Graphics and company have brought to the
attention of the United States Trustee's office. The Trustee
responded by correspondence that, despite the conflict of
interest, it would not appoint a committee to provide for the
trade debtors' interests.

Eric A. Browndorf of Cooper Perskie, imploring Judge Walrath to
grant the relief requested, reasoned that Lincoln Graphics and
company do not have financial resources to hire lawyers and
other professionals to conduct the type of investigations and
mount challenges necessary to maximize the bankruptcy estate for
the unsecured creditors' benefit. Without the assistance of the
Court in directing the appointment of a Trade Debt Holders
Committee, trade debt holders will not be able to organize
sufficiently to appropriately express their views and have their
interests protected in the bankruptcy proceedings.

Mr. Browndorf contended that, to protect the $50 million of
trade debts, the appointment of an official Trade Debt Holders
Committee will not be an undue burden to the estate. While it
may add administrative expenses in connection with the costs of
attorneys and possibly other professionals, the incremental
increase in expenses to be paid would not be significant.

Multiplicity of interest among the creditors themselves
demonstrates the need for the appointment of a specific Trade
Debt Holders Committee. For instance, the economic interest of
the subordinated bondholders, who presently control the
Creditors Committee, likely will prevent the Trade Debt Holders,
who stand to gain from a reduction or elimination of senior
secured debts, from questioning the extent or validity of the
senior secured debt. Because, as a matter of contract,
subordinated bondholders cannot receive any distribution unless
and until certain senior secured debts in excess of $3 million
are paid in full, their primary focus must be that the senior
secured debt be paid in full; otherwise as subordinated
bondholders, they would receive nothing. At the first creditors'
meeting, the Debtors' Chief Executive Officer indicated that
there is as much as $50 million of trade debt. Unlike the
subordinated bondholders, the Trade Debt Holders' economic
interests would compel them to try to reduce, modify or
eliminate as much of the senior secured debt as possible in
order to attain a substantially better distribution. Sadly,
without a unified, organized committee to represent the Trade
Debt Holders, there may never be a question as to the extent or
validity of the senior secured debt.

In addition, the complex nature of the Debtors' bankruptcy cases
demands the Trade Debt Holders' representation in the
reorganization process. The size of the jointly administered
cases will require the Trade Debt Holders to participate more
actively in the proceedings than simply just voting on a plan,
in order to protect their interests. With a likely intricate
debt restructuring that will most likely affect subordinated
bondholders and the Trade Debt Holders in different ways, a
specific Trade Debt Holders Committee's participation in the
details of the reorganization is critical.

The Heinz transaction will create an additional problem. It is
clear that certain assets to be sold in that transaction, as
well as the Debtors' other assets, are not subject to the senior
secured debts. Considering the contractual subordination of the
bondholders' claims to the senior secured debt, the subordinated
bondholders will allow and encourage the Debtors to pay all
proceeds from this sale, irrespective of their free and clear
nature, to the senior secured debt. A Trade Debt Holders
Committee, however, would not and could not take the same
position because these free and clear assets may represent the
only realistic and meaningful possibility that Trade Debt
Holders may have of receiving a significant distribution.

Additionally, other aspects of the transactions for senior
secured debts, as well as the debts held by the subordinated
bondholders, may be suspect. Specifically, while the principal
obligor under the senior secured debts is the parent or holding
company, a cursory review would lead to the preliminary
conclusion that each of the subsidiaries personally guaranteed
the parent/holding company's senior secured debt for no
consideration, which transactions and guarantees may have made
the subsidiaries insolvent. If this is accurate, the Trade Debt
Holders should pursue setting aside the guarantees in order to
substantially increase their distribution. However, if the
guarantees are set aside, the subordinated bondholders are
unlikely to receive any meaningful distribution, remaining
contractually subordinated to the senior secured debts. It is
plainly obvious that, while the Trade Debt Holders would do
everything possible to succeed on this issue, the subordinated
bondholders will fight this issue at all costs.

Believing that the relief sought is warranted under the
circumstances, Eric Browndorf of Cooper Perskie told Judge
Walrath that the Trade Debt Holders need their own committee
with the requisite powers in the proceedings to effectively
advocate their views, protect their rights and negotiate a
resolution of the complex issues in the bankruptcy cases.
Lincoln Graphics and the other persons seeking the appointment
of the Trade Debt Holders Committee believe that the Trade Debt
Holders are entitled to a separate and independent
representation by a coordinated body having a fiduciary duty to
all of the holders of unsecured trade debt. (Vlasic Foods
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


W.R. GRACE: Paying Shipping And Warehousing Claims
--------------------------------------------------
Arguing that it is necessary and essential to W. R. Grace &
Co.'s continued business operations and the success of their
reorganization efforts to make payments on account of certain
Shipping and Warehousing Charges, the Debtors sought and
obtained permission to pay approximately $3,200,000 of these
kinds of non- disputed prepetition obligations. This request
also extends to lease payments for trucks leased by the Debtors.

The Debtors have achieved a reputation for reliability and
dependability among their customers. Many of the Debtors'
pricing policies and marketing strategies revolve around their
reliability and dependability. This reputation depends in
substantial part on the timely delivery of product and service
to the Debtors' customers. The Debtors' ability to timely
perform depends in turn on a successful and efficient system for
receipt of raw materials, parts and components used in the
Debtors' operations. This supply and delivery system involves
the use of reputable domestic and international common carriers,
shippers, truckers and leased trucks, a network of warehouses
and professional customs brokers and freight forwarders. Timely
and efficient clearance of the Debtors' goods through customs is
also a vital component of the Debtors' supply and delivery
system. It is essential for the Debtors' continuing business
viability and the success of their reorganization efforts that
they maintain a reliable and efficient distribution system.

The Shippers, David B. Siegel, Grace's Senior Vice President and
General Counsel, relates, ship, transport, store and deliver raw
materials, parts and components, as well as the finished product
between and among the various Debtors and their customers. Such
goods which are in transit are often then deposited into
warehouses that do not belong to the Debtors or their affiliates
but rather to independent third parties. Unless the Debtors
continue to receive delivery of goods on a timely and
uninterrupted basis, their manufacturing operations will shut
down within a matter of weeks or less, thereby causing
irreparable damage to the Debtors' business and their
reorganization efforts, Mr. Siegel said.

Mr. Siegel suspected that the Shippers and the Warehousemen will
argue that they are entitled to possessory liens for
transportation and storage, as applicable, of the goods in their
possession as of the Petition Date and will refuse to deliver or
release such goods before their claims have been satisfied and
their liens redeemed. In addition, Mr. Siegel would expect that,
as of the Petition Date, certain of the Shippers and
Warehousemen will have outstanding invoices for goods that were
delivered to the Debtors or the Debtors' customers prior to the
Petition Date. If the Debtors refuse to pay these unrelated
Shipping and Warehousing Charges, certain of the Shippers will
discontinue services and/or withhold shipment of essential
goods, while certain of the Warehousemen will refuse to release
essential goods. The value of the goods in the possession of the
Shippers and Warehousemen, and the potential injury to the
Debtors if the goods are not released, likely will far exceed
the amount of such Shipping and Warehousing Charges.

With respect to the Truck Lease Payments, Mr. Siegel indicated
that the lessors trucks leased by the Debtors are a vital
component of the Debtors' supply and delivery system. If the
Debtors don't make the Lease Payments, they won't be allowed to
continue operating the leased trucks.

The Debtors assured the Court that they will only pay the
Shipping and Warehousing Charges where they believe, in their
business judgment, that the benefits to their estates and
creditors from making such payments would exceed (i) the costs
that their estates would incur by bringing an action to compel
the turnover of such goods, and (ii) the delays associated with
such actions. (W.R. Grace Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


WINSTAR COMMUNICATIONS: Court Grants More Time To File Schedules
----------------------------------------------------------------
Due to the complexity of Winstar Communications, Inc.'s
businesses and their significant assets, liabilities, financial
and transactional records, executory contracts and unexpired
leases, Pauline K. Morgan, Esq., at Young, Conaway, Stargatt &
Taylor, LLP, told the Court, the Debtors will be unable to
complete and file their Schedules of Assets and Liabilities,
Schedules of Current Income and Expenditures, Statements of
Financial Affairs and Statements of Executory Contracts by May
3, as required by Rule 1007 of the Federal Rules of Bankruptcy
Procedure. The additional 15 day grace period through May 18,
available by way of recently-promulgated Local Bankruptcy Rule
1007-1 for Delaware debtors with more than 200 creditors, won't
be sufficient either.

Ms. Morgan said that the Debtors expect to have all information
necessary to enable them to complete the preparation of their
Schedules and Statements by June 12, 2001.

Accepting the Debtors' arguments that extensions of time to file
Schedules and Statements are routinely granted in large chapter
11 cases and an similar extension of Winstar's time is
warranted, Judge Farnan granted the Debtors' request without
prejudice to the Company's right to seek further extensions if
necessary. (Winstar Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

                            *********

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

                            *********


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

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

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

This material is copyrighted and any commercial use, resale or
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