TCR_Public/010517.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 17, 2001, Vol. 5, No. 97

                            Headlines

24/7 MEDIA: Posts $78.7 Million Net Loss For First Quarter 2001
3DFX INTERCATIVE: Nasdaq Delists Shares, Now Trading On OTCBB
ALTERRA HEALTHCARE: Restructuring Debt & Lease Obligations
ASSISTED LIVING: Reports First Quarter 2001 Financial Results
BANCA TURCO: Fitch Slashes Foreign Currency Rating To DD From C

BANYAN STRATEGIC: Net Assets in Liquidation Increase By $1.1 Mil
BURNHAM PACIFIC: Posts Q1 Results & Gives Update on Liquidation
CATALINA LIGHTING: Q2 Net Loss Results in Debt Covenant Default
CMI Industries: Involuntary Case Summary
DERBY CYCLE: Moody's Downgrades Senior Notes Rating to C

EARTHCARE COMPANY: Seeks To Amend Senior Credit Agreement
ELEPHANT & CASTLE: Restructuring $10 Million Debt
FACTORY CARD: Exclusive Filing Period Extended To July 31
FINOVA GROUP: Effect Of The Plan On Claims And Interests
FOUNTAIN VIEW: Further Delays Interest Payment On Senior Notes

GLOBALSTAR: Publishes Results for First Quarter of 2001
HARNISCHFEGER: Resolves Claim Dispute With Barclays Bank
IMP INC: Secures Additional Funding From Management-Led Group
IMPERIAL SUGAR: PBGC May File Consolidated Proofs Of Claim
INTEGRATED HEALTH: Court Okays Transfer of Kent Facility In DE

KINDRED HEALTHCARE: Reports First Quarter Results
LASON, INC.: Clueless When Quarterly Financials Will Be Ready
LERNOUT & HAUSPIE: Appoints P. Bodson & E. Davignon To Board
LERNOUT & HAUSPIE: Reschedules Shareholders' Meeting To June 29
LOEWEN GROUP: Ohio Unit Seeks Authority To Sell Assets For $300K

LTV CORPORATION: Wants To Sell Mahoning Valley Railway Company
MARINER POST-ACUTE: Agrees To Modify Stay For Insured Claim
MIDLAND FOOD: Disclosure Statement Hearing Set for June 6
MPOWER: Moody's Reviews Long-Term Ratings For Possible Downgrade
MURDOCK COMMUNICATIONS: Posts Weak First Quarter Results

OTR EXPRESS: First Quarter Net Loss Amounts To $2,360,000
OXIS INT'L: Says Capital Insufficient for Ongoing Operations
PATHNET: Delaware Docket Too Clogged, Cisco & Nortel Argue
RAYTEL MEDICAL: OIG Investigation Negatively Impact Results
ROCKWELL MEDICAL: Receives Notice of Delisting From Nasdaq

SAKS INC.: Fitch Cuts Senior Note Rating To BB+ From BBB-
SLATKIN, REED: Court Orders Earthlink Co-Founder Asset Freeze
STROUDS INC: Asks Court To Extend Exclusive Period To July 6
THCG, INC.: Continues to Explore Strategic Alternatives
TRACK 'N TRAIL: Releases Revised Fiscal Year 2000 Results

US WOOD: Has Until May 27 To Assume/Reject Real Property Leases
VODAVI TECHNOLOGY: Closes Certain Operations & Restructures Debt
W.R. GRACE: Obtains Injunction Against Utility Companies
WATERLINK INC.: Amends Senior Credit Facility
ZANY BRAINY: Files Voluntary Chapter 11 Petition in Wilmington

ZANY BRAINY: Case Summary & 20 Largest Unsecured Creditors

                            *********

24/7 MEDIA: Posts $78.7 Million Net Loss For First Quarter 2001
---------------------------------------------------------------
24/7 Media, Inc. (Nasdaq:TFSM), a global leader in multi-
platform interactive marketing, announced its financial results
for the first quarter ended March 31, 2001.

The Company reported first quarter revenues of $25.3 million and
a pro forma net loss, excluding acquisition and equity-related
costs, of $24.8 million, or $0.58 per share.

24/7 Media's reported net loss was $78.7 million in the quarter.
Included in this number were charges related to amortization of
goodwill and intangibles and advances ($11.7 million), stock-
based compensation ($2.5 million), restructuring costs ($0.5
million), impairment of investments ($3.1 million) and
impairment of intangible assets ($40.1 million) offset by gains
by sale of investments of $4.0 million. The Company continually
evaluates the carrying value of its investments. Due to the
continued decline in the Internet and online industries an
additional charge of $40.1 million was recorded.

The Company reviewed the impact of its initiatives to streamline
business units through improved cost controls, better operating
processes and lowering overheads. The Company announced that, to
date, it has achieved bottom-line annualized improvements of
over $50 million, representing a combination of headcount
reduction, improved operating efficiencies, divestitures, and
gross margin enhancements.

The Company disclosed that during the first quarter it raised
over $6 million through the monetization of its marketable
securities and that since the end of the first quarter, it has
sold the balance of these securities.

First quarter revenues were as follows: the 24/7 Network, which
includes revenues derived from global banner advertising and
customer promotional programs had revenues of $11.4 million;
24/7 Mail, which features revenues from 24/7 Media's list
management and database alliance businesses earned $3.9 million;
and the Company's technology division had revenues of $10.0
million.

"We are encouraged with the steps this Company took in the first
quarter of this year", said David J. Moore, CEO 24/7 Media.
"Although the online advertising industry remains challenging,
we have aggressively acted upon our strategies to improve the
quantity and quality of revenues, reduce operating costs,
eliminate redundancies across our businesses and reduce the cash
burn by divesting divisions that are not likely to be profitable
in the near future. We are refocusing on our core competencies,
which are: multi-platform advertising; email list management,
brokerage and consulting services; search engine optimization;
and our proprietary technologies that support these efforts. We
believe this focus is important as we execute our business plan
in what will continue to be a tough marketplace over the next
nine to 12 months."

The Company also announced progress in its plan to divest non-
core assets, thereby raising cash and further reducing cash
burn. Since the end of the first quarter, the Company has sold
the assets of Sabela (a third-party ad serving technology) and
AwardTrack (an online loyalty program technology). These
divestitures together with the monetization of the balance of
its marketable securities have generated $6.3 million in
proceeds in the second quarter.

Mr. Moore concluded, "24/7 Media is acutely aware of the
challenges we face as we redefine our role in this marketplace.
With the infusion of cash, the reduction of operating costs and
greater efficiencies, we are cautiously optimistic about the
Company's long-term viability. 24/7 Media is taking the proper
steps to weather the current economic storm. Interactive
marketing is here to stay, and we are committed to driving its
success."

                  About 24/7 Media, Inc.

24/7 Media Inc. is a leading global provider of end-to-end
advertising and marketing solutions for Web publishers, online
advertisers, advertising agencies, e-marketers and e-commerce
merchants. 24/7 Media provides a comprehensive suite of media
and technology products and services that enable Web publishers,
online advertisers, advertising agencies and e-marketers to
attract and retain customers worldwide, and to reap the benefits
of the Internet and other electronic media. Our solutions
include advertising and direct marketing sales, ad serving,
promotions, email list management, email list brokerage, email
delivery, data analysis, loyalty marketing and convergence
solutions, all delivered from our industry-leading data and
technology platforms. The company's 24/7 Connect ad serving
technology solutions are designed specifically for the demands
and needs of advertisers and agencies, Web publishers and e-
commerce merchants. 24/7 Media is a global company headquartered
in New York. For more information, visit http://www.247media.com


3DFX INTERCATIVE: Nasdaq Delists Shares, Now Trading On OTCBB
-------------------------------------------------------------
3dfx Interactive, Inc. (Nasdaq:TDFX) announced that, pursuant to
a delisting notice received by 3dfx from Nasdaq on May 11, 2001,
its common stock would be delisted from the Nasdaq National
Market effective as of the opening of business on May 16, 2001.
At that time 3dfx's common stock will be available for trading
on the Over-the-Counter Bulletin Board ("OTCBB"). The decision
by Nasdaq to delist 3dfx's securities was based on Marketplace
Rule 4310(c)(8)(B) and results from the failure to maintain a
$1.00 minimum bid price for a time period sufficient to satisfy
Nasdaq officials.

The OTCBB is a regulated quotation service that offers real-time
quotes, last-sale prices and volume information on selected
over-the-counter equity securities. 3dfx will retain its current
stock symbol:TDFX.

3dfx expects to file with the Securities and Exchange Commission
its annual Report on Form 10-K for the fiscal year ended January
31, 2001 on May 16, 2001.

3dfx Interactive, Inc., developed high performance, cost-
effective graphics chips, graphics boards, software and related
technology that enables an interactive and realistic 3D
experience across multiple hardware platforms, but is now in the
process of winding up its business.


ALTERRA HEALTHCARE: Restructuring Debt & Lease Obligations
----------------------------------------------------------
Alterra Healthcare Corporation (AMEX:ALI) announced financial
results for the three-month period ended March 31, 2001. At
quarter-end, the Company operated or managed 481 residences with
a total capacity to serve approximately 22,400 residents.

                Operating & Financial Results

The Company reported revenues of $128.3 million for the quarter
ended March 31, 2001, a 20.4% increase over revenues of $106.6
million for the quarter ended March 31, 2000. The Company's pre-
tax loss for the quarter ended March 31, 2001 was $25.5 million
(excluding $2.5 million of reserves recorded for anticipated
losses related to asset dispositions and $9.6 million of
reserves for losses on lease terminations) compared to a pre-tax
loss of $8.6 million for the comparable period of 2000. The
Company's net loss for the quarter ended March 31, 2001 was
$37.6 million. The pre-tax loss for the quarter ended March 31,
2001 includes $18.2 million of non-cash expenses including
depreciation, amortization, and payment-in-kind ("PIK") interest
expense.

                 Recent Operational Results

In the first quarter of 2001, the Company's residence level
operating margins improved, as stabilized residence and same
store residence margins improved by 3.2% and 4.9%, respectively,
over the fourth quarter of 2000. Margins improved in the first
quarter as price increases were implemented in a large portion
of the portfolio primarily to compensate for significant
increases in labor and fixed costs experienced in the second
half of 2000. In addition, general and administrative costs
(excluding costs related to the Company's restructuring
activities) declined to $10.2 million. For the three months
ended March 31, 2001, the Company reported overall average
occupancy of 83.8%, a 3.5% increase over occupancy of 80.3% for
the comparable quarter of 2000 and a 0.9% decline from the
quarter ended December 31, 2000.

Steven Vick, President and Chief Operating Officer said, "Our
focus on our core operations in the first quarter has produced
solid positive momentum in our financial results. We look
forward to continued improvements as we progress through 2001."

                  Restructuring Activities

As previously announced, the Company is seeking to
comprehensively restructure its capital structure. To conserve
cash and fund ongoing residence operations, the Company did not
make a significant portion of its scheduled debt service and
certain lease payments in March, April and May 2001, and as a
result is in default under many of its major credit instruments
(including its convertible subordinated debentures) and certain
of its lease facilities. The Company is currently prohibited
from making cash payments on its convertible subordinated
debentures pursuant to the subordination provisions of these
debt securities.

The Company previously announced that the principal components
of its restructuring plan are: (i) the disposition of a
substantial number of the Company's residences, which the
Company expects to accomplish primarily by actively working with
its lenders and lessors to identify new operators and by selling
assets through an organized sales process; (ii) the
restructuring of the Company's principal debt and lease
obligations, including in certain instances payment deferrals,
extensions of additional credit, the rescheduling of debt
maturities and the elimination or modification of certain
covenants; and (iii) the exchange of new debt, equity or equity-
linked securities of the restructured Company for the Company's
currently outstanding convertible debentures and joint venture
interests held by third parties in certain of the Company's
residences. While substantive restructuring discussions are
underway with the Company's lenders, lessors and joint venture
partners, no assurance can be given that the Company will be
successful in negotiating the appropriate restructuring
arrangements with its various capital structure constituents.

Alterra offers supportive and selected healthcare services to
our nation's frail elderly and is the nation's largest operator
of freestanding Alzheimer's/ memory care residences. Alterra
currently operates in 28 states.

The Company's common stock is traded on the American Stock
Exchange under the symbol "ALI."


ASSISTED LIVING: Reports First Quarter 2001 Financial Results
-------------------------------------------------------------
Assisted Living Concepts, Inc. (AMEX:ALF), a national provider
of assisted living services, announced its financial results and
the filing of its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001.

For the quarter ended March 31, 2001, the Company incurred a net
loss of $4.2 million, or $0.25 per basic and diluted share, on
revenue of $36.9 million as compared to a net loss of $3.8
million, or $0.22 per basic and diluted share, on revenue of
$33.1 million for the quarter ended March 31, 2000.

The Company recorded operating income of $25,000 for the March
2001 Quarter as compared to $28,000 for the March 2000 Quarter.
Operating results for the March 2001 Quarter included charges of
$303,000 related to the potential restructuring of the Company's
convertible debentures and certain of its under-performing
leases.

The Company's Quarterly Report on Form 10-Q includes a
discussion of the Company's potential restructure of its
convertible debentures and certain of its under-performing
leases. The Form 10-Q also includes information regarding the
Company's liquidity.

Assisted Living Concepts, Inc. owns and operates 185 assisted
living residences for older adults who need help with the
activities of daily living, such as bathing and dressing. In
addition to housing, the Company provides personal care, support
services, and nursing services according to the individual needs
of its residents, as permitted by state law. This combination of
housing and services provides a cost efficient alternative and
provides an independent lifestyle for individuals who do not
require the broader array of medical and health services
provided by nursing facilities. The Company currently has
operations in Oregon, Washington, Idaho, Nebraska, Iowa,
Arizona, Texas, New Jersey, Ohio, Pennsylvania, Indiana,
Louisiana, Florida, Michigan, Georgia, and South Carolina.


BANCA TURCO: Fitch Slashes Foreign Currency Rating To DD From C
---------------------------------------------------------------
Fitch, the international rating agency, has downgraded the
International Long-term Foreign Currency rating of Banca Turco
Romana (BTR) to 'DD' from 'C'. It has also downgraded the Intra-
Country Issuer rating to 'IC-E' from 'IC-D/E and affirmed its
Short-term Local Currency rating at 'LC-4'. The downgrade
reflects ongoing liquidity difficulties, negative capital and
risk of banking license withdrawal.

BTR was Romania's fifth largest bank in 2000 and is 70% owned by
Turkey's Bayindir Holding. The bank's difficulties began in
early 2000 due to uncertainty at the top management level and
escalated during the Turkish crisis. As a result, the bank
experienced liquidity problems at the end of 2000. Its
controlling shareholder provided some liquidity support, but has
so far failed to replenish negative capital. BTR has
successfully reduced its assets and has repaid most of
liabilities during the last several months, however its total
assets now stand at USD32mln down from USD300mln before the
crisis, and the remaining assets are likely to be illiquid.

As regular banking activities have ceased and with the bank's
deteriorating asset quality in 2001, BTR's capital was wiped out
to an estimated capital loss of USD8mln at end-April 2001. This
could worsen further if the National Bank of Romania were to
withdraw the bank's license, as is expected if no solution is
found; as accounting principle of going concern would no longer
be applied. However, more importantly, the bank's remaining
goodwill, represented by its banking license, its relatively
advanced IT system and branch network will disappear, together
with its hopes of finding a new strategic investor.

Management still believes that controlling shareholder will
inject new capital to comply with the minimum capital
requirement of USD5mln in Romania, as it would be keen to
preserve its reputation. However, the shareholder is already
stretched due to problems in its domestic market as well as in
some other emerging markets, and time is running out. The
National Bank of Romania has already extended BTR's deadline to
comply with regulatory requirements several times and appears to
be losing patience. Fitch will continue to monitor the situation
and review BTR's ratings accordingly.


BANYAN STRATEGIC: Net Assets in Liquidation Increase By $1.1 Mil
----------------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) announced that for
the quarter ending March 31, 2001, its Net Assets in Liquidation
increased by approximately $1.1 million from approximately $61.1
million at December 31, 2000 to approximately $62.2 million at
March 31, 2001. The increase was primarily the result of
operating income in the amount of approximately $2.5 million and
recovery of losses on loans, notes and interest receivable of
approximately $0.9 million reduced by depreciation expense of
approximately $1.6 million and distributions to shareholders in
the amount of approximately $0.6 million.

The recovery of losses on loans, notes and interest receivable
of approximately $0.9 million represents cash received in
respect of the Trust's interest in a liquidating trust
established for the benefit of the unsecured creditors VMS
Realty Partners and its affiliates. The interest in this
liquidating trust had previously been accorded no carrying value
in the Trust's financial statements.

For the three months ending March 31, 2000, the Trust reported
Net Income Available to Common Shares of approximately $1.0
million. Because of the differences between the liquidation
basis of accounting and the going concern basis of accounting
described below, this amount is not comparable to the net
changes in assets in liquidation as reported for the three
months ending March 31, 2001.

               Liquidation Basis of Accounting

As a result of the adoption of a Plan of Termination and
Liquidation on January 5, 2001, the Trust began reporting on the
liquidation basis of accounting effective for the quarter ending
March 31, 2001. Therefore, operations for the three months
ending March 31, 2001 are reported on the Consolidated Statement
of Changes in Net Assets in Liquidation while the March 31, 2000
results are reported on a going concern basis on the
Consolidated Statement of Operations. The financial statement
presentations differ in that under the liquidation basis of
accounting, the Trust no longer amortizes deferred financing
fees and leasing commissions and no longer records straight line
rental income. Leasing commissions, however, are deducted in the
computation of Operating Income and are no longer capitalized
and amortized.

Upon adopting the liquidation basis of accounting, the Trust
also recorded a charge of approximately $6.3 million in order to
write off certain intangible assets that were included on the
December 31, 2000 balance sheet. As a result, its Shareholders'
Equity as of December 31, 2000 as reported on the going concern
basis was reduced by approximately $5.5 million related to the
write off leasing commissions and deferred financing fees that
were included in total assets at December 31, 2000 and
approximately $0.8 million for costs related to the liquidation
and termination of the company.

                     Property Sale Update

As previously announced, the closing of the Trust's 27-property
sale to Denholtz Management Corporation which commenced on May
9, 2001, was adjourned by Denholtz, pursuant to its contractual
right to do so. Although a specific timetable has not yet been
established, the closing is expected to resume and be completed
by May 21, 2001.

Assuming the closing takes place as now anticipated, Banyan
indicated that it does not anticipate any material change in the
timing or amount of its projected first liquidating distribution
of between approximately $4.60 per share and approximately $4.80
per share within thirty (30) days of the initial closing. Banyan
added that its final liquidating distribution is now anticipated
to occur during the third or fourth quarter of 2002. The
estimated total amount of liquidating distributions remains at
approximately $6.00 per share.

Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) that owns primarily office and
flex/industrial properties. The properties are located in
certain major metropolitan areas of the Midwest and Southeastern
United States, including Atlanta, Georgia and Chicago, Illinois,
and smaller markets such as Huntsville, Alabama; Louisville,
Kentucky; Memphis, Tennessee; and Orlando, Florida. Banyan's
current portfolio consists of properties totaling 3.5 million
rentable square feet. As of this date Banyan has 15,488,137
shares of beneficial interest outstanding.


BURNHAM PACIFIC: Posts Q1 Results & Gives Update on Liquidation
---------------------------------------------------------------
Burnham Pacific Properties, Inc. (NYSE: BPP) announced operating
results for the first quarter ended March 31, 2001.

                     Review of Results

For the first quarter ended March 31, 2001, revenues decreased
by $5,783,000 to $25,277,000 from $31,060,000 in the first
quarter of 2000. This decrease was primarily attributable to a
decrease in rental revenues of $4,224,000 resulting from asset
sales and a decrease in management fee income of $1,200,000
resulting from the termination of the Company's former joint
venture with the State of California Public Employees'
Retirement System. Net income available to common stockholders
for three months ended March 31, 2001 was $3,216,000 or $0.10
per share as compared to a net loss of $80,000 for the first
quarter of 2000. This increase was primarily attributable to the
Company not recording depreciation expense in 2001 subsequent to
the adoption of the liquidation basis of accounting for periods
subsequent to December 15, 2000. If, for comparison purposes,
depreciation expense was eliminated in the first quarter of
2000, then net income available to common stockholders for the
three months ended March 31, 2000 would have been $6,408,000.

                     Funds From Operations

The Company has historically reported Funds From Operations
(FFO) because it is generally accepted in the real estate
investment trust (REIT) industry as a meaningful supplemental
measure of performance. However, because the Company is
liquidating, it no longer believes that FFO is meaningful to
understanding its performance and is therefore no longer
reporting FFO.

          Adjustment to Liquidation Basis of Accounting

As a result of the adoption of the Plan of Liquidation by the
Company's Board of Directors and its approval by the Company's
stockholders, the Company adopted the liquidation basis of
accounting for all periods subsequent to December 15, 2000.
Accordingly, on December 16, 2000, assets were adjusted to
estimated net realizable value and liabilities were adjusted to
estimated settlement amounts, including estimated costs
associated with carrying out the liquidation. The valuation of
real estate held for sale as of March 31, 2001 is based on
current contracts, estimates as determined by independent
appraisals or other indications of sales value, net of estimated
selling costs, and capital expenditures of approximately
$19,535,000 anticipated during the liquidation period. The net
adjustment at December 16, 2000, required to convert from the
going concern (historical cost) basis to the liquidation basis
of accounting, amounted to a negative adjustment of $85,228,000,
which is included in the December 31, 2000 Consolidated
Statement of Changes in Net Assets (liquidation basis). A
further negative adjustment has been included in the March 31,
2001 Consolidated Statement of Changes in Net Assets
(liquidation basis) to reflect additional capital expenditures
and less-than-anticipated closing costs.

Adjusting assets to estimated net realizable value resulted in
the write- up of certain real estate properties and the write-
down of other real estate properties. The anticipated gains
associated with the write-up of certain properties have been
deferred until their sales, and the anticipated losses
associated with the write-down of other certain properties have
been included in the Consolidated Statement of Changes of Net
Assets.

Under the liquidation basis of accounting, the Company is
required to estimate and accrue the costs associated with
executing the Plan of Liquidation. These amounts can vary
significantly due to, among other things, the timing and
realized proceeds from property sales, the costs of retaining
personnel and trustees to oversee the liquidation, including the
cost of insurance, the timing and amounts associated with
discharging known and contingent liabilities and the costs
associated with cessation of the Company's operations. These
costs are estimates and are expected to be paid during the
liquidation period.

                         Dispositions

Since the adoption of the Plan of Liquidation by the Company's
Board of Directors in August 2000 through April 26, 2001, the
Company has sold 29 properties.

During the fourth quarter of 2000, the Company sold five
shopping centers and one office building. In October 2000, the
Company sold the Anacomp office building for approximately
$21,300,000. On December 5, 2000, the Company sold the Meridian
Village and San Diego Factory Outlet Center for an aggregate of
approximately $48,700,000. On December 29, 2000, the Company
sold La Mancha, the Plaza at Puente Hills and Valley Central
shopping center for an aggregate of approximately $109,900,000.
Meridian Village, San Diego Factory Outlet, La Mancha, the Plaza
at Puente Hills, and Valley Central represent a portion of a
portfolio of properties targeted for sale under an agreement
with The Prudential Insurance Company of America.

In February 2001, the Company sold the Puget Park and Cameron
Park shopping centers for approximately $18,953,000. In March
2001, the Company sold the Richmond shopping center for
approximately $10,381,000. These transactions also represent a
portion of a portfolio targeted for sale under the agreement
with Prudential.

On April 2, 2001, the Company sold a portfolio of 19 shopping
centers to Weingarten Realty for aggregate sales proceeds of
approximately $288,500,000.

On April 26, 2001, the Company sold the Downtown Pleasant Hill
shopping center for approximately $62,400,000. This transaction
also represents a portion of a portfolio targeted for sale under
the agreement with Prudential.

                Redemption of Preferred Equity

On April 3, 2001, the Company used approximately $126,000,000 of
the cash proceeds from the Weingarten sale to redeem all of the
outstanding shares of Series 2000-C Convertible Preferred Stock
and Series 1997-A Preferred Units of limited partnership
interest in Burnham Pacific Operating Partnership.

Burnham Pacific Properties, Inc. is a real estate investment
trust (REIT) that focuses on retail real estate. More
information on Burnham may be obtained by visiting the Company's
web site at www.burnhampacific.com.


CATALINA LIGHTING: Q2 Net Loss Results in Debt Covenant Default
---------------------------------------------------------------
Catalina Lighting, Inc. (NYSE: LTG) a leading international
designer, manufacturer and distributor of lighting products for
residential and office environments, announced operating results
for the second quarter of its fiscal year ending September 30,
2001. The Company also announced that progress continues toward
completion of the proposed $20.5 million junior capital infusion
for the Company.

For the quarter ended March 31, 2001, net sales were $55.8
million, including $27.8 million in sales generated by Ring
Ltd., a British subsidiary that was acquired in July 2000.
Excluding Ring's results, Catalina's net sales totaled $28.0
million in the second quarter of FY2001, compared with $42.0
million in the prior-year period. The reduction in sales was
primarily attributable to declines in sales to U.S. customers.
The Company reported a net loss of $3.4 million, or ($0.46) per
diluted share, in the quarter ended March 31, 2001, compared
with net income of $752,000 or $0.10 per diluted share, in the
quarter ended March 31, 2000.

Net sales for the six months ended March 31, 2001 were $120.4
million. Excluding Ring's sales, net sales for this six month
period ended March 31, 2001 were $64.4 million, as compared to
$85.2 million for the six months ended March 31, 2000.

The net loss for the six months ended March 31, 2001 was $5.3
million, or ($0.72) per share, as compared to net income of $1.3
million, or $0.17 per share, for the six months ended March 31,
2000.

"The prevailing downturn in the U.S. economy has had a major
adverse impact on our operating results to this point in our
2001 fiscal year," stated Robert Hersh, Catalina's Chairman and
Chief Executive Officer. "However, the financial press for
several of our retail customers has been more favorable in the
last month, and Catalina's open orders backlog improved in the
month of April. Historically, sales and profitability for the
second half of our fiscal year has been stronger than the first.
While we continue to feel the effects of the current economic
environment, we currently expect operating results for the
latter half of fiscal 2001 to be significantly better than those
for the first six months of fiscal 2001."

The Company also announced that the proposed $20.5 million
capital infusion from Sun Catalina Holdings LLC (an affiliate of
Sun Capital Partners, Inc.) and a separate lender is proceeding
as expected with SCH presently engaged in due diligence and
discussions with the bank syndication group for the proposed
restructuring of the Company's $75 million credit facility. The
transaction remains subject to a number of conditions.

Due to the net loss for the quarter, the Company was not in
compliance with a financial covenant under its $75 million
credit facility. On May 15, 2001 the Company obtained a
forbearance of actions by its lenders resulting from this
covenant violation through June 15, 2001. This forbearance
agreement also extended the deadline under the credit facility
for the Company's procurement of certain statutory declarations
and an auditors' report related to the Company's acquisition of
Ring Plc to June 15, 2001. Based upon ongoing discussions with
its bank lenders, the Company believes that it will be able to
successfully negotiate a mutually agreeable waiver or amendment
to its credit facility on or prior to June 15, 2001.

On April 5, 2001 the New York Stock Exchange (NYSE) announced
that it had determined that the common stock of the Company
should be removed from the list of companies trading on the
NYSE. The Company has determined not to appeal the NYSE's
decision. The Company is working with Nasdaq and Nasdaq market
makers in order to allow the Company's stock to be quoted
through the Nasdaq Bulletin Board. The Company believes that its
stock will be quoted through the Bulletin Board under a new
trading symbol shortly after the stock ceases to trade on the
NYSE.

There can be no assurance that the Company's proposed capital
infusion will be consummated, that the Company will be
successful in negotiating a further waiver or amendment to its
credit facility on or prior to June 15, 2001, or that market
makers will quote the Company's stock on the Nasdaq Bulleting
Board.


CMI Industries: Involuntary Case Summary
----------------------------------------
Alleged Debtor: CMI Industries, Inc.
                 1301 Gervais Street
                 Suite 700
                 Columbia, SC 29201

Involuntary Petition Date: May 3, 2001

Chapter: 11

Case Number: 01-01660

Court: District of Delaware

Petitioner's Counsel: Jeffrey M. Schlerf, Esq.
                       The Bayard Firm, P.A.
                       222 Delaware Avenue, Suite 900
                       Wilmington, DE 19801

Petitioner: Chancellor\Triton CBO, Limited

Amount of Claim: $2,752,013.89 Principal plus Accrued and Unpaid
                  Interest


DERBY CYCLE: Moody's Downgrades Senior Notes Rating to C
--------------------------------------------------------
Moody's Investors Service cut to C from Caa3 the ratings of The
Derby Cycle Corporation's $100 million of 10% senior notes and
DM 110 million (US $53 million) of 9.375% senior notes, both due
2008. Approximately $153 million of debt securities are said to
be affected.

Lyon Investments B.V., a wholly owned subsidiary of Derby, is a
co-issuer of the notes. As co-issuers both companies are jointly
and severally liable for these obligations, Moody's said. The
following ratings were also downgraded: (a) senior implied
rating to Ca from Caa1 and (b) the senior unsecured issuer
rating to C from Caa2. The secured credit facilities B3 rating
has been withdrawn by the rating agency while the outlook
remains negative.

As reported, the company has defaulted on its scheduled interest
payments on its senior notes that were due May 15, 2001 and has
a 30-day grace period to make the payments under the terms of
the indentures governing the notes. However, Moody's stated that
there can be no assurance that such payments will be done by the
end of the grace period.

The Company has retained Lazard Freres & Co. L.L.C. as its
financial advisor, and is working with an  informal committee of
senior note holders for the purposes of negotiating a consensual
restructuring of its outstanding securities, reported Moodys's.

The Derby Cycle Corporation is based in Nottingham, England. Its
is designs, manufactures and markets bicycles. Its operations
are centered in the U.K., The Netherlands, Germany, the United
States and Canada; with additional sales and marketing
operations in Europe and South Africa. Its brands include, among
others, Raleigh, Nishiki, Univega, Gazelle, Winora and Diamond
Back.


EARTHCARE COMPANY: Seeks To Amend Senior Credit Agreement
---------------------------------------------------------
EarthCare Company (Nasdaq: ECCO) announced its operating results
for the first quarter of 2001. EarthCare reported revenue from
its continuing EarthCare Solid Waste Division of $5.6 million
for the first quarter of 2001, a 37% increase from the pro forma
revenues for the same quarter last year. EarthCare's operating
loss during the first quarter of 2001 amounted to $460,000, a
14% decline from its pro forma operating loss of $582,000 for
the same quarter last year. The improvement in the operating
loss was a result of the improved operating results of its
EarthCare Solid Waste Division and relatively flat corporate
expenses. The Company reported a net loss from continuing
operations of $1.8 million in the first quarter of 2001, or
$0.12 per share, as compared to a pro forma loss from continuing
operations of $1.0 million in the first quarter of 2000, or
$0.07 per share. The increase in the loss is primarily due to
increased interest expense due to a higher level of debt
outstanding during the first quarter of 2001.

On a historical basis, EarthCare reported an operating loss from
continuing operations of $0.9 million in the first quarter of
2000 and a net loss from continuing operations of $1.0 million
in the first quarter of 2000, or $.09 per share. EarthCare's
continuing operations in the first quarter of 2000 consisted
only of its corporate office. The operating results for its
discontinued EarthLiquids and EarthAmerica divisions are not
included in these operating results. The pro forma results of
operations for the first quarter of 2000 consist of EarthCare's
Solid Waste operations in Florida and its corporate office.

"We are extremely pleased with the growth of our solid waste
business in Florida. This growth shows that we can obtain strong
operating results by focusing on internal growth and customer
service in our existing markets," said Donald Moorehead,
Chairman and Chief Executive Officer of EarthCare. "We are
continuing our efforts to restructure our debt and equity
capital and with our plans to find strategic alternatives for
our EarthAmerica and EarthLiquids divisions."

EarthCare also announced that it is not in compliance with
certain covenants in its senior credit agreement, specifically
the company did not complete the sale of its EarthAmerica
division by April 30, 2001; it did not attain the minimum level
of EBITDA required for the first quarter of 2001; and the
required collateral for its credit agreement has not yet been
fully provided. EarthCare is currently negotiating with its
senior lenders for a waiver and amendment to its credit
agreement and, until such waiver and amendment is completed, is
in default under its credit agreement. EarthCare and its senior
lenders have entered into a letter of agreement effective April
30, 2001, whereby EarthCare may continue to borrow and repay
amounts under its senior credit agreement.


ELEPHANT & CASTLE: Restructuring $10 Million Debt
-------------------------------------------------
Elephant & Castle Group Inc. (OTCBB: PUBSF) has concluded a
letter of intent with its principal lender, GEIPPP II, to
restructure its US $10MM of indebtedness. Under this proposal
the company will issue 2,600,000 Common Shares in exchange for a
waiver of up to US $600,000 of current interest and
approximately US $600,000 of future interest through the
exchange of the existing US $10MM of 8% Notes for US $5MM of 6%
Senior Notes, repayable in quarterly installments commencing
November 2001 and US $5MM of 6% Junior Notes, convertible into
Common Shares at prices ranging from US $1.00 to US $1.75
commencing September, 2002. Additionally, the company proposes
to issue US $1.00 warrants to existing shareholders on a 1 for 1
basis.

The company reported a net loss of CDN $(29,000) before and
after tax or CDN $(0.01) per share for the first quarter of
2001. This represents an improvement of CDN $579,000 over 2000,
when the company reported a net loss after tax of CDN $(608,000)
or CDN $(0.26) per share, and an improvement of CDN $840,000
over 2000 at the pre-tax level, when the company reported a loss
before tax of CDN $(869,000) or CDN $(0.37) per share.

Total revenues for the thirteen week period were CDN $10,019,000
compared with CDN $11,875,000 in 2000, reflecting the closure of
the loss-making Franklin Mills store and the restructuring of
the Rainforest Cafe joint venture. Same store sales improved by
6.2%, representing strong growth over a weak first quarter of
2000.

Rick Bryant, President and Chief Executive Officer commented,
"The restructuring of our indebtedness will give the company the
room it needs for growth. The strength of the core business is
now starting to show through, and the future is looking very
positive." He added "The new Chicago Elephant & Castle has
opened to very promising sales levels and is expected to be a
significant profit contributor in the current year."

Elephant & Castle Group Inc. is the premier operator and
franchisor of authentic British-style pubs with 22 locations
throughout North America. In addition, the Company owns and
franchises the Southwestern-theme steakhouse concept called
Alamo Steakhouse & Grill(TM).


FACTORY CARD: Exclusive Filing Period Extended To July 31
---------------------------------------------------------
By order entered on April 30, 2001, the US Bankruptcy Court,
District of Delaware approved the motion of the debtors, Factory
Card Outlet Corp. and Factory Card Outlet of America Ltd.,
extending the exclusive periods for filing a plan of
reorganization and solicitation of acceptances thereof.

Pursuant to section 1121(d) of the Bankruptcy Code, the debtors'
exclusive filing period is extended to and including July 31,
2001.

Pursuant to section 1121(d) of the Bankruptcy Code, the debtors'
exclusive solicitation period is extended to and including
October 1, 2001.


FINOVA GROUP: Effect Of The Plan On Claims And Interests
--------------------------------------------------------
             Effect of The FINOVA Group, Inc.'s Plan
                   on Certain Securities

(I) Cancellation

     On the Effective Date, certain instruments, securities and
other documentation shall be deemed canceled and shall be of no
further force and effect, without any further action on the part
of the Bankruptcy Court or any Debtor or Reorganized Debtor. The
documentation deemed cancelled includes:

      (a) the notes and other documents or instruments evidencing
the Bank Claims and the Debt Securities, the Bank Credit
Agreements, the Debt Securities Indentures, any Group
Subordinated Debentures that otherwise would be issued to FNV
Group, and all other credit instruments, provided, however, that
the Group Subordinated Debentures distributed pursuant to
Section 5.9(e) to parties other than FNV Group and the
instruments evidencing the Loan Commitments shall not be
affected by this provision;

      (b) the certificates and other documents evidencing the
TOPrS Interests and the common beneficial Interests in FNY Trust
held by FNV Group;

      (c) all rights issued under the Rights Plan; and

      (d) all rights under existing options, warrants and rights
of conversion (other than those pursuant to the Group
Subordinated Debentures).

The holders of such canceled instruments, securities and other
documentation shall have no rights arising from or relating to
such instruments, securities and other documentation or the
cancellation thereof, except the rights provided pursuant to the
Plan, provided, however, that no distribution under the Plan
shall be made to or on behalf of any holder of an Allowed Claim
evidenced by such canceled instruments, securities or other
documentation unless and until such instruments, securities or
other documentation are received by the Disbursing Agent
pursuant to the Plan.

(II) Continuing Rights

      Each indenture or other agreement that governs the rights
of the holder of a Claim and that is administered by an
Indenture Trustee or an agent shall continue in effect solely
for the purposes of:

      (a) allowing such Indenture Trustee or agent to make the
distributions under this Plan;

      (b) permitting such Indenture Trustee or agent to maintain
any rights or liens it may have for fees, costs, expenses and
indemnification under such indenture or other agreement and to
be paid or reimbursed from the distributions; provided, however,
that this will not affect the discharge of Debtors' liabilities
under the Bankruptcy Code and the Confirmation Order or result
in any expense or liability to the Debtors. (Finova Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


FOUNTAIN VIEW: Further Delays Interest Payment On Senior Notes
--------------------------------------------------------------
Fountain View, Inc., a leading operator of 50 long-term care
facilities in California, Texas and Arizona, announced a further
delay in payment of the interest on the Company's 11.25% Senior
Subordinated Notes due 2008.

Interest on the Senior Subordinated Notes was due on April 16,
2001, but was deferred by the Company. During the deferral
period, the Company has been working with its Senior Bank Group
to restructure its Term Loan and Revolving Credit Facility, with
the intention of having sufficient funds available to make the
interest payment on the Senior Subordinated Notes by May 15,
2001. To date, the Company has not succeeded in reaching an
agreement with its Senior Bank Group to permit that interest
payment to be made, but is actively continuing those
discussions. There can be no assurance that a satisfactory
agreement will be reached.

The Indenture relating to the Senior Subordinated Notes provides
for a 30 day cure period for the interest payment that was due
on April 16. After that cure period expires, and while the
interest default is continuing, the Trustee or a specified
percentage of holders of the Senior Subordinated Notes may
accelerate the Company's obligations under the Notes.

The Company intends promptly to begin discussions with the
Trustee and holders of the Senior Subordinated Notes in an
effort to resolve the Company's current financial situation.
The Company also will request a five calendar day extension of
time for filing its Form 10-Q with the Securities and Exchange
Commission.


GLOBALSTAR: Publishes Results for First Quarter of 2001
-------------------------------------------------------
Globalstar (NASDAQ:GSTRF), the global mobile satellite telephone
service, announced its results for the quarter ended March 31,
2001, which showed growth in both voice and data traffic.

While the company is continuing to work on restructuring its
debt, Globalstar's marketing efforts remain uninterrupted. As a
result, the company's rate of growth, both in minutes of use
(MOUs) and subscriber numbers, rose substantially over the
previous quarter.

Globalstar recorded a total of 4 million minutes of use (MOUs),
including both mobile and fixed service, in the first quarter,
representing a 53% increase in traffic over the previous
quarter. The estimated number of mobile and fixed subscribers at
the end of March was 40,700, an increase of over 30% from the
previous quarter. As of the end of April, there were
approximately 44,000 subscribers registered on the Globalstar
system.

Most key markets continued to show encouraging MOU growth over
the previous quarter, including Russia (up 118%), Canada (up
78%), Saudi Arabia (up 179%) and Argentina (up 101%). In
addition, MOUs in the Central American countries collectively
were up 45%, driven in large part by strong fixed phone usage.

Data services, which were introduced in North America in late
December, represented 4% of total billable minutes for the
quarter. This is expected to rise substantially as data is
introduced in other markets. In March, data represented nearly
8% of total traffic volume, driven by testing and demonstrations
in Mediterranean markets.

"The introduction of data services has opened up a variety of
new opportunities for Globalstar, not just for data-only
customers but also for business and industry users who have an
important requirement for both data and voice communications,"
said Tony Navarra, president of Globalstar. "The response from
data users in North America has been very encouraging, and we
are already at work implementing this feature in other gateways
around the world."

In early May, the Globalstar partners, along with advisors from
The Blackstone Group, reviewed several business proposals to
continue and to strengthen Globalstar's business. Efforts to
restructure the company's debt remain on track, and work on a
final plan is expected to continue into the third quarter of
this year.

                      Financial Results

A full discussion of Globalstar's financial performance for the
first quarter can be found in the company's Report on Form 10-Q,
filed today with the U.S. Securities and Exchange Commission.
Highlights are as follows:

Gross service revenue for the first quarter was $1.9 million, up
66% over the previous quarter, and net revenue, including
royalty income from phone sales and less discounts and
promotions, was $1.5 million, an increase of 32% over the fourth
quarter of 2000.

Globalstar, L.P. reported a net loss applicable to ordinary
partnership interests for the quarter of $145 million or $2.25
per partnership interest that converts to a loss of $0.31 per
share of Globalstar Telecommunications Ltd.

As of March 31, 2001, Globalstar had approximately $138 million
in cash and cash equivalents, including restricted cash. As part
of the company's work to conserve cash, Globalstar has
instituted a number of cost saving measures across the company.
According to the company's current operating plan, Globalstar
has sufficient cash to continue operations through the end of
2001.

As announced in January, in order to have sufficient funds
available to pursue continued progress in its marketing and
service activities, Globalstar has suspended indefinitely
principal and interest payments on all of its funded debt,
including its credit facility, vendor financing agreements and
Senior Notes, as well as dividend payments on its preferred
stock. The suspension of these payments will reduce the
company's expected cash outflow by approximately $400 million
for the year 2001. As a result of these actions, however,
defaults have now occurred with respect to some of Globalstar's
debt.

            Operating and Marketing Initiatives

Globalstar is taking several steps to broaden and strengthen its
business and marketing operations, including:

      Introduction and expansion of data applications: Globalstar
is continuing its introduction of data services, which began in
late 2000 in the U.S., Canada and the Caribbean where
preliminary sales results have been encouraging. In late March,
SCADA (Supervisory Control and Data Acquisition) data modem
service was also introduced in North America, offering an
attractive data transmission capability which can be used for
monitoring the status of pipelines, transmission lines and other
industrial operations in remote locations. Globalstar is working
with outside companies to develop further specialized equipment
for aviation, maritime, and other potential data markets.
Expansion of service in new country markets: During the quarter,
two new gateways - in Ogulbey, Turkey, and Manaus, Brazil -
initiated service, and the State Planning Commission in China
gave its approval for a second and third gateway to be
constructed in that country. Globalstar service coverage now
reaches 109 countries or over 75% of the world's land areas.
Extension of coverage in maritime areas: Because the Globalstar
gateways have performed even better than original design
specifications predicted, the company has been able to extend
the coverage of many gateways to bring service to new offshore
and mid-ocean regions. In addition to the wide areas across the
North Atlantic and northeast Pacific announced last year, new
service areas have been opened up including the Caribbean; the
Tasman Sea between Australia and New Zealand; and the Sea of
Japan between Korea and Japan.

      Fixed phone services: Installation of fixed phones grew,
with phones installed on public intercity buses in Brazil, in
remote communities across Central America and Morocco, and along
highways in Argentina. At a single mining operation in Honduras,
five fixed phones each are generating several thousand minutes
of use per week.

In early 2001, Globalstar signed a memorandum of understanding
with SeaTel, a major provider of maritime telecommunications
equipment and services, under which SeaTel now markets a marine
satellite telephone package for installation and use aboard
ships. The package, which includes a Globalstar Qualcomm fixed
access unit along with a weatherproof antenna housing and
related equipment, is included in SeaTel's current catalog of
products.

Globalstar service also continues to serve a critical role in
rescue operations around the world. Use of Globalstar phones
have been credited with saving lives in the wake of earthquakes
earlier this year in El Salvador and in rescue work by the Royal
Canadian Mounted Police.

                        System Update

The Globalstar system continues to operate well, with
impressively high rates of call retention and call completion.
In recent months, three satellites experienced operational
anomalies and have been taken out of service pending further
analysis and investigation. While work on restoring these
satellites continues, on-orbit spare satellites are gradually
being maneuvered toward the orbital slots of the affected
satellites. If these satellites cannot be restored to full
service in the coming months, the company will then have the
option of replacing them with the on-orbit spares. In the
meantime, this temporary situation has caused minimal impact to
overall service, usually for a few minutes per day and generally
only for users in equatorial or very Northern or Southern
latitude regions.

Globalstar is a partnership of the world's leading
telecommunications service providers and equipment
manufacturers, including co-founders Loral Space &
Communications and Qualcomm Incorporated; Alenia; China Telecom
(HK); DACOM; DaimlerChrysler Aerospace; Elsacom (a Finmeccanica
Company); Hyundai; TE.SA.M (a France Telecom/Alcatel company);
Space Systems/Loral; and Vodafone Group Plc. For more
information, visit Globalstar's web site at www.globalstar.com.


HARNISCHFEGER: Resolves Claim Dispute With Barclays Bank
--------------------------------------------------------
In preparation for the hearing on confirmation of the Plan, and
in order to resolve any remaining issues over the matter,
Harnischfeger Industries, Inc. and Barclays Bank PLC presented
for the Court's approval a proposed Stipulation and Order form
which essentially represented the parties' agreement to the
proposed treatment of the Barclays Claim as provided in the
Debtors' Third Amended Joint Plan of Reorganization, as at the
date the parties entered into the stipulation.

The Debtors' Third Amended Joint Plan comes after a series of
events and a Prior Stipulation regarding the Barclays Claim. It
provides that:

      (a) the Stipulated Barclays Claim is to be expunged as
against HII and

      (b) the Guarantee and Modified Financing Guaranty are to
remain in full force and effect as against New HII post
confirmation, consistent with the Prior Stipulation;

                        Barclay's Claim re
             Revolving Credit Agreement and Guarantee

On or about February 28, 2000, Barclays filed an unsecured claim
in the amount of $27,167,293 which was comprised of two
components:

      (1) a claim in the amount of $13,500,000 under the
$500,000,000 Revolving Credit Agreement with the Chase Manhattan
Bank as Administrative Agent the Barclays/Chase Claim) and

      (2) a claim in the amount of $13,667,293, on account of the
Guarantee by which HII guaranteed payment to Barclays of the
liabilities of certain of HII's affiliates (Beloit Walmsley
Limited, Harnischfeger Industries Limited, Harnischfeger (UK)
Limited, Joy Mining Machinery Limited), with a limit on the
amount recoverable of a sum not exceeding Sterling 11,500,000
plus accruing interest, costs and expenses.

The Barclays/Chase Claim was deemed timely filed and allowed
pursuant to a stipulation between HII and Chase Manhattan Bank,
on account of the Revolving Credit Agreement.

The Guarantee had an expiry date of August 31, 1999, but upon
two extensions, has been extended until June 30, 2002.

Barclays and HII's non-debtor affiliates subsequently executed
documentation for Modified Financing, the effectiveness of which
was contingent upon, among other things, the provision by HII of
a guarantee of the same in the form of a supplemental guarantee.

Accordingly, HII sought and obtained the Court's authority to
provide the Modified Financing Guarantee.

                Prior Stipulation re Barclays Claim

In its Thirty Second Omnibus Objection to Claims, HII asserted
an objection to the Barclays Claim in the amount of $13,667,293
on the grounds that the claim is allegedly contingent and not
allowable under Section 502(e)(1)(B) of the Bankruptcy Code.

HII and Barclays resolved the Claims Objection by means of a
Stipulation and Order.

The Prior Stipulation provided, among other things, that:

      (A) the Stipulated Barclays Claim, in the amount of
$13,667,293 or such other amount representing HII's obligations
to Barclays under the Guarantee would be deemed a contingent
claim against HII.

      (B) in the event of the occurrence of one or more
Triggering Events,

          (i) the designation of the Stipulated Barclays Claim as
              "contingent" would automatically, and without
              further Order of the Court or action by any party,
              be vacated, and be of no force or effect; and

         (ii) the Stipulated Barclays Claim would be deemed
              allowed in an amount equal to HII's obligations to
              Barclays under the Guarantee, as of the occurrence
              of such Triggering Event.

      (C) in the event the Court authorized HII to issue a
Modified Financing Guarantee, and HII issues such guarantee in
the form and substance required by the Modified Financing, and
conditioned upon the Modified Financing becoming effective,
then, notwithstanding anything to the contrary set forth in
the Prior Stipulation, the Stipulated Barclays Claim would be
in the amount of $13,667,293, or in such other amount
representing HII's obligations to Barclays under the Guarantee
and/or the Modified Financing Guarantee.

          The Third Amended Plan of Reorganization

After filing their Third Amended Joint Plan of Reorganization
Under Chapter 11 of the Bankruptcy Code, in preparation for the
hearing on confirmation of the Plan, and in order to resolve any
remaining issues over the matter, the Debtors have requested
Barclays to enter into the current Stipulation.

In this Stipulation, the parties, with the intention to be
legally bound, but subject to approval of the Court, stipulated
and agreed that:

      "Upon the effective date of the Plan, the Stipulated
Barclays Claim (claim no. 7324) shall be deemed expunged in its
entirety. Notwithstanding the stipulation or anything to the
contrary set forth in the Bankruptcy Code, the Plan or in
applicable law, the Guarantee and Modified Financing Guaranty
shall remain in full force and effect as against New HII on and
subsequent to the effective date of the Plan and shall be fully
enforceable in accordance with their terms."

       HII shall use its best efforts to obtain (a) Court
approval of [the] Stipulation on or prior to the hearing on
confirmation of the Plan and (b) an order confirming the Plan
which expressly refers to [the current] Stipulation and is
consistent in all respects with this Stipulation.

       [The current] Stipulation shall not in any way be deemed
to modify or amend the Prior Stipulation, which shall remain in
full force and effect."

       [The] Stipulation shall be governed by and construed and
enforced in accordance with the bankruptcy laws of the United
States and the laws of the State of Delaware, without regard to
choice of law principles."  (Harnischfeger Bankruptcy News,
Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900)


IMP INC: Secures Additional Funding From Management-Led Group
-------------------------------------------------------------
IMP, Inc. (Nasdaq:IMPX) has entered into a Memorandum of
Understanding providing for an emergency cash infusion from a
group of investors led by members of the company's management.

Pursuant to the terms of the MOU, IMP will issue approximately
27.4 million shares of common stock for a purchase price of $6.0
million, or $0.22 per share. The investor group also agreed that
recent advances made by it to IMP, totaling $1.4 million, will
remain in the Company for the immediate future. No stock,
warrants or other equity will be issued in connection with these
advances which will remain general, unsecured obligations. The
new capital infusion is necessary to meet IMP's critical
obligations and failure to secure these funds would have
required that operations be ceased. The new funds are expected
to be provided on a staged basis over the next 60 days.

The investor group includes Subba Rao Pinamaneni, Chairman of
the Board of Directors; Sugriva Reddy, President and Chief
Executive Officer; John Chu, Vice President and General Manager
Standard Products; Moiz Khambaty, Vice President Technology
Development; and Tarsaim Batra, Chief Operating Officer and
General Manager Foundry Operations. IMP entered into the MOU
after exploring all available financing alternatives and after
extensive negotiation among the Company, its outside directors,
its present majority stockholder, Teamasia, and the investor
group. Teamasia, the company's existing majority stockholder,
has separately agreed to approve the new financing.

In connection with this new financing, the investor group
required that Teamasia amend the terms of $3.5 million principal
amount of convertible debentures held by it which otherwise
would have been due and payable in May and June 2001. Teamasia
has agreed to extend the maturity date for one year. The
convertible debentures will bear interest at the prime rate, and
the conversion rate will be reduced from $1.75 to $0.69, the
closing price of IMP's common stock on the Nasdaq Small Cap
Market on May 10, 2001. Interest on the convertible debentures
will be deferred until maturity. In addition, IMP has agreed to
grant to Teamasia a warrant to purchase approximately 1.6
million shares of common stock at an exercise price of $0.22 per
share.

Teamasia will continue to be entitled to nominate one director
for election to IMP's Board of Directors so long as it owns at
least five percent of the outstanding stock.

The closing of the additional financing is subject to certain
conditions, including the completion of definitive
documentation. IMP has a limited right to terminate this
financing transaction if a superior proposal is made by another
party.

The signing of the MOU ends the company's exhaustive search for
additional financing after the company's revenues for its fourth
fiscal quarter, ended March 31, 2001, were less than originally
expected. The disappointing fourth quarter revenues resulted in
a shortage of working capital necessary to support the company's
operations. The lowered revenue level reflected operational
difficulties caused by MIS system problems and yield shortfalls
on a discontinued line of foundry business.

Even though the investor group will become the majority
stockholder of IMP, the company will remain publicly traded.
However, recent trading prices are below the Nasdaq minimum of
$1.00 creating the prospect of delisting which has been
communicated in correspondence from Nasdaq to IMP. Among the
actions being considered to preserve the listing is a reverse
stock split.

Nonetheless, there can be no assurances that IMP will retain its
Nasdaq listing, with the alternative being to trade on the OTB
Bulletin Board.

IMP, Inc. provides analog semiconductor solutions that power the
portable, wireless and Internet driven computer and
communications revolution. From its ISO 9001 qualified wafer
fabrication plant in San Jose, California, IMP supplies standard
setting, power-management integrated circuit products and wafer
foundry services to computer, communications and control
manufacturers worldwide.


IMPERIAL SUGAR: PBGC May File Consolidated Proofs Of Claim
----------------------------------------------------------
The Pension Benefit Guaranty Corporation, a wholly-owned United
States government corporation, administers the Pension Plan
Termination Insurance Program under the Employee Retirement
Income Security Act of 1974, as amended. Each of the Imperial
Sugar Company Debtors either sponsors one of the pension plans
or is a member of the sponsors' controlled group. Pension
Benefit has concluded that, with respect to each of the seven
pension plans, it would have to file three separate claims
against each of the 37 Debtors, representing the claims for
which the Debtors are joint and severally liable to the pension
plans and/or Pension Benefit. A literal compliance with the Bar
Date Order and the Bar Date Notice would require Pension Benefit
to file 777 separate proofs of claims for multiple claims, which
would impose a significant administrative burden on the Debtors,
Pension Benefit and the Debtors' claims agent.

James L. Patton Jr., Brendan L. Shannon, M. Blake Cleary, at
Young Conaway Stargatt & Taylor, LLP, in Delaware, for the
Debtors, and Michael C. Miller, assistant General Counsel, for
Pension Benefit, informed Judge Robinson that both parties have
agreed that Pension Benefit would be permitted to file 21
consolidated proofs of claim on its own behalf and on behalf of
the Debtors' seven defined benefit pension plans, which would be
deemed to have been filed in each of the Debtors' cases. It is
required however, that Pension Benefit state, on each proof of
claim, or statement in support, or schedule attached to the
proof of claim, the names of the Debtors against which a claim
is asserted. The Debtors acknowledged that each proof of claim
filed on or before the General Bar Date shall be deemed timely
filed for all purposes under the Bar Date Order and Bar Date
Notice.

Counsels clarified that the parties' stipulation is intended
solely for administrative convenience purposes for Pension
Benefit's assertion of its claims in the bankruptcy cases, and
not as a determination of the sufficiency, validity or any other
related matter. Except to the extent provided in the stipulation
regarding the procedures for filing a combined claim for
administrative convenience, the stipulation shall not affect
substantive rights of the Debtors, Pension Benefit, the
Creditors' Committee or any other party-in-interest with respect
to the allowance, amount, priority, sufficiency or treatment of
claims or with respect to any objection, defense, offset, or
counterclaim relating to Pension Benefit's claim or otherwise.

The Stipulation having been found appropriate, Judge Robinson
ordered it to be implemented. (Imperial Sugar Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)


INTEGRATED HEALTH: Court Okays Transfer of Kent Facility In DE
--------------------------------------------------------------
In implementing their strategy to shrink administrative expenses
and eliminate unprofitable business operations, Integrated
Health Services, Inc. identified the Kent Convalescent Center,
located at 1455 South Dupont Highway, Smyma, Delaware for
divestiture in light of consistent operating losses. In the
Debtors' estimation, the Facility exposes their estates to
annual administrative liability in excess of $1,200,000.

Accordingly, the Debtors sought and obtained the Court's
approval of an Operations Transfer Agreement by and between IHS-
Kent and Green Valley Pavilion, LLC providing for the transfer
of the Facility to Green Valley, and for approval of the related
HCFA Stipulation, pursuant to sections 105(a), 363(b) and 365(a)
and (b) of the Bankruptcy Code, and Rules 6004 and 6006 of the
Bankruptcy Rules.

IHS-Kent leased the Facility from Kent Associates pursuant to a
lease dated December 16, 1993. The Court has approved the Lease
Termination Agreement by and among Kent Associates, Ltd., South
Trust Bank, and IHS-Kent, dated as of March 16, 2001, pursuant
to which the lease will terminate upon Closing of the Transfer
Agreement. In accordance with applicable state and federal
regulations, IHS-Kent continues to operate a skilled nursing
center at the Facility.

The Transfer Agreement governs the transition of the Facility to
Green Valley in accordance with applicable state and federal
regulations. It also governs the disposition of IHS-Kent's
Medicare Provider Agreement and its Medicaid Provider Agreement.

Pursuant to the Transfer Agreement, Green Valley may elect to
take assignment of the Medicaid Provider Agreement if it cures
all defaults thereunder.

In addition, Green Valley may elect to take assignment of the
Medicare Provider Agreement, however, only if it cures all
defaults thereunder and, in addition, the Health Care Financing
Administration (HCFA) releases the Debtors from all liabilities
and obligations thereunder. As a matter of fact, the Debtors
told Judge Walrath, HCFA has agreed to release the Debtors from
all liabilities and obligations under the Medicare Provider
Agreement if Green Valley pays a total of $50,000 to HCFA in
full satisfaction of all defaults thereunder.

Accordingly, the Debtors submit that, inasmuch as their estates
will incur no liability in connection with the assignment, if
any, of either the Medicare Provider Agreement or the Medicaid
Provider Agreement, such assignments are exercises of sound
business judgment. (Integrated Health Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)


KINDRED HEALTHCARE: Reports First Quarter Results
-------------------------------------------------
Kindred Healthcare, Inc. (OTC BB:KIND), formerly Vencor, Inc.,
announced its operating results for the first quarter ended
March 31, 2001.

Revenues for the quarter totaled $752 million compared to $715
million in the year-earlier period. The Company reported a loss
from operations of $9 million or $0.13 per share compared to a
loss of $16 million or $0.23 per share in the first quarter of
2000. The reported loss from operations for both interim periods
included expenses incurred in connection with the Company's
restructuring activities totaling $4 million and $3 million,
respectively.

During the first quarter of 2001, the Company continued to
operate its businesses as a debtor-in-possession subject to the
jurisdiction of the United States Bankruptcy Court for the
District of Delaware. On April 20, 2001, the Company emerged
from bankruptcy and also changed its name to Kindred Healthcare,
Inc. The results for the quarter do not include any adjustments
that will result from the Company's emergence from bankruptcy.

Kindred Healthcare, Inc. is a national provider of long-term
healthcare services primarily operating nursing centers and
hospitals.


LASON, INC.: Clueless When Quarterly Financials Will Be Ready
-------------------------------------------------------------
Lason, Inc. (OTC:LSONE) filed with the Securities and Exchange
Commission  (SEC), under Rule 12b-25, a notification of late
filing of its Form 10-Q  for the quarter ended March 31, 2001.

Due to the ongoing evaluation of past financial statements, as
stated in the Company's Form 8-K filed with the SEC on March 26,
2001, the Company will not be in a position to timely file its
Form 10-Q for the quarter ended March 31, 2001. The Company does
not know, at this time, when the Form 10-Q will be completed and
filed.

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


LERNOUT & HAUSPIE: Appoints P. Bodson & E. Davignon To Board
------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. (EASDAQ: LHSP, OTC:
LHSPQ), a world leader in speech and language technology,
products, and services, announced that the Board of Directors
has accepted the resignations of directors Hubert Detremmerie
and Francis Vanderhoydonck.

Following these resignations, the board appointed as directors
Messrs. Philippe Bodson, the Company's president and chief
executive officer, and Etienne Davignon, vice chairman of
Societe Generale de Belgique (SGB), Belgium's leading financial
services holding company. In addition, the three members of the
board's audit committee, Messrs. Dirk Cauwelier, Marc De Pauw
and Erwin Vandendriessche, all of whom are independent directors
under the Company's Articles of Association, have been asked and
have agreed to remain on the Company's board. The current board
composition is subject to confirmation of each individual board
member by the Annual General Shareholders' Meeting in June.

In addition to his position at SGB, board appointee and Belgian
national Etienne Davignon serves as vice chairman of Belgian-
based Fortis and Tractebel. He is also a director on the boards
of Anglo American, BASF, ICL, the Royal Sporting Club of
Anderlecht, Sofina, Solvay, Suez Lyonnaise des Eaux, as well as
several SGB group companies. Before joining SGB in 1985, Mr.
Davignon held numerous high-level posts within the Belgian
government and the administration of the European Economic
Community (EEC). During his tenure at the EEC, Mr. Davignon was
active in the restructuring of various sectors of the European
economy, including the steel, textile and synthetic fiber
industries. Currently, he is also the chairman of the Advisory
Board of the Business Network for Corporate Responsibility (CSR)
as well as chairman of the Association for the Monetary Union of
Europe, a position he has held since 1991. Mr. Davignon's
complete professional biography can be found on L&H's Web site
at www.lhsl.com/company/bios.

Commenting on Mr. Davignon's appointment to L&H's Board of
Directors, Philippe Bodson said: "Etienne is a welcome addition
to our board. As a board member of several prominent Belgian and
European companies, he brings to L&H extensive corporate
governance experience. His vast leadership experience in both
the private and public sectors over the last four decades also
make him a strong complement to our board, and will serve us
well as we guide L&H through its reorganization."


LERNOUT & HAUSPIE: Reschedules Shareholders' Meeting To June 29
---------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. announced the
postponement of the Company's Annual General Shareholders'
Meeting. The meeting has been rescheduled from June 5 to June
29, 2001, due to a scheduling conflict with the Meeting of
Creditors, which has been scheduled for June 5 by the Ieper
Commercial Court in accordance with Concordat proceedings.
Details of the shareholders' meeting, such as its location, will
be announced at a later date. The Notarial Deed of the minutes
(in Dutch) of L&H's April 27 Extraordinary Shareholders' Meeting
will be posted on the Company's Web site on May 15 and will also
be available to the public at L&H's headquarters in Ieper,
Belgium. An English translation of the minutes is being prepared
and will be posted to the Company's Web site at a soon to be
announced date.

                  About Lernout & Hauspie

Lernout & Hauspie Speech Products N.V. is a global leader in
advanced speech and language solutions for vertical markets,
computers, automobiles, telecommunications, embedded products,
consumer goods and the Internet. The company is making the
speech user interface (SUI) the keystone of simple, convenient
interaction between humans and technology, and is using advanced
translation technology to break down language barriers. The
company provides a wide range of offerings, including:
customized solutions for corporations; core speech technologies
marketed to OEMs; end user and retail applications for
continuous speech products in horizontal and vertical markets;
and document creation, human and machine translation services,
Internet translation offerings, and linguistic tools.

L&H's products and services originate in four basic areas:
automatic speech recognition (ASR), text-to-speech (TTS),
digital speech and music compression (SMC) and text-to-text
(translation). For more information, please visit Lernout &
Hauspie on the World Wide Web at www.lhsl.com.


LOEWEN GROUP: Ohio Unit Seeks Authority To Sell Assets For $300K
----------------------------------------------------------------
Pursuant to The Loewen Group, Inc.'s Disposition Program, Loewen
Cemetery (Ohio), Inc. asked the Court for authority:

      (a) to sell, pursuant to section 363 of the Bankruptcy
Code, free and clear of all liens, claims and encumbrances, the
real property and Management Assets used in connection with the
management of the cemeteries located at

          (1) Coshocton County Memory Gardens, 25580 State Route
              621, Coshocton, Ohio 43812,

          (2) Mt. Vernon Memorial Gardens, 18260 Coshocton Road,
              Mount Vernon, Ohio 43050,

          (3) Ridgecrest Memory Gardens, 1926 Saltwell Road,
              Dover, Ohio 44622;

      (b) to assume and assign to the Purchaser, pursuant to
section 365 of the Bankruptcy Code, the executory contracts
listed on the schedule attached to the motion (a Sales and
Management Agreement);

      (c) enter into all related agreements and transactions.

The Selling Debtor told Judge Walsh that in accordance with the
Disposition Program, it has entered into the Asset Purchase
Agreement dated April 10, 2001 with the Purchaser. Pursuant to
the Asset Purchase Agreement, the Purchaser agrees to buy and
the Debtors agree to sell the property at a purchase price of
$300,000 less the amount paid by the Purchaser under the Neweol
Purchase Agreement. Certain accounts receivable, transferable
permits and goodwill relating to the management of the
Businesses will be transferred to the Purchaser. The Purchaser
agrees to assume all of the Selling Debtor's rights and
obligations under the Assignment Agreements.

The Purchaser paid to the Selling Debtor a Deposit in the amount
of $15,000 upon the execution of the Purchase Agreement and
agrees to pay the remainder of the Purchase Price at the closing
either directly to the Purchaser or into an interest-bearing
escrow account to be established pursuant to an escrow agreement
among the Selling Debtor, the Purchaser and the escrow agent. Of
the $300,000 purchase price, $250,000 will be paid into the
Escrow Account. The parties are establishing the Escrow Account
to cover the liabilities being assumed by the Purchaser in
respect of certain preneed contracts associated with the
Businesses. The Purchaser's liability on these Preneed Contracts
will depend on the number of claims that are made and whether or
not Cemetery Assurance Company, a third party unaffiliated with
either the Selling Debtor or the Purchaser, fulfills its
obligations under the Preneed Contracts in the event that claims
are made.

Pursuant to the Purchase Agreement, the Purchaser is entitled to
a break- up fee of $6,000 under certain circumstances.

One of the conditions to the closing of the transactions is that
either:

      (a) the lawsuit commenced by Carol Houck against Ridgecrest
Memory Gardens, the nondebtor nonprofit cemetery association
that owns the cemeteries that the Selling Debtor currently
manages has been concluded and, if a judgment has been entered
in the lawsuit, the judgment has been satisfied; or

      (b) Ms. Houck has agreed to release the claims asserted in
the lawsuit.

The Selling Debtor has determined that the sale of the Business
to the Purchaser on the terms set forth in the Purchase
Agreement is in the best interests of their estates and
creditors. (Loewen Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


LTV CORPORATION: Wants To Sell Mahoning Valley Railway Company
--------------------------------------------------------------
The LTV Corporation proposes to sell all of the outstanding
capital stock, including real property interests, of the
Mahoning Valley Railway Company in Youngstown, Mahoning County,
Ohio. Mahoning Railway is a wholly-owned, indirect subsidiary of
LTV Steel. The proposed terms of the sale of this stock are:

      (a) Purchaser. The proposed purchaser is Summit View, Inc.,
an Ohio corporation, with no relationship with the Debtors.

      (b) Seller. The Seller is The Cuyahoga alley Railway
Company, an Ohio Corporation owed by LTV Steel.

      (c) Purchase Price. The purchase price is $1,300,000, with
a potential price adjustment at the closing of the proposed sale
in the event that it is determined by either the Buyer or the
Seller, within 45 days after the closing, that the dollar amount
of the current assets of Mahoning Railway is greater or less
than the dollar amount of the current liabilities of the
Railway.

      (d) Executory Contracts and Unexpired Leases. The Debtor
proposed to assume and assign to Summit View all executory
contracts and unexpired leases of Mahoning Railway, without
rejection of any. These agreements consist of certain easement
agreements between LTV Steel and various parties such as the
Allied Industrial Development Corporation, the City of
Youngstown, Ohio, Astro Shapes, inc., Youngtown Campbell
Industrial Park, and Norbridge Enterprises, Inc. These also
include Road, Rail and Utility Agreements between LTV Steel
and P.F.M. Associates, American Ladle & Furnace Co., Youngtown
Campbell Industrial Park, Inc., Norbridge Enterprises, Inc.,
Casey Equipment Corporation, and Castlo Community Improvement
Corporation, and a licenses between LTV Steel and Casey
Equipment Corporation.

The Debtor LTV Steel advised Judge Bodoh that in its view the
conveyance of these assets does not require the consent of the
lenders under the Revolving Credit and Guaranty Agreement,
including both the pre- and postpetition credit facilities.

Objections to this proposed sale must be made in writing, state
with specificity the nature of the objection, and be filed with
the Court. If no objections are filed, LTV Steel will be
authorized to convey the stock and assets to Valley View without
further action or notice.

Upon the consummation of such a sale, the Stock and Assets will
be transferred to Valley View:

      (a) "as is" and "where is", without any representations or
warranties from LTV Steel as to the quality or fitness of the
Assets for either their intended or any particular purposes; and

      (b) free and clear of all liens, claims, encumbrances and
other interests in those assets. All liens, claims,
encumbrances, and other interests will attach to the proceeds of
the proposed sale. (LTV Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-00900)


MARINER POST-ACUTE: Agrees To Modify Stay For Insured Claim
-----------------------------------------------------------
The Mariner Post-Acute Network, Inc. Debtors have agreed to lift
the automatic stay to permit the prosecution and defense by John
Paulson and MPAN of the State Court Action related to John
Paulson's allegedly sustained injuries caused by MPAN or its
subsidiaries at Naperville, IL.

The parties agreed and stipulated that:

      -- Claimant may enforce or execute upon any (a) settlement,
(b)judgment entered by a court of competent jurisdiction or (c)
other disposition of the underlying claims in the State Court
Action only to the extent such claims are covered by proceeds
from applicable insurance policies of the Debtors, only to the
extent permitted by such settlement, judgment or other
disposition;

      -- Claimant will not have any allowed claim against any of
the Debtors or their estates and will have no right to share in
any distribution from the Debtors or their estates, whether
under a plan of reorganization or otherwise;

      -- Claimant will not engage in any efforts to collect any
amount from any of the Debtors or any of the Debtors' current
and former employees, current and former ofticers and directors,
or any person or entity indemnified by the Debtors or listed as
an additional insured under any of the Debtors' liability
policies;

      -- Claimant waives any and all claims for recovery against
the Debtors and entities as mentioned above;

      -- Any settlement of the State Court Action will include a
mutual general release of all claims;

      -- Claimant will not name as a defendant and, if already so
named, to dismiss with prejudice from the State Court Action any
of the Debtors' current and former employees, officers and
directors, and any person or entity indemnified by any of the
Debtors or listed as an additional insured under any of the
Debtors' liability policies.

      -- Claimant will not to amend the Complaint to name as a
defendant, or to file a separate lawsuit naming as a defendant,
any of these entities, asserting against such named defendant(s)
causes of action arising from the allegations, matters, acts,
omissions or assertions averred In the Complaint.

      -- However, if the Debtors defend the State Court Action on
the ground that an Affiliated Third Party released is liable
rather than the Debtors, the claimant may give the Debtors and
such party 30 days notice that, unless the Debtors recant such
defense, the Claimant intends to amend his or her complaint to
add such formerly released party as a defendant, and if the
Debtors fail to renounce suchh defense within such 30 day
period, the Claimant's release as to such party will be rendered
void and ineffective ab initio. (Mariner Bankruptcy News, Issue
No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)


MIDLAND FOOD: Disclosure Statement Hearing Set for June 6
---------------------------------------------------------
A hearing will be held on June 6, 2001 at 10:00 AM before Judge
Newsome in Wilmington, DE, to consider approval of the
Disclosure Statement of Midland Food Services, LLC.

Any objections to the Disclosure statement must be filed with
the Bankruptcy Court, and served upon counsel so as to be
received on or before 4:00 PM on May 30, 2001. The debtor is
represented by Charlene D. Davis and Elio Battista, Jr., of The
Bayard Firm and Leon R. Barson, of Adelman Lavine Gold and
Levin.


MPOWER: Moody's Reviews Long-Term Ratings For Possible Downgrade
----------------------------------------------------------------
Due to the company's weak operating and financial performance
and its recent decision to defer declaring the preferred stock
dividend, Moody's Investors Service placed the following ratings
of New York-based Mpower Communications Corporation on review
for possible downgrade:

      * B3 senior unsecured ratings

      * B3 senior implied and issuer ratings and

      * "caa" preferred stock rating

Approximately $617 million of debt and preferred securities are
affected.

Moody's said its review will assess whether the earlier
announced scaled-back business plan will affect the company's
operating and financial performance metrics and the impact that
a decelerated growth mode may have on the company's ability to
service its debt obligations in the long term.


MURDOCK COMMUNICATIONS: Posts Weak First Quarter Results
--------------------------------------------------------
Murdock Communications Corporation (OTC Bulletin Board: MURC and
MURCW) reported results for the first quarter ended March 31,
2001. The Company reported revenues of $1.3 million and a net
loss of $833,000, or $0.07 per share for the three months ended
March 31, 2001 compared with revenues of $2.4 million and net
loss of $2.3 million, or $0.21 per share for the year ago
period.

The revenue reduction is primarily due to a significant decline
in business from a principal customer of the Company's PIC
subsidiary, a lower advance funding rate on calls processed by
PIC in the current period and elimination of revenues from the
former MTS division. The major asset of the MTS division was
sold in December 2000, and as a result, the MTS division is now
inactive. MTS realized revenues of $165,000 in the prior year
period.

The Company offset the decline in revenues and gross profit
with: 1) reduction in Selling, General and Administrative
Expense of $324,000, primarily due to lower compensation
expense; 2) reduction in Depreciation and Amortization Expense
of $220,000, primarily due to impairments recorded in 2000 and
3) reduction in Interest Expense of $433,000, primarily due to
the Debt Refinancing program completed in the second quarter of
2000. In addition, results for the year ago period include Loss
From Discontinued Operations of $1.1 million attributable to the
Company's former Incomex subsidiary which was sold effective
June 30, 2000. Accordingly, the Statement of Operations for the
three months ended March 31, 2000 has been reclassified so that
the results for the subsidiaries operations are classified as
discontinued operations.

Murdock Communications Corporation currently operates as a
holding company with the Company's remaining principal assets in
the telecommunications industry. The Company's previously
announced current strategic direction is to continue to
negotiate with its creditors to restructure indebtedness and to
attempt to obtain financing to fund operations. If the Company
is successful in completing further improvements to its
financial condition, the Company may seek other strategic
alternatives, including attempting to use the Company's public
shell as a merger vehicle.


OTR EXPRESS: First Quarter Net Loss Amounts To $2,360,000
---------------------------------------------------------
OTR Express, Inc. (AMEX:OTR (delisting pending)), a nationwide
truckload carrier and logistics company, reported a net loss of
$2,360,000, or $1.32 per share (basic and diluted) for the first
quarter ended March 31, 2001, compared to a net loss of $814,000
or $0.46 per share (basic and diluted) in 2000.

The year 2001 results include a $0.01 per share charge for the
cumulative effect of changing the way the company accounts for
its derivatives. The year 2000 results include a $0.02 per share
charge for the cumulative effect of changing the way the company
recognizes revenue.

Revenues for the quarter decreased 39 percent to $12,815,000
from $20,977,000 in 2000. The company's loss from operations was
$1,531,000 compared to $327,000 in 2000.

On May 9, 2001, OTR announced that it is ceasing operations
within sixty days and will be liquidating the Company and that
shareholders should not expect any distributions in such
liquidation.

The decline in revenue is primarily a result of the previously
announced downsizing of its fleet during the quarter and the
consolidation of its rail logistics division into the logistics
division at its home office in Olathe, Kansas, eliminating an
office in Salt Lake City, Utah.

According to President and CEO William P. Ward, "As we
previously reported, our first quarter results reflect a net
loss. This loss was brought on by various factors, including
high fuel costs, weaker freight demand and higher insurance
costs."

The Company also reported the results of its 2001 Annual
Meeting of Shareholders. At the meeting, shareholders elected
all three Class C Directors and ratified the selection of Arthur
Andersen LLP as the Company's independent auditors for 2001.
Shareholders rejected a shareholder proposal concerning
declassification of the Company's staggered board of directors.
After the meeting, the Company accepted the resignation of four
of its seven directors, namely Dr. Ralph E. MacNaughton, Dr.
James P. Anthony, Charles M. Foudree and Terry G. Christenberry.
The Company's three remaining directors---William P. Ward,
Janice K. Ward and Dean W. Graves---are expected to serve as
directors during the Company's previously announced closing of
business. "Considering the limited role of the board in the
activities needed to wind down operations, it was difficult to
justify maintaining seven directors on the board," remarked Mr.
Ward. "OTR expresses its appreciation to Messrs. MacNaughton,
Anthony, Foudree and Christenberry for their years of dedicated
and steadfast service."

OTR previously announced that shareholders should not expect to
receive any distribution in the liquidation of the company, and
that OTR has sought delisting of its shares of common stock from
trading on the American Stock Exchange. It is possible that a
trading market for the shares of common stock will soon commence
over the counter (OTC), but there can be no assurance that
sufficient interest in the stock will exist to substantiate such
market.

OTR Express, Inc. is a nationwide dry-van truckload carrier
serving customers throughout the 48 states. For further
information, please contact Steve Ruben, chief financial
officer, OTR Express, Inc., at (913) 829-1616, extension 3102 or
visit the company's website at www.otrx.com.


OXIS INT'L: Says Capital Insufficient for Ongoing Operations
------------------------------------------------------------
OXIS International, Inc. (Nasdaq:OXIS) (Nouveau Marche:OXIS),
announced a net loss of $1,148,000 or $0.12 per share for the
quarter ended March 31, 2001, increased from $968,000 or $0.12
per share for the first quarter of 2000.

Total revenues for the quarter were $973,000 as compared to
$943,000 in the prior year's quarter. Primarily as the effect of
the net loss for the quarter, the Company's working capital
decreased from $2,511,000 at December 31, 2000 to $1,460,000 at
March 31, 2001.

"While we believe that OXIS' new therapeutic products and
technologies show considerable promise," said Joseph F. Bozman,
Jr., OXIS Chairman and Chief Executive Officer, "the Company
does not have the required resources to develop or market these
products. The commercial success of those assets therefore
depends on the Company's ability to develop business alliances
with biotechnology and/or pharmaceutical companies that do have
the required resources." He added that there can be no assurance
that the Company's efforts to develop such alliances will be
successful.

The Company believes that its capital is insufficient for
ongoing operations, with current cash reserves almost completely
exhausted. Although the Company is attempting to secure
additional funds through asset sales and additional investments
in or loans to the Company, there can be no assurance that the
Company will be able to raise any additional funds, or that such
funds will be available on acceptable terms. Any funds raised
through equity financing will likely be significantly dilutive
to current shareholders. The failure by the Company to secure
additional funds within the next several months will materially
affect the Company and its business, and may cause the Company
to cease operations or to seek protection of the courts through
reorganization, bankruptcy or insolvency proceedings.
Consequently, shareholders could incur a loss of their entire
investment in the Company. Cash reserves at May 1, 2001 were
approximately $600,000.

OXIS also is awaiting a decision following its April 26, 2001
hearing before a Nasdaq Listing Qualifications Panel regarding
the Company's continued listing on the Nasdaq National Market.
OXIS is not in compliance with Nasdaq requirements for
maintaining a minimum bid price of $1.00 and a market value of
public float greater than $5,000,000. Based on its inability to
date to raise additional equity capital in 2001, OXIS believes
that its appeal will be unsuccessful and that its common stock
will be delisted from the Nasdaq National Market. Failure of the
Company's common stock to continue to be listed on the Nasdaq
National Market could have a material adverse effect on the
transferability and value of the common stock.

As further reported in OXIS International's Form 10-Q, which was
filed with the Securities and Exchange Commission today, the
Company's employment agreements with Humberto V. Reyes,
President of OXIS Health Products, and Jon S. Pitcher, Chief
Financial Officer, expired on March 31, 2001. Although neither
agreement was renewed, Mr. Reyes is continuing to serve as
President of OXIS Health Products on a month-to-month basis, and
payment of the severance package to which he is entitled has
been deferred. Mr. Pitcher is providing certain services to the
Company on a contract basis, and the Company has not hired a
chief financial officer to replace him.

OXIS, headquartered in Portland, Oregon, has focused on
developing technologies and products to research, diagnose,
treat and prevent diseases associated with damage from free
radical and reactive oxygen species -- diseases of oxidative
stress. The Company holds the rights to three therapeutic
classes of compounds in the area of oxidative stress and,
through its Health Products division, develops, manufactures and
markets products and technologies to diagnose and treat diseases
caused by oxidative stress.


PATHNET: Delaware Docket Too Clogged, Cisco & Nortel Argue
----------------------------------------------------------
High-tech titans Nortel Networks Corp. and Cisco System Capital
Corp. are pressing the U.S. Bankruptcy Court in Wilmington,
Del., to move chapter 11 proceedings for Pathnet
Telecommunications Inc. to Virginia to avoid potential delays
from the case-burdened Delaware docket. Pathnet owes Nortel and
Cisco a combined $70 million in loans. In a joint request for
change of venue to the U.S. Bankruptcy Court for the Eastern
District of Virginia, the companies said proceedings for Reston-
based Pathnet would be best handled in its home state. (ABI
World, May 15, 2001)


RAYTEL MEDICAL: OIG Investigation Negatively Impact Results
-----------------------------------------------------------
Raytel Medical Corporation (Nasdaq:RTELC) reported operating
results for its second fiscal quarter ended March 31, 2001.

Revenues for the second quarter of fiscal 2001 were $18.1
million, compared to $18.5 million for the second quarter of
fiscal 2000. Giving effect to non-recurring items, including a
loss of $19.4 million recorded in connection with the sale of
the Company's clinic in Port St. Lucie, Florida and an
additional $2 million reserve for estimated legal fees and other
expenses related to the pending OIG investigation, the Company
recorded a net loss of $20.5 million, or $2.34 per diluted
share, for the quarter ended March 31, 2001. This compares to
net income of $880,000, or $.10 per diluted share, for the same
quarter last year. On a pro-forma basis, operating income from
continuing operations for the quarter ended March 31, 2001, was
$618,000 before the provision for OIG investigation expenses,
compared to operating income of $1.2 million for the same
quarter last year.

Richard F. Bader, Chairman and Chief Executive Officer,
commented, "Our Diagnostic Imaging Services business unit
reported consistent growth in both revenue and earnings.
Diagnostic Imaging Services revenue was $6.5 million for the
quarter ended March 31, 2001, compared to $5.5 million for the
quarter ended March 31, 2000, an increase of $973,000, or 17.6%.
The increase in revenue was due primarily to increases in
patient volumes at some of our Company-owned centers as well as
our imaging network. As a result of the increase in revenues,
Diagnostic Imaging Services operating income increased from
$690,000 to $986,000. We believe that this positive trend will
continue into the second half of the fiscal year.

"Results for our Cardiac Information Services operations
continued to reflect the effects of the ongoing OIG
investigation into certain business practices of our subsidiary,
Raytel Cardiac Services. Cardiac Information Services revenues
were $9.7 million for the quarter ended March 31, 2001, compared
to $10.6 million for the quarter ended March 31, 2000, a
decrease of $896,000, or 8.5%. The decrease in Cardiac
Information Services revenues was due primarily to lower
revenues from our trans-telephonic pacemaker testing services.
Cardiac Information Services operating income of $508,000 for
the quarter ended March 31, 2000 compared to a loss of $253,000
for the current quarter excluding the OIG reserve. We are
hopeful that the recent institution of a new internally-
developed testing system, the addition of new test technicians,
and an increase in pacemaker testing bookings experienced over
the last eight weeks will have a positive effect on Cardiac
Information Services operations. However, the ongoing OIG
investigation has diverted the efforts and attention of
management and administrative personnel, reduced the efficiency
of the Company's pacemaker monitoring operations and adversely
affected revenues and operating expenses. We believe that, as
the investigation proceeds, it will continue to adversely affect
operating results."

During the quarter ended March 31, 2001, the Company announced
the sale of its wholly-owned subsidiary, The Heart Institute of
Port St. Lucie, Inc. to a new company organized by physicians
practicing at the clinic including David Wertheimer, M.D. who
had formerly served as President of the subsidiary as well as an
officer of Raytel and a member of Raytel's Board of Directors.
The Company recorded a non-cash loss of $19. million resulting
from the disposal of the subsidiary.

For the six months ended March 31, 2001, revenues were $35.4
million, compared to $36.5 million in the same period last year.
For the first six months of fiscal 2001, the Company reported a
net loss of $20.4 million, or $2.34 per diluted share, versus
net income of $1.8 million, or $.20 per diluted share, for the
same period one year ago.

The Company noted that it continues to be in technical default
of certain of its bank loan covenants. The Company is working
with its banks to resolve these issues

                         About Raytel

Raytel (www.raytel.com), headquartered in San Mateo, California,
is a leading provider of services and efficient dissemination of
technical information to physicians and patients. These services
include remote cardiac monitoring and testing services utilizing
telephone technology and the delivery of diagnostic information
over secure Internet links, as well as ambulatory diagnostic
imaging facilities for general as well as cardiac imaging.


ROCKWELL MEDICAL: Receives Notice of Delisting From Nasdaq
----------------------------------------------------------
Rockwell Medical Technologies, Inc. (Nasdaq:RMTI), a leading,
innovative hemodialysis concentrate manufacturer in the
healthcare industry, said that it received a Nasdaq Staff
Determination on May 8, 2001, that the Company does not comply
with the $1.00 minimum bid price requirements set forth in
Marketplace Rule 4310(c)(4) and that its securities are subject
to delisting from the Nasdaq SmallCap Market.

The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. Until
the Panel reaches its decision, the Company's stock will remain
listed and will continue to trade on the Nasdaq SmallCap Market.
There can be no assurance the panel will grant the Company's
request for continued listing.

Rockwell Medical Technologies, Inc., is an innovative leader in
manufacturing, marketing and delivering high-quality dialysis
solutions, powders and ancillary products to hemodialysis
providers. Hemodialysis is a process which duplicates kidney
function for patients whose kidneys have failed to function
properly and suffer from end-stage renal disease (ESRD). There
are an estimated 350,000 dialysis patients in the United States
and the incidence of ESRD has increased 6-8% on average each
year over the last decade. Rockwell offers Dri-Sate Dry Acid,
Liquid Acid, SteriLyte(TM) Liquid Bicarbonate, Powder
Bicarbonate and a wide range of ancillary dialysis items.
Rockwell's products are used to cleanse the ESRD patient's blood
and replace nutrients in the bloodstream. Visit Rockwell's
website at www.rockwellmed.com for more information.


SAKS INC.: Fitch Cuts Senior Note Rating To BB+ From BBB-
---------------------------------------------------------
Fitch has downgraded its rating of Saks Incorporated's $1.7
billion of senior notes from `BBB-` to `BB+'.

The downgrade reflects the company's weak operating results,
high financial leverage as measured on a cash flow basis, and
uncertainty as to the timing and pace of any future recovery.
The Rating Outlook is Stable reflecting management's emphasis on
debt reduction and efforts to improve operations.

Saks' traditional department store business has been pressured
by weak demand, a competitive operating environment and soft
apparel sales industry-wide. In addition, sales momentum at the
company's luxury retail business (Saks Fifth Avenue) stalled in
the past six months as consumer confidence and equity valuations
declined. Weak industry conditions are expected to persist over
the near term.

Saks' credit measures softened in 2000, with EBITDAR coverage of
interest plus rents declining to 2.2 times (x) from 2.7x in
1999. Leverage as measured by lease-adjusted debt (excluding
off-balance sheet receivables) to EBITDAR increased in the year
to 4.4x from 4.0x in 1999. The current levels are weak for the
rating category, though they should begin to recover in the
second half 2001 as debt levels are reduced and operating
results show modest improvement.

In view of the current environment, management has adopted a
more conservative financial posture, avoiding major acquisitions
and share repurchases, and scaling back capital spending in
order to harness cash flow for debt reduction. In addition, Saks
recently completed the sale of nine of its stores to the May
Department Stores Company for $308 million, with a majority of
the proceeds earmarked for debt reduction. While positive from a
credit standpoint, the benefits of this deleveraging will be
tempered over the near term by the difficult operating
environment.


SLATKIN, REED: Court Orders Earthlink Co-Founder Asset Freeze
-------------------------------------------------------------
A federal court in California issued a temporary restraining
order and asset freeze against Reed Slatkin, co-founder and
former director of Earthlink Inc., according to Dow Jones.
Slatkin, who recently filed for bankruptcy, allegedly defrauded
clients in an unregistered investment advisory business. The
Securities and Exchange Commission (SEC) claims that Slatkin
defrauded up to 500 clients from his Santa Barbara, Calif.-based
advisory business. He managed at least $230 million for clients
since 1985, purportedly through trading accounts in Switzerland.
The SEC maintains the accounts don't exist and claims Slatkin
was running a securities-fraud scheme. The SEC alleges Slatkin
misappropriated $10 million that was supposed to be invested in
a money-market fund. Instead, the agency said Slatkin used
almost $7 million to pay off other clients and spent $24,000 on
his bills. (ABI World, May 15, 2001)


STROUDS INC: Asks Court To Extend Exclusive Period To July 6
------------------------------------------------------------
Strouds, Inc. filed a motion for an order further extending
exclusivity periods pursuant to section 1121(d) of the
Bankruptcy Code. A hearing on the motion will be held on June
20, 2001 at 9:00 AM.

The debtor seeks to further extend through and including July 6,
2001 the time within which the debtor maintains the exclusive
right to file a plan of reorganization; and to further extend
through and including September 4, 2001 the time within which
the debtor maintains the exclusive right to solicit acceptances
for any plan of reorganization filed on or prior to July 6,
2001.

The debtor asserts that its case is large and complex. The
diligence of management and the administration of the case are
factors that support extension of the plan exclusivity periods.
In the first seven months of its case, the debtor has
accomplished a number of critical tasks. The debtor negotiated a
sale of substantially all of its assets; the debtor has closed
18 of its less profitable retail store locations and is in the
process of closing two more stores. The debtor has also filed
motions to reject 17 leases governing the stores that have been
closed. The debtor has selected Mr. Thomas Paccioretti to serve
as its CEO on a going-forward basis. The debtor has also
received court approval to establish a retention bonus program
for certain key employees. The debtor has begun a preliminary
analysis of various claims asserted in this case. Prior to
confirmation of any plan it will be necessary for the debtor to
determine the extent, validity, priority, aggregate amount and
identity of holders of administrative claims asserted against
the debtor's estate to evaluate potential classes of and
distributions to creditors. The debtor anticipates filing a
motion to establish a bar date for administrative claims on or
before May 11, 2001.

The debtor seeks the extension of exclusivity in order to
prepare a plan of reorganization, and to enter meaningful
substantive discussions with the Committee regarding the nature
of such a plan.

The debtors are represented by David B. Stratton, David M.
Fournier and Aaron A. Garber, Pepper Hamilton LLP and Bennett J.
Murphy and Kelly K. Frazier of Hennigan, Bennett & Dorman.


THCG, INC.: Continues to Explore Strategic Alternatives
-------------------------------------------------------
THCG, Inc. (Nasdaq:THCG) announced its operating results for the
three month period ended March 31, 2001.

During the period under review, revenues stood at $2.2 million,
down from $14.3 million in the same period last year. For the
three months ended March 31, 2001, net income (loss) available
for common stock amounted to a loss of $23.0 million, or ($1.73)
per share, fully diluted, in comparison with income of $1.5
million (including a net loss of $3.2 million from discontinued
operations), or $0.10 per share, fully diluted, in the same
period last year. Net income from continuing operations in the
three-month period ended March 31, 2000, totaled $4.7 million,
or $0.31 per share, fully diluted (there were no discontinued
operations in the first quarter of 2001).

The Company's financial results during the period under review
included $21.0 million in non-cash items, including $12.0
million of equity-based compensation charges, $5.7 million of
unrealized losses on investments, $3.1 million related to the
write-down of the carrying value of goodwill, amortization of
goodwill and equity in losses of a company accounted for by the
equity method, and $0.3 million of amortization of goodwill and
other intangible assets.

At March 31, 2001, the Company had cash, cash equivalents and
marketable securities of approximately $4.4 million (excluding
restricted cash of $1.1 million). As previously disclosed, due
to market conditions during 2001 the Company significantly
curtailed its venture funding and venture development services,
restructured its operations and reduced the number of personnel
in both the United States and in Israel by approximately 85%.
Moreover, THCG is no longer providing even a limited level of
investment banking or other financial advisory services. The
headcount and expense reduction program continues, in an effort
to further trim ongoing expenses.

As previously disclosed, the Company continues to explore
strategic alternatives aimed at maximizing the value of its
assets and the income associated with those assets, although
there can be no assurances that any transaction will be
successfully negotiated and closed. In addition, the Company
continues to assess the feasibility of establishing a
liquidating trust for the benefit of its shareholders as had
been discussed in the past.

On May 10, 2001, THCG received a NASDAQ Staff Determination
indicating that the Company fails to comply with the minimum bid
price requirement for continued listing set forth in Marketplace
Rule 4450(a)(5), and that its securities are, therefore, subject
to delisting from The NASDAQ National Market at the opening of
business on May 18, 2001, unless the Company formally requests a
hearing to appeal the delisting decision prior to that date. The
Company has formally requested a hearing before a NASDAQ Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the Company's request
for continued listing. Even if the Company's shares were to be
delisted, the Company anticipates that trading of its securities
would thereafter be conducted on the OTC Bulletin Board or in
the "Pink Sheets."


TRACK 'N TRAIL: Releases Revised Fiscal Year 2000 Results
---------------------------------------------------------
Track 'n Trail (OTC:TKTLE.OB), a specialty retailer of branded
casual, outdoor and adventure footwear, announced revised
earnings for the fiscal year ended December 30, 2000 as a result
of significantly lower than expected first quarter 2001
operating results, and the company's filing for Chapter 11
Bankruptcy protection.

Subsequent to the Company's previous press release, and prior to
the Company's filing of its Annual Report on Form 10-K with the
Securities and Exchange Commission, the Company experienced
significantly lower than expected first quarter 2001 operating
results. Such downturn in operating results has caused the
Company to downgrade its projected future cash flows, resulting
in the Company taking a long-lived asset impairment charge of
$3.3 million during the fourth quarter of fiscal 2000. Further,
based on a number of factors, including recurring losses during
fiscal 2000 and 1999, the significant downturn during 2001, and
the Company's filing for Chapter 11 Bankruptcy protection on
April 13, 2001, management believes there is significant
uncertainty as to the Company's ability to realize its deferred
tax assets, and therefore, has recorded a full valuation
allowance at December 30, 2000, resulting in a tax provision of
$6.5 million for fiscal 2000. In addition, due to further
declining operating results of certain of the Company's stores
and as a result of filing for bankruptcy protection, the Company
adopted a restructuring plan to close 50 stores during the
second quarter of fiscal 2001. The decision to close the stores
was based on store performance combined with market economic
conditions and projected future cash flows. Substantially all
assets related to the 50 stores have been written off as of
December 30, 2000 in connection with the $3.3 million asset
impairment charge in fiscal 2000.

As a result of these charges, the Company's previously announced
net earnings of $20,000 or $0.00 per basic and diluted share
have been revised to a net loss of $9.8 million or ($1.37) per
basic and diluted share for fiscal 2000, as compared to a net
loss of $11.1 million or ($1.62) per basic and diluted share in
fiscal 1999.

Track 'n Trail is one of the largest full-service specialty
retailers in the United States, focusing on a broad range of
branded casual, outdoor and adventure footwear. As of December
30, 2000, the Company operated 113 Track 'n Trail stores and 45
Overland Trading stores in 33 states. The Track 'n Trail and
Overland stores offer a wide range of rugged walking and fashion
casual shoes, sandals and boots, featuring brands such as
Timberland, Dr. Martens, Birkenstock, Teva, Vans, Airwalk,
Clarks, Ecco, Rockport and Skechers.


US WOOD: Has Until May 27 To Assume/Reject Real Property Leases
---------------------------------------------------------------
By order entered on May 4, 2001, by the Honorable Sue L.
Robinson, U.S. Bankruptcy Court, District of Delaware, the third
extension of US Wood Products' time to assume or reject
unexpired leases of nonresidential real property was extended to
May 27, 2001.


VODAVI TECHNOLOGY: Closes Certain Operations & Restructures Debt
----------------------------------------------------------------
Vodavi Technology Inc., (Nasdaq:VTEK), a provider of business
telecommunications solutions, announced results for the first
quarter ended March 31, 2001.

Excluding the special charges, revenue for the first quarter of
2001 declined 32.3 percent to $6.5 million from $9.6 million in
the first quarter of 2000. Excluding special charges, the
company reported a first quarter net loss of $941,000, or $0.22
per share, compared to a net loss of $380,000, or $.09 per
share, for the comparable quarter in the prior year.

The company previously announced on April 3, 2001 that its net
sales and earnings for the first quarter of 2001 would fall
significantly below sales and earnings for the comparable
quarter of 2000.

As expected, the reduction in revenue reflected a quarter over
quarter decrease of 61.3 percent in sales through the company's
wholesale distribution channel, which represented approximately
66 percent of net sales in 2000.

Consistent with overall industry trends, the company reported
that its distributors experienced an estimated 20 percent
reduction in sales of the company's products during the first
quarter. In addition, Vodavi's top six distributors further
reduced their purchases by approximately $3.5 million in order
to bring down their inventory levels.

The decline in sales through the wholesale channel was somewhat
offset by a quarter over quarter increase of 8.1 percent in
sales from the company's growing dealer direct channel.
Special Charges During the first quarter of 2001, Vodavi
implemented a restructuring plan aimed at reducing its operating
expenses to coincide with its current sales outlook.

In line with the restructuring plan, the company reduced its
workforce by approximately 20 percent, discontinued certain
operations of its Interactive Voice Response product group, and
implemented broad-based price reductions on certain product
groups.

These actions created severance-related obligations of $168,000,
estimated shut-down costs of $265,000, and estimated price
protection obligations of $432,000 to the company's distribution
partners.

Additionally, in light of current economic and industry
conditions and planned introductions of new products, the
company re-evaluated the carrying value of certain receivables
and inventory items resulting in additional accounts receivable
reserve requirements of $328,000 and inventory impairments of
$568,000.

The pre-tax financial impact of these initiatives during the
first quarter totaled approximately $1.8 million consisting of
$700,000 in cash charges and $1.1 million in non-cash charges.
Including the impact of these special charges, first quarter
revenue totaled $6.1 million and the net loss amounted to $2.1
million, or $0.49 per share.

                           Special Charges

Financial Position

On April 3, 2001 the company reported that it was not in
compliance with one of its loan covenants under its revolving
credit facility. Vodavi's principle lender waived this covenant
violation and modified other covenants to eliminate the effects
of the first quarter special charges from current and future
covenant calculations.

The company's financial position remains strong with available
borrowing capacity of $3.7 million under its line of credit at
March 31, 2001. During the quarter, the company reduced its
outstanding borrowings from $6.3 million at year-end to $5.7
million to end the first quarter of 2001.

                            About Vodavi

Vodavi Technology Inc. is headquartered in Scottsdale. The
company designs, develops, markets and supports a broad range of
business telecommunications solutions.

Vodavi products include digital telecommunications systems,
computer telephony products, and voice-processing systems
including voice mail, fax mail, Internet messaging, and IVR
(interactive voice response) for a wide variety of commercial
applications. For more information on Vodavi, visit
www.vodavi.com.


W.R. GRACE: Obtains Injunction Against Utility Companies
--------------------------------------------------------
Hundreds of Utility Companies provide electricity, gas, water,
and telephone service to W. R. Grace & Co. "Any interruption of
these services would severely disrupt the Debtors' business
operations. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl,
Young & Jones, P.C., told the Court. The Debtors would not be
able to operate their businesses without these services from
Utility Companies.

Pursuant to 11 U.S.C. Sec. 366, if the Debtors do not provide
each Utility Provider with "adequate assurance of payment" for
post-petition utility service within 20 days of the Petition
Date, the Utility Companies may elect to "alter, refuse or
discontinue service." Ordinarily, a chapter 11 debtor provides
"adequate assurance" in the form of a cash deposit. That, W.R.
Grace argued to Judge Farnan, would be an improvident use of the
Estates' cash in these chapter 11 cases.

The Debtors told the Court that they have an excellent
prepetition payment history with each of the Utility Companies.
Other than utility bills not yet due and owing as of the
Petition Date, which the Debtors are prohibited from paying as a
result of the commencement of these chapter 11 cases, the
Debtors historically have paid their prepetition utility bills
in full when due. The Debtors also represented that they have
sufficient cash reserves, together with anticipated access to
sufficient debtor in possession financing, to pay promptly all
of their respective obligations to the Utility Companies for
postpetition utility services on an ongoing basis and in the
ordinary course of their businesses. Moreover, they noted, all
such claims will be entitled to administrative priority
treatment under the Code, providing additional assurance that
future obligations to the Utility Companies will be satisfied in
full. Finally, certain of the Utility Companies currently may
hold cash security deposits or other forms of security to insure
the Debtors' payment of future utility bills. These facts, the
Debtors said, show that the Utility Companies already have
adequate assurances that post-petition invoices will be paid.

Based on this evidentiary record, Judge Farnan entered an Order
finding that the Utility Companies are adequately protected and
prohibiting Utility Companies from altering, refusing or
discontinuing service to W.R. Grace. If a Utility Company
believes that it does not have adequate assurance within the
meaning of Sec. 366, Judge Farnan's order is without prejudice
to the right of the Utility to ask for a determination hearing
on the subject with the next 30 days. (W.R. Grace Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


WATERLINK INC.: Amends Senior Credit Facility
---------------------------------------------
Waterlink, Inc. (OTCBB:WLKN) announced its results for its
second fiscal quarter. Net sales from continuing operations were
$20.6 million for the current quarter as compared to $20.1
million in the prior year quarter, an increase of 2.5%. The
increase in sales in the current year quarter is attributable to
the Pure Water Division, which experienced a 38.2% increase in
sales as compared to the prior year due to increased systems
sales. This increase was partially offset by a 6.5% decrease in
sales at the Specialty Products Division primarily due to a
combination of certain systems orders previously received being
delayed until the second half of fiscal 2001 and lower carbon
sales. Bookings from continuing operations for the quarter ended
March 31, 2001 were $20.9 million, resulting in backlog from
continuing operations at March 31, 2001 of $24.2 million, which
is unchanged from December 31, 2000, but is 29.1% higher than
backlog from continuing operations at March 31, 2000.

Effective with the current fiscal quarter, Waterlink's
continuing operations are only comprised of its Specialty
Products and Pure Water Divisions, as the Company's Board of
Directors has approved a plan to sell the European Water and
Wastewater Division, thereby causing this division to be treated
as a discontinued operation. Also included in discontinued
operations are the results of the Biological and Separations
Divisions, both sold previously during the fiscal year.

Commenting on the treatment of the European Division as a
discontinued operation, Scott King, Waterlink's President and
Chief Executive Officer commented, "Given the sale of the
Separations and Biological Divisions, the focus of the Company
is now more with the purification of water and air through media
and membranes with our Specialty Products and Pure Water
Divisions. As such, strategically, with the European Division's
wastewater focus and poor operating performance, we have decided
to exit this division. While we are currently in discussions
with interested parties for the European division, at this time
we can give no assurance that a buyer will ultimately purchase
this division, or if the division is sold, what net proceeds
will be realized."

For the quarter ended March 31, 2001 the Company recorded a loss
from continuing operations of $981,000, or ($0.05) per share, as
compared to a loss from continuing operations of $159,000, or
($0.01) per share in the prior year quarter. The current year
quarter includes an $807,000 increase in the amortization of
deferred financing costs due to a change in the maturity date of
the Company's Senior Credit Facility. The current quarter net
loss of $15,045,000, or ($0.77) per share, includes an estimated
loss on the disposal of the European Water and Wastewater
Division of $13,584,000, or ($0.69) per share. This estimated
loss on disposal of the European Water and Wastewater Division
includes a $6,416,000 write-off of the cumulative translation
adjustment component of equity related to this division. The
Company reported a net loss of $1,328,000, or ($0.07) per share,
during the same period last year, which included a loss from
discontinued operations of $1,169,000, or ($0.06) per share.

The Company also announced it has entered into an amendment to
its Senior Credit Facility that waived existing covenant
violations. The amendment also established additional covenant
obligations on the Company, modified the principal repayment
terms, and increased the interest rate on all outstanding
borrowings under the Senior Credit Facility to prime plus three
percent.

For the six-month period ended March 31, 2001, the Company
reported net sales of $37.5 million as compared to $40.8 million
for the same period last year, a decrease of 8.1%. With regard
to the comparable six-month periods, the Pure Water Division
realized an increase in sales of 8.4% due to higher bookings in
the current fiscal year; and net sales at the Specialty Products
Division decreased by 12.7%, primarily due to a combination of
certain systems orders previously received being delayed until
the second half of fiscal 2001 and lower carbon sales.

For the six-month period ended March 31, 2001 the Company
recorded a loss from continuing operations of $2,226,000, or
($0.11) per share, as compared to income from continuing
operations of $5,000, or $0.00 per share, in the prior year. The
current year includes an increase in the amortization of
deferred financing costs of $814,000, which was discussed
previously in the current quarter's results. The net loss of
$20,484,000 for the six-month period ended March 31, 2001, or
($1.04) per share, includes an estimated loss on the disposal of
the European Water and Wastewater Division and the loss on the
disposal of the Separations Division, which together totaled
$17,475,000, or ($0.89) per share. The Company reported net
income of $124,000, or $0.01 per share, during the same period
last year, which included income from discontinued operations of
$119,000, or $0.01 per share.

Scott King, commenting on the Company's year to date
performance, "While we are disappointed in our operating results
for the first half of the year, we are entering the second half
of our fiscal year with a strong backlog within our continuing
operations. The systems backlog within our Specialty Products
Division will be more accessible during the second half of the
year as work on certain large projects received in late fiscal
2000 will soon begin. In addition, we are very pleased that we
were able to enter into a new amendment with our banks which
will give us the ability to operate over the coming months as we
seek ways to maximize shareholder value under our strategic
alternative process that was announced one year ago."

Waterlink is an international provider of integrated water
purification and wastewater treatment solutions, treating
process water and wastewater for its industrial customers and
drinking water for its municipal customers. Waterlink's
executive offices are located in Cleveland, Ohio, USA.


ZANY BRAINY: Files Voluntary Chapter 11 Petition in Wilmington
--------------------------------------------------------------
Zany Brainy, Inc. (Nasdaq: ZANY), a leading specialty retailer
of high quality toys, games, books and multimedia products,
filed a voluntary petition under Chapter 11 of the Federal
Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware. Despite organizational improvements in the
first few months of this year and positive sales trends in the
first two months of the quarter, liquidity issues and the
inability to secure additional financing led the Company to
file.

Zany Brainy has secured a commitment of $115 million Debtor-in-
Possession (DIP) financing from Wells Fargo Retail Finance LLC,
subject to bankruptcy court approval. The Company believes that
this financing package will provide sufficient funding to
resolve its liquidity issues and normalize relations with its
vendors in order to keep its stores well-stocked with the most
up-to-date merchandise. The Company has been working closely
with its vendor community to address trade claims and expects
their continued support of the Zany Brainy strategy and brand.

"Our rapid growth this past year, which included the acquisition
of 60 Noodle Kidoodle stores, the opening of 27 new Zany Brainy
stores and substantial investment in our Internet strategy
presented significant operational challenges. These factors,
along with a difficult retail climate compounded by an absence
of "hot" product, led to a decline in sales which caused
liquidity issues that precipitated our filing for Chapter 11
protection," said Tom Vellios, President & CEO of Zany Brainy.

"This strategic restructuring will allow the management team to
focus its efforts on improving our capital structure, enhancing
operational efficiencies and improving both top line and bottom
line performance in order to restore the Company to health and
position us for the future. The restructuring also enables us to
focus on offering consumers an appropriate merchandise mix while
fully integrating the former Noodle Kidoodle locations into the
chain."

Earlier this year, the Company announced a number of strategic
initiatives to strengthen store operations. In an effort to
improve top line performance the Company has implemented
merchandising, marketing and operational strategies to increase
average transaction size, improve traffic in the stores and
enrich the store experience through the merchandise mix and the
look and feel of the stores across the chain. The Company also
has begun implementing initiatives to improve inventory
management.

The Company will continue to execute these initiatives
throughout the restructuring. At the same time, management will
continue its rigorous evaluation of the financial structure and
operations to identify opportunities to increase sales while
improving efficiency and bottom line performance.

                     About Zany Brainy

Zany Brainy, Inc. is a leading specialty retailer of high
quality toys, games, books and multimedia products for kids. The
Company combines a distinctive merchandise offering with
superior customer service and in-store events to create an
interactive, kid-friendly and exciting shopping experience for
children and adults. The Company presently operates 187 stores
in 34 states.


ZANY BRAINY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Zany Brainy, Inc.
              2520 Renaissance Boulevard
              King of Prussia, PA 19406

Debtor affiliates filing separate chapter 11 petitions:

              Noodle Kidoodle, Inc. dba Zany Brainy
              Zany Brainy Direct LLC
              Children's Distribution, LLC
              Children's Products, Inc.
              Children's Development, Inc.

Type of Business: Specialty retailer of toys, games, books and
                   multimedia products for kids

Chapter 11 Petition Date: May 15, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-01744 through 01-01749

Debtors' Counsel: Mark D. Collins, Esq.
                   Daniel J. DeFranceschi, Esq.
                   Richards Layton & Finger, P.A.
                   One Rodney Square
                   PO Box 551
                   Wilmington, De 19899-0551
                   T: (302) 658-6541
                   F: (302) 658-6548

Total Assets: $200,862,000

Total Debts: $131,283,000

Consolidated List of Debtors' 20 Largest Unsecured Creditors:

Entity                        Nature Of Claim     Claim Amount
------                        ---------------     ------------
Ingram Book Company             Trade Debt        $5,056,675
PO Box 277616
Atlanta, GA 30384-7616
Attn: Robert Montgomery
One Ingram Boulevard
La Vergne, TN 37086-1986

Valley Media                    Trade Debt        $4,755,241
Attn: Donald E. Rose
1280 Santa Anita Court
Woodland, CA 95776

Learning Curve Toys             Trade Debt        $3,025,376
Dept. 77-2874
Chicago, IL 60678-2874
Attn: Cindy Fitzgerald
314 West Superior Street, 6th Floor
Chicago, IL 60610-3538

Lego Systems                    Trade Debt        $2,113,524
555 Taylor Road
Enfield, CT 06083-1600
Attn: Ray Luciano
555 Taylor Road
Enfield, CT 06083

TY, Inc.                        Trade Debt        $1,713,471
PO Box 93953
Chicago, IL 60673-3953
Attn: Michael W. Kanzler
PO Box 5377
Oak Brook, IL 60522

Submitorder.com               Service Provider    $1,577,448
Attn: John Zimmer
7003 Post Road
Dublin, OH 43016

Online Retail Partners        Former Joint        $1,124,000
Attn: Murray Karp             Venture Partner
1440 Broadway
New York, NY 10018

Northeast Graphics, Inc.      Expense               $981,117
291 Slate Street
P.O. Box 477
Northaven, CT 06473-0471
Attn: Chris Smith
P.O. Box 98668
Cicago, IL 60693-8668


K'Nax Industries              Trade Debt            $923,734
Attn: Alice A. Edgar
2990 Bergey Road
Po Box 700
Hatfield, PA 19440

Americomm Data Direct         Trade Debt            $916,730
Attn: J. David Craig
1065 Bristol Road
Mountainside, NJ 07092-2301

Infogrames                    Trade Debt            $887,648
PO Box 26456
New York, NY 10087-6456
Attn: Paul Setteducati/Ed Lee
417 5th Avenue
New York, NY 10016

Klutz                         Trade Debt            $851,712
PO Box 7848
San Francisco
CA 94120-7848
Attn: Deba Shannahan
455 Portage Avenue
Palo Alto, CA 94306

Newspaper Services            Service Provider      $760,216
of America
Kunya Sanpokasop
75 Remittance Drive
Suite 91327
Chicago, IL 60675-1327

University Games              Trade Debt            $708,956
2030 Harrison Street
San Francisco, CA 94110
Attn: Bob Moog
1633 Adrian Road
Burlingame, CA 94010

Britney & Smith               Trade Debt            $637,438
PO Box 93210
Chicago, IL 60673-3210
Attn: Gene Fusik
110 Church Lane
PO Box 431
Easton, PA 18014

Rounder Kids                  Trade Debt            $630,207
Attn: Kevin Bernhardt
PO Box 516
79 River Street
Montpelier, VT 05601

Midland Paper                 Trade Debt            $629,989
PO Box 73007
Chicago, IL 60673-7007
Attn: David Olson
1825 Greenleaf Avenue
Elk Grove Village, IL 60007-5501

Jack of All Games             Trade Debt            $623,910
Attn: David Rosenbaum
8800 Global Way
West Chester, OH 45069

Walt Disney Home Video        Trade Debt            $602,010
Attn: Jacquelyn Benn
500 S. Buena Vista Street
Burbank, CA 91521-97305045

The Learning Company          Trade Debt            $601,992
Attn: Kevin Smith/Janet Andoe
2030 Harrison Street
San Francisco, CA 94110


                            *********


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

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of interest to troubled company professionals. All titles are
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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, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.

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

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