TCR_Public/010611.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

               Monday, June 11, 2001, Vol. 5, No. 113


AEROVOX INCORPORATED: Files Chapter 11 Petition in Massachusetts
AEROVOX: Chapter 11 Case Summary
ARMSTRONG: Promotes Stockwell To Sr. VP of Strategic Relations
ARMSTRONG: Names Fleckenstein as New Senior VP Of Floor Products
ARMSTRONG: Taps Former GE General Manager To Lead Floor Products

ARMSTRONG: Wants to Forgive $46.2 Million of ESOP Loans
ASD GROUP: Files Chapter 11 Petition in S.D. New York
ASD GROUP: Case Summary & Largest Creditors
AZ LIGHTNING: Country Fest Producer Files For Chapter 11
AZ LIGHTNING: Chapter 11 Case Summary

BENEDEK COMM.: S&P Cuts Corporate Debt Rating to CCC+ From B
BRM HOLDINGS: Hilco to Manage McWhorter's Liquidation Sales
COVAD COMM.: Moody's Cuts Senior Debt Ratings To Caa3 From Caa1
DIGITAL FUSION: Shares Kicked-Off the Nasdaq Market
ELECTRONIC TELECOM: Shares Subject To Nasdaq Delisting

ENCOMPASS SERVICES: S&P Rates Proposed Senior Sub Note At B+
FINOVA GROUP: US Trustee Appoints Official Equity Committee
FINOVA GROUP: GE Capital Sweetens Bailout Offer
FRANK'S NURSERY: Seeks To Extend Exclusive Period To October 19
GENERAL TIME: Clockmaker Shuts Down And May File For Bankruptcy

IMPERIAL SUGAR: Plan Confirmation Hearing Set For August 7
INTEGRATED HEALTH: Moves To Assume/Reject Cross-Defaulted Leases
LOEWEN: Certain Legal Proceedings Described In 2nd Amended Plan
NEON COMM: Fiber Optek Files Liens Due To Troubled SEC Report

NEON COMM: Calls Fiber Optek's News Release "Misleading"
NET SHEPHERD: Asks for More Time to File Financial Statements
ORIUS CORP.: Fitch Places NATG's Senior Note Rating On Watch
PACIFIC GAS: Sierra Pacific Seeks Injunction Against Debtor, ISO
PACIFICNET.COM, INC.: Receives Delisting Notice From Nasdaq

PILLOWTEX: Moves To Assume & Reject Cotton Purchase Contracts
PROMOTIONS.COM: Appeals Nasdaq's Decision To Delist Shares
PSINET INC.: Selling Substantially All Latin American Operations
SAFETY-KLEEN: Dawson Realty Demands Payment of Real Estate Taxes
SALIENT 3: Shares Now Trading On the OTC Bulletin Board

STAR TELECOM: Disconnects 28 Customers For Non-Payment
TELIGENT INC.: Shares Knocked-Off the Nasdaq Market
WESTPOINT STEVENS: Moody's Reviews Debt Ratings for Downgrade
WHEELING-PITTSBURGH: Enters Into MetalWorks Consignment Pact
WORLD ACCESS: I-Link Completes Purchase Of Long Distance Assets

ZANY BRAINY: Hilco Capital Extends $15 Million DIP Loan

BOND PRICING: For the week of June 11 - 15, 2001


AEROVOX INCORPORATED: Files Chapter 11 Petition in Massachusetts
Aerovox Incorporated (Nasdaq.NM:ARVX) said that its U.S.
operation filed a voluntary petition for reorganization pursuant
to the provisions of Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Massachusetts, Eastern Division.

The petition allows for reorganization of the Company's U.S.
debts. The Company's two foreign subsidiaries, BHC Aerovox Ltd.,
in Weymouth, England and Aerovox de Mexico, located in Juarez
and Mexico City, Mexico, are not included in the petition.

The Company plans to maintain its operations under the
protection of the bankruptcy code and will continue to pursue
strategic alternatives through its investment banker, Loeb
Partners Corporation. The Company is also currently involved in
negotiations to obtain debtor-in-possession financing.

The Company also reported the receipt of a letter dated May 31,
2001 from NASDAQ notifying the Company that it has failed to
maintain a minimum market value of public float of $5,000,000
and a minimum bid price of $1.00 over the last thirty
consecutive trading days, as required by The Nasdaq National
Market Marketplace Rules. The letter states that the Company
will have until August 29, 2001, to regain compliance or written
notification will be given that the Company's securities will be
delisted. The Company may appeal such a decision. The Company
does not at this time believe that it will be able to regain
compliance with these listing requirements. In light of the
bankruptcy filing, NASDAQ may suspend or terminate trading of
the Company's securities.

Aerovox Incorporated is a leading manufacturer of film, paper
and aluminum electrolytic capacitors. The Company sells its
products worldwide, principally to original equipment
manufacturers as components in electrical and electronic
equipment. Aerovox has operations in New Bedford, Massachusetts;
Huntsville, Alabama; Juarez and Mexico City, Mexico; and
Weymouth, England.

AEROVOX: Chapter 11 Case Summary
Debtor: Aerovox
         167 John Vertente Blvd.
         New Bedford, MA 02745

Chapter 11 Petition Date: June 6, 2001

Court: Eastern District of Massachusetts (Boston)

Bankruptcy Case No.: 01-14680

Debtor's Counsel: Harold B. Murphy, Esq.
                   Hanify & King
                   One Federal Street
                   13th Floor
                   Boston, MA 02110

ARMSTRONG: Promotes Stockwell To Sr. VP of Strategic Relations
Armstrong Holdings, Inc. (NYSE: ACK) announced the promotion of
long-term company executive Steve Stockwell to the new post of
Senior Vice President, Armstrong Strategic Relations. Reporting
directly to Armstrong CEO Michael D. Lockhart, Stockwell will
assume oversight for the Armstrong Strategic Accounts (ASA)
Group (led by VP-Sales, Craig Wirth), while continuing to manage
the progress of Armstrong's Chapter 11 restructuring.

"Steve's insights and experience are invaluable," said CEO Mike
Lockhart. "He created the original ASA organization within
Armstrong, which today accounts for 23% of our total sales. His
skills in developing and managing key relationships -- with
customers, with suppliers, and within Armstrong -- are
recognized with this new post. As we continue with the important
work of realigning Armstrong's operations for today's highly
competitive marketplace, I will draw on Steve's innovative
approaches to our businesses -- that's the kind of thinking that
will play a critical role in our success."

Armstrong Holdings, Inc. is a global leader in the design,
innovation and manufacture of floors and ceilings. Based in
Lancaster, PA, Armstrong has approximately 15,000 employees
worldwide. In 2000, Armstrong's net sales totaled more than $3.0
billion. Additional information about the company can be found
on the Internet at

ARMSTRONG: Names Fleckenstein as New Senior VP Of Floor Products
Armstrong Holdings, Inc. (NYSE: ACK) has appointed John T.
Fleckenstein to the position of senior vice president,
Operations, for its Armstrong Floor Products unit effective June
25. Fleckenstein, 59, joins Armstrong from EGS Electrical Group,
an Emerson-led joint venture, where he was president, Electrical
Construction Materials. Fleckenstein replaces William R.
DiJirolanio, who has announced his intention to retire effective
July 1, 2001.

"We are pleased to welcome John to Armstrong Holdings," said
chairman and CEO Michael D. Lockhart. "His strong track record
as a general manager with expertise in operations will be a
valuable combination for Armstrong. We also thank "DJ"
DiJirolanio for his many contributions to a range of Armstrong
businesses and most recently related to the benchmark technology
that enables the innovative ToughGuard product."

Fleckenstein's extensive background began at the AccuRay
Corporation in 1966, where he rose through the ranks and
ultimately served as vice president, Americas Specialty
Division. He joined Combustion Engineering in 1985 as vice
president and general manager of the Taylor Instrument division,
before moving on to the Daniel Woodhead Company as president in
1988. From 1995 until the present, Fleckenstein has held senior
positions at General Signal and the Emerson Electric/General
Signal joint venture. Prior to his appointment there as
president, Electrical Construction Materials, these posts
included executive vice president, operations, EGS Electrical
Group; president, General Signal electrical group; and executive
vice president and general manager, O-Z/Gedney.

Fleckenstein received a Bachelor of Science degree in
Engineering Science from the University of Notre Dame and his
MBA from the University of Chicago. He has been the Midwest
council chairman and a member of the national board of directors
for the American Electronics Association.

ARMSTRONG: Taps Former GE General Manager To Lead Floor Products
Armstrong Holdings, Inc. (NYSE: ACK) announced that it has named
Chan W. Galbato to the position of president and chief executive
officer, Armstrong Floor Products, effective June 25. Galbato,
38, was president and CEO of ChoiceParts LLC, and earlier held
leadership roles at several divisions of General Electric. He
replaces Marc Olivie, who resigned from the company in April.

"Chan is a unique individual with great vision and energy," said
Armstrong chairman and CEO Michael D. Lockhart. "A talented and
accomplished leader, he has an impressive track record of
innovation and team-building across a broad range of business
disciplines, including operations, finance, and customer
service. I know Chan will lead Armstrong's Floor Products with
passion and enthusiasm."

Galbato joins Armstrong from his post as president and CEO of
ChoiceParts LLC, a provider of integrated virtual exchange
services for the auto parts industry. His prior career includes
senior management positions at various divisions of General
Electric, most recently President and CEO of Coregis, a G.E.
Capital insurance company. Earlier, he was a general manager at
GE divisions including Medical Systems from 1996-1998 in
Milwaukee; Appliances from 1993-1996 in Louisville; and
Transportation Systems from 1989-1993 in Erie. He was at GE's
corporate headquarters from 1988-1989 in Schenectady; and the
Aircraft Engine Division from 1987-1988 in Cincinnati. After
completing his studies, Galbato spent two years playing minor
league baseball for the Montreal Expos.

Galbato received a Bachelor of Arts degree in Economics summa
cum laude from the State University of New York at Fredonia and
his MBA with honors from the University of Chicago.

ARMSTRONG WORLD: Wants to Forgive $46.2 Million of ESOP Loans
Bankrupt Armstrong World Industries Inc. seeks to forgive $46.2
million of debt it is owed by its employee stock ownership plan
(ESOP), according to Dow Jones. A hearing on the request is
scheduled for June 13. Armstrong, the main operating unit of
Armstrong Holdings Inc., said it can take a significant tax
deduction if the employee stock ownership plan loans are
forgiven. The Internal Revenue Code (IRS) would treat the loan
forgiveness the same way as if the company had made a $46.2
million cash contribution, the company said. If the loans are
forgiven prior to July 1, the company said it believes it will
receive a federal tax benefit of $14 million and a state tax
benefit of $1.2 million. (ABI World, June 7, 2001)

ASD GROUP: Files Chapter 11 Petition in S.D. New York
ASD Group, Inc. (OTCBB: ASDG) announced that ASDG and its
operating subsidiary (jointly "ASDG") voluntarily filed
petitions for relief under Chapter 11 of the United States
Bankruptcy Court.

The petitions, which allow for reorganization of the companies'
debts, were filed in the United States Bankruptcy Court of the
Southern District Court of New York. ASDG was granted the right,
by the court, to use cash collateral on an interim basis until a
further hearing.

Concurrent with these filings, ASDG is initiating efforts to
achieve a comprehensive restructuring of its obligations with
all of its creditors. Management is pursuing various strategies
in connection with payment of ASDG's outstanding indebtedness.
At this time, management believes these filings are in the best
interest of ASDG's employees, creditors, customers and
shareholders. ASDG expects to continue its operations while it
uses the reorganization process to regain the financial strength
necessary to compete effectively. The filings will enable ASDG
to continue to provide contract manufacturing and engineering
services to its customers.

ASDG provides comprehensive contract manufacturing and
engineering services to original equipment manufacturers. ASDG
specializes in the fabrication, assembly and testing of complex
industrial products and non-invasive testing equipment. ASDG
manufactures complete systems, as well as assemblies, including
printed circuit boards, cable and wire harnesses and other
electro-mechanical assemblies. ASDG complements its basic
manufacturing services by providing its customers with a broad
range of sophisticated product engineering and design services.
Products manufactured by ASDG range from automated test and
production systems to less complex products such as bicycle
wheel hubs.

ASD GROUP: Case Summary & Largest Creditors
Lead Debtor: ASD Group, Inc
              One Industry Street
              Poughkeepsie, NY 12603
              aka Dutchess Design & Development Corp.

Debtor affiliate filing separate chapter 11 petition:

              Automatic Systems Developers, Inc

Chapter 11 Petition Date: June 7, 2001

Court: Southern District of New York (Poughkeepsie)

Bankruptcy Case Nos.: 01-346481 and 01-36475

Judge: Cecelia G. Morris

Debtors' Counsel: Michael D. Brofman, Esq.
                   Harold Somer, Esq.
                   Certilman Balin Adler & Hyman, LLP
                   90 Merrick Avenue
                   9th Floor
                   East Meadow, NY 11554
                   Tel: (516) 296-7014
                   Fax : (516) 296-7111

Total Assets: $6,279,065

Total Liabilities: $9,019,906

Debtors' Largest Creditors:

Entity                   Category Of Claim     Claim Amount
------                   -----------------     ------------
Town of Lagrange/          Secured Claims        $4,959,851
Dutchess Co.
Attn: Jane Sullivan
Rec. of Tax
120 Stringham Road
Lagrange, NY 12540

Town of Lagrance/          Secured Claims        $4,959,851
Dutchess Co.
Attn: Jane Sullivan
Rec. of Tax
120 Stringham Road
Lagrange, NY 12540

PNC Bank, N.A.             Secured Claims        $4,339,140
2 Tower Center
East Brunswick, NJ 08816

Peter Zacharioe            Unsecured Claims       $ 775,351
C/O Que Model Mgt.
180 Varick Street
New York, NY 10014

Bankers Trust/Deutsche     Secured Claims         $ 550,000
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006

Peter Zacharioe            Unsecured Claims       $ 278,897
C/O Que Model Mgt.
180 Varick Street
New York, NY 10014

Town of Lagrance/          Secured Claims          $ 17,569
Dutchess Co.

Benjamin Rabinovici        Unsecured Claims        $ 13,000

Macmillan Computer         Secured Claims           $ 8,030

Getzler and Co., Inc       Unsecured Claims             $ 0

IRS                        Priority Claims              $ 0

Macmillan Computer         Secured Claims               $ 0

NYS Attorney General       Priority Claims              $ 0

NYS Dept. of Taxation      Priority Claims              $ 0
and Finance

Pryor Cashman, et al.      Secured Claims               $ 0

Thomas Publishing Co.      Unsecured Claims             $ 0

U.S. Attorney              Priority Claims              $ 0
Bankruptcy Litigation

U.S. Dept. of Justice      Priority Claims              $ 0

AZ LIGHTNING: Country Fest Producer Files For Chapter 11
AZ Lightning Productions, Inc., the company that promotes and
produces the Country Thunder music festival on a farm east of
Phoenix, filed chapter 11 bankruptcy in the U.S. Bankruptcy
Court in Phoenix, according to the Associated Press.  The Queen
Creek, Ariz.-based company does business under the names Country
Thunder, AZ Lightning Productions and others. The event has been
staged since 1994 at the Mark Schnepf farm. The April 2001
festival drew an estimated 90,000 to 100,000 people, which was
tens of thousands fewer than expected. (ABI World, June 7, 2001)

AZ LIGHTNING: Chapter 11 Case Summary
Debtor: AZ Lightning Productions, Inc.
         1979 East Broadway, Suite 1
         Tempe, AZ 85282

Chapter 11 Petition Date: May 31, 2001

Court: District of Arizona (Phoenix)

Bankruptcy Case No.: 01-07048

Judge: Randolph J. Haines

Debtor's Counsel: Michael W. Carmel, Esq.
                   80 E Columbus Ave.
                   Phoenix, AZ 85012
                   (602) 264-4965

BENEDEK COMM.: S&P Cuts Corporate Debt Rating to CCC+ From B
Standard & Poor's lowered its corporate credit ratings on
Benedek Communications Corp. and its subsidiary, Benedek
Broadcasting Corp. to triple-'C'-plus from single-'B'. Ratings
on all rated debt and preferred stock are also lowered (see list
below). All ratings are also placed on CreditWatch with negative

The downgrades are based on revenue weakness and the onset of
cash interest payments on Benedek's senior subordinated discount
notes that will result in non-compliance with financial
covenants under the company's senior secured credit facility at
the end of the 2001 second quarter. Benedek has negligible
liquidity and is in discussion with its banks to amend the
credit facility. If the company is unsuccessful in amending the
facility, the banks could block the Nov. 15, 2001, interest
payment on the discount notes.

Benedek's already high financial risk from acquisition-related
debt, fractional coverage of total interest and payment-in-kind
(PIK) dividends of debt-like preferred securities is increasing.
The company's rising cash interest obligations coincide with the
usual odd-numbered year lack of political advertising, very soft
overall advertising demand, and digital television conversion
spending requirements. Benedek's EBITDA will be unlikely to
cover cash interest and debt-like preferred dividend
requirements and the company will need funding from external
sources or asset sales.

Benedek has a diverse portfolio of 22 network-affiliated
television stations reaching about 3.4% of U.S. households in
markets ranked between 84 and 199. Most of the stations are
ranked first or second in their markets and potentially could be
sold to improve liquidity. However, the company might be
reluctant to sell stations in the currently weak TV station
business environment. Demand for generally less lucrative
smaller market stations is also usually lower than for larger
market stations.

Standard & Poor's will continue to monitor the situation as the
company proceeds with its bank negotiations.

Ratings Lowered And Placed On CreditWatch With Negative

      Benedek Communications Corp.          To     From
         Corporate credit rating            CCC+    B
         Senior subordinated debt           CCC-   CCC+
         Preferred stock rating             CC     CCC

      Benedek Broadcasting Corp.
         Corporate credit rating            CCC+    B
         Senior secured bank loan rating    CCC+    B

BRM HOLDINGS: Hilco to Manage McWhorter's Liquidation Sales
Hilco Merchant Resources announced that the U. S. Bankruptcy
Court in Delaware has approved its appointment to manage the
liquidation of the inventory at 27 stores operated by the
McWhorter's specialty retail chain in California.

McWhorter's began its store closing sales Wednesday, and the
sales are expected to continue for the next several weeks.

In addition, Hilco Real Estate was awarded the right to market
the leases of the 27 stores and the corporate office/warehouse
owned by McWhorter's. Hilco (Hilco Merchant Resources and Hilco
Real Estate) out bid a consortium of virtually all its major

McWhorter's is owned by BRM Holdings, Inc. (formerly US Office
Products Company). BRM filed for Chapter 11 bankruptcy
protection on March 5, 2001. Since that time BRM has been
selling substantially all of its businesses to generate cash to
pay its creditors. "We had hoped to find a new owner for the
McWhorter's business, to continue the enormous progress we have
made in re-designing this business over the last two years,"
said Mark Syrstad, President of McWhorter's. "Ultimately,
however, Hilco's bid provided the greatest value to our

McWhorter's has served its customers in the Northern California
area since 1940 when it was founded by Tom McWhorter and Elmer
Young. "I'm certain that McWhorter's will be missed in the
communities we have served, and we are saddened to be closing
our doors. I believe I speak for all of us at McWhorter's when I
say thank you to our friends and neighbors who have remained
loyal customers throughout the years. It is my hope that we can
continue to serve them and contribute to our communities in
different capacities as we each move forward," said Syrstad. "I
am also grateful to our employees for their accomplishments and
their hard work. We have a great team, and I am confident that
with their superb skills, they will be able to find new
opportunities very quickly."

Cory Lipoff, Executive Vice President of Hilco Merchant
Resources, stated "Consumers in California will be able to get
great values in the store-closing sales. All of the items in the
store, including items for the office, home office and gift
items, are being discounted."

Hilco Real Estate, headed by Mitch Kahn, is leading the process
of selling the corporate office, as well as releasing to new
tenants the soon-to-be vacated 27 stores in some of the prime
real estate locations in Northern California.

Hilco Real Estate has subleased, relocated, and renegotiated
hundreds of thousands of square feet of retail space, including
the disposition and restructuring of the real estate portfolio
for HQ/Hechinger, Heilig-Meyers Furniture, Filene's Basement,
Play Co., Camellia Food Centers, Ice Chalet and Maurice. Hilco
Real Estate has been retained by some of the world's largest and
well-known retailers.

Hilco Merchant Resources is the leading firm assisting retailers
in converting inventory into cash at very high recoveries. Hilco
Merchant Resources converted in the last year over $3 billion in
inventory for major retailers in the United States, Canada and
the United Kingdom.

Hilco is composed of the top people in the fields of inventory,
receivables, machinery, equipment and real estate appraisal
services, machinery & equipment auction services, real estate
services, merchant resources for the redeployment of inventory,
acquisition of receivables and junior debt financing.

This senior management team has an average of 20 years in their
respective business area and Hilco has conducted in excess of
$15 Billion in transactions. To learn more about Hilco Merchant
Resources, visit

COVAD COMM.: Moody's Cuts Senior Debt Ratings To Caa3 From Caa1
Moody's Investors Service downgraded the senior unsecured debt
ratings and the senior implied and issuer ratings of Covad
Communications Inc. to Caa3 from Caa1. Affected ratings are:

      * $425 million 12% Senior Notes due 2010
      * $215 million 12.5% Senior Notes due 2009
      * $138 million Senior Discount Notes due 2008
      * $500 million Conv. Senior Notes due 2005

Accordingly, the ratings action concludes Moody's review
initiated on February 21, 2001. The outlook is negative while
approximately $1.3 billion of debt securities are affected.

Moody's related that Covad's financial performance fell far
short of its expectations. Reportedly, Covad posted its full
year 2000 financial results last May 25, 2001, which included
significant restatement of operating revenues and expenses the
company attributed to internal control weaknesses. The rating
agency is concerned about the company's ability to secure the
necessary capital to fund its future operations. It is also
doubtful that the company's liquid and monetizeable assets would
fully satisfy the claims of all debtholders in a liquidation
scenario, stated Moody's.

DIGITAL FUSION: Shares Kicked-Off the Nasdaq Market
IBS Interactive, Inc. d/b/a Digital Fusion (Nasdaq:IBSXE),
announced that NASDAQ informed the Company that its securities
were to be delisted from the NASDAQ primarily for its failure to
file its 10-K annual report and 10-Q in a timely manner. The
NASDAQ said that the delisting was effective as of June 7, 2001.

The Company has completed its audit and will move forward with
its Form 10-K and Form 10-Q filings as previously announced on
May 17, 2001.

The Company plans to file an immediate appeal to NASDAQ
regarding its decision and plans to vigorously seek
reinstatement as soon as possible.

                     About Digital Fusion

Digital Fusion provides comprehensive e-Business and information
technology (IT) solutions to businesses, organizations and
public sector institutions in the Eastern U.S. We have over 10
years of experience designing, developing, and integrating
complex business systems, providing a range of services,
including strategy, development, desktop support, network, and
education services. For additional information regarding Digital
Fusion's services, visit the Company web site at

ELECTRONIC TELECOM: Shares Subject To Nasdaq Delisting
Electronic Tele-Communications, Inc. (ETC) received a Nasdaq
Staff Determination on June 1, 2001, indicating that the Company
failed to comply with the minimum market value of public float
and $1 minimum bid price requirements for continued listing set
forth in Marketplace Rules 4310(c)(7) and 4310(c)(4), and that
its securities are, therefore, subject to delisting from The
Nasdaq SmallCap Market. The Company has requested a hearing
before a Nasdaq Listing Qualification Panel to review the Staff
Determination. The Company's Class A common stock will continue
to be traded on The Nasdaq SmallCap Market pending a
determination in the hearing. There can be no assurance the
Panel will grant the Company's request for continued listing.
The Company is eligible to and will trade on the OTC Bulletin
Board if it does not obtain continued listing on The Nasdaq
SmallCap Market.

ETC, like many suppliers to the telecommunications industry, has
been adversely impacted by the economic slowdown. This has put
pressure on ETC's sales, earnings, and stock price, causing it
to fall below the minimum requirements of the Nasdaq Marketplace
Rules. ETC's stock has a book value of $1.80 per share as of
March 31, 2001.

Electronic Tele-Communications is a supplier of Voice
Application Processing Platforms to domestic and foreign
telephone utilities and of messaging systems to the commercial
market. ETC's equipment, provides a wide range of audio
information and call handling services via telephone networks,
computer networks, and the Internet. ETC, with corporate
headquarters in Waukesha, Wisconsin also has operations in
Norcross, Georgia.

ENCOMPASS SERVICES: S&P Rates Proposed Senior Sub Note At B+
Standard & Poor's assigned its single-'B'-plus rating to
Encompass Services Inc.'s proposed $100 million, 10.50% senior
subordinated note issue due 2009, which is being issued under
SEC Rule 144A with registration rights. At the same time,
Standard & Poor's affirmed its corporate credit, senior secured,
and subordinated debt ratings on the company (see list below).

At March 31, 2001, Encompass had approximately $962 million of
debt outstanding. The outlook remains stable.

Proceeds from the debt offering are expected to be used to
reduce outstanding debt under the firm's secured bank credit

The ratings reflect the company's leading positions in the
mechanical, electrical, and janitorial services industries, and
a somewhat aggressive financial profile.

Houston, Texas-based Encompass is a leading participant in the
large, highly fragmented, and modestly capital-intensive
mechanical, electrical, and janitorial service industries. The
industry is tied in part to new commercial, industrial, and
residential construction; however, a healthy amount of sales are
derived from maintenance, repairs, and retrofits (MRR), which
helps temper cyclically. Fair intermediate-term growth prospects
are driven by outsourcing and vendor rationalization, which are
occurring in a variety of North American industries. These
trends should lead to increased national account projects for
the industry's largest participants.

Encompass is the largest independent supplier of mechanical,
electrical, and janitorial services in North America. Although
Encompass is exposed to the cyclically of new construction, the
firm generates about half of its sales from MRR services,
providing a fair level of earnings stability. The company
benefits from a wide geographic presence and broad service
offering, which enables it to take advantage of the industry
trends of outsourcing and vendor rationalization. Encompass
continues to rationalize disparate business units acquired over
the past two years, particularly in management information
systems, purchasing leverage, cross selling, and implementing
standardized operating procedures. Over time, Encompass is
expected to increase its MRR business through bundling facility
services with construction services, additional national account
exposure, and a modest acquisition program.

The financial risk assessment reflects the company's fair credit
protection measures. Cash flow benefits from modest fixed
capital and moderate working capital needs, as well as a high
variable cost structure. In the future, a focus on margin
improvement and working capital management should enable the
firm to generate a fair amount of free cash flow, which is
expected to be used for debt reduction. Therefore, funds from
operations to total debt, which was approximately 15% at March
31, 2001, should strengthen to the 20% area, while total debt to
EBITDA is expected to remain between 2.5 times (x) and 3.0x.

                     Outlook: Stable

Leading business positions, modest fixed capital needs, and the
expectation for limited debt-financed acquisitions reduce
downside risk. A somewhat aggressive financial profile and
integration challenges limit upside ratings potential, Standard
& Poor's said.


* Encompass Services Corp.
    $100 million senior subordinated note issue (proposed) B+


* Encompass Services Corp.
    Corporate credit rating        BB
    Senior secured debt            BB
    Subordinated debt              B+

FINOVA GROUP: US Trustee Appoints Official Equity Committee
Pursuant to Section 1102(a)(l) of the Bankruptcy Code, the
United States Trustee for Region 3 appointed the following
persons to serve on the Committee of Equity Security Holders in
the FINOVA Group Inc. chapter 11 cases:

     (1)  Legg Mason Investment Trust, Inc.
          Attn: Jennifer W. Murphy
          100 Light Street
          Baltimore, MD 21202
          Phone: (410) 454-5315, Fax: (410) 454-3296

     (2)  Bennett Management
          Attn: James D. Bennett
          2 Stamford Plaza
          Stamford, CT 06901
          Phone: (203) 353-3101, Fax: (203) 353-3113

     (3)  Greenlight Capital
          Attn: David Einhorn
          420 Lexington, Suite 1740
          New York, NY 10170
          Phone: (212) 973-1900, Fax: (212) 973-9219

     (4)  Dimensional Fund Advisors
          Attn: Lawrence Spieth
          10 S. Wacker Drive, #2275
          Chicago, IL 60606
          Phone: (312) 382-5370, Fax: (312) 382-5375

     (5)  Samuel H. Park, M.D.
          2660 S. Birmingham Place
          Tulsa, OK 74114
          Phone: (918) 749-1714, Fax: (918) 749-1614

     (6)  Nicholas A. Rago
          2425 E. Camelback Road, Suite #450
          Phoenix, AZ 85016
          Phone: (602) 912-8586, Fax: (602) 912-8587

     (7)  Eugene Linden
          12 LaVeta Place
          Nyack, NY 10960
          Phone: (845) 358-5634, Fax: (845) 358-6359

Frank J. Perch, III, Esq. (Phone: (302) 573-6491, Fax: (302)
573-6497) is the Staff Attorney for the U.S. Trustee assigned to
FINOVA's chapter 11 cases. (Finova Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

FINOVA GROUP: GE Capital Sweetens Bailout Offer
GE Capital Corp. enhanced the terms of a bailout offer made to
creditors of bankrupt Finova Group Inc., increasing its fight to
gain control of the loan provider, according to The Wall Street
Journal. The Journal also reported that GE Capital was
challenging Finova's backing of a rival reorganization plan from
Berkadia LLC, which is a joint venture of Warren E. Buffett's
Berkshire Hathaway Inc. and Leucadia National Corp., a New York-
based financial-services holding company. GE Capital argued that
Finova proceeded without "any auction process" even though the
GE Capital plan "provides more benefits to creditors and equity

GE Capital's offer would provide as much as $7.25 billion in
financing, up from the $7 billion previously offered. GE Capital
also said its plan offers increased liquidity. Berkadia proposed
combining a $6 billion loan with cash on hand to make a payment
of $7.35 billion to holders of bank and public debt. (ABI World,
June 7, 2001)

FRANK'S NURSERY: Seeks To Extend Exclusive Period To October 19
Frank's Nursery & Crafts Inc. wants to keep its chapter 11 plan
exclusivity for four more months and to pay bonuses to certain
managers to keep them from leaving. About 100 managers would be
eligible to participate in a $2.4 million retention payment as
an incentive to stay, according to a request filed recently. In
a separate motion, Frank's Nursery asked Judge Schneider to
extend through Oct. 19 the exclusive period during which only it
can file a chapter 11 plan in its case, from June 19. If it
files a plan by Oct. 19, it would maintain plan exclusivity
through Dec. 18 while it solicits votes. (ABI World, June 7,

GENERAL TIME: Clockmaker Shuts Down And May File For Bankruptcy
General Time Corp. is closing down its entire operation,
according to the Associated Press. The company, which was once
the country's top maker of alarm and wall clocks under the brand
names Westclox, Seth Thomas and Spartus, will put 141 people out
of work at its manufacturing plant in Athens, Ga., and another
30 at its headquarters in Norcross, Ga. General Time
distribution centers in Canada, the United Kingdom and Hong Kong
will also shut down.

"Lending institutions no longer will provide the cash to support
the ongoing business requirements," company spokesman Daniel
Moreland said. "As a result, we could not guarantee that
salaries could be paid past today (Tuesday). Very likely we will
initiate bankruptcy proceedings." (ABI World, June 7, 2001)

Harnischfeger Industries, Inc. (OTC Bulletin Board: HFIIV)
announced operating results for the three and six-month periods
ended April 30, 2001 and provided an update on the status of the
Company's emergence from Chapter 11.

Second quarter net sales totaled $287.8 million, compared to
$283.0 million for the second quarter last year. Net loss for
the current quarter was $0.6 million, compared to a $6.3 million
loss a year ago. Both periods include expenses associated with
the Chapter 11 process and the current quarter includes a $5.9
million gain from discontinued operations.

Operating income from continuing operations before
reorganization items was $19.7 million for the current quarter
compared to $16.9 million for the second quarter last year.

For the first six months of the current year, net sales were
$555.3 million, compared to $570.0 million for the first six
months of last year. Net loss for the first half of fiscal 2001
was $15.9 million compared to a $23.9 million loss for the first
six months of fiscal 2000. Both periods include expenses
associated with the Chapter 11 process and the first six months
of fiscal 2001 includes a $3.2 million loss from discontinued
operations while the first six months of fiscal 2000 includes
restructuring charges of $6.5 million.

Operating income from continuing operations before
reorganization and restructuring items was $31.6 million for the
first half of fiscal 2001, compared to operating income of $29.1
million for the first half of fiscal 2000.

Despite relatively flat net sales for both the three and six-
month periods, operating income from continuing operations
improved for both periods as a result of a sales mix that
included a larger percentage of aftermarket products and
services and cost reduction programs implemented over the last
several years.

"At this juncture, the unusually large amount of publicly
available information about our businesses leads us to deviate
from our policy of not commenting on projected financial
results," said John Nils Hanson, Chairman, President and CEO.
"We now believe HII will likely end the year short on revenues
as compared to the business plan contained in our bankruptcy
disclosure statement. We believe, however, we will make up most
or all of the resultant decrease in operating income through a
better sales mix and cost controls.

"It is important to recognize that our businesses are fairly
'lumpy.' We have equipment that sells for millions of dollars.
If we get a few more orders in one period and a few less in
another period, we can have a swing in revenue with really no
change in overall business levels.

"We continuously collect intelligence relative to our customers'
needs and outlook, and plan our businesses to these forecasts.
Accordingly, we must constantly make adjustments from an
operating standpoint fairly far out from the current period."

The bankruptcy court confirmed the Company's plan of
reorganization on May 18, 2001 and the ten-day appeal period
expired without any appeals on May 29, 2001. The last major step
in the Company's emergence process is the completion of the
Company's exit financing facility. Bankers Trust Company and its
affiliate, Deutsche Banc Alex. Brown Inc., are providing a four
and one half year, $350 million exit financing facility to HII
in connection with the Company's emergence. The Company is
currently documenting this credit facility and expects to emerge
from Chapter 11 during the month of June.

The business plan in the Company's bankruptcy disclosure
statement was prepared solely to support confirmation of the
Company's plan of reorganization. As with any business,
projections and other data may become outdated at any time. The
Company assumes no responsibility to update information filed in
connection with its bankruptcy proceedings, including any
financial projections. Investors are advised to disregard such
information when considering future investment decisions.

Harnischfeger Industries, Inc. is a worldwide leader in
manufacturing, servicing and distributing equipment for surface
mining through its P&H Mining Equipment division and underground
mining through its Joy Mining Machinery division.

IMPERIAL SUGAR: Plan Confirmation Hearing Set For August 7
Imperial Sugar Company (OTC BB: IPRL) has received approval from
the United States Bankruptcy Court for the District of Delaware
of its Disclosure Statement in Support of Debtors' Second
Amended and Restated Joint Plan of Reorganization at a hearing
held on Tuesday, June 5, 2001.

The approval of the Disclosure Statement allows Imperial Sugar
Company to solicit votes for approval of its Plan of
Reorganization. The Disclosure Statement and ballots to vote on
the Plan are expected to be mailed by June 20, 2001. The hearing
to consider confirmation of the Plan is scheduled for August 7,

James C. Kempner, President and CEO of Imperial Sugar, said, "We
are pleased to have reached this significant milestone and to be
ready to begin to solicit acceptance of our Plan. We have worked
closely with our bank group, the creditors committee and other
interested constituencies on the structure of the Plan."

Mr. Kempner continued, "Once the Plan is approved, we believe
that the Company can emerge a stronger business with a de-
leveraged balance sheet and the ability to compete successfully
in the domestic sugar industry. We owe a great deal of gratitude
to our dedicated employees, suppliers, lenders and customers for
their support of Imperial Sugar throughout this reorganization

The Company has been operating its business as a debtor-in-
possession subject to the jurisdiction of the Bankruptcy Court
since filing for relief under chapter 11 of the U. S. Bankruptcy
Code on January 16, 2001.

Imperial Sugar Company is the largest processor and marketer of
refined sugar in the United States and a major distributor to
the foodservice market. The Company markets its products
nationally under the Imperial(TM), Dixie Crystals(TM),
Spreckels(TM), Pioneer(TM), Holly(TM), Diamond Crystal(TM) and
Wholesome Sweeteners(TM) brands. Additional information about
Imperial Sugar may be found on its web site at

INTEGRATED HEALTH: Moves To Assume/Reject Cross-Defaulted Leases
The Integrated Health Services, Inc. Debtors including
Integrated Health Services at Somerset Valley, Inc., Integrated
Health Services of Cliff Manor, Inc., Briarcliff Nursing Home,
Inc., Integrated Health Services of Riverbend. Inc., Alpine
Manor, Inc., Elm Creek of IHS, Inc., Spring Creek of IHS, Inc.,
Carriage-by-the-Lake of IHS, Inc., Firelands of IHS, Inc., and
Integrated Health Group Limited Partnership, by their counsel,
moved the Court pursuant to Sections 105 and 365 of the
Bankruptcy Code and Rule 6006 of the Bankruptcy Rules, for entry
of an order, authorizing the Debtors, inter alia:

     (a) to assume six leases of nonresidential real property,
     (b) to reject four leases of nonresidential real property,

by and between certain Debtors, as tenants, and THCI Company
LLC, f/k/a New Meditrust Company LLC ("THCI"), as successor by
merger to Meditrust Company LLC ("Meditrust"), successor to the
original landlords, as identified. The ten leases each has a
cross-default provision, and is subject to a cross-renewal
provision in a separate Lease Modification Agreement linking the
ten THCI leases contractually.

The Debtors filed the motion in compliance with the time frame
set in a Stipulation and Order Between the Debtors and
Meditrust, approved by the Court, by which the Debtors may
petition the Court to assume or reject Debtors' ten leases with
THCI expires on June 1, 2001.

                    The Favorable Leases

The six leases which Debtors seek to assume (the "Favorable
Leases") each relate to premises on which the Debtors operate a
long-term care facility which has been, and promises to be,

The Debtors' analysis indicates that the facilities operated
under the Favorable Leases generate significant profits and fit
into Management's plans for ongoing operations. As the following
table reflects, the facilities operated under the Favorable
Leases generated combined profits in excess of $4,900,000 for
the year 2000:

Facility             EBITDAR          Expense          EBITDA
--------             -------      --------------       ------
Bound Brook, NJ     $l,186,936      $  568,142        $618,794
Grand Blanc, MI      1,350,989       1,183,041         167,949
Erie, PA             1,281,108         900,783         380,325
Huber Heights, OH    1,162,385         749,001         413,384
BelLbrook, OH          920,706         640,926         279,780
Greenbburg, PA       4,158,645       1,066,531       3,092,112

Debtors' management has therefore concluded that it is in the
best interests of the Debtors' estates and creditors to assume
the Favorable Leases.

                    The Unfavorable Leases

On the other hand, Debtors have determined that they must reject
the four Unfavorable Leases identified because the long term
care facilities operated on the properties are burdensome to the
Debtors and to their estates and must be divested as soon as

As the following table reflects, three of the four unprofitable
facilities generated combined losses in excess of $1,000,000 for
the year 2000, while the fourth facility generated a gain of
$125,773 (before taxes, depreciation and amortization) but was
not profitable enough to justify continued operations:

Facility              EBITDAR          Expense          EBITDA
--------              -------      --------------       ------
Alabaster, AL       $1,536,763       $1,410,990       $ 125,773
Kansas City, MO        656,327        1,241,192        (584,865)
New London, OH         304,305          376,996         (72,691)
West Carrolton, OH     293,617          680,445        (386,828)

EBITDAR - Facility's earnings before interest, taxes,
depreciation, amortization and rent, including a capital expense
of $625 per bed.

EBITDA - Facility's earnings before interest, taxes,
depreciation and amortization, i.e., EBITDAR minus rent.

Debtors' management has therefore concluded that it is in the
best interests of the Debtors' estates and creditors to arrange
the orderly transfer of the operations of the foregoing four

                        Cure Claims

Pursuant to section 365(b) of the Bankruptcy Code, at the time
of assumption, the Debtors must cure any existing defaults or
provide adequate assurance that the Debtors will cure such
defaults. The Debtors will pay any arrearages due under any of
the Favorable Leases either upon agreement with the lessor or as
may be determined by the Bankruptcy Court at a subsequent

The Debtors submit that their current cash position and access
to debtor in possession financing represents sufficient adequate
assurance that the Debtors will be able to cure any defaults
that may exist under the Favorable Leases.

                     Rejection Claims

The Debtors requested that the Rejection Claims Deadline be 30
days from the date of entry of the order granting the instant

The Debtors proposed that a holder of a claim allegedly arising
from the rejection of the Unfavorable Leases who fails to timely
file a proof of such claim on or prior to the expiration of the
Rejection Claims Deadline be: (a) forever barred from asserting
such claim against any of the Debtors or their estates; (b)
forever barred from sharing in any distribution of the Debtors'
estates or assets under any plan of reorganization confirmed in
these Chapter 11 cases or order of the Court.

                        *  *  *

The Debtors specify that they have no intention of abandoning
their patients at the facilities under the unfavorable leases
but they intend to transition the facilities to new licensed
operators, if reasonably possible, or if a transition is not
feasible, to terminate operations at the facilities in
accordance with applicable federal and state laws and

The Unfavorable Leases were all negotiated at a time when the
economic climate for long term healthcare facilities was far
more favorable than it is today, and consequently provide for
rents that are well in excess of current market rents. Because
the Unfavorable Leases are uneconomical under current market
conditions, the Unfavorable Leases contribute substantially to
the losses suffered by the facilities operated on those
leaseholds. For the same reason, the Unfavorable Leases are not
attractive to potential new operators for the facilities and
impair the Debtors' prospects for transitioning the facilities.
The Debtors have attempted to negotiate rent concessions with
THCI, and previously with THCI's predecessor, Meditrust but no
agreement was reached. Therefore, the Debtors have decided that
they have no choice but to reject the Unfavorable Leases as part
of their plan to divest themselves of the facilities operated on
those leaseholds.

                 The Cross-Default Provision

Each of the Favorable Leases and Unfavorable Leases contains a
cross-default provision, and is subject to a cross-renewal
provision in a separate Lease Modification Agreement linking the
ten THCI leases contractually. If the cross-default provisions
and cross-renewal provisions are triggered by the rejection of
the Unfavorable Leases, the Debtors may forfeit valuable
leasehold and renewal rights with respect to the Favorable

In light of this, the Debtors are also seeking certain
collateral relief which is necessary to insure that the
rejection of the Unfavorable Leases does not cause a forfeiture
of valuable rights held by Debtors under the Favorable Leases,
including the right to assume the Favorable Leases and, if
appropriate at a later date, to exercise renewal rights with
respect to the Related Leases.

The Debtors argued that the Cross-Default and Cross-Renewal
Provisions cannot be enforced.

"The ten THCI leases were entered into at various times during
the years 1986 through 1990," the Debtors tell Judge Walrath,
"Each lease relates to a separate and distinct parcel of real
estate. Each of the leased properties is in a different city,
and the properties are found in six different states. The leases
are therefore not linked geographically or in any other
meaningful or practical sense."

The Favorable Leases and Unfavorable Leases are linked
contractually, however, to the extent that each lease has a
cross-default clause, making a lessee's default under any one of
the leases a default under all ten of the leases. "In this
regard, the ten leases do not specifically reference each
other," the Debtors argued, "Rather, each lease defines an event
of default to include a default by an "Affiliate" of the lessee
under any lease between the lessee's "Affiliate" and an
"Affiliate" of the lessor. Since the lessors of the Favorable
Leases and Unfavorable Leases are all "Affiliates" of each other
and the lessees are all "Affiliates" of each other, a default
under any one of the leases is a default under all ten leases.
Through this device, each new lease between an IHS affiliate and
a THCI affiliate was drawn within the circle of the cross-
default clauses, even though the new lease was not connected to
the previously existing leases, or even conceived of when the
previously existing leases were executed."

The ten THCI leases are also linked by the terms of a cross-
renewal clause found in a Lease Modification Agreement, dated as
of April 30, 1993, which applies to all ten leases (the "Lease
Modification"). In this regard, as originally drawn, each of the
Favorable Leases and Unfavorable Leases had its own renewal
clause, and the Debtor could decide on a lease by lease basis
which leases should be renewed. In the Lease Modification
Agreement, those renewal clauses were all deleted, and replaced
by a cross-renewal clause requiring that all ten leases be
renewed, or that none of the ten leases be renewed. Thus, as a
result of the Lease Modification Agreement, Debtors could no
longer terminate unprofitable leases, while retaining profitable
leases. The Lease Modification Agreement also extended the
original lease term of each of the ten leases to May 31, 2001,
so that all ten leases could be terminated or renewed

In deciding to divest themselves of the unprofitable facilities
and reject the four Unfavorable Leases, Debtors have assumed
that the rejection of the Unfavorable Leases will not trigger
the cross-default clauses in the Favorable Leases, or cause
Debtors to forfeit renewal rights for the Favorable Leases.
Debtors believe that the cross-default clauses in the Favorable
Leases and Unfavorable Leases, and the cross-renewal clause in
the Lease Modification Agreement cannot be invoked in these
Chapter 11 cases to deprive Debtors of the right to assume or
reject each of the THCI leases or to renew each of the THCI
leases separately and independently, pursuant to Section 365 of
the Bankruptcy Code.

Debtors have also assumed that THCI cannot invoke the cross-
renewal provision in the Lease Modification Agreement to prevent
the Debtors, if they chose, to renew the Favorable Leases.

Debtors cannot proceed with the rejection of the Unfavorable
Leases, however, unless this issue is resolved with a finding in
the Order that the rejection of the Unfavorable Leases will not
trigger the cross-default clauses or constitute a ground for
depriving Debtors of their renewal rights with respect to the
Favorable Leases.

The Debtors argued that if the word and spirit of Chapter 11 of
the Bankruptcy Code is to be upheld, the rejection of the
Unfavorable Leases should not result in a triggering of the
cross-default provisions in the Favorable Leases or prevent
Debtors, at a later time, from exercising any renewal rights
they may have with respect to the Favorable Leases.

The Debtors noted that, absent the protections of Section 365,
Debtors could be forced to choose between simultaneously
assuming all the THCI leases (or any other group of leases
linked by cross- default provisions) or simultaneously rejecting
all such leases, their ability to manage their assets
effectively and maximize the recovery of creditors would be
severely impaired. However, "enforcement of the cross-default
provisions and cross-renewal provisions under these
circumstances would frustrate the policy of Section 365 of the
Bankruptcy Code allowing Debtors broad powers to assume or
reject executory contracts," the Debtors told Judge Walrath.

"It is a fundamental precept of Chapter 11 that a Debtor-lessee
may reject an unfavorable lease if the rejection is in the best
interests of the Debtor's estate and its creditors, even though
the rejection will cause the landlord to suffer rejection
damages," the Debtors asserted, "In the instant situation, for
example, the Bankruptcy Code permits the Debtors to reject the
Unfavorable Leases even though the rejection may cause THCI to
suffer some rejection damages.

The Debtors submit that any rejection damages which THCI may
suffer as a result of the rejection of the Unfavorable Leases
will in no way be increased by virtue of the fact that the
Favorable Leases are allowed to stand. On the other hand, the
Debtors would be deprived of significant benefits conferred by
Section 365 of the Bankruptcy Code if Debtors are not permitted
to assume the Favorable Leases by reason of their rejection of
the Unfavorable Leases.

To avoid future arguments in this regard, and to insure that
Debtors' valuable leasehold interests are preserved, it is
essential that the Debtors' proposed Order contain a finding
that the Favorable Leases shall not be deemed breached by reason
of the rejection of the Unfavorable Leases, the Debtors told
Judge Walrath. The Debtors believe that without such a finding,
they would be forced to reconsider their plan to divest
themselves of the Facilities and to reject the Unfavorable
Leases, with great prejudice to the Debtors' estates and their

Accordingly, the Debtors seek the entry of an order:

(a) authorizing the Debtors to assume the Favorable Leases and
     to reject the Unfavorable Leases;

(b) finding that the rejection of the Unfavorable Leases does
     not constitute a default under the Favorable Leases or
     prevent Debtors from exercising any renewal rights they may
     otherwise have under the Favorable Leases or under the lease
     Modification Agreement;

(c) providing for cure payments required pursuant to section
     365(b) of the Bankruptcy Code with respect to the Favorable

(d) setting a bar date for filing claims for rejection damages
     with respect to the Unfavorable Leases; and

(e) for such other or further relief as the Court may deem just
     and proper.

(Integrated Health Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

LOEWEN: Certain Legal Proceedings Described In 2nd Amended Plan
                      (A) NAFTA Claims

In October 1998, The Loewen Group, Inc., on its own behalf and
on behalf of LGII, and Raymond L. Loewen filed claims against
the United States of America under the investment protection
provisions of the North American Free Trade Agreement ("NAFTA")
for injury to themselves and their investment in the U.S. (the
"NAFTA Claims.") The claimants contended that they were damaged
as a result of breaches by the U.S. of its obligations under
NAFTA in connection with certain litigation in the State of
Mississippi entitled O'Keefe v. The Loewen Group Inc. See
"Certain Events Preceding the Debtors' Chapter 11 Filings -
Mississippi Litigation." Specifically, the plaintiffs alleged
that they were subjected to discrimination, denial of the
minimum standard of treatment guaranteed by NAFTA and
uncompensated expropriation, all in violation of NAFTA.

The NAFTA Claims are currently the subject of a pending
proceeding before an arbitration panel (the "Arbitration
Tribunal") appointed pursuant to the rules of the International
Centre for Settlement of Investment Disputes.

In January 2001, the Arbitration Tribunal issued a ruling
rejecting certain of the U.S. government's jurisdictional
challenges and scheduled a hearing on the merits of the NAFTA
Claims for October 2001.

In connection with the NAFTA litigation, on July 25, 2000, TLGI
and its counsel, Jones Day, entered into the NAFTA Contingency
Fee Agreement, which was subsequently approved by the Bankruptcy
Court. Pursuant to the NAFTA Contingency Fee Agreement, among
other things, in the event of a recovery on the NAFTA Claims by
TLGI, Jones Day will be entitled to 20% of such recovery subject
to a cap of $30 million.

In addition, on May 27, 1999, TLGI entered into the NAFTA
Arbitration Agreement with Raymond L. Loewen in order to
maximize the likelihood of recovery and to provide incentives to
both TLGI and Mr. Loewen to cooperate in pursuing their
respective claims. Pursuant to the NAFTA Arbitration Agreement,
the parties agreed to cooperate in the action against the United
States and to apportion any recoveries obtained pursuant to
binding arbitration. In addition, pursuant to paragraph 3 of the
NAFTA Arbitration Agreement, TLGI agreed to reimburse Mr. Loewen
for certain legal expenses out of the proceeds of a NAFTA Claim

Prior to the Effective Date, TLGI will cause LGII to form:

      (a) a wholly owned Delaware limited liability company
          ("Delco") and

      (b) a wholly owned Nova Scotia unlimited liability company

On the Effective Date, LGII will transfer its rights to receive
any proceeds of the NAFTA Claims arising under article 1117 of
NAFTA to Delco and will transfer the membership interests in
Delco to TLGI. Immediately thereafter, TLGI will transfer to
Nafcanco all right, title and interest to any proceeds of the
NAFTA Claims arising under article 1116 of NAFTA and TLGI will
cause Delco to transfer to LGII all right, title, and interest
to any proceeds of the NAFTA Claims arising under article 1117
of NAFTA, and in respect thereof, TLGI will irrevocably delegate
to Nafcanco all powers and responsibilities of TLGI in respect
of the pursuit and prosecution of the NAFTA Claims and the
arbitration under the NAFTA Arbitration Agreement, all in
accordance with the terms of Exhibit I.A.29 of the Plan.

As of the Effective Date and as part of the Reinvestment
Transactions, TLGI will assign to Reorganized LGII, and
Reorganized LGII will assume, the NAFTA Contingency Fee
Agreement and the NAFTA Arbitration Agreement.

In addition, pursuant to the Plan, on the Effective Date
immediately following completion of the Reinvestment
Transactions, an undivided 25% interest in the NAFTA Net
Proceeds will be transferred to the Liquidating Trust. Under the
Plan, NAFTA Net Proceeds take into account any adjustments or
payments under the NAFTA Arbitration Agreement and are net of
payments under the NAFTA Contingency Fee Agreement.

The Debtors do not believe that it is possible at this time to
predict the final outcome of this proceeding or the timing
thereof or to establish a reasonable estimate of the damages, if
any, that may be awarded to the plaintiffs or the proceeds, if
any, that may be received in respect of the NAFTA Claims.

The NAFTA Claims are Retained Claims under the Plan.

            (B) Northeast Disposition Sale Dispute

On March 31, 1999, pursuant to a Stock Purchase Agreement dated
as of February 28, 1999, as amended (the "Northeast Agreement"),
the Northeast Disposition was consummated and LGII sold to
Cornerstone, all of the issued and outstanding stock of
approximately 100 companies owned by LGII.

The Northeast Agreement contains two post-closing adjustment
mechanisms, one relating to the working capital required to be
transferred by LGII to Cornerstone for the acquired companies
and the other to the possible overfunding or underfunding of
trusts maintained by the acquired companies.

The Northeast Agreement also contains essentially two dispute
resolution mechanisms.

First, the Northeast Agreement requires the parties thereto to
designate an independent accountant to resolve any disputes
between them regarding post-closing adjustments, including
adjustments associated with working capital and with the
overfunding or underfunding of the trusts.

Second, the Northeast Agreement requires disputes concerning the
Northeast Agreement, its effect or the transactions contemplated
by it to be resolved through arbitration.

While LGII and Cornerstone have succeeded in reconciling some of
their differences regarding the postclosing working capital and
trust funding adjustments, certain disputes remain between them.
Based on preliminary calculations, LGII believes that as a
result of the working capital adjustment it has a claim against
Cornerstone for approximately $5.1 million, while Cornerstone
argues for an adjustment of approximately $4.2 million in its

Regarding the trust funding adjustment, LGII believes the trusts
were overfunded by approximately $5.3 million while Cornerstone
believes the trusts were underfunded by approximately $4.2

Since overfunding and underfunding are reimbursed under the
Northwest Agreement at 50% of their respective amounts, the
parties' claims differ in the approximate amount of $4.75

Accordingly, LGII and Cornerstone have initiated the
contractually-mandated process to appoint an independent
accountant to resolve their disputes regarding the working
capital and trust funding adjustments. Carl W. Pergola of BDO
Seidman, LLP has been jointly appointed by the parties to serve
as their independent accountant, and the independent accountant
review to be conducted by Mr. Pergola has commenced. Cornerstone
has informally asserted certain other claims against LGII under
the Northeast Agreement.

LGII believes Cornerstone may attempt to secure a determination
of such claims by the independent accountant or, failing that,
may file a demand for arbitration. LGII preliminarily believes
that Cornerstone may seek approximately $2.6 million in respect
of these claims. All of the claims of LGII against Cornerstone
are Retained Claims under the Plan and will not be affected by
consummation of the Plan. In early September 2000, certain
entities affiliated with Cornerstone filed a complaint for
express trust, constructive trust and declaratory judgment
against LGII and TLGI alleging that LGII and TLGI failed to
deposit certain receipts into trust fund accounts maintained by
or on behalf of certain of the businesses acquired from them by
Cornerstone. In October 2000, LGII and TLGI filed an answer and
counterclaim asserting and seeking a declaratory judgment that
the plaintiffs' claims are barred because Cornerstone agreed in
the Northeast Agreement to resolve all claims regarding working
capital and trust fund adjustments pursuant to the independent
accountant review procedure under the agreement.

LGII's claims in respect to these matters are Retained Claims
under the Plan.

             (C) Osiris Declaratory Judgment

In early November 1999, funds totaling approximately $2.4
million were withdrawn by Cornerstone from an account maintained
in the name of Osiris Holding Corp. ("Osiris") by First Union
National Bank, as Trustee (under an agreement dated June 4,

Osiris was not part of the above-referenced stock purchase
transaction and funds that were maintained on behalf of that
entity are not the property of Cornerstone. LGII has demanded
that Cornerstone return to Osiris the funds wrongfully obtained
by it, but, to date, Cornerstone has refused to do so.

On or about January 31, 2000, Cornerstone filed a complaint for
declaratory judgment in the Bankruptcy Court against LGII and
TLGI, seeking a declaration of the Court that Cornerstone
rightfully owns and possesses the funds withdrawn from the
Osiris account. On or about April 14, 2000, LGII and TLGI
answered the complaint and Filed a counterclaim seeking return
of the Osiris funds wrongfully converted by Cornerstone.

In February 2001, the parties reached a settlement of their
dispute regarding the Osiris funds under which $1,658,000 plus
interest has been paid to LGII and TLGI. The settlement was
approved by the Bankruptcy Court and the complaint will be

   (D) Other Claims Related to the Collateral Trust Agreement

In connection with the issues surrounding the CTA Note Claims,
certain holders of the CTA Note Claims may hold claims, demands,
rights and causes of action against certain third parties.

In September 2000, certain holders of the CTA Note Claims
entered into agreements to toll and suspend through April 1,
2001 the running of any and all statutes of limitations, laches
or any other time-based limitations or defenses relating to such
claims, demands, rights and causes of action with the following

        (a) Bankers Trust Company;
        (b) Davis, Polk & Wardwell;
        (c) Kramer Levin Naftalis & Frankel LLP;
        (d) Reid & Reige, P.C.;
        (e) Russell & DuMoulin;
        (f) Salomon Smith Barney, for itself and as successor to
            Smith Barney, Inc.;
        (g) Skadden, Arps, Slate, Meagher & Flom LLP;
        (h) State Street Bank and Trust Company;
        (i) Thelen Reid & Priest LLP; and
        (j) UBS Warburg LLC, for itself and as successor to UBS
            Securities LLC (collectively, the "Tolling Parties").

Except as specifically provided in the Plan, any claims,
demands, rights and causes of action that any Indenture Trustee
or a holder of CTA Note Claim may have against Tolling Parties
or other third parties with respect to the CTA ("Reserved CTA
Claims") are reserved and will not be affected by Confirmation
or the occurrence of the Effective Date.

Pursuant to the Plan, Reorganized LGII may reimburse a portion
of the costs of the pursuit of certain of these claims.

Reserved CTA Claims of any Indenture Trustee or holder of a CTA
Note Claim shall in no way be prejudiced or adversely affected
by virtue of the fact that any holder of any such claim voted in
favor of the Plan, did not challenge the treatment of its Claim
or its recovery under the Plan, did not pursue to conclusion its
claims or defenses in the CTA Proceeding pending before the
Bankruptcy Court, or otherwise did not fully pursue any rights
that it may have had with respect to its CTA Note Claim before
the Bankruptcy Court. (Loewen Bankruptcy News, Issue No. 40;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

NEON COMM: Fiber Optek Files Liens Due To Troubled SEC Report
Fiber Optek issued the following statement:

Due to NEON's recent filing with the U.S. Securities and
Exchange Commission on Form S-3 dated April 12, 2001, which
stated, "We have experienced, and are currently experiencing,
cash flow problems. We may be required to seek protection from
our creditors under the federal bankruptcy laws," Fiber Optek, a
leader in the development and installation of fiber optic
communications networks, Thursday reported that it has taken
steps to confirm its position as a secured creditor of NEON
Optics Inc., a subsidiary of NEON Communications Inc. (Nasdaq:

Michael S. Pascazi, president of Fiber Optek, reported that the
company has filed mechanic's liens in White Plains, N.Y. upon
certain real property including optical cable networks and
license agreements located in Westchester County, N.Y. He
further indicated that additional liens would be filed in the
coming days.

Copies of the filings may be viewed and downloaded at

Fiber Optek, a 17-year-old private concern, has designed and
installed hundreds of fiber optic communications systems for
local, county and state government agencies, companies and
educational institutions throughout the Northeast.

Fiber Optek is a registered trademark of Fiber Optek
Interconnect Corp.

NEON COMM: Calls Fiber Optek's News Release "Misleading"
NEON(R) Communications, Inc. (Nasdaq:NOPT) described the news
release issued by Fiber Optek as materially misleading and as an
attempt by Fiber Optek, one of NEON's contractors, to pressure
NEON to settle disputed contractual claims following NEON's
termination of its agreement with Fiber Optek. The news release
reported that Fiber Optek "has filed mechanic's liens in White
Plains, NY upon optical cable networks and license agreements
located in Westchester Country, NY."

NEON Communications and its legal counsel call the news release
"materially misleading." The liens are on a small portion of
NEON's Network and total $1,178,393 out of a total network
having a book value of $192 million. NEON believes the liens
have been filed in an attempt to bring pressure on NEON to
resolve several routine contractual disputes with a contractor
that NEON has recently terminated for breach of contract. The
contractor's press release of information that is several months
old is a continuation of this tactic. NEON intends to seek to
have the liens removed and the contractor enjoined from filing
further liens. In addition, NEON intends to seek to damages for,
among other things, the cost of correcting the work done by the

NEON Chief Executive Officer Stephen Courter stated "NEON is NOT
seeking protection from its creditors under federal bankruptcy
laws" and reminded its shareholders that NEON recently announced
$28M of new funding from various alternatives.

The company has taken the position that it will protect its
interests vigorously and not bow to the tactic of airing a
commercial trade dispute in the public media to sway NEON from
our current legal path and the due course of our settling our
disagreement in an appropriate manner by a court of competent

NEON is a registered trademark of NEON Communications, Inc.

NET SHEPHERD: Asks for More Time to File Financial Statements
Net Shepherd Inc. (CDNX: WEB) announced that it is not able, at
this time, to present its annual audited consolidated financial
statements for the year ended December 31, 2000. Net Shepherd
has made an application to the Alberta and Ontario Securities
Commissions for an extension to file and mail to shareholders
financial statements for the year ended December 31, 2000 and
the three months ended March 31, 2001. A decision has not yet
been made to grant the extension. If the extension is not
granted, a cease trade order may be issued against the company.
Net Shepherd expects the financial statements can be completed
by June 29, 2001.

The delay is due to the proposed restructuring of Net Shepherd.
Between April 12, 2001 and May 14, 2001, a restructuring of Net
Shepherd, including settlement of Net Shepherd's debt, was
negotiated between Net Shepherd and Vanenburg and between Net
Shepherd and certain of its creditors. While the proposed
restructuring was being negotiated, all work on the preparation
of the financial statements ceased.

Closing of the proposed restructuring will be delayed until the
financial statements have been finalized. Trading on the
Canadian Venture Exchange of the common shares of Net Shepherd
is not expected to commence until the outcome of the application
is determined.

Net Shepherd was advised on June 4, 2001 by Vanenburg that a
foreclosure sale of all of the assets of Answers was scheduled
for June 4, 2001. Vanenburg, as secured party under a note and
security agreement dated April 13, 2001 in the amount of
$315,000 and a note and security agreement dated May 9, 2001 in
the amount of $185,000, foreclosed on its security and called a
public auction for the sale of the assets. Vanenburg's bid of
$315,000 was the only one received. Accordingly, Vanenburg
acquired all the assets of Answers on June 4, 2001 for $315,000.
Vanenburg proceeded with the foreclosure on its own initiative
and did not consult with the directors of Net Shepherd prior to
taking these proceedings. Vanenburg has advised Net Shepherd
that it plans to honour the terms and conditions of the
agreement respecting the proposed restructuring.

In response to questions from shareholders respecting the
restructuring of the company, the directors outlined their
reasons for proposing the transaction:

      * both Answers, Inc. and, Inc. (the assets
to  be transferred to Vanenburg Group BV) require significant
infusions of capital for the foreseeable future (which has
not been found to be immediately available)

      * the value of the assets to be transferred to Vanenburg
has declined substantially in the past 14 months due primarily
to market and economic conditions in the high tech sector

      * while the directors would prefer to obtain independent
valuations of the assets to be transferred to Vanenburg, Net
Shepherd does not have the capital to obtain such valuations

      * the independent directors had sought third party offers
for  Answers which confirm the consideration to be received
from Vanenburg for these assets under the restructuring is

      * failing the restructuring, the directors would have been
forced to consider Net Shepherd's bankruptcy

The directors also commented that they would prefer to hold a
shareholders' meeting to consider the restructuring. However,
the closing of the restructuring would have to be delayed until
such a meeting could be held, which would jeopardize the
company's ability to resolve its outstanding liabilities. Net
Shepherd requires an immediate injection of capital, which will
not occur until its liabilities are resolved. If a private
placement cannot be completed, Net Shepherd may be forced to
consider bankruptcy.

Net Shepherd announces that Owen Pinnell has been appointed
Chairman of the company, and is coordinating the restructuring.

ORIUS CORP.: Fitch Places NATG's Senior Note Rating On Watch
Fitch has placed the `B' rating for NATG Holding, LLC's $150
million 12.75% senior subordinated notes due 2010 (Notes) on
Rating Watch Negative.

NATG is a wholly owned subsidiary of Orius Corp. and is the
issuer of the Notes.

The rating has been put on Rating Watch Negative due to below
plan financial performance, increasing leverage and weakening
conditions in the telecom market. EBITDA as a percentage of
revenue declined to 6.8% in the first quarter of 2001 vs. 17.2%
in the first quarter of 2000.

As of March 31, 2001, Orius had remaining available borrowing
capacity under its $100 million revolving credit facility of
$38.5 million. If second quarter 2001 cash flow does not improve
relative to first quarter of 2001 levels, then one or more bank
facility covenants will be violated.

Fitch plans to meet Orius' senior management in the near future
to discuss current results, future business prospects and
revised projections.

Orius is a holding company with headquarters in West Palm Beach,
Fla., and operating subsidiaries engaged in the provision of
telecommunications and broadband network infrastructure services
on a national basis. Services include design, engineering and
installation of central office equipment, premise-wiring and

PACIFIC GAS: Sierra Pacific Seeks Injunction Against Debtor, ISO
In an Adversary Proceeding (No. 01-3087 DM), Sierra Pacific
Industries (SPI) seeks a preliminary injunction against both
PG&E and the California Independent System Operator ("ISO") to
enjoin each of them from interfering with SPI's efforts to sell
its electricity into the California market.

SPI told the Court that its four electricity generating plants
produce clean, reliable electricity that serves as an
alternative to the large out-of-state energy generators.
Together, SPI's four plants produce electricity totaling 54.5
MWs, enough output to meet the electricity demand of
approximately 54,500 homes in California. Until March 29, 2001,
were parties to Power Purchase Agreements ("PPAs") with PG&E,
SPI told the Court, but effective that day, SPI suspended power
deliveries and cancelled the PPAs based on PG&E's material
breaches, including PG&E's extended failures to pay for power
aleady delivered, and PG&E's anticipatory repudiation by its
failure to provide reasonable assurances that it would perform
its obligations under the PPAs. SPI asserted that it was the
only power supplier to terminate its PPAs prior to PG&E's filing
for bankruptcy. SPI also told the Court that it then sought to
sell its power to financially solvent companies on the power
market administered by the ISO in an attempt to mitigate

PG&E, the plaintiff alleged, had unilaterally inserted itself as
the Scheduling Coordinator (SC) for the SPI plants, and refused
to permit a new Scheduling Coordinator to take over. At the same
time, the ISO refused to permit SPI to sell its power to third

The Scheduling Coordinators are agents through the ISO is in
constant communication with energy generators and who provide
the ISO with the necessary generation information for the
generators they represent. Every generator must have a qualified
SC to represent it before the ISO. An SC, SPI says, has the duty
to ensure that the electricity of the generators it represents
is properly scheduled and transmitted across the power grid by
the ISO. An SC must be a viable, creditworthy and solvent entity
that can fulfill the financial obligations of its principal -
the power generator - at any given time, to ensure that the
generator can deliver its electricity whenever it is needed, SPI

After the above-mentioned actions of PG&E and the ISO, SPI
sought a temporary restraining order ("TRO") from the Sacramento
County Superior Court on April 5. In issuing the TRO, the Court
found that SPI was likely to prevail on its breach of contract
claims, that PG&E's "force majeure" defense was not meritorious,
and that SPI would suffer irreparable injury if the TRO were not
issued, Sierra told Judge Montali.

After PG&E filed for bankruptcy, SPI abandoned the preliminary
injunction motion against PG&E, but proceeded as to the ISO.
When the State Court issued a tentative ruling continuing the
hearing date and extending the TRO against the ISO, PG&E removed
the case to the Bankruptcy Court. PG&E simultaneously took steps
to coerce the ISO to return SPI's plants to PG&E's control,
actions which were clearly contempt of the TRO clause forbidding
PG&E from taking any extra-judicial means to interfere with
SPI's sales of power into the market, SPI alleges. After the ISO
refused to accede to PG&E's demands, the parties stipulated to
maintain the status quo until the Bankruptcy Court can rule on
SPI's motion for preliminary injunction.

As the SPI noted, the central issue in this case is whether SPI
properly cancelled or terminated its PFAs before FG&E petitioned
for bankruptcy protection, meaning that the FFAs never became
part of the bankruptcy estate.

To support its request for a preliminary injunction, SPI alleged

(1) SPI Cancelled the PPAs Well Before PG&E Filed for Bankruptcy

     On January 18, 2001, PG&E sent a letter to SPI declaring
that it did not have "sufficient cash" to make full payments for
the electricity delivered by SF1 in December, 2000. On January
31, 2001, PG&E made good on its warning and failed to pay
$8,941,515 for electricity SPI delivered in December, 2000.
Despite SFI's demands for payment, on February 28, PG&E again
breached the PPAs by failing to pay $3,797,244 for electricity
andcapaeity delivered in January 2001. On March 31, 2001, PG&E
failed to pay SPI $3,106,548 for capacity and electricity
deliveries made in February. Estimated amounts due for March
deliveries are about $2,000,000, none of which has ever paid by

Given the magnitude of the defaults, SPI could not afford to
continue to incur the costs of producing and delivering the
power without receiving payment On February 13, 2001, SPI served
PG&E with a certified letter providing notice of breach and a
demand for reasonable assurances pursuant to Section 2609 of the
California Commercial Code.

On February 20, PG&E responded by letter to SPI's notice of
breach. In that letter, PG&E acknowledged that it had not paid
for the power already delivered, but did not provide any
assurances that it would pay for the delivered power or the
power to be delivered in the future. Instead, PG&E asserted that
it was excused from performance due to force majeure based on
the CPUC's failure to approve the full rate increase FG&E had

SPI therefore elected to cancel its PPAs with PG&E, pursuant to
the common law and the Commercial Code, unless PG&E promptly
cured its defaults. On March 22, 2001, SPI sent FG&E a certified
letter notifying PG&E that if payment in full for all past due
amounts was not received by 3:00 p.m. March 29, 2001, all four
of the PPAs were cancelled effective midnight March 29, 2001.

PG&E did not cure its defaults nor otherwise cure its
repudiation of the PPAs. As a result, SPI's cancellation of the
PPAs became effective at midnight March 29, 2001, well before
FG&E filed for bankruptcy.

(2) PG&E Was Never Authorized to Serve as SPI's Scheduling

     PG&E's ability to block SPI from selling its power was not
attributable to its PPAs with SPI, but to the fact that it had
unilaterally inserted itself as SPI's agent in dealings with the

Until the recent energy crisis, the California Power Exchange
("CalPX") was PG&E's SC at ISO. However, PG&E and Southern
California Edison both defaulted by failing to pay for hundreds
of millions of dollars of energy purchases made through the
CalPX at the ISO. Thus, the CalPX terminated PG&E's and Edison's
rights to act as market participants and ceased acting as their
SC. At that point, PG&E, unilaterally and without notice to SPI,
simply assumed CalPX's duties as SC at the ISO.

SPI never authorized FG&E to serve as its SC. Under the ISO's
own Tariff, PG&E bad the obligation to report to ISO that it was
not authorized to serve as SPI's SC before the ISO.

(3) PG&E Is Not Qualified to Act as a Scheduling Coordinator

     By ruling dated February 14,2001, the Federal Energy
Regulatory Commission ("FERC") explicitly ruled that PG&E is not
qualified to serve as an SC for third party generators,
including SPI.

Because it is not qualified to act as an SC, FG&E itself urged
the ISO to identify a "creditworthy party" . . . "to act as
Scheduling Coordinator (SC) for the residual loads, and to carry
out ISO tariff obligations as they relate to the residual loads
[for third parties]. In its filings before the FERC, PG&E in
essence admitted this fact.

SPI also informed the ISO of this.

(4) SPI's Repeated Demands that APX be Substituted as its
     Scheduling Coordinator

     Because FG&E was never authorized, and is not presently
qualified, to act as SPI's SC, on or about March 18, 2001 the
APX notified the ISO that it would be replacing PG&E as SPI's SC
effective March 30, 2001. In denying this request, the ISO sent
an e-mail to SPI stating that it was "PG&E's position that all
contracts are in effect (not broken) as they have engaged the
force majeure provisions of the contract and are making partial

Thus, at PG&E's behest, the ISO took the indefensible position
that the PPAs somehow gave PG&E, the breaching party, the right
to determine who SPI's SCs should be.

ISO's position indicates that it has agreed to give FG&E veto
power over a QF's request to change SCs, regardless of whether
the QF still has a contract with FG&E.

In response, on March 27, SPI's counsel sent a letter to the
ISO, notifying the ISO that: (1) the PPAs between PG&E and SPI
had been cancelled; (2) PG&E's contrived invocation of the force
majeure provision to support its allegation that the agreements
were still in effect is baseless; and (3) PG&E is not qualified
to serve as SPI's SC and must be removed. Any one of these
reasons gives SPI the right to replace FG&E as its SC and
replace it with a qualified and authorized entity.

On the evening of April 2, 2001, the ISO belatedly responded to
SPI's request by stating that the ISO had previously entered
into a Participating Generator Agreement ("PGA") with PG&E.
These agreements require generators to list each resource for
which it claims a right of control. PG&E had originally listed
SPI's four units in its PGA with the ISO because SPI was then
contractually obligated by the PPAs to sell its power to FG&E.
However, when SPI cancelled its PPAs, the basis for PG&E listing
SPI's power plants on its PGA vanished.

Nonetheless, the ISO claimed that it is bound by the terms of
its PGA with FG&E, and that since PG&E lists SPI facilities as
its "resources," the ISO must treat them as such. In short, the
ISO's sole basis for refusing to allow SPI to schedule its own
resources through an SC of its choosing and to sell its power to
third parties is that the ISO had an agreement with PG&E, to
which SF1 was not party, listing SFI's facilities on PG&E's
schedule of "resources."

(5) SPI Lawsuit and TRO

     On April 2, 2001, SPI filed a complaint in Sacramento County
Superior Court against both the ISO and PG&E. SPI has alleged
several causes of action against both defendants, including
violations of the state antitrust laws and the Unfair
Competition Law. In addition, SPI alleged various causes of
action against PG&E for breach of contract. On April 5, 2001,
SPI obtained a TRO from the Sacramento County Superior Court
prohibiting PG&E and the ISO from taking any extra-judicial
steps to prevent SPI from selling its power to third parties.
SPI immediately made arrangements through APX, its Scheduling
Coordinator, to sell its power on the open market. At the same
time, SPI amended its Participating Generator Agreement with the
ISO to list the generating facilities previously committed to

The next day, April 6, 2001, PG&E filed for bankruptcy. SPI
pursued its motion for a preliminary injunction, which was set
for April 25, 2001, against the ISO alone. However, within an
hour after the state court's tentative ruling on the motion for
preliminary injunction, PG&E filed its notice of removal of the
action to the U.S. Bankruptcy Court for the Eastern District of
California. The state court's ruling was to continue the hearing
until May 17 on the Court's own motion and to maintain the TRO
in the interim.

On April 24, PG&E attempted to force the ISO to switch SPI's
power plants back to PG&E's control based on some sort of order
from the Bankruptcy Court. In addition, a PG&E employee also
contacted SPI and advised that SPI would be switched back to
PG&E effective April 26, 2001, based on an order from the
Bankruptcy Court.

PG&E's actions were in violation of the TRO, SPI alleged.


Drawing upon legal basis for its request for preliminary
injunction, SPI argues that:

      (A) It has a strong likelihood of success on the merits of
its claims based upon its pre-bankruptcy termination of the
PPAs, as the state court found in issuing the TRO, because:

          (1) the PPAs Are Not Subject to the Automatic Stay;

          (2) SP1 Validly Cancelled the PPAs on two grounds:

              -- PG&E's anticipatory repudiation of the PFAs due
                 to its failure to provide adequate assurances

              -- PG&E's material breaches of the PPAs by failing
                 to pay $19 million.

          (3) PG&E's "force majeure" defense is meritless.

      (B) SPI Has a Strong Probability of Prevailing on Its
Claims That Do Not Depend on Its Cancellation of the PPAs
considering that:

          (1) SPI never authorized PG&E to serve as its
              Scheduling Coordinator and

              -- SPI had the absolute right to replace its agent;
              -- PG&E does not satisfy the qualification
                 requirements of a Scheduling Coordinator;
              -- the ISO Tariff mandates that SPI replace PG&E as
                 its Scheduling Coordinator

          (2) SF1 Is Likely to Succeed on its Claims of Concerted
              Refusal to Deal

      (C) SPI will suffer irreparable harm if the injunction is
not issued considering:

          (1) Loss of customers and business opportunity
          (2) Loss of electricity to the people of California
          (3) Adverse impact on other operations
          (4) Damage to business reputation and relations with
          (5) Possible breach of future agreements with
              multiplicity of actions

      (D) The Balances of the Hardships Favors SPI

          SPI argued that granting a preliminary injunction will
merely maintain what has been the status quo since before PG&E's
bankruptcy filing - SPI selling electricity into the open market
and will cause no prejudice to PG&E or the ISO. SPI further
argues that this will relieve PG&E of the responsibility to buy
SPI's power. If SPI continues to sell its electricity into the
open market, PG&E will not be responsible to pay SPI for power
on a going forward basis. On the other hand, if the Court were
to deny SPI's preliminary injunction, it will leave the parties
in a state of uncertainty as to their rights, and will only
encourage self-help remedies, which PG&E has already attempted
to employ in violation of the TRO.

Any denial of the preliminary injunction might be in effect a
mandatory injunction, SPI argues, because it might be construed
by defendants as a license to force SP1 to change the status quo
and sell its power to PG&E, and waive its claim that the PPAs
were cancelled pre-petition, or to cease selling its power

In conclusion, SPI requested that the Court issue a preliminary
injunction against ISO and PG&E. (Pacific Gas Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PACIFICNET.COM, INC.: Receives Delisting Notice From Nasdaq
-----------------------------------------------------------, Inc. (Nasdaq: PACT) announced that the Company
has received notification from Nasdaq that it is no longer in
compliance with the $5,000,000 minimum market value of public
float requirement for continued listing on The Nasdaq National
Market as set forth in Marketplace Rule 4450(a)(2).

The Company has requested a hearing, pursuant to the procedures
set forth in the Nasdaq Marketplace Rule 4800 Series, before the
Nasdaq Listings Qualifications Panel to discuss the continued
listing of the Company's common stock on Nasdaq. Pending the
outcome of the hearing, completion of the review process and
further notification from Nasdaq, the Company's common stock
will continue to trade on The Nasdaq National Market.

                      About PacificNet

PacificNet is an Asian e-Business solutions provider that
develops and implements full-service e-Commerce solutions.
PacificNet solutions encompass consultation, implementation,
integration, training and support services. PacificNet has
developed a suite of proprietary e-Commerce software
applications that have been localized for use throughout Asia.
For more information, see

PARADISE MUSIC: Equity Trading Moves to the OTC Bulletin Board
The shares of Paradise Music & Entertainment, Inc., a provider
of entertainment content and services, began trading on the OTC
BB under the symbol "PDSE" following the delisting of the shares
from the Nasdaq SmallCap.

Paradise Chairman, Mr. Kelly Hickel, said, "We believe that this
move will not have a significant effect on management's plans
for Paradise, and we also believe that an active trading market
should continue on the OTC Bulletin Board."

Paradise Music & Entertainment, Inc. ("PDSE")
( an entertainment company comprised of
three complementary units: PDSE Film and TV Group (Picture
Vision and Rave Music); PDSE Music Group (PDSE Records Inc. and
All Access Entertainment); and PDSE Commercial Production Group
(Straw Dogs and Shelter Films).

PILLOWTEX: Moves To Assume & Reject Cotton Purchase Contracts
Pillowtex Corporation, Staple Cotton Cooperative Association and
Allenberg Cotton Co. are party to various Cotton Contracts
entered into in February, April and October, 2000, calling for
the purchase and sale of 248,000 bales of cotton for delivery in
2001.  All of these Prepetition Cotton Contracts obligate
Pillowtex to buy cotton at above-market rates -- by $9,800,000.

Applying a pure economic analysis to the situation, the Debtors
should reject all of the Cotton Contracts and cut new deals on
more favorable terms.  Since the Petition Date, the market price
for cotton has steadily declined.

The Debtors find that they can't risk alienating Allenberg and
Staple Cotton completely.  The relationship between the Debtors
and their cotton suppliers are very critical since cotton is the
primary raw material used in the Debtors' business.  Debtors
maintain very little cotton supply and their manufacturing
equipment and processes are calibrated to handle the particular
blend, grade and cut of cotton provided by their suppliers.  In
order not to jeopardize the manufacturing processes, the Debtors
have to purchase cotton from their existing suppliers.

Shortly after the Petition Date, the Debtors approached
Allenberg and Staple Cotton, asking for concessions on some of
the most unfavorable prepetition contracts.  Allenberg agreed to
modify three contracts while Staple consented to modify one
contract.  Despite these adjustments, the market price of cotton
continued to drop while the Debtors' losses increased.

Gregory M. Gordon, Esq., at Jones, Day, Reavis & Pogue related
that Pillowtex management had long conversations with Allenberg
and Staple about business judgment and fiduciary duty and those
conversations led to a negotiated settlement under which the
Debtors will reject some cotton contracts and assume others and
the parties will split the losses.

By Motion, the Debtors asked the Court to approve the Debtors'
decision to:

     (A) Reject Cotton Contracts priced at $5.2 million above
         current market rates and calling for these deliveries:

    Supplier         Contract Date   No. of Bales   Delivery Date
    --------         -------------   ------------   -------------
    Allenberg          02/22/00         10,000        Dec. 2001
    Allenberg          02/22/00         10,000        Dec. 2000
    Allenberg          10/23/00          2,160        Oct. 2000
    Allenberg          10/23/00          2,160        Nov. 2000
    Allenberg          10/23/00          2,160        Dec. 2000
    Allenberg          10/23/00         10,000        Dec. 2001
    Allenberg          10/23/00          5,000        Oct. 2001
    Staplcotn          04/26/00          8,500        Jun. 2001
    Staplcotn          04/26/00          8,500        Jul. 2001
    Staplcotn          10/23/00          5,000        Oct. 2001
    Staplcotn          10/23/00          5,000        Nov. 2001
    Staplcotn          10/23/00          5,000        Dec. 2001


     (B) Assume Cotton Contracts for which pricing was modified
         post-petition (but are still $4.2 million above current
         market rates) and call for these deliveries:

    Supplier         Contract Date   No. of Bales   Delivery Date
    --------         -------------   ------------   -------------
    Allenberg          04/28/00          6,000        Jul. 2001
    Allenberg          04/26/00         10,000        Jul. 2001
    Allenberg          04/26/00         10,000        Jun. 2001
    Allenberg          04/26/00         10,000        Jul. 2001
    Allenberg          02/22/00          3,880        Apr. 2001
    Allenberg          02/22/00          3,880        May  2001
    Allenberg          02/22/00          3,840        Jun. 2001
    Allenberg          02/22/00         11,880        Jan. 2001
    Allenberg          02/22/00         11,880        Feb. 2001
    Allenberg          02/22/00         11,840        Mar. 2001
    Allenberg          04/26/00          6,000        Aug. 2001
    Allenberg          04/26/00          6,000        Sep. 2001
    Allenberg          04/26/00         10,000        Aug. 2001
    Allenberg          04/26/00         10,000        Sep. 2001
    Staplcotn          08/15/00          1,260        Oct. 2000
    Staplcotn          08/15/00          1,000        Nov. 2000
    Staplcotn          08/15/00          1,000        Dec. 2000
    Staplcotn          08/15/00          1,000        Jan. 2001
    Staplcotn          08/15/00          1,000        Feb. 2001
    Staplcotn          08/15/00          1,000        Mar. 2001
    Staplcotn          08/15/00          1,000        Apr. 2001
    Staplcotn          08/15/00          1,000        May  2001
    Staplcotn          08/15/00          1,000        Jun. 2001
    Staplcotn          08/15/00          1,000        Jul. 2001
    Staplcotn          04/26/00          8,500        Mar. 2001
    Staplcotn          04/26/00          8,500        Feb. 2001
    Staplcotn          04/26/00          8,500        Mar. 2001
    Staplcotn          04/26/00          8,500        Jan. 2001
    Staplcotn          04/26/00          8,500        Feb. 2001
    Staplcotn          04/26/00          8,500        Mar. 2001
    Staplcotn          04/26/00          8,500        Apr. 2001
    Staplcotn          04/26/00          8,500        May  2001
    Staplcotn          04/26/00          8,500        Aug. 2001
    Staplcotn          04/26/00          8,500        Sep. 2001

The Debtors and the Suppliers did not disclose the pricing under
these Cotton Contracts.

Mr. Gordon said the Debtors doubt if they could purchase the
same quantity and quality of cotton from other sources.  The
wrong kind of cotton will only create significant manufacturing
inefficiencies and delay production.  New cotton suppliers are
also likely to require advance payment, a letter of credit and
other financial accommodations that would impose further cost on
the Debtors, Mr. Gordon adds. (Pillowtex Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PROMOTIONS.COM: Appeals Nasdaq's Decision To Delist Shares
---------------------------------------------------------- (Nasdaq: PRMO) announced that it met with the
Nasdaq Qualification Panel to appeal Nasdaq's decision to delist
its shares from the Nasdaq National Market due to its
noncompliance to certain listing requirements.

In addition to the Company's previously announced failure to
maintain a minimum bid price of $1.00, the Company has been
notified that it is not in compliance with the market value of
public float requirement set forth in Nasdaq marketplace Rule

The Company will continue to trade under the symbol PRMO on
Nasdaq's National Market pending the outcome of these
proceedings. In the event the Company's request for continued
listing on the National Market is not granted, the Company will
pursue other listing alternatives.

                  About, Inc., Inc. serves as a strategic partner for marketers
and their agencies, creating Internet-based promotions and
integrating them with offline marketing initiatives. The Company
leverages its extensive promotion experience, Internet expertise
and proprietary technology infrastructure with a broad range of
promotion and direct marketing tools to optimize marketing
spending and provide quantifiable results for clients including
Kraft Foods (NYSE: MO), NBC (NYSE: GE) and AT&T (NYSE: T).
Current promotions running for clients can be
found at

PSINET INC.: Selling Substantially All Latin American Operations
PSINet Inc. (OTC BB:PSIXE) has signed a letter of intent with an
investment group led by Cori Capital Partners, L.P. and
consisting of additional investors, including senior members of
PSINet's Latin American management team, pursuant to which the
investment group has offered to purchase PSINet's Latin American
operations and facilities in Argentina, Brazil, Mexico and

The proposed purchase is subject to a number of conditions,
including regulatory approval and approval under the bankruptcy

PSINet expects that its operations in Argentina, Brazil, Mexico
and Uruguay will continue to operate in the normal course of
business, providing reliable services to its customers. PSINet's
operating subsidiaries in Latin America are not part of the
filing under Chapter 11 of the US Bankruptcy Code.

PSINet is considering strategic alternatives for its operations
in Chile and is in discussions with a potential purchaser group.
No assurance can be given that those discussions will result in
a sale of PSINet's Chilean operations.

Headquartered in Ashburn, Va., PSINet Inc. is a leading provider
of Internet and IT solutions offering flex hosting solutions,
global eCommerce infrastructure, end-to-end IT solutions and a
full suite of retail and wholesale Internet services through
wholly-owned PSINet subsidiaries. Services are provided on
PSINet-owned and operated fiber, web hosting and switching
facilities, currently providing direct access in more than 900
metropolitan areas in 20 countries on five continents.

Cori Capital Partners, L.P. is a private equity vehicle
sponsored by Violy, Byorum & Partners Holdings, LLC, CDP Capital
International, a subsidiary of Caisse de depot et placement du
Quebec (CDP Capital), and Fenway Partners. The investment group
has retained Violy, Byorum & Partners Holdings, LLC, as its
exclusive financial advisor and Paul, Weiss, Rifkind, Wharton &
Garrison as legal counsel.

SAFETY-KLEEN: Dawson Realty Demands Payment of Real Estate Taxes
A.P. Dawson Realty Trust is the lessor of non-residential estate
located at 50A Brigham Street, Marlborough, Massachusetts,
currently occupied by Safety-Kleen Systems, Inc. The Debtor
Safety-Kleen Corp. has guaranteed all tenant obligations under
the lease of this property, which has been amended, modified and
extended a number of occasions and which is currently set to
expire in 2010.

Systems is required to pay real estate taxes due upon the leased
property, and this obligation is set forth in no less than three
sections of the lease. Dawson Realty has submitted invoices to
the Debtor for the real estate taxes due and payable upon the
leased property but Alden Pearlstein, Dawson Realty's trustee,
told Judge Walsh that the Debtor has consistently neglected,
failed and refused to pay those taxes. Dawson Realty's counsel
has corresponded with the Debtor's counsel, requesting the
Debtor to pay the amounts due under the Lease. Still, the Debtor
has not settled this obligation.

Dawson requested that Judge Walsh require the Debtors to
immediately pay to Dawson all postpetition real estate tax
charges, interest and expenses currently due and/or past due
with respect to the leased property. The real estate taxes for
the 2nd and 3rd quarters of fiscal year 2001 totaled $7,070.45.

Richard A. Sheils, Jr., at Bowditch & Dewey LLP, in
Massachusetts, told Judge Walsh that there is no question that
real property tax payment concerning the leased property is an
obligation of the Debtor under the lease. He pleaded that Dawson
has attempted to obtain payment of the taxes by the Debtor for
some time already and there appears no good faith rationale for
the Debtor's refusal to pay Dawson these amounts, consisting of
the due and past due real estate taxes, together with interests
and expenses and attorney's fees incurred by Dawson because of
the Debtor's refusal to pay the amounts due. (Safety-Kleen
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

SALIENT 3: Shares Now Trading On the OTC Bulletin Board
Salient 3 Communications, Inc., (OTC Bulletin Board: STCIA)
announced that effective Thursday, June 7, 2001, the Company's
Class A common stock was traded on the OTC Bulletin Board
(OTCBB) using the trading symbol STCIA. At the close of business
Wednesday, the Company was delisted from the Nasdaq National
Market System. The process of dissolution and liquidation has
resulted in a lower share price and a reduced volume of trading
of the Company's stock. Therefore, the Company expects that it
would fail to meet the listing requirements for the Nasdaq NMS
within a short time. The Company decided to make the transition
now, so it could be done in an orderly fashion that would allow
investors to continue trading the Company's stock.

In accordance with recently implemented Regulation FD, Salient 3
will not respond to individual investor inquiries regarding the
timing, process or ultimate outcome of its liquidation process.
The Company will, however, issue announcements whenever material
events occur in its liquidation process that could have a
potential impact on its net assets in liquidation.

STAR TELECOM: Disconnects 28 Customers For Non-Payment
STAR Telecommunications Inc. announced that pursuant to the
terms and conditions of certain Carrier Service Agreements, it
has recently terminated service to 28 customers for failure to
make required payments under such agreements.

STAR is taking all actions necessary to collect the outstanding
payments owed to it under the Carrier Service Agreements. STAR
also announced that because of the terminations, it anticipates
its revenues will decrease accordingly.

STAR filed a voluntary petition for U.S. Bankruptcy Code Chapter
11 bankruptcy protection on March 13, 2001. Trading in STAR's
stock was halted by Nasdaq on March 13, 2001 in accordance with
Marketplace Rule 4450(f), pending receipt and review of
additional information requested by the staff.

On March 27, 2001, STAR requested that Nasdaq terminate the
designation of its securities as Nasdaq National Market
securities and requested that the staff delist its securities at
the earliest practicable date, in accordance with Marketplace
Rule 4480(b). STAR's securities were subsequently delisted by
Nasdaq on April 4, 2001. Trading in STAR's stock is extremely

                About STAR Telecommunications

STAR Telecommunications provides global telecommunications
services to consumers and long distance carriers. STAR provides
international and national long distance services, international
private line, dial around services and international toll-free

TELIGENT INC.: Shares Knocked-Off the Nasdaq Market
Teligent, Inc. (NASDAQ:TGNQE), a provider of broadband
communications services, announced that the company's securities
were delisted from the Nasdaq National Market at the opening of
business on June 8, 2001.

The decision, made jointly by Teligent and Nasdaq, follows
Teligent's voluntary filing for Chapter 11 bankruptcy protection
on May 21, 2001.

The trading of Teligent's stock was halted by Nasdaq on May 11,
2001, at 9:03 a.m. Eastern Time, at the last trading price of

                      About Teligent

Based in Vienna, Virginia, Teligent, Inc. is a provider in
broadband communications offering business customers local, long
distance, high-speed data and dedicated Internet services over
its digital SmartWave? local networks in major markets
throughout the United States.
The company is working with international partners to provide
broadband communications services in Europe, Asia and Latin
America. Teligent's offerings of regulated services are subject
to all applicable regulatory and tariff approvals.
For more information, visit the Teligent website at:

Teligent is a registered trademark of Teligent, Inc. SmartWave
is an exclusive trademark of Teligent, Inc.

WESTPOINT STEVENS: Moody's Reviews Debt Ratings for Downgrade
Moody's Investors Service placed the long-term debt ratings of
WestPoint Stevens, Inc. on review for downgrade. Approximately
$1 billion of debt is affected.

Affected ratings include:

      * $525 million issue of 7.875% senior unsecured notes due
         2005, rated Caa2

      * $475 million issue of 7.875% senior unsecured notes due
         2008, rated Caa2

      * senior implied rating at Caa1

      * issuer rating at Caa2

Moody's said that the review is prompted by the rating agency's
concerns about the company's liquidity position considering the
very weak retail environment, the approach of the company's
traditional peak borrowing season, and the upcoming $39 million
bond interest payment due June 15th. In addition, the possible
downgrade also reflects the mandatory $25 million principal
reduction on the senior credit facility on August 1st, and the
company's negative cash generation in the first quarter. Based
upon the current retail environment, Moody's said it expects
that the second quarter will also be weak.

Based in West Point, Georgia, WestPoint Stevens Inc. is a
vertically integrated, manufacturer and marketer of bed linens,
towels, blankets, comforters, and accessories that are sold
across multiple price points through each major retail
distribution channel.

WHEELING-PITTSBURGH: Enters Into MetalWorks Consignment Pact
Wheeling-Pittsburgh Steel Company asked Judge Bodoh to permit it
to enter into a Consignment Agreement with MetalWorks LP in
order to establish a consignment arrangement for delivery and
use of certain roofing shingles and accessories in order to
ensure the continued supply of products to Wheeling Corrugating
Company division, an affiliate of WPSC.

WCC is a fabricator of roll-formed products for agricultural,
construction, highway and bridge-building markets. In the
ordinary course of its business, WCC obtains roofing shingles
and accessories from MetalWorks, which manufactures these
products, and sells the products to its customers, including
lumber yards, roofing contractors, and roofing distribution
centers. Until mid-November 2000, WCC and MetalWorks transacted
for the supply of the products through traditional sale
arrangements. However, in an effort to better match WCC 's
inventory needs with market demand and to reduce related
shipping and freight costs associated with the delivery of the
products to WCC, commencing December 9, 2000, WCC and MetalWorks
have conducted these transactions on a consignment basis whereby
MetalWorks retains title to the products that are delivered to
WCC until they are used by WCC. In order to memorialize this
revised supply arrangement, WCC and MetalWorks have negotiated
the Agreement. WPSC now seeks the Court's approval of the
agreement, and authorization for WCC to perform under the terms
and conditions of the arrangement.

The central provisions of the Consignment Agreement are:

      (a) Delivery and acceptance: MetalWorks will delivery such
quantities of the products, in full truckloads, based on the
then- current inventory of WCC and the market demand for such

      (b) Storage: WCC will store the products under roof in a
safe storage area, and assume responsibility for the products'

      (c) Pricing terms: The price for the products, including
freight charges, will be as set forth in a blanket purchase
order. MetalWorks will be responsible for actual payment of
freight charges;

      (d) Invoice and payment: MetalWorks will invoice WCC for
products purchased by WCC semi-monthly, within ten days of
taking physical inventory of the products by WCC. Payments are
due from WCC to MetalWorks within 30 days of the receipt of the
invoice. "Purchase" is deemed to have occurred upon the shipment
by WCC of products to its customers;

      (e) Ownership: MetalWorks will maintain ownership of the
products until the products are purchased by UCC's customers.
MetalWorks may file protective U.C.C. Rep. Serv.-1 financing
statements for the products delivered to WCC, but not purchased
thereby; provided that the filing of such financing statements
will not be intended to create any security interest in and to
the products or the proceeds of the products;

      (f) Insurance: WCC will insure the products stored at its
facilities against fire and theft, up to $300,000;

      (g) Indemnity: MetalWorks will indemnify and hold WCC
harmless from and against any and all claims and costs for
personal injuries, bodily injuries, death or property damage
arising out of or relating to the performance of the Agreement.
The Agreement does not require WCC to indemnify MetalWorks.

The Debtor told Judge Bodoh that, because the Agreement does not
obligate WCC to purchase any quantity of the products, the risk
associated with the Agreement is negligible. Moreover, the terms
and conditions contained in the Agreement are typical of similar
agreements employed by purchasers and suppliers of goods such as
the products, and the Debtor assured Judge Bodoh that the terms
are reasonable. WPSC further told Judge Bodoh that counsel for
the Debtors' postpetition lenders have approved the form and
substance of the Agreement, and have consented to WCC's
performance under the Agreement. (Wheeling-Pittsburgh Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-

WORLD ACCESS: I-Link Completes Purchase Of Long Distance Assets
I-Link Incorporated (Nasdaq:ILNK) announced that it has
completed its acquisition of substantially all of the assets of
the retail long distance business of WorldxChange
Communications, Inc., as part of a court supervised sale in the
bankruptcy proceedings of World Access, Inc.

I-Link paid $13 million for these assets, which include retail
accounts receivable of approximately $13 million as well as the
right to retain the first $2.7 million of proceeds realized from
the collection of wholesale accounts receivable.

Counsel Corporation (TSE:CXS.)(Nasdaq:CXSN), the majority
stockholder of I-Link, has agreed to provide a secured loan to
I-Link of $15 million, of which $13 million was utilized to fund
the acquisition. The loan bears interest at 10% per annum and
matures in one year, and I-Link has agreed to issue Counsel
warrants to purchase 5 million shares of common stock at an
exercise price of $0.60 per share, plus additional warrants to
purchase 5 million shares at $0.60 per share if the loan is not
repaid within three months and 5 million shares at $0.60 if the
loan is not repaid within six months. The terms of the loan were
approved by an independent committee of the board of I-Link, who
were advised by Kaufman Brothers. I-Link intends to refinance
the Counsel loan as soon as possible, utilizing the acquired
assets as collateral.

I-Link has commenced operating its newly acquired 10XXX "dial
around" business under a substantially reduced cost structure
and expects to realize significant additional cost reductions,
in part through the modification of agreements with principal
equipment vendors and service providers, resulting in enhanced
cash flow and earnings. I-Link will continue to acquire and
aggregate additional 10XXX revenue streams to its existing dial-
around platform of approximately US$70 million of annualized
revenues with approximately 300,000 retail subscribers.

"We are delighted to have completed this acquisition on
exceptionally advantageous terms," said Gary Wasserson,
President and CEO of I-Link. "By structuring the transaction as
an asset purchase, we have been able to leave behind the legacy
issues that were plaguing WorldxChange, with the result that I-
Link has acquired a very strong core business that it can
operate profitably. In addition, this presents a significant
opportunity to rapidly expand and entrench our customer base by
offering access to I-Link's technologically superior products
and services."

                       About I-Link

Headquartered in Draper, Utah, I-Link (Nasdaq: ILNK - news) is
an enhanced voice/data service provider. With its software-
defined network architecture, I-Link simplifies the delivery of
unified communications today. I-Link offers a full range of
enhanced services such as one-number call routing; caller
screening; unified voice, fax, pager and e-mail messaging;
voice-and fax-on-demand; conference calling; and seamless call
transfer from cell phone to land-line and vice versa via a
direct connection to its nationally deployed Internet Protocol
telephony network. I-Link's open API-programming platform for
enhanced IP communications, Gatelink, uses softswitch technology
to rapidly create and deploy IP-based, enhanced communications
services with less expense and complexity. For further
information, visit I-Link's website at

ZANY BRAINY: Hilco Capital Extends $15 Million DIP Loan
Theodore L. Koenig, President and Chief Executive Officer of
Hilco Capital LP, announced the completion and funding of a $15
million junior credit participation for Zany Brainy, Inc.
(Nasdaq: ZANY) in the new $115 million debtor-in-possession
credit facility led and agented by Wells Fargo Retail Finance,
LLC. Zany Brainy, based in King of Prussia, PA, filed for
Chapter 11 bankruptcy protection in Delaware three weeks ago.
Zany Brainy is the leading specialty retailer of high quality
toys, games, books and multimedia products for children in the

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. Zany Brainy currently operates 187 stores
in 34 states. Net sales for its most recently completed fiscal
year, February 3, 2001, amounted to $400.4 million.

Mr. Koenig said, We are very pleased that we could provide
additional capital to assist Zany Brainy in restructuring its
operations. We firmly believe in the Zany Brainy concept and
have structured our facility to provide management with the
liquidity necessary to complete their strategic plan.

Thomas G. Vellios, President and Chief Executive Officer of Zany
Brainy stated, We are very pleased with our new credit facility.
It will provide us with the liquidity necessary to improve our
operations and financial performance. We look forward to working
with our bank group and count Hilco Capital as one of our key
strategic partners.

Hilco Capital LP is an investment fund specializing in providing
junior secured debt, tranche B debt and senior bridge financing
throughout North America. Hilco Capital focuses on a broad
cross-section of manufacturers, distributors, service providers
and retailers. Hilco Capital prides itself on its flexible
investment approach, its ability to execute difficult or complex
transactions and its ability to close and fund transactions
quickly. To learn more about Hilco Capital, visit

BOND PRICING: For the week of June 11 - 15, 2001
Following are indicated prices for selected issues:

Algoma Steel 12 3/4 '05            15 - 18 (f)
Amresco 9 7/8 '05                  57 - 59
Arch Communications 12 3/4 '05     12 - 15 (f)
Asia Pulp & Paper 11 3/4 '05       20 - 22 (f)
Chiquita 9 5/8 '04                 66 - 69
Friendly Ice Cream 10 1/2 '07      53 - 56
Globalstar 11 3/8 '04               6 - 7 (f)
Level III 9 1/8 '04                60 - 62
PSINet 11 '09                       8 - 10 (f)
Revlon 8 5/8 '08                   52 - 54
Trump AC 11 1/4 '06                66 - 68
Weirton Steel 10 3/4 '05           44 - 46
Westpoint Stevens 7 3/4 '05        50 - 52
Xerox 5 1/4 '03                    84 - 86


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

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

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

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


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

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

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
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                      *** End of Transmission ***