TCR_Public/010619.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

              Tuesday, June 19, 2001, Vol. 5, No. 119

                             Headlines

360NETWORKS: Will Not Make Scheduled Bond Interest Payment
360NETWORKS: Moody's Cuts Senior Unsecured Debt Rating to Ca
BLUE ZONE: Nasdaq Notifies Of Additional Deficiency
BULL RUN: Bank Waiver Period Extended To July 16
BULONG OPERATIONS: S&P Withdraws Senior Secured Note's D Rating

CALIBER LEARNING: Files Chapter 11 Petition in Maryland
CALIBER LEARNING: Chapter 11 Case Summary
CALIBER LEARNING: Sylvan Learning Stung by Bankruptcy Filing
CAPITAL ENV'L: Lenders Agree To Waive Senior Debt Default
CENTAUR MINING: S&P Downgrades Ratings to D Following Default

CLARIDGE HOTEL: Fox Rothschild Applies for $178,000 Bonus
COMDISCO INC.: Quiet on Chapter 11 Rumors
CONTINENTAL INVESTMENT: Seeks Shareholder Approval to Liquidate
DYNAMIC HEALTHCARE: Board Approves 1-for-3 Reverse Stock Split
DYLEX LTD.: Forced into Bankruptcy by Creditors

EGLOBE INC.: Obtains Final Court Nod For $2 Million DIP Loan
EQUUS GAMING: Says Unit Will Not Pay Due Interest on $68MM Notes
FINE AIR: Judge Cristol to Examine Executive's Jet Commute
FINOVA GROUP: Stipulation With ABN AMRO Bank re Retention Plan
FIRSTWAVE TECHNOLOGIES: Securities Subject To Nasdaq Delisting

FRIEDE GOLDMAN: Signs Master Shipyard Pact With Noble Drilling
GULFMARK: BB- Ratings Remain On Watch With Negative Implications
HAMILTON BANCORP: Fitch Cuts Long-Term Ratings, Outlook Negative
HENLEY HEALTHCARE: Bank Forecloses & Sells Sugar Land Facilities
INTEGRATED HEALTH: Agrees To Allow 23 More Tardy Proofs Of Claim

JORE CORP.: Perkins Coie Says "Locality Rule" Not Applicable
KITTY HAWK: Bank Group Says Don't Value Our Collateral
LIGHTNING ROD: Shares Face NASDAQ Delisting
LTV CORP.: C&K & Enviroserve Move To Initiate Rule 2004 Exams
LTV: USWA & Creditors To Avert Shutdown of Cleveland Facility

MALIBU ENTERTAINMENT: Lender Agrees To Extend Forbearance Period
MERRY-GO-ROUND: Trustee Settling Preference Claims for Pennies
NATIONAL AIRLINES: Talking To Second Party On Possible Bailout
NORTHSTAR CBO: S&P Lowers Rating On Class A-2 Notes To CCC-
OWENS CORNING: Reaches Standstill Agreement With Credit Suisse

PAKISTAN INVESTMENT: Executing Plan of Liquidation & Dissolution
PEERCE'S PLANTATION: Bankrupt Restaurant Sold for $1.91 Million
PLAY-BY-PLAY: Posts $6.7 Million Net Loss For Third Quarter 2001
PSINET INC.: Retains Nixon Peabody As Special Corporate Counsel
RELIANCE GROUP: Employs Debevoise & Plimpton As Lead Counsel

RITE AID: S&P Rates Proposed $200MM Senior Unsecured Notes at B-
SALON MEDIA: Appeals Nasdaq's Move To Delist Shares
TOWER AIR: Those Insurance Proceeds are Ours, FINOVA Says
VLASIC FOODS: Files Skeletal Joint Plan of Distribution
W.R. GRACE: APD Committee Taps Bilzin Sumberg As Lead Counsel

WARNACO GROUP: Sidley Austin Serving as Bankruptcy Counsel
WASHINGTON GROUP: UST Balks at Modified Consolidated Schedules
WASHINGTON GROUP: Judge to Appoint Examiner in Bankruptcy Case
WHEELING-PITTSBURGH: Court Okays Mono Sales & Security Agreement
WINSTAR COMM: Committee Seeks to Retain Cadwalader as Counsel

                             *********

360NETWORKS: Will Not Make Scheduled Bond Interest Payment
----------------------------------------------------------
360networks (NASDAQ: TSIX and TSE: TSX) will not make a US $10.9
million interest payment on its 12.5% Senior Notes. Under the
terms of the debt, 360networks has another 30 days to make the
payment in order to avoid default consequences under the Notes.

The company is not making this payment to preserve cash as it
reviews its options. Last month, 360networks announced it was in
discussions with current shareholders and others to resolve its
funding issue. As these discussions have not been successfully
concluded, the company is now concentrating its efforts on other
alternatives, including restructuring.

360networks has retained Lazard Freres to assist the company in
this process.

                      About 360networks

360networks (NASDAQ: TSIX and TSE: TSX) offers network services
to telecommunications and data-centric organizations.
360networks is developing one of the largest and most
technologically advanced fiber optic mesh networks in the world.
By early 2002, the planned network will span approximately
140,000 kilometers (86,000 miles) and link approximately 100
major cities in North America, Europe, South America and Asia
with terrestrial routes, undersea cable systems and network
capacity.


360NETWORKS: Moody's Cuts Senior Unsecured Debt Rating to Ca
------------------------------------------------------------
Moody's Investors Service lowered the senior unsecured debt
rating of 360networks, Inc. to Ca from Caa3.

Moody's said that the downgrade follows the company's
announcement that it will not make a June 15, 2001, US$10.9
million interest payment on its 12.5% senior notes. Last month
360networks reportedly met with shareholders in order to resolve
its funding issue, but the discussions have not been
successfully concluded. 360Networks is now concentrating its
efforts on other alternatives, including restructuring, Moody's
stated.

Other ratings downgraded are as follows:

      * senior secured downgraded to Caa3 from Caa2
      * senior implied ratings to Caa3 from Caa2
      * issuer rating to Ca from Caa3.

Outlook remains negative while approximately $2.6 billion of
debt securities are affected.


BLUE ZONE: Nasdaq Notifies Of Additional Deficiency
---------------------------------------------------
Blue Zone, Inc. (Nasdaq: BLZN), the interactive broadcast
solutions company, received a Notification of Additional
Deficiency from the Nasdaq Stock Market stating that the Company
does not currently comply with the net tangible assets/market
capitalization/net income requirement set forth in Nasdaq
Marketplace Rule 4310c(2)(B). In its notice to the Company,
Nasdaq informed Blue Zone that it had failed to maintain net
tangible assets of $2 million, market capitalization of $35
million, or net income of $500,000 in the most recently
completed fiscal year.

On May 25, 2001 the Company disclosed that it had received a
Staff Determination as a result of its bid price deficiency. The
Company has filed an appeal and has been granted a hearing
before the Nasdaq Listing Qualifications Panel to review the
Staff Determination discussed in Blue Zone's May 25, 2001
release and to present the Company's plan to regain compliance
for continued listing. This additional deficiency will also be
considered at the Company's hearing. Until the Panel reaches its
decision, Blue Zone's common stock will remain listed and will
continue to trade on the Nasdaq Smallcap Market. There can be no
assurance that the Panel will grant the Company's request for
continued listing. In the event the Panel determines to delist
the Company's common stock, the Company's common stock may
continue to trade on the OTC Bulletin Board's electronic
quotation system.

                      About Blue Zone

Blue Zone makes you interactive. A leading developer of
convergence applications, Blue Zone has delivered solutions for
interactivity for more than ten years. The company's MediaBZ
software is the definitive content management and convergence
publishing solution, enabling you to efficiently aggregate,
create, manage and cross-publish interactive content to multiple
platforms from a user-friendly, browser-based interface. Blue
Zone's clients - including Canada's number-one news organization
CTV - use MediaBZ to unite and enhance video, audio, Web and
print content, together with interactive elements such as links,
quizzes, polls, message boards, advertising and e- commerce -
delivering deep, rich content. With MediaBZ, content is authored
once and published simultaneously to the Web, personal digital
assistants (PDA's), traditional television, interactive
television on multiple middleware platforms, cell phones and
other Web-enabled devices. Convergence is here www.bluezone.net.


BULL RUN: Bank Waiver Period Extended To July 16
------------------------------------------------
Bull Run Corporation (Nasdaq: BULL) announced that its bank
lenders have agreed to extend its waiver of all existing events
of default under Bull Run's bank credit facility from June 15,
2001 to July 16, 2001 in order to provide adequate time for the
Company and its lenders to complete an amendment to the
Company's bank credit facility. The amendment is also expected
to extend the facility's maturity date. The Company expects to
execute the amendment within the period of the waiver.


BULONG OPERATIONS: S&P Withdraws Senior Secured Note's D Rating
---------------------------------------------------------------
Standard & Poor's withdrew its rating on Bulong Operations Pty.
Ltd.'s (BOP) US$185 million senior secured fixed-rate notes due
in 2008 at the request of BOP's management.

The rating was 'D', following the company's default on the
interest payment to noteholders on June 15, 2000. BOP has been
finalizing a restructure of debt and recapitalization with its
lenders, but this is taking longer than originally expected.
Based in Australia, BOP and its wholly owned subsidiary, Bulong
Nickel Pty. Ltd. (BNP), own the Bulong nickel cobalt project,
located east of Kalgoorlie, Western Australia. The project,
which achieved practical completion in December 1998, has
suffered from commissioning and ramp-up delays. Ramp-up to
steady-state operations, which are required to establish long-
run operating costs and performance, is not expected until at
least the end of 2001.

BOP was tightly financed before the default, relying on cash
flows from operations to meet costs during start-up. Initial
problems delayed revenue and quickly depleted available cash
reserves. BOP's weak unrated parent, Preston Resources Ltd., was
unable to provide much-needed liquidity support at that time.
Initial cash shortfalls were topped up using debt, increasing
the cash flow burden on BOP. Later efforts to raise additional
equity were unsuccessful. The project fell into a cash flow
spiral: with revenues delayed, the project was starved of cash,
which in turn delayed rectification works needed to fix design
problems and improve revenue generation.

The project incorporates the following risks: Exposure to
volatile nickel and cobalt prices and exchange rates, which may
be increased through out-of-the-market hedge contracts. The
plant uses complex processing with pressure acid leach
technology. The risks of this technology are compounded by the
fact that the plant is designed primarily as a single-process
train with one autoclave. The level of contracted cost cover for
key inputs of mining, sulfuric acid, and power is short-term.
Both BOP and BNP have been restructured as special-purpose
entities following their acquisition by Preston Nickel Holdings
Pty. Ltd. (PNH, not rated) on Nov. 5, 1998. These two entities,
however, may remain exposed to liabilities relating to past
activities, and are currently subject to litigation. This has
been mitigated by extensive legal due diligence and warranties
by the previous owner of BOP and BNP, Resolute Ltd. (not rated).

The project has the following strengths: The geology is well-
tested, with reserves substantially above bond requirements.
Mining is simple, with high-grade ore scheduled to be mined
early in the mine's life and covering the term of the notes. The
mine is located near a significant mining center, close to all
required infrastructure. Although there are some concerns about
water quality, this is not expected to cause any substantial
problems. A sales contract that covers off-grade production in
initial years.

Although Standard & Poor's has not been provided with copies of
the proposed restructured finance documents or revised project
cash flows, it expects that after the restructure the project
will be substantially weaker than when originally rated in
December 1998. This results from our expectations, based on
publicly available data, of the final structure of the notes,
which includes: Significantly higher debt with an increased
working-capital facility, the capitalization of two interest
payments on the bonds totaling US$12 million, and increased
liability on currency and commodity hedges; Weaker structural
protections, which are expected to include the removal of the
debt service reserve (DSR) account, and proceeds of the sweep
account to be directed to reduce hedge positions rather than
debt service; Higher operating and interest costs than forecast
at the time of the initial rating that include default interest
rates on missed payments; A restructured maturity profile
designed to reduce refinance risk and accommodate increased
debt, which reduces the certainty of the timing of debt
reduction; Increased operating risk as the default will make it
more difficult for BOP to enter into competitive long-term
contracts for consumables and services without additional
support; and A weaker competitive position due to increased
costs and the inability to expand plant to achieve better
economies of scale.

In consideration for agreeing to the restructure, it is expected
that noteholders will acquire 95% of the equity in BOP, either
directly or indirectly. The transfer of equity will require the
approval of Preston Resources' shareholders. Standard & Poor's
ascribes little additional value to this security as dividend
flows are expected to be low.


CALIBER LEARNING: Files Chapter 11 Petition in Maryland
-------------------------------------------------------
Caliber Learning Network (Nasdaq: CLBR) voluntarily filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in
Baltimore, Maryland. The Company also announced that it has
entered into a debtor-in-possession (DIP) facility, in the form
of a loan by Sylvan Learning Systems, Inc. to Caliber for
purposes of working capital, which is subject to court approval.
The company previously said it will focus its efforts on
supplying software and services for broadband delivery of
corporate communications and training as it restructures.

We are committed to providing our Internet customers with high
quality, reliable service as we look to restructure for long-
term viability. These actions provide us with the flexibility to
explore all strategic alternatives including the sale of the
Company as a going concern, as well as the viability of a stand-
alone reorganization, stated Glen Marder, Caliber's interim CEO.
The Company is also working to assist its customers impacted by
the closure of the training facilities business, by helping them
transition to other classroom delivery alternatives or through
conversion to Caliber Internet-based delivery.

Caliber also announced the following changes to its Board.
Effective immediately, the following members have resigned their
positions: Douglas Becker, Chris Hoehn-Saric, Robert Burr and
Chris Nguyen. Ed Mullen has opted not to renew after his current
term expires.

            About Caliber Learning Network, Inc.

Caliber (Nasdaq: CLBR) is a leading provider of eLearning
infrastructure for strategic corporate initiatives. Its
interactive eLearning is delivered either live or OnDemand
directly to individual workstations, anytime, anywhere through
Caliber's Enterprise Learning Platform. Caliber enables Global
2000 companies to increase the reach and reduce the cost of
traditional training programs through a host of services,
including Internet, Intranet and portable media. For more
information, visit www.caliber.com.


CALIBER LEARNING: Chapter 11 Case Summary
-----------------------------------------
Debtor: Caliber Learning Network, Inc.
         502 South Exeter Street
         Suite 400
         Baltimore, MD 21202

Chapter 11 Petition Date: June 15, 2001

Court: District of Maryland (Baltimore)

Bankruptcy Case No.: 01-59533

Judge: James F. Schneider

Debtor's Counsel: Joel I. Sher, Esq.
                   Shapiro Sher and Guinot
                   36 S. Charles St., Fl. 20
                   Baltimore, MD 21201
                   410-385-0202


CALIBER LEARNING: Sylvan Learning Stung by Bankruptcy Filing
------------------------------------------------------------
Sylvan Learning Systems, Inc. (NASDAQ:SLVN) said it would take a
non-operating pre-tax charge of approximately $14 million
against second quarter 2001 earnings due to certain unpaid
obligations and costs related to Caliber Learning Network, in
which Sylvan is both an investor and a creditor, as a result of
Caliber's Chapter 11 bankruptcy filing.

The second quarter charge, which is subject to adjustment once
final costs are calculated, includes reserves for notes payable
to Sylvan by Caliber and lease obligations guaranteed by Sylvan.
Sylvan will also make available a debtor-in-possession (DIP)
facility, in the form of a secured loan by Sylvan to Caliber for
purposes of working capital, which is subject to court approval.

Sylvan also reiterated its revenue and earnings guidance for
2001. Sylvan expects 2001 revenues of $475 to $490 million, an
increase of more than 50% over 2000 revenues. Operating income
for 2001 is projected to grow more than 75% over 2000, to $46 to
$48 million with earnings per share of $.63 to $.65, excluding
Sylvan Ventures and the announced Caliber charges.

"As a minority shareholder in Caliber, Sylvan Learning Systems
is disappointed, but understands Caliber's decision to file for
Chapter 11 bankruptcy protection," said Douglas Becker, Sylvan's
Chairman and CEO. "We expect that these charges against our
earnings, and our offer of modest DIP financing to Caliber, will
conclude our financial involvement with Caliber. At this time,
we do not anticipate investing or lending any additional funds
to Caliber."

Sylvan also confirmed that Becker and Sylvan Ventures Chairman
and CEO R. Christopher Hoehn-Saric had both resigned from the
Caliber board of directors, effective immediately.

Sylvan's investment arm, Sylvan Ventures LLC, has approximately
a 34% interest in Caliber Learning Network.

             About Sylvan Learning Systems, Inc.

Sylvan Learning Systems, Inc. (www.sylvan.net) builds market-
leading learning networks on a global scale. Sylvan provides
courses to adult students throughout the world in the areas of
English language, teacher training and accredited university
offerings through the Wall Street Institute, Canter and
Associates, and Sylvan International Universities subsidiaries.

The Sylvan Learning Centers and Sylvan Education Services
divisions provides personalized instruction services to K-12
students through direct consumer relationships and under
contract to school systems.


CAPITAL ENV'L: Lenders Agree To Waive Senior Debt Default
---------------------------------------------------------
As previously announced, Capital Environmental Resource Inc.
(Nasdaq: CERI) is in breach of the obligation under its senior
debt facilities to raise cash proceeds from the issuance of
equity securities or subordinated debt. In conjunction with the
sale of the Company's United States assets, the senior lenders
agreed not to take action with respect to such default provided
that the Company refinanced the senior debt or raised $16
million from the issuance of equity or subordinated debt prior
to June 15, 2001. The Company is currently in discussions with
respect to such transactions and with its senior lenders with
respect to a waiver of the existing default and a further
amendment to its senior debt facilities. Pending receipt of a
waiver or execution of an amendment, the Company continues to
include the full amount of its outstanding senior debt in the
current portion of its long-term debt.

Capital Environmental Resource Inc. is a regional integrated
solid waste services company that provides collection, transfer,
disposal and recycling services in markets in Canada. The
Company's web site is http://www.capitalenvironmental.com.


CENTAUR MINING: S&P Downgrades Ratings to D Following Default
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Centaur
Mining & Exploration Ltd. (in receivership) to 'D' from double-
'C'. In addition, Centaur's rating on its US$225 million senior
secured fixed-rate notes due 2007 has been lowered to 'D' from
double-'C', following Centaur's US$12.5 million interest payment
default due to noteholders on June 15, 2001.

"The problems facing Centaur illustrate the need for adequate
cash reserves for start-up projects using unproven technology or
an innovative design," said Mr. Peter Stephens, associate
director, Corporate & Infrastructure Finance Ratings at Standard
& Poor's.

"Like most projects of this nature, Centaur's Cawse nickel
project was tightly financed, relying on cash flows from the
company's existing gold operations and ramp-up production to
meet costs overruns during start-up. Initial cost overruns and
production problems at Cawse, in conjunction with the
underperformance of the company's gold operations, delayed cash
flow and quickly depleted available cash reserves. Centaur's
further attempts to raise additional capital were unsuccessful
and a receiver and manager was appointed in May 2001."

The ratings were lowered progressively to double-'C' and were
again placed on CreditWatch with negative implications on Feb.
22, 2001, after Centaur failed to replenish its debt service
reserve account relating to its US$225 million senior secured
notes. The rated notes technically defaulted when Centaur failed
to replenish the debt service reserve account within the 30-day
grace period, and payment default was triggered on June 15,
2001, when interest on the bonds was not paid, Standard & Poor's
said.


CLARIDGE HOTEL: Fox Rothschild Applies for $178,000 Bonus
---------------------------------------------------------
Fox, Rothschild, O'Brien & Frankel, LLP, served as counsel to
the Official Secured Noteholders' Committee appointed in the
1999 chapter 11 cases commenced by The Claridge Hotel and Casino
Corporation, The Claridge at Park Place, Incorporated, and
Atlantic City Boardwalk Associates, in the U.S. Bankruptcy Court
for the District of New Jersey.  Fox Rothschild applies to Judge
Wizmur for allowance of its final $890,000 fee application and a
$178,000 fee enhancement pursuant to 11 U.S.C. Sec.
503(b)(3)(D).

The cases involved the restructuring of $132.5 million in assets
and $159 million of debt. There were four major players: (i) the
Debtors; (ii) trade creditors owed $3.5 million; (iii) Carl
Ichan, owning 40-45% of Claridge's 11-3/4% First Mortgage Notes
due 2002; and (iv) the Official Noteholders' Committee
representing the non-Ichan Noteholders. The Debtors proposed a
stand-alone plan valued the Casino at $40 million and provided
for the transfer of ownership from then-existing equity to the
Noteholders and full repayment over a couple of years. Mr. Ichan
supported that plan, as he would emerge as the controlling
shareholder of the reorganized company. At the time that Ichan-
supported stand-alone plan was proposed, the Notes traded at 50
cents-on-the-dollar.

The Noteholders Committee came onto the scene, opposed the
stand-alone plan, secured a $78 million appraisal of the Casino
from PricewaterhouseCoopers and convinced the key players to
open the process up to third-party bidding.  The Noteholders
Committee brought Park Place Entertainment Corporation to the
table.  Park Place inked a deal to buy the Casino.  That
transaction became the cornerstone of a Second, Third and Fourth
Amended Plan, which was ultimately confirmed, and will deliver
more than an 80% recovery to the Noteholders as well as a 61%
distribution to unsecured creditors.

Fox Rothschild's legal services played a key role in delivering
more than $30 million of additional value to creditors over what
the stand-alone plan provided. A 20% fee enhancement is
warranted, Michael J. Viscount, Jr., Esq., argues, based on the
Firm's "extraordinary efforts in the face of substantial
opposition during most of the case [and] the exceptional result
that was obtained in the case which far exceeded the reasonable
expectations of the parties going in."


COMDISCO INC.: Quiet on Chapter 11 Rumors
-----------------------------------------
Comdisco Inc. officials declined comment Wednesday on published
reports that it is considering filing for chapter 11 bankruptcy
protection from creditors, according to the Chicago Daily
Herald. The Rosemont-based technology company said in April that
it is reviewing its strategic business plan and officials still
are working on that review.

The Financial Times reported last week that Comdisco is
considering chapter 11 as part of a plan for GE Capital to take
over Comdisco's $5 billion leasing portfolio. Comdisco's price
closed at $1.37 Wednesday, up from a 52-week low of $1.09, but
well off from the 12-month high of $33.50. In May, Comdisco
posted a $54 million loss for its second quarter compared to net
earnings of $43 million a year earlier. The company blamed the
losses on the poor performance of its Comdisco Ventures
investment division and continued write-offs for Network
Services and Prism Communications. (ABI World, June 15, 2001)


CONTINENTAL INVESTMENT: Seeks Shareholder Approval to Liquidate
---------------------------------------------------------------
Continental Investment Corporation (Pink Sheets: CONI),
headquartered in Dallas, announced that it is asking its
shareholders to approve Management's proposal for the
liquidation and dissolution of the Company.

The proposal would include selling off substantially all of the
Company's assets, including its two operating subsidiaries. Upon
shareholder and Bankruptcy Court approval, current Management
will resign and a Disbursing Agent will be appointed to wind up
the Company's operations and address all post-liquidation legal
and reporting issues.

The shareholders will be furnished a ballot and voting proxy for
a special meeting on July 3, 2001, together with a copy of a
Disclosure Document filed with the Bankruptcy Court for a
hearing to close the Company's Chapter 11 proceeding.

The Company cites misconduct by past management resulting in
overwhelming legal issues, SEC reporting deficiencies and
current Management's desire to preserve the assets of the
Company for the benefit of shareholders as the primary reasons
for the liquidation. The Company will continue to pursue various
litigation claims brought by the Company while in the
liquidation process.


DYNAMIC HEALTHCARE: Board Approves 1-for-3 Reverse Stock Split
--------------------------------------------------------------
Dynamic Healthcare Technologies, Inc. (Nasdaq:DHTI) announced
that its Board of Directors has approved a one-for-three reverse
stock split of the Company's common stock. Authority to
implement the reverse stock split was obtained from Company's
shareholders at its annual meeting held on June 7, 2001. The
reverse stock split will reduce the number of shares of common
stock presently issued and outstanding from 19,428,142 shares to
approximately 6,476,048 shares, subject to increase to eliminate
fractional shares resulting from the reverse stock split. No
fractional shares of common stock will be issued in connection
with the reverse stock split. In instances where the reverse
stock split would result in a shareholder becoming the holder of
a fractional interest in a share of common stock, the number of
shares held by such shareholder will be rounded up to the
nearest whole share. The record date for the reverse stock split
will be the close of business on June 28, 2001. The reverse
stock split will be effective as of the close of the market on
June 28, 2001, and the Company's common stock will begin trading
on a post-split basis on June 29, 2001. Wells Fargo Bank
Minnesota, N.A. has been retained to effect the exchange of
certificates.

The reverse stock split is being implemented in order to meet
the Nasdaq Stock Market National Market System's ("Nasdaq-NMS")
maintenance standard that requires the Company to maintain at
least a $1.00 per share minimum closing price. The Company has
been given a deadline of June 29, 2001 to become compliant with
this minimum closing price requirement in order to maintain its
listing on this Nasdaq-NMS. If the Company does not become
compliant with this maintenance standard the common stock will
be delisted from the Nasdaq-NMS.

"We believe that it is in the best interests of our shareholders
to continue the listing of the Company's common stock on the
Nasdaq Stock Market National Market System," commented
Christopher Assif, Dynamic's chief executive officer. "We are
committed to moving the Company toward a trend of consistent and
profitable growth, and creating value for our shareholders. As a
result of increased focus on our core competencies in delivering
lab, radiology and pathology systems, we believe we have made
significant progress to that end" Assif added.

The Company anticipates that following reverse stock split, the
Company's common stock will trade at a price higher than the
$1.00 per share minimum closing price requirements thereby
satisfying Nasdaq's continued listing requirements. However,
there can be no assurance that, after the consummation of the
reverse stock split, the common stock will trade at three times
the market price prior to the reverse stock split or above the
$1.00 per share minimum closing price requirements. If the
Company is not able to maintain compliance with these listing
requirements, the common stock again may become subject to
delisting.

In accordance with the recapitalization plan approved by the
Company's shareholders, the authorized capital stock of the
Company will remain unchanged following the effective date of
the reverse stock split. The reverse stock split will result in
a proportional adjustment to the conversion rate at which the
outstanding Series C 8% Redeemable Convertible Preferred Stock
will be convertible into the Company's common stock.

Dynamic Healthcare Technologies makes diagnostic medicine
digital through its clinical and diagnostic workflow solutions
for pathology, laboratory, and radiology services in hospitals,
clinics, and ambulatory care settings. The company's systems are
installed in more than 640 client locations, including half of
the nation's "Best Hospitals" and 40% of the "Best Hospitals" in
cancer treatment as reported in US News and World Reports
magazine. Dynamic is expanding its reach even deeper into the
care process through Internet-based clinical connectivity and
application service provider capabilities marketed under the
name CoMed.


DYLEX LTD.: Forced into Bankruptcy by Creditors
-----------------------------------------------
Creditors of Dylex Ltd. alleged that the company owed them in
excess of $2.2 million. Thus, Dylex, a parent company of BiWay,
is being prodded into bankruptcy by three of its major
creditors, according to the Ottawa Business Journal.

Murray Page, the lawyer for the creditors, said that since the
suit was filed in Ontario, he had been contacted by other
creditors claiming they are owed money by the company. The debt
now totaled to approximately $10 million, he said.

Reportedly, Dylex was recently taken over by U.S. firm Hardof
Wolf Group Inc. for $70 million, which runs the Dollar Zone
stores. The latter plans to convert many of the 261 BiWay
locations into dollar stores.


EGLOBE INC.: Obtains Final Court Nod For $2 Million DIP Loan
------------------------------------------------------------
A bankruptcy court has granted eGlobe Inc. final authorization
to obtain up to $2 million of debtor-in-possession (DIP)
financing and to use post-petition cash collateral, according to
Dow Jones Newswires. U.S. District Judge Joseph J. Farnan Jr. of
the U.S. Bankruptcy Court in Wilmington, Del., signed the order
June 5. Special Investment Risks Ltd., an affiliate of pre-
petition secured creditor EXTL-Special Investment Risks LLC, has
agreed to fund up to $2 million, which eGlobe believes will
provide enough liquidity to manage and operate its business
during the chapter 11 case, pending the possible asset sales.

At the time of its April 18 chapter 11 bankruptcy filing, the
Internet service provider owed EXTL-Special Investment $15
million plus interest under pre-petition credit agreements, the
final order said. As reported, the lender agreed to disburse $1
million as a lump-sum payment upon entry of an interim order
April 20. The DIP loans will accrue interest at 12 percent
annually, and a $25,000 commitment fee was to be paid on the
date the financing agreement took effect. Eglobe listed
consolidated assets of $99.4 million and liabilities of $89.7
million as of Sept. 30, 2000, in its chapter 11 petition. (ABI
World, June 15, 2001)


EQUUS GAMING: Says Unit Will Not Pay Due Interest on $68MM Notes
----------------------------------------------------------------
El Comandante Capital Corporation (ECCC), a wholly owned
subsidiary of Housing Development Associates S.E., which in turn
is owned by Equus Gaming Company L.P., a Virginia limited
partnership, announced that it would not make the interest
payment on its mortgage notes in the principal amount of $68
million, secured by El Comandante Race Track. ECCC is exploring
ways to cure the interest default during the 30-day cure period
provided under the trust indenture securing the notes but to
date has been unable to arrange the necessary equity or debt
financing.

Equus Gaming Company (OTC Bulletin Board: EQUU) is a publicly
traded partnership with thoroughbred horse races and
entertainment interest in Latin America and the Caribbean.


FINE AIR: Judge Cristol to Examine Executive's Jet Commute
----------------------------------------------------------
The Honorable A. Jay Cristol will convene a hearing in Miami,
Florida, on  June 27, 2001, to consider an anonymous letter the
Court received from the  "Arrow Air Pilot Group" concerning
Frank Fine's use of a Fine Air Services Corp. Sabreliner
Business Jet to commute to work in Miami from his home in
West Palm Beach.

The full-text of the unsigned letter on Arrow Air stationery,
dated May 28, 2001, addressed to Judge Cristol reads:

      "The Arrow Pilot Group wishes to make known to this court
that Mr. Frank Fine and company commute to work via personal use
Sabreliner Business Jet between West Palm Beach and Miami. The
use of such extraordinary transportation is an unnecessary
expense to this bankrupt business.

      "In light of the fact that Fine Air Services has furloughed
Arrow Air and Fine Air pilots to reduce operating expenses, the
Arrow Air pilot group objects to the continued operation of this
non revenue producing jet which employs two non Arrow Air
pilots."

Luis Salazar, Esq., at Greenberg Traurig, representing Fine Air,
will be on the receiving end of who-knows-what from Judge
Cristol at the June 27 hearing.


FINOVA GROUP: Stipulation With ABN AMRO Bank re Retention Plan
--------------------------------------------------------------
ABN AMRO Bank N.V. is the Agent for Certain Lenders (the PLC
Lenders) to FINOVA Capital PLC as borrower, and FINOVA Capital
Corp. (FCC) as guarantor, pursuant to a Credit Agreement dated
as of July 7, 1997, as amended. The principal amount outstanding
under the Credit Agreement owed by PLC and FCC to the Agent and
the PLC Lenders is equal to an amount not less than $87,000,000,
plus certain interest, fees and unreimbursed costs and expenses,
including professional fees.

Pursuant to a stipulation approved by the Court on April 11,
2001, the Debtors are required to provide the Agent with 15
days' prior notice (i) if PLC is going to be funding any or all
of the Retention Programs and (ii) if any of the other Debtors
will fund any of the cost or expense of the Retention Programs
attributable to PLC and its employees.

Subsequent to a letter dated May 10, 2001 by way of which the
Debtors' counsel transmitted to the Agent's counsel a
spreadsheet reflecting the amounts attributable to the PLC
Employees for retention bonuses and severance, the Debtors and
the Agent have agreed to certain undertakings with respect to
the Employee Retention Plan Motion.

The parties agreed and stipulated that:

      (1) The PLC estate will be permitted to pay the PLC
Retention/Severance Amounts, up to a maximum amount of $558,866,
in the aggregate, attributable solely to PLC Employees who are
eligible to receive benefits under the Retention Programs, and
provided further, however, that such costs shall not exceed, per
PLC Employee by line-item, the amounts set forth in the
attachment to the May 10 Letter.

      (2) No funds of the PLC estate shall be used for, and the
PLC estate shall not be required to fund, directly or
indirectly, any of the costs of the Retention Programs
attributable to employees of the remaining Debtors who are
eligible to receive benefits under the Retention Programs.

      (3) No funds of the PLC estate were escrowed prepetition
with Security Title Agency, Inc. representing payments due to
six terminated executives, as described in the Employee
Retention Plan Motion.

      (4) The source of the Escrowed Funds was FCC and The FINOVA
Group Inc. (Finova Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


FIRSTWAVE TECHNOLOGIES: Securities Subject To Nasdaq Delisting
--------------------------------------------------------------
Firstwave Technologies, Inc., (Nasdaq: FSTW) received a Nasdaq
Staff Determination indicating that the Company fails to comply
with the minimum net tangible assets requirement for continued
listing set forth in Marketplace Rule 4450(a)(3), and that its
securities are subject to delisting from The Nasdaq National
Market. The Company believes this determination was primarily
based upon Nasdaq's extrapolation of First Quarter 2001 results.
Firstwave has filed a request to have a hearing before the
Nasdaq Listing Qualifications Panel to review the Staff
Determination and the company's plan to achieve compliance with
the listing requirements. The hearing is expected to be held
before the end of July. 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.

There are clear advantages to maintaining our Nasdaq National
Market listing, and we intend to appeal the Staff Determination
and demonstrate to the Panel that our plan for achieving and
maintaining compliance with Nasdaq listing standards is sound,
said Richard Brock, President and CEO of Firstwave. We will seek
to convince Nasdaq that, with our expected second quarter
results, recent expense reductions, and additional funding we
are seeking, Firstwave expects to more than satisfy the Nasdaq
National Market listing requirements in a reasonable period of
time, said Mr. Brock. The company noted, however, that there can
be no assurance that the Nasdaq Listing Qualifications Panel
will grant the company's request for continued listing. The
company noted that it is exploring eligibility for listing of
its securities on other markets and exchanges, including the
Nasdaq SmallCap Market, in the event that its request is not
granted.

                     About Firstwave

Firstwave (www.firstwave.net) provides web-based eCRM solutions
that automate and optimize the way companies win and keep
customers. Firstwave offers one of the only 100% Web-based CRM
applications available on the market today. Originally founded
in 1984 as Brock Control Systems, Firstwave maintains the depth
and industry experience required to address unique
business needs. Firstwave holds the distinction of being the
Best Internet Based CRM Solution as cited by the Denali Group
and has received the CRM Excellence Award by the Technology
Marketing Corporation.


FRIEDE GOLDMAN: Signs Master Shipyard Pact With Noble Drilling
--------------------------------------------------------------
Friede Goldman Offshore, Inc., the rig segment of Friede Goldman
Halter, Inc. (OTCBB:FGHLQ) and Noble Drilling (U.S.), Inc. have
signed a Master Shipyard Agreement, which will cover all
repairs, modifications, refurbishment and construction services
provided to the Noble Companies by Friede Goldman Offshore. The
Agreement, which is subject to the approval of the bankruptcy
court, defines the contractual relationship between the
companies and delineates their respective responsibilities for
performing repairs, modifications, refurbishments and
construction services during FGH's reorganization process.

"We are satisfied with our progress so far during our
reorganization effort," said Ron Schnoor, Group President of the
Offshore Division. "This Agreement demonstrates Noble's
continued confidence in our ability to provide quality services,
and it reinforces their belief in our viability as a going
business concern. We have a long history with Noble, and have
provided our services for many of their rigs in the past."

Friede Goldman Halter is a world leader in the design and
manufacture of equipment for the maritime and offshore energy
industries. Its operating units are Friede Goldman Offshore
(construction, upgrade and repair of drilling units, mobile
production units and offshore construction equipment); Halter
Marine (construction of vessels for commercial and governmental
markets); FGH Engineered Products (design and manufacture of
cranes, winches, mooring systems and other types of marine
equipment); and Friede & Goldman Ltd. (naval architecture and
marine engineering).


GULFMARK: BB- Ratings Remain On Watch With Negative Implications
----------------------------------------------------------------
Standard & Poor's announced that its ratings on GulfMark
Offshore Inc. remain on CreditWatch with negative implications,
where they were placed on May 31, 2001. Upon the completion of
GulfMark's announced equity offering for approximately $100
million, the double-'B'-minus corporate credit and senior
unsecured debt ratings on GulfMark would be affirmed with a
stable outlook, and removed from CreditWatch.

GulfMark unexpectedly announced that it will sell three million
shares of common stock in an underwritten public offering for
estimated proceeds of $100 million. The use of funds is expected
to repay amounts borrowed under its credit facility and for
general corporate purposes, which may include its new vessel
construction program, acquisitions of other vessels, and the
potential repayment of other debt.

The stock offering would alleviate many of Standard & Poor's
concerns about the funding of GulfMark's vessel construction
program and the recent acquisition of Sea Truck Holding AS, and
provide the company with additional financial resources to
withstand a downturn in the volatile and cyclical offshore
support vessel industry. Pro forma for the new common shares,
GulfMark's leverage is expected to improve to 42% from a three-
year historical average of 56%. Funds from operations to total
debt is expected to reach 21%.

While Standard & Poor's views the equity offering as strongly
positive for GulfMark's credit quality, the company is likely to
continue its aggressive expansion. Barring a sustained rebound
in GulfMark's markets, leverage is likely to climb in the next
two years as the company funds its construction program. If the
company were to execute on its expansion, maintain reasonable
debt levels, and secure long-term contracts on its new vessels,
Standard & Poor's would consider additional positive ratings
actions.


HAMILTON BANCORP: Fitch Cuts Long-Term Ratings, Outlook Negative
----------------------------------------------------------------
Fitch has lowered its long-term ratings for Hamilton Bancorp
Inc. (HABKE or Hamilton), and its principal subsidiary, Hamilton
Bank, N.A (the bank), including the bank's long-term deposit
rating, which has been lowered to 'B+' from 'BB+'. The long-term
Rating Outlook for Hamilton continues to be Negative. Short-term
ratings for Hamilton and the bank have been affirmed at 'B'. A
complete list of rating revisions is provided at the end of this
release.

The rating action, which follows Fitch's Nov. 8, 2000 downgrade
of Hamilton and assignment of a Negative Rating Outlook, is
primarily in response to the continued asset quality
deterioration associated with both domestic and international
borrowers, as exhibited in the company's recently filed
regulatory and audited financial statements.

Related credit costs currently projected by Hamilton's
management are expected to contribute the reporting of only
nominal earnings for the balance of 2001, offering an additional
challenge as the bank attempts to comply with regulatory capital
directives by the Office of the Comptroller of the Currency
(OCC). Specifically, the OCC, in amended regulatory notice filed
on March 28, 2001, has proposed that the bank achieve and
maintain Tier 1, Total and leverage capital ratios of 12%, 14%
and 9%, respectively (each ratios that represent a 4% excess
above standard regulatory 'well capitalized' minimums). This
proposal follows the previous regulatory capital directive that
was part of the OCC's Sept. 8, 2000 order, agreed to by
Hamilton, that required the achievement and maintenance of Tier
1, Total and leverage capital ratios of 10%, 12%, and 7%,
respectively. At March 31, 2001, the bank's Tier 1, Total and
leverage capital ratios were 9.5%, 10.8%, and 6.5%,
respectively. The bank's progress satisfying agreed to
operational and control directives that were part of the OCC's
in Sept. 8, 2000 order have been considered as part of this
ratings decision.

The following ratings for Hamilton Bancorp Inc., and Hamilton
Bank, N.A., have been lowered:

Hamilton Bank, N.A.

      * Long-term deposits to 'B+' from `BB+';
      * Long-term senior obligations to `B' from `BB';
      * Individual rating to `D' from `C/D'.

Hamilton Bancorp

      * Long-term senior obligations to `B' from `BB';
      * Individual rating to `D' from `C/D'.

The following ratings for Hamilton Bancorp Inc., and Hamilton
Bank, N.A., have been affirmed:

Hamilton Bank, N.A.

      * Short-term deposits at `B',
      * Short-term senior obligations at `B'.

Hamilton Bancorp

      * Short-Term senior obligations at `B'.

The support rating of `5' for Hamilton Bancorp and Hamilton
Bank, N.A. remains unchanged.


HENLEY HEALTHCARE: Bank Forecloses & Sells Sugar Land Facilities
----------------------------------------------------------------
As previously reported, Henley Healthcare Inc. has defaulted on
its indebtedness owed to Comerica Bank, Texas.  Comerica Bank
Texas has now foreclosed on the Sugar Land facilities and they
have been sold for $2,300,000. The proceeds of this sale will be
used to reduce the indebtedness owed by the Company to Comerica
Bank. The Company anticipates that Comerica Bank will also
foreclose and sell the Belton facility and its account
receivable in the near future. The proceeds from those sales
will also be used to reduce the Company's indebtedness to
Comerica Bank.

Henley has ceased doing business in the U.S. and is actively
seeking to restructure its outstanding indebtedness to Comerica,
Maxxim Medical, Preferred Stockholders and vendors. Such
restructuring may include the sale of securities which would
substantially dilute existing stockholders, or the sale of its
remaining assets. In the event the Company cannot restructure or
repay its outstanding debt, it will be required to seek
protection under federal bankruptcy laws.


INTEGRATED HEALTH: Agrees To Allow 23 More Tardy Proofs Of Claim
----------------------------------------------------------------
Integrated Health Services, Inc. agreed to grant another 23
movants permission to file proofs of claim after the bar date.

Subject to the reservation of rights to object to such proofs of
claim on bases other than timeliness, the Debtors agreed that
the proofs of claim by the respective parties as follows will be
deemed timely if they are filed within 30 days of the date of
entry of the respective Stipulated and Agreed Order:

      * Virginia Perez, Temporary Administrator of the Estate of
        Juanita Garcia;

      * Grace Warren, Individually and on Behalf of Imogene
        Keene;

      * Therese A. Glynn Executor of the Estate of James T.
        Glynn, Deceased;

      * Gregory A. Gallagher As Next of Kin of Marlene J.
        Gallagher;

      * Ann Santos;

      * Stoll Health Care Consulting Services, Inc. at P.O. Box
        701934, St. Cloud, Florida, 34770-1934;

      * The Estate of William Newberry;

      * Marie Riley As Next of Kin of Allene Mitchell;

      * Letha Lewis;

      * Rex and Rhanelda Jones;

      * Brenda Walker;

      * Rodelia McDougal;

The Debtors agreed that the following proofs of claim previously
filed by the following parties after the Bar Date will be deemed
timely:

      * Michael Hall;

      * Virginia Brennan As Independent Executrix of the Estate
        of Paul Irvin Brennan, Deceased;

      * Estelle Smalls, As Personal Representative of the Estate
        of William Smalls;

      * Bernice Goulet;

      * Jennie A. Corsi;

      * Michael Hardy Myers, By and Through Sharon Daniels,
        Planary Guardian;

      * The Estate of Gene C. Allison By and Through Christian M.
        Allison As Next of Kin;

      * The Estate of Theresa Reynolds By and Through Patricia
        Reynolds, Executor De Don Tort;

      * Sidney Earl Greene, By and Through Patricia D. Greene,
        Power of Attorney;

      * Napoleon Elortegui By and Through Enrique Elortegui As
        Next of Kin;

      * CNA Companies.

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


JORE CORP.: Perkins Coie Says "Locality Rule" Not Applicable
------------------------------------------------------------
Seattle-based Perkins Coie LLP, serving as counsel to Jore
Corporation, tells the U.S. Bankruptcy Court for the District of
Montana that application of the "Locality Rule" -- limiting fees
of out-of-state lawyers to what local attorneys receive in
Montana bankruptcy cases -- is inappropriate for three reasons:

      (1) Jore isn't a small bankruptcy case. The company
manufactures and sells $55 million of power tool accessories and
hand tools. Jore's products are sold to big-name customers like
Sears, Home Depot, Canadian Tire, Black & Decker and Makita.
Jore's million-dollar intellectual property portfolio includes
50 patents, 23 trademarks and 6 licenses from companies like
Sears, Stanley Tools, Rexon and Sema. Debts exceed $85 million,
owed to creditors located in 39 States and two foreign
countries.

      (2) Regardless of the hourly fee structure applied, the
Court always retains jurisdiction to determine the
reasonableness of the professional fees and expenses requested
under 11 U.S.C. Sec. 330.

      (3) For all intent and purpose, the Firm's fees are being
voluntarily funded out of collateral pledged to First Security
Bank, N.A., and Harris Trust and Savings Bank. Those pre-
petition lenders made it clear to Jore that Perkins Coie's
retention was a "substantial factor" in persuading them to
participate in post-petition financing arrangements. "Absent a
firm with a national reputation as Debtor's counsel," Bruce G.
MacIntyre, Esq., explains, First Security and Harris told
Perkins Coie "that they would not advance the additional $8-$10
million necessary to make a successful reorganization of this
Debtor possible."


KITTY HAWK: Bank Group Says Don't Value Our Collateral
------------------------------------------------------
Deny the Debtors' request to have the Court determine the value
of an airplane securing a loan's repayment, if the Debtors
intend to return that collateral to the Bank Group, or make the
Debtors specify exactly what purpose the proposed valuation is
for, Janes Donnell, Esq., at Andrews & Kurth L.L.P., urges
Bankruptcy Judge Barbara J. Houser in Dallas.

Wells Fargo Bank (Texas), N.A., individually and as agent for
Daystar L.L.C., as agent for an on behalf of Yale University
(successor to Bank One, Texas, N.A.), Comerica Bank, Wingate
Capital Ltd. (successor to Nelson Partners, Ltd., an assignee of
Heller Financial, Inc.'s original interest), CoMac Endowment
Fund, L.P. (successor to Heller Financial, Inc.), and Bear,
Stearns & Co., Inc. (successor to Union Bank of California,
N.A.), or their successors, are owed money on account of loans
extended to Kitty Hawk, Inc., et al., for the purchase of 14
Boeing 727 aircraft. Those loans are secured by prepetition
security interests in the Aircraft. Under the terms of the
Debtors' Amended Joint Plan of Reorganization dated April 17,
2001, the aircraft collateral can be abandoned to the Bank Group
in exchange for credit against the Bank Group's claims.

Pursuant to 11 U.S.C. Sec. 506(a), Kitty Hawk asks Judge Houser
to convene hearings for the purpose of determining the value of
the aircraft collateral. The Bank Group objects, saying that
Bank of America v. 203 N. LaSalle, 526 U.S. 434 (1999), "clearly
indicates the Supreme Court's requirement of market valuations
in lieu of court-determined valuations." The best the Court can
provide is a hypothetical valuation of the aircraft. Market
values of aircraft are easy to obtain by selling them in the
open market.


LIGHTNING ROD: Shares Face NASDAQ Delisting
-------------------------------------------
Lightning Rod Software, Inc. (Nasdaq:LROD), received a Nasdaq
Staff Determination dated June 8, 2001, indicating that the
Company fails to comply with, among other requirements, the net
tangible asset requirement for continued listing set forth in
Marketplace Rule 4310c(2)(B) and that its securities are,
therefore, subject to delisting from The Nasdaq SmallCap
Market. The Staff made the determination based on a review of
the Company and the materials that the Company submitted to
Staff on May 14, 2001. The Company has requested a hearing
before a Nasdaq Listing Qualifications Panel to review the Staff
Determination. There can be no assurance the Panel will grant
the Company's request for continued listing. If the Company's
stock is ultimately delisted from Nasdaq, it may still be
eligible for quotation on the NASD-regulated OTC Bulletin Board.

                 About Lightning Rod Software

Lightning Rod Software (www.lightrodsoft.com), based in
Minneapolis, Minnesota, is a developer of multi-channel, real-
time customer sales and loyalty solutions for e-businesses such
as e-tail site www.estyle.com and online trading site
www.stockwalk.com. In addition to these markets, the company
provides customer interaction and online loyalty solutions for
online financial services, e-service bureaus, online
entertainment and other industries. Its customers also include
Invacare Supply Group, Gage Marketing Group, and State Capital
Credit Union. Lightning Rod is a Microsoft Certified Solutions
Provider (MSFT) (www.microsoft.com), Dialogic Strategic Partner
(www.intel.com), and member of the CT Media Value Network.


LTV CORP.: C&K & Enviroserve Move To Initiate Rule 2004 Exams
-------------------------------------------------------------
C&K Industrial Services, Inc., and Enviroserve, J.V., asked
Judge Bodoh to direct a representative of LTV Steel Company,
Inc., and its affiliates to appear for examination and produce
certain documents pursuant to Rule 2004 of the Federal Rules of
Bankruptcy Procedure.

The Creditors droned on about how the The LTV Corporation
Debtors filed a Motion seeking authority to pay up to $33.5
million to "critical vendors", which was granted, without any
specification of who those vendors might be, and without any
oversight or accountability as to whether the monies were
actually being paid to the holders of critical vendor claims.

In connection with their motion asking the Court to dub them as
critical vendors, these Creditors want to examine a
representative of the Debtors most knowledgeable about the
Debtors' procedures, controls, policies, criteria, or other
information utilized or considered by the Debtors in any manner
to determine which persons or entities qualified as "critical
vendors" within the contemplation of that Motion, and which have
been paid by the Debtors to date under the authority of this
Motion, and to produce related documents. (LTV Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-
00900)


LTV: USWA & Creditors To Avert Shutdown of Cleveland Facility
-------------------------------------------------------------
An agreement between the United Steelworkers of America and the
Unsecured Creditors Committee of LTV Steel (OTCBB:LTVCQ) will
avert the company's announced plans to permanently close its
Cleveland West hot-rolled steel facility.

Over the next two weeks, the Union will negotiate with the
Unsecured Creditors Committee with the objective of keeping the
facility part of the company's restructured operations.
"This is another extremely crucial step in the right direction
for LTV steelworkers, shareholders, creditors, and for the city
of Cleveland," said Leo Gerard, president of the 700,000-member
USWA, which represents 9,000 steelworkers at LTV operations in
Ohio, Indiana and Illinois.

"We've always maintained that, with the right investment and
good management, Cleveland West's Direct Hot Charge Complex can
be a profitable operation," he said, "and we're pleased that the
Unsecured Creditors recognize that destroying jobs and
steelmaking capacity is not the only way -- or the best way --
to transform LTV into a profitable company."

The agreement between the union and the Unsecured Creditors
Committee will halt the permanent shutdown of Cleveland West's
C-1 blast furnace, basic oxygen steelmaking shop, continuous
slab caster and hot strip mill announced by the company April 11
and scheduled for Saturday. Instead, the operation will be
placed on "hot-idle" status, preserving its productive capacity
while the parties use the next two weeks to evaluate plans to
enhance the facility's productivity and profitability.

The Unsecured Creditors Committee previously announced that it
would directly negotiate with the union for a new labor
agreement at LTV after the company claimed in federal Bankruptcy
Court Monday that it had been unable to do so.

"Stopping the permanent shutdown of Cleveland West proves that -
- while the issues may be difficult and the bargaining tough --
agreement is possible if the parties share the goals of LTV's
continued operation and transformation into a profitable
integrated steel producer," Gerard said, "and we remain hopeful
of achieving similar success in negotiations with the Creditors
for a new labor agreement."


MALIBU ENTERTAINMENT: Lender Agrees To Extend Forbearance Period
----------------------------------------------------------------
Malibu Entertainment Worldwide, Inc. (OTC Bulletin Board: MBEW)
announced that its primary lender agreed to an additional 15-day
forbearance of debt obligations that became due on May 31, 2001.

The Company's primary lender has agreed, to forbear from
exercising the remedies available to it under the Company's
credit agreement until the earliest to occur of (i) July 15,
2001 (or such later date as the lender may designate in writing
in its sole discretion); (ii) the occurrence of any other event
of default; (iii) the failure of the Company to continue to
engage a consultant, satisfactory to the lender, to advise the
Company in connection with their repayment obligations and (iv)
the failure of the Company to deliver a budget proposal to the
lender, in a form acceptable to the lender, by June 30, 2001.

The Company and its primary lender are discussing the
possibility of amending and restating the Company's credit
agreement to modify the Company's obligations. There can be no
assurance that the Company and this lender will be able to reach
an agreement or, if so, as to the timing, terms or effect
thereof.

The Company is continuing to seek to divest certain assets in an
effort to generate cash to fund its ongoing obligations. There
can be no assurance that the Company will be able to complete
such divestitures, or, if so, as to the timing, terms or effects
thereof. If the Company is unsuccessful in selling these assets,
in securing certain sale-leaseback arrangements, in obtaining
other financing or in modifying the terms of its existing
indebtedness or if the proceeds of such sales are significantly
less than their estimated value or if these actions are not
sufficient to permit the Company to continue to operate, the
Company may seek or be forced to seek to restructure or
reorganize its liabilities, including through proceedings under
the federal bankruptcy laws.

Headquartered in Dallas, Texas, Malibu Entertainment Worldwide,
Inc. is a leader in the location-based entertainment industry,
operating 17 parks in 7 states under the SpeedZone, Malibu Grand
Prix and Mountasia brands, primarily clustered in Texas,
California, Georgia and Florida.


MERRY-GO-ROUND: Trustee Settling Preference Claims for Pennies
--------------------------------------------------------------
Deborah H. Devan, the Chapter 7 Trustee for Merry-Go-Round
Enterprises, Inc., and its debtor-affiliates, is settling
preference actions she brought against suppliers who received
payments from the failed retailer within the 90 days prior to
its 1994 chapter 11 filing.

Ms. Devan will present two settlements to Judge Derby for his
stamp of approval at a hearing later this month:

      * a compromise of her $1,233,537.62 preference complaint
        against I.C. ISAACS & COMPANY, L.P., for $185,756.39; and

      * a compromise of her $286,943.58 preference complaint
        against J.K. CABINET, INC., for 13,355.13.

Sandra A. Manocchio, Esq., at Shapiro Sher & Guinot, says that
that informal discovery followed the filing of the Trustee's
complaints against these two creditors, there's been a careful
review of the facts and potential defenses, extensive
negotiations have taken place, and Ms. Devan is convinced that
these pennies-on-the-dollar settlements are in the best
interests of the estate. Moreover, Ms. Manocchio indicates,
these settlements avoid the inherent risks and costs associated
with litigation.


NATIONAL AIRLINES: Talking To Second Party On Possible Bailout
--------------------------------------------------------------
Bankrupt National Airlines, now in talks with billionaire
financier Carl Icahn about a bailout, is also talking with a
second party about a rescue plan, reported Reuters on Thursday.
National Spokesman Dik Shimizu would not disclose the name of
the second party, citing confidentiality agreements, but said
the entity is not an airline and that talks have been going on
for "a few months." The discount airline, which operates flights
between its Las Vegas base and various U.S. markets, has been
operating in chapter 11 bankruptcy since December, but hopes to
submit a reorganization plan in the near future.

Icahn was the only party known to be interested in the airline
until company officials disclosed the existence of another party
at a hearing in bankruptcy court in Las Vegas on Wednesday.
National officials are scheduled to return to bankruptcy court
on June 22 for another hearing. Airline officials convinced a
bankruptcy judge on June 1 to issue a 10-day temporary
restraining order that enabled the company to keep operating.
The judge later extended the order until the June 22 hearing.
(ABI World, June 15, 2001)


NORTHSTAR CBO: S&P Lowers Rating On Class A-2 Notes To CCC-
-----------------------------------------------------------
Standard & Poor's lowered its rating on the class A-2 notes
(current balance $246.304 million) issued by Northstar CBO 1997-
1 Ltd. and co-issued by Northstar CBO 1997-1 (Delaware) Corp. to
triple-'C'-minus from single-'B'-plus, and removed it from
CreditWatch with negative implications, where it was placed on
March 29, 2001. The rating on the class A-2 notes was previously
lowered to triple-'B' from single-'A'-minus on July 28, 2000,
and then to single-'B'-plus from triple-'B' on Jan. 4, 2001.

The lowered rating on the class A-2 notes reflects a decline in
the par value of the asset pool collateralizing the rated notes,
a deterioration in the weighted average coupon generated by the
performing assets within the pool, and concerns about the credit
quality of the performing assets. Currently, $66.600 million (or
approximately 24.4%) of the assets within the collateral pool
come from obligors rated 'D' by Standard & Poor's. In addition,
$32.774 million (or approximately 15.9% of the performing
assets) come from obligors rated in the triple-'C' range by
Standard & Poor's, and $44.724 million (or approximately 21.7%
of the performing assets) come from obligors with Standard &
Poor's ratings currently on CreditWatch negative.

According to the June 2, 2001 monthly performance report, the
class A overcollateralization ratio test was out of compliance,
with a ratio of 90.49% versus a current minimum required level
of 118%. An overcollateralization ratio for class B, which is
not rated by Standard & Poor's, was also out of compliance, with
a ratio of 83.13% versus a current minimum required level of
104%. Northstar CBO 1997-1 triggered an event of technical
default on Feb. 2, 2001 due to its failure to maintain its class
A and class B overcollateralization ratios at 90% or more of
their respective minimum required levels. Because the
transaction triggered the technical event of default, the
collateral manager's ability to make changes in the portfolio
going forward has been effectively eliminated.

Standard & Poor's has reviewed current cash flow runs generated
for Northstar CBO 1997-1 to determine the level of future
defaults the transaction can withstand under various stressed
scenarios, while still paying all of the rated interest and
principal due on the class A-2 notes. After comparing the
results of these cash flow runs with the projected default
performance of the transaction's current collateral pool,
Standard & Poor's determined that the previously assigned rating
was no longer consistent with the credit enhancement available
to support the rated notes. Standard & Poor's will continue to
monitor the future performance of the transaction in order to
ensure that the rating assigned remains consistent with the
credit enhancement available to support the class A-2 notes,
Standard & Poor's said.

Rating Lowered And Removed From CreditWatch With Negative
Implications

Northstar CBO 1997-1 Ltd./Northstar CBO 1997-1 (Delaware) Corp.:

                   Balance (millions)          Rating
      Class      Original       Current      To      From
      A-2        $285.000       $246.304     CCC-    B+/Watch Neg


OWENS CORNING: Reaches Standstill Agreement With Credit Suisse
--------------------------------------------------------------
Norman L. Pernick, along with J. Kate Stickles of the Wilmington
firm of Saul Ewing LLP, joined by Charles O. Monk, II, Stephen
M. Goldberg, and Edith K. Altice of Baltimore, told Judge
Fitzgerald that Owens Corning has reached a "stand still"
agreement in their disputes with Credit Suisse First Boston.
Under this agreement, the Debtors want to implement a Standstill
and Waiver Agreement with certain opponents, and to compromise
and settle certain related matters; terminate all injunctive
relief previously obtained, with respect to certain opponents,
dismiss all pending litigation as to those opponents, and
compromise and settle setoff rights asserted by Credit Suisse
and terminate the stay to that end, and release, discharge and
waive certain claims of the opponents.

Under a 1997 Credit Agreement, Credit Suisse as agent for a
group of lenders made credit facilities of up to $1,800,000,000
available to Owens Corning and certain of its subsidiaries. This
agreement matures by its own terms on June 26, 2002. 47 banks
and other parties participate as lenders in this Credit
Agreement, with Credit Suisse serving as their collective agent.

On the Petition Date the Debtors began a proceeding attempting
to enjoin the bank group from exercising their purported rights
under the Credit Agreement against any Debtors or non-debtor
subsidiaries, declaring any non-debtor subsidiaries of the
Debtors in default under any separate banking agreements as a
result of the Debtors' filing these Chapter 11 proceedings,
accelerating the payments under any separate banking agreements
as a result of the Debtors' filing these cases, freezing,
impairing or otherwise moving against the funds of a nondebtor
subsidiary of the Debtors that are held by the bank group as a
result of the Debtors' filing these cases, and declaring the
rights and obligations of the parties under the setoff provision
of the Credit Agreement.

In the course of these proceedings, the Debtors and Credit
Suisse have agreed to periodic continuations of a restraining
order preserving the status quo for the benefit of these estates
and their creditors. This agreed injunction enjoined the bank
group and each of their respective branches, affiliates,
offices, agents and employees from exercising against designated
non-debtor entities any enforcement rights or remedies,
including setoff rights, without further Order of the Court.
However, the bank group were permitted to impose an
administrative freeze on any funds in accounts of the designated
non-debtors as of the Petition Date, and to terminate any
commitment of the bank group to make additional loans or
advances. Certain members of the bank group imposed an
administrative freeze on funds of certain Debtors and non-
debtors in the approximate amount of $46,000,000.

By Motion, the Debtors requested entry of an order (i) approving
a standstill agreement and authorizing the Debtors to execute
all documents and take all other actions that may be reasonably
necessary or appropriate to effectuate the terms of the
standstill agreement; (ii) terminating the agreed injunction
with respect to the lenders participating in the standstill
agreement; (iii) dismissing the litigation against those
lenders; (iv) authorizing the Debtors to compromise and settle
setoff rights asserted by those lenders and terminating the stay
of the Bankruptcy Code with respect to those setoff rights; and
(v) releasing, discharging and waiving N.V. Owens Corning S.A.,
Owens Corning Composites S.P.R.L., and the Alcopor related
entities, consisting of Alcopor Owens Corning Holding AG, Owens
Corning Alcopor Belgium S.A., Owens Corning (UK) Holdings
Limited, Owens-Corning Fiberglas (U.K.) Limited; Owens Coring
Alcopor UK Ltd., Owens Corning Polyfoam UK Ltd., and Owens
Corning Alcopor France S.A.S., and each of their respective
subsidiaries, affiliates, predecessors, successors and assigns,
from all actions, causes of action, claims, damages, rights and
remedies now existing or hereafter arising, of the participating
lenders relating to the Credit Agreement; provided, however, to
the extent that any of the lenders have asserted a right to
setoff or recoup funds in accounts of OCSA, SPRL and the Alcopor
related entities which are currently subject to an
administrative freeze, such rights are preserved until resolved
under the terms of the Standstill Agreement.

                    The Standstill Agreement

      Parties: The Debtors; non-debtor borrowers; non-debtor
guarantors; consenting subsidiaries; non-debtor affiliates of
Owens Corning; other non-debtor affiliates of Owens Corning that
are parties to bilateral credit facilities; non-debtor
affiliates of Owens Corning that have funds currently subject to
an administrative freeze; and the participating lenders.

      Standstill: During the standstill period, except for valid
setoff rights existing as of the Petition Date, the
participating lenders will be prohibited from exercising any
right or remedy for the enforcement, collection, or recovery of
any of the guaranteed obligations from any of the non-debtor
borrowers, the non-debtor guarantors, the consenting
subsidiaries, and the consolidated IPM affiliates (each a
covered non-debtor); and the participating lenders party to
certain scheduled bilateral credit facilities will not be
permitted, as a result of any default under those facilities
arising solely from the commencement of these Chapter 11 cases,
to exercise any enforcement right or remedy against any of the
covered non-debtors, bilateral affiliates, or setoff affiliates,
each non-debtors, that are parties to the agreement.

      Standstill Period: The standstill period begins when the
conditions precedent to the effectiveness of the standstill
agreement have been satisfied, and ends on the earliest to occur
of (i) the date of the filing of a plan or plans of
reorganization in these cases; (ii) a termination due to an
event of default; or (iii) the date which is no earlier than
October 31, 2002, and which is 45 days after written notice has
been given to Owens Corning that the participating lenders have
elected to terminate the standstill period.

      Setoff Rights: With respect to funds currently subject to
an administrative freeze by the participating lenders: (i) to
the extent the parties agree that any asserted setoff right is
valid, the frozen funds may be setoff; (ii) to the extent the
parties agree that any asserted setoff right is not valid, the
participating lenders must release the frozen funds; or (iii) to
the extent the parties are unable to agree as to the validity of
any asserted setoff right, the administrative freeze remains in
full force and effect, and the rights of all parties are
preserved until resolved by the parties or this Court.

      Conditions Precedent: The Standstill Agreement becomes
effective only when on or prior to June 30, 2001, unless
extended by the parties, (i) Credit Suisse notifies Owens
Corning that it has given due notice of the Standstill Agreement
to the participating lenders as provided in he Credit Agreement;
(ii) the Standstill Agreement has been duly executed; (iii) an
order acceptable to Credit Suisse is entered (x) terminating the
injunction and dismissing the litigation without prejudice with
respect to the participating lenders, (y) approving the
Standstill Agreement, and (z) lifting the automatic stay to
permit the exercise of certain setoff rights; (iv) an order
acceptable to Credit Suisse is entered authorizing the use of
certain existing bank accounts, the use of a modified cash
management system, and certain transfers between the Debtors and
non-debtors; and (v) the fees and expenses due under the
Standstill Agreement have been paid.

      Fees: Owens Corning agrees to pay (i) a standstill fee of
$3,000,000 to Credit Suisse for the benefit of the participating
lenders, and (ii) a fee of $200,000 to each of Credit Suisse and
Chase Manhattan Bank, as co-chairs of the opponents' steering
committee. The standstill fee will be shared by the
participating lenders pro rata based on each participating
lender's outstanding commitment under the Credit Agreement.

      Costs and Expenses: Certain costs and expenses must be paid
by Owens Corning. These include (i) reasonable fees and expenses
incurred by Credit Suisse as Agent incurred in connection with
its participation in the Chapter 11 cases or the enforcement of
any rights under the Credit Agreement, including payment for the
Agent's counsel and financial advisor, subject (with respect to
a financial advisor) to certain monetary limits; (ii) reasonable
fees and expenses of participating lenders incurred in
connection with their participation on the opponents' steering
committee, subject to certain monetary limits; (iii) reasonable
travel and related out-of-pocket expenses of the participating
lenders incurred in connection with meetings of the opponents
and related matters under the Credit Agreement; and (iv)
reasonable fees and expenses of any participating lender that is
a party to a bilateral facility to the extent so provided in
such bilateral facility and connected with the injunction and
the enforcement of rights under such bilateral facility.

      Rights Preserved: Except to the extent expressly modified
by the Standstill Agreement, the rights of all parties to the
Credit Agreement or any bilateral facility are preserved. Any
credit facility between any of the opponents, and any non-
debtor, that is not specifically listed as subject to the
Standstill Agreement is excluded from its scope.

      Alcopor Release: The Standstill Agreement includes a full
and unconditional release and waiver of all existing or future
actions, claims, rights and remedies relating to the Credit
Agreement which the opponents may have against OCSA, SPRL, and
the Alcopor related entities, except that any setoff rights
asserted by the opponents in accounts of OCSA, SPRL and the
Alcopor related entities current subject to an administrative
freeze are preserved.

      Covenants: The Standstill Agreement incorporates the
covenants from the DIP Loan Agreement and contains certain
additional covenants, both negative and affirmative. These
include:

      (i) a requirement that Owens Corning and each covered non-
debtor furnish certain pleadings and other court documents to
the Agent;

     (ii) a requirement that the Debtor will not amend that
portion of the previously entered cash management order
governing the transfers of funds among IMP and its non-debtor
subsidiaries, affiliates and joint ventures, without prior
approval of the Agent;

    (iii) a requirement that Owens Corning notify the Agent of
any failure by any covered non-debtor to make any payment, or
otherwise timely perform, under any bilateral facility;

     (iv) a requirement that Owens Corning provide the Agent
with certain notices and information (including financial
information);

      (v) a prohibition on liens on assets of covered non-
debtors, subject to some limited exceptions for ordinary-course
transactions;

     (vi) a prohibition on distributions, except for
distributions to other covered non-debtors and the acquisition
of stock in a covered non-debtor under a compensation or benefit
plan;

    (vii) assurances that senior management of the covered non-
debtors and their professionals will confer with the Agent and
the opponents' steering committee;

   (viii) restrictions on the prepayment of debt by covered
non-debtors subject to ordinary-course exceptions;

     (ix) a prohibition on capital expenditures by covered non-
debtors, subject to the exceptions specified in the cash
management order; and

      (x) a prohibition on mergers, sales and other corporate
action taken by the covered non-debtors, subject to certain
limited ordinary-course exceptions. (Owens Corning Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


PAKISTAN INVESTMENT: Executing Plan of Liquidation & Dissolution
----------------------------------------------------------------
The Pakistan Investment Fund, Inc. (NYSE: PKF) said it is
anticipated that the Fund's transfer agent, American Stock
Transfer and Trust Company, will close the Fund's stockholder
records effective after the close of trading on the New York
Stock Exchange on June 22, 2001.

The closing of the Fund's stockholder records is being done
pursuant to the Fund's Plan of Liquidation and Dissolution which
was approved by the Fund's stockholders on June 12, 2001. The
Fund also anticipates that the Fund's shares will be suspended
from the New York Stock Exchange effective prior to the opening
of trading on the Now York Stock Exchange on June 25, 2001. The
Fund expects to be in a position to distribute substantially all
of the Fund's liquidation proceeds to its stockholders by late
June 2001. Stockholders can ascertain the daily net asset value
of the Fund and the Fund's daily cash position by calling (800)
221-6726.


PEERCE'S PLANTATION: Bankrupt Restaurant Sold for $1.91 Million
---------------------------------------------------------------
Peerce's Plantation, the 64-year-old landmark Baltimore County
restaurant and catering facility that slid into bankruptcy, was
sold to the Baltimore owner of Girls' Life magazine at a court-
ordered auction for $1.91 million in cash, according to The
Baltimore Sun. The sale included the restaurant, an adjoining
6,000-square-foot house, and 14.74 acres zoned for residential
development near Loch Raven Reservoir. First Mariner Bank and
Greenpoint Mortgage Funding Inc., two of the biggest creditors,
were owed more than $1.7 million on loans for the restaurant and
the house. (ABI World, June 19, 2001)


PLAY-BY-PLAY: Posts $6.7 Million Net Loss For Third Quarter 2001
----------------------------------------------------------------
Play-By-Play Toys & Novelties, Inc. (Nasdaq: PBYP) announced
results for the third quarter and nine months ended April 30,
2001. Net sales for the third quarter of fiscal 2001 were $21.7
million, a decrease of 30.6%, from $31.3 million reported for
the third quarter of fiscal 2000. The Company reported a net
loss of $6.7 million, or $0.91 per diluted share, for the third
quarter of fiscal 2001, as compared to a net loss of $4.4
million, or $0.60 per diluted share, for the comparable period
in the prior year.

The decrease in sales for the quarter occurred principally
within the Company's worldwide amusement and retail markets. The
decrease in amusement sales in the third quarter occurred
principally within the Company's domestic markets, which
continue to be impacted by softening demand for Looney Tunes and
Pokemon merchandise and the absence of "hit" licensed properties
in the current season, coupled with reduced pricing related to
the Company's inventory reduction and liquidity improvement
efforts. Additionally, the Company believes that a number of
factors including increased competition, a maturing market and
slowing attendance at arcades and family fun centers have
negatively impacted domestic amusement sales. International
amusement sales increased slightly, while Latin American
amusement sales remained relatively flat. Retail sales for the
third quarter were down primarily due to a decline in sales of
licensed plush at mass-market retail and licensed feature plush.

Gross profit as a percentage of net sales decreased to 17.5% for
the third quarter of fiscal 2001 from 26.7% in the comparable
period in fiscal 2000. This decrease was principally due to the
lower overall sales as compared to the same period a year ago,
as well as from reduced margins on sales made in connection with
the Company's inventory reduction and liquidity improvement
efforts, and the Company's worldwide retail division, partially
offset by increased margins on the Company's international
amusement sales. The Company's gross profit was negatively
impacted by charges totaling $523,000 and $900,000 recorded in
the third quarter to write-off the balance of a prepaid royalty
related to a retail toy licensing agreement that the Company is
no longer pursuing, and to write-down certain slow moving
merchandise, respectively.

Selling, general and administrative expenses for the third
quarter of fiscal 2001 decreased approximately 24.3%, to $8.9
million, from $11.7 million in the comparable period in fiscal
2000. The overall favorable decrease in selling, general and
administrative expenses is the result of the Company's ongoing
restructuring and cost saving efforts.

Net sales for the nine months ended April 30, 2001 decreased
20.9% to $84.8 million, from $107.2 million in the comparable
period last year. Net loss for the first nine months ended April
30, 2001 was $19.8 million, or $2.68 per diluted share, compared
with net loss of $6.4 million, or $0.86 per diluted share, for
the comparable period last year. Gross profit as a percentage of
net sales decreased to 22.6% for the first nine months of fiscal
2001 from 30.5% in the comparable period in fiscal 2000.
Selling, general and administrative expenses decreased
approximately 4.4%, to $33.5 million for the first nine months
of fiscal 2001 from $35.0 million in the comparable period in
fiscal 2000.

On June 14, 2001, the Company received notice from the holders
of its Convertible Debentures rejecting the Company's most
recent offers to restructure and extend the final maturity of
the Debentures or to buyout the debt under the Debentures on a
discounted basis.

Play-By-Play Toys & Novelties, Inc. designs, develops, markets
and distributes a broad line of quality stuffed toys, novelties
and consumer electronics based on its licenses for popular
children's entertainment characters, professional sports team
logos and corporate trademarks. The Company also designs,
develops and distributes electronic toys and non-licensed
stuffed toys, and markets and distributes a broad line of non-
licensed novelty items. Play-By-Play has license agreements with
major corporations engaged in the children's entertainment
character business.


PSINET INC.: Retains Nixon Peabody As Special Corporate Counsel
---------------------------------------------------------------
PSINet Inc. and the affiliated Debtors asked the Court to
authorize them, pursuant to Section 327(e) of the Bankruptcy
Code and Rule 2014 of the Bankruptcy Rules, to employ and retain
Nixon Peabody LLP as their special counsel in the Chapter 11
cases, effective as of the Petition Date, with respect to

     (a) general corporate, tax, litigation, real estate,
         intellectual property, international telecommunications,
         human resources, and ERISA matters, and

     (b) certain bankruptcy related issues, at the request of
         Debtors' general bankruptcy counsel, Wilmer, Cutler &
         Pickering ("WCP"), where WCP has a conflict or it would
         otherwise not be prudent for WCP to act for Debtors in
         these Chapter 11 cases.

The Debtors sought to retain Nixon Peabody as special counsel
for, among other reasons, the firm's extensive experience and
knowledge in the field of debtors' and creditors' rights and
business reorganizations under Chapter 11 of the Bankruptcy
Code. Nixon Peabody, the Debtors noted, has expertise,
experience and knowledge practicing before bankruptcy courts,
including the courts of the judicial district of the southern
district of New York.

Moreover, Nixon Peabody is a full-service law firm with
experience and expertise in other legal areas that will affect
the Debtors' day-today operations and their reorganization under
Chapter 11 of the Bankruptcy Code.

In particular, Nixon Peabody has been one of the Debtors'
regular outside legal counsel since 1989, and has provided legal
services to the Debtors in connection with various facets of
their business. Over the past few months, Nixon Peabody has
assisted the Debtors in exploring restructuring alternatives and
negotiating possible sale transactions, and preparing for the
Debtors' Chapter 11 filings. As a result of this experience as
well as Nixon Peabody's historical knowledge of Debtors, Nixon
Peabody has become intimately familiar with the Debtors'
business operations and financial affairs, as well as many of
the legal issues that are likely to arise in the course of their
Chapter 11 cases. The Debtors believe that if they were required
to retain special counsel other than Nixon Peabody to perform
the services which Debtors have requested Nixon Peabody to
perform, they would incur additional expense and delay.

If the Application is approved, the professional services which
Nixon Peabody will be required to render to the Debtors are
expected to include, without limitation:

(a) Performing legal services and advice relating to general
      corporate, tax, litigation, real estate, intellectual
      property, international telecommunications, human
      resources, and ERISA matters;

(b) Providing general advice concerning ongoing business
      activities of the Debtors;

(c) Providing legal services and advice concerning certain
      bankruptcy related issues, at the request of Debtors'
      general bankruptcy counsel, Wilmer, Cutler & Pickering
      ("WCP"), where WCP has a conflict or it would otherwise not
      be prudent for WCP to act for Debtors in these Chapter 11
      cases; and

(d) Performing all other legal services, as requested by the
      Debtors, which may be necessary and proper in furtherance
      of the foregoing duties.

The Debtors believe that Nixon Peabody is both well-qualified
and uniquely able to represent it in their Chapter 11 cases. The
Debtors further believe that Nixon Peabody will provide the most
effective and efficient representation available to the Debtors.

Nixon Peabody will work closely with the Debtors' other
attorneys to ensure that there is no duplication of services
performed for or charged to the Debtors' estates.

The Debtors submit that the retention of Nixon Peabody would be
in the best interest of the Debtors from both an operational and
financial point of view. Moreover, Nixon Peabody would be
retained only for purposes consistent with section 327(e) of the
Bankruptcy Code.

Nixon Peabody received $5,496,081.96 in calendar year 2000 as
compensation for prepetition legal services and disbursements
and charges. As described in the Langan Affidavit, Nixon Peabody
has been paid in full or has conditionally waived all fees and
direct charges in connection with legal services provided to the
Debtors prior to the Petition Date. Nixon Peabody did not
receive a prepetition retainer from the Debtors in connection
with its representation in these cases.

Nixon Peabody intends to apply to the Court for allowance of
compensation and reimbursement of expenses in accordance with
the terms of the Compensation Procedures Motion, the Bankruptcy
Code, the Bankruptcy Rules, the Local Rules of the United States
Bankruptcy Court for the Southern District of New York and the
orders of this Court.

Nixon Peabody agrees to charge, and the Debtors have agreed to
pay, subject to the Court's approval in accordance with section
330(a) of the Bankruptcy Code, Nixon Peabody's hourly rates for
the Debtors and its customary reimbursements for the Debtors.
The hourly rates applicable to the proposed retention at present
range:

     from $350 to $525 per hour for partners,
     from $170 to $370 per hour for counsel and associates, and
     from  $90 to $170 per hour for paralegals.

The rates are adjusted from time to time.

Richard F. Langan, Jr., a member of the firm of Nixon Peabody
LLP, presented to the Court a list which shows the result of the
firm's review for conflicts. Mr. Langan recognizes that Nixon
Peabody and the partners and associates of Nixon Peabody
currently represent, and may in the future represent creditors,
equity security holders (or their respective affiliates),
lessors, claimants of the Debtors. Moreover, Nixon Peabody,
which employs more than 500 attorneys in 11 cities, has a large
and diversified legal practice which encompasses the
representation of many financial institutions and commercial
corporations, some of which may be or become claimants or equity
security holders in the PSINet cases, or may involve
professionals that may represent claimants and parties in
interest in these cases. Nevertheless, Mr. Langan represented,
Nixon Peabody does not presently, has not in the past and will
not in the future represent any such entity in connection with
the PSINet chapter 11 cases. To the extent that Nixon Peabody
discovers any such relationship, it will immediately disclose it
to the Court, Mr. Langan submitted.

Mr. Langan revealed that attorneys in the firm own approximately
234,557 shares of PSINet Inc. common stock of the approximately
191,570,016 shares outstanding as of April 3, 2001
(approximately 0.12%) with a current value of approximately
$16,000 and 96 shares of preferred stock. The number and value
of all such shares, Mr. Langan remarked, is de minimis in the
context of these cases. Moreover, none of the individuals who
would be active in this case owns sufficient stock or debt to
influence such holder of securities or debt in any discernible
way.

Mr. Langan himself owns or controls 8,384 shares of PSIX.
William S. Thomas, Jr. owns or controls 2,950 shares of PSIX.
Mr. Langan told the Court that Mr. Thomas and himself are each
an Accredited Investor within the meaning of Securities and
Exchange Commission Rule 501.

Mr. Langan submitted that, except as may be disclosed to the
Court, neither he, Nixon Peabody, nor any partner, counsel or
associate of the firm, has any connection with the Debtors,
their creditors or stockholders, or any party in interest in the
PSINet cases, and Nixon Peabody is confident that it does not
hold or represent any interest adverse to the Debtors' estates,
shareholders or their creditors, with respect to the matters for
which Nixon Peabody is to be employed in these cases.

Mr. Langan covenants that Nixon Peabody is continuing and will
continue to review potential conflicts. If Nixon Peabody learns
that it has a relationship with, or has represented, a party in
interest in these cases, he will supplement his affidavit
immediately and promptly notify the United States Trustee.
(PSINet Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


RELIANCE GROUP: Employs Debevoise & Plimpton As Lead Counsel
------------------------------------------------------------
Reliance Group Holdings and Reliance Financial Services seek
Bankruptcy Court authority to employ the law firm of Debevoise &
Plimpton, headquartered in New York City, as their lead counsel
in these chapter 11 cases pursuant to 11 U.S.C. Sec. 327(a).
Specifically, D&P will:

     (a) advise the Debtors of their rights, powers, and duties
         as debtors and debtors-in-possession;

     (b) advise the Debtors concerning, and assisting in the
         negotiation and documentation of, financing agreements,
         debt restructuring, cash collateral arrangements, and
         related transactions;

     (c) review the nature and validity of liens asserted against
         the property of the Debtors and advise the Debtors
         concerning the enforceability of such liens;

     (d) advise the Debtors concerning the actions that they
         might take to collect and recover property for the
         benefit of the Debtors' estate;

     (e) prepare on behalf of the Debtors all necessary and
         appropriate applications, motions, pleadings, draft
         orders, notices, schedules, and other documents, and
         reviewing all financial and other reports to be filed in
         these chapter 11 cases;

     (f) advise the Debtors concerning, and preparing responses
         to, applications, motions, pleadings, notices, and other
         papers that may be filed and served in these chapter 11
         cases;

     (g) counseling the Debtors in connection with the
         formulation, negotiation, and promulgation of plans of
         reorganization and related documents;

     (h) Advising the Debtors regarding the rehabilitation
         proceeding involving RIC and the role of the
         Pennsylvania Insurance Department over the operations of
         Debtor Subsidiaries; and

     (i) performing all other legal services for and on behalf of
         the Debtors that may be necessary or appropriate in the
         administration of these chapter 11 cases and the
         reorganization of the Debtors' business, including
         advising and assisting the Debtors with respect to debt
         restructurings, stock or asset dispositions, claim
         analysis and disputes, and legal issues involving
         general corporate, bankruptcy, environmental, labor,
         employee benefits, securities, tax, finance, real estate
         and litigation matters.

The Debtors acknowledged that there are inherent potential
conflicts of interest that arise with one law firm representing
multiple affiliated chapter 11 debtors-in-possession, as
observed by the Third Circuit in In re BH&P, Inc., 949 F.2d 1300
(3d Cir. 1991).  The facts, however, militate in favor of D&P's
simultaneous representation in these cases because:

     (1) the overwhelming amount of claims, over $12,00,000,000,
         is common to all Debtors and any business between or
         among the Debtors is not significant in comparison to
         such debt;

     (2) the Debtors cannot afford to employ multiple debtors'
         counsel -- such appointment would sound the death-knell
         of these cases;

     (3) numerous parties in interest and their counsel will have
         the right to review all inter-company claims; and

     (4) the Debtors believe that the holders of the common debt
         do not object to this procedure and do not desire the
         appointment of multiple debtors' counsel.

D&P will bill for legal services at its standard hourly rates.
The attorneys expected to counsel RGH and their hourly rates
are:

                 Edward A. Perrell          $625
                 Steven R. Gross            $625
                 Michael E. Wiles           $625
                 Andrew Berg                $625
                 Lorna G. Schofield         $610
                 Judith Taft                $415
                 Huey-Fun Lee               $415
                 Young Lee                  $345
                 Alison LaCroix             $275
                 Vadim Mahmoudov            $275
                 Dagmar Schwartz            $240
                 Alexia Richmond            $168

Steven R. Gross, Esq., relates to Judge Arthur J. Gonzalez that
his firm received a $200,000 retainer prior to the Petition Date
in contemplation of these chapter 11 cases and for other pre-
petition legal services.  The remainder of the retainer will be
applied against future fees and expenses, subject to this
Court's approval.  Mr. Gross disclosed that, because D&P is a
national law firm, it has possibly represented and possibly
represents other creditors of the Debtors' estates.  Mr. Gross
is confident that D&P does not represent any of the Debtors'
creditors in connection with these chapter 11 cases. (Reliance
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


RITE AID: S&P Rates Proposed $200MM Senior Unsecured Notes at B-
----------------------------------------------------------------
Standard & Poor's assigned its single-'B'-minus rating to Rite
Aid Corp.'s proposed $200 million senior unsecured notes, which
mature in 2008. The notes are being issued under Rule 144A with
registration rights.

At the same time, Standard & Poor's affirmed its ratings on Rite
Aid Corp. and Rite Aid Lease Management Co. (see list below).

The outlook is positive.

The unsecured notes are rated one notch below the corporate
credit rating, reflecting the unsecured debt's structural
subordination to the secured debt.

The ratings on Rite Aid reflect the challenges the company faces
in improving operations at its drug stores amidst intense
competition. The ratings also reflect the company's significant
debt burden and thin cash flow protection.

Although Rite Aid is a dominant player in the drug store chain
industry, ranking second in terms of units, credit measures have
been deteriorating since fiscal 1995 due to previous
management's poor execution of a rapid growth strategy. The
company's operating performance improved throughout fiscal 2001
due to strategies put in place by new management. Rite Aid's
recurring unadjusted EBITDA margin increased to 4.2% in fourth
quarter of fiscal 2001 from 3.4% in the third quarter and a low
2.2% in the second quarter. Still, Rite Aid needs to continue
taking aggressive steps to improve store execution and operating
efficiencies, as its profitability measures remain significantly
below those of its chief rivals, Walgreen Co. and CVS Corp.

Rite Aid's credit protections measures are weak. Pro forma for
the proposed recapitalization, EBITDA coverage of interest is
1.5 times. The company had $396 million available on its
revolving credit facility as of March 3, 2001.

                       Outlook: Positive

Standard & Poor's believes the strategies being implemented by
management will continue to improve operations. Ratings could be
raised within the next year if profitability levels continue to
rise and result in improved credit protection measures.

                      Rating Assigned
                                                        Rating
Rite Aid Corp.
   $200 million senior unsecured notes (Rule 144A)      B-

                      Ratings Affirmed

Rite Aid Corp.
   Corporate credit rating                              B
   Senior secured debt                                  B-
   Senior unsecured debt                                B-
   Subordinated debt                                    CCC+
   $1 billion senior secured credit facility            BB-
   Proposed $1.9 billion senior secured credit facility BB-

Rite Aid Lease Management Co.
   Corporate credit rating                              B
   Preferred stock                                      CCC+


SALON MEDIA: Appeals Nasdaq's Move To Delist Shares
---------------------------------------------------
Salon Media Group, Inc. (Nasdaq: SALN), a leading Internet media
company, reported that it received a Nasdaq Staff Determination
on June 13, 2001, indicating that the Company has failed to
comply with the minimum bid price requirement for continued
listing (Nasdaq Marketplace Rule 4450(a)(5)). Salon has
requested an oral hearing before the Nasdaq Qualifications Panel
to appeal the Staff Determination. Salon stock will continue to
be traded on the Nasdaq National Market pending the final
decision by the Qualifications Panel. There can be no assurance
that the Panel will grant the Company's request for continued
listing. The hearing date will be determined by Nasdaq. The
Company is considering seeking stockholder approval for a
reverse stock split in order to comply with Nasdaq's minimum bid
price requirement.

                          About Salon:

Founded in 1995, Salon.com is a leading Internet media company
that produces 10 award-winning, original content sites; and
hosts two online communities -- Table Talk and The WELL. In
October 2000, Salon.com launched Salon Audio, a site offering
music programming, daily downloads and streaming audio from
Salon's favorite columnists, as well as hundreds of downloadable
versions of short stories, poems and interviews in MP3 and Real
Audio formats. Over 530 companies have advertised on Salon.com
including: IBM, Lexus, Microsoft, EDS, Hewlett-Packard,
Mastercard, AskJeeves, Virgin Megastore Online, Kimberly Clark
and Intel. In December 1999, Salon.com announced a content and
equity agreement with Rainbow Media Holdings, Inc., a subsidiary
of Cablevision Systems Corp. and NBC. Strategic wireless
distribution partners include: AvantGo, Omnisky, Palm.net and
Skytel.


TOWER AIR: Those Insurance Proceeds are Ours, FINOVA Says
---------------------------------------------------------
Charles A. Stanziale, Jr., the Chapter 7 Trustee overseeing the
liquidation of Tower Air, Inc., proposes to compromise and
settle, pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, an insurance claim under an Aircraft Hull and
Liability Insurance Policy, providing that the Insurer will pay
$951,503 in full settlement and release of an aircraft engine
damage claim.

That compromise and settlement is fine, FINOVA Capital
Corporation says, so long as the money comes to FINOVA.  Jill
Levi, Esq., at Todd & Levi, LLP, in New York, explains that
FINOVA lent Tower tens of millions of dollars to buy a Boeing
747-200 Aircraft and four engines and took a mortgage to secure
repayment of the loan.  The $951,503 insurance proceeds belong
to FINOVA under the terms of the mortgage -- not Tower and not
Mr. Stanziale, Ms. Levi argues.

Ms. Levi adds that she can envision the Trustee arguing that
FINOVA shouldn't get the insurance proceeds because Tower
repaired the engine.  Read the Loan Documents closely, Ms. Levi
advises Judge Walsh, and the Court will see they provide for no
such exception.  "There is no basis either in law or in fact to
permit the Trustee to retain FINOVA's property," Ms. Levy says.


VLASIC FOODS: Files Skeletal Joint Plan of Distribution
-------------------------------------------------------
VF Brands, Inc., and certain of its affiliates filed a Joint
Plan of Distribution with the U.S. Bankruptcy Court in
Wilmington last week. The plan is skeletal, providing no greater
detail than:

      * Senior secured creditors are expected to be paid in full.

      * Unsecured creditors are expected to receive a partial
        distribution; and

      * Common shareowners are not expected to receive any
        distributions.

No financial details are provided in the Joint Plan of
Distribution. At some point in time, the Company will deliver a
Disclosure Statement in support of their Joint Plan of
Distribution providing estimates about the realizable values of
their assets, total claims against their estates and projected
recoveries.

"The ultimate amount and settlement terms for such liabilities
are subject to a Chapter 11 bankruptcy plan, and accordingly,
are not presently determinable," Vice President and Controller
Joseph Adler says in a June 13 regulatory filing with the
Securities and Exchange Commission.

As previously reported, Vlasic entered into an asset purchase
agreement with Pinnacle Foods Corporation (formerly named HMTF
Foods Acquisitions Corp., an affiliate of Hicks, Muse, Tate &
Furst Incorporated, providing for the sale of substantially all
of the assets relating to the Seller's pickle products, barbecue
sauce and grilling sauce products and frozen food products
businesses to Pinnacle. After the end of the third quarter, on
May 22, 2001, the Company completed the sale of the North
American Business to PFC. The stated sale price was $370
million, plus warrants to purchase shares of the common stock of
Pinnacle or its parent corporation, subject to certain
adjustments principally related to working capital. As a result
of these estimated adjustments, the Company received $335.3
million at closing, including $6 million deposited into an
escrow account based on the terms of the Asset Purchase
Agreement. Separately, the Company's cash balance increased by
more than $35 million since January 28, 2001, driven principally
by seasonal liquidations of inventories.

On April 5, 2001, Stratford-upon-Avon Foods Limited, an indirect
wholly owned subsidiary of the Company, completed the sale of
substantially all of the assets related to its canned and jarred
pickle, fruit and vegetable products business in the United
Kingdom to Chivers Hartley Limited for approximately $17.6
million, subject to certain adjustments. On April 5, 2001,
Freshbake Foods Limited, a wholly owned subsidiary of the
Company, completed the sale of substantially all of the assets
related to its frozen pastry and sausage products business in
the United Kingdom to Smoothrun Limited and Ezzentialize Limited
for approximately $2.7 million, subject to certain adjustments.
A total of $7.7 million of the above sale proceeds were retained
as escrow funds pursuant to the terms of the purchase agreements
for the SONA Business and the Freshbake Business. Under the
terms of the transactions, the Company's United Kingdom
subsidiaries retained cash on hand and also retained certain
liabilities that are required to be liquidated prior to making
final distributions to the Company. Such distributions are not
expected for approximately one year due to United Kingdom
regulations in connection with liquidations of U.K. companies.

As a result of the sales of the North American Business, the
SONA Business and the Freshbake Business, the Company and its
subsidiaries are left with no business activities and no
substantial operating assets.

Pursuant to an order of the Bankruptcy Court, on June 7, 2001
the Company used $323.6 million, including the proceeds from the
sale of the North American Business, to repay amounts
outstanding under its senior secured credit facility. After
paying administrative and other priority claims, the remaining
proceeds from the liquidation of estate assets will be
distributed pursuant to the Company's Chapter 11 bankruptcy plan
when filed and approved. (Vlasic Foods Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)


W.R. GRACE: APD Committee Taps Bilzin Sumberg As Lead Counsel
-------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants in
W. R. Grace & Co.'s chapter 11 cases, acting through Darrell W.
Scott as designee for its Chairperson, Marco Barbanti, asked
Judge Farnan to authorize the retention of the law firm of
Bilzin Sumberg Dunn Baena Price & Axelrod LLP, nunc pro tunc as
of April 9, 2001, as lead counsel for the Committee. The
services to be provided by the firm are:

      (a) providing the Committee with legal advice with respect
to its rights, duties and powers in these cases;

      (b) Assisting the Committee in investigating the acts,
conduct, assets, liabilities, and financial condition of the
Debtors, the operation of the Debtors' businesses, and the
desirability of the continuance of such businesses and any other
matter relevant to these cases, or to the formation of a plan;

      (c) Preparing pleadings an applications as may be necessary
in furtherance of the Committee's interests and objectives;

      (d) participating in formulating a plan or plans of
reorganization;

      (e) Assisting the Committee in considering and requesting
the appointment of a trustee or examiner or conversion, should
such action(s) become necessary;

      (f) Consulting with the Debtors, their counsel and the
United States Trustee concerning the administration of this
estate;

      (g) Representing the committee in hearings and other
judicial proceedings; and

      (h) Performing such other legal services as may be required
and as are deemed to be in the best interest of the Committee
and the constituency which it represents.

Mr. Scott L. Baena, a partner with the firm, averred that the
firm is a disinterested person within the meaning the Bankruptcy
Code and has no connection with the Debtors, their creditors, or
any other party in interest, including their respective
attorneys or accountants, the United States Trustee, or any
person employed by that office. No hourly rates are provided by
the firm, other than a statement that it would charge its
customary rates.

Mr. Baena did disclose, however, that the firm formerly
represented parties with interests in these estates, such as
Amerada Hess Corporation, The Chase Manhattan Bank, and
Prudential Property & Casualty, and currently represents First
Union National Bank, NationsBank NA, Citibank, FSB, Morgan
Guaranty Trust Company of New York, and Robins, Kaplan, Miller &
Ciresi. (W.R. Grace Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


WARNACO GROUP: Sidley Austin Serving as Bankruptcy Counsel
----------------------------------------------------------
The Warnaco Group, Inc. and its debtor-affiliates seek the
Court's authority to retain and employ the firm of Sidley Austin
Brown & Wood and its affiliated law practice entities, with
offices in the United States, Europe and Asia, as their lead
bankruptcy counsel in these cases.

Stanley P. Silverstein, vice-president of The Warnaco Group,
related that Sidley has advised the Debtors on bankruptcy,
insolvency, restructuring and reorganization issues, including
issues pertaining to the filing and commencement of these cases,
since April 2001.  As a result, the firm has become familiar
with the Debtors' business and legal affairs.  Partners, counsel
and associates of Sidley, who will advise the Debtors in these
cases have considerable knowledge and experience in the field of
bankruptcy law, debtors' and creditors' rights, including
insolvencies, restructurings and business reorganizations and
liquidations, as well as litigation, real estate, corporate law,
and tax law.  Because of these reasons, Mr. Silverstein told the
Court that SABW is well qualified to represent them in these
Chapter 11 cases.

Specifically, among other things, Sidley will:

       (a) Advise the Debtors with respect to their powers and
duties as debtors-in-possession in the continued management and
operation of their businesses and properties;

       (b) Attend meetings and negotiate with representatives of
creditors and other parties-in-interest, and advise and consult
on the conduct of the cases, including all of the legal and
administrative requirements of operating in Chapter 11;

       (c) Take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions commenced
under the Bankruptcy Code on their behalf and objections to
claims filed against the estates;

       (d) Prepare all motions, applications, and other papers
necessary to the administration of their estates;

       (e) Negotiate and prepare a plan or plans of
reorganization, disclosure statements, and other related
documents. The firm will also take necessary actions to obtain
confirmation of such plans;

       (f) Advise the Debtors on any sale of assets;

       (g) Appear before the courts and protect the interests of
the Debtors' estates; and

       (h) Perform all other necessary bankruptcy services in
connection with these Chapter 11 cases.

Subject to the Court's approval, Sidley will charge the Debtors
for its legal services on an hourly basis in accordance with its
ordinary and customary rates (which might change from time to
time).  Sidley's hourly rates currently range from:

            Partners/Senior Counsel  -  $475 to $675
            Associates               -  $250 to $335
            Para-professionals       -  $100 to $135

Sidley customarily charges its clients for all costs and
expenses incurred, including telephone and telecopier toll and
other charges, mail and express mail charges, special or hand
delivery charges, document processing, photocopying charges,
travel expenses, expenses for "working meals", computerized
research and transcription costs, as well as non-ordinary
overhead expenses such as secretarial overtime.

Sidley received a $715,000 retainer from Warnaco, and a $35,000
retainer from Warnaco Canada, in connection with the preparation
for the filing of these Chapter 11 cases and for its proposed
post-petition representation of the Debtors.  A portion of the
retainers will be applied to any remaining pre-petition fees and
expenses, while the remainder will constitute general retainers
for post-petition services and expenses.  In the event the
retainers are insufficient to pay any remaining pre-petition
services and expenses, Sidley agrees to waive any remaining pre-
petition claims against the Debtors.  Sidley has been providing
services to the Debtors since April 22, 2001 and received
$853,406.25 on account of legal services rendered in
contemplation of, or in connection with, these bankruptcy cases
within one year prior to the Petition Date.

Kelley A. Cornish, Esq., a Sidley, Austin, Brown & Wood member,
assured the Court that the firm is a disinterested person within
the meaning 11 U.S.C. Sec. 101(14).  Ms. Cornish relates that he
reviewed the Firm's potential connection and relationships with
The Warnaco Group; all its subsidiaries and affiliates; its
officers and directors; pre-petition secured lenders;
stockholders; professionals to be retained; 50 larges unsecured
creditors; the Union of Needletrades, Industrial and Textile
Employees; significant litigation parties; non-debtors parties
to license agreements with Debtors; 5 largest lessors,
customers, vendors; indenture trustee; and significant non-bank
lienholders.

Ms. Cornish said he also instructed the firm's accounting
department to prepare a list comparing the list of Warnaco
entities against the top 200 clients of Sidley & Austin and the
top 100 clients of Brown and Wood, in terms of revenues for the
year 2000.  The list seeks to determine the percentage of each
firm's revenues in that year attributable to such client.
Records before the recent merger of Sidley & Austin and Brown &
Wood are maintained on a separate basis.  A summary of that
analysis shows that the percentage of Sidley's revenues for two
significant client relationships:

       * General Electric Company and all of its subsidiaries and
         affiliates (including General Electric Capital
         Corporation, one of the Debtors' prepetition lenders)
         contributed 2.23% of the Firm's revenues;

       * Citibank N.A. (the Debtors' prepetition debt
         coordinator), Citicorp (including Citicorp USA Inc., a
         prepetition lender to the Debtors) and Salomon Smith
         Barney Inc. (the lead arranger for the Debtors'
         prepetition secured indebtedness) contributed 1.77% of
         the Firm's revenues.

The percentage of Sidley revenues for all other Warnaco entities
identified in the Cornish affidavit is less than 1%.

With over 1,300 attorneys worldwide, Ms. Cornish tells the Court
that Sidley has represented and continues to represent (i)
creditors of Warnaco and/or the subsidiaries and affiliates of
Warnaco that are also debtors-in-possession in these cases, and
(ii) possibly other parties-in-interest in these cases, but only
in matters not involving the Debtors.

With such an extensive number of creditors and parties-in
interest, and because definitive lists of all such creditors and
other parties have not yet been obtained, neither Ms. Cornish
nor the firm were able to conclusively identify all potential
relationships at this time.  The firm reserves the right to
supplement this disclosure as additional relationships come to
their attention.  Ms. Cornish promises to file a supplemental
affidavit if they become aware of any additional relationship
that may be relevant to Sidley's representation of the Debtors.
(Warnaco Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


WASHINGTON GROUP: UST Balks at Modified Consolidated Schedules
--------------------------------------------------------------
Nicholas Strozza, Esq., tells the U.S. Bankruptcy Court for the
District of Nevada that it should deny a request by Washington
Group International,  Inc., to file modified consolidated
schedules of assets and liabilities.

Washington, wanting to follow fast-track to confirmation of a
chapter 11 plan, proposes to file abbreviated schedules of
assets and liabilities that provide detailed information only
about impaired claims under its proposed plan of reorganization.
The U.S. Trustee says that abbreviation will not provide
creditors all the material information they are entitled to
under the Bankruptcy Code and Rules. In particular, Mr. Strozza
points out, the impaired creditors may want detailed information
about the body and extent of the unimpaired creditors who are
being provided more favorable treatment in WGI's case. "Which
creditors, and in what amounts, are being paid in full," Mr.
Strozza wonders?

"Impaired creditors need to review complete schedules to
determine the magnitude of all claims to evaluate whether they
may receive more from a liquidation of the company," Mr. Strozza
says. "In addition, the payment of unimpaired creditors to
maintain the overall going concern value of the Debtors'
business is irrelevant to impaired creditors who will not
receive payments from the future profits of the business, but
only a pro-rata share of the creditor trust." Without full and
complete schedules as required by 11 U.S.C. 521(1), creditors
can't assess the feasibility of the proposed plan under 11
U.S.C. Sec. 1129(a)(11), the U.S. Trustee contends.


WASHINGTON GROUP: Judge to Appoint Examiner in Bankruptcy Case
--------------------------------------------------------------
A bankruptcy judge in Nevada has agreed to appoint an
independent examiner to investigate Washington Group
International Inc.'s decision to file for bankruptcy protection,
according to TheDeal.com. The judge also approved a $350 million
debtor-in-possession financing plan that will keep the company
in business as it reorganizes. Bankruptcy Judge Gregg W. Zive
ruled Thursday that an examiner should investigate the
circumstances that led Washington Group to file for chapter 11
bankruptcy protection in Reno, Nev., in May. Washington Group, a
Boise, Idaho-based construction company, has blamed a bad deal
with Raytheon Co. for causing a liquidity crisis. (ABI World,
June 15, 2001)


WHEELING-PITTSBURGH: Court Okays Mono Sales & Security Agreement
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corp. asked for Judge Bodoh's approval
of its entry into a sales contract with Mono Ceramics, Inc., for
the purchase of a slag control dart placement machine,
refractory darts, and related services, and for approval of the
Debtor's execution of a security agreement under which WPSC
would grant to Mono Ceramics a security interest in the
equipment to secure its payment obligation under the Sales
Contract.

The steel tapping process requires the use of slag control dart
placement machines to ensure the separation of liquid slag from
liquid steel. The slag control dart placement machines drop
refractory darts into the basic oxygen furnace while it is
tapping. The dart floats between the liquid slag and the liquid
steel. The dart is then pulled into the tapping plug to ensure
that the slat stays separated from the steel. It is a standard
practice in the steel industry for sellers of slag control dart
placement machines to provide labor and technical supervision to
steel manufacturers like WPSC.

WPSC proposed to enter into the sales contract with Mono
Ceramics to purchase one purpose-built slag control dart
placement machine at a cost of $160,000. The sales contract
provides that payment will be made in eight monthly installments
of $20,000, beginning 30 days after delivery, and continuing
every 30 days thereafter. The sales contract also requires WPSC
to purchase 100% of its requirements for refractory darts for 12
months from Mono at a price of $51 per dart. The proposed
contract also requires WPSC to pay $4,600 per month to Mono
Ceramics for labor and technical supervision relating to product
assembly, calibration, and maintenance. This service provision
may be terminated by either WPSC or Mono upon 30 days' written
notice.

The Sales Agreement also requires WPSC to enter into a Security
Agreement providing Mono Ceramics with a security interest in
the slag control dart placement machine to secure the payment of
the $160,000 purchase price of the machine. Events of default
under this Agreement include:

      (a) Failure of WPSC to pay any amount due under the Sales
          Contract within 30 days after the date on which the
          same becomes due;

      (b) Breach or failure by WPSC to observe or perform any of
          its other obligations, that continues for 30 days after
          written notification by Mono; and

      (c) Loss, theft, destruction or sale of all or a material
          portion of the machine.

Upon the occurrence of an event of default by WPSC, Mono
Ceramics may, at its election, declare the entire amount of
indebtedness then outstanding due and payable at once, and has
the right to take possession of and remove the slag control dart
placement machine.

In the absence of any objection, and with the consent of the DIP
lenders in place, Judge Bodoh granted the Motion and approved
the granting of the lien created by the Security Agreement on
the terms stated in the Motion. (Wheeling-Pittsburgh Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


WINSTAR COMM: Committee Seeks to Retain Cadwalader as Counsel
-------------------------------------------------------------
Cadwalader, Wickersham & Taft (CWT) is a law firm with extensive
experience, expertise and knowledge in the field of debtors' and
creditors' rights, and business reorganizations.  The Committee
believes CWT will be able to provide the most effective and
efficient representation of their interests.

By application, the Committee wants to retain and employ CWT as
its lead counsel for Winstar Communications, Inc.'s Chapter 11
cases, nunc pro tunc to April 27, 2001.  The attorneys presently
designated to represent the Committee, and their current hourly
rates, are:

                 Bruce R. Zirinsky   $650
                 Mark C. Ellenberg   $590
                 Jason A. Cohen      $320
                 Kenneth Epstein     $190

These hourly rates are subject to periodic adjustments.  Other
attorneys and paralegals may, from time to time, serve the
Committee.  Their hourly rates range from $120 to $195 for legal
assistants, $190 to $565 for associates, and $435 to $680 for
partners.

CWT also expect to be reimbursed of the actual and necessary
expenses incurred such as telephone and telecopier charges, toll
charges, mail and express mail charges, special or hand delivery
charges, document processing, photocopying charges, travel
expenses, expenses for "working meals", computerized research,
and transcription costs, as well as non-ordinary overhead
expenses like overtime for secretarial personnel and other
staff.

The professional services that CWT will render to the Committee
include, but are not limited to:

       (a) Assist, to advise and to represent the Committee with
respect to the administration of these cases and the exercise of
oversight with respect to the Debtors' affairs, including all
issues arising from or impacting the Debtors, the Committee or
these Chapter 11 cases;

       (b) Provide all necessary legal advice with respect to the
Committee's powers and duties;

       (c) Assist the Committee in maximizing the value of the
Debtors' assets (both foreign and domestic) for the benefit of
all creditors;

       (d) Pursue confirmation of a plan of reorganization and
approval of an associated disclosure statement with respect to
the Debtors;

       (e) Conduct an investigation, as the Committee deems
appropriate, concerning, among other things, the assets,
liabilities, financial condition and operating issues of the
Debtors;

       (f) Commence and prosecute any and all necessary and
appropriate actions and/or proceedings on behalf of the
Committee that may be relevant to this case;

       (g) Prepare on behalf of the Committee necessary
applications, pleadings, motions, answers, orders, reports and
other legal papers;

       (h) Communicate with the Committee's constituents and
others as the Committee may consider desirable in furtherance of
its responsibilities;

       (i) Appear in Court and to represent the interests of the
Committee; and

       (j) Perform all other legal services for the Committee,
which are appropriate, necessary and proper in these Chapter 11
cases.

CWT has approximately 400 attorneys and has offices in New York,
North Carolina, Washington D.C. and London, England.  The
Committee believes CWT's London office will be able to assist
the Committee, if necessary, in evaluating the foreign aspects
of these cases.

Cadwalader attorneys Bruce R. Zirinsky and Mark C. Ellenberg
will be primarily responsible for the representation of the
Committee. Both attorneys have good reputations and have
significant experience in complex Chapter 11 and litigation
proceedings.  Mr. Zirinsky is co-chair of CWT's Financial
Restructuring Department, while Mr. Ellenberg is partner in that
group.

Mr. Zirinsky admitted that CWT may have represented and may
continue to represent parties-in-interest of Winstar's Chapter
11 cases, but those representation is not related to the
Debtors' pending cases.

CWT disclosed that it has represented and may be presently
representing some prepetition lenders, postpetition lenders,
equity investors holding more than 5%, bondholders, unsecured
creditors such as: ABN-Ambro Bank, Alex Brown Investment
Management and Affiliates, Bank of New York, Bank of Nova
Scotia, Barclays Bank PLC, CIBC Inc., Citicorp USA Inc., Credit
Lyonnais, Credit Suisse First Boston, Dresdner Bank AG, Fleet
National Bank, General Electric Capital Corp., ING Capital
Advisors Inc., Janus Capital Management and Affiliates, J.P.
Morgan Chase & Company, MCI Communications Corp., Merrill Lynch
Asset Management, Morgan Stanley, P-Com Inc., Royal Bank of
Canada, Societe General, UBS AG, and United States Trust
Company.

But Mr. Zirinsky assured Judge Farnan that CWT will only
represent the Committee in these Chapter 11 cases.  Mr. Zirinsky
swore CWT is a "disinterested person" since neither CWT nor any
of its attorneys that will be working in the case represent any
matters adverse to the Debtors or the Committee in matters upon
which CWT is to be engaged. (Winstar Bankruptcy News, Issue No.
5; Bankruptcy Creditors' Service, Inc., 609/392-0900)

                            *********

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provided by DLS Capital Partners in Dallas, Texas.

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

                           *********

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

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

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

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