TCR_Public/010622.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

               Friday, June 22, 2001, Vol. 5, No. 122


AMERICAN HOMEPATIENT: Reaches Settlement With Federal Government
BETHLEHEM STEEL: Issues Revised Second Quarter 2001 Outlook
BID.COM INTERNATIONAL: Receives Nasdaq Delisting Notice
COLOR SPOT: S&P Cuts Subordinated Debt Rating to D From CCC
COMDISCO INC.: Moody's Junks Debt Ratings

CONVERGENT COMMUNICATIONS: Terminates Pact With Transfer Agent
COOKER RESTAURANT: Closes 12 Restaurants in Five States
CORRPRO COMPANIES: Shares Face Delisting From NYSE
COVAD COMMUNICATIONS: Posts $174.7 Million Loss For Q1 2001
CROWN VANTAGE: Completes Sale of St. Francisville Mill to Tembec

DERBY CYCLE: Selling Koninklijke Unit To Gazelle For EUR 142.5MM
EDISON INT'L: SCE Defers Quarterly Payment on 8-3/8% QUIDS
FINOVA GROUP: Employs Insignia/ESG, Inc. As Real Estate Broker
FRUIT OF THE LOOM: DDJ, Lehman & Mariner Start to Make Waves
GENESEE CORPORATION: Posts Losses For Fiscal Year End 2001

GRAPES COMM: S&P Affirms CCC- Long Term Rating, Outlook Negative
HOLLYWOOD ENTERTAINMENT: Discloses Senior Management Shake-Up
ICG COMMUNICATIONS: Moves To Assume Headquarters Lease
JPE INC.: Calls Off Annual Stockholders' Meeting This Year
LERNOUT & HAUSPIE: Belgian Court Rejects Recovery Plan

METROMEDIA FIBER: S&P Rates Corporate Credit Rating At B+
NATIONAL RECORD: Suppliers File Chapter 7 Involuntary Petition
NATIONAL RECORD: Involuntary Chapter 7 Case Summary
NETOBJECTS: Shares Subject To Delisting From Nasdaq

NETWORK COMMERCE: Appeals Nasdaq's Delisting Determination
NMT MEDICAL: Discloses Results of Annual Stockholders' Meeting
NORTHPOINT: Seeks To Convert Bankruptcy Case To Chapter 7
OWENS CORNING: Assumes Agreements With Northern Elastomeric
PLAY-BY-PLAY: Arturo Torres Steps Down as Chairman of the Board

PSINET INC.: Seeks Authority To Maintain Cash Management System
PSINET: Inks US$77MM Sale Pact With TELUS For Canadian Assets
RELIANCE GROUP: Honoring Prepetition Employee Obligations
SIDEWARE SYSTEMS: Recurring Losses Trigger Going Concern Doubts
SKG INTERACTIVE: Taps Rampart To Develop Reorganization Plan

TALON AUTOMOTIVE: Intends To File Pre-Negotiated Chapter 11 Plan
TALON RESOURCES: Bankruptcy Judge Rejects Union's Motion
TOWER RECORDS: Moody's Cuts MTS Inc.'s Senior Note Rating to Ca
WARNACO GROUP: Moves To Continue Cash Management System
WINSTAR COMMUNICATIONS: Hires Graubard Miller As Special Counsel

              Imprisonment for Debt, and Bankruptcy 1607-1900


AMERICAN HOMEPATIENT: Reaches Settlement With Federal Government
American HomePatient, Inc. (OTC:AHOM) announced that it has
reached a settlement with the federal government to resolve an
investigation by the Civil Division of the U.S. Department of
Justice (DOJ), the Office of the Inspector General of the
Department of Health and Human Services (HHS-OIG), and the
TRICARE Management Activity (CHAMPUS) relating to alleged
improprieties by the Company during the period from January 1,
1995 through December 31, 1998.

While the Company has denied these allegations and admitted no
liability, the terms of the settlement provide that American
HomePatient will pay $7.0 million, including an initial $3.0
million payment. The balance, including interest, is payable in
installments over the next 57 months. The Settlement has been
submitted to Judge Russell of the United States District Court
for the Western District of Kentucky for his final approval,
which is expected to be received.

American HomePatient has been dealing with this matter since
February 1998. The Company agreed to the settlement in order to
avoid delay, uncertainty, inconvenience and expense of
protracted litigation.

BETHLEHEM STEEL: Issues Revised Second Quarter 2001 Outlook
In its first quarter release, Bethlehem Steel Corporation (NYSE:
BS) said, "we expect to report a loss for the second quarter of
2001 that is less than the loss reported for the first quarter
of 2001." Bethlehem still expects this to be the case.

However, as a result of recent changes in Bethlehem's outlook
for the second quarter 2001, Bethlehem is issuing this release
in order to modify certain key assumptions relative to its
second quarter outlook, which were communicated publicly with
the release of its first quarter earnings on April 24, 2001.
Bethlehem now believes that:

     (1) Costs will be lower than the first quarter by about 3%.
         This reflects lower assumed cost reductions than
         previously assumed primarily because of the effects of
         temporarily idling its Hibbing Taconite iron ore mine,
         unplanned outages and repairs involving certain
         facilities, and lower operating rates.

     (2) Product mix will be worse than previously assumed
         because of continued weakness involving higher value
         cold rolled and coated products for non-automotive
         markets and a higher percentage of secondary product
         sales related to expediting the sales of slow moving

     (3) Shipments and steel prices are expected to be about the
         same as previously assumed (i.e., shipments about the
         same as in the first quarter, and prices, on a constant
         mix basis, lower by about 1%).

     (4) It will write-off its equity interest in MetalSite, an
         Internet marketplace for steel that ceased operations in

Regarding Bethlehem's new revolving credit agreement, Bethlehem
is continuing its efforts to syndicate a satisfactory new
agreement. However, since it is unlikely that this can be
completed by June 30, 2001, Bethlehem also has initiated a
process to obtain an amendment to its existing revolving credit
agreement and a waiver of the adjusted consolidated tangible net
worth covenant contained therein. Future liquidity will remain
dependent upon its sources of financing, completion of asset
sales, business conditions and operating performance.

BID.COM INTERNATIONAL: Receives Nasdaq Delisting Notice
Bid.Com International Inc. (NASDAQ: BIDS, TSE: BII), a global
provider of dynamic pricing solutions, received a Nasdaq Staff
Determination indicating that the Company fails to comply with
the $1.00 (US) minimum bid price requirement for continued
listing on the Nasdaq National Market set forth in Nasdaq
Marketplace Rule 4450(a)(5). Accordingly, the Company's common
stock is subject to delisting from the Nasdaq National Market.

Bid.Com will be requesting a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. While
there can be no assurance that the Panel will grant the
Company's request for continued listing, the Company is
exploring all possible avenues to preserve the Nasdaq listing.

Pending a final ruling, delisting will be stayed and Bid.Com's
common stock (NASDAQ: BIDS) will continue to be listed on the
Nasdaq National Market.

The Company's listing on the Toronto Stock Exchange is
unaffected by the Nasdaq notice.

               About Bid.Com International Inc.

Founded in 1995, Bid.Com (NASDAQ: BIDS, TSE: BII) provides a
comprehensive suite of dynamic pricing solutions that allow
organizations to buy and sell on-line more effectively. Thanks
to an award-winning and scalable technology platform, Bid.Com's
multiple transaction methods and strategic sourcing applications
can be integrated within any business-to-business or consumer-
based environment. Current customers and partners include GE
Capital, News International, Research In Motion, CapGemini,
ValueVision International Inc., Skerman Group and

Bid.Com has offices in Toronto (Ontario), Tampa (Florida), New
York, Sacramento (California), London (U.K.), Dublin (Ireland),
and Melbourne (Australia).

COLOR SPOT: S&P Cuts Subordinated Debt Rating to D From CCC
Standard & Poor's lowered its rating on Color Spot Nurseries
Inc.'s subordinated debt to 'D' from triple-'C' following the
firm's nonpayment of interest due on June 15, 2001. The
corporate credit and senior secured debt ratings are also
lowered to 'D' from single-'B'-minus and the preferred stock
rating is lowered to 'D' from triple-'C'-minus.

The ratings are removed from CreditWatch where they were placed
on April 3, 2001. Color Spot was in violation of financial
covenants under its secured bank facility as of the last test
date, April 28, 2001. The firm and its senior lenders have not
agreed on a waiver and amendment to the bank facility.
Therefore, the senior lenders did not consent to the
subordinated interest payment to be made on its due date. Color
Spot is currently negotiating with its senior lenders to allow
the company to make the subordinated interest payment within the
30-day grace period.

Color Spot Nurseries is one of the largest wholesale nurseries
in the U.S., providing a wide product portfolio and services to
leading national and independent home centers, mass merchants,
and commercial landscapers, Standard & Poor's said.

COMDISCO INC.: Moody's Junks Debt Ratings
Moody's Investors Service downgraded the ratings of Comdisco,
Inc. and its affiliate with approximately $4 billion of debt
securities affected. Said ratings are:

Comdisco, Inc.

      * Long Term Issuer to Caa1 from B2
      * Senior to Caa1 from B2

Comdisco Finance (Nederland) B.V. - guaranteed by Comdisco, inc.

      * Senior to Caa1 from B2

Moody's believes that the franchise power and value of
Comdisco's businesses has dropped, practically reducing their
value to a potential acquirer. Also, Moody's said that the
company has substantial debt maturities drawing near, yet
restricted financial flexibility would make it difficult to
successfully fulfill these obligations.

The rating agency opined that the likelihood of default has
risen but believes that there will likely be substantial
recovery for bondholders in case of a default.

Comdisco, Inc. is a technology services provider and technology
equipment lessor. The company headquarters is in Rosemont,

CONVERGENT COMMUNICATIONS: Terminates Pact With Transfer Agent
Convergent Communications, Inc. (OTC: CONV) announced that it
has terminated the agreement with the transfer agent for its
publicly held common stock, effective June 29, 2001.

On April 19, 2001, the Company and a subsidiary filed a
voluntary petition for protection under Chapter 11 of the
Bankruptcy Code with the U.S. Bankruptcy Court in Colorado.
Presently, the Company is negotiating a liquidation plan with
the official unsecured creditors committee, whereby the Company,
through a liquidating trust, will liquidate all of its assets
and distribute the proceeds to its creditors. The Company
anticipates that its assets will not be sufficient to satisfy
claims of its creditors and therefore there will be no
distribution to shareholders. Furthermore, this proposed plan
provides that all of the issued and outstanding shares of the
Company will be cancelled without compensation to the holders of
such shares.

Because claims of creditors will not be satisfied in full, the
Company believes that its outstanding equity is worthless.
Because of this assessment, the Company will not register or
keep track of any transfers of shares. If any shareholder of the
Company disagrees with the Company's assessment of the worth of
the shares, such shareholder may file a proof of interest with
the clerk of the U.S. Bankruptcy Court in the District of

COOKER RESTAURANT: Closes 12 Restaurants in Five States
The Cooker Restaurant Corporation (OTC Bulletin Board: CGRT)
announced that it has closed 12 restaurants in Florida (4),
Tennessee (3), Georgia (2), North Carolina (2) and Kentucky (1).
Henry R. Hillenmeyer, Chairman and CEO, said, "This leaves us
with 50 restaurants, all of which produce positive cash flows
for the Company. This concentrates our efforts in the markets
where we do the best."

The Company is currently going through Chapter 11
reorganization. The Company operates "Cooker Bar & Grille" full-
service restaurants in Florida, Georgia, Indiana, Kentucky,
Michigan, North Carolina, Ohio, Tennessee and Virginia. The
restaurants offer a family-friendly, cozy ambience, with menu
selections that include a wide variety of appetizers, soups,
salads, entrees, sandwiches and desserts, as well as a full
beverage menu in most locations; a large percentage of these
items are actually prepared "from scratch" daily, using original
recipes and fresh ingredients. Portion sizes are generous,
service is prompt, friendly and efficient, and The Cooker backs
everything with its famous "100% Satisfaction Guarantee."

CORRPRO COMPANIES: Shares Face Delisting From NYSE
Corrpro Companies, Inc. (NYSE: CO), the leading provider of
corrosion protection engineering services, systems and
equipment, reported that its revenue gains for the first two
months of its fiscal year ending March 31, 2002 have
accelerated, exceeding the year- earlier period.

Chairman, President and CEO Joseph W. Rog stated, "We are
pleased that our revenues are responding faster than we
anticipated, with strengthening in several of our key markets.
Our coatings business continues to exhibit strong growth and our
energy-related markets are gaining momentum. Selling, general
and administrative costs are in line with our expectations.
Taken together, these positive trends indicate that despite
higher interest costs, fiscal first-quarter earnings per share
could be in line with those of the prior year first-quarter."

As previously reported, the fiscal 2001 fourth-quarter loss
caused the Company to violate several of the financial covenants
included in its debt agreements. The Company has obtained
waivers of the covenant violations through the end of June 2001
and is working with its lenders to amend these agreements. It is
currently anticipated that amendments resetting the financial
covenants will be finalized by the end of this month.

Disappointing results in fiscal 2000 and fiscal 2001 coupled
with general market conditions helped to cause Corrpro's stock
to fall to new lows during March and April of this year. As a
result, Corrpro received notice from the New York Stock Exchange
("NYSE") that it falls below certain of NYSE continued listing
requirements. NYSE rules provide for a process involving the
submission of a plan that would result in compliance with
continuing listing requirements within 18 months. Corrpro is
providing the NYSE with a plan that it believes should result in
its meeting or exceeding all requirements for continued listing.
The NYSE will review the plan and decide whether to accept it.
If accepted, the Company will be subject to quarterly monitoring
for compliance with the plan. Should the Company's shares be
delisted, an alternative national trading venue will be pursued.

Corrpro, headquartered in Medina, Ohio, with over 60 offices
worldwide, is the leading provider of corrosion control
engineering services, systems and equipment to the
infrastructure, environmental and energy markets around the
world. Corrpro is the leading provider of cathodic protection
systems and engineering services, as well as the leading
supplier of corrosion protection services relating to coatings,
pipeline integrity and reinforced concrete structures.

COVAD COMMUNICATIONS: Posts $174.7 Million Loss For Q1 2001
Covad Communications Group, Inc. (Nasdaq:COVDE) announced
financial results for its first quarter of 2001.

Revenue for the quarter ended March 31, 2001 was a record $71.2
million, representing a 29 percent increase over revenue of
$55.2 million for the quarter ended December 31, 2000. Loss from
operations for the quarter ended March 31, 2001 was $174.7
million. Contributing to this loss for the quarter was Covad's
previously announced restructuring charge of $14.8 million.
Excluding this restructuring charge, the loss from operations
would have been $159.9 million in the first quarter, a reduction
of $99.8 million in comparison with the fourth quarter of 2000
loss from operations of $259.7 million, not including charges
for restructuring of $5.0 million and $589.4 million for
adjustments to the recorded value of long-lived assets to
reflect their fair value.

Covad's subscriber lines in service increased 16 percent to
319,000 lines, compared with 274,000 lines at December 31, 2000.
This represents a 243 percent increase from Covad's subscriber
lines in service of 93,000 at March 31, 2000.

"Our results show we have taken a great first step on a path to
profitability," said Chuck McMinn, chairman of Covad. "Our
operating performance has improved substantially this quarter as
we continue to focus on increasing our productivity, lowering
our costs, loading our network, and strengthening our
distribution channels.

"However, our industry continues to experience substantial
challenges and opportunities. Given some of the uncertainties
that still remain within our distribution channels and our
business in general, the financial and operating results for the
three months ended March 31, 2001, are not necessarily
indicative of the results that may be expected in future
quarters and the full year 2001," continued McMinn.

Although the company expects to reduce the number of lines
served through financially distressed ISPs in the second
quarter, these and other efforts to reduce exposure to
financially distressed ISPs are expected to result in lowered
net subscriber line additions for the second quarter to
approximately half the first quarter net subscriber line

"We are taking a very disciplined approach to our efforts to
strengthen our ISP channel. Although these efforts are not
always easy, we believe that they will greatly reduce our
exposure to financially distressed ISPs, allowing us to put this
issue behind us in the shortest amount of time possible," said

                 About Covad Communications

Covad is the leading national broadband services provider of
high-speed Internet and network access utilizing Digital
Subscriber Line (DSL) technology. It offers DSL, IP and dial-up
services through Internet Service Providers, telecommunications
carriers, enterprises, affinity groups, PC OEMs and ASPs to
small and medium-sized businesses and home users. Covad services
are currently available across the United States in 109 of the
top Metropolitan Statistical Areas (MSAs). Covad's network
currently covers more than 40 million homes and businesses and
reaches approximately 40 to 45 percent of all US homes and
businesses. Corporate headquarters is located at 4250 Burton
Drive, Santa Clara, CA 95054. Telephone: 1-888-GO-COVAD. Web

CROWN VANTAGE: Completes Sale of St. Francisville Mill to Tembec
Crown Vantage Inc. (OTC Bulletin Board: CVANE) and its wholly
owned subsidiary, Crown Paper Co. (collectively, "Crown"),
announced that Crown Paper has completed the sale of its
integrated mill located in St. Francisville, Louisiana and
certain related assets to Tembec Inc., a Quebec corporation. As
previously announced on June 6, 2001, Crown and Tembec had
entered into a definitive asset purchase agreement dated as of
June 1, 2001.

The consideration for the sale to Tembec includes $140 million
in cash and $45 million in shares of Tembec common stock (valued
as of the signing of the asset purchase agreement) subject to a
post-closing working capital adjustment. In addition, Tembec
agreed to assume certain liabilities of Crown.

Proceeds from the sale were primarily used to pay off and retire
the debt from the Debtor-in-Possession facility. Remaining
proceeds were used to settle at a discount the claims of Crown's
prepetition secured debt. In addition, approximately $8 million
in cash and some contingent consideration were left with Crown
to fund the activities of its estate. Management anticipates
that such funds and contingent consideration will primarily be
used towards payment of severance, professional fees, and other
actions to be taken by the estate of Crown. Management estimates
that none of the proceeds from the sale will be available for
distribution to Crown's unsecured creditors or shareholders.

The sale, structured as a sale of assets to a subsidiary of
Tembec under Section 363 of the Bankruptcy Code, was approved by
the United States Bankruptcy Court for the Northern District of
California at a hearing held on June 15, 2001.

Crown filed for Chapter 11 protection on March 15, 2000.
Pursuant to the Bankruptcy Code, it has continued to manage and
possess all of its properties until they are sold or abandoned.
The integrated mill in St. Francisville sold to Tembec was the
last remaining operating mill of Crown. Substantially all of the
assets of Crown have now been either sold or abandoned.

DERBY CYCLE: Selling Koninklijke Unit To Gazelle For EUR 142.5MM
The Derby Cycle Corporation announced that its subsidiary, Derby
Nederland B.V., had entered into a definitive sale and purchase
agreement for the sale of all issued and outstanding shares of
its subsidiary, Koninklijke Gazelle B.V., to Gazelle Holding
B.V., a company controlled by Gilde Investment Management B.V.
located in The Netherlands. In the agreement terms, the purchase
price is EUR 142.5 million in cash, less EUR 11.9 million of
debt and taxes outstanding of Gazelle as of June 1, 2001, and
subject to certain adjustments based on Gazelle's balance sheet
as of June 1, 2001. EUR 10.0 million of the purchase price will
be placed in escrow, to be released to the Company upon the
determination of certain contingencies.

The sale of Gazelle under the agreement is subject to approval
by the Dutch competition authority (Nederlandse
Mededingingsautoriteit or NMa). The Company anticipates that the
necessary approval will be obtained and that the sale will be
completed on or about 30 days from the date of the agreement;
however, no assurances can be given that the sale will be

Upon completion of the sale, the Company intends that the sale
proceeds will be used primarily to repay or collateralize all of
the outstanding amounts under its senior secured revolving
credit facility, to make past due interest payments on its $100
million principal amount of 10% senior notes and its DM110
million principal amount of 9 3/8% senior notes, to pay fees and
taxes resulting from the sale and to partially repurchase the
Senior Notes. The Company also intends to retain up to the
equivalent of $2.5 million of the sale proceeds for working
capital and general corporate purposes.

The proposed use of the sale proceeds by the Company is
contingent upon the Company's entry into amendments to the
indentures governing the Senior Notes. These amendments require
the consent of holders of at least a majority in aggregate
principal amount of the outstanding Dollar Senior Notes and DM
Senior Notes. The Company has reached agreement on the form of
such amendments with the committee representing a majority in
aggregate principal amount of the outstanding Dollar Senior
Notes and DM Senior Notes and expects to obtain the necessary

The Derby Cycle Corporation is a designer, manufacturer and
marketer of bicycles. Competing primarily in the medium- to
premium-priced market, the Company owns many of the most
recognized brand names in the bicycle industry, including
leading global brands such as Raleigh, Diamond Back and Univega,
and leading regional brands such as Kalkhoff, Musing, Winora and
Staiger in Germany.

EDISON INT'L: SCE Defers Quarterly Payment on 8-3/8% QUIDS
Southern California Edison (SCE) announced that it is deferring
the quarterly interest payment on its 8-3/8% Junior Subordinated
Deferrable Interest Debentures, Series A (QUIDS), normally
payable on June 30, 2001.

According to the indenture governing these securities, interest
payments may be deferred for up to 20 consecutive quarters. The
company said that during the deferral period, unpaid interest
installments will accrue interest at the applicable coupon rate.

Future quarterly payments of interest on SCE's QUIDS will be
deferred, in accordance with the indenture, until the company
resumes payments.

An Edison International (NYSE: EIX) company, Southern California
Edison is one of the nation's largest electric utilities,
serving a population of more than 11 million via 4.3 million
customer accounts in a 50,000-square-mile service area within
central, coastal and Southern California.

FINOVA GROUP: Employs Insignia/ESG, Inc. As Real Estate Broker
The FINOVA Group, Inc. Debtors sought and obtained the Court's
approval, under sections 327(a), 328(a) and 365 of the
Bankruptcy Code and Rule 2014 of the Bankruptcy Rules, for the
retention of Insignia/ESG, Inc., nunc pro tunc to May 1, 2001,
as the Debtors' exclusive real estate broker to identify and
negotiate a transaction for the sale, assignment or other
disposition (the "Assignment") of the unexpired nonresidential
real property lease and related fixtures and personal property
(the "Lease") for the Debtors' office space at 1065 Avenue of
the Americas, New York, 14th and 15th Floors.

The Debtors explained that they previously used the New York
Office in connection with the operation of their commercial
services and corporate finance lines of business, but those
lines of business have been discontinued and the New York Office
has been largely vacated and no longer needed. The Debtors
believe that they have some equity in the Lease, which can be
realized for the Debtors' estates.

The Debtors believe that the services of a real estate broker
are necessary to maximize the value of the Assignment of the
Lease. In their business judgment, the Debtors also believe that
the employment of Insignia as the exclusive real estate broker
for the Assignment of the Lease is in the best interest of the
Debtors' estates and their creditors.

Insignia is a real estate brokerage firm that represents
numerous corporations and other entities with respect to their
real estate requirements, including acquisitions, dispositions,
leases or otherwise. Founded in 1993, Insignia has continued to
offer its corporate clients the full scope of consulting and
strategic planning in connection with real estate transactions
involving a broad range of industries. Besides, as required by
section 327(a) of the Bankruptcy Code, Insignia (i) is a
"disinterested person" within the meaning of section 101(14) of
the Bankruptcy Code, (ii) holds no interest adverse to the
Debtors and their estates in connection with the matters for
which Insignia is to be employed, and (iii) has no connection to
the Debtors, their creditors or their related parties herein
except as disclosed in the Seidman Declaration.

The Debtors and Insignia entered into a real estate retention
agreement, dated May 1, 2001 under which Insignia will have the
sole and exclusive authority to offer the Lease for Assignment.
In this regard, Insignia has agreed to provide the Debtors with
various services, which may include the following:

     * Development and implementation of a marketing program;

     * Communication with potential assignees, brokers and
       additional parties who may have an interest in the Lease;

     * Solicitation of offers from prospective assignees,
       negotiation with prospective assignees, and
       recommendations to the Debtors as to particular offers;

     * Meeting with and working with the Debtors, their
       accountants and attorneys responsible for the
       implementation of the Assignment.

The Retention Agreement provides, among other things, that
commissions are to be calculated by multiplying the rent due for
the balance of the term of the Lease by the following rates:

           5% for the first full year,
           4% for the second year,
           3 1/2% for years three through five,
           2% for years six through ten,
           1% for years eleven through twenty, and
           1% for years twenty-one to the term of the Lease.

In addition, any sums (over and above the rent due under the
Lease) payable to the Debtors by an assignee will be averaged
over the portion of the term being assigned and added to the
rents due before applying the commission rates.

In addition to compensation for services rendered, the Retention
Agreement provides that, subject to the Court's approval, the
Debtors will pay expenses incurred by Insignia in connection
with the Assignment of the Lease, provided that the Debtors
approve such expenses. As required by sections 330 and 331 of
the Bankruptcy Code, the Bankruptcy Rules and the such local
rules and orders of the Court as apply, Insignia will seek the
specific approval of the Court for the allowance of its
commission and expenses in respect of its services. Due to the
nature of the services to be provided and the commission-based
structure of the Retention Agreement, Insignia will not maintain
time records.

The Retention Agreement has a term of the earlier to occur of
(i) December 31, 2001, (ii) the effective date of a plan of
reorganization under chapter 11 of the Bankruptcy Code, or (iii)
the date on which the Lease is rejected.

If the Debtors enter into an Assignment of the Lease, but such
transaction does not close until after the term of the Retention
Agreement, the Debtors will still be obligated to compensate
Insignia under the Retention Agreement. In addition, Insignia
will be entitled to compensation under the Retention Agreement
if, within six months following the termination of the Retention
Agreement, the Debtors enter into an Assignment of the Lease
with any party solicited by Insignia during the term of the
Retention Agreement. No commission or other compensation is
payable in the event of rejection. The Debtors are free to seek
such rejection at any time.

The Debtors made it clear that, in accordance with their
previous representations before this Court, they will not use
the assets of FINOVA (Canada) Capital Corporation or F1NOVA
Capital plc to compensate Insignia with respect to the
Assignment of the Lease, unless such compensation is due and
owing specifically for work performed by Insignia for FINOVA
(Canada) Capital Corporation or FINOVA Capital plc.

The Debtors indicated that they will file a separate motion
seeking the Court's approval of any proposed Assignment of the
Lease, as required by the Bankruptcy Code. (Finova Bankruptcy
News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-

FRUIT OF THE LOOM: DDJ, Lehman & Mariner Start to Make Waves
DDJ Capital Management, Lehman Brothers and Mariner Investments
moved the Court for an order authorizing and compelling
examination of documents from the Fruit of the Loom, Ltd.
custodian of records, pursuant to Rule 2004 of the Federal Rules
of Bankruptcy Procedure.

Michael R. Lastowski Esq., at Duane, Morris & Heckscher, tells
Judge Walsh that this motion is necessitated by the persistent
failure of Fruit of the Loom to provide bondholders with even a
single piece of paper regarding corporate assets, operating
statements or the substance of the adversary proceeding. The
Bondholders said it is inexcusable for Fruit of the Loom to
proceed with a plan of reorganization that gives nothing to
unsecured creditors holding $500,000,000 in debt and distributes
substantially all of the value to the secured creditors and
management and refuse to share documentation that explains the
rationale behind that plan.

Since March 15, 2001, the Bondholders have made diligent efforts
to obtain enough documentation to understand the plan and
determine whether to support it. Through the efforts of the
official committee and third parties, the Bondholders have been
able to obtain a small portion of Fruit of the Loom's financial
records and documentation relating to loans made to former Fruit
of the Loom CEO William Farley. Despite these efforts, the
Bondholders have received no documents from Fruit of the Loom.
This failure is significant and should not be permitted.
Bondholders need the requested documentation as soon as possible
to evaluate the financial condition of Fruit of the Loom, the
fairness of the plan and the merits of the adversary proceeding.

Mr. Lastowski relates that the Bondholders have had numerous
correspondences with Fruit of the Loom management, through
facsimile, teleconference, email and standard letter. But none
of these discussions have led to the production of the requested

It is well established, Mr. Lastowski argues, that the scope of
examination under Rule 2004 is very broad and great latitude on
inquiry is ordinarily permitted. In re Feim, 96 B.R. 135,
137(Bankr. S.D. Ohio 1999); In re Bazemore, 216 B.R. 1020,
1023(Bankr. S.D. GA 1998). Thus the Bondholders should be
permitted to conduct the examination and request the production
of documents.

The Bondholders want documents pertaining to a range of topics,

      (a) documents titled "Plans," "Plan Updates," "Long Range
Projections," and "Monthly Reporting Packages;"

      (b) documents that will permit comprehension of valuation
and help gauge accuracy of forecasts;

      (c) documents related to accounting and auditing;

      (d) correspondence regarding settlements pertaining to the
disclosure statement;

      (e) documents about directors and officers insurance;

      (f) documents relating to the adversary proceedings; and

      (g) documents about the credit relationship between the
banks and Mr. Farley.

Kevin J. Mangan Esq., at Walsh, Monzack & Monaco, on behalf of
Mr. Farley, reminds Judge Walsh that on June 23, 2000, the Court
entered a confidentiality order pertaining to Fruit of the Loom,
William F. Farley, Farley Inc., and Farley Industries. According
to Mr. Mangan, the Bondholders seek documents that fall within
the purview of the confidentiality order. Specifically, he
stated that paragraph 4 of the confidentiality order requires
that before any party discloses confidential material to a party
other than Fruit of the Loom, the Farley parties, the U.S.
Trustee, the official committee, the informal committee or their
employees, the party must submit a signed copy of the
confidentiality order. Therefore, Fruit of the Loom must not
produce the requested documents unless or until the Bondholders
and their counsel agree that they will be bound by the
confidentiality order. (Fruit of the Loom Bankruptcy News, Issue
No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900)

GENESEE CORPORATION: Posts Losses For Fiscal Year End 2001
Genesee Corporation (Nasdaq: GENBB) announced results for its
fiscal year ended April 28, 2001.

The Corporation is currently operating under a plan of
liquidation and dissolution that was approved by shareholders in
October 2000. Pursuant to this plan, the Corporation sold its
brewing business and a substantial portion of its equipment
leasing business in December 2000. As a result of these
transactions, the Corporation's brewing and equipment leasing
businesses are reported as discontinued operations.

Results for the Corporation's continuing operations reflect only
its Foods Division and corporate segment. The Corporation
continues to operate the Foods Division as it works with J.H.
Chapman Group, which was engaged in April 2001 to assist in
evaluating strategic alternatives for the divestiture of the
Foods Division.

Consolidated gross revenues in fiscal 2001 from continuing and
discontinued operations were $122,708,000, compared to
consolidated gross revenues of $172,069,000 in fiscal 2000. The
Corporation recorded a consolidated net loss of $2,414,000, or
$1.48 basic and diluted net loss per share in fiscal 2001,
compared to a consolidated net loss of $3,400,000, or $2.10
basic and diluted net loss per share, in fiscal 2000.

Gross revenues in fiscal 2001 from continuing operations were
$50,023,000, compared to gross revenues from continuing
operations of $48,548,000 in fiscal 2000. The Corporation
recorded a net loss from continuing operations of $1,064,000, or
$.65 basic and diluted net loss per share in fiscal 2001,
compared to a net loss from continuing operations of $1,141,000,
or $.70 basic and diluted net loss per share, in fiscal 2000.

Gross revenues in fiscal 2001 from discontinued operations were
$72,685,000 compared to $123,520,000 in fiscal 2000.
Discontinued operations generated a net loss of $1,350,000, or
$.83 basic and diluted net loss per share, in fiscal 2001,
compared to a net loss of $2,259,000, or $1.40 basic and diluted
net loss per share, in fiscal 2000.

Fiscal 2001 results from continuing operations were adversely
affected by $1.4 million of compensation expense that was
recorded in the fourth quarter as a result of the exercise of
employee stock options prior to the payment of the March 1, 2001
liquidating distribution.

Net sales for the Corporation's Foods Division were $46.5
million in fiscal 2001, compared to $45.5 million in fiscal
2000. Sales of artificial sweeteners and bouillon products
increased in fiscal 2001 compared to the prior year. However,
these gains were offset by a decrease in contract packaging
revenues and a decline in sales of iced tea mix. Contract
packaging revenues were adversely affected by a customer's
decision to change suppliers. Lower sales of iced tea mix were
caused by lower prices in response to, and the loss of some
accounts resulting from, aggressive competition from a Canadian
competitor that has access to lower priced raw materials under
United States sugar import quotas. The Foods Division was able
to partially offset lower revenues from iced tea mix sales with
sales of a new instant drink mix that was introduced in the
summer of 2000.

Despite lower sales, operating income for the Foods Division
increased to $1 million in fiscal 2001, compared to an operating
loss of $189,000 in fiscal 2000. The improvement in operating
performance was the result of operating efficiencies achieved in
the first full fiscal year of operations at the Foods Division's
Medina, New York facility. The Medina facility was acquired in
October 1998 and the plant modification and relocation project
was completed in January 2000. Also, the Foods Division
implemented aggressive cost reduction and efficiency improvement
initiatives in December 2000 that helped to improve operating
performance during the second half of fiscal 2001.

During the fourth quarter, the Corporation completed the post-
closing adjustment of the purchase price for the brewery sale
and received an additional $1.4 million from High Falls Brewing
Company, bringing the total purchase price for the brewery sale
to $27.2 million. Also in the fourth quarter of fiscal 2001, the
Corporation adjusted the $12.7 million pre-tax deferred gain
recorded on the sale of its brewing business to reflect $475,000
of employee severance costs accrued by the Corporation in
connection with the sale of the business and higher than
expected transaction expenses that were charged against the sale
proceeds. The pre-tax deferred gain from the brewery sale is now
recorded at $11.9 million.

Under the Corporation's plan of liquidation and dissolution, on
March 1, 2001 the Corporation paid to shareholders a partial
liquidating distribution of $7.50 per share. The amount and
timing of subsequent liquidating distributions will depend on a
number of factors, including without limitation, the risk of
default by High Falls Brewing Company on its payment and other
obligations under the promissory notes held by the Corporation;
risks associated with continued ownership and operation of the
Corporation's Foods Division; the possibility of delay in
finding buyers and completing the divestiture of the Foods
Division and other assets of the Corporation; possible
contingent liabilities and post-closing indemnification and
other obligations arising from the sale of the Corporation's
brewing, equipment leasing and other businesses; and risks
associated with the liquidation and dissolution of the
Corporation, including without limitation, settlement of the
Corporation's liabilities and obligations, costs incurred in
connection with carrying out the plan of liquidation and
dissolution, the amount of income earned on the Corporation's
cash equivalents and short-term investments during the
liquidation period and the actual timing of liquidating

GRAPES COMM: S&P Affirms CCC- Long Term Rating, Outlook Negative
Following the repayment and cancellation by Grapes
Communications N.V. of its EUR 175 million bank facility,
Standard & Poor's affirmed its triple-'C'-minus long-term
corporate credit rating on the company, a Rome-based provider of
communications services in Italy and Greece. The outlook is

At the same time, the rating on Grapes' EUR 200 million senior
unsecured notes was raised to triple-'C'-minus from single-'C',
as the cancellation of the secured bank facility has removed the
primary factor for the subordination of the company's senior
unsecured debt. Both the ratings were removed from CreditWatch,
where they had been placed with negative implications on March
14, 2001.

The EUR68 million cash proceeds from the sale of its fixed-line
and wireless local loop services in Spain to Portuguese
telecommunications operator ONI has enabled Grapes to fully
repay and cancel its secured bank facility, leaving the company
with an unrestricted cash balance of about EUR58 million.
With an estimated cash-burn rate of about EUR17 million per
quarter, Grapes is expected to have sufficient cash to fund its
operations for the coming two to three quarters.

                      Outlook: Negative

While Grapes has sufficient cash to fund its operations over the
coming two to three quarters, its ability to secure additional
funding during this period is a critical factor and remains
highly uncertain, Standard & Poor's said.

HOLLYWOOD ENTERTAINMENT: Discloses Senior Management Shake-Up
Hollywood Entertainment Corporation (Nasdaq: HLYW), owner of the
Hollywood Video chain of over 1,800 video superstores, announced
that it has hired Jim Marcum as Executive Vice President and
Chief Financial Officer replacing David Martin who has resigned.
The Company also announced that it has hired John Alderson as
Senior Vice President Stores Western Division and that Scott
Schultze, previously Executive Vice President and Chief
Administrative Officer, has been made Executive Vice President
and Chief Operating Officer.

Jim Marcum, the Company's new Executive Vice President and Chief
Financial Officer, started his career as an auditor with Coopers
and Lybrand, then spent 12 years with Melville Corporation, a
multibillion dollar conglomerate of retail specialty chains,
with positions including Assistant Corporate Controller,
Treasurer, and most recently Chief Financial Officer of
Marshall's Inc. After Melville, Mr. Marcum spent 6 years at
Stage Stores, Inc., a 600 store specialty apparel chain, most
recently as Vice Chairman and Chief Financial Officer.

Scott Schultze, the Company's new Executive Vice President and
Chief Operating Officer, joined the Company last year as
Executive Vice President and Chief Administrative Officer. Prior
to coming to Hollywood, he was employed for 10 years at the
Limited Stores division of The Limited, Inc., most recently as
Executive Vice President and Chief Financial Officer. Prior to
that, he was with the May Company for 10 years, most recently as
Vice President and Controller.

John Alderson, the Company's new Senior Vice President Stores
Western Division, was previously Senior Vice President,
Southwest Zone for Starbucks Corporation where he was
responsible for 800 stores. Prior to that, he was with Shoney's,
Inc. for 3 years, Steak and Ale Restaurants for 2 years and
Chart House Enterprises, Inc. for 25 years, most recently as

During the fourth quarter of 2000, the Company announced
significant changes in its management team and operating
structure. As part of the change in operating structure, the
Company split the financial functions and responsibilities
between David Martin, its Chief Financial Officer, and Scott
Schultze, its newly hired Chief Administrative Officer, allowing
Mr. Martin to spend greater time negotiating the restructuring
of the Company's bank facility, which has now been successfully

The previously announced changes in management include
reinstating Mark Wattles, the Company's founder, as President
replacing the previous President, hiring Scott Schultze as Chief
Administrative Officer and Sam Ellis as Chief Information
Officer and promoting Roger Osborne to Executive Vice President
of Stores. The announced changes and additions, together with
the completion of an ongoing search for a Senior Vice President
Stores Eastern Division, will complete the Company's planned
changes in management. The Company does not anticipate any
additional significant changes in its Senior Management team in
the near future.

Commenting on the management changes Mark Wattles, President and
Founder said, "I am excited about the management team we have in
place. Over the last eight months we have become a more
structured and financially disciplined company. The video
business can be a very profitable business if run correctly, and
I believe we have the management team in place to significantly
grow profits going forward. On behalf of Hollywood's management,
shareholders, and bondholders, I want to thank David Martin for
successfully leading the Company's negotiations with its
lenders, setting the stage for the Company to focus on growing
profits and generating free cash flow. Hollywood wishes David
the best and looks forward to working with him again in the
future when the opportunity arises."

Hollywood Entertainment owns and operates the second largest
video store chain in the United States. Hollywood Entertainment
and Hollywood Video are registered trademarks of Hollywood
Entertainment Corporation.

ICG COMMUNICATIONS: Moves To Assume Headquarters Lease
ICG Communications, Inc., and its related Debtors ask Judge
Peter Walsh to permit the assumption of their corporate
headquarters in Englewood, Colorado, with ICG Holdings, Inc.,
which in turn formerly leased it from the original lessor,
TriNet Essential Facilities X, Inc., a third party with which
the Debtors told Judge Walsh they have no affiliation.

Eric M. Davis, Esq., at Skadden, Arps, Slate, Meagher & Flom,
tells Judge Walsh that in January 1998 the Debtors established
their corporate headquarters at 161 Inverness Drive West in
Englewood. This property includes the Debtors' main office
complex, which was designed specifically for the Debtors. With
nearly 250,000 square feet of space, the headquarters houses
most of the Debtors' corporate employees and corporate offices,
as well as a leading-edge Network Operations Center for
monitoring the Debtors' national telecommunications network.
As the hub for the entire network, the Debtors' employees
monitor and maintain the Network Operations Center 24 hours a
day. Essentially, the Debtors conduct nearly every aspect of
their telecommunications business from the headquarters

During these chapter 11 cases, the Debtors have begun to
consolidate many of their local offices as part of their ongoing
efforts to reduce costs and expenses. As a result, employees
from such offices have been or will be transferred to the
headquarters property.

                     The Headquarters Lease

The Debtors occupy the headquarters as a tenant under a lease
with ICG Holdings, inc., a related Debtor, as lessee. The lessor
was originally a non-affiliated third party, TriNet Essential
Facilities X, Inc. Under the headquarters lease, holdings
initially provided TriNet with a $10 million security deposit.
The lease was entered into in January 1998, and currently
expires by its terms on January 31, 2013.

Starting in January 1999, a series of transactions were
consummated under which (a) the headquarters property was sold
by TriNet to Debtor ICG Services, Inc., for approximately $44
million, and (b) Services then sold the headquarters property to
ICG 161, LP. This partnership is a single-purpose limited
partnership formed specifically to own the property and be the
lessor under the headquarters lease.

Under the partnership agreement, 99% of the partnership is owned
by ICG Corporate Headquarters, LLC, and 1% is owned by TriNet
Realty Investments V., Inc., which is an affiliate of TriNet.
ICG Corporate is a wholly-owned subsidiary of Services, and
neither the partnership nor ICG Corporate are Chapter 11 Debtors
in these cases.

To finance the purchase of the headquarters property, Services
obtained a loan for approximately $33 million from another
TriNet affiliate, TriNet Realty Capital, Inc., secured by a deed
of trust on the headquarters property. Services utilized the $10
million security deposit to pay the balance of the purchase
price. (When Services acquired the property, it became the
holder of the $10 million security deposit originally provided
by Holdings. Services repaid Holdings the $10 million.) When
Services then sold the property to the partnership, the
partnership assumed the loan, Services became the guarantor on
the loan, and the partnership became the landlord under the
headquarters lease. The parties agreed that the security deposit
did not at that time have to be reinstated. In sum, Holdings
pays rent under the headquarters lease to the partnership, which
in turn makes the mortgage payment under the loan.

In addition, under the partnership agreement the TriNet partner
has an option to purchase ICG Corporate's interest in the
partnership and/or purchase the headquarters property for
approximately $43 million upon conditions such as a default in
Corporate's partnership obligations. With respect to this
option, the TriNet partner may satisfy a portion of the option
price by assumption of the loan (approximately $33 million). The
remaining $10 million of the option price, nominally payable to
ICG Corporate (Services' wholly-owned subsidiary), in fact must
be used to reinstate the $10 million security deposit under the
headquarters lease. Under the terms of the headquarters lease,
the security deposit would not be returned until January 2013.

        Construction of the Garage, Default & Foreclosure

In the spring of 2000, Services entered into a construction
contract with Bovis Lend Lease for construction of a parking
garage on the headquarters property. Thereafter, Services failed
to pay certain of Bovis' invoices. As a result, Bovis and its
subcontractors filed substantial mechanics' liens totaling over
$2.5 million against the headquarters property. In the autumn of
2000, Bovis shut down the project site, even though construction
with respect to the garage was not complete. Shortly thereafter
Bovis, along with several of its subcontractors, began pursuing
lien foreclosure actions against the headquarters property.
Since the headquarters property is owned by the partnership, a
non-debtor entity, the foreclosure actions are not stayed due to
the pendency of the Debtors' Chapter 11 cases.

The current condition of the garage, which still is only
partially constructed, may violate local and county regulations,
as well as covenants with the business park that houses the
headquarters property. These violations arguable constitute
triggering events with respect to the TriNet partner's purchase
option, and the existence of the mechanic's liens on the
headquarters property are events of default under the
headquarters lease.

          Settlement of Garage & TriNet Dispute

By Motion, the Debtors seek an Order authorizing them to enter
into a settlement agreement with the TriNet partner to resolve
the numerous problems associated with the construction of the
garage and to restructure the ownership interest of the
property. Indeed the problems associated with the garage
construction have become acute:

      (a) The TriNet partner alleges that its purchase option
currently is exercisable;

      (b) The state of the garage, which is in essence an
abandoned and incomplete construction site, may pose a threat to
employees and visitors to the headquarters property and
therefore is a potential source of liability for the Debtors and
the partnership;

      (c) "The garage, and perhaps the entire headquarters
property, could be subject to foreclosure and regulatory action;

      (d) Given the Debtors' plan to transfer numerous additional
employees to the headquarters location, the need for additional
parking spaces, and as a result the completion of the garage,
has increased substantially.

In light of the foregoing, and after extensive negotiations, the
Debtors and the TriNet partner agree to restructure their
existing relationship, resolve the mechanics' lien against the
headquarters property, and provide for the completion of the

              The TriNet Partner Settlement

      (1) The Loan. ICG Corporate will be bought out of the
partnership under the purchase option, and the lender and the
partnership shall modify the loan documents to provide for
additional loan advances, up to $7.8 million to the partnership,
to fund completion of the garage (including arrearages and
mechanics' liens). The documents modifying the loan will provide
that the loan proceeds will be disbursed through a bank account
requiring joint signatures of the lender and the partnership.
The Deed of Trust will be modified and a title endorsement shall
be obtained, to reflect the additional loan advances. The
Debtors and ICG Corporate will receive a full release from any
and all obligations they may have as guarantor under the loan.
The construction contract and related architecture agreement
will be assigned to the lender as additional security for the

      (b) The Headquarters Lease. The headquarters lease will be

          (i) the security deposit requirement will be deleted;

         (ii) the partnership will release Holdings from any
obligation under the headquarters lease to pay for any costs
relating to the design, development and construction of the
garage, whenever incurred; provided, however, Holdings will fund
any costs in excess of a cost ceiling;

        (iii) The improvements to the garage shall be deemed
property of the partnership and part of the headquarters
property and Holdings will be responsible for operating costs
associated with the garage, such as taxes, insurance and

         (iv) The term of the headquarters lease will be extended
by ten years beyond the current expiration date, with rent
during the extension period being determined under the existing
headquarters lease;

          (v) The headquarters lease will be amended to provide
that Holdings may freely assign its rights under the lease to
any non-affiliated third party that acquires more than 50% of
the Debtors' assets or a majority of the Debtors' voting
securities for one year after the closing date, without the
landlord's consent. The headquarters lease will also be amended
to provide that any purchaser, or Holdings in the event that
Holdings is liquidated, may subsequently reject the lease after
assumption at any time during the pendency of these Chapter 11
cases, and that the administrative claim for damages to the
landlord resulting therefrom will be equal to two years' rent
from the date of rejection;

         (vi) The headquarters lease currently provides that
Holdings must pay for certain reasonable operating expenses with
respect to the headquarters property, which are costs in excess
of the rent payment. These provisions will be modified to
reflect the amendment to the Property Management Agreement,
eliminating Holdings' obligation to pay for certain overhead and
employee costs.

      (c) The Partnership Agreement. The TriNet partner and ICG
Corporate will agree that the purchase option is presently
exercisable and that the option price will be payable solely
through the TriNet partner's assumption of the loan and the
TriNet partner's agreement to the amendments to the headquarters
lease. The TriNet partner will retain the balance of what would
have been the remaining $10 million cash purchase price free of
any claim from Holdings, ICG Corporate or any other person. The
proceeds of the additional loan advances will remain property of
the partnership to which the TriNet partner is entitled, without
prorations, upon closing of the purchase option. At the closing
the TriNet partner will exercise the purchase option and acquire
ICG Corporate's interest in the partnership or, if the TriNet
partner elects, acquire the property by deed and dissolve the

      (d) The Construction Contract. The construction contract
will be assigned to the partnership. The lender and/or the
partnership shall give Bovis assurance that they will fund the
garage construction up to the cost ceiling. The partnership will
complete the garage and, in connection therewith, consult
regularly with Services and permit Services to attend
construction meetings.

      (e) Corporate Headquarters Management. The existing
Property Management Agreement between the partnership and TriNet
Property Management, Inc., will be amended to eliminate the
partnership's obligation to reimburse the Manager's overhead and
employee costs other than 50% of the employment costs for a
property manager and an administrative assistant.

      (f) Closing Date. Each of the transactions describe above,
including the loan modification, the headquarters lease
amendment, the exercise of the purchase option, the modification
and assignment of the construction contract, and the amendment
of the property management agreement, will occur and become
effective on the same date, and as soon as reasonably
practicable, but in no event later than June 30, 2001.

      (g) Lease assumption. Upon assumption of the headquarters
lease as amended, (i) Holdings will be released from any
obligation to cure existing defaults and/or past defaults under
the headquarters lease; (ii) ICG Corporate will be released from
all past defaults (and/or alleged breaches of fiduciary duties)
under the partnership agreement or the loan documents, and (iii)
Services will be released from all past defaults or claims under
the loan documents.

Additionally, under this Motion Holdings seeks authority to
assume the amended headquarters lease.

                   The Debtors' Rationale

The headquarters is absolutely essential to the continued
operation of the Debtors' businesses. A settlement is favored in
chapter 11 cases and should be approved unless it falls below
the lowest point of reasonableness. The Debtors argue that this
settlement is highly favorable to them and their estates. The
garage will be completed with little or no cash from the
Debtors. All mechanics' liens and related litigation, which is
not stayed, will be resolved. Services' contingent liability on
the mortgage will be released, and Holdings will continue to be
the tenant under the lease, which will have been extended for 10
years. The headquarters lease will be assumed, but if
subsequently terminated within the stipulated time period, will
have a damage cap of two years' rent. The headquarters lease
will be freely assignable to a third party for one year.
Holdings' obligation to pay certain operating costs under the
headquarters lease will be reduced, which would result in
approximately $65,000 in savings per year.

The only real economic concession made by the Debtors under the
settlement is the relinquishment of the right to receive the $10
million "equity" in the property in the future, as a security
deposit return. The Debtors submit, however, that this equity is
illusory. First, it could only be recovered in the form of a
security deposit return after the headquarters lease expires
well into the future. Second, Holdings could not assume the
headquarters lease - as it eventually must - without curing the
garage-related defaults by either completing the garage or
tearing it down, in either case at significant expense. Thus the
settlement represents the reasonable business judgment of the
Debtors and is appropriate under the Bankruptcy Code.

There is more than adequate reason to assume the headquarters
lease. Not only are most of the Debtors' employees located at
the premises, but the headquarters property serves as the hub
for the Debtors' nationwide telecommunications network. Any
movement of the operations from the headquarters property to
another site would be extremely costly, time consuming, and
would require significant capital expenditures. Accordingly, the
Debtors argued, assuming the lease as amended is in the best
interests of these estates and creditors. (ICG Communications
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

JPE INC.: Calls Off Annual Stockholders' Meeting This Year
The shareholders of JPE, Inc. are receiving notice as
shareholders of record that a Written Consent in Lieu of an
Annual Meeting of Shareholders will be executed on July 9, 2001.
It is anticipated that holders of 94.1% of the Company's Common
Shares and First Series Preferred Shares will execute the
Written Consent (1) electing the nominee director, (2) approving
an amendment to the Company's 1993 Stock Option Incentive Plan
for Key Employees and (3) ratifying the reappointment of Ernst &
Young LLP as the Company's independent accountants for fiscal

The Board of Directors and management of the Company indicate
that they are not aware of any other actions that will be
authorized in such consent. Because execution of the Written
Consent is assured, the Company's Board of Directors believes it
would not be in the best interest of the Company and its
shareholders to incur the costs of holding an annual meeting or
of soliciting proxies or consents from additional stockholders
in connection with these actions. Based on the foregoing, the
Board of Directors of the Company has determined not to call an
Annual Meeting of Shareholders, and none will be held this year.

Only shareholders of record of the Company's Common Shares and
First Series Preferred Shares at the close of business on June
13, 2001 will have received this Notice of Consent in Lieu of
Annual Meeting of Shareholders.

LERNOUT & HAUSPIE: Belgian Court Rejects Recovery Plan
A Belgian judge on Wednesday rejected Lernout & Hauspie Speech
Products NV's recovery plan and said the company should draw up
a new restructuring proposal, according to Dow Jones. The plan
had been approved by the company's creditors, but the judge at
the Ieper commercial court said it lacked substance.

"The recovery plan lacks the necessary transparency towards
creditors and it excels in vague and theoretical construction
based on wishful thinking," Judge Michel Handschoewerker said.
The court extended temporary bankruptcy protection to Sept. 30
and said L&H must come up with a new recovery plan by Sept. 10.
The court set a Sept. 18 hearing date when creditors, court-
appointed administrators and L&H will meet in Ieper to discuss
the plan. The rejected plan proposed either selling L&H's speech
and language technology or forming a new company from those
assets. The judge particularly criticized the failure to give
guarantees to creditors. (ABI World, June 20, 2001)

METROMEDIA FIBER: S&P Rates Corporate Credit Rating At B+
Standard & Poor's placed its single-'B'-plus corporate credit
rating on Metromedia Fiber Network Inc. (MFN) on CreditWatch
with negative implications. The preliminary triple-'C'-plus
preferred stock rating on the company's shelf registration was
also placed on CreditWatch negative.

The single-'B'-plus senior unsecured debt rating and the
preliminary single-'B'-plus senior unsecured rating on the
company's shelf registration remain on CreditWatch negative,
where it they were placed May 23, 2001. The senior unsecured
debt rating was originally placed on CreditWatch due to Standard
& Poor's expectation that the concentration of priority
obligations relative to total assets could require the debt
rating to be notched below the corporate credit rating.

The CreditWatch on the corporate credit rating reflects concern
about the company's ability to aggressively expand its business
over the next few years. Such concern is largely the result of
the company's recent announcement that it revised its revenue
guidance for 2001 based on general economic weakness and a
market downturn, both of which have had an adverse effect on the
company's Internet infrastructure business.

MFN's net change in EBITDA guidance from previous levels is not
material. However, because the concomitant revenue guidance
provided by MFN for the second through fourth quarters of 2001
was lowered by as much as $75 million, the company's ability to
grow its overall business base over the next few years may be
affected, especially if price declines in the Internet
infrastructure services sector are substantially more than

Moreover, the funding of MFN's operating and capital
requirements over the next few years incorporates near-term
receipt of a $350 million bank facility, which has not yet
closed. The company has until June 30, 2001, to enter into
definitive documentation for the senior credit facility or the
commitment will expire. Failure to close on this facility will
result in a near-term liquidity issue.

Standard & Poor's will review the company's business and
financial plans with management, in light of the more risky
economic market environment, to determine if the overall credit
profile is still supportive of the current ratings.

NATIONAL RECORD: Suppliers File Chapter 7 Involuntary Petition
On Tuesday, June 19, 2001, an Involuntary Petition under title
11 of the Bankruptcy Code was filed in the United States
Bankruptcy Court for the Western District of Pennsylvania
against National Record Mart, Inc. (OTC Bulletin Board: NRMI)
requesting an order for relief under Chapter 7 of the Bankruptcy
Code. The Involuntary Petition was filed by five of the
Company's major suppliers, Universal Music and Video
Distribution, Inc., BMG Distribution, EMI Music Distribution,
Sony Music Entertainment, Inc. and Warner/Elektra/Atlantic (WEA)
Corporation. National Record Mart, Inc., which operates 131
stores under the names National Record Mart or NRM Music, Waves
Music, Music Oasis, Vibes Music and Music X, will continue to
operate in the ordinary course of business while management
evaluates the petition and the Company's options with respect to
the filing.

NATIONAL RECORD: Involuntary Chapter 7 Case Summary
Alleged Debtor: National Record Mart, Inc.
                 507 Forest Avenue
                 Carnegie, PA 15106-2873

Involuntary Petition Date: June 19, 2001

Case Number: 01-26462             Chapter: 7

Court: Western District of Pennsylvania (Pittsburgh)

Judge: M. Bruce McCullough

Petitioners' Counsel: Michael A. Bloom, Esq.
                       Morgan, Lewis & Bockius LLP
                       1701 Market Street
                       Philadelphia, PA 19103-2921


                       Melissa Furrer, Esq.
                       Morgan Lewis & Bockius LLP
                       One Oxford Centre, 32nd Fl.
                       Pittsburgh, PA 15219

Petitioners: Universal Music and Video Distribution, Inc.
              BMG Distribution
              EMI Music Distribution
              Sony Music Entertainment, Inc.

NETOBJECTS: Shares Subject To Delisting From Nasdaq
NetObjects (Nasdaq: NETO), a leading provider of e-business
solutions and services, announced that it has requested
continued listing on The Nasdaq National Market.

NetObjects received a Nasdaq Staff Determination on June 13,
2001, indicating that the Company's bid price has not complied
with the minimum bid requirement for a continued listing in
accordance with Marketplace Rule 4450(a)(5), which requires the
Company's common stock to maintain a minimum bid price of $1.00
per share, and that its securities are, therefore, subject to
delisting from The Nasdaq National Market.

NetObjects has appealed the staff's determination to the Nasdaq
Listings Qualifications Panel. The company has requested a
hearing before this panel and intends to take steps (to the
extent consistent with the findings of the panel) to avoid
delisting of the common stock. The hearing will be held on July
26, 2001.

Separately, NetObjects also announced that it has retained
Broadview International LLC. Broadview is serving as an advisor
to NetObjects to evaluate its strategic business options.

Earlier this month NetObjects announced a new, hosted version of
the NetObjects Matrix Web Services platform, an agreement with
IBM Global Services and Telecom Italia, three new channel
partner programs, and a host of relationships with companies
that are integrating their Web Services into the NetObjects
Matrix platform. NetObjects Matrix is next-generation technology
with open, component-based interfaces that allow third-party Web
Services to integrate seamlessly into the Web site building and
hosting process. Positive response to this advanced technology
further positions the Company to pursue strategic business

                     About NetObjects

NetObjects, Inc., an IBM affiliate (NYSE: IBM), is a leading
provider of e-business solutions and services, including
NetObjects Fusion and NetObjects Matrix. NetObjects has been
ranked by Softletter 100, NewMedia 500 and as one of Fortune's
25 Very Cool Companies. Its products have won more than 75
awards, including Windows Magazine's Win 100 award, InfoWorld's
Analyst Choice award, CNET's Internet Excellence award, PC
Magazine's Editors Choice award and InternetWorld's Industry
Award. More information about NetObjects and its products can be
found at

NetSol International, Inc. (Nasdaq: NTWK) has engaged
international investment bank SOFTBANK Investments as a
financial advisor for the company.

The company will immediately begin working with SOFTBANK
Investments, with the goal of bringing the company to
profitability in the short term, and maximizing shareholder
value in the long term. SOFTBANK Investments is highly confident
the company can raise additional capital, and plans to
aggressively pursue acquisition opportunities, strategic
partnerships, and creative methods of building the customer

                About SOFTBANK Investments

SOFTBANK Investments International (Strategic) Limited is a Hong
Kong based financial services division of SOFTBANK Inc. SOFTBANK
is pioneering the global Internet economy with innovation,
capital and expertise -- building great Internet companies whose
products and services will over time enhance the quality of life
throughout the world. For more information about SOFTBANK Inc.
visit its website at,and for more
information on SOFTBANK Investments visit its website at

              About NetSol International Inc.

NetSol International Inc. is an ISO-9001 certified software
developer in the global information technology industry. With an
international workforce of more than 400 employees, NetSol
specializes in software development, proprietary and asset-based
leasing and finance programs, IT consulting, and creation of
eBusiness and Web-based solutions for a growing list of blue-
chip customers worldwide. Clients include Daimler Chrysler
Taiwan; Mercedes Benz Financing, Australia; Mercedes Benz
Leasing, Thailand; Volvo Finance Australia; International
Decision Systems, Inc.; St. George Bank, Australia; GMAC in
Australia; Debis Portfolio Systems, U.K.; VoiceStream; Prism
Inc, USA; Global One, USA; Clinical Interactions and Askari
Leasing Ltd. For more information about NetSol and its
subsidiaries, visit the company's web site

NETWORK COMMERCE: Appeals Nasdaq's Delisting Determination
Network Commerce Inc. (Nasdaq:NWKC, temporarily NWKCD), the
technology infrastructure and services company, has requested a
hearing from Nasdaq to appeal a notice regarding the potential
delisting of the company's common stock from the Nasdaq National

The hearing request will defer the delisting of the company's
securities, pending a decision by the Nasdaq Listing
Qualifications Panel. In its notice to the company, Nasdaq
informed Network Commerce that it had failed to maintain a
minimum bid price of at least $1.00 per share in accordance with
NASDAQ Marketplace Rule 4450(a)(5).

"Throughout this process, Network Commerce is continuing to
provide the suite of core online business services our customers
depend upon, and we are building upon those to develop our next
product offerings and continue the drive toward profitability,"
said Dwayne Walker, Chairman and CEO of the Company, "Given our
substantial base of customers and our expected achievement of
profitability from non-recurring items for the quarter ending
this month, we remain confident in the possibilities for our
future and in the business opportunity in the online business
services market." Network Commerce's common stock will remain
listed and will continue to trade on the Nasdaq National Market,
until the Nasdaq Listing Qualifications Panel reaches its
decision. There can be no assurance as to when Nasdaq will reach
a decision, or that such a decision will be favorable to the
company. An unfavorable decision would result in immediate
delisting, but would allow Network Commerce, if a sufficient
number of market makers apply for listing, to be traded through
the Over the Counter Bulletin Board.

               About Network Commerce Inc.

Established in 1994, Network Commerce Inc. (Nasdaq:NWKC,
temporarily NWKCD) is the technology infrastructure and services
company. Network Commerce provides a comprehensive technology
and business services platform that includes domain
registration, hosting, commerce, and online marketing services.
Network Commerce is headquartered in Seattle, WA.

NMT MEDICAL: Discloses Results of Annual Stockholders' Meeting
NMT Medical, Inc. (Nasdaq/NMS: NMTI) announced the results of
its 2001 Annual Meeting of Stockholders, which was held June 7,
2001, at 1:30 p.m., Eastern Daylight Time, at the World Trade
Center, 164 Northern Avenue, Boston, Massachusetts.

Specifically, the stockholders elected current directors John E.
Ahern, Robert G. Brown, Cheryl L. Clarkson, R. John Fletcher,
James E. Lock, M.D., Francis J. Martin and Morris Simon, M.D.
Additionally, the Company's 1996 Stock Option Plan for Non-
Employee Directors was amended, the Company's 2001 Employee
Stock Purchase Plan and 2001 Stock Incentive Plan were approved
and the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the current year was

Those attending the meeting had an opportunity to hear Mr.
Ahern, NMT Medical's, President and Chief Executive Officer,
review the progress of the Company during the past several
months and discuss the Company's strategic and operational
objectives for the future.

The record date for stockholders to vote at the Annual Meeting
was April 23, 2001. A formal meeting notice, agenda and proxy
card were mailed along with the Company's proxy statement and
2000 annual report in early May.

The Company also reported that on June 1, 2001, C. Leonard
Gordon resigned from the Board of Directors of NMT Medical, Inc.
citing differences with Company management and the Board
concerning the strategic direction of the Company as the reason
for his resignation. Mr. Gordon was not a nominee of the Board
of Directors for election at the annual meeting.

NMT Medical designs, develops and markets innovative medical
devices that utilize advanced technologies and are delivered by
minimally invasive procedures. The Company's products are
designed to offer alternative approaches to existing complex
treatments, thereby reducing patient trauma, shortening
procedure, hospitalization and recovery times, and lowering
overall treatment costs. The Company's cardiovascular business
unit provides the interventional cardiologist, interventional
radiologist, and vascular surgeon with proprietary catheter-
based implant technologies that minimize or prevent the risk of
embolic events. The cardiovascular business unit also serves the
pediatric interventional cardiologist with a broad range of
cardiac septal repair implants delivered with nonsurgical
catheter techniques. The NMT neurosciences business unit serves
the needs of neurosurgeons with a range of implantable and
single-use products, including cerebral spinal fluid shunts,
external drainage products, and the Spetzler(TM) Titanium
Aneurysm Clip.

NORTHPOINT: Seeks To Convert Bankruptcy Case To Chapter 7
According to documents obtained by,
NorthPoint Communications, Inc. filed a motion seeking a U.S.
Bankruptcy Court order converting its Chapter 11 reorganization
case to a Chapter 7 liquidation.  The Court scheduled a July 23,
2001 hearing to consider the motion. (New Generation Research,
June 20, 2001)

OWENS CORNING: Assumes Agreements With Northern Elastomeric
Owens Corning asked Judge Fitzgerald to permit it to assume, as
modified, a shareholders agreement and private label agreement
with Northern Elastomeric, Inc. In 1999 Owens Corning entered
into a Stock Purchase Agreement with NEI and the then
shareholders of NEI. Under this Agreement, Owens Corning
purchased 83,162 shares of Class A common stock and 26,590
shares of Class B common stock from NEI and acquired 52,515
shares of Class A common stock and 17,018 shares of Class B
common stock from the shareholders. As a result of this
Agreement, Owens Corning became the 50% owner of all of the
issued and outstanding class A and Class B common stock of NEI.
As a requirement of this Agreement, Owens Corning and NEI
entered into a Private Label Agreement and along with the
shareholders, a Shareholders Agreement.

NEI is the developer, manufacturer and distributor of asphalt-
based ice and water protection residential roofing products
which are known as "Weatherlock" products. In the past several
years, NEI has expanded its Weatherlock product line, developing
a high-temperature ice and water shield, a "low slope" product,
and an underlayment for use under metal which was among the
first of its kind in the industry. Although NEI had been
developing new products and expanding its product line, its
growth had been limited by its lack of marketing presence and
competition in the market from various roofing companies.

In an effort to expand its business operations and customer
base, NEI was looking for an appropriate business partner to
help NEI facilitate and accelerate further growth. In 1997, NEI
began supplying to Owens Corning 50% of its Weatherlock
requirements and since such time the two companies have enjoyed
a positive business relationship. In 1999, NEI and Owens Corning
began the negotiation of a joint venture agreement whereby Owens
Corning would acquire 50% of the stock of NEI.

                 The Private Label Agreement

The Private Label Agreement provides that, beginning February
24, 2000, NEI is to supply to Owens Corning 100% of Owens
Corning's requirements of Weatherlock. The Weatherlock product
is produced in accordance with certain product and packaging
specifications as identified by Owens Corning, using Owens
Corning's trademarks, Tradenames and logos. Nothing in the
Private Label Agreement, however, requires Owens Corning to
purchase from NEI any minimum quantity of product. The term of
the Private Label Agreement began on October 14, 1999, and
continues until the earlier of four years from the date of NEI's
sale of its business to a third party or a period of 7 years,
and contains renewal options.

                  The Shareholders Agreement

The Shareholders Agreement dated October 14, 1999, sets forth
certain put and call rights of the Debtor and the Shareholders.
Until October 14, 2002, which is the third anniversary of the
date of the Shareholders Agreement, the shareholders are not
permitted to make any disposition of any part of their stock in
NEI. However, after the third anniversary of the Shareholders
Agreement, Owens Corning may exercise its rights to call, or
purchase, the NEI stock held by the shareholders under certain
procedures. Similarly, after the third anniversary of the
Shareholders Agreement, the Shareholders may exercise their put,
or sale, rights to Owens Corning with respect to the NEI stock
held by the shareholders. However, despite the shareholders'
ability to put their shares, Owens Corning has no obligation to
purchase the shares from the shareholders. In the event that
Owens Corning chooses to purchase the shareholders' stock, it
must pay cash to the shareholders in an amount equal to
approximately the fair market value of NEI. In the event that
Owens Corning rejects the shareholders' put, Owens Corning and
the shareholders' representative will use their best efforts to
market and sell all of the NEI stock held by both Owens Corning
and the shareholders, or alternatively all of the assets of NEI,
to a third party.

                    The Amended Agreements

In an effort to further expand the marketing and growth
potential of Weatherlock and other NEI products and in an effort
to enhance the business opportunities for the parties, the
Debtor and NEI, subject to this Court's approval, have agreed to
modify, amend and assume the Private Label Agreement and the
Shareholders Agreement.

             The Amended Private Label Agreement

The Amended Private Label Agreement provides that NEI will, in
addition to manufacturing and supplying to Owens Corning 100% of
Owens Corning's requirements of Weatherlock, also manufacture
and supply to Owens Corning a variety of other products.
Further, unlike the Private Label Agreement, the Amended Private
Label Agreement requires Owens Corning to purchase from NEI
sufficient minimum product amounts to generate certain gross
sales to NEI. In the event that Owens Corning fails to purchase
enough products from NEI to meet certain minimum purchase
obligations for the years 2001 through 2004, Owens Corning must
pay a pre-established shortfall payment. In return for this
minimum purchase obligation, the Amended Private Label Agreement
provides that Owens Corning is to be the sole marketer and
exclusive distributor of a majority of NEI products and provides
some amended term and termination provisions.

              The Amended Shareholders Agreement

The Amended Shareholders Agreement modifies and amends some of
the put and call provisions contained in the Shareholders
Agreement. For example, the Shareholders Agreement provides that
Owens Corning cannot exercise its call rights and the
shareholders cannot exercise their put rights until the third
anniversary of the Shareholders Agreement. The Amended
Shareholders Agreement provides that Owens Corning's call rights
can be exercised after delivery to Owens Corning of NEI's fiscal
year 2003 financial statements and the shareholders put rights
can be exercised after delivery of the fiscal year 2004
financial statements. Further, unlike the Shareholders
Agreement, under the Amended Shareholders Agreement, not only
can Owens Corning exercise its rights to purchase from the
Shareholders their NEI stock, but Owens Corning can elect to
have NEI purchase the shares held by the Shareholders through a
redemption. Additionally, the Amended Shareholders Agreement
provides that the shareholders may exercise their put rights to
NEI. If such put rights are exercised, NEI is obligated to
redeem the NEI shares held by the Shareholders. Finally, the
Amended Shareholders Agreement provides that the consideration
for the purchase of the stock held by the shareholders can be in
the form of part cash and part note, payable in three annual

              The Debtor's Business Justifications

The Debtor's decision to assume, as modified, the Agreements is
an exercise of its sound business judgment. As a result of the
Amended Private label Agreement and the Amended Shareholders
Agreement, both of which provide Owens Corning with the benefit
of more favorable terms than the original agreements, Owens
Corning is in a position to enjoy the benefits of a
significantly growing niche business with minimal risk. The ice
and water barrier market is growing at the rate of approximately
20% annually. Owens Corning will be able to improve sales of
Weatherlock and the other NEI niche products through Owens
Corning's marketing efforts while capitalizing on the keen
product development work being done at NEI. The use of the
Debtor's sales and marketing network, as opposed to NEI's, will
result in substantial cost savings for NEI, thus improving
profitability and, ultimately, the value of the Debtor's
interest in NEI. Further, exercising more marketing control over
Weatherlock and other products enables Owens Corning to enhance
its existing roofing business by putting Owens Corning in the
position to offer its customers a more complete home-improvement
package, thereby enhancing profitability. Additionally, NEI's
expertise in certain areas, such as asphalt development, is
synergistic with certain work being done in various Owens
Corning divisions. All of these factors, when considered
together, make sound business sense and the Debtor's decision to
assume, as modified, the Agreements is an exercise of that
business judgment.

Judge Fitzgerald agreed, authorizing the Debtors to assume the
Agreements as amended. (Owens Corning Bankruptcy News, Issue No.
12; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PLAY-BY-PLAY: Arturo Torres Steps Down as Chairman of the Board
Play-By-Play Toys & Novelties, Inc. (OTC Bulletin Board: PBYP)
announced that on June 18, 2001 Arturo G. Torres, 64, resigned
as Chairman of the Board. Mr. Torres cited personal reasons as
the reason for his departure from the Company's Board of

Play-By-Play Toys & Novelties, Inc. designs, develops, markets
and distributes a broad line of quality stuffed toys, novelties
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.: Seeks Authority To Maintain Cash Management System
Like many companies of its size and breadth, PSINet, Inc.
maintains an integrated Cash Management System designed to
enable it to monitor, regulate and allocate their funds in an
efficient, centralized and secure manner. The Debtors find that
the existing Cash Management System, developed with substantial
effort, provides them with significant benefits in managing
their business, including:

      (a) control over collections and disbursements,

      (b) efficient investment of excess cash not actively used
          for daily operations,

      (c) maintenance of flexibility for allocation of funds as

      (d) reduced borrowing and administrative costs by
          facilitating the movement of 19 funds among the

Accordingly, the Debtors requested that the Court authorize them
to maintain the existing cash management system. Any replacement
of the system at this critical stage of these cases, the Debtors
represent, would disrupt operations, thus undermining their
prospects for reorganization.

In addition to developing procedures to control all postpetition
disbursements from the Bank Accounts, the Debtors assured that
they will refrain from the prepetition practice of transferring
funds to the bank accounts of Non-Debtor affiliates during the
Chapter 11 period unless with prior approval of the Court.

The Cash Management System is comprised of 31 special purpose
banking accounts into which all of the Debtors' money is
deposited, held, invested and/or disbursed. Although from time
to time and in the ordinary course of business, the Debtors may
open or close accounts in the Cash Management System as their
business needs change, the structure and fundamental premises of
the Cash Management System (security, centralized control, and
efficient allocation) remain the same.

Under the Cash Management System, virtually all customer
receipts are deposited into a Lockbox Account with F&M Bank.
Available funds in the Lockbox Account are transferred or
"swept" daily into the Debtors' main operating account (the
"Concentration Account,") maintained at the Debtors' primary
bank, Fleet Bank N.A. Wire transfers from third parties and
miscellaneous cash receipts are also deposited into the
Concentration Account.

The Debtors maintain a separate depository account with Fleet
(the "Merchant Payments Account,") to receive payments for
monthly subscriber fees for internet service provided by the
Debtors to fans of the Baltimore Ravens National Football League
football team (via connection with
a marketing agreement with the Baltimore Ravens. The balance in
the Merchant Payments Account is transferred on a discretionary
basis into the Concentration Account.

The Debtors use the Concentration Account as their main
operating account for purposes of concentrating cash receipts,
funding disbursements and redistributing cash to investment
accounts. Daily balances in the Concentration Account vary
substantially depending primarily on the amount of lockbox
receipts swept into the Concentration Account. The balance in
the Concentration Account is swept daily into an Overnight
Investments Account maintained at Fleet. Funds in the Overnight
Investments Account are invested in a Fleet money market account
that complies with the Debtors' Investment Guidelines. Money is
transferred from the Concentration Account to operational
accounts (Disbursement Accounts) as needed.

In addition to the Disbursement Accounts, wire transfers to
vendors or third parties are transmitted directly from the
Concentration Account. Wire transfers are typically used to make
time critical payments, such as certain lease and debt interest
payments, legal fees, insurance payments and 401(k)

Prior to the Petition Date, the Debtors also made wire transfers
from the Concentration Account from time to time to the bank
accounts of one or more of their non-Debtor subsidiaries as
needed. The Debtors tell the Court they will not make any such
transfers during their Chapter 11 cases without prior approval
of the Court.

The Controlled Disbursements Account at Fleet is the account
from which most disbursements are made, including payments to
vendors and most other non-employee creditors. Disbursements for
reimbursable business expenses incurred by employees are also
made from this account. The Controlled Disbursements Account is
funded from the Concentration Account as checks are presented to
Fleet each morning.

Before any check may be issued in payment of an invoice, it must
first be approved for payment by (i) a Manager (or more senior
member of management) of the applicable department with
requisite check-signing authority and (ii) the Accounting
Manager in PSINet Inc.'s accounts payable department, subject to
the oversight and direction of the Chief Financial Officer and
the Controller of PSINet Inc.'s North American division. The
Debtors and their professional advisors have developed
procedures which the foregoing individuals will apply without
exception to identify and prevent the payment of any invoice to
the extent such invoice requests payment on account of a pre-
Petition Date claim, except to the extent payment of any such
claim has been specifically authorized by the Court.

Two days prior to the payroll date (typically every other
Friday), the Debtors' payroll service, ProBusiness Services
Inc., provides Fleet and the Debtors with a report detailing the
amount of payments to be made to each employee who is paid
through direct deposit electronic fund transfers. In addition,
ProBusiness prepares manual checks payable from the Payroll
Account for those employees not receiving payroll through direct
deposit, which the Debtors distribute to employees on the date
of payroll. Following receipt of the ProBusiness report (but
before Fleet actually receives the funds from the Debtors
necessary to make payroll), Fleet distributes pay to employees
through direct deposit transfers. The aggregate amount paid to
employees by direct deposit transfer typically is approximately
$2 million per pay period. On the Thursday prior to payroll, the
Debtors fund the Payroll Account from the Concentration Account
in an amount equal to net payroll. On the Friday of payroll,
ProBusiness automatically debits payroll taxes from the Payroll
Account (which is funded automatically from the Concentration
Account) and distributes the payments among the applicable
taxing authorities. Fleet debits an amount equal to the direct
deposit payments from the Payroll Account. Because Fleet
releases the direct deposit ACH file as early as Wednesday
evening, Fleet has exposure at times for the payroll direct
deposit amounts between the time it advances payroll and the
time it obtains reimbursement from the Debtors by debiting the
Payroll Account. The Debtors seek authority to fund the Payroll
Account as necessary to reimburse Fleet for any payroll amounts
advanced to employees, whether such transfers were made pre-
Petition Date or post.

The Flexible Spending Account at Fleet is the account through
which the Debtors fund reimbursements for certain employee
medical and dependent care expenses incurred under the Debtors'
Flexible Spending Account programs. The Flexible Spending
Account is funded by the Concentration Account every Friday.

The Benefits Account at Fleet is the account through which the
Debtors fund their self-insured medical insurance program for
their employees. The Benefits Account is funded by the
Concentration Account every Thursday.

The R.B. Investments Account at Fleet held in the name of R.B.
Investments Delaware Inc. is used as an intermediary account to
facilitate fund transfers from the Concentration Account to a
non-Debtor Brazilian subsidiary, PSINet do Brazil, in compliance
with local legal requirements that funding for this subsidiary
come from PSINet do Brazil's parent company, R.B. Investments
Delaware Inc. (a Debtor and holding company organized under
Delaware law). The Debtors will not make any such transfers
during the Chapter 11 period without prior approval of the

Excess cash that is not used for daily operations in the
Concentration Account is transferred on a daily basis to one of
two Investment Accounts maintained at Donaldson, Lufkin &
Jenrette and Merrill Lynch. Funds are transferred from the
Investment Accounts to the Concentration Account as needed
(typically on a daily basis). The Debtors occasionally wire
transfer unusually large disbursements or time critical
payments, such as bond interest payments, directly from the
Investment Accounts to third parties rather than first
transferring them to the Concentration Account. Funds maintained
in the Investment Accounts are invested in accordance with the
Debtors' Investment Guidelines.

The Debtors maintain 3 Collateral Accounts at Bank of America
N.A., JP Morgan Chase Bank and United Bank, which are used to
hold certificates of deposit ("CDs") as security for letters of
credit issued to support obligations of certain Debtors and non-
Debtors with respect to a performance bond and various real
property and equipment leases. Proceeds of maturing CDs are
usually reinvested in new CDs, and any interest income earned on
the CDs or cash deposits is transferred to the Concentration

The Ventures Accounts are 8 Accounts that hold a portfolio of
minority equity investments in public and private companies (the
"Ventures Investments") that were acquired in connection with
the Debtors' venture capital and services-for-equity programs
(formally launched in February 2000). The Ventures Accounts also
hold limited cash reserves. The Debtors ceased making new
Ventures Investments prior to the Petition Date and will not
invest any money of the estate in additional Ventures
Investments. The existing Ventures Investments are assets of the
Debtors' estates that will be held, sold or otherwise disposed
of in the Debtors' Chapter proceedings, subject to the
requirements of the Bankruptcy Code, other applicable law and
any Order of this Court, in such manner as the Debtors believe
will maximize the value of the Ventures Investments for their
estates and the benefit of their creditors. Cash proceeds
realized from the Ventures Investments will be transferred to
the Concentration Account, or if not needed for daily
operations, invested in the Investment Accounts described above
in compliance with the Debtors' Investment Guidelines.

The Debtors also currently have 9 Inactive Accounts, which are
accounts at various banking institutions held in the name of
PSINet Inc. or certain subsidiaries of PSINet Inc., many of
which were established prior to their acquisition by, and/or
merger into, PSINet Inc. The Inactive Accounts are legacy
accounts with little to no activity and small to zero balances.
The Debtors are in the process of closing these accounts and
transferring any remaining balances to the Concentration
Account. If the Inactive Accounts remain inactive long enough,
they may also be subject to closing at the election of the
applicable banking institution. The Debtors do not fund these
accounts with transfers from the Concentration Account or

                Superpriority Status for Certain
                 Cash Management-Related Claims

The Debtors also seek authority to pay on a current basis, and
in the ordinary course, all postpetition obligations incurred by
any of the Debtors to any bank that participates in the Debtors'
Cash Management System (the "Cash Management Banks") arising
solely from ordinary course transactions under the Debtors' Cash
Management System, including without limitation, obligations to
pay service fees and expenses and reasonable attorneys fees and
expenses, to repay extensions of credit under the Cash
Management System, and to make indemnity payments, all to the
extent provided in applicable cash management agreements with
the Cash Management Banks and by the Cash Management System (all
such obligations, the "Cash Management Claims").

The Debtors further request that the Court grant such Cash
Management Claims superpriority status, with priority over
administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code.

                Actions By Cash Management Banks

The Debtors also request that the Court authorize the Cash
Management Banks to set off any Cash Management Claim arising
solely under the Cash Management System against any Bank Account
of any of the Debtors maintained with such Cash Management Bank,
without further leave of Court (notwithstanding any future
security interests or other liens of any party or provision of
any other Order in the Debtors' Chapter 11 cases). The Debtors
request, however, that as a condition of such authorization, the
Cash Management Banks be required to give the Debtors prior
written notice demanding payment of such Cash Management Claim
and that such Cash Management Claim have remain unpaid at the
time of any such setoff for at least 5 business days after the
date on which such notice is given.

The Debtors further request that the authorization to effect any
set off of a Cash Management Claim be limited such that
prepetition Cash Management Claims may be set off only against
prepetition obligations of a Cash Management Bank and that
postpetition Cash Management Claims may be set off only against
postpetition obligations of a Cash Management Bank.

Further, the Debtors request that the Court authorize the Cash
Management Banks to charge back to the Debtors' accounts any
amounts incurred by the Cash Management Banks resulting from
checks, drafts, wires or automated clearing house transfers
("ACH Transfers") deposited with the Cash Management Banks which
have been dishonored, rejected or returned for insufficient
funds, regardless of whether such amounts were deposited pre-
Petition Date or post-Petition Date and regardless of whether
the dishonored, rejected or returned items relate to prepetition
or postpetition items. The Debtors also request that the Cash
Management Banks be authorized to assess and deduct in the
ordinary course of business normal servicing charges (in
accordance with prepetition arrangements among the Debtors and
the Cash Management Banks).

The Debtors also request that the Cash Management Banks be
authorized and directed to accept and honor all representations
from the Debtors as to which checks, drafts, wires or ACH
Transfers should be honored or dishonored consistent with any
Order of this Court, whether the checks, drafts, wires or ACH
Transfers are dated prior to, on, or subsequent to the Petition
Date. Further, the Debtors request that no Cash Management Bank
that honors or dishonors a pre-Petition Date or post-Petition
Date check, draft, wire or ACH Transfer or other item drawn on
any account that is the subject of this Order either (a) at the
direction of the Debtors to honor or dishonor such check, draft,
wire, ACH Transfer or other item, (b) in a good 23 faith belief
that the Court has authorized such prepetition check, draft,
wire, ACH Transfer or other item to be honored or dishonored, or
(c) as the result of an innocent mistake made despite
implementation of reasonable item handling procedures, shall be
deemed to be liable to the Debtors or their estate or otherwise
in violation of any Order of the Court.

The Debtors further request that the Cash Management Banks be
authorized to honor any requests by the Debtors to open one or
more additional bank accounts or to close one or more Bank
Account(s) as the Debtors may deem necessary and appropriate,
and that nothing in the Order be deemed to preclude the Debtors
from opening or closing such accounts or Bank Accounts.

In addition, the Debtors seek authority to keep in place post-
Petition Date their pre-Petition Date cash management agreements
and arrangements with Fleet. In particular, the Debtors seek
authority to fund the Debtors' Payroll Account as necessary to
reimburse Fleet for any payroll amounts advanced to employees in
the ordinary course of business, whether such transfers were
made pre-Petition Date or post-Petition Date. If the Debtors are
unable to provide Fleet with assurance that it will be made
whole for any credit exposure resulting from payroll direct
deposit advances, Fleet may discontinue making direct deposit
transfers to the Debtors' employees. Efforts to re-establish a
payroll system for employee direct deposit transfers with
another financial institution would be timely and expensive, and
the resulting disruption could lead to significant delays and
errors in the payment of employees and a corresponding
deterioration in employee morale and retention.

To the extent Fleet may advance payroll amounts during the
postpetition period, the Debtors request that Fleet be accorded
superpriority status, with priority over any and all
administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code.

Finally, the Debtors propose that Fleet be permitted to close
any Bank Account or terminate any cash management services
provided to the Debtors upon not less than 30 days prior written
notice to the Debtors given at any time after October 1, 2001.

The Debtors believe that such treatment of the Cash Management
Claims and flexibility accorded the Cash Management Banks are
necessary in order to induce the Cash Management Banks to
continue providing cash management services without additional
credit exposure. (PSINet Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

PSINET: Inks US$77MM Sale Pact With TELUS For Canadian Assets
TELUS and certain subsidiaries of Virginia- based PSINet Inc.
have signed an agreement whereby TELUS will purchase PSINet's
Canadian operations and facilities for approximately US$77
million subject to final adjustments. The agreement supercedes
the letter of intent announced earlier this month.

Under the terms of the agreement, TELUS will offer employment to
at least 95 per cent of PSINet's Canadian-based employees.
PSINet's Canadian operations recorded more than C$75 million in
revenue last year. The company has a state-of-the-art Internet
data centre in Toronto and approximately 8,600 corporate
accounts across the country. The majority of PSINet's revenues
are generated in Ontario.

TELUS' proposed purchase is subject to a number of conditions,
including regulatory approval and approval under bankruptcy
proceedings, including the Companies' Creditors Arrangement Act
in Canada. As part of the bankruptcy process in Canada and the
U.S., PSINet will consider other qualified bids and if tendered,
will hold an auction. Prospective bids are subject to a minimum
incremental overbid amount. TELUS will be entitled to a break
fee in certain circumstances.

"I'm confident that our offer is a fair and competitive one and
TELUS will have the opportunity to serve PSINet customers later
this summer when the sales process and all required reviews are
complete," said Jim Peters, executive vice-president of TELUS
Corporate Development.

"I'm delighted that TELUS recognizes the value of PSINet's
Canadian operations," said Robert Offley, president of PSINet
Canada. "We will continue to serve our customers throughout the
auction process with the high level of service they have come to
expect from us and will also continue to support our valuable

In Canada, PSINet provides Internet access, Web hosting,
security and e-commerce application services to the Canadian
business and ISP markets. The company also delivers consumer and
small business Internet services in the Calgary area through its
wholly-owned subsidiary, CADVision. PSINet has about 50 points-
of-presence, or connection facilities. It serves most major
markets in the country, including Toronto, Montreal, Ottawa,
Edmonton, Calgary and Vancouver.

TELUS Corporation (TSE: T, T.A; NYSE: TU) is one of Canada's
leading telecommunications companies providing a full range of
telecommunications products and services that connect Canadians
to the world. The company is the leading service provider in
Western Canada and provides data, Internet, voice and wireless
services to Central and Eastern Canada. For more information
about TELUS, visit

RELIANCE GROUP: Honoring Prepetition Employee Obligations
As of December 31, 2000, Reliance Group Holdings, Inc. employed
46 people in hourly, salaried, supervisory, management and
administrative positions. However, since the petition date, most
of those employees have either been severed or transferred to
RIC. Currently, RGH compensates two employees who are necessary
to continue the business of RGH and RFS:

      * George E. Bello, president and CEO of RGH and RFS, and

      * Rose Marie Craig, his secretary.

A number of former RGH employees now employed at RIC continue to
perform services for RGH and RFS but are not directly
compensated by either entity.

To minimize personal hardship on the two employees, Debtor seek
to honor claims and pay expenses under its employee health
benefit plans, in the ordinary course of business and without
further application to the Court. RGH sponsors and maintains
various plans and policies that provide medical and dental
coverage to employees. This group health benefit is self-funded
with a stop-loss insurance policy. The policy limits the
liability of RGH to $150,000 per claimant. When claims are
approved by a third party administrator, RGH funds money to a
bank account for payment of claims.

Also included in the group health benefit arrangement is a
flexible spending account, which is subject to section 125 of
the Internal Revenue Code of 1986. Under the flexible spending
account, RGH employees set aside pretax contributions and are
reimbursed for certain medical claims up to the annual amount of
the employee's contribution. Under IRS rules, employees may be
reimbursed before they have contributed the full amount.

The group health benefit arrangement in many cases provides for
reimbursements of expenses incurred by the RGH employees. The
RGH employees may have incurred expenses prior to the petition
date for which reimbursements have not yet been made. Debtor
wishes to provide uninterrupted benefits under the group health
benefit arrangement to the RGH employees in order to minimize
any potential adverse impact of the chapter 11 proceedings on

RGH estimates the group health benefit arrangement cost not yet
paid with respect to9 claims incurred by the employees prior to
the petition date is approximately $3,100. Because any failure
to maintain the health benefit plan would injure the morale,
welfare and expectations of the employees, RGH seeks authority
to honor all the prepetition claims for benefits under the
arrangement and to pay such claims and related expenses in the
ordinary course of business and in accordance with existing
policies and practices. (Reliance Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

SIDEWARE SYSTEMS: Recurring Losses Trigger Going Concern Doubts
Sideware Systems Inc. is a leading provider of Customer
Relationship Management (eCRM) software. The Company's
collaborative solutions enable companies to better manage their
customer interactions by providing enhanced Internet-based
customer service. The Company operates in one segment as the
Company's sales are entirely made within the eCRM industry and
primarily within the United States of America.

KPMG LLC, the Company's auditors, in reporting on the financial
position of the Company at December 31, 2000 and 1999 and the
results of its operations and comprehensive loss and its cash
flows for the years ended December 31, 2000 and 1999, eight
months ended December 31,

1998 and year ended April 30, 1998 indicated that the Company
has suffered recurring losses from operations and has had
negative cash flows from operating activities for each of the
periods presented which raise substantial doubt about its
ability to continue as a going concern.

Through the date of these financial statements the Company has
not generated significant revenues, has incurred operating
losses and negative cash flow from operating activities.
Operations to date have been primarily financed by equity
transactions. The Company's future operations and its
continuation as a going concern are dependent upon its ability
to obtain market acceptance of its product, to increase sales of
its product by penetrating markets within North America,
generating positive cash flows from operations and ultimately
attaining profitability.

Depending on the Company's ability to develop sales and related
cash flows, the Company may need to raise additional capital
through public or private financings which may not be available
on reasonable terms. Subsequent to year-end, the Company secured
private financing with net proceeds of approximately $3,800,000.

SKG INTERACTIVE: Taps Rampart To Develop Reorganization Plan
SKG Interactive Inc., (TSE:SKG - suspended and subject to a
cease trade order) announced the appointment of Rampart
Securities Inc. as financial advisors to replace the previously
management consultants appointed in April 2001, who have
recently resigned. Rampart has accepted the interim appointment
and intends to proceed immediately with developing a
restructuring plan, including the divestiture of non-core
assets, in order to facilitate the restructuring of SKG and its
subsidiaries. Rampart has undertaken this assignment in
conjunction with support and co-operation of several former
staff of SKG and expects to proceed with a status review of SKG
and its' subsidiaries immediately.

The Company intends to call a shareholders' meeting as soon as
possible, the timing of which is dependant on funding, the
availability of required information and a preliminary
reorganization plan, in order to appoint a new board of
directors and to facilitate the reorganization process.

                About SKG Interactive Inc.

SKG Interactive Inc. (TSE: SKG - suspended and subject to a
cease trade order), was suspended from trading by the TSE on
March 8, 2001 for failure to meet original listing requirements,
and on March 14, 2001, the Ontario Securities Commission issued
a cease trade order for failure to file annual audited
statements. These restrictions remain in place. For more
information visit:

TALON AUTOMOTIVE: Intends To File Pre-Negotiated Chapter 11 Plan
The previously announced negotiations between Talon Automotive
Group, Inc. and its subsidiaries, VS Holdings, Inc. and Veltri
Metal Products Company and holders of the Company's 9.625%
Senior Subordinated Notes Due 2008 ended successfully on June 7,
2001 with the signing of a Lockup Agreement dated May 30, 2001
between the Company, its subsidiaries and the holders of
approximately 71.6% (excluding certain "insider holders") of the
Notes. As expected, the Lockup Agreement facilitates an exchange
of outstanding Notes for stock in the Company, significantly
reducing the outstanding indebtedness and interest obligations
of the Company. The Company intends to effect the exchange
through a prenegotiated plan of reorganization involving Chapter
11 bankruptcy reorganization proceedings in the United States
and creditors arrangement proceedings in Canada. The Company
does not anticipate any impairment of creditors (other than the
holders of the Notes and the parties to certain unexpired
leases) and does not anticipate any material change in its
operations. The Consenting Holders have agreed to support the
plan of reorganization subject to satisfaction of the terms and
conditions of the Lockup Agreement.

TALON RESOURCES: Bankruptcy Judge Rejects Union's Motion
U.S. Bankruptcy Court Judge John Copenhaver in Charleston,
W.Va., rejected the United Mine Workers' (UMV) motion to elevate
the seniority of the union's claim by alleging in court that
Logan County, W.Va.-based Talon Resources had illegally spun off
its Falcon Land Co. subsidiary to avoid paying UMW health
claims. Union officials had alleged in bankruptcy court that
Talon and Falcon were virtually the same company and that Talon
owner Rick Abraham had illegally sought to bypass the union's
claims by selling Falcon, according to The Daily Deal. Talon's
chapter 7 liquidation is pending. (ABI World, June 20, 2001)

TOWER RECORDS: Moody's Cuts MTS Inc.'s Senior Note Rating to Ca
Moody's Investors Service downgraded the debt ratings of MTS
Inc., ("Tower"), the main operating subsidiary of TOWER RECORDS
as follows:

      * Senior implied rating to Caa1 from B3;

      * $110 million senior subordinated notes to Ca from Caa3;

      * Senior unsecured issuer rating to Caa3 from Caa1.

Moody's said that the downgrade is based on the company's
uncertainty about its ability to maintain adequate operating
liquidity during the fourth calendar quarter, as well as current
weakness in the music retailing segment.

The rating of the bank credit facilities has been withdrawn,
Moody's added.

The rating outlook is developing while there is approximately
$110 million of debt securities that are affected.

Moody's believes that Tower is likely to file for bankruptcy if
it cannot find a new source of capital or otherwise repay the
banks within the next few months. The rating agency said that
the company has taken action to better productivity and lessen
operating expenses, but may have a problem demonstrating
improvements during the current weak environment for music

MTS, Inc. is a retailer of audio and video entertainment
products. The company is the operating subsidiary of TOWER
RECORDS, Inc. which is headquartered in West Sacramento.

WARNACO GROUP: Moves To Continue Cash Management System
Operating guidelines established by the United States Trustee
for the Southern District of New York require The Warnaco Group,
Inc. to close all pre-petition bank accounts; open new "Debtor-
in-Possession" accounts for each Debtor rather than utilize a
centralized cash management system that is typically used in
complex businesses; and provide new checks, business forms and
stationery bearing the designation "Debtor-in-Possession".

By motion, Kelley A. Cornish, Esq., at Sidley Austin Brown &
Wood LLP, in New York, asked the Court to authorize the Debtors
to waive the UST guidelines and instead, continue using a
centralized management system; maintain their pre-petition bank
accounts; and use existing business forms, stationery and

                    Cash Management System

Warnaco employs two centralized cash management systems, one for
all the domestic Debtors' receipts and disbursements in United
States, and another for Warnaco Canada. Both systems consists of
approximately 250 bank accounts.

The U.S. Cash Management System operates through approximately
24 bank accounts at Citibank N.A., the Bank of Nova Scotia,
Fleet Bank N.A., and Union Bank of California, and about 220
accounts with various banks located in approximately 38 states
and in three U.S. territories in support of the retail stores
division. Funds flow into this system when the U.S. Debtors
receive checks or electronic transfers from their merchant
customers, and credit card and cash transfers from their retail
customers. The U.S. Debtors have six primary concentration
accounts at Citibank:

      (i) The ABS by Allen Schwartz Retail Concentration Account

     (ii) The Penhaligon's by Request Concentration Account

    (iii) The CK Jeans/Warnaco Outlet Store Account

     (iv) The Authentic Fitness Concentration Account

      (v) The Main Accounts Receivable Account

     (vi) The Corporate Account.

The Debtors' access to the funds in these accounts is blocked by
Citibank, Ms. Cornish notes. Pursuant to the proposed post-
petition financing agreement, funds from the six concentration
accounts will sweep into a newly established DIP Account at
Citibank, and will be applied to reduce the outstanding balances
on the post-petition credit facility. Citibank will continue to
block the Debtors' access to the funds in the DIP account.
Instead, Citibank will require Debtors to borrow on a daily
basis to fund its operations. Such borrowings will transfer from
the DIP account into the Primary Warnaco Disbursement Account.

Money flows out of the U.S. Cash Management System from the
Primary Warnaco Disbursement Account into six categories of
controlled disbursement accounts:

      (i) An Authentic Fitness Accounts Payable Account

     (ii) A Main Accounts Payable Account

    (iii) A Manual Checks Account

     (iv) 1 Payroll Account

      (v) 4 Customs Accounts

     (vi) A Warnaco Corporate Account

Except the Payroll Account, which is with Fleet, the primary
accounts used to pay operating expenses are with Citibank. The
Debtors pay their domestic payroll through accounts with Fleet,
and their rents for the Authentic Fitness stores through
accounts with UBOC.

The Canadian Cash Management System operates through 7 accounts
with the Bank of Nova Scotia, 5 of which operate in Canadian
dollars and 2 operate in U.S. dollars. These accounts are
"mirror netted" on the last banking day of Warnaco's fiscal
month. Mirror netting is a process in which all accounts held in
the same currency are netted with each other for interest
calculations as well as overall debt position.

Cash flows into this system when it is deposited either into the
Canadian Dollar Trade Account or the Retail Deposit Account. The
U.S. Dollar Trade Account is used to disburse funds for the
payment of trade debts requiring payment in U.S. dollars. The
Canadian Dollar Trade Account performs the same functions as the
U.S. Dollar Trade Account with the addition of receiving trade
checks and wire transfer from customers. Receipts from Warnaco
Canada's retail stores are deposited into the Retail Deposit
Account, which operates in Canadian dollars. Warnaco Canada
maintains two payroll accounts - one to pay employees working on
an hourly basis, and another for paying salaried employees.
There are also two treasury accounts - one operating in U.S.
dollars and the other in Canadian dollars.

Both the U.S. Debtors and Warnaco Canada have comprehensive
internal controls governing the receipt and disbursement of
funds within their respective cash management systems. The
Debtors' software systems enable them to trace each receipt and
disbursement that enters the system by payor or payee, which
then permits the Debtors to account for the funds either by
operating division or legal entity.

Ms. Cornish noted that bankruptcy courts routinely grant Chapter
11 debtors authority to continue using their existing cash
management systems and treat such requests as a relatively
"simple matter". Ms. Cornish explains it is essential that the
Debtors be permitted to continue to consolidate their cash to:

      (i) Maximize efficiency;

     (ii) Reduce borrowing costs and administrative expenses by
          facilitating the movement of funds between entities;

    (iii) Ensure that the Debtors are able to procure inventory
          at the lowest possible price.

The cash management system also provides the Debtors with
substantial benefits, including the ability to control receipts
and disbursements by either legal entity or operating division
to ensure maximum availability of funds, and reduce the costs
and administrative expenses inherent in moving funds between
entities and tracking such funds, Ms. Cornish added.

Warnaco Canada is in the process of relocating its headquarters
from Ottawa to Montreal. AS part of this process, Warnaco Canada
will need to relocate its bank accounts and intends to establish
a centralized cash management system that is substantially
similar to the existing system. With much caution, the Debtors
also ask the Court for the authority to maintain the Canadian
Cash Management System until such time that Warnaco Canada can
close its existing accounts and open the new Debtor-in-
Possession accounts.

                          Bank Accounts

Closing bank accounts does not serve the rehabilitative goals of
Chapter 11. To guard against improper transfers from a bank
honoring post-petition, a pre-petition check, these courts have
ordered the Debtors' banks, with limited court-approved
exceptions, not to honor any checks drawn on the accounts before
the bankruptcy filing.

In the light of the number of Debtors and the number of bank
accounts maintained by the Debtors, the Debtors could not close
their existing bank accounts and open new "debtor-in-possession"
accounts without causing severe disruption to their normal
operating procedures and to their ability to pay normal post-
petition operating expenses in the ordinary course. Existing
relations with vendors -- with whom good relations are critical
to the Debtors' ability to continue to operate their businesses
-- could be adversely affected by the inevitable delays
resulting from the Debtors' need to establish new accounts from
which post-petition payments would be made after the Petition
Date. Moreover, the Debtors operate approximately 250 retail
stores scattered across the United States and Canada. Closing
the numerous local cash depository accounts for these stores
could require the stores to stockpile cash until new accounts
could be opened. Such stockpiling could make these stores the
targets of robberies, which in turn would jeopardize the safety
of the Debtors employees and could diminish assets of the

The UST generally requires that the debtors-in-possession bank
accounts containing more than $100,000 be with a bank approved
by the UST. The Debtors have approximately 250 accounts with
approximately 85 banks, and submit that (i) some of their banks
are approved, (ii) most of the other banks are exempt from the
requirement to be approved, and (iii) the requirement to be
approved should be waived for one of the banks.

Citibank N.A. and Fleet Boston Financial are on the UST's list
of approved depositories while Bank of Nova Scotia and Union
Bank of California are not listed. But given that the Debtors
only have one zero balancing account with Union Bank of
California that is used to disburse lease payments in connection
with the Authentic Fitness Stores, the Debtors submit that this
account is empty from the requirement that it be an approved
depository because it does not maintain overnight balances over

As earlier mentioned, the Debtors have approximately 220 local
depository bank accounts located in 38 stores. These accounts
receive cash deposits from approximately 230 of the Debtors'
retail stores. These accounts are swept either daily or on a
twice weekly basis, and virtually never have balances
approaching $100,000. These local accounts should be exempt from
the U.S. Trustee's requirement that the banks be approved
because their balances are small. However, it is possible that
an individual Debtor may have more than one account at a local
bank that could, at peak sales periods, cause such Debtor's
total balances at the bank to exceed $100,000. Because such
events do not occur often, and the funds are swept frequently,
the Debtors submit that the disruption caused by closing the
local bank accounts would be more detrimental to the Debtors'
businesses than the insignificant risk of a local bank failure.
To the extent a Debtor's total balances at a single unapproved
bank exceed $100,000, the Debtors request a waiver of the
requirement that the bank be approved. The Debtors seek a waiver
of the requirement that the Bank of Nova Scotia be approved.
Bank of Nova Scotia is a solid financial institution with a
Moody's Aa3 rating for long-term bank deposits and a P1 rating
for a short- term deposits, and a Standard and Poors rating of
A+ for long- term debt and a A1 rating for short-term debt.
Moreover, Bank of Nova Scotia is one of the Debtor's principal
prepetition lenders with outstanding balances approximately

Only Warnaco Canada maintains any significant balances in
accounts with Nova Scotia. Warnaco Canada's financial strategy
is to keep its balances at Bank of Nova as low as possible so
that its funds can be used to pay down the revolving credit
facility. Because the Bank of Nova Scotia is a strong financial
institution, and Warnaco Canada's balances on deposit are
minimal, there is negligible risk to the Debtors' estates with
respect to maintaining the existing Bank of Nova Scotia
accounts. Accordingly, the requirement that the Bank of Nova
Scotia be on the approved UST bank list should be waived.

To avoid the disruptions and delays attendant to changing the
bank accounts, while still complying with the applicable
provisions of the Bankruptcy Code, the Debtors requested
authorization to maintain their present bank accounts, with the
same account numbers, on the condition that:

      (a) The Debtors shall forthwith set up significant gaps in
numbering between checks issued prior to and including the
Petition Date and checks issued after the Petition Date;

      (b) Within 15 days from the date of entry of the order
approving this motion, the Debtors shall file all necessary
papers with the Debtors' banking institutions to cause the
Debtors' bank accounts to be renamed as "Debtors-in-Possession"

      (c) The Debtors shall notify each of their banks forthwith
not to honor any checks on or after the Petition Date, with the
exception of those checks subject to a separate court order
authorizing their payment, that were drawn on the accounts
before the Petition Date.

                    Business Forms

The Debtors use numerous checks and a multitude of stationery
and other business forms. Ms. Cornish notes it would be unduly
burdensome and costly to replace all of the Debtors' checks,
stationery and other business forms before they are exhausted.
Instead of replacing them, the Debtors (not including Warnaco
Canada) will stamp each check with "Debtor-in-Possession" as
soon as practicable to substantially comply with the UST's

Finally, the Debtors currently have an account with Morgan
Stanley that invests its balances in money markets. As of the
Petition Date, this account had been depleted, and the Debtors
do not seek authority to continue depositing funds into this
account. Post-petition, the Debtors will maintain zero or near
zero balances in their accounts given that any cash available
after they pay their operating expenses will be used to pay down
balances outstanding on their post-petition credit facility. For
this reason, the Debtors will not have sufficient amounts of
cash on deposit to justify overnight investment. Accordingly,
there is no need for the Debtors to request authority to
maintain their investment policies.  (Warnaco Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

WINSTAR COMMUNICATIONS: Hires Graubard Miller As Special Counsel
Winstar Communications, Inc. sought and obtained an order
authorizing them to retain and employ Graubard Miller as special
securities and general corporate counsel.

Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, convinced Judge Farnan that
Graubard Miller's retention is in the best interest of the
Debtors' estates because Graubard Miller will provide critical
advice regarding U. S. securities laws and the impact of such
laws on the Debtors' reorganization strategy.  Graubard Miller
will also be advising the Debtors on the potential asset
purchases and sales, as well as potential mergers and
acquisitions transactions during the course of Winstar's Chapter
11 cases, Ms. Morgan added.

Graubard Miller will charge the Debtors its customary hourly
rates ranging from:

            $340 to $490  - Partners
            $155 to $485  - Counsels and Associates
            $130 to $150  - Paralegals and Clerks

These rates are subject to change.  Graubard Miller also expects
to be reimbursed for all expenses incurred by it in connection
with representation of the Debtors such as: travel costs,
telecommunications, express mail, messenger service,
photocopying costs, document processing, temporary employment of
additional staff, overtime meals, Lexis and Westlaw expenses,
court fees, transcript costs, and all identifiable expenses that
would not have been incurred except for representation of the
Debtors.  GM will also be submitting interim and final
applications for compensation with the Court.

The Court also approved the Debtors' move to pay a retainer of
$75,000 to Graubard Miller for application against legal
services being provided from and after April 12, 2001.

Prior to Petition Date, Ms. Morgan told the Court, Graubard
Miller served as the Debtors' securities and corporate counsel
since 1991.  During that 10-year period, GM attorneys became
familiar with the Debtors' financial structure, creditor
relationships, and business operations.

Graubard Miller attorney David Alan Miller assured the Court
that GM does not hold or represent any interest adverse to the
Debtors or their estates in respect of the matters for which
Graubard Miller is to be employed.  Though the Firm might have
represented or is currently representing other entities that are
creditors, claimants or equity security holders of the Debtors,
Mr. Miller noted, it is in matters that are totally unrelated to
the Debtors' chapter 11 cases.

Mr. Miller noted, the Debtors are parties to a Revolving Credit
and Term Loan Agreement dated as of May 4, 2000 with some 60
lenders, and The Bank of New York as the administrative agent
and collateral agent.  Some of these lenders are clients of
Graubard Miller in matters unrelated to the Debtors Chapter 11
cases, such as Cablevision Lightpath.  Graubard Miller also
represents certain affiliates of some lenders under the Credit
Agreement in matters unrelated to the Debtors' cases such as
MSDW Inc., an affiliate of MSDW Prime Income Trust.  Mr. Miller
tells the Court they received information that The Bank of New
York has retained the law firm of Wachtell, Lipton, Rosen & Katz
as counsel to represent the lenders in these cases.

Mr. Miller assured Judge Farnan that Graubard Miller will only
represent the Debtors in these cases.  Mr. Miller also promises
to issue a supplemental affidavit immediately if Graubard Miller
learns it has other relationships with other parties-in-interest
in these cases. (Winstar Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

              Imprisonment for Debt, and Bankruptcy 1607-1900
Author:      Peter Coleman
Publisher:   Beard Books
Softcover:   303 Pages
List Price:  $34.95
Review by:   Susan Pannell

Suppose that, three hundred or so years ago, you were in urgent
need of a pig. But you couldn't afford the pig, so you purchased
it on credit. (Yes, there was credit in the woodsy days of this
country; it wasn't strictly a cash and barter economy.) Sometime
later, the pig having served the purpose for which it was
intended and hence being no longer recoverable, and you not
being the winner of the lottery you'd relied upon to pay your
debt, the creditor seeks satisfaction.

He could proceed against you in a couple of different ways, but
either way, assuming you still hadn't won the lottery, you went
to jail. And there you rotted, unless you had the means to buy
your way out, in which case you wouldn't be there in the first
place. In a notorious perversion of logic, a debtor, like any
other prisoner, was expected to feed and clothe himself while
incarcerated. A pauper's grave--the so-called potter's field--
awaited the debtor who died in prison. It could have been worse:
under ancient Roman law, creditors were entitled to chunks of
your actual body and--sorry, Will Shakespeare--there was no
penalty for hacking off a disproportionate slice.

What changed this nefarious system? Not sentiment (at least not
primarily), but hard economic facts. For one thing, it was an
ineffective arrangement. The creditor derived malicious
satisfaction from watching his debtor fade away in prison, but
they didn't satisfy the debt. For another thing, the colonies
suffered a chronic people shortage. They needed laborers and
militiamen. Society couldn't afford to lose the prisoner's
labor, or his ability to shoulder a musket and defend against
Indian attacks. Nor could society afford to support the innocent
wife and children "perishing with hunger & Cold" (here's where
sentiments entered into the equation).

The system began to be modified in various ways. For some
categories of debtors, commonly single men who owed little, some
colonies substituted indentured service for imprisonment.
Another modification, applicable to petty debts, provided a
release from prison and immunity from rearrest if the debtors
swore he was impoverished--presumably a more effective deterrent
centuries ago when there was true shame associated with being a
deadbeat. A third modification put clothing, furniture, eating
utensils, and tools beyond the reach of agreement.

None of this was of any help to the larger defaulters, the
businessmen, and it was for their benefit (economic necessity,
again) that colonial bankruptcy laws began to evolve.
Interestingly, the colonies preferred voluntary proceedings,
giving the right of action to the insolvent, in contrast to
English bankruptcy practice, which sided with the creditor.
Development of bankruptcy relief was by no means smooth as
predictably many stern and rockbound colonists took a moral
stance against it. Complicating matters was the requirement
that, until the Revolution, a debtor relief law, like any
colonial legislation, had to be approved by the Crown, in this
case the Board of Trade.

The author provides a painstaking region-by-region analysis of
the development of bankruptcy law, and sums up all the history
in the concluding chapter.


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of interest to troubled company professionals. All titles are
available at your local bookstore or through Go to order any title today.

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


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

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

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 301/951-6400.

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