TCR_Public/010716.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

              Monday, July 16, 2001, Vol. 5, No. 137


360NETWORKS INC.: Moves To Implement A Cross-Border Protocol
AMF BOWLING: Court Okays Continued Use Of All Business Forms
CARDLINK: VentureQuest Withdraws Offer to Acquire & Restructure
COOLSAVINGS.COM INC.: Securities Subject To Nasdaq Delisting
DREAMWINGS LLC: Aircraft Maker Files for Chapter 11 Protection

DREAMWINGS LLC: Case Summary and List of Largest Creditors
E.SPIRE COMM.: Exclusive Period To File Plan Extended To Nov. 18
EGGHEAD.COM: Appeals Nasdaq's Delisting Determination
EMERGING VISION: Shares Face Nasdaq Delisting
FOAMEX INTERNATIONAL: Marshall Cogan Reports 7.77% Equity Stake

GC COMPANIES: AMC Entertainment Makes $62.5 Mil Bid For Assets
GENESIS HEALTH: Capital Structure Under Revised Plan
HARNISCHFEGER: Emerges From Chapter 11 As Joy Global Inc.
HEARME: Plans Appeal In Response To Nasdaq's Delisting Notice
HOMELIFE FURNITURE: Closes Stores & Plans To File For Bankruptcy

HUNTINGTON BANCSHARES: Selling Florida Assets To Raise Capital
JORE CORPORATION: Reports Progress In Reorganization Strategy
KELLSTROM: Moody's Lowers Convertible Notes' Rating to Ca
LAIDLAW INC: Canadian Debtors To Maintain Cash Management System
LAIDLAW INC.: Reports Consolidated Third Quarter Revenues

LERNOUT & HAUSPIE: Selling Speech Machines To MedQuist Inc.
LOEWEN GROUP: Treatment Of CTA Issue Under Third Amended Plan
LTV STEEL: Rejects Landmark Office Towers Lease
MARINER POST-ACUTE: Wants To Extend Georgia Office Space Lease
PACIFIC GAS: Continuing Environmental Cleanup Programs

PACIFIC GAS: Court Authorizes Assumption of Calpine's Contracts
PENN SPECIALTY: List Of 20 Largest Unsecured Creditors
PILLOWTEX: Agrees To Lift Stay For Mutual Set-Off With Ex-Cell
PLAINWELL INC.: Selling Two Tissue Mills For $64.2 Million
PLANVISTA: Hires Donald Schmeling as Chief Financial Officer

PLAYDIUM ENTERTAINMENT: Has Until Sept. 14 To File CCAA Proposal
POLARIOD CORP.: S&P Cuts Ratings To Lower-C Levels
POLAROID: Fitch Downgrades Senior Note Rating To C From CCC-
POLAROID CORP.: Moody's Cuts Ratings& Says Outlook Is Negative
PSINET INC.: Employs Bankruptcy Services LLC As Claims Agent

QUAD SYSTEMS: Completes Asset Sale To Tyco Electronics
RESORT PROPERTIES: Tennessee Hotels Owner Files for Chapter 11
RESORT PROPERTIES: Chapter 11 Case Summary
SAFETY-KLEEN: Rule 9027 Removal Period Extended To Feb. 9, 2002
SECURITY ASSET: Pannell Kerr Forster Resigns As Accountant

SERVICE MERCHANDISE: Macon & Baton Want Decision On 4 Leases
SOFTLOCK.COM: Nasdaq Delists Securities
TREESOURCE INDUSTRIES: Pre-Petition Secured Debt Trades Hands
UNIFORET INC.: Files Plan of Arrangement Under CCAA
US AGGREGATES: Selling Southeastern Operations to Florida Rock

USG CORPORATION: Honoring Prepetition Freight Charges
VECTRIX BUSINESSS: Files Chapter 11 Petition in N.D. Texas
VECTRIX BUSINESS: Chapter 11 Case Summary
WARNACO GROUP: Rejecting 9 Property And 2 Aircraft Leases
WESTERN DIGITAL: Wellington Discloses 12.96% Equity Stake

WINSTAR COMMUNICATIONS: CIT Lending Seeks Relief From Stay

BOND PRICING: For the week of July 16 - 20, 2001


360NETWORKS INC.: Moves To Implement A Cross-Border Protocol
Given the complex, transnational nature of 360networks inc.'s
businesses, the Debtors submit that it would be appropriate to
implement a procedural protocol between the United States
Bankruptcy Court and the Supreme Court of British Columbia
overseeing the Canadian Applicants' restructuring under the
Companies' Creditors Arrangement Act.

The Protocol, Alan J. Lipkin, Esq., at Willkie, Farr &
Gallagher, explains to Judge Gropper, would address the
administrative issues anticipated to arise in coordinating the
Insolvency Proceedings involving the restructuring of
approximately 35 affiliated entities in the United States and
Canada as well as potentially additional entities in other
jurisdictions. The Debtors believe an administrative protocol is
required to ensure that:

      (a) the U.S. Cases and the Canadian Cases are coordinated
          to avoid inconsistent, conflicting or duplicative

      (b) all parties are adequately informed of key issues in
          the Insolvency Proceedings;

      (c) the substantive rights of all parties are protected;

      (d) the jurisdictional integrity of the Courts is

The Debtors provide Judge Gropper with a Draft Protocol designed
to achieve these various objectives by implementing a framework
of general principles to address the basic administrative issues
arising out of the cross-border nature of the Insolvency
Proceedings. That coordination is essential, Mr. Lipkin
stresses, arguing that it will maximize the efficiency of the
Insolvency Proceedings, reduce the costs associated therewith,
and avoid duplication of effort.

The key issues addressed by the Protocol include:

      (1) interaction between this Court and the Canadian Court;

      (2) retention and compensation of professionals;

      (3) interaction between the principal constituents in the
          U.S. and Canadian Cases;

      (4) appearances of parties in the Insolvency Proceedings;

      (5) notice to parties in the Insolvency Proceedings; and

      (6) reciprocal recognition of stays and injunctions issued
          by each court.

In short, the Draft Protocol provides that (x) the Judges may
talk to one another from time-to-time as they deem it prudent,
necessary or appropriate, before any hearing, in the context of
a joint hearing by video-link or telephone, or after a hearing;
(y) the U.S. Court will have sole and exclusive jurisdiction
over the U.S. Cases and primary responsibility for property
located in the United States and U.S. professionals while the
Canadian Court will have sole and exclusive jurisdiction over
the Canadian Cases and primary responsibility for matters
dealing with Canadian assets and professionals; and (z)
recognition, extension and enforcement of applicable stays,
injunctions and Court rulings in one country by the other,
without prejudice to the right of any party to assert the
applicability or non-applicability of the U.S. Stay or the
Canadian Stay to any particular proceeding, property, asset,
activity or other matter, wherever pending or located.

Mr. Lipkin notes that the Debtors anticipate, later in the
Insolvency Proceedings, that they may seek approval of an
additional protocol addressing key substantive issues, such as
procedures for: (a) filing and resolving proofs of claim; (b)
distributing assets of the various affiliated entities' estates;
and (c) preparing, filing and implementing proposals or plans of
arrangement or reorganization. Although such issues ultimately
must be coordinated between the Courts, the Debtors believe
these and other substantive issues are more appropriately
addressed after the initial postpetition period, following
negotiations among the key constituencies in the Insolvency
Proceedings, including a creditors' committee. By contrast, the
purely procedural and administrative nature of the Protocol
proposed herein, which does not adversely affect any party's
substantive rights, may be implemented now. In fact, Mr. Lipkin
says, it would be imprudent to delay the implementation of the
basic administrative procedures and protections included in the
Protocol pending future discussions with other parties, which
may not be concluded for weeks, or even months. This is
particularly true here because many of the key building blocks
for successful reorganization of the Company's businesses may
occur during the initial weeks of the Insolvency Proceedings,
thereby requiring that the Insolvency Proceedings be coordinated
to the fullest extent possible from the outset.

The Bankruptcy Code, at 11 U.S.C. Sec. 105(a), provides that
"[t]he court may issue any order, process, or judgment that is
necessary or appropriate to carry out the provisions of this
title." Other Courts, both in the Southern District of New York
and in others have authorized similar programs for the purpose
of establishing a protocol for dealing with cross-border
insolvency proceedings. See, e.g., In re Livent (U.S.) Inc., et
al., 98 B 48312 (AJG) (Bankr. S.D.N.Y. 1998); In re Everfresh
Beverages, Inc., 95 B 45405 (BRL) (Bankr. S.D.N.Y. 1995); In re
AIOC Corp., 96 B 41895 (TLB) (Bankr. S.D.N.Y. 1996); In re
Solvex Canada Limited, 11-97-14362-MA (Bankr. N.M. 1997).
Further, Mr. Lipkin relates, the Protocol is drafted to be
entirely consistent with the Preliminary Draft Rules Applicable
to Court Communications in Transnational Insolvency Cases
promulgated by The American Law Institute Transnational
Insolvency Project, Task Force on Court Communications.
Accordingly, Mr. Lipkin argues, there is ample authority for
this Court to grant the relief requested. (360 Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AMF BOWLING: Court Okays Continued Use Of All Business Forms
AMF Bowling Worldwide, Inc. uses numerous checks and a multitude
of stationery and other business forms. Rachel C. Strickland,
Esq., at Willkie Farr & Gallagher notes that it's no secret AMF
filed for bankruptcy protection -- it's on the front page of The
Wall Street Journal. It would be unduly burdensome and costly to
replace all of the Debtors' checks, stationery and other
business forms before they are exhausted.

By Motion, AMF sought and obtained Judge Tice's permission to
continue using all of their Prepetition Business Forms
(including, without limitation, letterheads, purchase orders,
invoices and checks) without the requirement that they bear a
"Debtor-in-Possession" legend. (AMF Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

CARDLINK: VentureQuest Withdraws Offer to Acquire & Restructure
VentureQuest Group, Inc., a U.S. corporation, (VQGI on Pink
Sheets), has withdrawn its unsolicited bid to acquire and
restructure Cardlink Worldwide Inc. under the Companies
Creditors Arrangement Act (CCAA), citing a material adverse
revaluation of the Company arising from its due diligence.
"After completing our due diligence of Cardlink's capital
structure, its business model, and the economic climate in
Brazil we have concluded that it's not in the interest of the
company's shareholders to proceed with the acquisition of
Cardlink" stated Eric Hutchingame the Chairman and CEO of

"In the short term, we intend to focus on North American based
opportunities that do not require the principal operations to be
located offshore or conducted in a foreign language" stated Mr.
Hutchingame. "We continue to maintain a global focus but believe
we can best develop it from a local base."

VentureQuest is engaged in the business of acquiring and then
consolidating emerging or underachieving transaction-based
companies that provide a recurring revenue stream from service
or entertainment related transactions.

COOLSAVINGS.COM INC.: Securities Subject To Nasdaq Delisting
------------------------------------------------------------ inc. (Nasdaq: CSAV) has received a Nasdaq Staff
Determination on July 5, 2001 indicating that its common stock
currently fails to maintain a minimum market value of public
float of $5,000,000 and a minimum bid price of $1.00 over the
previous thirty (30) consecutive days as required by the Nasdaq
National Market under Marketplace Rules 4450(a)(2) and
4450(a)(5), respectively. Therefore, the Company's securities
are subject to delisting from The Nasdaq National Market. The
company has, however, requested a hearing before a Nasdaq
Listing Qualifications Panel to review and appeal the Staff
Determination. There can be no assurance the Panel will grant
the Company's request for continued listing.

                   About CoolSavings

Launched in February 1997, CoolSavings is a comprehensive e-
marketing solution that delivers targeted advertising and
promotional incentives to help offline and online companies
identify, acquire and retain active shoppers. The Company's
extensive e-marketing infrastructure combines multiple incentive
and promotional solutions -- such as targeted coupons and e-
mail, loyalty points, category newsletters, rebates, savings
notices, samples, gift certificates and trial offers -- with
sophisticated database technology to enable advertisers to
efficiently build personal relationships with consumers. Today,
with more than 14.8 million registered members and 13.2 million
registered households,** CoolSavings is ranked the #1 coupon
Web site according to the Jupiter Media Metrix May 2001 report.
The Company's advertisers include national and local brick-and-
mortar retailers, online merchants, consumer packaged goods
manufacturers and leading service providers.

DREAMWINGS LLC: Aircraft Maker Files for Chapter 11 Protection
Lawrence, Kan.-based DreamWings LLC filed a chapter 11
bankruptcy petition last week in U.S. Bankruptcy Court in
Topeka, Kan., less than two weeks after it had laid off most of
its 15 employees, according to Knight Ridder/Tribune. The
company, founded in 1998 to design and manufacture kits for
assembling one- and two-seat ultralight aircraft, has suspended
operations as it faces debts of at least $1.4 million. Of that
total, the company owes $1.3 million to customers who previously
placed deposits on orders for 145 aircraft kits that have yet to
materialize. It hasn't sent the city a rent check for five
months, racking up a debt of $17,500. John Hunter, the company's
manager and only remaining employee, said he hoped to
"recapitalize" the company with money from outside investors in
the coming weeks, under protection from the bankruptcy court.
(ABI World, July 12, 2001)

DREAMWINGS LLC: Case Summary and List of Largest Creditors
Debtor: DreamWings, LLC
         2550 N 7th St
         Lawrence, KS 66044

Chapter 11 Petition Date: July 5, 2001

Court: District of Kansas (Topeka)

Bankruptcy Case No.: 01-41752

Judge: James A. Pusateri

Debtor's Counsel: DreamWings, LLC
                   PRO SE

Estimated Assets: $50,000 to $100,000

Estimated Debts: $1 million to $10 million

List of Debtor's Largest Creditors:

        15 West 6th Street Suite 2505
        Tulsa OK 74119

        The Advanced Composite Group
        PO Box 108809
        Oklahoma City OK 73101

        Barber Emerson Springer Zinn & Murray LC
        1211 Massachusetts
        PO Box 667
        Lawrence KS 66044

        CIT Tech/Newcourt Leasing
        21146 Newcourt Place
        Chicago IL 60673

        KU Center for Research
        2385 Irving Hill Road
        Lawrence KS 66045

        Citicorp Vendor Finance
        1990 Vaughn Road Suite 150
        Kennesaw GA 30144

        City of Lawrence
        PO Box 708
        Lawrence KS 66044

        120 East Ninth Street Suite 2
        Lawrence KS 66044

        James Foerster MD
        5937 Sarah Court
        Carmichael CA 95626

        Kansas Innovation Corporation
        1617 Saint Andrews Suite 210
        Lawrence KS 66047

        LAW Inc.
        1617 Saint Andrews Suite 210
        Lawrence KS 66047

        Doctor Douglas Lutz
        Del Banco Popular 75 metros al Este
        San Dedro De M De Oca
        Costa Rica

        Richard Meisman
        4114 Pawnee Road
        Perry KS 66073

        Rodger Musso
        1301 Loghouse Road
        Greenwood CA 95635

        Joe Personett
        19280 Lincoln Green Lane
        Monument CO 80132

        Carroll Shelby
        10862 Vicknza Way
        Los Angeles CA 90077

        Alex Molins
        NIF/CIF B17 440 512
        Zona Industrial, Nave, 25
        17220 Sant Feliu De Guixols
        Gerona, Spain

        Textron Financial
        PO Box 71593
        Chicago IL 60694

        Tool Chemical
        31200 Stephenson Highway
        Madison Heights MI 48071
        Toray Composites America
        19002 50th Avenue
        Tacoma WA 98446

E.SPIRE COMM.: Exclusive Period To File Plan Extended To Nov. 18
A bankruptcy court approved a 90-day extension of e.spire
Communications Inc.'s exclusive period to file a plan of
reorganization and solicit plan acceptances. E.spire has until
Nov. 18 to file the plan and until Jan. 18 to get the votes
needed for plan confirmation. The company's previous exclusive
period would have expired July 20. E.spire was initially seeking
a 120-day extension but amended its request after its committee
of unsecured creditors expressed concerns over the length of the
extension. (ABI World, July 12, 2001)

EGGHEAD.COM: Appeals Nasdaq's Delisting Determination
-----------------------------------------------------, Inc. (Nasdaq: EGGS), a leading Internet direct
marketer of technology and related products, requested a hearing
to appeal a Nasdaq Staff Determination that the Company's common
stock is subject to delisting from the Nasdaq National Market.
The Company received a letter from Nasdaq dated July 10, 2001,
informing it of this determination based on non-compliance with
the $1.00 minimum bid price requirement for continued listing
set forth in Nasdaq Marketplace Rules 4450(a)(5) and

Under Nasdaq rules, the delisting will be stayed pending the
outcome of the hearing. Until then, the Company's common stock
will remain listed and will continue to trade on the Nasdaq
National Market.

The hearing is expected to occur within 45 days of today's
hearing request filing. At the hearing, the Company intends to
request an extension of time to come into compliance with the
$1.00 minimum bid price requirement. The Company has previously
announced Board approval of a reverse stock split, and is
considering this as a proposal to Nasdaq to increase the trading
price of its common stock.

The Nasdaq Listing Qualifications Panel, which would conduct the
hearing, will consider the current trading price of the
Company's common stock, trading activity, financial health and
other factors affecting the qualifications to remain on the
Nasdaq National Market. There can be no assurance that the Panel
will grant the Company's request for continued listing.

If the appeal is denied, the Company's common stock will be
delisted from the Nasdaq National Market. In such an event, the
Company's common stock will trade on the OTC Bulletin Board's
electronic quotation system, or another quotation system or
exchange on which the shares of the Company may qualify. The
Company's shareholders will still be able to obtain current
trading information, including the last trade bid and ask
quotations, and share volume.

                  About, Inc. is a leading Internet direct marketer of
technology and related products. With an emphasis on Small- to
Medium-sized Business (SMB) customers, offers a wide
range of products from computer hardware and software, consumer
electronics and office products, to sporting goods and vacation
packages. Its Clearance, After Work and Auction formats offer
bargains on excess and closeout goods and services.
combines broad selection, low prices, and excellent service to
provide an outstanding online shopping experience for businesses
and consumers. is located on the Internet at

EMERGING VISION: Shares Face Nasdaq Delisting
Emerging Vision, Inc. (NASDAQ: ISEE) received a notice from the
Nasdaq Stock Market, Inc. of its Staff's decision that Emerging
Vision had failed to comply with the minimum bid price ($1.00)
requirement for the continued listing of its shares of Common
Stock on the Nasdaq National Market System (Nasdaq-NMS), all as
set forth in Nasdaq's Marketplace Rule No. 4450(a)(5), and that
such Common Stock was subject to delisting from the Nasdaq NMS,
at the opening of business on July 16, 2001, pursuant to
Marketplace Rule No. 4310(c)(8)(B).

In response to such decision, Emerging Vision, in accordance
with Nasdaq's Marketplace Rule No. 4815(b), has requested an
oral hearing before a Nasdaq Listing Qualifications Panel
(Panel), based upon Emerging Vision's authorization (subject to
shareholder approval at its 2001 Annual Meeting of Shareholders)
to effect a reverse stock split of its issued and outstanding
shares of Common Stock. Emerging Vision has been advised by
Nasdaq that a hearing request will stay the delisting of its
Common Stock pending the Panel's decision. However, there can be
no assurance that the Panel will grant the Company's request for
continued listing.

                  About Emerging Vision

Emerging Vision, Inc. operates one of the largest chains of
retail optical stores and the second largest franchised optical
chain in the United States, with approximately 225 franchised
and company owned stores located in 26 states, Canada and the
U.S. Virgin Islands, principally operating under the names
"Sterling Optical" and "Site for Sore Eyes."

FOAMEX INTERNATIONAL: Marshall Cogan Reports 7.77% Equity Stake
Marshall S. Cogan may be deemed to be the beneficial owner of
1,865,263 shares (approximately 7.77% of the total number of
shares outstanding), of the common stock of Foamex International
Inc., assuming the exercise of all of the options which are held
for the account of Mr. Cogan and which are exercisable within 60
days. This number includes (A)164,300 shares held for the
account of Trust A; (B) 702,500 shares held for the account of
Trust B; (C) 545,396 shares held for the account of Mr. Cogan
and (D) 453,067 shares issuable upon the exercise of the 453,067
options which are held for the account of Mr. Cogan and which
are exercisable within 60 days.

Mr. Cogan has the sole power to direct the voting and
disposition of the 1,865,263 shares held for the accounts of
Trust A, Trust B and himself, (assuming the exercise of all of
the options which are held for his account and which are
exercisable within 60 days).

Mr. Cogan acts as the sole trustee ("Trust A" and "Trust B"
respectively). By virtue of his position as the sole trustee of
Trust A and Trust B, he has voting and investment power over the
securities held for the accounts of Trust A and Trust B and may
therefore be deemed to be the beneficial owner of such
securities. Mr. Cogan, however, does disclaim beneficial
ownership of any securities not held directly for his account.
Marshall Cogan's principal occupation is to serve as Chairman of
the Board of Foamex International Inc. He expended approximately
$623,456 of his personal funds to acquire the securities since
May 7, 2001. The foregoing amount expended does not include any
trading commissions or other fees paid by him.

The securities held for the accounts of Mr. Cogan, Trust A and
Trust B may be held through margin accounts maintained with
brokers, which extend margin credit as and when required to open
or carry positions in their margin accounts, subject to
applicable federal margin regulations, stock exchange rules and
such firms' credit policies. The positions which may be held in
the margin accounts, including the shares, are pledged as
collateral security for the repayment of debit balances in the
respective accounts.

GC COMPANIES: AMC Entertainment Makes $62.5 Mil Bid For Assets
In a surprise move, AMC Entertainment Inc. signed a letter of
intent to acquire substantially all the assets of motion picture
theatre operator GC Cos. for $62.5 million in cash, according to
Dow Jones. The proposal is $20 million more than a proposal by
Onex Corp. and Oaktree Capital Management LLC earlier this
month. AMC made the proposal to acquire the parent of movie
theater chain General Cinema Theatres Inc. at a hearing in the
U.S. Bankruptcy Court in Wilmington, Del. The court was
considering a request by GC Cos. for approval of bid procedures
it planned to use to help ensure that the Onex-Oaktree proposal
was the best deal out there. The court called a recess in the
hearing to allow GC Cos. to go over the terms of what AMC had

Aside from offering $20 million more than Onex and Oaktree, AMC
said it would reduce to $1.5 million the breakup fee that would
be payable in the event GC Cos. was eventually sold to a
competing bidder. GC Cos. had proposed paying Onex and Oaktree a
$3 million breakup fee. In court filings, the creditor group
said it had agreed on the terms of an internal restructuring for
GC Cos. and was prepared to file a plan in the company's chapter
11 case based on that proposal. GC Cos. and some of its
subsidiaries filed for chapter 11 bankruptcy protection on Oct.
11, 2000, in the U.S. Bankruptcy Court in Wilmington, Del. They
listed assets of $328.9 million and liabilities of $195.1
million as of Aug. 31, 2000. (ABI World, July 12, 2001)

GENESIS HEALTH: Capital Structure Under Revised Plan
As under the original Plan, the post-Effective Date financing
arrangements under the revised Plan are anticipated to include a
revolving credit facility in the amount of at least
$100,000,000. Genesis Health Ventures, Inc. & The Multicare
Companies, Inc.'s administrative expenses will be paid through
the incurrence of senior secured debt of approximately
$235,000,000. In the alternative, it may be desirable for
Reorganized Genesis to raise funds in the public debt markets.
The Debtors will determine the best form of such exit financing
as the projected Confirmation Date approaches. Except as
otherwise provided in the Plan, unless the underlying property
is sold or surrendered, the Genesis Debtor or Multicare Debtor
that is the current obligor on a mortgage will continue as the

The following table summarizes the proposed capital structure
for Reorganized Genesis. Differences from the orginal Plan are
shown in [].

Instrument                Description           Comments
----------                -----------           --------
Revolver                  up to $150.0 million  (exit financing)

Senior Secured Term Loans $235.0 million        (exit financing)
or New Public Debt        [to $245.0 million]

Mortgages                 [$146.4 million]      (reinstated or
                            ($141.4 million        amended)
                            under original Plan)

New Senior Notes          [$242.6 million]      (restructuring
                            ($247.6 million        securities)
                            under original Plan)

New Convertible Preferred
Stock                     $42.6 million         (restructuring

New Common Stock           41,000,000 shares     (restructuring

New Warrants              To purchase up to     (restructuring
                             11.1% of the            securities)
                             New Common Stock
                            (5.8% under original

(Genesis/Multicare Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

HARNISCHFEGER: Emerges From Chapter 11 As Joy Global Inc.
"We are pleased to announce that Harnischfeger Industries, Inc.
has emerged from bankruptcy court protection as a financially
and operationally healthy company under a new name, Joy Global
Inc.," John Nils Hanson, Chairman, President and Chief Executive
Officer announces.

The Company's emergence, effective immediately, reflects the
terms of its amended plan of reorganization confirmed by the
U.S. Bankruptcy Court on May 18, 2001. In accordance with the
plan, the Company's new common stock and senior notes, as well
as some cash, will be distributed to creditors with allowed
claims around the end of July. The Company's former stock (OTC:
HRZIQ) has been canceled. The Company's new common stock began
trading on a "when issued" basis (OTC Bulletin Board: HFIIV) on
May 25, 2001. "Regular trading" of Joy Global Inc. is expected
to commence on the Nasdaq market under the symbol "JOYG"
following the distribution of the shares.

In conjunction with the emergence, the Company closed on a $350
million senior secured credit facility provided and arranged by
Bankers Trust Company and Deutsche Banc Alex. Brown. This
facility has been designed by Deutsche Banc Alex. Brown, Inc. to
finance the company's global operations.

Mr. Hanson said: "With our reorganization complete, we are
focused on the mining markets and on utilizing our managerial
strengths to build the long-term value of Joy Global for the
benefit of all of our stakeholders -- shareholders, customers,
suppliers, lenders and employees. We are committed to
reinforcing our strengths to be the supplier of choice for our
customers. At both our P&H Mining Equipment and Joy Mining
Machinery divisions, we will leverage our superior product
lines, strong customer relationships and global opportunities to
build greater value.

"The adoption of the Joy Global name is designed to facilitate
the re-establishment of our relationship with the investment
community and to do so in the simplest and most cost effective
way possible. We will continue to go to market and place the
highest premium on the brand identities of P&H Mining Equipment
and Joy Mining Machinery, reflecting their many marketplace

"As we move ahead, we are very well positioned to capitalize on
the renewed interest in coal mining, and are flexible enough to
adjust to developments in all of our markets. We continue to
strengthen our product lines, customer services and
manufacturing capabilities to provide the best value for our
customers worldwide.

"As part of the reorganization, we have a new Board of
Directors. I will be joined on the board by six new independent
directors selected by the official creditors committee through a
formal process: Steven L. Gerard, President and Chief Executive
of Century Business Services, Inc.; Ken C. Johnsen, President
and Chief Executive Officer of Geneva Steel Company; James R.
Klauser, Senior Vice President of Wisconsin Energy Corp.;
Richard B. Loynd, Chairman of the Executive Committee of
Furniture Brands International; P. Eric Siegert, Managing
Director of Houlihan Lokey Howard & Zukin; and James H. Tate,
Senior Vice President and Chief Financial Officer of Thermadyne
Holdings Corp. We expect to benefit greatly from the breadth
and scope of our new directors' experiences as we proceed to
execute our business strategy."

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

HEARME: Plans Appeal In Response To Nasdaq's Delisting Notice
HearMe (Nasdaq:HEAR), a leading provider of voice application
technologies for next generation networks received a Nasdaq
Staff Determination letter on July 10, 2001, indicating that it
has failed to comply with the minimum bid price requirement for
continued listing on the Nasdaq Exchange (Nasdaq Marketplace
Rule 4450 (a)(5)).

In response, HearMe plans to request a hearing before the Nasdaq
Listing Qualifications Panel to appeal the Staff Determination.
As part of this  effort, HearMe will ask the Panel to review the
Staff Determination based on the Company's plan to achieve
compliance with the minimum bid listing requirement through a
10-for-1 reverse stock split that the Company intends to submit
to a vote of the stockholders at its Annual Meeting scheduled to
be held on July 31, 2001. Further information concerning the
proposed reverse stock split is set forth in the Company's proxy
statement dated June 29, 2001, that has been mailed to

In accordance with Nasdaq rules, HearMe stock will continue to
trade on the Nasdaq National Market pending the final decision
by the Listing Qualifications Panel. The hearing date is to be
determined by Nasdaq. There can be no assurance that the Panel
will grant the Company's request for continued listing. There
can also be no assurance that the proposed reverse stock split
will be approved by the shareholders or that it will result in
the Company satisfying all of the Nasdaq requirements for
continued listing on the Nasdaq National Market either
immediately or indefinitely.

                     About HearMe

HearMe (Nasdaq:HEAR) develops VoIP application technologies that
deliver increased productivity and flexibility in communication
via next generation communications networks. The Company's
industry-leading PC-to-phone, phone-to-phone, and PC-to-PC VoIP
application platform offers innovative technology and turnkey
applications that dramatically simplify the process of bringing
differentiated, enhanced communications services to market.
Communications services supported or enhanced by HearMe
technology include VoIP-based conferencing, VoIP Calling, and
VoIP-enabled customer relationship management (CRM). HearMe has
already licensed its VoIP application technologies to such
leading companies as 3Com Corporation, QUALCOMM, and eshare
Communications. Founded in 1995, HearMe is located in Mountain
View, California, and can be reached at or

HOMELIFE FURNITURE: Closes Stores & Plans To File For Bankruptcy
Closely held HomeLife Furniture, a former unit of Sears, Roebuck
and Co., closed its 130 furniture stores, according to Reuters.
HomeLife will file for chapter 11 bankruptcy protection and does
not have plans to reorganize, reports Crains Chicago Business.
The furniture chain, based in the Chicago area, employed more
than 2,000 people.  HomeLife joins a growing pile of retailers,
including Montgomery Ward & Co. and furniture retailer Helig-
Meyers, that have closed stores and filed for bankruptcy as the
slowing U.S. economy weeds out weaker retailers.  Sears, the
nation's No. 4 retailer, sold the chain of stores that sell
moderately priced furniture in November 1998 to Citicorp Venture
Capital Ltd. and other investors, but still retains a 19 percent
equity interest in the company. (ABI World, July 12, 2001)

HUNTINGTON BANCSHARES: Selling Florida Assets To Raise Capital
Huntington Bancshares Incorporated (Nasdaq: HBAN) announced a
comprehensive strategic and financial restructuring to sharpen
the Company's focus on its core Midwest markets, streamline
operations and reduce costs, and redeploy capital to increase
shareholder value.

Under the plan developed by new management and approved by the
Board of Directors, Huntington will divest its Florida
operations, consolidate 43 banking offices in its core Midwest
franchise and reduce its quarterly dividend per share by 20%,
which will bring Huntington's dividend payout more in line with
industry peers. The Company has also implemented expense
initiatives which are expected to result in savings of
approximately $36 million in 2001.

The actions announced are expected to free up significant
capital, which will be used to strengthen Huntington's balance
sheet, repurchase shares and for other corporate purposes. It is
expected that a major share repurchase program will begin
following Huntington's completion of the sale of its Florida

Huntington expects to take restructuring and special charges of
approximately $140 million after tax in the second, third and
fourth quarters of 2001 related to exited businesses; branch
consolidations; asset impairment; staffing rationalization; and
credit, accounting and legal reserves. Excluding the impact of
these charges in the second quarter, earnings per share in the
quarter are expected to be in the range of $0.27 to $0.29, in
line with consensus analyst estimates. The Company also expects
earnings per share for the 2001 full year, excluding non-
recurring charges, in the range of $1.15 to $1.17. Huntington
will report quarterly results on July 17.

"Following an in-depth review over the past four months of all
of our businesses, we are moving ahead with a bold set of
interrelated strategic and financial actions to strengthen the
Company, improve our financial flexibility and execution, and
provide a strong platform for focused growth in the years
ahead," said Thomas E. Hoaglin, who was named president and
chief executive officer earlier this year. "With the
implementation of these initiatives, we are taking significant
steps to improve our core earnings, capital position and
operating efficiency -- as well as creating a more focused,
customer- centric organization -- which together we believe will
materially improve our financial performance and deliver more
value to our shareholders."

Hoaglin added, "Huntington has a strong presence and brand name
in its primary midwestern markets -- as well as solid franchises
in corporate and retail banking, private financial services and
automobile financing. While we also have a promising business
located in attractive central Florida markets, this business is
not geographically strategic to our future and we believe it
offers greater value to a strategic buyer in that marketplace.
With this restructuring, we intend to begin the process of
returning the Company to the ranks of the nation's premier
regional banks. To do so, we are determined to improve our
customer focus as we reinforce our position as a deeply rooted
local bank with national capabilities."

Huntington has retained Goldman Sachs and Morgan Stanley as
financial advisors and to assist in selling the Florida
operations. The sale process will begin immediately and is
expected to be completed by year-end. Huntington, which is the
eighth-largest bank in Florida with deposits of approximately
$4.5 billion, has 139 banking offices and 458 ATMs concentrated
in the central part of the state in such markets as Tampa/St.
Petersburg, Orlando, Sarasota/Bradenton, Ft. Myers, Lakeland,
Leesburg and Melbourne, and a processing center located in

Hoaglin commented, "While Florida is a high-potential franchise,
we believe we can unlock significant value through the sale of
this valuable asset, freeing up funds to enhance our capital
position and provide increased value to shareholders through a
share repurchase. At the same time, the Florida sale will enable
us to focus our resources on growing our core Midwest franchises
that are strategically important to our future."

In addition to selling its Florida operations, Huntington will
consolidate 43 banking offices in Ohio, Michigan, Indiana and
West Virginia. The consolidations will occur where there are two
or more Huntington banking offices in close proximity.
"Rationalizing our branch network through consolidations sets
the stage for Huntington to build a stronger network going
forward," said Hoaglin.

Based on the restructuring plan, Huntington expects to improve
its tangible equity to assets ratio to a minimum of 6.5%.
Huntington has also established new financial targets, including
annual earnings per share (EPS) growth of 10-12%.

"Our objectives are ambitious, but we are confident that as a
more sharply focused and revitalized company we will attain
these goals," said Hoaglin. "We have a solid new management team
in place comprised of both company veterans and new talent from
the outside, that is committed to serving customers and meeting
our financial objectives."

                     About Huntington

Through its affiliated companies, Huntington has more than 135
years of serving the financial needs of its customers.
Huntington provides innovative products and services through
more than 500 offices in Florida, Indiana, Kentucky, Maryland,
Michigan, New Jersey, Ohio, and West Virginia. Huntington also
offers products and services online at ,
through its technologically advanced, 24-hour telephone bank,
and through its network of more than 1,400 ATMs.

JORE CORPORATION: Reports Progress In Reorganization Strategy
Jore Corporation has been awarded the largest drill bit category
as well as the fast-change category for Lowe's.

These products will be manufactured and sold by Jore under the
Porter Cable brand. Initial shipments for both categories are
scheduled for August 2001.

Concurrent with this significant award of new business, the
lenders providing Jore debtor-in-possession financing have
agreed to a substantial increase in Jore's line of credit to
support the new business.

"This is a very significant event for Jore Corporation," said
Gerald J. McConnell, President and Chief Executive Officer of
Jore. "We are extremely pleased to have added such a significant
customer as Lowe's, obtained additional funding to support the
business, and with positive support from the employees,
creditors, lenders, economic development groups, customers
and suppliers we are well on our way to executing our
reorganization strategy."

The new agreement, approved Tuesday by the U.S. Federal Court in
the District of Montana along with 11 other debtor motions
approved on June 28, provides an excellent platform for
restructuring success.

                 About Jore Corporation

Jore Corporation filed for voluntary reorganization under
Chapter 11 of the U.S. Bankruptcy Code on May 22, 2001. On that
date the Company also restructured its board of directors and
executive team.

Jore Corporation designs and manufactures innovative power tool
accessories and hand tools for the do-it-yourself and
professional craftsman markets. Its products save users time by
offering enhanced functionality, increased productivity and ease
of use. Jore sells its products under licensed brands, as well
as under various private labels of the industry's largest
retailers and power tool manufacturers.

KELLSTROM: Moody's Lowers Convertible Notes' Rating to Ca
Moody's Investors Service downgraded the ratings on Kellstrom
Industries, Inc.'s $54 million of 5.75% convertible subordinated
notes due October 15, 2002 and $86.25 million of 5.5%
convertible subordinated notes due June 15, 2003 to Ca from
Caa2. The senior implied rating was lowered to Caa2 from B3
and the issuer rating was lowered to Caa3 from Caa1.

The downgrades reflect the following reasons:

      (i) poor operating performance in the first quarter
          following poor performance in 2000

     (ii) limited financial flexibility

    (iii) weakened credit protection statistics and expected
          continued losses in the near term due to weak industry

     (iv) concern about the Company's ability to refinance the
          convertible subordinated notes and effect the pending
          exchange offer.

      (v) high leverage, limited liquidity

     (vi) current weakness in commercial aerospace aftermarket

    (vii) risks and uncertainties of integrating its December
          2000 acquisition of the aircraft and engine parts
          resale business of Aviation Sales Company (AVS) and
          realizing on its JV investment with AVS

The outlook remains negative while approximately $140 million of
debt securities are affected.

The company is engaged in the purchasing, overhauling (through
subcontractors), reselling and leasing of aircraft parts,
aircraft engines and engine parts. Kellstrom Industries, Inc. is
headquartered in Miramar, Florida.

LAIDLAW INC: Canadian Debtors To Maintain Cash Management System
The Canadian Applicants sought and obtained authority at a First
Day Hearing, to maintain their Cash Management System. Laidlaw
Inc.'s cash management systems provide well-established
mechanisms for the collection, concentration, management and
disbursement of funds used by the Laidlaw Companies' businesses,
Jay A. Carfagnini, Esq., from Goodmans LLP, told Mr. Justice
Farley at the First Day Hearing.

Indeed, Mr. Justice Farley found, the benefits of the systems
and the continued and uninterrupted use of those systems is
obvious. The Applicants' request is approved. (Laidlaw
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

LAIDLAW INC.: Reports Consolidated Third Quarter Revenues
Laidlaw Inc. (TSE:LDM; OTC:LDWIF) has reported consolidated
revenue from its continuing school, inter-city, public transit
and travel services bus operations increased 3% during its third
fiscal quarter ended May 31, 2001. Revenue increased to $835.5
million from the $811.6 million reported for the same period in
2000. Revenue gains of 5%, from $370.6 million to $389.0
million, were generated in the Inter-city, Public Transit and
Travel Services segment primarily as a result of higher bus
ticket prices. Education Services' revenue increased slightly
from $441.0 million to $446.5 million as a result of negotiated
price increases and route additions. Revenue increases were
partially offset by reductions due to weather and non-renewals
of specific contracts. The decline in the value of the Canadian
dollar reduced revenue by approximately 0.5% in each segment.

Consolidated income before interest, taxes and amortization,
(IBITA) was $72.4 million compared with $74.8 million in last
year's quarter. Increases in driver-related and energy costs --
fuel and utilities -- along with insurance claims costs are
responsible for the year-over-year decline.

Income before interest, taxes, depreciation and amortization,
(IBITDA) was $133.9 million compared with $135.0 million last
year. Capital spending for asset replacement and expansion
increased slightly to $78.6 million from $76.2 million last
year. Cash-on-hand at May 31, 2001 was $211.4 million.

A net loss of $24.0 million or $0.07 per share for the quarter
ended May 31, 2001 was principally attributable to increased
accrued interest, professional fees and other costs associated
with the company's restructuring efforts. A net loss of $542.5
million or $1.66 per share for the quarter ended May 31, 2000
included one-time items related to financing, taxes and write-
downs in the value of the company's holdings in Safety-Kleen and
its discontinued healthcare operations.

John R. Grainger, Laidlaw Inc.'s president and CEO said,
"Employees of Laidlaw's operating companies have done an
excellent job of continuing to deliver high-quality service
despite the distractions of the holding company restructuring.
We are grateful for the strong customer support demonstrated
during this unusual period for Laidlaw Inc.

"We are generally pleased with our operating results for the
current quarter given the increased driver costs, continued high
energy costs -- fuel and utilities -- and insurance claims costs
faced during the spring quarter. Our operating companies
generated revenue increases through negotiating contract changes
in Education Services and increasing retail ticket prices at
Greyhound Lines," concluded Mr. Grainger.

                    Education Services

Quarterly IBITA for the company's school bus segment was $60.4
million compared with $61.2 million for the same fiscal 2000
quarter. Driver-related and energy cost increases were the
primary factors in the difference.

        Inter-City, Public Transit And Travel Services

Quarterly IBITA for this segment was $12.0 million compared with
$13.6 million for last fiscal year's quarter, primarily due to
increases in energy, driver-related and insurance claims costs.

                    Nine Months Results

For the nine months ended May 31, 2001, consolidated revenue
increased 4% to $2.41 billion compared with $2.31 billion for
the same fiscal 2000 period.

IBITDA from continuing operations was $357.4 million compared
with $397.8 million reported for the same fiscal 2000 period.

The net loss for the nine-month period ended May 31, 2001 was
$114.0 million or $0.35 per share compared with a loss of $1.95
billion or $5.96 per share for the first nine months of fiscal

                 HealthCare Operations

For the nine months ended May 31, 2001, IBITDA for the company's
healthcare operations, (classified as discontinued for
accounting purposes) was $95.2 million compared with $83.3
million in the same fiscal 2000 period. Capital spending for
asset replacement in the healthcare businesses was $19.4 million
compared with $21.0 million in the same fiscal 2000 period.

                  Subsequent Event

On June 28, 2001 Laidlaw Inc. and five subsidiary holding
companies filed voluntary petitions for reorganization with the
U.S. Bankruptcy Court, Western District of New York, in Buffalo.
Laidlaw Inc. and one subsidiary holding company also made
filings with the Ontario Superior Court of Justice in Toronto,
Ontario. None of Laidlaw Inc.'s operating companies were subject
to the filings. The company's plan of reorganization, as filed,
contemplates no distribution of value to holders of the Laidlaw
Inc. equity.

Laidlaw Inc. is a holding company for North America's largest
providers of school and inter-city bus transportation, public
transit, patient transportation and emergency department
management services. All dollar amounts are in U.S. dollars.

LERNOUT & HAUSPIE: Selling Speech Machines To MedQuist Inc.
Robert J. Dehney, Gregory W. Werkheiser, and Michael G.
Busenkell of the Wilmington firm of Morris Nichols Arsht &
Tunnell, together with Luc A. Despins and Allan S. Brilliant of
the New York firm of Milbank Tweed Hadley & McCloy, on behalf of
Lernout & Hauspie Speech Products N.V., ask Judge Wizmur to
approve its entry into a Stock Purchase Agreement with MedQuist,
Inc., and her approval of the sale of L&H NV's Redeemable
Preference Shares in Speech Machines, Inc. to MedQuist free and
clear of all liens, claims and encumbrances.

Prior to the Petition Date, as part of its business strategy,
L&H NV made several investments in other technology-related
companies in an effort to, among other things, (a) expand its
market presence in the computerized speech recognition market,
and (b) provide financial assistance to companies that had the
potential to become business partners for L&H NV. In August
1998, in connection with an investment in Speech Machines, L&H
NV purchased 2,225,000 shares of Series B Convertible Cumulative
Redeemable Preference ?Stock of Speech Machines, a provider of
integrated internet-based medical transcription services, at a
subscription price of $1.72 per share, for a total investment of
$3,878,600. As part of this transaction, L&H NV also entered
into a Value-Added Reseller Agreement with Speech Machines under
which L&H NV became the exclusive reseller of Speech Machines'
outsourced medical transcription service in the hospital market
in the United States.

It is L&H NV's understanding that, over time, Lernout & Hauspie
Investment Corporation, a non-debtor company owned by Jo Lernout
and Pol Hauspie, also purchased 1,700,000 shares of Redeemable
Preference Shares, 100,000 shares of Speech machines' common
stock, and warrants to purchase 400,000 shares of Speech
Machines' common stock, It is the L&H NV's understanding that
these shares have been sold to MedQuist.

After L&H NV's initial investment in Speech Machines, Speech
Machines approached L&H NV, among other parties, about making
further investments in Speech Machines. L&H NV did not made any
additional investments, and, at the beginning of 2000, L&H NV
decided to sell the Redeemable Preference Shares. Unfortunately
all attempts to sell these shares at that time proved

In March 2001, Speech Machines announced in a letter to
shareholders that MedQuist, a leading provider of outsourced
transcription services to the medical market and a competitor of
the Debtors' Healthcare Solutions Group, had offered to acquire
all of the outstanding shares - common stock and the Redeemable
Preference Shares - of Speech Machines for $10,000,000, or
approximately $0.5672192 per share (reduced by professional fees
and expenses). L&H NV's management believed that MedQuist's
offer was the best offer it would receive for the Redeemable
Preference Shares; therefore L&H NV's management determined, in
their business judgment, that a deal with MedQuist presented the
best business opportunity for maximizing the value of L&H NV's
investment in Speech Machines. L&H NV agreed in principle to
sell its Redeemable Preference Shares to MedQuist by a Stock
Purchase Agreement dated April, 2001, subject to this Court's

L&H NV understands that MedQuist has acquired approximately 85%
of the outstanding securities of Speech Machines. L&H NV also
believes that such an acquisition by MedQuist constitutes a
"sale" under Speech Machine's Articles of Association and
triggers L&H NV's right to require redemption of the Redeemable
Preference Shares by Speech Machines. However, L&H NV's
management believes that they will be unable to obtain the
redemption amount from Speech Machines without protracted and
expensive litigation. L&H NV did, however, send to Speech
Machines, and to MedQuist, a notice in accord with the Articles
of its intent to require Speech Machines to redeem the
Redeemable Preference Shares if the transaction contemplated by
the Stock Purchase Agreement is not consummated. Speech
Machines' response to the notice alleges that the notice was not
timely sent, that L&H NV waived its right to the redemption
amounts, and that, even if the notice was timely, Speech
Machines is prohibited by law from redeeming the Redeemable
Preference Shares because Speech Machines has no distributable
profits. Again, L&H NV's management believes that selling the
Redeemable Preference Shares to MedQuist will maximize value
fort the estate. L&H NV's management also advises Judge Wizmur
that any respect of receiving the redemption amount from Speech
Machines may occur only after protracted and expensive

                   The Redemption Right

The Articles of Speech Machines provides, among other things,
that in case of a sale of shares representing at least 50% of
the voting rights of Speech Machines' common stock, each holder
of the Redeemable Preference Shares could request that Speech
machines redeem its Redeemable Preference Shares at a redemption
amount of the initial investment, plus 10% compounded on an
annual basis. If honored, L&H NV believes that the Redemption
Amount for its Redeemable Preference Shares would be
approximately $5 million. In addition, the Articles provide that
each holder of the Redeemable Preference Shares is allowed to
redeem 1/3 of its Redeemable Preference Shares at the Redemption
Amount on August 29, 2002, August 29, 2003, and august 29, 2004,
respectively. The Articles further provide that each holder of
Redeemable Preference Shares can also request Speech Machines to
redeem its Shares at the Redemption Amount if there is no sale
or public offering on o before August 29, 2004.

                 The Stock Purchase Agreement

Under the Stock Purchase Agreement, MedQuist will purchase L&H
NV's 2,255,000 Redeemable Preference Shares in Speech Machines
for $1,308,773.81 (reduced by a pro-rata share of expenses of
$80,882.10 for amounts owed to Brobeck Hale & Door, and Deutsche
Bank) for net proceeds of $1,227,891. These proceeds are to be
paid at closing.

As a condition to the closing, L&H NV will deliver releases of
all liens, claims, interests and other encumbrances on the
Redeemable Preference Shares or evidence of the termination of
such liens, claims, interests or other encumbrances reasonable
acceptable to MedQuist. L&H NV will also use its best efforts to
obtain the consent of the proposed transaction of this Court,
the Belgian commissioners, L&H NV's postpetition DIP Lenders,
and the Creditors' Committees by July 1.

For a period of one year, L&H NV will indemnify MedQuist and its
successors and assigns from all damages resulting from any
misstatement in or omission from any representation or warranty
by L&H NV contained in the Stock Purchase Agreement. Such
representations are limited to: (i) L&H NV's ownership of the
Redeemable Preference Shares clear of all encumbrances; (ii) L&H
NV's power and authority to execute and deliver the Stock
Purchase Agreement to MedQuist; (iii) the execution or delivery
of the Stock Purchase Agreement not being in violation of any
judgment, decree, injunction or order of any court or
governmental authority which is applicable to or binding on L&H
NV; and (iv) no authorization, consent, approval, order or
filing with or notice to any court, governmental agency,
instrumentality, or authority, other than the consent of this
Court and the Belgian Court being necessary to execute the Stock
Purchase Agreement.

                   The Debtor's Arguments

The Debtor argues that the Court should approve this agreement
if the Debtors can show a sound business purpose. Since the
beginning of 2001 Speech Machines has been a passive investment
for L&H NV. At the time they signed the Stock Purchase
Agreement, L&H NV's management believed that they would be
unable to sell the Redeemable Preference Shares for more than
the purchase price currently offered by MedQuist. Once L&H NV
articulates its sound business judgment, there is a presumption
that, in making the business decision, the directors acted on an
informed basis, in good faith, and that the action is in the
best interests of the debtor. The management of L&H NV believes
that the MedQuist offer to purchase is fair, reasonable, and
represents the best return available under the circumstances,
and urges the Court to approve the sale. (L&H/Dictaphone
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

LOEWEN GROUP: Treatment Of CTA Issue Under Third Amended Plan
There has been substantial controversy and an adversary
proceeding (the "CTA Proceeding") over certain alleged
deficiencies with respect to filings required under the CTA and
the effect of such alleged deficiencies on the relative rights
of the holders of more than $2 billion of CTA Note Claims.

Professor White -- highly respected law professor and authority
on commercial and bankruptcy law -- conducted a Bankruptcy Court
mandated mediation that failed to produce a settlement of the
issues.  Following that failure, Professor White provided a
report to The Loewen Group Inc. Debtors recommending a range of
potential treatments for the CTA Note Claims that he believed
reflected his objective evaluation of the probabilities of
success of the numerous legal and factual arguments presented by
the various parties involved in the mediation.

The Plan is based on the mediator's recommendations and proposed
recoveries for the various series of CTA Note Claims at the
midpoint of the mediator's recommended range and reflects an
overall settlement among the Principal CTA Creditors and the
Debtors relating to these issues under the CTA and certain other
issues. (See table below regarding classes and treatment of
claims and entry regarding treatment of Indenture Trustee

If Class 7 accepts the Plan, in addition to the distributions to
holders of Group III CTA Note Claims, Reorganized LGII will
reimburse up to an aggregate amount of $3,000,000 of legal fees
and expenses incurred by attorneys representing holders of Group
III CTA Note Claims in certain litigation against certain
parties potentially responsible for the failure to file
Additional Secured Indebtedness Registration Statements with the
CTA Trustee in respect of the Series 6 Notes, the Series 7 Notes
and the PATS Notes. To be eligible for such reimbursement, the
fees and expenses must be incurred in connection with litigation
commenced by or on behalf [of a majority amount of] the Group
III CTA Note Claims within one year of the Effective Date.
Reorganized LGII will be entitled to repayment of the second
$1,500,000 of such reimbursements or portion thereof plus
interest at 10% per annum from the date of each applicable
reimbursement, with any such repayment and interest to be paid
solely from any recoveries in respect of such litigation whether
by judgment, settlement or otherwise.

The request for and acceptance of funds from Reorganized LGII
will, without the necessity for any further action, constitute
the consent and agreement of each plaintiff and plaintiffs'
counsel in the respective litigation to such repayment (together
with interest) from any such recoveries and such repayment
(together with interest) will be made prior to any distributions
of such recoveries to such plaintiffs.

The approval by the Bankruptcy Court pursuant to Bankruptcy Rule
9019 of the settlement of the issues relating to the CTA Note
Claims embodied in the Plan and the authorization to dismiss all
claims in the CTA Proceeding is a condition for confirmation of
the Plan. The Confirmation Order shall provide that:

(1) the treatment in the Plan of CTA Note Claims is fair,
      reasonable, and adequate in light of the litigation risks
      confronting Indenture Trustees and holders of CTA Note
      Claims in the CTA Proceeding;

(2) the decisions of certain holders of CTA Note Claims to
      accept the Plan under which their CTA Note Claims are not
      treated on a pari passu basis with the CTA Note Claims of
      certain other holders of such CTA Note Claims were
      appropriate and reasonable in light of the litigation risks
      that they faced in the CTA Proceeding; and

(3) Reserved CTA Claims of any holder of a CTA Note Claim will
      in no way be prejudiced or adversely affected by virtue of
      the fact that any holder of any such claim voted in favor
      of the Plan, did not challenge the treatment of its Claim
      or its recovery under the Plan, did not pursue to
      conclusion its claims or defenses in the CTA Proceeding or
      otherwise did not fully pursue any rights that it may have
      had with respect to its CTA Note Claim before the
      Bankruptcy Court.

                    Release of CTA Claims

As of the Effective Date, and upon cancellation of the CTA as
provided in the Plan, each Indenture Trustee, the CTA Trustee
and each holder of a CTA Note Claim will be deemed to forever
release, waive and discharge each Loewen Company, including as a
Pledgor under the CTA, and each of their respective current or
former directors, officers or employees from any claims,
demands, rights or causes of action in respect to any rights or
claims under or in respect to the CTA and CTA Note Claims (other
than the right to enforce the Debtors' or the Reorganized
Debtors' obligations under the Plan and the contracts,
instruments, releases, agreements and documents delivered
thereunder), all of such claims having been settled and
discharged through the respective distributions to holders of
Claims in Class 5, Class 6 or Class 7.

As of the Effective Date, each holder of a CTA Note Claim will
be deemed to forever release, waive and discharge each other
holder of a CTA Note Claim and each Indenture Trustee from any
claims, demands, rights or causes of action in respect to the
treatment and distributions under the Plan or otherwise in
respect of CTA Note Claims or payments thereon, all of such
claims having been settled as part of the settlement embodied in
the Plan, and any duty or obligation, contractual or otherwise,
of any Indenture Trustee to initiate or continue any action or
proceeding in respect to the CTA Note Claims or the status
thereof under the CTA will be deemed to have been released and
discharged as of the Effective Date. Such release does not apply
to Tolling Party.

As of the Effective Date, the Debtors will be deemed to forever
release, waive and discharge any and all avoidance claims or
causes of action under sections 510, 542, 544, 545, 547, 548,
549, 550, 551 or 553 of the Bankruptcy Code against all persons
and entities in respect to any CTA Note Claim or in respect of
any payment thereon (including avoidance claims subject to a
proceeding set forth on Exhibit IX.B.8 to the Plan which will be
deemed dismissed, with prejudice).

           Reservation of Certain Third-Party CTA Claims

(a) Except as specifically provided in the Plan, any claims,
      demands, rights and causes of action that any holder of a
      CTA Note Claim may have against Tolling Parties or other
      third parties with respect to the CTA (Reserved CTA Claims)
      are reserved and will not be affected by Confirmation or
      the occurrence of the Effective Date. Claims, demands,
      rights and causes of action against all persons and
      entities that are the beneficiaries of the release provided
      in Section IV.F.2 or the release provided in Section IV.F.3
      do not constitute Reserved CTA claims.

(b) Reserved CTA Claims of any holder of a CTA Note Claim will
      not be prejudiced or adversely affected by virtue of the
      fact that any holder of any such claim in favor of the
      Plan, did not challenge the treatment of its claim or its
      recovery under the Plan, did not pursue to conclusion its
      claims or defenses in Adversary Proceeding No. 00-01181
      pending before the Bankruptcy Court, or otherwise did not
      fully pursue any rights that it may have had with respect
      to its CTA Claim before the Bankruptcy Court.

           Distribution with Respect to CTA Note Claims

The following describes the distributions of cash and securities
to be issued to holders of Allowed CTA Note Claims in Classes 5,
6 and 7. Each category of consideration will be allocated among
Classes 5, 6 and 7 as follows:

                                  Class        Percentage
                                  -----        ----------
                                    5             50.103%
                                    6             18.397%
                                    7             31.500%

The aggregate cash proceeds received on or prior to the
Effective Date by the Debtors in respect of the sale of any of
the Disposition Properties (including any amounts allocated to
Neweol (Delaware) LLC in respect of the sale of receivables),
net of the direct costs relating to such sale (i.e., the
Realized Asset Disposition Proceeds Amount), will be distributed
to holders of Allowed CTA Note Claims in Classes 5, 6 and 7.

Pursuant to the Plan, cash equal to the "Excess Cash
Distribution Amount" will be distributed to holders of Allowed
CTA Note Claims in Classes 5, 6 and 7. For purposes of the Plan,
the term "Excess Cash Distribution Amount" means the sum of:

(a) $40 million, less the sum of (i) amounts to be paid or set
      aside pursuant to the Plan in respect of the fees and
      expenses of each Indenture Trustee and the CTA Trustee and
      (ii) amounts to be paid or set aside pursuant to the Plan
      in respect to the fees and expenses of the Principal CTA
      Creditors (i.e., the Minimum Cash Distribution Amount); and

(b) if the Available Cash Amount exceeds the sum of (i) the
      Minimum Cash Distribution Amount and (ii) $45 million, an
      amount equal to 75% of any such excess.

(Loewen Bankruptcy News, Issue No. 42; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

LTV STEEL: Rejects Landmark Office Towers Lease
LTV Steel Company, Inc. asks Judge Bodoh for authority to reject
an unexpired lease for commercial real property located in the
landmark Office Towers in Cleveland, Ohio, along with an
unexpired sublease for the property, effective as of the date on
which the Motion is filed. The lease began in December 1996,
between LTV Steel as tenant, and Sherwin-Williams Company as
landlord. The fixed monthly rent under the lease is $45,943.01,
and LTV Steel is required to pay its metered share of the
electricity and water consumed at the Property. The lease
expires by its own terms in December 2001.

In February 2000, LTV Steel, as sublessor, and Getronics Wang
Co., as sublessee, entered into a sublease agreement for a
portion of the property. The fixed monthly rent under the
sublease is $6,090, and the fixed monthly electricity is
$761.25. The sublease expires in December 2001 on the same date
as the primary lease.

LTV Steel tells Judge Bodoh it has evaluated the lease and
concluded that it is not necessary to its ongoing business
operations or its restructuring efforts. LTV Steel currently is
using only approximately 860 square feet of the approximately
45,990 square feet of total space at the property to store
equipment. To continue to use the property in this manner would
be financially imprudent. Moreover, the sublease comprises only
a small portion of the property and does not provide sufficient
economic benefit to compensate for the burdens imposed by the
lease. In addition, based on LTV Steel's experience in the
industry and the particular market in which the property is
located, LTV Steel does not believe that a market exists for a
sale of the lease or the sublease. Accordingly, in LTV Steel's
business judgment, the rejection of the lease and sublease is in
the best inters of the estate and its creditors.

LTV Steel assures Judge Bodoh that it notified Sherwin-Williams
and Getronics of its intention to reject the lease and sublease
effective as of the date of the Motion. In fact, LTV says, it
and Sherwin-Williams have been discussing the rejection or
termination of the lease for several weeks. In addition, LTV is
in the process of vacating the property and will no longer
occupy the property as of the rejection date. Accordingly, LTV
believes that the equities in this case weigh in favor of
permitting LTV to reject the lease and sublease effective as of
the date of the Motion.

Agreeing with the Debtors' arguments, Judge Bodoh authorizes the
rejection of the lease and sublease effective as of the date of
the Motion. (LTV Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-00900)

MARINER POST-ACUTE: Wants To Extend Georgia Office Space Lease
As the leases for Mariner Post-Acute Network, Inc.'s corporate
offices in Georgia are due to expire in August, the Debtors seek
the Court's authority for entry into:

      (a) the "Fifth Amendment to Lease" (the Ravinia I Lease
Amendment) by and between MPAN, as lessee, and DIFA A.G., as
lessor, for the lease of corporate office space located at One
Ravinia Drive in Atlanta, Georgia; and

      (b) the "First Amendment to Lease" (the Ravinia II Lease
Amendment) by and between MPAN, as lessee, and Prime Real Estate
Equities II, L.P., as lessor, for the lease of corporate office
space located at Two Ravinia Drive in Atlanta, Georgia.

                 The Ravinia I Lease

Under the Ravinia I Lease, the Debtors currently occupy the
entire 15th floor and a portion of the 12th floor of Ravinia I.
After various amendments, the Lease will expire on August 31,
2001. The Debtors seek to extend the lease for a period of 18
months, through February 28, 2003. At the time of the expiration
of the existing Ravinia I Lease, MPAN will surrender its
premises on the 12th floor of Ravinia I to DIFA.

Before the expiration, MPAN has the right to pay fixed base rent
under Ravinia I Lease at an average rate of $14.96 on a
collective per square foot basis for the Ravinia I space, plus
variable additional rent equal to MPAN's pro rata share of the
operating expenses for each calendar year. MPAN pays its rental
obligations on a monthly basis.

Under the Amendment MPAN will pay $18.50 per square foot as Base
Rent. MPAN will also have the right, during the pendency of its
bankruptcy case, to assign the Ravinia I Lease, as entended,
pursuant to section 365 of the Bankruptcy Code and to be
relieved from further liability thereunder pursuant to section
365(k) of the Bankruptcy Code.

                   The Ravinia II Lease

Pursuant to the Lease Agreement between MPAN as successor to
GranCare, Inc. and Prime as successor to Ravinia II Associates,
MPAN currently occupies the entire 5th floor of Ravinia II. Like
the Ravinia I Lease, the Ravinia II Lease is also due to expire
on August 31, 2001.

The Amendment of this lease also provides for an extension for a
period of 18 months, through February 28, 2003. During the
extension, MPAN will pay $18.50 per square foot as Base Rent,
the same rate as for the Ravinia I space with an unrelated
lessor. Under the terms of the Ravinia II Lease Amendment, MPAN
has the right, during the pendency of its bankruptcy case, to
assign the Ravinia II Lease, as extended, under the terms of
section 365 of the Bankruptcy Code and to be relieved from
further liability thereunder pursuant to Bankruptcy Code section

MPAN believes that because of the strength of the Atlanta real
estate market and because of the somewhat abbreviated nature of
the extension, the increase in the Base Rent is reasonable and

Moreover, MPAN requires administrative office space to
administer its corporate businesses. In the course of
investigating all of its options, MPAN found that it will be
less expensive to renew the Ravinia Leases than to move to
alternative administrative office space. (Mariner Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,

PACIFIC GAS: Continuing Environmental Cleanup Programs
In relation to Pacific Gas and Electric Company's motion to
continue environmental cleanup programs, Karl J. Fingerhood,
Esq., a Trial Attorney for the Environmental Enforcement Section
at the U.S. Department of Justice, tells the Court, "The United
States has no objection to and supports the relief sought by the
debtor". The Government feels compelled, however, to publicly
state that it does not agree with the decision in In re Goodwin,
163 B.R. 825 (Bankr. D. Idaho 1993), cited in the Debtor's
motion papers.  The Government calls the Goodwin decision
"aberrant" and is convinced, if reviewed by the Ninth Circuit,
would overturned.

Considering the merits of the Debtors' Motion, Judge Montali
ruled that it is granted and the Debtor may expend (i) up to
$22,000,000 each calendar year in which its chapter 11 case is
pending to continue hazardous substance remediation programs and
procedures and (ii) any additional amounts necessary in
emergency situations involving post-petition releases or
threatened releases of hazardous substances. (Pacific Gas
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

PACIFIC GAS: Court Authorizes Assumption of Calpine's Contracts
Calpine Corporation (NYSE: CPN), the San Jose, Calif.-based
independent power company, announced the U.S. Bankruptcy Court
for the Northern District of California approved the agreement
authorizing PG&E to assume Calpine's modified QF contracts.
Effective immediately, PG&E has assumed all of Calpine's QF
contracts. Under the terms of the agreement, Calpine continues
to receive its contractual capacity payments plus a five-year
fixed energy price component of approximately 5.37 cents per
kilowatt-hour, which is consistent with the recent California
Public Utilities Commission Decision No. 01-06-015. In addition,
all past due receivables under the QF contracts are now elevated
to administrative priority status and will be paid to Calpine,
with interest, upon the effective date of a confirmed plan of
reorganization. Administrative claims enjoy priority over
payments made to the general unsecured creditors. As of April 6,
2001, Calpine had recorded approximately $267 million in
accounts receivable with PG&E under its QF contracts.

Based in San Jose, Calif., Calpine Corporation is dedicated to
providing customers with reliable and competitively priced
electricity. Calpine is focused on clean, efficient, natural
gas-fired generation and is the world's largest producer of
renewable geothermal energy. Calpine has launched the largest
power development program in North America. To date, the company
has approximately 34,000 megawatts of base load capacity and
7,380 megawatts of peaking capacity in operation, under
construction, pending acquisition and in announced development
in 29 states, the UK and Canada. The company was founded in 1984
and is publicly traded on the New York Stock Exchange under the
symbol CPN. For more information about Calpine, visit its
website at

PENN SPECIALTY: List Of 20 Largest Unsecured Creditors

Entity                        Nature Of Claim       Claim Amount
------                        ---------------       ------------
Lyondell Chemical             Trade Debt            $3,580,011
June Varnadoe
2502 Sheldon Rd.,
Channelview, TX 77530

SigCorp Energy Services       Contract              $1,771,022
Laurie Langford
19 NW 4th Street
Suite 600
Evansville, IN 47708

Tieling North Furfural        Trade Debt              $856,485
Mr. Bi Zi Cai
Tieling North Furfural
(Group) Co. Ltd.
Teiling Municipal Economic
and Technological Development
Zone, Tieling 112616,
Liaoning, China
Tel: +86-410-260-1842
Fax: +89-410-260-0844

Chang Tu Furfural Company     Trade Debt              $761,866
Mr. Ran Shao Xiang
General Manager
Chang Tu Furfural Factories
PO Box 27
Tieling 112000, Liaoning,
Tel: +86-410-265-5585
Fax: +86-410-265-0618

Siping City Foreign           Trade Debt              $567,987
Trade Company
Mr. Zhang Bao ku
Vice President
No 42 Hero Street,
Siping City
136000, Jilin, China
Tel: +86-434-363-2195
Fax: +86-434-363-2192

Sinochem International        Trade Debt              $424,027
Furan Comapny
Mr. Liu MenZhen
Room 209 Sinochem Tower A2
Fuxingmenwai Dajie
Beijing 100045, China
Tel: +86-10-6856-9176
Fax: +86-10-6856-9123

VOPAK Logistic                Contract                $369,061
Philippe Baetens
Oude Leeuwenrui 25 PV 69
Antwerpen 1, Belgium 2000
32 3 205 07 02

Plant Maintenance             Trade Debt              $327,807
Bob Baker
PO Box 280883
Memphis, TN

CDI Engineering Group         Trade Debt              $270,852
Walter Teesdale
10 Penn Center
13th Floor
1801 Market Street
Philadelphia, PA
(215) 751-1773

VOPAK USA                     Trade Debt              $261,998
David Canard
PO Box 200450
Houston, TX

CSXT N/S 121636                Contract               $223,808

GE Capital                     Contract               $194,445

Harbor Chem                    Trade Debt             $187,638

Deloitte & Touche              Trade Debt             $162,432

Votg                           Trade Debt             $150,105

General Chemical Corp.         Trade Debt             $149,111

Matlack                        Trade Debt             $137,594

Air Products                   Trade Debt             $108,591

DuPont Company                 Trade Debt             $106,276

Price Waterhouse Coopers       Trade Debt              $98,522

PILLOWTEX: Agrees To Lift Stay For Mutual Set-Off With Ex-Cell
Prior to the Petition Date, Fieldcrest Cannon of the Pillowtex
Corporation Debtors purchased a substantial amount of goods from
Ex-Cell Home Fashions, Incorporated. Ex-Cell also incurred a
substantial amount of licensing fees payable to the Debtor under
an "Amended and Restated Trademark License Agreement". Aside
from that, Ex-Cell also purchased certain goods from the Debtor.

Fieldcrest and Ex-Cell continues to transact business in a
reciprocal manner.

Both parties want to exercise their respective rights of setoff
to reduce the amount of payments they owe to one another.
However, such setoff rights may only be exercised if the claim
and the debt are between the same entities and accrued either
entirely pre- petition or entirely post-petition.

Fieldcrest and Ex-Cell agree that the automatic stay should be
modified to permit:

      (a) Ex-Cell shall be allowed to set-off $76,270 for product
it had shipped to the Debtor pre-petition against $381,008.47
Ex-Cell owes the Debtor for pre-petition transactions, resulting
in a net payment to the Debtor of $304,738.47.

      (b) Ex-Cell shall be allowed to setoff $135,134.28 for
product it had shipped to the Debtor post-petition against
$245,678.98 Ex- Cell owes the Debtor for post-petition
transactions, resulting in a net payment to the Debtor of

      (c) To the extent further debts fall due from Ex-Cell to
the Debtor, Ex-Cell shall, with prior written notice to the
Debtor, be allowed to setoff funds owed by the Debtor against
such debts, provided, however, that such setoff shall only be
allowed to the extent the claim and the debt are between the
same entities and accrued either entirely pre-petition or
entirely post-petition.

But in the event of a dispute, the parties agree to the
bankruptcy court for resolution. While the case is pending, any
payment requirements related to the dispute will be held in

Judge Robinson put her stamp of approval on this agreement.
(Pillowtex Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PLAINWELL INC.: Selling Two Tissue Mills For $64.2 Million
PLAINWELL INC. has reached an agreement to sell its Consumer
Products Division to Perkins Papers Ltd., a subsidiary of
Cascades Inc. for a total purchase price of 64.2 million U.S.
dollars. The sale would consist of two tissue mills located in
Eau Claire, Wis., and the other in Ransom, Pa., along with
converting and distribution facilities for the Ransom facility
located in nearby Pittston, Pa.

The Consumer Products Division is a leading manufacturer and
marketer of a broad line of consumer tissue products, including
bath tissue, paper towels, napkins and facial tissue for the
private label market, with an annual capacity of approximately
110,000 short tons. "We look forward to the acquisition and
being a part of the highly regarded and successful Perkins Paper
Ltd. Organization," stated Gary Hayden, president and COO of
PLAINWELL INC. "The synergies realized through this acquisition
will enhance the position of Perkins Paper Ltd. as one of the
leaders in the private label tissue marketing in North America."

The transition is subject to the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and approved by the
Bankruptcy Court in accordance with Bankruptcy Court procedure.
If the transaction is approved, it is anticipated that a closing
will occur no later that October 31, 2001.

PLANVISTA: Hires Donald Schmeling as Chief Financial Officer
PlanVista Corporation (NYSE: PVC) announced that Donald
Schmeling has joined the Company as its interim Chief Financial
Officer. Mr. Schmeling previously served as chief financial
officer of Hydrogen Media, Inc. in St. Petersburg, Florida and
as a partner of Grant Thornton in Tampa. He has extensive
experience in SEC matters, public debt and equity offerings,
merger and acquisitions, and technology.

According to PVC Chairman and Chief Executive Officer Phillip S.
Dingle, "Our Board of Directors and senior management team are
delighted that Don has joined our team. His enthusiasm,
intellect, character, and experience will serve our shareholders

PlanVista is a leading health care technology and product
development company, providing medical cost containment for
health care payers and providers through PlanVista Solutions,
one of the nation's largest independently owned full-service
preferred provider organizations. PlanVista Solutions provides
network access, electronic claims repricing, and claims and data
management services to health care payers and provider networks
throughout the United States. Visit the company's website at

PLAYDIUM ENTERTAINMENT: Has Until Sept. 14 To File CCAA Proposal
Playdium Entertainment Corporation (PEC) continues to anticipate
filing its December 31, 2000 annual results and March 31, 2001
interim results upon completion of its restructuring under the
Companies' Creditor Arrangement Act.

On July 4, 2001, the Ontario court extended the date by which
the company has to file a proposal under the Companies'
Creditors Arrangement Act from July 6, 2001 to September 14,

PEC continues to operate normally at its four major locations in
Toronto, Mississauga, Edmonton and Burnaby, and at its 50 game
centres across Canada.

Playdium Entertainment Corporation is the leader in the
introduction of location-based entertainment centers in Canada
and is dedicated to developing and operating entertainment
centers worldwide. Playdium operates Playdium Mississauga,
Playdium Burnaby, Playdium Toronto and Playdium Edmonton. In
addition PEC has equipped and operates 50 game centers across

POLARIOD CORP.: S&P Cuts Ratings To Lower-C Levels
Standard & Poor's lowered its ratings on Polaroid Corp.
The ratings remain on CreditWatch with negative implications.

The downgrade follows Polaroid's announcement that it will forgo
interest payments on its bonds as it seeks to restructure its
debt obligations.

Polaroid also announced that it received a third waiver of
financial covenant violations from its U.S. bank lenders. The
waiver will extend through October 12, 2001, and will replace
the existing waiver that expired July 12, 2001, however, the
waiver will not be effective until Polaroid receives a similar
waiver from its U.K. lenders. Once effective, the new waiver
will allow the company to avoid immediate acceleration of the
amounts due under its bank loans and it will continue to
operate. Polaroid will nonetheless continue to face considerable
challenges as it seeks to improve its financial performance and
realign its capital structure. The company has taken a number of
steps to reduce its cost structure and maximize cash flow in
2001; however, it has been unsuccessful in refinancing its debt
maturities as sales of the company's core products decline and
the long-term potential of newer products and recently unveiled
technologies remains uncertain.

The company has retained Dresdner Kleinwort Wasserstein and
Merrill Lynch & Co. to help it explore strategic alternatives
and DrKW and Zolfo Cooper LLC to assist in restructuring
negotiations with its bondholders.

Upon failure to make the scheduled interest payments on each
issue, the ratings for that issue will be lowered to 'D'.
Similarly, the corporate credit rating will be lowered to 'D'
upon the first missed interest payment. The two $150 million
bonds have interest payments due on July 16, 2001, and the
coupon for the $275 million bond is due on August 15, 2001.
Bondholders will have the right to accelerate the repayment of
the bonds if a coupon remains unpaid for 30 days.

The ratings will remain on CreditWatch until the company
implements long-term solutions to its financial and operating
woes, Standard & Poor's said.

Ratings Lowered And Remaining On CreditWatch Negative

      Polaroid Corp.                              To      From

         Corporate credit rating                  CC      CCC+
         Senior secured bank loan rating          CC      CCC+
         Senior unsecured debt                    C       CCC
         Senior unsecured shelf debt (prelim.)    C       CCC
         Subordinated shelf debt (prelim.)        C       CCC-

POLAROID: Fitch Downgrades Senior Note Rating To C From CCC-
Polaroid Corp.'s senior unsecured debt is downgraded to C from
CCC- and its $350 million secured domestic bank facility is
lowered to CC from CCC+. Both ratings remain on Rating Watch
Negative. These actions follow the company's announcement it
would not make two interest payments totaling $11 million due on
July 16, 2001 on its 6 3/4% bonds maturing Jan. 15, 2002 and on
its 71/4% bonds maturing Jan. 15, 2007. Polaroid also indicated
that it would not make the Aug. 15, 2001 $16 million interest
payment on its 11 1/2% notes due on Feb. 15, 2006.

On July 16, 2001, Polaroid will be in technical default of its
obligations, and the ratings will again be lowered. The senior
unsecured debt will then be downgraded to D and the secured
domestic bank facility will be lowered to DDD, reflecting the
secured position of the bank lenders.

POLAROID CORP.: Moody's Cuts Ratings& Says Outlook Is Negative
Moody's Investors Service downgraded Polaroid Corp.'s ratings as

      * senior unsecured notes aggregating $575 million due 2002,
        2006, and 2007 to Ca from Caa3

      * Senior secured $350 million bank credit facility due
        December 2001 to Caa2 from Caa1

      * senior implied rating was lowered to Caa2 from Caa1

The rating outlook is negative while approximately $930 million
of debt securities are affected.

The rating agency said that the downgrade follows the company's
announcement that it intends not to make interest payments
totaling $26 million due by August 15th for its senior unsecured
notes. As reported, Polaroid will begin negotiations immediately
with senior unsecured bondholders regarding a potential
restructuring of the company's senior unsecured debt.

Also, Moody's expects that there will be a continued negative
cash flow in the second quarter with positive cash flow beyond
that point uncertain. Moody's further relates that an absence of
investment and definitive partnership arrangements for the
introduction of new printing media, and refinancing risk of
approximately $500 million of debt maturing by January
2002 incorporate the downgrade.

Polaroid, designs, manufactures, and markets products worldwide
that are used primarily in the imaging fields and related
industries. The company headquarters is in Cambridge,

PSINET INC.: Employs Bankruptcy Services LLC As Claims Agent
PSINet, Inc. has estimated that there are several thousand
creditors and potential creditors, many of which are likely to
file proofs of claim. The receiving, docketing and maintaining
of these proofs of claim would be unduly time consuming and
burdensome for the Clerk's Office. The Court is simply not
equipped to send notices to the thousands of creditors and other
parties in interest when such work could be outsourced in a
cost-efficient manner. PSINet tells the Court that the most
effective and efficient manner to handle proofs of claim is to
engage an independent third party to act as an agent of the

At the Debtors' behest, the Court authorized the Debtors to
retain and employ BSI as notice and claims agent of the
Bankruptcy Court, effective as of the petition date, to perform
noticing, balloting and disbursing services, and to receive,
maintain, record and otherwise administer the proofs of claim
filed in the PSINet chapter 11 cases.

Bankruptcy Services LLC ("BSI") is a firm specializing in claims
management, consulting and computer services.  It has assisted
and advised numerous chapter 11 debtors with respect to
balloting and vote tabulation in connection with confirmation of
plans of reorganization. The Debtors have convinced the Court
that BSI has the capability and experience to provide such
services, and BSI does not hold an interest adverse to the
Debtors or their estates with respect to the matters for which
it is to be retained.

Pursuant to the appointment, BSI will act as agent for the Clerk
and custodian of court records and as such, is designated as the
authorized repository for all proofs of claims filed in the
PSINet chapter 11 cases. The Court has authorized and directed
BSI to maintain official claim registers for each of the Debtors
and to provide the Clerk with a certified duplicate on a weekly
basis unless otherwise directed by the Clerk.

In PSINet's cases, BSI will:

(a) Prepare and serve notices, including:

(b) After mailing a particular notice, file with the Clerk's
     Office a certificate or affidavit of service that includes a
     copy of the notice involved, a list of recipients and the
     date and manner of mailing, within 10 days of service;

(c) Maintain an official copy of the Debtors' schedule of assets
     and liabilities and statement of financial affairs, listing
     the Debtors' known creditors and the amounts owed;

(d) Maintain a special post office box for the receipt of proofs
     of claim;

(e) Maintain copies of all proofs of claim and proofs of
     interest filed;

(f) Maintain official claims registers, including information
     for each proof of claim or proof of interest:

(g) Make changes in the claims register pursuant to Court

(h) Implement necessary security measures to ensure the
     completeness and integrity of the claims registers;

(i) Transmit to the Clerk's Office a copy of the claims register
     on a weekly basis, unless requested by the Clerk's Office on
     a more or less frequent basis;

(j) Maintain an up-to-date mailing list for all claimants;

(k) Provide access to the public for examination of the original
     proofs of claim without charge during regular business

(l) Record all transfers of claims pursuant to Federal Rules of
     Bankruptcy Procedure 3001(e) and provide notice of the
     transfer as required by Federal Rules of Bankruptcy
     Procedure 3001(e);

(m) At the close of the cases, box and transport all original
     documents in proper format, as provided by the Clerk's
     Office, to the Federal Records Center;

(n) Comply with applicable federal, state, municipal, and local
     statutes, ordinances, rules, regulations, orders and other

(o) Provide temporary employees to process claims, as necessary;

(p) Promptly comply with such further conditions and
     requirements as the Clerk's Office or the Court may at any
     time prescribe.

With respect to balloting services, BSI has agreed to:

(a) Coordinate the design and printing of ballots with Debtors
     and their counsel;

(b) Identify the "universe" of voting and non-voting creditors
     and shareholders subject to a plan of reorganization and
     voting procedures;

(c) Prepare voting reports;

(d) Coordinate mailing of ballots, disclosure statement and plan
     of reorganization to all voting and non-voting parties;

(e) Establish a toll-free "800" number to receive questions
     regarding voting on the plan of reorganization;

(f) Solicit acceptances to the plan of reorganization;

(g) Receive and inspect ballots for conformity to voting

(h) Date stamp and number ballots consecutively; and

(i) Tabulate and certify the results of the vote.

With respect to disbursement services, BSI has agreed to

(a) Calculate the disbursement amounts after confirmation of a
     plan of reorganization;

(b) Calculate reserves for disputed claims and interest for
     specific classes of claims in view of the plan of

(c) Develop customized disbursement reports;

(d) Upon approval of the disbursement report, pay holders of
     allowed claims by check or wire transfe; and

(e) Coordinate the issuance of new securities with a transfer
     agent/trustee selected by the Debtors.

The Debtors have provided BSI with a retainer of $25,000 which
will be applied to BSI's final invoice.

In connection with its appointment as notice and claims agent,
BSI represents, among other things, that BSI will not consider
itself employed by the United States government and will not
seek any compensation from the government. By accepting
employment in the PSINet cases, BSI waives any rights to receive
compensation from the United States government. BSI will not be
deemed to be an agent of the United States and will not act on
behalf of the United States. BSI also covenants not to employ
any past or present employees of the Debtors in connection with
its work as the notice and claims agent in these chapter 11

BSI will serve monthly statements of its invoices upon the
Debtors, the Debtors' counsel and the Office of the United
States Trustee for the Southern District of New York, and if
directed by the Court, will be required to file a final fee
application for consideration by the Court.

The Court's order specifies that in the event BSI is unable to
provide the services set out in the motion and order, BSI is to
immediately notify the Clerk and the Debtors' general bankruptcy
counsel, Wilmer Cutler & Pickering and cause to have all
original proofs of claim and computer information turned over to
anther claims agent with the advice and consent of the Clerk and

Thirty days prior to the close of the Debtors' cases, an order
will be entered, terminating the services of BSI as an agent for
Clerk upon completion of its duties and upon the closing of the
Debtors' cases.

                     Fee Schedule of BSI

(A) Claims Agent and Reconciliation

      Set-Up Fee                                 waived

      Claims Docketing

        Document Handling                        waived
        Document Storage                         waived
        Input Records
          Tape/Diskette                          $  0.1 each
          Other Data Formats                      125.00/hour
        Input Filed Claims                          0.95/claim +
                                                    hourly rates
        Database Maintenance & Claims              250.00 + 0.10
          Tracking System Software Utilization*    /creditor/mo.

* Includes software design and customization, system
utilization, installation at customer site, training and ongoing
systems maintenance. There will be no ongoing charges for modern
access to BSI computer network.

(B) Balloting

     Printing and mailing of ballots to be incorporated with a
     Disclosure Statement/Reorganization Plan mailing is subject
     to unit pricing for Mailing/Noticing. Set-up, tabulation and
     verification of the vote are charged at the hourly rates
     shown below.

(C) Disbursements

     Transaction Fees

      Per check or Form 1099           $ 1.50/each
      Per record to transfer agent        .25/each
      Special reports                     .10/page
      Database Maintenance                waived

(D) All Services


      Print & Mail (First Page)               $  .20/each
      Additional Pages                           .10/each
      Single Page (Duplex)                       .24/each
      Change of Address                          .46/each
        - data input and modifications

      Printing and Reproduction

      Reports                                 $  .10/page
      Photocopies                                .15/page
      Labels                                     .05/each
      Fax                                        .50/page
      Document Imaging                           .40/image

      Newspaper & legal notice publication   Quoted as Required


      Any additional consulting services not covered in the
      proposal ill be charged at BS1 hourly rates including any
      outsourced data input services performed under BSI
      supervision and control:

      Diane Rocano                           $175.00/hour
      Other Senior consultants                150.00/hour
      Programmer                              125.00/hour
      Associate                               110.00/hour
      Data Entry/Clerical                 35.00 - 55.00/hour

(PSINet Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

QUAD SYSTEMS: Completes Asset Sale To Tyco Electronics
Quad Systems Corporation (OTC: QSYSQ) (Quad) has completed the
sale of its business and substantially all of its U.S. assets
other than accounts receivable, including the Quad name, to Tyco
Electronics Corporation, a Pennsylvania corporation on the terms
described below. In connection with the sale, Quad will now be
known as Epigenesis, Inc., until the completion of its expected
liquidation. Quad also at the same time announced the sale of
the business and assets of Quad's U.K. subsidiary to an
affiliate of Tyco Electronics Corporation.

Until the sale, Quad had been operating its business as a debtor
and a debtor-in-possession in Chapter 11 bankruptcy proceedings
pending before the United States Bankruptcy Court for the
Eastern District of Pennsylvania (Bankruptcy Court). Quad
entered into the Agreement of Sale and consummated the
transaction with Tyco with the prior approval of the Bankruptcy
Court. Following the closing, Tyco will continue to operate the
assets that formerly comprised Quad's business.

The total purchase price for the sale of the U.S. assets was
approximately $5.2 million, subject to post-closing adjustment
in certain circumstances based on the post-closing value of the
assets transferred, plus the assumption of certain liabilities.
The purchase price was paid in cash at closing, net of a hold-
back of $1,250,000 to secure any such post-closing adjustment
and certain continuing warranty obligations of Quad in
connection with the sale of Quad's assets and its U.K.
subsidiary. The Quad U.K. subsidiary was sold for approximately
(U.S.) $550,000, plus the assumption of certain liabilities.
After payment of secured indebtedness aggregating approximately
$1,140,000, Quad currently expects that net proceeds from the
U.S. sale of approximately $2.8 million will be available to pay
priority and general unsecured claimants in Quad's bankruptcy
proceedings under a plan of reorganization/liquidation that Quad
expects to file with and have approved by the Bankruptcy Court.
The proceeds of Quad's retained accounts receivable, and any
portion of the $1,250,000 holdback ultimately paid over to Quad
will also be available to pay claimants in the bankruptcy
proceedings. It is not anticipated that any distribution will be
made to any of Quad's equity security holders, in connection
with its bankruptcy proceedings or otherwise. Quad expects that
Tyco will retain some portion of the $1,250,000 holdback upon
completion of the post-closing adjustment.

RESORT PROPERTIES: Tennessee Hotels Owner Files for Chapter 11
Resort Properties Inc., owner of Gatlinburg, Tenn.-based River
Terrace Resort and Convention Center and the nearby River
Terrace Creekside hotel, has filed for chapter 11 bankruptcy
protection, according to  The company listed
assets valued at $15 million and debts totaling $13.75 million
in documents filed June 28 by Robert A. Charnock, Resort
Properties president. Other principals listed by the lodging
company are Leisure Development Inc. of Gatlinburg, David E.
Williams Jr. of St. Petersburg, Fla., and Thomas Michael Squires
of Brentwood, Tenn.

The two hotels, with about 100 employees and 272 rooms over
29,000 square feet, are now for sale, said Brandon McCarter,
Resort Properties general manager. A list with about 167
creditors accompanied Resort Properties' bankruptcy petition.
Debts owed include more than $91,000 in taxes to the city of
Gatlinburg, more than $206,300 in back taxes to the Internal
Revenue Service and more than $153,000 in loans to Citizens
National Bank in Sevierville, Tenn. (ABI World, July 12, 2001)

RESORT PROPERTIES: Chapter 11 Case Summary
Debtor: Resort Properties, Inc.
         aka River Terrace Resort Properties
         aka River Terrace Creekside
         aka River Terrace Resort & Convention Center
         P.O. Box 747
         Gatlinburg, TN 37738

Chapter 11 Petition Date: June 28, 2001

Court: Eastern District of Tennessee (Knoxville)

Bankruptcy Case Nos.: 01-33195

Judge: Richard Stair, Jr.

Debtor's Counsel: Michael H. Fitzpatrick, Esq.
                   2121 First Tennessee Plaza
                   Knoxville, TN 37929-2121

SAFETY-KLEEN: Rule 9027 Removal Period Extended To Feb. 9, 2002
As of the Petition Date, the Safety-Kleen Corp. Debtors were
parties to hundreds of civil actions pending in various
jurisdictions around the country, and involving a variety of
claims, including claims sounding in contract and tort, as well
as claims arising under federal, state and/or local
environmental laws. The Debtors propose to extend the time
during which they may cause the removal of one or more of these
litigative matters to the federal courts of Delaware to (a)
February 9, 2002, or (b) 30 days after entry of an Order
terminating the automatic stay with respect to any action sought
to be removed.

A further extension of this time period is in the best interests
of the Debtors and these estates. Since the commencement of
these proceedings, the Debtors' focus has been first on
stabilizing their business, and second on the formulation of a
comprehensive business plan for the future. However, the Debtors
remain unable to finalize their plan until their completion of
the restatement of their 1997, 1998 and 1999 financial results,
a process now completed. Because their focus has been on
completion of the restatement and audit process, the Debtors
have not yet been able to complete their analysis of the merits
of removing any, or each, of the hundreds of actions to which
they are a party. The proposed extension will afford the Debtors
the chance to make an informed decision with respect to the
benefits, if any, to be derived from removal of some or all of
these actions.

A further extension will not prejudice the non-debtor parties to
these actions. Each non-debtor party to an action for which
removal is sought will continue to have the right to seek
remand. Further, an additional extension will not unduly delay
the prosecution of these actions, as most, if not all, of these
actions remain subject to the automatic bankruptcy stay. In
short, a further extension will simply permit maintenance of the
status quo while the Debtors review, analyze and consider their
options with respect to the actions.

Agreeing to maintain status quo, Judge Walsh grants the
requested extension. (Safety-Kleen Bankruptcy News, Issue No.
18; Bankruptcy Creditors' Service, Inc., 609/392-0900)

SECURITY ASSET: Pannell Kerr Forster Resigns As Accountant
On June 26, 2001, Pannell Kerr Forster (PKF), Security Asset
Capital Corporation's certifying accountants, notified the
Company that the client-auditor relationship between Security
Asset Capital Corporation and its subsidiaries and PKF had

The Company's Board of Directors accepted PKF's notification.
PKF's report for the year ended December 31, 2000 includes a
paragraph expressing substantial doubt as to the Company's
ability to continue as a going concern.

Security Asset Capital has initiated the process of selecting
new independent accountants and expects to announce the results
of its selection process shortly.

SERVICE MERCHANDISE: Macon & Baton Want Decision On 4 Leases
Two of Service Merchandise Company, Inc.'s landlords -- Macon
Associates, L.P., and Baton Associates, L.P. -- moved the Court
to compel the Company before section 365(d)(4) deadline to July
30, 2001 to assume or reject four store leases:

      (1) Store 323 in Macon, Georgia;
      (2) Store 427 in Tuscaloosa, Alabama;
      (3) Store 431 in Tyler, Texas; and
      (4) Store 432 in Baton Rouge, Louisiana.

Macon is the landlord of Store 323 and Baton is the landlord of
the other three stores.

The landlords' request is based on arguments that:

      -- Originally, the Debtors predicted to emerge from chapter
11 in the spring of 2001, so Landlord is governed by the
extension of assumption/rejection deadline to plan confirmation,
but circumstances have changed;

      -- During the pendency of the case, Tenant has allowed the
properties to deteriorate, the maintenance and repair defaults
threaten the value of the property, and the landlord is going
into its third year without commitment as to when the defaults
will be cured and whether the lease will ultimately be assumed
or rejected, thus "cause" exists for shortening the deadline;

      -- As a result of the Debtors' Third Motion for extension,
the time was extended by agreement for some properties and, with
regard to certain objecting parties, the deadline was
established as July 30, 2001 pursuant to the Court's order on
March 12, 2001.

      -- The Court has already ruled against the continuing open
ended extension in light of prior objections filed by certain

                The Debtors' Omnibus Objection

The Debtors filed an omnibus objection in which the Debtors
contend that there are no postpetition defaults and the subject
properties are in good repair. The outstanding prepetition
amounts, the Debtors note, are modest (the highest balance for
any landlord is $16,000, according to the motions), and the
landlords are in a position to protect themselves from any

The Debtors argue that, whereas the March Memorandum cited by
the landlords resulted from the Debtors' proof of cause to
extend the section 365 deadline, in the current issue, the
landlords bear the burden to prove cause to shorten.

With respect to the change in SMCO's emergence timetable, the
Debtors point out that the landlords could have objected to the
extension of their exclusive time to file a plan of
reorganization but they did not.

              The Court's Memorandum & Order

The Court has denied the landlords' motion. In its Memorandum &
Order, the Court notes that the landlords' argument appears to
be twofold: (1) the Court's earlier ruling allowing the Debtors'
third extension request indicates the Court's willingness to
shorten "for cause" the deadline for these stores; and (2) cause
exists for shortening the deadline.

The Court finds that its earlier ruling allowing the Debtors'
third extension is inapposite in the current issue because in
that instance, the Debtors were seeking to extend the section
365(d)(4) deadline, and although the Court did not grant the
lengthy extension requested, the Court did grant a shorter
extension upon "cause" being demonstrated by the Debtors. In
this instance, the landlords are bound by the earlier ruling
extending the time to assume or reject leases until plan
confirmation, unless and until "cause" is shown by the landlord
for a reduction in that deadline, the Court opines.

The Court therefore focuses on whether the landlords can
demonstrate "cause" to shorten the deadline as to these four
leases. The Court finds that the landlords did not carry that

In this instance, proof centered around whether the Debtors were
in post-petition default of the leases by failing to adequately
repair and maintain the properties as is required under the
respective leases, the Court states in its Memorandum & Order.

The Court finds that the proof was conflicting. Service
Merchandise's Vice President of Facility Services, Terry Mayo,
testified that once the Debtors learned that certain deferred
maintenance or repairs were required at these four locations,
the Debtors committed to make most of those repairs within 60
days. Unfortunately, the Debtors had not been aware of the
alleged problems until the filing of the motions by the

To the contrary, the Court finds that Mr. Andrew Abernathy, the
landlords' expert hired to inspect the four stores, testified
inconsistently about the state of disrepair. The Court finds
that his testimony is less than compelling on the need for
immediate attention to the properties by the Debtor or that the
Debtor had somehow neglected the properties.

The Court finds the testimony by the Debtors' witnesses, Mr.
Terry Mayo and Mr. Caroll Combs, to be more persuasive on the
issue of whether the debtor has allowed certain repairs and
deferred maintenance to go unperformed. Therefore, based upon
the credibility of Mr. Combs and Mr. Mayo, the Court finds no
post-petition defaults that arise to the level of "cause" to
shorten the section 365(d)(4) deadline.

The Court also relied upon the negative notice of the debtors as
to these repairs. The Court finds that there has been an utter
lack of communication between the store managers, the landlords,
and the debtors as to the needs at these locations. The Court
takes note of Mr. Abernathy's remark, that it would be almost
impossible to find a perfect store location in need of no
repairs and/or deferred maintenance.

The Court remarks that cause is an undefined standard that
really depends ultimately upon the Court's discretion to weigh
the facts and circumstances of each request. Even assuming the
Court finds that somehow the debtors have been derelict in their
deferred maintenance and repair of these stores, the Court does
not find that to equate to "cause" to shorten the deadline,
especially in light of the debtors' sincere testimony to repair
such problems within 60 days. (Service Merchandise Bankruptcy
News, Issue No. 18; Bankruptcy Creditors' Service, Inc.,

SOFTLOCK.COM: Nasdaq Delists Securities
---------------------------------------, formerly doing business as Digital Goods, provided
information on several recent developments.

The Company announced that it received a NASDAQ Staff
Determination letter dated June 27, 2001 indicating that the
Company was not in compliance with NASDAQ's net tangible assets
requirement, as well as not being in compliance with NASDAQ's
independent director and audit committee requirements, and
that the Company's common stock, was, therefore, subject to
delisting from The Nasdaq SmallCap Market. On July 6, 2001,
Company's common stock was delisted from the Nasdaq SmallCap
Market. The Company does not intend to appeal the delisting. The
Company's common stock is currently trading on the Pink Sheets.

The Company also announced that it has been threatened with
litigation by certain stockholders concerning the cessation of
its operations. The Company does not believe that there is any
merit to the claim, which may be in excess of $16.5 million,
exclusive of attorneys' fees. However, if legal proceedings were
instituted and the Company was unsuccessful in defending such a
lawsuit, an award of damages in the amount claimed would
materially and adversely affect the Company. Furthermore, even
if the Company was successful in defending such a lawsuit, the
cost alone in professional fees to defend such a lawsuit could
materially and adversely affect the Company. Company has also
been threatened with litigation by certain creditors.

The Company also announced that it had retained counsel, Looney
& Grossman LLP, to provide advice with respect to the
relationships between the Company and its creditors and
shareholders and to help formulate and implement a comprehensive
consensual informal plan of reorganization or other strategic
alternatives, including the possibility of the filing of a
petition in bankruptcy.

SoftLock President and CEO Jonathan Schull said, "This is, and
has been, a difficult time but it has been made easier by the
knowledge that the Company has always sought to protect the
interests of its stakeholders in as open and forthright a manner
as possible. I hope the present circumstances will allow us to
re-align the interests of all of our stakeholders in a manner
that will permit us to maximize our opportunities."

TREESOURCE INDUSTRIES: Pre-Petition Secured Debt Trades Hands
TreeSource Industries, Inc., (OTC Bulletin Board: TRES) reported
that its pre-petition senior secured debt was purchased by an
investment group. TreeSource filed for voluntary reorganization
under Chapter 11 of the U.S. Bankruptcy Code in September of
1999. At the time of filing the Company's senior secured debt
totaled $42.4 million excluding accrued and unpaid interest. The
Company remains in Chapter 11 and continues to assess the
potential sale of its assets.

TreeSource President Jess Drake commented that "the sale of the
debt itself will not change the Company's status in bankruptcy
and that the Company continues to pursue its goal of maximizing
value for creditors whether through sale of assets,
reorganization, or combination thereof. Unfortunately, the
Company's current shareholders are still expected to receive no

TreeSource Industries, Inc. operates facilities in Oregon and
Washington, producing softwood and hardwood lumber products.

UNIFORET INC.: Files Plan of Arrangement Under CCAA
UNIFORET INC. and its subsidiaries, Uniforet Scierie-Pate Inc.
and Foresterie Port-Cartier Inc., have filed in Court their plan
of arrangement under the "Companies' Creditors Arrangement Act"
which sets out the terms of the restructuring of their debts and
obligations. The plan of arrangement will be sent to the
Company's creditors within the next days.

As already announced, the Company keeps on its current
operations. Suppliers who provide goods and services necessary
for the operations of the Company are paid in the normal course
of business.

Uniforet Inc. is an integrated forest products company which
manufactures softwood lumber and bleached chemi-thermomechanical
pulp. It carries on its business through its subsidiaries
located in Port-Cartier (pulp mill and sawmill) and in the
Peribonka area in Quebec (sawmill). Uniforet Inc.'s securities
are listed on The Toronto Stock Exchange under the trading
symbol UNF.A, for the Class A Subordinate Voting Shares, and
under the trading symbol UNF.DB, for the Convertible Debentures.

US AGGREGATES: Selling Southeastern Operations to Florida Rock
U.S. Aggregates Inc. (NYSE: AGA) executes a definitive agreement
to sell its southeastern operations to Florida Rock Industries,
Inc., for approximately $105 million in cash, plus the
assumption of certain external debt and equipment operating
leases, having an approximate value of $45 million.

The transaction is subject to certain customary closing
conditions, including U.S. Aggregates shareholder approval,
expiration of the Hart-Scott-Rodino waiting period, and
completion of due diligence. The transaction will be consummated
as soon as all conditions are satisfied. Proceeds from the sale
will be used to reduce debt and for working capital purposes.
The Company expects to record a gain in the third quarter
related to this transaction which it anticipates will be offset
by substantial one-time non-cash charges relating to asset
writedowns, inventory revaluations, accounts receivable and
other adjustments to be taken in the second quarter.

Stan Springel, U.S. Aggregates Chief Executive Officer,
commented on the sale, "As previously announced, it has been
senior management's priority to review the Company's entire
organization and implement a plan to generate cash through a
variety of initiatives including asset disposition. The sale
of our Southeastern assets is another step in reaching an accord
with our lenders for the restructuring of our debt. While we are
encouraged as a result of this announcement, the Company still
faces ongoing operating and financial challenges. Weighing the
alternatives available, the Company's Board of Directors decided
that this asset sale was in the best interest of the Company and
its constituents."

Deutsche Banc Alex Brown acted as financial advisor to U.S.
Aggregates. Kirkland & Ellis along with Baker, Donelson, Bearman
& Caldwell acted as legal advisors to the Company.

Founded in 1994, U.S. Aggregates, Inc. (USAI) is a producer of
aggregates. Aggregates consist of crushed stone, sand and
gravel. The Company's products are used primarily for
construction and maintenance of highways and other
infrastructure projects as well as for commercial and
residential construction.

USG CORPORATION: Honoring Prepetition Freight Charges
USG Corporation relies on many freight companies in the ordinary
course of their businesses. The Freight Carriers transport
products, goods, documents and many other materials in all
stages of the manufacturing process. In the Debtors' opinion,
the payment of the Freight Carriers prepetition claims is
necessary to (a) ensure uninterrupted future deliveries and (b)
maintain critical customer relationships.

Timely and efficient delivery of materials used in the
manufacturing process and finished goods to customers is
extremely important to the Debtors' businesses. If the Freight
Carriers are not assured of payment of their prepetition claims,
they could delay deliveries to the Debtors' customers. A minor
delay could cause the Debtors to break customer commitments. If
the Freight Carriers refuse continued delivery of the Debtors'
goods and materials, it will be very difficult to find
replacement carriers with the ability to transport the Debtors'
products efficiently and on time.

The Debtors explain to the Court that due to the nature of the
Debtors' products, which are both bulky and heavy, (a) it isn't
economical to carry the products over long distances, and (b)
specialized equipment is necessary to deliver goods to their
destinations. Freight Carrier options are therefore limited. The
Debtors' delivery demands are heavy and an alternate Freight
Carrier may not be in the position to both deliver numerous
loads of material and do so in a timely, consistent manner. It
is likely that if customers are dissatisfied with the quality of
the service, they will fill their future orders with another
company. This would seriously impair the Debtors' ability to
reorganize and preserve the companies' value for their

Most importantly, the Freight Carriers that were in the process
of delivering the Debtors' goods and materials on the Petition
Date may refuse to deliver those items unless their prepetition
claims are paid. The goods and materials may be subject to
possessory liens under applicable state law and the Freight
Carriers may withhold delivery to preserve their lien rights.
The Debtors could possibly initiate adversary proceedings to
recover such goods and materials, but the delay involved would
cause the Debtors to default on their customer obligations. The
resulting loss of those customers who would then order their
products from competing suppliers would seriously jeopardize the
Debtors' reorganization efforts. The Debtors' are certain that
the failure to pay their Freight Carriers charges would be
detrimental to the Debtors' operations and postpetition efforts
to stabilize the businesses and as a result, they should be able
to pay Freight Charges.

The Debtors ask the Court for authority to pay, at their
discretion, up to $15,000,000 of undisputed prepetition amounts
owed by the Debtors on outstanding Freight Charges and discharge
liens, if any, the Freight Carriers may hold against the
Debtors' property. The amounts owed to Freight Carriers who have
lien rights are likely to be much less than the value of the
property securing the Freight Charges. It is also likely that
such Freight Carriers are secured creditors. Payment of the
Freight Charges will give the Freight Carriers no more than what
they would be entitled to under a reorganization plan and will
save the Debtors interest that could accrue on the Freight
Charges during the bankruptcy cases. (USG Bankruptcy News, Issue
No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)

VECTRIX BUSINESSS: Files Chapter 11 Petition in N.D. Texas
Vectrix Business Solutions Inc., a Dallas-based technology
services company, filed for protection from its creditors under
chapter 11 of the federal bankruptcy code, according to the
Dallas Morning News. Vectrix, which has been slashing its staff
this year in response to a weakening market, said it expects to
continue operations while reorganizing its debts. The company
said it has about $3 million in cash for near-term operations.
In response to the souring market, in January Vectrix slashed
nearly a quarter of its staff. And in March, Mark C. Lynd
resigned from his posts as chairman and chief executive. Vectrix
officials declined to discuss the company's situation. They also
wouldn't reveal how many people remain on staff. The company
noted that its filing in the U.S. Bankruptcy Court for the
Northern District of Texas was voluntary. (ABI World, July 12,

VECTRIX BUSINESS: Chapter 11 Case Summary
Debtor: Vectrix Business Solutions, Inc.
         dba Vectrix Corp.
         dba Millenium Technologies Group, Inc.
         dba Innovative Business Technologies, Inc.
         1605 N. Stemmons Frwy.
         Dallas, TX 75207

Chapter 11 Petition Date: July 9, 2001

Court: Northern District of Texas (Dallas)

Judge: Harold C. Abramson

Bankruptcy Case No.: 01-35656

Debtor's Counsel: Josiah M. Daniel, III, Esq.
                   Vinson & Elkins
                   3700 Trammell Crow Center
                   2001 Ross Ave.
                   Dallas, TX 75201-2975

WARNACO GROUP: Rejecting 9 Property And 2 Aircraft Leases
The Warnaco Group, Inc. will now save approximately $400,000 per
month in administrative rent after they obtained an order
rejecting certain unexpired leases of nonresidential real
property and aircraft leases.

The unexpired leases rejected are:

      (a) A real property lease for an administrative office with
          a monthly rental rate of $43,500.

      (b) Seven real property leases for retail stores with an
          aggregate monthly rental rate, and associated carrying
          costs, of $80,936.

      (c) A real property lease for a manufacturing and
          distribution facility with a monthly rental rate of

      (d) An aircraft lease for a 1996 Gulfstream IV Aircraft
          with a monthly rental rate of $234,800.

      (e) An aircraft lease for a 1985 Sikorsky S-76 Helicopter
          with a monthly rental rate of $33,800.

J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, in New
York, convinced the Court that rejecting these leases are in the
Debtors' best interest since the Debtors are no longer using the
premises covered these unexpired leases. If the Debtors were to
continue maintaining such idle leases, Mr. Trost says, it would
only unnecessarily drain the Debtors' much-needed funds.
(Warnaco Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

WESTERN DIGITAL: Wellington Discloses 12.96% Equity Stake
Wellington Management Company, LLP, in its role as an investment
adviser, beneficially owns 18,440,830 shares of the common stock
of Western Digital Corporation with shared voting rights, and
22,987,850 shares with shared dispositive powers. This amount
represents 12.96% of the outstanding common stock of the

WINSTAR COMMUNICATIONS: CIT Lending Seeks Relief From Stay
Jami B. Nimeroff, Esq., at Buchanan Ingersoll Professional
Corp., in Wilmington, Delaware, relates that prior to Petition
Date, Winstar Communications, Inc. purchased from Executive Jet
Companies a 5/16 undivided interest in 1 Dassault Aviation
Falcon 2000 aircraft, bearing manufacturer's serial number 77
and United States Registration No. N278QS. The plane contains 2
CFE Co. Model No. CFE738-1-1B8 aircraft engines bearing
manufacturer's serial numbers, P105282 and P105297. The Debtors
also bought a 1/16 undivided interest in 1 Gulfstream Aerospace
G-IV aircraft bearing manufacturer's serial number 1311 and
United States Registration N411QS. The aircraft contains 2 Rolls
Royce Tay 611-8 engines bearing manufacturer's serial number
16745 and 16746. Variousrelated equipment was also purchased.

Under the terms and conditions set forth in the Executive Jet
Companies' fractional interest program documents, Ms. Nimeroff
notes, the Debtors agreed to pay Executive Jet Companies
significant fees for its use of the Falcon Interest and
Gulfstream Interest, and waived any rights to demand a sale and
partition of its undivided interests in such property.

Ms. Nimeroff explains CIT Lending Services Corporation came into
the picture when it financed the Debtors' purchase of the Falcon
Interest and Gulfstream Interest by providing the Debtors with a
loan in the original principal amount of $7,040,400 in 1999. The
loan was covered by a Loan and Security Agreement, Promissory
Note, financing statements and various other loan documents.
These contracts provided CIT with a valid and enforceable
security interest in the Debtors' collateral. The security
interest was perfected by filing the Loan and Security Agreement
with the Federal Aviation Administration and filing various
UCC-1 financing statements with the New York Secretary of State,
the Virginia State Corporation Commission, and in New York
County, New York and Fairfax County, Virginia.

According to Ms. Nimeroff, the Debtors defaulted on its
obligations to CIT under the loan documents by failing to pay
the March, April, and May installments that total $254,661.60.
They also failed to pay CIT various interest, fees, and expenses
relating to the loan, Ms. Nimeroff adds.

Bryan Van Horn, CIT Vice-President, tells Judge Farnan that the
Debtors outstanding balance to CIT has reached $6,484,713.73 as
of Petition Date.

The value of the collateral exceeds the outstanding balance by a
narrow margin, Ms. Nimeroff notes. But the gap is being erased,
Ms. Nimeroff relates, as the Falcon Interest and Gulfstream
Interest continue to depreciate and the Debtors' obligations to
CIT continue to accumulate additional interest, fees and
expenses on a monthly basis.

In the absence of such payments, Ms. Nimeroff emphasizes, CIT
needs adequate protection from the Debtors to CIT. And CIT
should be entitled to relief from the automatic stay, Ms.
Nimeroff adds.

According to Ms. Nimeroff, the Debtors' use of the Falcon
Interest and Gulfstream Interest costs them $84,887.20 in loan
payments per month, and between $1,150 and $9,490 per occupied
hour plus fuel charges for the Falcon Interest (subject to
annual escalations) and between $2,825 and $12,200 per occupied
hour plus fuel charges for the Gulfstream Interest (subject to
annual escalations). Perhaps, Ms. Nimeroff suggests, it would be
better for the Debtors to resell the Falcon Interest and
Gulfstream Interest to the Executive Jet Companies and save
money by using commercial airlines instead.

By motion, CIT asks Judge Farnan to grant them relief from the
automatic stay so that the Lender may exercise all of its post-
default remedies under the loan documents or compel the Debtor
to provide them with adequate protection payments as required by
the loan documents. (Winstar Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

BOND PRICING: For the week of July 16 - 20, 2001
Following are indicated prices for selected issues:

Algoma Steel 12 3/4 '05            18 - 20 (f)
Amresco 9 7/8 '05                  40 - 42 (f)
Arch Communications 12 3/4 '05      8 - 11 (f)
Asia Pulp & Paper 11 3/4 '05       23 - 25 (f)
Chiquita 9 5/8 '04                 66 - 69
Friendly Ice Cream `0 1/2 '07      55 - 58
Globalstar 11 3/8 '04               6 - 7 (f)
Level III 9 1/8 '08                41 - 43
PSINet 11 '09                       6 -  7 (f)
Revlon 8 5/8 '08                   42 - 44
Trump AC 11 1/4 '06                67 - 68
Weirton Steel 10 3/4 '05           31 - 33
Westpoint Stevens 7 3/4 '05        35 - 38
Xerox 5 1/4 '03                    81 - 82


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

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

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

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


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

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

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
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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