TCR_Public/010803.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

               Friday, August 3, 2001, Vol. 5, No. 151


AMF BOWLING: Moves to Adopt Retention & Severance Programs
APOGEE ENTERPRISES: Appoints Bank of New York As Rights Agent
ARMSTRONG: W.W. Henry Presses For Pollution Clean-Up & Abatement
AZTEC TECHNOLOGY: Banks Agree To Extend Loan Term To August 31
BORDEN CHEMICALS: Discloses Financial Reporting Issues and Delay

BRESEA RESOURCES: Files Plan of Arrangement in Canada
BRIDGE INFORMATION: Selling Interest In FutureSource/Bridge LLC
BRIDGE INFORMATION: Reaches Settlement With Reuters And SunGard
CENTRAL VERMONT: Resolves Contract Dispute With Hydro-Quebec
COMMERCIAL FINANCIAL: Plan Confirmation Hearing Set For Aug. 20

CSC LTD.: Renaissance-Led Group Forms Plan To Restart Operations
CLASSIC COMM.: Fails To Make Interest Payment on $240MM Debt
COOLSAVINGS.COM: Shares Face Nasdaq Delisting
DELTA FINANCIAL: Will Not Make Coupon Payment On $150MM Notes
DELTA FINANCIAL: Fitch Lowers Senior Secured Rating To C From CC

EUROWEB INTERNATIONAL: Board Approves Reverse Stock Split
FINOVA GROUP: Equity Committee Retains Glass & Assoc. as Advisor
FINOVA GROUP: Posts $436.5 Million Net Loss for Second Quarter
FOUNTAIN PHARMACEUTICALS: Shuts Down, Schuchert Gets Assets
FRUIT OF THE LOOM: Wants Ernst & Young Disclosure Under Seal

GENESIS HEALTH: Plan Confirmation Hearing Set For August 28
HALO INDUSTRIES: Court Grants Approval Of $30MM DIP Financing
HEDSTROM CORPORATION: Emerges from Chapter 11
HOMELAND STORES: Files For Chapter 11 Protection
IGI INC.: Frank Gerardi Discloses 6.8% Equity Stake

INTEGRATED HEALTH: Robert Mills Asks Court For Relief From Stay
LERNOUT & HAUSPIE: Seeks To Extend Exclusive Period To Sept. 14
LUCENT: Raises $1.75 Billion Through Preferred Stock Offering
MARINER POST-ACUTE: Obtains Approval For River Hills Settlement
MMH HOLDINGS: Memorandum of Law in Support of Plan

OWENS CORNING: Asks For Six-Month Extension of Exclusive Periods
PACIFIC AEROSPACE: Delays $3.6 Million Interest Payment
PACIFIC GAS: Frank Rombauer Cellars Seeks Relief From Stay
PG&E CORPORATION: Reports Second Quarter Financial Results
PAYLESS CASHWAYS: Says Vendor Support Is Improving

PILLOWTEX: U.S. Trustee Draws Battle Lines with Jones Day
PSINET INC.: Global Crossing Moves To Compel CPA Decision
RELIANCE GROUP: Hearing on Motion to Dismiss Set for August 8
STANDARD AUTOMOTIVE: PNC Bank Issues Acceleration Notice
STRUCTURED ASSET: Fitch Downgrades Certificates to B and CCC

SUN HEALTHCARE: Rejects New River Facility Lease
SURGE COMPONENTS: Receives Notice Of Non-Compliance From Nasdaq
TITANIUM METALS: Reports Second Quarter Losses
TRANSFINANCIAL: Releases Second-Quarter Results
VENCOR, INC.: Van Kampen Seeks Reimbursement Of Expenses

WARNACO GROUP: Taps Keen Realty as Real Estate Consultant
WINSTAR COMMUNICATIONS: Rejecting Five Real Property Leases
WINSTAR COMMUNICATIONS: Focuses on New Sales & Hires Blackstone
XO COMMUNICATIONS: Fitch Cuts Ratings To Low-B & Junk Levels

BOOK REVIEW: Full Faith and Credit: The Great S & L Debacle
              and Other Washington Sagas


AMF BOWLING: Moves to Adopt Retention & Severance Programs
In January 2000, AMF Bowling Worldwide, Inc. consulted a
nationally recognized compensation consultant, Watson Wyatt &
Company, to study AMF's compensation and benefits package. The
study confirmed that the compensation and benefits of many of
AMF's employees, particularly U.S. employees above the Director
level, were below market.

In the summer of 2000, AMF announced that it would restructure
its capital resources, paving the road to these chapter 11
filings.  The past year was a difficult period and was a
stressful time for the Debtors' employees.  Employees expressed
their concerns over the stability of their employment and
financial well-being.  In fact, in the wake of the restructuring
announcement and the period of speculation that preceded it, the
Debtors lost a number of employees.  From October 1999 through
October 2000, over 30 voluntary resignations of corporate
employees and over 140 voluntary resignations of Bowling
Products' employees were tendered.  Departing employees
constituted approximately 21% and 27% of WINC's and Bowling
Products' workforce, respectively, and included individuals who
performed critical managerial and operational tasks.  Moreover,
in light of the Debtors' highly publicized financial
difficulties, it was extremely difficult for the Debtors to hire
qualified replacements for those who resigned.  Additional
uncertainty arose in November 2000, when the Debtors laid off 60
employees as part of their operational restructuring efforts
designed to reduce the level of general and administrative

As events progressed, these adverse developments resulted in an
urgent need to abate accelerating attrition and maintain the
morale of the remaining employees. To address this pressing
need, in August 2000 and beyond, the Debtors conceived and began
to implement the Retention Programs (as defined below) that are
the subject of this motion. These plans have ensured the
retention of the approximately 1,200 dedicated, qualified and
productive bonus-eligible Employees, including 17 of the
Debtors' Key Managers, who have been actively involved in the
Debtors' restructuring and/or who are essential to the
successful outcome of these cases. The Retention Programs that
were promised to the Employees in August 2000 will continue to
produce this desired result, but only if they are approved by
this Court at the very outset of these cases.

Marc Abrams, Esq., at Willkie Farr & Gallagher stresses that
attrition of Employees would be harmful to the Debtors' ongoing
business operations and would increase the burdens on existing
Employees, who are already overburdened by increased
responsibilities due to these chapter 11 cases and prior
layoffs. This result would not only further erode Employee
morale -- which will be strained due to the pressures and
demands of the chapter 11 environment -- but also would threaten
the very implementation of the Restructuring Plan. Accordingly,
the Debtors respectfully submit that it is necessary for this
Court to formally authorize and approve the Retention Programs
at this time.

                       The Retention Programs

The Retention Programs, which are the subject of this motion
consist of:

       (a) certain Key Manager Retention Agreements for the Key

       (b) the Senior Executives Retention Plan for CEO Roland
           Smith and CFO Stephen E. Hare;

       (c) severance plans for Employees not covered by either
           the Key Manager Retention Agreements or the Executive
           Retention Plan; and

       (d) a discretionary bonus fund that the Executives may
           award to employees (other than the Executives and Key
           Managers) during the restructuring

These Retention Programs, Mr. Hare tells Judge Tice, have been
designed to provide the Debtors' Employees with the proper
incentives to remain in the Debtors' employ and continue to work
toward a successful reorganization. Mr. Hare advises the Court
that the Debtors' financial advisor, The Blackstone Group,
assisted in the development of the Retention Programs. In
addition, Watson Wyatt reviewed the Retention Programs and
concluded they were well within the range of industry standards.
On the advice of the Debtors' professionals and management, the
Debtors' Board of Directors approved the Retention Programs on
November 9, 2000 and March 28, 2001.  In October 2000, the
Debtors provided the Bondholders' Informal Committee and the
Prepetition Lenders Steering Committee with a draft summary of
certain of the Retention Programs, including the Key Manager
Retention Agreements, the Special Bonus Plan, the Severance
Plans, and the Executive Retention Plan, for review. On November
2, 2000, the Steering Committee agreed, in writing, to support
and/or recommend approval of the terms of the Retention Programs
they had reviewed.  Mr. Hare makes it clear that the Retention
Programs are an integral part of AMF's restructuring process as
he steps the Court through the details:

A.   Key Manager Retention Agreements
      Under the Key Manager Retention Agreements, the Key
Managers, who are crucial to the Debtors' operations and their
successful emergence from these cases, have committed to work
for the Debtors through the date of the Consummation of the
Restructuring.  In exchange for this commitment, the Debtors
promised each eligible Key Manager that (i) he or she will be
paid a Retention Bonus ranging from 25% to 100% of the Key
Managers' base salary, depending on the position held and the
role in the restructuring played by such employee, and (ii) if,
before the one year anniversary date of the Consummation of the
Restructuring, a Key Manager's employment is terminated by the
Debtors without Cause, or for Good Reason, each such Key Manager
will receive a Severance Benefit.

      When the Retention Programs were approved in 2000, WINC's
Board of Directors anticipated that the Restructuring would be
completed in early 2001. Accordingly, WINC promised each Key
Manager that his or her Retention Bonus would be paid in one
lump sum within 10 days of the Consummation of the
Restructuring. If the Consummation of the Restructuring did not
occur by June 1, 2001, 50% of the Retention Bonuses would be
paid on such date. Except as otherwise provided, pursuant to the
Key Manager Retention Agreements, as approved by the Debtors'
board of directors, Key Managers must be employed by the Debtors
on the date the Retention Bonus is paid in order to receive such
bonus. Thus far, the Key Managers have all kept their promises
and remained with AMF. Accordingly, on June 1, 2001, the Key
Managers were paid 50% of their Retention Bonuses. The total
amount of the bonuses paid on June 1, 2001 equaled approximately
$637,550. Pursuant to the Key Manager Retention Agreements, the
remainder of the Retention Bonuses will be paid within 15 days
of the Consummation of the Restructuring. The Debtors hereby
seek bankruptcy court authority to pay eligible Key Managers the
remaining portion of such bonuses on the Payment Date.

      If before the first anniversary of the Consummation of the
Restructuring, a Key Manager is terminated without Cause or
terminates his or her employment for Good Reason, under either
the Key Manager Retention Agreements or the AMF Senior Manager
Severance Plan, the Debtors also promised to pay or will provide
the Key Manager: (a) all accrued but unpaid base salary and
vacation pay within 15 days following the termination of
employment; (b) severance equaling one year of annual salary,
within 15 days following the Termination Date; (c) if not
previously paid, the Retention Bonus at such time as would
otherwise be payable under the Key Manager Retention Agreements;
and (d) one year of continued benefits under the Welfare Benefit
Plans under which the Key Manager participated as of the
Termination Date. In the event a Key Manager dies or the Debtors
terminate the Key Manager's employment on account of a
Disability, the Debtors promised to pay the Key Manager (or his
or her estate or legal representative, as applicable): (a) his
or her Accrued Salary, and (b) the unpaid portion of his or her
Retention Bonus at such time as would otherwise be payable under
the Key Manager Retention if each of the eligible Key Managers
are still employed by the Debtors on the Payment Date, the
Debtors' total remaining Retention Bonus distributions will be
approximately $700,000, with individual amounts ranging from
$10,135 to $98,280. In addition, in the extremely unlikely event
that all of the Key Managers became entitled to Severance
Benefits under the Key Manager Retention Agreements, the maximum
cost of such benefits would aggregate approximately $700,000. By
this Motion, the Debtors seek to assume the Key Manager
Retention Agreements.

B.   Executives

      1.  Executive Agreements
          In 1999, BINC entered into separate employment
agreements with Roland Smith, the Debtors' Chief Executive
Officer, and Stephen E. Hare, the Debtors' Chief Financial
Officer. In 2000, BINC assigned its rights and obligations under
the Smith Agreement and the Hare Agreement to WINC and certain
Subsidiary Debtors. In addition, WINC secured its obligations
under the Executive Agreements with letters of credit issued
under the Prepetition Credit Facility.  By this motion, the
Debtors seek to assume the Executive Agreements. The maximum
total cost of the severance benefits under the Executive
Agreements would be:

    CEO Roland Smith     Severance                       $630,000
                         Continued Salary                 525,000
                         Bonus                            472,500
                         Cost of Providing Benefits         5,000
    CFO Stephen E. Hare  Severance                       $394,450
                         Bonus                            236,670
                         Cost of Providing Benefits         5,000

      2.  Executive Retention Plan
          The Executive Retention Plan, the Debtors assert, will
induce the Executives to remain with the Debtors through the
conclusion of these cases. Under the Executive Retention Plan,
each Executive is eligible to receive 200% of his base salary as
a retention bonus:

                  Executive               Maximum Estimated Cost
                  ---------               ----------------------
                 Roland Smith                    $630,000
                 Stephen Hare                    $394,450

C.   Severance Plans and Benefits
      Under AMF's formal, prepetition severance policy, Employees
below the Director level, who are not bonus eligible, are
entitled to severance benefits equal to one week's pay for each
year of service. In order to ensure that these Employees remain
with the Debtors during this difficult restructuring period and
to aid the Debtors in hiring new personnel, the Debtors seek to
offer current and future Employees severance benefits equal to
the greater of (i) their entitlement under the existing
prepetition severance policy or (ii) one month's pay if their
employment is terminated by the Debtors without Cause before the
date of the Consummation of the Restructuring.

      Prior to the Petition Date, the Debtors implemented the SMS
Plan, which provides severance benefits that exceed the basic
entitlement to Employees who are at or senior to the Director
level. The SMS Plan23 memorializes the severance benefits that
were promised to certain of the Debtors' Managers when the
Debtors announced the Retention Programs in mid-2000 and
provides for a range of severance payments to be made to
eligible Managers in the event they are terminated for any
reason except (a) death, (b) Disability, or (c) Good Cause.

      In the extremely remote event that all SMS Plan
participants became eligible to receive all of the benefits
under the SMS Plan, the maximum total cost of the SMS Plan would
be approximately $3,183,805 in the aggregate:

      Position/Title   Number  Amount of Severance     Total Cost
      --------------   ------  -------------------     ----------
      Directors         17     4 months' base salary     $580,490
      Vice Presidents   15     6 months' base salary   $2,603,315

D.   Special Bonus Plan
      Additionally, in recognition of the fact that the
Executives and Key Managers cannot be effective without the
assistance, loyalty and dedication of other employees, the
Debtors seek authorization to maintain a $100,000 discretionary
bonus pool that will be divided among such employees based upon
their assistance to the Debtors above and beyond an employee's
normal responsibilities. The Chief Executive Officer will
determine, based upon the foregoing, the amounts of the
distributions to be made from this pool and to whom such
distributions should be made.  Mr. Abrams notes that neither the
Executives nor the Key Managers are eligible to receive any
distributions under the Special Bonus Plan. (AMF Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-

APOGEE ENTERPRISES: Appoints Bank of New York As Rights Agent
Effective July 2, 2001, Apogee Enterprises, Inc., a Minnesota
corporation, removed American Stock Transfer & Trust Company
(f/k/a American Stock Transfer Company) as Rights Agent under
its Rights Agreement, dated October 19, 1990, and amended June
28, 1995, February 22, 1999, and December 7, 1999. Effective
upon the removal of American Stock Transfer & Trust Company as
Rights Agent, the Company appointed The Bank of New York as
successor Rights Agent and entered into Amendment No. 4 to the
Rights Agreement with The Bank of New York. The Amendment was
executed on July 17, 2001.

The Amendment removes all references to American Stock Transfer
& Trust Company as Rights Agent and replaces such references
with "The Bank of New York." Additionally, the Amendment, among
other things, (a) provides that the Company's reimbursement and
indemnification obligations under the Rights Agreement shall
survive the termination of the Rights Agreement, (b) eliminated
the requirement that the Company provide written notice to
individual holders of Rights Certificates of any future change
in Rights Agent, (c) extended to the Rights Agent the authority
under certain circumstances to request a court to appoint a new
Rights Agent in the event the Company fails to do so, and (d)
changed the governing law of the Rights Agreement from Minnesota
to New York.

ARMSTRONG: W.W. Henry Presses For Pollution Clean-Up & Abatement
In conjunction with the Motion to force Armstrong Holdings, Inc.
to assume or reject the Acquisition Agreement with W. W. Henry,
Henry brings a Motion seeking an Order from Judge Farnan to
compel the Debtors to clean up and abate what Henry says is
continuing pollution at property in Maywood, California under a
Cleanup and Abatement Order issued by California Environmental
Protection Agency, Regional Water Quality Control Board, issued
June 15, 2001.  Under its Order, the California EPA has
determined that the property represents a potential imminent
and substantial endangerment to public health and human health.
Accordingly, the California EPA has ordered Armstrong to clean
up and abate conditions posing a danger to human health and the

Henry says that from the time AWI filed for bankruptcy relief on
December 6, 2000, until recently, AWI assured the Water Control
Board and Henry, and Henry's affiliates, that AWI would honor
its contractual and statutory obligations and proceed with
cleanup of the environmental contamination at the property.  AWI
also continued its investigative and remedial efforts
postpetition, including the submission of an "Additional
Subsurface Soil and Groundwater Investigation" dated January 9,
2001, and retained possession and control over the subject
property until at least April 23, 2001.  Nevertheless, Armstrong
recently and abruptly announced that it was abandoning all
activities with respect to the property.

AWI previously owned real property known as 5920 Alamo Avenue in
Maywood California, under a partnership grant deed dated October
29, 1986, and a grant deed dated October 30, 1986.  At least as
early as October 7, 1998, AWI undertook the investigation of
soil and groundwater contamination and remediation of the Alamo
Street Property. The Water Control Board also found that certain
events have occurred with respect to the Alamo Property:

        (a) Flooring and roofing adhesives were manufactured at
the Alamo Street Property.  Organic solvents, including toluene,
were the major constituents used for activities such as adhesive
mixing and blending operations.  There also were underground
storage tanks located at the Alamo Street Property;

        (b) The alluvial basin underlying the City of Maywood is
an important source of groundwater and provides drinking water
to over 1 million residents in the Los Angeles region.  The past
activities at the Alamo Street Property have contaminated the
underlying soil and groundwater and continue to threaten soil
and groundwater beneath residential areas near the site;

        (c) A subsurface soil and groundwater investigation
report, dated May 19, 1998, and prepared by AWI's consultant,
reported that 3 underground storage tanks were installed on the
property and used to store chemicals, including toluene;

        (d) AWI had the tanks removed under the supervision of
the Los Angeles County Department of Public Works;

        (e) On April 17, 1998, AWI installed four groundwater
monitoring wells.  AWI found solid and water contamination,
including free product (toluene) in 2 of those wells;

        (f) In July 1998, AWI excavated 171 tons of contaminated
soil from the former underground storage tank location.
Contaminants, including toluene, were detected in soil samples
from the bottom of the excavation according to a "Remedial
Action Report for Toluene-Impacted Soils" dated July 23, 1998,
and prepared by AWI's consultant;

        (g) In October 1998, AWI met with the Water Board to
discuss contamination from sampling that AWI conducted in
December 1997 and April 1998.  In November 1998, AWI conducted
additional soil sampling that revealed further contamination on
the Property;

        (h) AWI submitted a remedial action plan dated December
23, 1998, and prepared by its consultant;

        (i) AWI excavated additional soils at the facility in
January 1999, as reported in a "Remedial Action Report for HVOC-
Impacted Soils" dated January 15, 1999, prepared by AWI's

        (j) Groundwater samples that AWI collected in December
1999, and May and June 2000, defined a subsurface layer of
toluene at the Alamo Street Property according to a report of
"Additional Subsurface Soil and Groundwater Investigation" dated
January 9, 2001, and prepared by AWI's consultant. According to
the report dated January 9, 2001, the free product plume was
more than 10 feet thick;

        (k) AWI proposed a free product recovery system as early
as January 9, 1999.  The Water Control Board approved AWI's
recovery system on February 29, 1999, but Henry says AWI has not
operated the system;

        (l) On November 14, 2000, AWI proposed another remedial
action plan to remove contaminated soil that wads identified by
a consultant for The Trust of Public Land.  The Water Control
Board approved AWI's plan on December 19, 2000, but Henry again
says AWI has not executed that plan;

        (m) Postpetition, AWI submitted a report of "Additional
Subsurface Soil and Groundwater Investigation" dated January 9,
2001, prepared by its consultant; and

        (n) In April, 2001, AWI notified the Water Control Board
that it had ceased all activities at the Alamo Street Property.

Before its bankruptcy filing, AWI sold the assets of its
Installation Products Division to Ardex, Inc., in July 2000.
Those assets included various manufacturing facilities as well
as the stock of The W. W. Henry Company, another former owner of
the Alamo Street Property.  In accord with the Acquisition
Agreement between AWI and Ardex, AWI agreed to conduct and
complete remediation activities at the Alamo Street Property.
Additionally, AWI agreed to indemnify and hold harmless W.
W. Henry and Ardex and their affiliates against any loss
resulting from or related to liabilities and obligations
associated with the Alamo Street Property.  Henry now says that
AWI is using its bankruptcy filing as an excuse for abandoning
investigation and remediation efforts at the Alamo Street
Property, although immediately after the filing AWI repeatedly
advised Henry and Ardex that AWI would honor its environmental
obligations with respect to the Property.

After its bankruptcy filing, AWI advised the Water Control Board
that "Armstrong has worked closely with the Board to address
impacts associated with leaking underground storage tanks
formerly at the Maywood property, and Armstrong is interested in
continuing to do so", and that "Armstrong is working to seek
approval from the Bankruptcy Court for authorization to continue
the underground storage tank-related corrective action" at the
Alamo Street Property.  AWI also filed reports with the Water
Control Board, had numerous meetings and conferences with the
Water Control Board, and claims to have had intense, active
involvement concerning investigation and remediation of
the Alamo Street Property through at least May, 2001.

In March 2001, Armstrong corresponded and met with the Water
Control Board to affirm its interest in continuing to conduct
remediation relating to the former, leaking underground storage
tanks.  In April 2001, Armstrong again confirmed its interest in
continuing ton conduct remediation at the Alamo Street Property
relating to the former underground storage tanks.  Armstrong
retained the keys to a fenced area of the Alamo Street Property
until April 23, 2001.

The United States Environmental Protection Agency's
environmental investigation of an adjacent property gave the
Water Control Board reason to believe that the toluene layer had
flowed off-site and adjacent to nearby residences.  According to
the Water Control Board, federal EPA staff advised the Board
that a flash fire occurred during drill activities adjacent to
the Property and attributed the flash fire to toluene vapors
migrating from the Alamo Street Property.

Armstrong informed the Water Control Board in April 2001 that it
had abandoned investigation and remediation at the Alamo Street
Property, but did not inform Henry or Ardex of that.  In a
letter dated May 24, 2001, Armstrong informed Henry's counsel
that Armstrong's "intense, active involvement in this needs to
end very soon".

Henry recently discovered that Armstrong had filed an
application with, and was seeking reimbursement from, the
California Underground Storage Tank Cleanup Fund under Henry's
name.  Armstrong had not disclosed that it had submitted the
refund application under Henry's name.  Not coincidentally,
Armstrong abandoned its investigative and remedial work shortly
after Henry learned of the unauthorized refund application.

The Water Control Board issued a Cleanup and Abatement Order to
Henry on or about April 11, 2001.  The Water Control Board
issued a Cleanup and Abatement Order to include Armstrong on or
about June 15, 2001. The Water Control Board found that "past
operations at the facility have resulted in the release of waste
to waters of the State at levels that have impaired, and
threaten to further impair, groundwater resources" and
"continues to threaten soil and groundwater beneath residential
areas near the site".  The Water Control Board said in the
Order that Armstrong is "also named a Discharger, as it
purchased WW Henry and operated the site facility from 1986 to
1996, and continued to actively manage the facility closure and
building demolishing from 1996 to June 2000."

In view of Armstrong's loan, and until the last few weeks,
exclusive control of the investigation and remediation,
Armstrong has the most complete understanding of the property
and the remedial measures that Armstrong has proposed.
Therefore, Armstrong is in the best position to promptly and
effectively complete the cleanup as required by the Water
Control Board, and alleviate the continuing pollution that,
according to the Water Control Board, is an imminent threat to
the public health, safety and welfare of nearby residents.

Henry argues that Armstrong's obligations under the Order to
assess, clean up and abate the contamination at the Alamo Street
Property are not a "right to payment" and therefore are not
liabilities on claims that would be discharged upon confirmation
of a plan.  Armstrong must comply with the Order.  The fact that
Armstrong no longer owns the Alamo Street Property does not
permit it to avoid its obligations under the Order.  Until
abruptly abandoning all activities at the Property, Armstrong
has solely conducted all investigation and remediation
efforts and has had possession and control of the Property for a
number of years.  Indeed, as the Water Control Board found,
Armstrong has continued to actively manage the facility closure
for years.  Under California law, Armstrong has actively managed
the cleanup and is responsible for its completion.

As a debtor in possession, Armstrong must abide by state law
where the property is located, and cannot violate the state laws
under which the Water Control Board issued its order.  The
United States Supreme Court in Midlantic National Bank v. New
Jersey Department of Environmental Protection, 474 U.S. 494
(1986) held that the Bankruptcy Code prohibits a trustee or
debtor in possession from abandoning property in contravention
of state law or regulation that is reasonably designed to
protect the public health or safety from identified hazards.

For all of these reasons, Henry asks that the Debtor be
compelled to perform its obligations for clean up and abatement
at the Alamo Street Property. (Armstrong Bankruptcy News, Issue
No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AZTEC TECHNOLOGY: Banks Agree To Extend Loan Term To August 31
Aztec Technology Partners, Inc. (OTC Bulletin Board: AZTC) said
that its bank lenders had extended the deadline for repayment of
the company's outstanding debt to August 31 from July 31.

Aztec said that constructive negotiations are continuing for the
restructuring of the company's debt, though there can be no
assurance that the negotiations will result in an agreement. The
bank lenders previously extended the repayment date for the
company's debt beyond the original due date of April 30.

              About Aztec Technology Partners

Aztec Technology Partners, Inc. is a single-source provider of
e-Solutions and e-Integration products and services for middle
market and Fortune 1000 companies across a broad range of
industries. Aztec helps clients throughout the U.S. gain
competitive advantages by exploiting the power of intranet,
Internet and extranet technologies. For further information,

BORDEN CHEMICALS: Discloses Financial Reporting Issues and Delay
Borden Chemicals and Plastics Limited Partnership (BCPLP)
(OTC:BCPUQ), the sole limited partner of Borden Chemicals and
Plastics Operating Limited Partnership (BCP), announced that
management has identified issues relating to possible
inaccuracies in the reporting of accounts payable and inventory
in BCP financial statements. Management believes that these
issues relate to certain accounting entries associated with the
implementation of a management information system, which
occurred before the April 3, 2001 bankruptcy filing of BCP. As a
result of these issues, the filing by BCP of its June operating
report with the Bankruptcy Court has been delayed, and it
is anticipated that the filing by BCPLP of its Form 10-Q for the
quarterly period ended June 30, 2001, will also be delayed.

On July 31, BCP informed the Office of the U.S. Trustee, the
Official Committee of Unsecured Creditors and its secured
lenders of its discovery of these issues. In commenting on these
meetings, Mark J. Schneider, president and chief executive
officer, BCP Management, Inc., the general partner of
BCP, said, "We advised these constituencies of the issues and
that we and our external auditors have begun a full
investigation. We appreciate their understanding. We believe
that these accounting issues do not reduce availability under
the present debtor-in-possession credit facility (DIP
facility). Our secured lenders have expressed their willingness
to support us in accordance with the DIP facility."

It has not yet been determined whether the issues that have been
identified to date relate to income statements as well as
balance sheets, or what the impact will be on financial
information previously issued by BCPLP and/or filings previously
made by BCP with the Bankruptcy Court. However, subject
to the completion of the investigation and further analysis,
management preliminarily estimates the negative impact of any
possible inaccuracies to be in the range of $10 million to $20

As previously announced, management continues to pursue
strategic alternatives for BCP, which could include a potential
merger, joint venture or asset sale.

BCPLP and BCP are managed and operated by their general partner,
BCP Management, Inc. (BCPM). On April 3, 2001, BCP and its
subsidiary, BCP Finance Corporation, filed voluntary petitions
for protection under Chapter 11 of the U.S. Bankruptcy Code with
the Bankruptcy Court for the District of Delaware. BCPM and
BCPLP were not included in the Chapter 11 filings. (Two
other separate and distinct entities, Borden, Inc., and its
subsidiary, Borden Chemical, Inc., are not related to the

BRESEA RESOURCES: Files Plan of Arrangement in Canada
Pursuant to an Order of the Court of Queen's Bench of Alberta
dated July 24, 2001, Bresea Resources Ltd. has, on July 24,
2001, filed with the Court a Petition requesting the Court's
approval of a Plan of Arrangement made pursuant to the Canada
Business Corporations Act, R.S. 1985, c. C-44, as amended.

The Company also notifies Affected Creditors pursuant to the
Interim Order of a meeting to be held at 4:00 p.m. (PST) on
August 23, 2001 at 1000 Cathedral Place, 925 West Georgia
Street, Vancouver, British Columbia for the purpose of passing a
resolution to approve the Plan of Arrangement and to transact
such other business as may properly come before the Creditors'
Meeting or any adjournments thereof.

The Interim Order directs Bresea to solicit claims from all
creditors of Bresea for the purpose of determining the claims
which will participate in voting on Bresea's Plan of
Arrangement. Any party having a claim against Bresea is required
to file a Proof of Claim with Bresea in a prescribed form in
order to participate in any voting on the Plan of Arrangement. A
Claims' Bar Date of 4:00 p.m. (PST) on August 21, 2001, has been
set. All claims received by Bresea after the Claims' Bar Date
will be forever extinguished, barred and will not participate in
any voting on the Plan of Arrangement, subject to further order
of the Court. All claims of any nature, including unsecured,
secured and contingent or unliquidated, against Bresea must be
made on or before the Claims' Bar Date. All claims must be made
in the prescribed "Proof of Claim" form together with the
required supporting documentation and be received by Bresea on
or before the Claims' Bar Date, at Bresea, at 1620-400 Burrard
Street, Vancouver, B.C., V6R 4J4, Canada.  The prescribed "Proof
of Claim" form can be obtained by calling Bresea at (604) 408-
8538 or (604)-683-5767.

BRIDGE INFORMATION: Selling Interest In FutureSource/Bridge LLC
Bridge Information Systems Inc. and its debtor-affiliates seek
the Court's authority to sell their interest in
FutureSource/Bridge LLC, together with certain claims Bridge
holds against FutureSource/Bridge LLC and its subsidiaries.

David M. Unseth, Esq., at Bryan Cave, in St. Louis, Missouri,
relates that Bridge currently owns a 45% Interest in
FutureSource/Bridge LLC, an Illinois limited liability company
(FS/B).  Prior to the Petition Date, Bridge marketed this
Interest to potential buyers.  Those efforts culminated in two

     (a) Compagnie Financiere Tradition (CFT) offered to purchase
         the Interest for $500,000; and

     (b) Merrill J. Oster offered to purchase the Interest for

Obviously, Mr. Unseth notes, Oster's offer better than Compagnie
Financiere Tradition's.  So, Bridge and Oster have entered into
an Asset Purchase Agreement, where Oster agreed to purchase:

      (i) the Interest, and all rights appurtenant thereto, and

     (ii) all claims of Bridge against FS/B and its subsidiaries
          for the amount of $551,291.

As a show of good faith, Mr. Unseth says, Oster deposited
$55,129 into an escrow account.  Oster promises to pay the
remaining balance by wire transfer of immediately available
funds at closing of the sale.  If the Court will not approve the
sale, Mr. Unseth emphasizes that Bridge is required to refund
Oster's earnest money.

Though Oster's offer is fair, reasonable and represents the
highest and best offer to purchase the Property, the Debtors
still plan to accept additional Qualified Bids.  The Qualified
Bid Procedure is:

                          The Sale Hearing

      (1) At the Sale Hearing, which is currently scheduled for
          August 15, 2001 at 10:00 a.m., the Seller will present
          its Motion and seek entry of an order, inter alia,
          authorizing and approving the Agreement if (i) no other
          Qualified Bid is received by Bridge pursuant to the
          terms and conditions set forth herein, and/or (ii)
          Bridge determines in the exercise of its business
          judgment, after consultation with its financial
          advisors and/or other, that any Qualified Bid is not
          the highest or otherwise best offer to purchase the
          Property.  The Sale Hearing may be adjourned or
          rescheduled without notice other than by an
          announcement of the adjourned date at the Sale Hearing.

                         Determination of the Seller

      (2) The Seller, in its sole discretion, shall:

               (i) determine whether any person is a Qualified

              (ii) coordinate the efforts of Qualified Bidders in
                   conducting their respective due diligence
                   investigations regarding the Property,

             (iii) receive offers from Qualified Bidders, and

              (iv) negotiate any offer made to purchase the
                   Property (collectively, the Bidding Process).

          Any person who wishes to participate in the Bidding
          Process must be a Qualified Bidder.  Neither the Seller
          nor its representatives shall be obligated to furnish
          any information of any kind whatsoever relating to the
          Property to any person who is not a Qualified Bidder.
          The Seller shall have the right to adopt such other
          rules for the Bidding Process which, in its sole
          judgment, will better promote the goals of the Bidding
          Process and which are not inconsistent with any of the
          other provisions hereof or of any Bankruptcy Court

                          Participation Requirements

      (3) Unless otherwise ordered by the Bankruptcy Court for
          cause shown, to participate in the Bidding Process each
          person (Potential Bidder) must deliver (unless
          previously delivered) to the Seller:

          (a) An executed confidentiality agreement in form and
              substance satisfactory to the Seller; and

          (b) Current audited financial statements of the
              Potential Bidder, or, if the Potential Bidder is an
              entity formed for the purpose of acquiring the
              Property,  current audited financial statements of
              the equity holder(s) of the Potential Bidder and/or
              such other form of financial disclosure deemed
              acceptable by the Seller, in its sole discretion,
              and its advisors.

      (4) A Qualified Bidder is a Potential Bidder that delivers
          the documents described in subparagraphs 3(a) and 3(b)
          above, whose financial information demonstrates the
          financial capability of the Potential Bidder to
          consummate the Sale, and that the Seller determines is
          reasonably likely to be able to consummate the Sale if
          selected as the Successful Bidder, based on
          availability of financing, experience, and other
          considerations deemed material and relevant to Seller
          in its sole discretion. Merrill J. Oster shall be
          deemed a Qualified Bidder.

      (5) Within 5 business days after a Potential Bidder
          delivers all of the materials required by subparagraphs
          3(a) and 3(b) above, the Seller shall determine, and
          shall notify the Potential Bidder in writing, whether
          the Potential Bidder is a Qualified Bidder.  At the
          same time that the Seller notifies the Potential Bidder
          that it is a Qualified Bidder, the Seller shall deliver
          (unless previously delivered) to the Qualified Bidder a
          copy of the Agreement and allow the Qualified Bidder to
          conduct due diligence on the Property subject to the
          conditions hereinafter stated.

                             Due Diligence

      (6) To obtain due diligence access or additional
          information form the Seller, a Qualified Bidder must
          first advise the Seller in writing of its preliminary
          (non-binding)  proposal regarding:

               (i) the purchase of the Property,

              (ii) purchase price range,

             (iii) the structure and financing of the transaction
                   (including the mount of equity to be committed
                   and sources of financing),

              (iv) any additional conditions to closing that it
                   may wish to impose, and

               (v) the nature and extent of additional due
                   diligence it may wish to conduct.

          If, based on the preliminary proposal and such
          additional factors as the Seller determines are
          relevant, the Seller, in its business judgment,
          determines that the preliminary proposal is reasonably
          likely to result in a bona fide and serious higher or
          otherwise better offer for the Property.  The Seller
          will designate an employee or other representative to
          coordinate all requests deemed reasonable by the Seller
          in its sole discretion for additional information and
          due diligence.  Due diligence shall not continue after
          the Bid Deadline.  Neither the Seller nor any of its
          affiliates (or any of their respective representatives)
          are obligated to furnish any information relating to
          the Property to any person except to a Qualified Bidder
          who makes an acceptable preliminary proposal.

                             Bid Deadline

      (7) A Qualified Bidder that desires to make a bid shall
          deliver a written copy of its bid to Bridge Information
          Systems, Inc., 3 World Financial Center, 27th Floor,
          New York, New York 10281-1009, Attn: Sankar Krishnan,
          not later than 12:00 noon (St. Louis time) on
          Wednesday,  August 10, 2001 (the Bid Deadline).  A copy
          of the bid shall also be delivered to Gregory D.
          Willard, Esq.,  Bryan Cave LLP, One Metropolitan
          Square, 211 North Broadway, Suite 3600, St. Louis,
          Missouri 63102 by the Bid Deadline.  The Seller may
          extend the Bid Deadline once or successively, but is
          not obligated to do so.  If the Seller extends the Bid
          Deadline, it shall promptly notify all Qualified
          Bidders of the extension.

                            Bid Requirements

      (8) A bid is a letter from a Qualified Bidder stating that:

               (i) the Qualified Bidder offers purchase the
                   Property upon the terms and conditions set
                   forth in a copy of the Agreement, marked to
                   show those amendments and modifications to the
                   Agreement, including price and terms, that the
                   Qualified Bidder proposes (Marked Agreement),

              (ii) the Qualified Bidder's offer is irrevocable
                   until 48 hours after the closing of a sale of
                   the Property.

          A Qualified Bidder shall accompany its bid with:

               (i) a certified check in the amount of $60,000
                   payable to the order of the Seller (the Good
                   Faith Deposit), which shall be held in an
                   interest bearing escrow account established by
                   the Seller at a financial institution of its
                   choice, and

              (ii) written evidence of a commitment for financing
                   or other evidence of ability to consummate the

      (9) The Seller will consider a bid only if the bid:

          (a) provides for a purchase price of at least $25,000
              over the purchase price in the Agreement;

          (b) is on terms that, in the Seller's business
              judgment, are not materially more burdensome or
              conditional than the terms of the Agreement;

          (c) is not conditioned on obtaining financing or on the
              outcome of unperformed due diligence by the bidder
              with respect to the Property, but may be subject to
              the accuracy in all material respects at the
              closing of that transaction of specified
              representations and warranties or the satisfaction
              in all material respects at the closing of that
              transaction of specified conditions, none of which
              shall be materially more burdensome than those set
              forth in the Agreement; and

          (d) does not request or entitle the bidder to any
              break-up fee, termination fee, expense
              reimbursement or similar type of payment.

     (10) A bid received from a Qualified Bidder that meets the
          above requirements is a "Qualified Bid."  For purposes
          hereof, the Agreement executed by Merrill J. Oster
          shall constitute a Qualified Bid.

                            "As Is, Where Is"

     (11) The sale of the Property shall be on an "as is, where
          is" basis and without representations or warranties of
          any kind, nature, or description by the Seller, its
          agents or its estate, except to the extent set forth in
          the Agreement.


     (12) If more than one Qualified Bid has been received by the
          Seller by the Bid Deadline, the Seller will conduct an
          auction (the Auction) with respect to such Property.
          The Auction shall take place at a date, time and
          location to be designated by Seller.  Only a Qualified
          Bidder who has submitted a Qualified Bid by the Bid
          Deadline is eligible to participate in the Auction.  At
          the Auction, Qualified Bidders will be permitted to
          increase their bids in increments of at least $25,000.
          The bidding shall start at the purchase price stated in
          the best or highest Qualified Bid, as determined in the
          Seller's sole discretion and as disclosed at all
          Qualified Bidders.  The Seller may adopt rules for the
          bidding process at the Auction that, in its judgment,
          will better promote the goals of the bidding process
          and that are not inconsistent with any of the
          provisions of the Agreement, any Bankruptcy Court
          order, or these Bidding Procedures.

     (13) Immediately prior to the conclusion of the Auction, the
          Seller, in consultation with its financial advisors
          and/or others, shall:

               (i) review each Qualified Bid on the basis of
                   financial and contractual terms and the
                   factors relevant to the sale process,
                   including those factors affecting the speed
                   and certainty of consummating the Sale, and

              (ii) identify the highest or best offer for the
                   Property (the Successful Bid).

          At the Sale Hearing, the Seller shall present to the
          Bankruptcy Court for approval the Successful Bid.

                         Acceptance of Qualified Bids

     (14) The Seller presently intends to sell the Property to
          the highest or otherwise best Qualified Bid received,
          whether received from Merrill J. Oster or another
          Qualified Bidder.  The Seller's presentation to the
          Bankruptcy Court for approval of a particular Qualified
          Bid does not constitute the Seller's acceptance of the
          bid, except with respect to the bid of Merrill J. Oster
          as reflected in the Agreement (subject to higher or
          otherwise better Qualified Bids and subject to
          Bankruptcy Court approval).
          The Seller will be deemed to have accepted any other
          bid only when the bid has been approved by the
          Bankruptcy Court at the Sale Hearing.

                        Return of Good Faith Deposit

     (15) Good Faith Deposits, and all interest earned thereon,
          shall be returned not later than 30 days after an order
          entered by the Bankruptcy Court approving the sale of
          the Property.


     (16) Notwithstanding any terms of agreement or provisions
          herein, the Seller expressly reserves the right to:

          (a) determine, in its business judgment, which
              Qualified Bid, if any, is the highest or otherwise
              best offer; and

          (b) reject at any time before entry of an order of the
              Bankruptcy Court approving a Qualified Bid, any bid
              that, in the Seller's sole discretion, is:

               (i) inadequate or insufficient,

              (ii) not in conformity with the requirements of the
                   Bankruptcy Code, the Bidding Procedures, or
                   the terms and conditions of sale, or

             (iii) contrary to the best interests of the Seller,
                   its estate and its creditors.

          At or before the Sale Hearing, the Seller reserves the
          right to impose such other terms and conditions as it
          may determine to be in the best interests of the
          Seller's estate, its creditors, and other parties in

Mr. Unseth explains the sale of the Interest is necessary to the
consummation of the Debtors' anticipated plan of liquidation
because the consummation of the Plan requires the liquidation of
all property of the Debtors' estates.  Mr. Unseth adds that the
proceeds of the sale of the Property will be distributed under
the Plan.  Therefore, Mr. Unseth contends, that the sale of the
Interest should be exempt from stamp or similar taxes since it
constitute a transfer of securities under a plan.

The Debtors also request the Court to eliminate or reduce the
10-day stay under Rule 6004(G), which provides sufficient time
for an objecting party to request a stay pending appeal before
the order can be implemented.  However, the Debtors believe that
the 10-day stay, in this case, should be eliminated to allow the
sale to close immediately "where there has been no objection to
the procedure". (Bridge Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

BRIDGE INFORMATION: Reaches Settlement With Reuters And SunGard
Bridge Information Systems, Reuters Group PLC and SunGard Data
Systems Inc. announced that they have amicably resolved suits
filed by Bridge and Reuters against SunGard last month in the
United States Bankruptcy Court for the Eastern District of
Missouri in St. Louis.

                        About Bridge

BRIDGE, together with its principal operating units, Bridge
Information Systems, Telerate(R), Inc., eBRIDGE(SM), Bridge
Trading, and BridgeNews(SM), is one of the world's largest
providers of financial information and related services
including trading, transaction, e-commerce, Internet and
wireless technologies.

BRIDGE information products include a wide range of
workstations, market data feeds and web-browser-based
applications, combined with comprehensive market data, in-depth
news, powerful analytic tools and trading room integration
systems. BRIDGE, with over a quarter million users in over 65
countries, is headquartered in New York City with the BRIDGE
trading and Technology center in St. Louis, and major regional
centers in Europe, the Middle East, Africa, and the Pacific Rim.
For more information visit the BRIDGE web site at

                       About Reuters

Reuters -- premier position as a
global information, news and technology group is founded on its
reputation for speed, accuracy, integrity and impartiality
combined with continuous technological innovation. Reuters
strength is based on its unique ability to offer customers
around the world a combination of content, technology and
connectivity. Reuters makes extensive use of internet
technologies for the widest distribution of information and
news. Around 73 million unique visitors per month access Reuters
content on some 1,400 Internet websites. Reuters is the world's
largest international text and television news agency
with 2,500 journalists, photographers and camera operators in
190 bureaux, serving 160 countries. In 2000 the Group had
revenues of 3.59 billion pounds and on 31 December 2000, the
Group employed 18,082 staff in 204 cities in 100 countries.
Reuters celebrates its 150th anniversary this year.

This news release may be deemed to include forward-looking
statements relating to Reuters within the meaning of Section 27A
of the US Securities Act of 1933 and Section 21E of the US
Securities Exchange Act of 1934. Certain important factors that
could cause actual results to differ materially from those
disclosed in such forward-looking statements are described in
Reuters Annual Report and Form 20-F for the year ended 31
December 2000 under the heading 'Risk Factors'. Copies of the
Annual Report and Form 20-F are available on request from
Reuters Group PLC, 85 Fleet Street, London EC4P 4AJ.

In addition, Reuters may not be able to complete the acquisition
on the terms previously summarized or other acceptable terms, or
at all, due to a number of factors, including failure to get
applicable regulatory approval or to satisfy other closing

Reuters and the sphere logo are the trademarks of the Reuters
group of companies.

                     About SunGard

SunGard (NYSE: SDS) is a global leader in integrated IT
solutions and eProcessing for financial services. SunGard is
also the pioneer and a leading provider of high-availability
infrastructure for business continuity. With annual revenues in
excess of $1 billion, SunGard serves more than 20,000 clients in
over 50 countries, including 47 of the world's 50 largest
financial services institutions. Visit SunGard at

CENTRAL VERMONT: Resolves Contract Dispute With Hydro-Quebec
Hydro-Quebec and 15 Central Vermont Public Service utilities
have agreed to a final settlement of a contract dispute that
arose after power and energy deliveries to Vermont from Quebec
were interrupted during an ice storm in January 1998.

Under the settlement, the Vermont Joint Owners (VJO) will
continue to receive power and energy from Hydro-Quebec under a
long term, stable-priced contract that for most utilities
extends to 2016 and to 2020 for others. Hydro-Quebec will make a
$9 million payment to the 15 utilities, which comprise the VJO.

"This is a fair settlement that brings to an end once and for
all contract issues that arose between the contracting parties
after a massive 1998 ice storm knocked down power lines and
interrupted electric service in Vermont and Quebec. We look
forward to restoring a fruitful business relationship that is
important for Vermont and Quebec," said Richard H. Saudek,
representing Hydro-Quebec, and Stephen C. Terry, spokesperson
for the Vermont Joint Owners.

The settlement brings to a close the final issue of an
arbitration proceeding that was decided on April 17 by a panel
of three international jurists.

COMMERCIAL FINANCIAL: Plan Confirmation Hearing Set For Aug. 20
On July 17, 2001, Commercial Financial Services Inc. filed its
first amended plan of orderly liquidation. August 20, 2001 is
fixed as the last date for filing written acceptances or
rejections of the plan. The hearing on confirmation of the plan
shall commence on August 29, 2001.

Both general unsecured claims and ABS claims are impaired. CFS
estimates that there are approximately $265 million of general
unsecured claims. There are $1,610,133,452. of ABS claims that
will be allowed under the plan.

CSC LTD.: Renaissance-Led Group Forms Plan To Restart Operations
Renaissance Partners, Inc., a leading management buyout firm
with offices in Cleveland, Detroit and Pittsburgh, announced
that it has formed a coalition including Hatch Beddows, the
leading business strategy consulting firm to the steel industry,
and the management of steel bar producer CSC, Ltd. to formulate
a plan to restart the Warren, Ohio-based producer of high
quality steel bar products.

The coalition plans to work with the United Steelworkers of
America (USWA) in a collaborative effort to restart the

CSC, Ltd., operating under Chapter 11 protection since January
2001, ceased operations in April 2001 putting 950 members of the
USWA and 170 salaried employees out of work due to the Company's
inability to secure working capital to continue operations.

Leo A. Keevican, Jr., managing director of Renaissance Partners
commented, "We are very optimistic about the coalition we have
formed. We have brought together the resources of management and
steel industry strategists to formulate a plan to restart CSC,
Ltd. Renaissance Partners is being assisted in this effort by
our affiliates Doepken Keevican & Weiss, which is providing its
labor and transactional legal expertise, and DKW Value
Recovery, which is providing turnaround and business
reorganization expertise. We are highly confident that this
coalition will be successful in formulating a business plan
necessary to attract private equity to fund the restart of CSC,

Keevican further stated, "Our inter-disciplinary approach to
solving complex restructurings in the steel industry is unique
and particularly attractive to our private equity sponsors, who
stand ready to fund the restart of CSC, Ltd. upon presentation
of a rational plan that ensures the Company's on-going

"Time is of the essence," Keevican noted. "We are prepared to
deploy the necessary resources in an extremely timely manner, in
order to forestall the looming liquidation of the CSC, Ltd.

Renaissance Partners is a management buyout firm affiliated with
Doepken Keevican & Weiss, a leading regional middle-market law
firm with offices in Cleveland, Detroit, Harrisburg, Pittsburgh
and Washington, D.C.

Hatch Beddows is the management consulting unit of Hatch Group,
and is a leading consultancy to the global metals and mining

DKW Value Recovery is a recently formed turnaround consulting,
interim management and bankruptcy reorganization and
restructuring firm affiliated with Doepken Keevican & Weiss.

CLASSIC COMM.: Fails To Make Interest Payment on $240MM Debt
Classic Communications, Inc. (NASDAQ: CLSC) announced it has
discontinued negotiations with respect to the previously
announced $75 million senior second secured loan. The Company
also reported it did not make its interest payment due July 6th
to the senior lenders under the Company's $240 million Credit
Agreement. As a result of the default under the senior credit
agreement, the Company is prohibited from making the $7.2
million interest payment due August 1, 2001 on its 9 3/8% Senior
Subordinated Notes due 2009 and 9 7/8% Senior Subordinated Notes
due 2008.

Classic has retained Credit Suisse First Boston Corporation as a
financial advisor to consider options relating to refinancing,
raising new capital and restructuring existing debt. In this
role, CSFB has begun discussions with Classic's senior lenders
and holders of the Company's subordinated debentures to pursue a
consensual restructuring of the Company's debt. The Company is
also working closely with various vendors to make certain it can
continue to provide quality service to all of its customers.

The Company further reported that it has received a letter from
the Nasdaq National Market indicating the Company had failed to
maintain a minimum bid price of $1.00 over 30 consecutive
trading days. If the Company's common stock price does not match
or exceed $1 for at least 10 consecutive trading days by
September 18, 2001, the Company will be provided with written
notification that its securities will be delisted.

              Second Quarter 2001 Guidance

The Company said it expects to report revenues and Adjusted
EBITDA (excluding restructuring expenses) of $46 million and $17
million, respectively, for the three-month period that ended
June 30, 2001. The number of basic subscribers was 376,500 at
the end of the quarter, an increase of 1,700 over the first
quarter of 2001. The Company continues to experience strong
growth with its digital product. It had approximately
41,900 digital subscribers at quarter end, which reflects
penetration of digital-ready subscribers of 11.1%. Digital
installations continued at 1,000 installs per week.

Classic Communications, Inc., based in Tyler, Texas, has
approximately 376,500 subscribers in non-metropolitan markets in
Texas, Kansas, Oklahoma, Nebraska, Missouri, Arkansas,
Louisiana, Colorado, Ohio and New Mexico. Classic trades on the
NASDAQ under the trading symbol "CLSC."

COOLSAVINGS.COM: Shares Face Nasdaq Delisting
--------------------------------------------- inc. (Nasdaq: CSAV), announced that it has
received a Nasdaq Staff Determination on July 26, 2001
indicating that it does not currently comply with the net
tangible assets requirement, as required by the Nasdaq National
Market under Marketplace Rules 4450(a)(3). 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 nearly 15 million registered members and 13.4 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.

COMDISCO: Moves To Continue Intercompany Financial Transactions
Prior to Petition Date, Comdisco, Inc. and certain non-debtor
affiliates periodically engaged in certain inter-company
financial transactions in the ordinary course of their
businesses. Some Debtors would often infuse capital into its
subsidiaries, which is covered under a loan agreement. But
because these subsidiaries are part of the Comdisco Group, the
funds still remain within the spectrum of the Debtors' control.
Many non-debtor affiliates rely on these fund infusions to
continue their operations and maintain their value. If these
inter-company transactions between the Debtors and their non-
debtor affiliates would be severed, the value of the non-debtor
affiliates would suffer.

The Debtors believe that the continuation of these inter-company
transactions is in the best interests of their estates,
creditors, and other parties-in-interest.  (Comdisco Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-

DELTA FINANCIAL: Will Not Make Coupon Payment On $150MM Notes
Delta Financial Corporation (OTCBB: DLTO) announced that it will
not make the coupon payment due on August 1, 2001 on its $150
million of 9 1/2% Senior Secured Notes and 9 1/2% Senior Notes
due August 2004.

Holders of these Notes have been offered an opportunity to
participate in an exchange offer launched on July 23, 2001,
which will remain open until August 20, 2001 - in which all
tendering Noteholders will waive their right to receive the
August 1st interest coupon. If consummated, the exchange
offer will extinguish substantially all of the Notes and, with
it, the Company's obligations to make the August 1st interest
payment relating to those tendered Notes. If the exchange offer
is not consummated, the Company likely will default on its
August 1st interest payment. Each Noteholder should have
received a prospectus containing a comprehensive description of
the exchange offer and all of the risks associated with it; if
not, please call D.F. King & Co., Inc., the information agent,
at 1-800-488-8095 and reference the Delta Financial Exchange

"We are in the final stages of the exchange offer, first
announced in late February, which we expect will extinguish
substantially all $150 million of the outstanding Notes," said
Hugh Miller, President & Chief Executive Officer. "In doing so,
we will remove the uncertainty surrounding our ability to repay
the Notes at maturity and eliminate the financial burden of
approximately $14 million per year in interest payments on the
Notes tendered in the exchange offer. We also will then be able
to operate our business model without the encumbrance of the
outstanding debt. The holders of just over 50% of the Notes
comprised of Putnam Investment Management, Fidelity Investment
and Prudential Investments already have committed to
tender their Notes in the exchange, pursuant to a letter of
intent signed in February 2001," added Miller.

Noteholders who tender their Notes in the exchange offer will
receive the Company's newly-issued preferred stock and
membership interests in a newly formed LLC, into which the
Company will transfer all of the mortgage-related securities
currently securing the senior secured notes. The exchange offer
is conditioned upon at least 95% of the existing Noteholders
tendering their Notes, although the Company has the option of
waiving this condition to the exchange offer. If the exchange
offer is consummated, following such consummation, only
Noteholders who fail to tender their Notes in the exchange will
receive their August 1, 2001 interest coupon. The indentures
governing the Notes provide the Company with a 30-day grace
period within which to make the interest payment, without
triggering an event of default under such indentures. Non-
tendering Noteholders, however, will no longer have any
collateral securing their Notes; nor will they be protected by
any of the restrictive covenants in the indentures governing the
Notes, which previously limited our ability to engage in certain
activities, like incurring additional debt or disposing our
assets. Further, the trading market for Notes not tendered in
the exchange offer is likely to be significantly more limited
than it is currently.

As previously announced, the Company expects to record a
substantial loss for the second quarter of 2001 of approximately
$1.04 per share, related to its continued efforts to restructure
its business and strategically reduce its negative cash flow in
order to return to profitability by, as planned, as soon as the
fourth quarter of 2001. The expected loss was primarily
related to (1) the costs of maintaining an unprofitable
servicing platform until it was transferred to Ocwen in May
2001, plus the associated costs of transferring the portfolio,
(2) debt restructuring costs, and (3) a change in the useful
life of computer-related equipment.

"I am encouraged about the future of the Company. With the
successful transfer of servicing behind us, and with the
completion of the debt extinguishment expected later this month,
senior management can now focus its time and efforts on
improving and growing our mortgage banking business," added

Founded in 1982, Delta Financial Corporation is a Woodbury, New
York-based specialty consumer finance company engaged in
originating, securitizing and selling (and until May 2001,
servicing) non-conforming home equity loans. Delta's loans are
primarily secured by first mortgages on one- to four-family
residential properties. Delta originates home equity loans
primarily in 20 states. Loans are originated through a network
of approximately 1,500 brokers and the Company's retail offices.
Prior to July 1, 2000, loans were also purchased through a
network of approximately 120 correspondents. Since 1991, Delta
has sold approximately $6.7 billion of its mortgages through 29
AAA rated securitizations. At March 31, 2001, Delta's servicing
portfolio was approximately $3.1 billion.

DELTA FINANCIAL: Fitch Lowers Senior Secured Rating To C From CC
Fitch has lowered the rating on Delta Financial Corp.'s (Delta)
senior secured $150 million 9 1/2% notes due 2004 to `C' from
`CC'. Concurrent with this action, the rating has been placed on
Rating Watch Negative. These actions follow the company's
announcement that it will not make its required interest payment
due on Aug. 1, 2001. Under the terms of the indenture, Delta has
a 30 day grace period in which to make the payment before
triggering an event of default under the indenture.

In February 2001, Delta agreed to offer noteholders the option
to exchange their notes into shares of a liquidating trust
backed by approximately $150 million of the company's retained
interests in securitized assets. The company represents that it
has already received over 50% approval from bondholders to
proceed. The offer expires on Aug. 20, 2001. Bondholders who
tender their notes waive their right to the Aug. 1, 2001
interest payment. Fitch will not rate the shares of the
liquidating trust and therefore if a substantial majority of
notes are tendered, Fitch will withdraw its current rating at
that time. In the unlikely event that the exchange offer is
unsuccessful, Fitch will likely lower the rating to `D'.

EUROWEB INTERNATIONAL: Board Approves Reverse Stock Split
Euroweb International Corp., (Nasdaq:EWEB), announced through
its Chairman, Frank R. Cohen, that its Board of Directors has
approved a one for five reverse split of its common stock. Any
fractional shares resulting from the reverse split will be
rounded to the nearest whole share. The reverse split, approved
by the Board of Directors Meeting held on July 31, 2001, is
subject to approval by the Company's shareholders. The Company
announced it was scheduling a special meeting of shareholders,
to be held on August 30, 2001, for the sole purpose of approving
the corporate action.

The Company was notified by Nasdaq on July 6, 2001 that the
price of its common stock had failed to maintain a minimum bid
price of $1.00 during 30 consecutive trading days immediately
preceding the notification. As a result, the Company's common
stock is subject to delisting as of October 4, 2001, should the
Company fail to demonstrate compliance with the listing criteria
established by Nasdaq before October 4, 2001. At this time, the
sole criteria for continued listing with which the Company is
not in compliance is the maintenance of the minimum $1.00 bid
price. A hearing request from the Company to the Nasdaq Listing
Qualifications Panel will stay the delisting pending the Panel's
decision. The Company indicated a hearing request would be filed
in a timely fashion.

In commenting on the reverse split, Euroweb International
Corp.'s President and CEO Robert Genova stated: "We are
confident that shareholder approval of this action will bring us
into compliance with all the continued listing requirements of
the Nasdaq SmallCap Market. The timing required for the
establishment of a record date, required filings with the SEC,
mailing of proxy materials and then providing sufficient time
for all shareholders to vote, makes August 10, 2001 the earliest
possible date for presenting this proposal to shareholders. We
remain extremely confident in our direction to continue the
acquisitions program in Central and Eastern Europe and achieve
long term benefits of our business strategies."

Euroweb International Corp. is a leading Internet Service
Provider in Central and Eastern Europe, operating in Hungary,
Czech Republic, Slovakia, and Romania. It has acquired thirteen
Internet Service Providers over the last three years.

FINOVA GROUP: Equity Committee Retains Glass & Assoc. as Advisor
On May 18, 2001, the Official Committee of Equity Security
Holders resolved to retain Glass & Associates, Inc. and Deborah
Hicks Midanek as FINOVA Group, Inc.'s financial advisor
commencing as of that date in connection with the pursuit of the
FINOVA Chapter 11 case and the performance of financial advisory
services. As of the same date, Glass and Midanek sought
additional support for their anticipated financial advisory
role, which was subsequently represented in writing in an
Engagement Team Agreement to form a Glass Team with four other
Glass Team Members: (1) Water Tower Capital, LLC, (2) Chasen
Enterprises, (3) The Clayton Group and (4) Steven M. Miller.

Accordingly, the Equity Committee moves the Court for an order
authorizing and approving

  (a) the Committee's employment and retention of Glass &
      Associates, Inc., and Deborah Hicks Midanek as financial
      advisors to the Committee, as of May 18, 2001, pursuant to
      Sections 1102, 1103, 328 and 504 of the Bankruptcy Code and
      Rules 2014, 2016 and 5002 of the Bankruptcy Rules,

  (b) the Consulting Agreement, dated as of May 31, 2001, between
      Glass and the Equity Committee, and

  (c) the Engagement Team Agreement, dated as of May 31, 2001,
      among Midanek, Glass, Water Tower, Chasen, Clayton and
      Miller (collectively the "Glass Team").

Because the Committee retained the services of Glass beginning
May 18, 2001, the Committee seeks approval of such retention
effective as of such date.

The financial advisory services that Glass is expected to render
to the Committee include, but are not limited to, the following:

  (1) communicate with the Debtors' officers and directors with
      respect to the proposed Plan of Reorganization and any
      other plan as may be proposed by any party;

  (2) review the Debtors' asset pools and evaluate their quality
      and management;

  (3) advise the Committee with respect to potential business
      plans for the debtors-in-possession and any reorganized

  (4) advise the Committee with respect to the business
      operations of the debtors-in-possession;

  (5) communicate relevant information to the Committee's
      valuation experts; and

  (6) provide such further and other services as reasonably may
      be requested by the Committee.

The Equity Committee tells the Court that it selected Glass
based upon, among other reasons, the considerable experience and
knowledge of Glass and the other Glass Team members in the field
of financial advisory services in Chapter 11 contexts as a
whole, and in particular areas of company analysis related to
the FINOVA Chapter 11 case, including cash flow analysis and
financial restructuring matters. The Equity Committee believes
that the Glass Team is well-qualified to advise and assist it in
this proceeding. Each member of the Glass Team is familiar with
the field of financial advisory services in Chapter 11 contexts
in general, the Equity Committee represents, and each also
possesses valuable, in-depth expertise in a distinct facet of
bankruptcy-and/or restructuring-oriented financial advisory
services. The Equity Committee believes it will benefit greatly
from the synergies created between and among the Glass Team
members when they function as a single financial advisory unit.
Because Glass and the Glass Team members will be paid a flat
monthly aggregate fee, the members will have no incentive to
duplicate one another's efforts, the Equity Committee notes.

The Committee understands that Glass will seek compensation from
the Finova estate at monthly rates that cover all services of
its consultants, advisors and the other Glass Team members, and
reimbursement of expenses incurred on the Committee's behalf,
subject to Court approval after notice and hearing. Under the
terms of the Consulting Agreement, Glass will charge for its
financial advisory services at the rate of $250,000 for the
first thirty days of its services and $150,000 for each
successive month, plus an incentive payment of $1,500,000 (the
"Success Fee") upon the occurrence of the confirmation and
effectiveness of a plan of reorganization pursuant to Chapter 11
of Title 11 of the Bankruptcy Code and as supported by the
Committee or the substantial consummation of a "Transaction",
and for Glass' out-of-pocket disbursements incurred in
connection the engagement.

The parties anticipate that Water Tower will be compensated by
Glass at the rate of $50,000 per month; Chasen will be
compensated at the rate of $25,000 per month; Clayton will be
compensated (out of the monthly fee paid to Glass by Finova) in
accordance with its usual hourly rates billed in one-quarter
hour increments; Miller will be paid a salary of $25,000 per
month; and Glass will be compensated at the rate of $50,000 per
month. In the event Glass receives all or a part of the Success
Fee, each member of the Glass Team will share in the Success Fee
in accordance with a formula set forth in the Engagement Team

The hourly rates charged by Clayton are:

           Principal                    $250 - $350
           Case Director                $150 - $250
           Senior Consultant            $100 - $150
           Consultant                   $ 75 - $100
           Clerical/Administrative      $ 35 - $ 45
           Out-of-Pocket Expense        At Cost

Also under the terms of the Consulting Agreement, Finova will
indemnify and hold harmless Glass and the Glass Team,
collectively and individually, and their directors, officers,
employees, agents (including independent contractors),
affiliates or controlling persons from losses, claims, damages,
costs, judgments, assessments, penalties, fines, settlement
costs, demands, actions, arbitration awards or other liabilities
whatsoever, in law or equity, that may result, directly or
indirectly, from, among other things, the engagement of Glass
under the Consulting Agreement or any transaction or conduct in
connection therewith.

The Committee and Glass presently anticipate that, upon the
approval of the Court, the other Glass Team members, which/who
are independent consultants and analysts with special skills
related to individual industries in which the Debtors are
engaged, will be involved in this matter on behalf of the
Committee, will work on an "as needed" basis, and will be
compensated from the funds made available to Glass, pursuant to
the terms of the Engagement Team Agreement.

The Equity Committee submits that neither Glass, Water Tower,
Chasen, Clayton, Miller nor, as the case may be, any of their
principal officers, insofar as the Committee has been able to
ascertain, provide consulting services to any interest adverse
to Finova or any other Debtor, their estates, their creditors or
the Committee, in the matters upon which Glass is to be engaged.
Each of the Glass Team members is a "disinterested person," as
the Committee understands this term is defined, within the
meaning of Sections 101(14) and 101(31), as modified by Section
1103(b), of the Bankruptcy Code. The Equity Committee has
perused the affidavits of Deborah Hicks Midanek, of John Stark,
III, of Andrew Chasen, of Paul Marchese and of Steven M. Miller,
and believes that none of the Glass Team members provides any
services to or holds any interest adverse to Finova or any other
Debtor, their estates, or their creditors with respect to the
matters upon which Glass is to be engaged.

The Equity Committee further submits that, to the best of its
knowledge, each member of the Glass Team has no prior connection
with the Debtors, their creditors or any other party-in-
interest, or their respective attorneys or accountants in the
matters upon which Glass is to be engaged that would in any way
disqualify it from providing financial advisory services to the

Individual Glass Team Members have filed affidavits respectively
which tell about the individual firms and disinterestedness,
among other things. Thus, these affidavits tell that:

Chasen Enterprises is a vendor of financial analysis and
structured financial products specializing in the collateralized
mortgage obligations (CMO) market. Chasen provides a variety of
custom-developed software products via a versatile modeling
language designed and developed by Chasen's founder, Andrew

                Limited Objection by U.S. Trustee

The United States Trustee objects to the indemnification
provisions on the grounds that these may be contrary to
applicable law and may be inconsistent with prior decisions in
the District. The U.S. Trustee notes that the proposed
indemnification may constitute a breach of fiduciary duty of one
or more of the various fiduciaries in the case. (Finova
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

FINOVA GROUP: Posts $436.5 Million Net Loss for Second Quarter
The FINOVA Group Inc. (NYSE: FNV) announced a net loss of $436.5
million or $7.15 per diluted share for the quarter ended June
30, 2001, compared to net income of $42.9 million or $0.69 per
diluted share in the second quarter of 2000. The results
included a net loss from continuing operations of $435.8
million or $7.14 per diluted share in the second quarter of 2001
compared to net income of $55.7 million or $0.89 per diluted
share in the second quarter of 2000, and a net loss from
discontinued operations in the 2001 quarter of $0.7 million or
$0.01 per diluted share compared to a net loss of $12.7
million or $0.20 per diluted share in the second quarter of

For the six months ended June 30, 2001, the Company announced a
net loss of $512.2 million or $8.39 per diluted share compared
to net income of $53.3 million or $0.86 per diluted share in the
first six months of 2000. The net loss from continuing
operations for the six months of 2001 was $492.8 million or
$8.07 per diluted share compared to net income of $103.3 million
or $1.64 per diluted share in the first six months of 2000, and
the net loss from discontinued operations in the six months of
2001 was $19.4 million or $0.32 per diluted share compared to a
net loss of $49.9 million or $0.78 per diluted share in the
first six months of 2000.

The results for the second quarter and first six months of 2001
reflected a continuation of trends noted in FINOVA's 2000 10-K/A
and were adversely impacted by some of the events of 2000 and by
the continued softening of the U.S. and international economies.
The most significant factors impacting 2001 resulted from the
fair market value write-down of assets held for sale
(specifically the Company's portfolio of leveraged leases
included in its Transportation Finance line of business), higher
loss provisions caused by increases in delinquencies, write-offs
and nonaccruing assets, higher cost of funds and the inability
to recognize tax benefits. Results were also negatively impacted
by the negative spread between the investment income earned on
the Company's accumulated cash and cash equivalents ($2.8
billion at June 30, 2001) and the interest expense accrued on
the Company's debt.

A more detailed analysis of results of operations can be found
in the Company's 10-Q report for the period ended June 30, 2001,
which is being filed with the Securities and Exchange Commission

                        Other Matters

On March 7, 2001, The FINOVA Group Inc., FINOVA Capital
Corporation and seven of their subsidiaries filed for protection
pursuant to Chapter 11, Title 11, of the United States Code, in
the United States Bankruptcy Court for the District of Delaware
to enable them to restructure their debt (the "Reorganization

As discussed more fully in the 2000 10-K/A, FINOVA and FINOVA
Capital have entered into a proposed transaction with Berkshire
Hathaway Inc. ("Berkshire"), Leucadia National Corporation
("Leucadia") and Berkadia LLC ("Berkadia"), an entity jointly
owned by Berkshire and Leucadia. The terms of the proposed
transaction, as amended, form the basis for FINOVA's Third
Amended and Restated Joint Plan of Reorganization of Debtors
under Chapter 11 of the Bankruptcy Code (the "Plan"). The Plan
was submitted to the creditors and equity interest holders for
approval. The voting deadline is today.

The Plan generally provides for Berkadia to make a secured loan
of $6 billion to FINOVA Capital. Pursuant to the Plan, the
proceeds of that loan, along with available cash on hand, will
be used to pay the holders of allowed unsecured claims against
FINOVA Capital a cash payment equal to 70% of those claims plus
100% of the pre- and post-petition interest with respect to
those claims. In addition, 7.5% New Senior Notes will be issued
by FINOVA having a principal amount equal to 30% of those
claims. Depending on the amount and nature of other allowed
claims, the creditors will receive reinstatement, cash or a
combination of cash and new senior notes. In the case of allowed
secured claims, the Plan also permits the surrender of the
asset securing the claim. The terms of the New Senior Notes are
described more fully in the Company's Report on Form 8-K filed
with the SEC on June 22, 2001.

The confirmation hearing on the Plan is currently scheduled for
August 10, 2001. If the court confirms the Plan on that date,
the earliest effective date for the Plan and the consummation of
the Berkadia loan would be August 21, 2001. Berkadia's $6
billion loan commitment expires on August 31, 2001, absent
agreement to extend that date.

The FINOVA Group Inc., through its principal operating
subsidiary, FINOVA Capital Corporation, is a financial services
company focused on providing a broad range of capital solutions
primarily to midsize business. FINOVA is headquartered in
Scottsdale, Ariz. with business offices throughout the U.S.
and in London, U.K. For more information, visit the company's
website at

FOUNTAIN PHARMACEUTICALS: Shuts Down, Schuchert Gets Assets
On June 21, 2001, Mr. Joseph S. Schuchert, Jr. notified the
Company that it was in default of the funds advanced by him
under the Secured Credit Agreement dated December 31, 1998. Mr.
Schuchert requested immediate payment and in the event such
payments were not forthcoming on or before July 2, 2001, notice
was hereby given that Mr. Schuchert shall take action necessary
to take possession of the Company's assets and other collateral
as defined in the agreement.

Fountain Pharmaceuticals, Inc. (OTC Bulletin Board: FPHI) Board
of Directors voted on June 28, 2001 to comply with the agreement
and transfer the assets of the Company at the close of business
on July 6, 2001 to Mr. Schuchert, since the Company was not in a
financial position to make the payment. As of July 6, 2001, the
Company had $1,870,997 of principal and interest due under
this facility.

Since the Company no longer has tangible assets, except the
Company's public shell, to generate revenue to offset the
Company's unsecured liabilities, the Company is not in position
to continue as a going concern. The Company's Board of Directors
acted accordingly by suspending operations and terminating the
remaining employees including the interim Chief Executive
Officer/Vice President of Operations effective July 6, 2001. The
Company's Board of Directors retained only one employee, the
Interim Chief Financial Officer/Director of Finance and
Administration, who will assist in the transfer of assets to Mr.
Schuchert and close down the operations of the Company. The
Company's Board of Director's are currently pursuing candidates
with interests in purchasing the Company's public shell of which
those proceeds will be used to pay the unsecured liabilities,
other related Company expenses and final distributions, if any,
to the Company's shareholders. However, there can be no
assurance that any such transactions will be successfully
completed by the Company.

The Company will cease filings with the Security and Exchange
commission after it files the 10-KSB for June 30, 2001. The
Company's shares are traded on the "OTC-Bulletin Board."

FRUIT OF THE LOOM: Wants Ernst & Young Disclosure Under Seal
James J. Doyle, at Ernst & Young, serving as Fruit of the Loom's
tax advisors in these chapter 11 cases, has prepared an
affidavit that describes "a proposed retention of E&Y by a
third-party." This affidavit supplements E&Y's disclosure of
connections with parties-in-interest Fruit of the Loom's chapter
11 cases.

The Debtors want to keep the information in Mr. Doyle's
affidavit a secret. Fruit of the Loom needs to preserve the
confidence of the supplemental disclosure, lawyers at Milbank,
Tweed, Hadley & McCloy argue, because "its revelation would be
prejudicial to the reorganization effort." Pursuant to 11 U.S.C.
Sec. 107(b), Fruit of the Loom seeks an order permitting it to
file Mr. Doyle's affidavit and supplemental disclosure under

The Debtors provide Judge Walsh with a copy of the document in
an envelope marked "Confidential Document -- To Be Kept Under
Seal." Fruit of the Loom asks Judge Walsh for permission to
limit disclosure of the contents to the Court, counsel for the
Creditors' Committee, Fruit of the Loom's prepetition bank
group, the informal committee of secured noteholders and
the U.S. Trustee -- and keep it out of everyone else's view. The
core parties-in-interest, the Debtors remind Judge Walsh, are
all subject to existing confidentiality agreements. (Fruit of
the Loom Bankruptcy News, Issue No. 35; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

GENESIS HEALTH: Plan Confirmation Hearing Set For August 28
                       DISTRICT OF DELAWARE

In re                                 : Chapter 11 Case No.
GENESIS HEALTH VENTURE, INC., et al., : 00-2692 (JHW)
          Debtors.                     : (Jointly Administered)
In re                                 : Chapter 11 Case No.
MULTICARE AMC, INC., et al.,          : 00-2494(JHW)
          Debtors.                     : (Jointly Administered)


      1.  By order date July 13, 2001 (the "Order"), the United
States Bankruptcy Court for the District of Delaware (the
"Court) approved the Disclosure Statement for the Debtors' Joint
Plan of Reorganization Under Chapter 11 of the Bankruptcy Code
(the "Disclosure Statement"), dated July 6, 2001, filed by
Genesis Health Ventures, Inc. and certain of its direct and
indirect subsidiaries, as set forth below, as debtors and
debtors in possession (collectively, the "Genesis Debtors"), and
Multicare AMC, Inc., The Multicare Companies, Inc., and certain
of their direct and indirect subsidiaries, as set forth below,
as debtors and debtors in possession (collectively, the
"Multicare Debtors" and, together with the Genesis Debtors, the
"Debtors"), and directed the Debtors to solicit votes with
regard to the approval or rejection of the Debtors' Joint Plan
of Reorganization Under Chapter 11 of the Bankruptcy Code, dated
July 6, 2001 (as may be amended, the "Plan"), annexed as an
exhibit thereto.

      2.  A hearing (the "Confirmation Hearing") to consider the
confirmation of the Plan will be held at 9:30 a.m. Eastern Time
on August 28, 2001, before the Honorable Judith H. Wizmur in the
United States Bankruptcy Court, Mitchell H. Cohen Courthouse,
401 Cooper Street, Camden, New Jersey 80101.  The Confirmation
Hearing may be continued from time to time without further
notice other than the announcement by the Debtors of the
adjourned date(s) at the Confirmation Hearing or any continued
hearing, and the Plan may be modified, if necessary, pursuant to
11 U.S.C. Sec. 1127 prior to, during, or as a result of the
confirmation Hearing, without further notice to interested

      3.  If you hold a claim against one of the Debtors as of
July 6, 2001, the Record Date as established in the Order, and
are entitled to vote to accept or reject the Plan, you have
received with this Notice a Ballot form and voting instruction
appropriate for your claim.  For your vote to accept or reject
the Plan to be counted, you must complete all required
information on the Ballot, execute the Ballot, and return the
completed Ballot to the address indicated on the Ballot by 5:00
p.m. Pacific Time on August 17, 2001.  Any failure to follow the
voting instructions included with the Ballot may disqualify your
Ballot and your vote.

      4.  Holders of (i) unimpaired claims and (ii) claims or
interested who will receive no distribution at all under the
Plan are not entitled to vote on the Plan and, therefore,
received a Notice of Non-Voting Status rather than a Ballot in
their Solicitation Packages.  In addition, unless otherwise set
forth in the objection, claims that are the subject of an
objection are not entitled to vote on the Plan and, therefore,
did not receive a Ballot in their Solicitation Packages.  If you
disagree with the Debtors' classification of, or objection to,
your claim and believe that you should be entitled to vote on
the Plan, then you must (i) have timely filed a proof of claim
by the applicable Bar Date and (ii) serve on the Debtors and
file with the Court a motion for an order pursuant to Rule
3018(a) of the Federal Rules of Bankruptcy Procedure (a "Rule
3018(a) Motion") temporarily allowing such claim in a different
amount or in a different class for purposes of voting to accept
or reject the Plan.  All Rule 3018(a) Motions must be filed on
or before the tenth (10th) day after the later of (i) service of
the Confirmation Hearing Notice and (ii) service of notice of an
objection, if any, to such claim.  In accordance with Bankruptcy
Rule 3018(a) Motions that are not timely filed and served in the
manner as set forth above shall not be considered.

      5.  Objections, if any, to the confirmation of the Plan
must (i) be in writing, (ii) state the name and address of the
objecting party and the nature of the claim or interest of such
party, (iii) state with particularity the basis and nature of
any objection or proposed modification, and (iv) be filed,
together with proof of service, with the Court and served so
that they are received no later than 4:00 p.m. Eastern Time on
August 17,2001 by (a) the Clerk of the Court, (b) attorneys for
the Genesis Debtors, Weil Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153 (Attn: Gay T. Holzer, Esq.) and
Richards, Layton & Finger, P.A., One Rodney Square, P.O. Box
551, Wilmington, Delaware 19899 (Attn:  Mark D. Collins, Esq.),
(c) attorneys for the Multicare Debtors, Willkie, Farr &
Gallagher, 787 Seventh Avenue, New York, New York 10019-6099
(Attn:  Paul V. Shallhoub, Esq.) and Young, Conaway, Stargatt &
Taylor, 11th Floor, Wilmington Trust Company, P.O. Box 391,
Wilmington, Delaware 19899-0391 (Attn:  David S. Rosner, Esq.)
and Saul Ewing LLP 222 Delaware Avenue, Suite 1200, P.O. Box
1266, Wilmington, Delaware 19889 (Attn:  Mark Minuti, Esq.), and
(g) the United States Trustee for the District of Delaware, 601
Walnut Street, Curtis Center, Suite 950 West, Philadelphia,
Pennsylvania 19106 (Attn:  Joseph McMahon, Esq.).  Objections
not timely filed and served in the manner set forth above shall
not be considered and shall be overruled.  The Debtors, the
Agent, the Genesis Committee, and the Multicare Committee may
serve replies to such objections and proposed  modifications by
no later than August 24, 2001.

      6.  Any holder of a claim that (i) is scheduled in (a) the
Genesis Debtors' schedules of assets and liabilities dated
October 19, 200, or any amendment thereof or (b) the Multicare
Debtors' schedule of assets and liabilities dated October 19,
2000, or any amendment thereof (collectively the "Schedules") at
zero or in an unknown amount or as disputed, contingent, or
unliquidated, and is not the subject of a timely filed proof of
claim or a proof of claim deemed timely filed with the Court
pursuant to either the Bankruptcy Code or any order of the
Bankruptcy Court or otherwise deemed timely filed under
applicable law, or (ii) is not scheduled and is not the subject
of timely filed proof of claim or a proof of claim deemed timely
filed with the Court pursuant to either the Bankrputcy Code or
any order of the Court or otherwise deemed timely filed under
applicable law, shall not be treated as a creditor with respect
to such claim for purposes of (a) receiving notices regarding or
distributions under, the Plan, or (b) voting on the Plan.

      7. Any party in interest wishing to obtain (i) information
about the solicitation procedures or (ii) copies of the
Disclosure Statement, the Plan, or the Plan Supplement should
visit the Debtors' website at http://www.ghv.comor telephone
the Debtors' voting agent, Poorman-Douglas, at (800) 510-0923
for creditors of the Genesis Debtors and (800) 473-1419 for
creditors of the Multicare Debtors.  All Documents that are
filed with the Court the District of Delaware, Marine Midland
Plaza, 824 Market Street, Wilmington, Delaware 19801.

Dated:     Wilmington, Delaware
            July 16, 2001

767 Fifth Avenue                  787 Seventh Avenue
New York, New York 10153          New York, New York 10019-6099
Michael F. Walsh                  Marc Abrams
Gary T. Holzer                    Paul V. Shalhoub

-and-                             -and-

One Rodney Square                 11th Flr., Wilmington Trust Co
P.O. Box 551                      P.O. Box 391
Wilmington, Delaware 19899        Wilmington, Delaware 19899
Mark D. Collins (No. 2981)        Robert S. Brady (No 2847)


HALO INDUSTRIES: Court Grants Approval Of $30MM DIP Financing
HALO Industries (NYSE: HMK), a promotional products industry
leader, received approval of all of its first-day Chapter 11
motions from the U.S. Bankruptcy Court for Wilmington, Delaware.
These motions are intended to protect the Company's customers,
employees and vendors, while providing sufficient financing to
conduct business as usual as HALO proceeds with its
reorganization process. On Monday, HALO announced it had filed
for protection under Chapter 11 of the U.S. Bankruptcy Code.

At HALO's request, the court approved all first day motions,
including: the interim approval of a $30 million debtor-in-
possession credit facility; the authority to honor all customer
deposits; the authority for a vendor payment plan to assure
immediate post-petition payment of all trade creditors; and
the authority to pay employee benefits, wages and other

"These actions reflect the Company's commitment to maintaining
and protecting all of our valued relationships while we take the
necessary steps to relieve our business from past burdens," said
Marc Simon, president and chief executive officer. "The entire
HALO team is gratified to have received overwhelmingly favorable
support from its valued supplier community. Today's approvals
allow HALO to conduct business operations as usual while
continuing to provide our customers with the highest quality
service that they have come to expect from us. This is a
positive first step toward emerging from this a stronger

A final hearing to approve the DIP credit facility, which is
being provided by LaSalle Bank and Comerica, has been scheduled
for September 5, 2001. HALO will use the DIP financing for
employee compensation, materials and services from vendors,
ongoing operations and other working-capital needs. The credit
facility expires on December 31, 2001.

The case has been assigned case number 01-10000. Related filings
for Lee Wayne Corp. and have been assigned case
number 01-10001 and 01-10002, respectively. Additional
information on the case can be obtained via the Internet at,clicking on WebPACER icon, and
entering the case number 01-10000.

                       About HALO

HALO Industries, Inc. (NYSE: HMK) is the world's largest
distributor of promotional products.

HEDSTROM CORPORATION: Emerges from Chapter 11
Hedstrom Corporation, one of America's leading manufacturers and
marketers of children's products, emerged from bankruptcy
Wednesday, fifteen months after it sought protection under
Chapter 11. The company's plan of reorganization, approved on
July 17, 2001, by Judge John C. Akard of the U.S. Bankruptcy
Court, District of Delaware, was consummated and is now

Hedstrom emerges with a new board of directors composed of
representatives from its investor group and industry leaders.
The newly-capitalized company will go forward with its current
management team headed by business veteran, Michael Johnston,
who continues as President and CEO. Johnston will also
serve as a member of the board of directors.

"This is an exciting day for our company and our people,"
Johnston said. "Our core businesses have been and continue to
perform profitably, and our business plan and financing going
forward puts us in an even better position to develop new
products and to maintain and enhance our leadership position
in the markets we serve."

Hedstrom was founded in 1915 and underwent a series of ownership
and management changes leading to its acquisition in 1995 by
Hicks, Muse, Tate & Furst in partnership with then-company
management. The new ownership group is composed of Foothill
Capital, Highland Capital, and several of the company's primary
pre-petition lenders and suppliers. President and CEO Johnston
joined Hedstrom three years ago after a successful business
career with Phillips Consumer Electronics, Black & Decker
Corporation and GE.

During the bankruptcy, the company completed the liquidation of
its Montreal and UK Divisions, which had been poor performers.
Hedstrom will now focus on its three core businesses:

Backyard and Fun Products Division, with products including
backyard gym sets, trampolines and spring rides, with facilities
in Bedford, Pa. and Collingwood, Ontario, Canada;

Ball, Bounce and Sport Division, with products including play
balls, ball pits and family games, with facilities in Ashland,
Ohio; Carrolton, Texas; Dothan, Alabama and Reno, Nevada; and

ERO Division, with products including licensed slumber bags and
play tents, wall stickups and room decor and a line of water
sports products including flotation vests and swim and pool
products, with facilities in Hazelhurst, Ga. and Mount Prospect,

"We are fortunate to be the market leader in every major product
line we produce," Johnston went on. "I want to thank our
retailers and suppliers for working with us during this time,
and particularly thank our dedicated employees for their
commitment to quality and customer service."

Hedstrom Corporation, with year 2000 sales of approximately $255
million, employs 1,800 people. The company is a major licensee,
currently working with such well known and respected brands as
the beloved Disney characters including Winnie the Pooh, the
Classic Looney Tunes and Scooby-Doo characters, Harry Potter,
The Powerpuff Girls, Pokemon(R) and Barbie(TM).

HOMELAND: Files For Chapter 11 Protection
Homeland Stores, Inc. and its parent company, Homeland Holding
Corporation (OTCBB:HMLD), filed for reorganization under Chapter
11 of the U.S. Bankruptcy Code after Homeland was unable to
reach an accord with its current lending institutions on a
portion of its financing.

The filing will allow Homeland to refinance its bank and other
debt, which will provide sufficient funding for its ongoing

Homeland has arranged for interim financing through its current
lenders and Associated Wholesale Grocers, Homeland's primary
wholesaler. In addition, the company has received commitments
for a $48 million debtor-in-possession financing through Fleet
Retail Finance, Back Bay Capital Funding and Associated
Wholesale Grocers.

"The interim financing will ensure that we are in a position to
fulfill our obligations during the proceedings and operate our
stores without interruption," said David B. Clark, Homeland

"The filing will not affect day-to-day operations at the stores
in Oklahoma, the Texas panhandle and southern Kansas. The
company will conduct business as usual throughout the process
and remains optimistic it will emerge with a renewed ability to
compete in the marketplace. The move will have no impact
on the company's popular promotions, such as double coupons and
Homeland shopping card and weekly advertised specials."

"Our current agreements and arrangements will permit us to
continue business as usual, which is good news for our
customers, our employees and our suppliers," commented Clark.
"Our stores are fully stocked and ready to serve our customers."

The company has engaged McDonald Investments, a respected full-
service business investment and financial consulting firm, with
a known expertise in refinancing and raising capital, as well as
RCP Merchant Banking LLC, a merchant bank specializing in
Chapter 11 reorganization strategic matters. "Homeland will
benefit from the experience, knowledge and strategic
orientation of these groups and their collective ability to
assist us in executing our financial and business strategies,"
Clark noted.

In closing, Clark commented: "In order to position the company
to compete over the long-term in the manner we would all like,
it requires refinancing of our debt and working capital. This
move is an important step toward positioning Homeland to better
achieve its goals without affecting service to our customers."

IGI INC.: Frank Gerardi Discloses 6.8% Equity Stake
Frank Gerardi, an investment adviser, beneficially owns 6.8% of
the outstanding common stock of IGI Inc., represented by his
holding of 760,000 shares of the Company's common stock. Mr.
Gerardi has sole power to vote or dispose of the stock.

INTEGRATED HEALTH: Robert Mills Asks Court For Relief From Stay
Robert J. Mills, former CEO of First American Health Care, moves
the Court for an order modifying the automatic stay of 11 U.S.C.
section 362(a) in order that the estate of Integrated Health
Services, Inc. et al. may be joined as a party in Civil Action
No. CV295-140 pending in the United States District Court for
the Southern District of Georgia, Brunswick Division, styled
Towne et. al. v. First American Health Care of Georgia, Inc. et
al. Over employment matters involving Towne. As a former
officer, director and agent of First American, Mills was also a
party to the Merger Agreement dated February 21, 1996 as amended
September 9, 1996 by and among Integrated, IHS Acquisition XIV,
Inc. First American and Mills,

Mills seeks indemnification provision by First American and IHS,
as successor-in-interest to First American which filed for
bankruptcy in the Bankruptcy Court for the Southern District of
Georgia, Savannah Division on February 21, 1996 (Case Number 96-
20188 through 96-20218) and got its Plan of Reorganization
confirmed on October 4, 1996. On March 2, 2001, the District
Court severed the civil action as to First American and ordered
that Towne could proceed to trial against Mills in the District
Court Action.

The District Court Action was filed by Roger Towne and Tri-
County Home Health Care, Inc. on September 12, 1995 (before the
merger), seeking damages and other relief against First American
and Mills, individually and as Chief Executive Officer of First
American. In the Action, Towne alleges that Mills and First
American are jointly and severally liable for compensatory and
punitive damages, as well as attorneys' fees, for breach of
contract, fraud in the inducement, constructive trust and
rescission involving certain employment contracts to which Towne
and First American were parties.

Towne has filed a proof of claim in the First American
bankruptcy for the damages sought in the District Court Action.
Upon information and belief, First American objected to Towne's
proof of claim for tardiness in filing. Such objection was
denied. There has been no resolution as to the allowance of
Towne's proof of claim and it has not been paid.

First American's confirmed Plan incorporates by reference the
Omnibus Settlement Agreement by and between First American, its
successors and assigns, and Mills. Pursuant to the Settlement
Agreement, Integrated, as successor-in-interest to First
American, is obligated to indemnify Mills for any legal fees,
expenses, settlement amounts, and/or damages incurred by Mills
if he is made a party to an action solely because he was an
officer, director or agent of First American, including any
liability Mills may have to Towne as a result of the District
Court Action, Mills tells Judge Walrath.

Mills has filed a proof of claim in the IHS cases based upon the
Indemnification Provision. A judgment against Mills based on the
allegations in the District Court Action will collaterally estop
Integrated from challenging the amount of Mills' claim for
indemnification arising out of the District Court Action, the
movant notes.

Mills asserts that cause exists under 11 U.S.C. section
362(d)(1) for modifying the automatic stay to join Integrated as
a party in the District Court Action in order to facilitate
Integrated's right, pursuant to the Settlement Agreement, to
manage and control the defense, settlement or other disposition,
payment or discharge of the District Court Action. The stay is
justified, Mills puts forward, to avoid the possibility of
inconsistent judgments and for the sake of judicial economy.
(Integrated Health Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

LERNOUT & HAUSPIE: Seeks To Extend Exclusive Period To Sept. 14
"The L&H Group has circulated a term sheet containing the
salient terms of its proposed plan of reorganization and
commenced drafting both the joint plan of reorganization and a
disclosure statement relating to the joint plan," Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, tells
Judge Wizmur, "anticipating that an agreement among the
members of the L&H Group and the Creditors' Committees may be
reached promptly."

"Indeed," Mr. Despins continues, "at this point in the
negotiations, the remaining issues that require resolution are
largely intercreditor issues," where the Debtors will stand back
and referee.

Against this backdrop, the Debtors ask Judge Wizmur for a third
extension, through and including September 14, 2001, of their
exclusive period during which to file a plan of reorganization,
and a concomitant extension, through November 12, 2001, of their
exclusive period during which to solicit acceptances of that

The Debtors remind Judge Wizmur that creditors overwhelmingly
supported their Belgian Reorganization Plan.  While the Ieper
Commercial Court, sua sponte, declined to approve that plan, the
Concordat Proceeding is extended through September 30, 2001, to
allow L&H NV to file a revised Belgian Reorganization Plan by
September 10.

L&H's goals during the next 45 days on two continents are:

      (A) to propose a Belgian Reorganization Plan that the Ieper
          Commercial Court will find acceptable; and

      (B) to finalize the terms of a U.S. plan of reorganization
          that resolves the in-fighting among the Debtors'

Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell in
Wilmington, notes that long extensions of the exclusive periods
in are typical in multi-billion-dollar chapter 11 cases in
Delaware, pointing the Court's attention to In re Safety-Kleen
Corp., et al., Bankr. Case No. 00-2303 (PJW) (Bankr. D. Del. May
16, 2001) (extending exclusive periods to 14 months after the
petition date); In re Harnischfeger Industries, Inc., Bankr.
Case No. 99-2171 (PJW) (multiple extensions totaling 20 months);
In re Loewen Group Int'l, Inc., Bankr. Case. No. 99-1244 (PJW)
(exclusive periods extended for 19 months); In re Montgomery
Ward Holding Corp., Bankr. Case No. 97-1409 (PJW) (exclusive
periods extended for 21 months); In re Trans World Airlines,
Inc., Bankr. Case No. 02-115 (HSB) (exclusivity extended for
approximately 20 months).

Judge Wizmur will entertain the Debtors' request at a hearing on
August 7, 2001.  By application of Del.Bankr.L.R. 9006-2, the
Debtors' exclusive period during which to file a plan of
reorganization is automatically extended through the conclusion
of that hearing. (L&H/Dictaphone Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

LUCENT: Raises $1.75 Billion Through Preferred Stock Offering
Lucent Technologies (NYSE: LU) announced that, due to
substantial interest, it has raised approximately $1.75 billion
through its offering of redeemable convertible preferred stock,
which was priced at $1,000 per share.

The convertible preferred shares have an annual dividend rate of
8 percent and are convertible into Lucent common stock at a
conversion premium of 22 percent over the closing stock price of
$6.13 a share (convertible at a price of $7.48 per share).

Beginning in August 2006, the company has certain rights to
redeem the shares, and beginning August 2004 the holders have
certain rights to require the company to redeem the shares. The
shares have a mandatory redemption by the company in 30 years.

Lucent Technologies, headquartered in Murray Hill, N.J., USA,
designs and delivers the systems, software and services for
next-generation communications networks for service providers
and enterprises. Backed by the research and development of Bell
Labs, Lucent focuses on high-growth areas such as broadband and
mobile Internet infrastructure; communications software; Web-
based enterprise solutions that link private and public
networks; and professional network design and consulting

MARINER POST-ACUTE: Obtains Approval For River Hills Settlement
Mariner Post-Acute Network, Inc. sought and obtained the Court's
approval for a settlement agreement with SPTMNR Properties Trust
which, among other things, allowed for divestiture of twenty-two
skilled nursing facilities that the Debtors leased from SPTMNR.
The approval was given on or about May 10, 2000.

Accordingly, Debtor AMS Properties, Inc. ceased operating the
Facility located at 321 Riverside Drive, Pewaukee, Wisconsin
53072 (Medicare provider number 52-5040) and transferred
operations of the Facility in or around November 2000.

A hiccup occurred in the process related to Civil Monetary
Penalty and HCFA Claims. One of the relevant terms of the
Divestiture Settlement was that SPTMNR and its replacement
operator would not have any successor liability for any civil
monetary penalties that accrued prior to the date of the
transition of the Facility.  However, prepetition and prior to
the divestiture of the Facility, HCFA imposed a $500.oo per day
civil monetary penalty against the Facility for a period of 91
days beginning on April 16, 1998 (the CMP).

According to HCFA, the CMP was imposed based upon the results of
inspection s of the Facility performed by the Wisconsin
Department of Health and Family Services (WDHFS) in April and
June 1998. The total CMP assessed against the Facility is
$45,500.00 (the CMP Claim). AMS timely appealed the inspection
results and filed the CMP Appeal with the Department of Health
and Human Services Departmental Appeals Board, Civil Remedies
Division (C-98-535). The Administrative Law Judge of the Appeals
Board issued an order dismissing the case for 90 days and denied
further continuances in light of representations by the parties
on January 9, 2001 that they had settled the case subject only
to the approval of the U.S. Bankruptcy Court, which they
expected would require 60 days to secure. Judge Hughes of the
Appeals Board granted the parties leave within the time to
eithre re-file based on the Bankruptcy Court's rejection of the
settlement, or to demonstrate good cause to extend the time to
secure the Bankruptcy Court's approval.

Absent a global settlement of claims between the Debtors and
HCFA despite attempt to get one both pre-petition and post-
petition, the Debtors negotiated with HCFA for a settlement
agreement over the current issue, got it and presented it to the
Court for approval.

The Settlement Agreement provides for:

  (1) A reduction in the CMP Claim from $45,500 to $24,456.35;

  (2) Setoff of CMP Claim against prepetition underpayment and
      Prudent Buyer Claims of AMS;

  (3) Dismissal of CMP Appeal.

Judge Walrath has given her stamp of approval to the Settlement
by order dated June 1, 2001. Judge Walrath directs that,
notwithstanding anything to the contrary in the Settlement
Agreement, the offset rights granted to HCFA under the
Settlement Agreement will not apply to any funds from the
prudent buyer settlement with the facility known as Tarzana
Health Care Center (Provider No. 05-6124) until and unless the
Court enters a final order determining that such funds are not
held in constructive trust for NovaCare Holdings, Inc. (or its
predecessors or successors-in-interest) or that NCH is not
otherwise entitled to such funds. (Mariner Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)

MMH HOLDINGS: Memorandum of Law in Support of Plan
A memorandum of law in support of confirmation of the debtors'
second amended joint plan of reorganization, dated July 23,
2001, was filed with the US Bankruptcy Court, District of
Delaware.  Attorneys representing the debtors are Alan B. Hyman,
Jeffrey W. Levitan and Glenn S. Walter of Proskauer Rose
LLP, New York, NY and Teresa K.D. Currier of Klett Rooney Lieber
& Schorling, Delaware.

Pursuant to the plan, holders of allowed general unsecured
claims will receive their pro rata share of 800,000 shares of
New Holdings Common Stock, New Series A Warrants to purchase
500,000 shares of New Holdings Common Stock, New Series B
Warrants to purchase 500,000 shares of New Holdings Common
Stock, New Series C Warrants to purchase 750,000 shares of New
Holdings Common Stock and 25% of the amount to be received by
the debtors in respect of the Harnischfeger Claim after the
Harniscfeger Claim shall have been sold by the debtors and
reduced to cash.

Holders of Allowed Convenience Claims shall receive cash in an
amount equal to the lesser of 5% of such holder's Allowed
Convenience Claim and such holder's pro rata share of $300,000.

The memorandum asserts that the plan meets the requirements for
confirmation, and that the plan satisfies all of the seven
mandatory plan requirements contained in Section 1123(a) of the
Bankruptcy Code.

The plan provides for the substantive consolidation of the
debtors' estates, in that the debtors are all affiliated
entities, sharing common management, business operations and
long-term debt-structure under the Holdings' corporate umbrella
for tax and business purposes.

All impaired classes of claims have accepted the plan and the
plan provides for payment in full of all allowed priority

OWENS CORNING: Asks For Six-Month Extension of Exclusive Periods
Six more months of exclusivity are justified in these chapter 11
cases, Owens Corning tells Judge Fitzgerald, because:

     (A) these are large and complex cases;

     (B) the Debtors have made good-faith progress toward
         proposing a plan of reorganization; and

     (C) Owens Corning is not requesting this extension in order
         to pressure creditors to accede to any of the Debtors'

Specifically, the Debtors ask Judge Fitzgerald to extend their
exclusive period during which to file a plan of reorganization
through and including February 2, 2002, and grant a concomitant
extension of their exclusive period during which to solicit
acceptances of that plan through and including April 3, 2002.

Norman L. Pernick, Esq., at Saul Ewing LLP, tells Judge
Fitzgerald that Owens Corning's business has stabilized.  The
Debtors and the Creditors' Committees are working cooperatively.
The Debtors have started to analyze their asbestos-related
liability in the bankruptcy context.  And, Mr. Pernick adds, the
Company has "begun to discuss a preliminary strategy for the
development of a plan of reorganization" with someone.

To prematurely terminate the exclusive periods at this juncture,
Mr. Pernick warns, would deny the Debtors a meaningful
opportunity to negotiate with creditors and propose a
confirmable plan.  This would be antithetical to the purpose of
chapter 11.  Termination of the exclusive periods would lead to
the threat of multiple plans, unwarranted confrontations and
enormous administrative costs.  No party's legitimate interests
are prejudiced by a six-month extension of Owens Corning's
exclusive periods, Mr. Pernick asserts; to the contrary, the
extension will further the Debtors' efforts to preserve
value and avoid unnecessary and wasteful litigation.

Judge Fitzgerald will entertain the Debtors' request at a
hearing on August 28, 201 at 12:00 noon.  By application of
Del.Bankr.L.R. 9006-2, the Debtors' exclusive period during
which to file a plan of reorganization is automatically extended
through the conclusion of that August 28 hearing. (Owens Corning
Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

PACIFIC AEROSPACE: Delays $3.6 Million Interest Payment
Pacific Aerospace & Electronics, Inc. (Nasdaq: PCTH), a
diversified manufacturing company specializing in metal and
ceramic components and assemblies, said that it will not make a
scheduled $3.6 million interest payment on its outstanding
senior subordinated notes. Under the terms of the indenture
governing the notes, the Company has a 30-day grace period in
which to make the interest payment before an event of default

"We are working closely with our lenders, and we hope to reach a
debt restructuring plan with them soon," said Don Wright,
President and CEO of the Company.

The Company also announced that it has retained Jefferies &
Company, Inc. to act as its financial advisor.

If the Company determines that it will not be able to make the
interest payment by the end of the 30-day grace period, or if it
cannot reach an acceptable debt restructuring plan with its
lenders, the Company may be forced to seek protection from
creditors under the bankruptcy laws. In that event, the Company
would use its best efforts to negotiate with its creditors and
to reorganize the Company quickly, efficiently, and in a
manner aimed at obtaining a positive outcome and preventing
disruption for the Company's customers, suppliers, and

Pacific Aerospace & Electronics Inc. is an international
engineering and manufacturing company specializing in
technically demanding component designs and assemblies for
global leaders in the aerospace, defense, electronics, medical,
telecommunications, energy and transportation industries. The
Company utilizes specialized manufacturing techniques,
advanced materials science, process engineering and proprietary
technologies and processes to its competitive advantage. Pacific
Aerospace & Electronics has approximately 900 employees
worldwide and is organized into three operational groups -- U.S.
Aerospace, U.S. Electronics and European Aerospace. More
information may be obtained by contacting the company
directly or by visiting its Web site at

PACIFIC GAS: Frank Rombauer Cellars Seeks Relief From Stay
Frank Rombauer Cellars; Rombauer Vineyards, Inc.; Napa Cellars,
Inc.; Federal Insurance Company; and Vigilant Insurance Company
seek relief from the automatic stay to proceeding with a pending
State Court action against Pacific Gas and Electric Company.

Anthony B. Levin, Esq., at Shartsis Friese & Ginsberg,
represents the Vintners and Gerard P. Harney, Esq., at Cozen and
O'Connor in San Diego, representes the Insurers.

Mr. Harney relates that a fire in June 2000 destroyed a wine
storage warehouse. The premises was owned and occupied by the
Vintners and insured by the Insurers. A post-blaze investigation
showed that the fire began at a hot water heater, the fire
spread and caused an illegal pressure regulating valve venting
gas to explode. The valve installer selected and installed the
wrong valve, but, the Vintners and Insurers allege, PG&E failed
to discover and warn the occupants during its many visits to the
wine warehouse. (Pacific Gas Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

PG&E CORPORATION: Reports Second Quarter Financial Results
PG&E Corporation posted net income from operations of $243
million, or $0.67 per share, compared with $253 million, or
$0.69 per share, for the same quarter last year. Adjusting for
non-operating items related to the California energy crisis, the
Corporation reported total net income of $750 million, or $2.07
per share. Pacific Gas and Electric Company contributed
operating income of $175 million, or $0.48 per share, compared
with $216 million, or $0.59 per share, last year.

PG&E National Energy Group grew operating results to $71
million, or $0.19 per share, for the quarter, compared with $37
million, or $0.10 per share, in the second quarter of 2000.
PG&E Corporation (NYSE:PCG) today reported second-quarter net
income from operations of $243 million, or $0.67 per share,
compared with $253 million, or $0.69 per share, for the same
quarter last year. Total net income for the quarter was $750
million, reflecting the impact of several non-operating

Income from operations at Pacific Gas and Electric Company, the
Corporation's utility business, was $175 million, or $0.48 per
share, compared with $216 million, or $0.59 per share, last
year. The lower operating results primarily reflect the reduced
capacity factor for Unit 2 at the company's Diablo Canyon
Nuclear Power Plant, which was off-line for 29 days during the
quarter for regularly scheduled refueling and maintenance
work, compared with no refueling outage in the second quarter of
last year.

Income from operations at PG&E National Energy Group grew to $71
million, or $0.19 per share, for the quarter, compared with $37
million, or $0.10 per share, in the second quarter of 2000. The
results reflected particularly strong performance in the
integrated energy and marketing segment of the business.
Performance was strong in the natural gas pipeline segment in
the Northwest as well.

"The Corporation's operating results show that the underlying
performance of our business remains solid," said PG&E
Corporation Chairman, CEO and President Robert D. Glynn, Jr.
"Pacific Gas and Electric is responding to the operational
demands of the energy crisis, and our National Energy Group
is continuing to grow its contribution to our bottom line."

                     Total Net Income

PG&E Corporation reported total net income of $750 million, or
$2.07 per share, compared with $248 million, or $0.68 per share,
for the same quarter of 2000. The substantial increase over the
same period from the prior year is attributable to various non-
operating items affecting results for the quarter. Most
significantly, as reported in a filing earlier this week with
the Securities and Exchange Commission, these include $552
million in non-operating income offsetting a portion of the
charges previously recorded for unrecovered wholesale power and
transition costs at Pacific Gas and Electric Company.

The $552 million offset primarily reflects the following two

Accounting for the value of certain bilateral power contracts
that were terminated by the counterparties, who were entitled to
do so in the event of a decline in the utility's credit quality.
The contracts require that the market value of the contracts be
settled upon termination. The estimated value of the contracts
is reflected as a non-operating item.

Accounting for the actual charges from the ISO for power the ISO
purchased in March, which were lower than the estimated amounts
the company recorded in the first quarter based on available
information at the time. The difference between the estimated
charges and the actual charges is reflected as a non-operating
item for the second quarter offsetting previously
recorded power purchase costs.

Further, Pacific Gas and Electric Company's second quarter
results do not include any ISO charges for purchases and related
services after April 6, the date on which the Federal Energy
Regulatory Commission reaffirmed its ruling that the ISO cannot
bill non-creditworthy parties for power purchases. The company
continues to assert that it is not responsible for ISO purchases
made during the majority of the first quarter. However,
accounting rules required that the company estimate and record
those charges in its first quarter results, pending resolution
of the issue.

Even with the positive impact of these offsets in the second
quarter, however, the company estimates that its net
undercollection remains at approximately $4.7 billion after tax,
as a result of charges recorded in the fourth quarter of 2000
and the first quarter of 2001.

      Accomplishments at Pacific Gas and Electric Company

The success of the refueling outage at Diablo Canyon, which was
the shortest in the facility's history, was one of a number of
operational accomplishments throughout the utility during the
quarter in preparation for the summer. These other
accomplishments included increasing customer energy
efficiency programs, and enhancing various systems and
procedures related to plan for and manage potential rotating
outages. The utility also worked with 10 generators to
interconnect more than 1,000 additional megawatts to the
electric transmission grid this summer, and it signed agreements
with more than 130 QF power generators to lock in power
deliveries at fixed costs, helping to protect customers against
swings in wholesale market prices.

       Accomplishments at PG&E National Energy Group

In addition to strong earnings performance, the PG&E NEG
completed two important financings during the second quarter.
Specifically, the unit sold $1 billion of 10-year notes in a
private placement, and it obtained a new $550 million senior
letter of credit and revolving credit facility. The
financings will be used by the unit to invest in generating and
pipeline assets, and to support its energy trading activities
and fund working capital requirements.

Second quarter accomplishments also included further progress in
developing and building the unit's portfolio of controlled
megawatts. Commercial operations began in June at the 526-
megawatt (MW) Attala power plant in Mississippi and at the final
unit of the 144-MW multi-unit peaking facility in Ohio. Also in
June, PG&E NEG began construction on the 1,080-MW Athens
plant in New York and the 111-MW Plains End facility in
Colorado. In addition, an agreement was announced in June
between the PG&E NEG and the city of Denton, Texas, under which
the company acquired a 178-MW generating facility and agreed to
a power sales contract with the city. The various projects grew
the company's total electric generation portfolio to
approximately 7,000 MW in operation and approximately 5,700 MW
currently under construction.

In its natural gas pipeline operations, during the second
quarter the PG&E NEG completed two open seasons for new
capacity. The unit expects the open seasons will lead to
capacity expansions and extensions of its Northwest

"The earnings growth in the PG&E National Energy Group and its
success in securing new capital show that this business is
strong and on track with executing its growth strategy," said

PAYLESS CASHWAYS: Says Vendor Support Is Improving
Payless Cashways, Inc. (OTC Bulletin Board: PCSH) officials have
announced that the company's overall vendor support continues to
improve following the finalization of its debtor- in-possession
financing agreement on July 19. Congress Financial Corporation
is the agent bank in a one-year facility that started at $160
million, and reduces to $130 million in 120 days, after the
company has completed a downsizing initiative.

At the company's Lee's Summit headquarters on Tuesday, about 190
vendor representatives were provided with an update by the
company's senior management team. Following the hour-and-a-half
meeting, Payless' management team conducted an informal question
and answer session for the group.

"I am encouraged by the improving level of support we are
receiving from our vendors," Millard Barron, Payless Cashways
president and chief executive officer said. "I believe the
turnout and level of participation in today's meeting
demonstrates the interest in and importance of Payless Cashways'
success to the vendor community. Since the announcement of our
debtor-in-possession agreement in principle, more than 200
vendors have extended payables terms -- and that continues to
increase daily. Enthusiastic vendor support over the last two
and a half years has been critical to the progress we made prior
to last winter. Those relationships continue to be a critical
requirement to our reorganization process."

On July 19, the United States Bankruptcy Court for the Western
District of Missouri authorized Payless' store closing and
corporate downsizing plan. As a result, 39 stores are now
holding store closing sales. At the corporate office, the
downsizing plan projects a 75 percent reduction in corporate
overhead expenses by the end of August. The company's
distribution centers and manufacturing operations will be
reduced by 50 percent and cash proceeds from those asset sales
will be used to further reduce the company's debt. As
a result of these strategic actions, the company presently
anticipates that its third quarter 2001 results will include
non-recurring, special charges of approximately $33-37 million,
net of taxes, to provide for corporate and store staff
eliminations and certain fixed-asset and inventory disposal
costs associated with the consolidation and closure of these
retail locations.

"Although filing for Chapter 11 protection was not something we
ever wanted to do, we are taking the aggressive steps we believe
are necessary to best position the company for a successful
future," Barron continued. "Obviously we are facing a tremendous
challenge, however, I am encouraged that we can successfully
execute our business plan with reasonable levels of vendor
support. We will continue to execute our mission statement,
which is organized around the professional builder, remodel and
repair contractor, institutional buyer, and heavy project-
oriented consumer. Our 73-store company will generate
approximately $500 million in annual sales revenue, and our
profit model should deliver a five to six percent EBITDA from a
65 percent professional and a 35 percent do-it-yourselfer blend
of sales. As a result, our smaller company should be cash flow
positive and profitable, with a much healthier balance sheet and
total debt levels below $120 million. This is a difficult
process for our employees, our vendors, our lenders, our
stockholders, and our customers, however, this direction is
clearly in the best interests of all these constituencies at
this time."

Payless Cashways, Inc. is a full-line building materials and
finishing products company that focuses on professional
builders, remodel and repair contractors, institutional buyers
and heavy project-oriented consumers. The company operates 73
retail stores in 13 Midwest, Southwest, Pacific Coast
and Rocky Mountain States, under the names Payless Cashways,
Furrow, Lumberjack, and Hugh M. Woods. The company also operates
three manufacturing plants.

PILLOWTEX: U.S. Trustee Draws Battle Lines with Jones Day
Patricia Staiano, the United States Trustee for Region III,
contends that the Bankruptcy Court must deny Pillowtex
Corporation's application to employ Jones, Day, Reavis & Pogue
as its legal counsel on the grounds that:

     (a) JDR&P received payments before the filing of the
         petition which were voidable as preferences under
         Section 547 of the Bankruptcy Code.  As a result of
         these payments, Jones Day is not a disinterested person
         and cannot be retained to represent the debtors in

     (b) JDR&P did not adequately disclose in its application and
         related papers its receipt of preferential transfers and
         therefore its retention should not be approved.

Joseph J. McMahon, Jr., Esq., on behalf of the US Trustee, has
learned through extensive discovery that the Debtors paid at
least $897,569.38 to JDR&P between August 16, 2000 (the
Preference Date) and the Petition Date.  On September 11, 2000,
Debtors paid JDR&P $78,652.96.  On November 3, 2000, the Debtors
paid JDR&P $40,759.09. On November 10, 2000, the Debtors paid
JDR&P $778,157.33.  Finally, on November 13, 2000, JDR&P drew
against a $300,000 retainer paid to it that day by the Debtors.
While the amount of this draw is unclear, the US Trustee
believes it to have been approximately $90,000.

Mr. McMahon argues that each of the payments was to or for the
benefit of JDR&P, a creditor of the Debtors.  Mr. McMahon
further alleges that each of these payments was for or on
account of an antecedent debt owed by one or more of the debtors
before the payment was made.  Mr. McMahon notes that each of the
payments was made while the Debtors were insolvent.  During the
90 days prior to the date of the order for relief, the Debtors
are presumed to have been insolvent.

According to Mr. McMahon, each of the payments enabled JDR&P to
received more than it would have received if the case were a
case under Chapter 7, the payment had not been made, and JDR&P
received payment of its debt to the extent provided by the
Bankruptcy Code

The US Trustee believes that the November 10 payment included
$200,000 to be applied by JDR&P toward payment for services
performed by them between November 1 and the Petition Date.
"The US Trustee concedes that the $200,000 payment was not a
preferential transfer to the extent that it was applied to pay
for services rendered between November 10 and the Petition
Date," Mr. McMahon says.  The US Trustee believes that JDR&P was
paid $99,142.75 for services rendered during this period, Mr.
McMahon adds.

Mr. McMahon notes that under section 547(c) of 11 U.S.C.,
certain transfers that would otherwise be voidable as
preferences are not subject to avoidance.  Mr. McMahon contends
that JDR&P bears the burden of proving the nonavoidability of
these transfers.  The US Trustee concludes that any defense
JDR&P could apply to the avoidance of the payments in question
is limited, and the JDR&P has received voidable preferences of
at least $545,000 plus the amount that it drew against its
$300,000 retainer for services rendered before the retainer was

                     Judge Robinson Rules

But the Delaware Bankruptcy Court overruled the US Trustee's
objection.  Judge Robinson finds that the employment of Jones
Day is in the best interests of the Debtors and their respective
estates and creditors.  Judge Robinson authorized the Debtors to
retain and employ Jones Day as their counsel in these Chapter 11
cases, pursuant to section 327 of the Bankruptcy Code, nunc pro
tunc as of the Petition Date.

           The UST Takes a Trip to the Third Circuit

Asserting that Judge Robinson erred in her decision, the United
States Trustee filed a Notice of Appeal in the Debtors' chapter
11 cases indicating her intention to appeal the United States
Court of Appeals for the Third Circuit from District Court Judge
Robinson's Order approving Pillowtex's application to employ
Jones, Day, Reavis & Pogue as its legal counsel.

The Third Circuit received the U.S. Trustee's appeal and the
Clerk has assigned Docket No. 01-2775 to the proceeding.
(Pillowtex Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PSINET INC.: Global Crossing Moves To Compel CPA Decision
Global Crossing USA, Inc., represented by McCarter & English,
LLP, moves the Court for the entry of an Order, pursuant to 11
U.S.C. section 365(d) either:

(a) compelling Debtor PSINetworks Inc. to assume or reject the
     Capacity Purchase Agreement dated December 23, 1999 or, in
     the alternative,

(b) granting Global relief from the automatic stay pursuant to
     11 U.S.C. 362(d)(1) to permit Global to terminate the
     Capacity Purchase Agreement, or in the alternative,

(c) requiring the Debtor to provide adequate protection of
     performance in the post-petition period in the form of
     timely payment and superpriority administrative claim status
     for any untimely payments.

The CPA provides the Debtor with the right to use certain
capacity on Global's fiber optic cable network, referred to in
the CPA as the "indefeasible right to use," or "IRU". In
addition, Global provides operational and maintenance support
for the IRUs used by the Debtor on Global's network.

Global Crossing seeks the relief on the basis that the Debtor
has allegedly defaulted on payment both prepetition and

Global notes that the Debtors have sought and obtained approval
from the Court to pay Critical Vendors for prepetition service
as protection for the continuation of service postpetition and
Global seems to be the only Vendor that is left with no
protection for payments for prepetition service. It is also the
only contract party that terminated service prepetition and
agreed to assist the Debtor based upon its various
representations, Global tells the Court. Global relates to the
Court a series of events with respect to this:

      -- By letter dated May 30, 2001, Global advised the Debtor
that it had failed to cure the payment default noticed and if
payment was not received by 12:00 noon on May 31, 2001, Global
would immediately suspend service on the three circuits
providing the Latin America Capacity.

      -- By 12:00 noon on May 31, 2001, Global had not received

      -- By approximately 2 p.m. on May 31, 2001, all service on
the three circuits providing the Latin America Capacity was
taken down.

      -- About two hours later, the Debtor phoned Global and
advised that a wire transfer of funds in the amount of
$2,033,577 had been sent to Global's account.

      -- At approximately 7:00 p.m. the same day, the Debtor
filed its chapter 11 petition.

      -- Immediately after the filing, the Debtor contacted
Global and requested that Global reinstate service on three
circuits making up the Latin America Capacity. The Debtor took
the position that its post-termination payment of the first
installment required Global to restore service on those
circuits. Global advised the Debtor that it had no obligation to
acquiesce to the Debtor's request as it had properly exercised
its rights and remedies under the express provision of the CPA
and had terminated the CPA in accordance with its terms prior to
the filing of the bankruptcy petition.

      -- Discussions followed. The Debtor represented that it
desperately needed the service turned up on the Latin American
Capacity. In order to induce Global to provide service on these
circuits, the Debtor and its bankruptcy counsel represented to
Global that: (a) the Debtor had in fact wired a $2,033,577
payment pre-petition, (b) the Debtor would take action to shield
the pre- petition payment from a preference attack by having
Global deemed a "critical vendor" and (c) the Debtor could take
action to obtain an order authorizing the payment of all pre-
petition sums due.

      -- In reliance on the Debtor's representations, Global
accepted the Debtor's proposal and restored service on the three
circuits at issue by 8:00 a.m. on June 1, 2001. In exchange the
Debtor promised that it had in fact wired a payment the previous
day and that it would obtain authority to pay all pre-petition
sums due Global.

      -- In connection with its "first day order" applications,
the Debtor filed a motion seeking to pay Global Crossing as a
Critical Trade Vendor on an ex-parte basis. According to the
Debtor, the Court was unwillingly to consider the motion ex
parte, and instructed the Debtor to bring the motion on
notice once an unsecured creditors' committee was appointed.

      -- Later, on or about June 4, 2001, the Debtor demanded
that Global return the prepetition payment of $2,033,577 wired
to Global. The Debtor threatened that, if the payment was not
returned then it would not prosecute the Critical Vendor Motion.

      -- The Debtor now contends that, at the time it entered the
June 1st Agreement, it believed that Global had "rejected" the
money, and that it could not comply with the June 1st Agreement
unless and until the money was returned.

      -- The Debtor's Committee was appointed on June 8, 2001.
The Debtor refused to prosecute its Critical Vendor Motion
because it believes the Committee does not approve.

As a result, the situation now, Global notes, is that, "the most
critical vendor that turned up service in good faith in reliance
on the Debtor's promises, and without awaiting an order, is now
the only vendor not getting protection for payment for
prepetition service.

Global tells the Court that the relief requested is well
justified considering that:

(1) The Debtor has outstanding performance obligations under the
     CPA - the Debtor has defaulted on all of its prepetition and
     postpetition obligations to Global. Specifically, the Debtor
     failed to pay the next installment, due on April 27, 2001,
     in the amount of $2,033,577. Thus, the Debtor currently owes
     pre- petition sums under the CPA of at least $2,033,577.

(2) All other Critical Vendors were paid for prepetition service
     as protection for the continuation of service postpetition.
     It also appears that other vendors received payment for
     their entire prepetition arrearage as protection.

(3) This is particularly egregious insofar as the Debtor induced
     Global to restore the Capacity post-petition, and because of
     the automatic stay, Global is now precluded from terminating
     the Latin America Capacity notwithstanding the Debtor's
     failure to perform as promised.

(4) The Debtor should not be permitted to enjoy the benefits of
     the CPA without bearing the burdens.

(5) Because Global turned up service in reliance upon promises
     of protection consistent with that to be afforded other
     critical vendors, it should now be permitted to terminate
     service in light of the Debtor's failure to prosecute.

(6) At best, the Debtor's rationale for refusing to perform as
     promised establishes a mutual mistake. Even if true, the
     Debtor should not be permitted to gain the unilateral
     benefits of such mistake and shift the entire risk to

(7) Termination of the automatic stay for cause is appropriate
     in order to allow Global to terminate the CPA and the Latin
     America Capacity, andn to place the parties in essentially
     the same position they were in prior to the entry of the
     postpetition agreement.

(8) Global should be entitled to the benefit of the June 1
     Agreement and the Debtor should be required to pay Global
     for prepetition services.

(9) Equity dictates that the parties be put back to their
     positions before the June 1st Agreement was entered.

(PSINet Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

RELIANCE GROUP: Hearing on Motion to Dismiss Set for August 8
William Taylor, Deputy Insurance Commissioner of the
Commonwealth of Pennsylvania, steps Judge Gonzalez through the
statutory and regulatory framework that underpins the
Commissioner's motion to dismiss Reliance Group Holdings, Inc.'s
chapter 11 cases.

Mr. Taylor explains that the General Assembly assigned to the
Insurance Department of the Commonwealth of Pennsylvania the
task of overseeing the regulation of the industry and the
responsibility of executing the insurance laws of the
Commonwealth. See generally Foster v. Mutual Fire, Marine and
Inland Ins. Co., 521 Pa. 598, 614 A.D.2d 1086 (1992), and
Maleski v. Conning, 1995 WL 570466 (E.D. Pa.) (recognizing the
Commonwealth Court as a specialized tribunal for regulating the
insurance industry).

Based on Pennsylvania statutes, the Rehabilitator's powers and
duties include:

       (a) operating the insurer, with all of the powers of its
           officers, directors and managers;

       (b) bringing actions against any person, if it appears
           there has been wrongdoing detrimental to the insurer;

       (c) creating and submitting a plan of rehabilitation;

       (d) avoiding fraudulent transfers; and

       (e) taking any other action deemed "necessary or
           expedient" to correct the condition which led to the
           entry of an order of rehabilitation.

The Insurance Act of Pennsylvania, as it governs rehabilitation
and liquidation of insurance companies, sets forth, as a matter
of public policy, priorities as to the rights and claims of
various parties. The regulatory and statutory scheme under the
Insurance Act is designed with the principal public policy of
protecting policyholders (above creditors and others). Unlike
the priority scheme under the Bankruptcy Code, although
administrative claims are a first priority, claims of
policyholders have a higher priority of payment than tax

The Rehabilitator is aware of approximately 200,000 pending and
reported policyholder insurance claims having claims exposure of
$3.8 billion, and another $3.5 billion of incurred but not
reported (IBNR) exposure to policyholder claims and
approximately $1.4 billion in claims of other insurance
companies that RIC reinsured, for a combined exposure of $8.7
billion. These figures are based upon the reserves or liability
of the company established by both claims experts and actuarial
determinations of the liabilities.

Mr. Taylor asserts that the payment upstreamed from RIC to RGH,
discussed in the original filing by Ms. Koken, was wrongfully
obtained and was not disclosed to the insurance regulators until
December 2000.  It was taken at a time when RIC's capital was
impaired to a degree that would require the regulators' consent
to a dividend. Indeed, the Debtors were aware of the consent
requirement, as it sought to make a $200,000,000 dividend in
June 2000, and consent was appropriately denied. The timing of
this distribution suspiciously coincided with a payment due to
the Debtors' bank group in August 2000.

Michael Z. Brownstein Esq., of Blank, Rome, Tenzer & Greenblatt
reminds interested parties that a hearing on the motion to
dismiss is scheduled for August 8, 2001 at 10:00 a.m. in
Courtroom 617.  (Reliance Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

STANDARD AUTOMOTIVE: PNC Bank Issues Acceleration Notice
Standard Automotive Corporation (AMEX: AJX - news) announced
that it had received an acceleration notice from PNC Bank,
National Association, the administrative agent under Standard's
senior secured credit facility, terminating the commitments to
make loans under the facility and declaring all amounts due
under the facility, approximately $91 million at June 30,
2001, excluding costs and legal fees, to be immediately due and

Standard has been in default of certain financial covenants
under the credit facility since December 2000. In addition,
Standard failed to make scheduled interest and principal
payments totaling approximately $2.8 million and $4.2
million under the credit facility on March 31, 2001 and July 2,
2001, respectively, which constituted additional events of
default thereunder. From May 21, 2001 to July 17, 2001, Standard
and the bank lenders under the credit facility had been
operating under the terms of a forbearance agreement pursuant to
which the banks had agreed to refrain from exercising
their remedies under the credit facility until such date. During
the forebearance period, and since then, Standard has been
engaged in efforts to obtain additional financing to facilitate
a restructuring of Standard's existing indebtedness.

The credit facility is secured by substantially all of
Standard's assets, including bank accounts and receivables.
According to the notice of acceleration, if the amounts due are
not paid by today, the administrative agent and the banks under
the credit facility reserve their rights without further notice
to exercise all of their rights and remedies under the credit
facility documents, including but not limited to collecting
receivables owed to Standard and its subsidiaries directly from
the parties owing such amounts, taking control of and voting and
managing all or part of the pledged stock of Standard's
subsidiaries and instituting suit, including foreclosure
actions, to collect the debt as well as costs and legal fees. In
the event that the banks were to take the foregoing actions,
Standard's ability to operate its business would be severely
impaired and, in all likelihood, Standard would be required to
seek protection from its creditors to continue its operations,
which could involve Standard filing for bankruptcy protection in
the United States and possibly Canada and Mexico where Standard
has operations.

Standard Automotive Corporation is a diversified company with
production facilities located throughout the United States,
Canada, and Mexico. Standard manufactures precision products for
the aerospace, nuclear, industrial and defense markets; it
designs and builds remotely operated systems used in
contaminated waste cleanup; it designs and manufacturers
trailer chassis used in transporting maritime and railroad
shipping containers; and it builds a broad line of specialized
dump truck bodies, dump trailers, and related products. Through
its Providence Group, Standard provides engineering professional
services to both government and commercial industry.

STRUCTURED ASSET: Fitch Downgrades Certificates to B and CCC
Fitch lowers its ratings of the following Structured Asset
Securities Corporation's mortgage pass-through certificates:
SASCO 1996-4, class B4 ($1,276,499 outstanding), rated 'BB' is
downgraded to 'B', Rating Watch-Negative;

SASCO 1996-4, class B5 ($365,322 outstanding), rated 'B' is
downgraded to 'CCC'.

The action is the result of a review of the level of losses
incurred to date and the current high delinquencies relative to
the applicable credit support levels. As of the June 25, 2001

SASCO 1996-4 remittance information indicates that 12.54% of the
pool is over 90 days delinquent, and cumulative losses are
$1,723,624 or 2.01% of the initial pool. Class B4 currently has
1.26% of credit support, and class B5 currently has 0.11% of
credit support remaining.

SUN HEALTHCARE: Rejects New River Facility Lease
In connection with the long term care facility commonly known as
SunBridge Care and Rehabilitation for New River Valley located
at 5872 Hanks Street, Dublin, Virginia, Sun Healthcare Group,
Inc. sought and obtained the Court's approval of

(1) Rejection of the Facility Lease and Medicaid Provider

(2) Assumption and assignment of Medicare Provider Agreement;

(3) Entry into Lease Termination Agreement and Operations
     Transfer Agreement.

The Debtors then filed a notice of the Operations Transfer
Agreement, pursuant to the Court-approved "Procedures for the
Disposition of Healthcare Facilities and the Related Leases and
Provider Agreements". The major points of the notice are as

       * Annual savings from transfer: $422,592
       * Sales price of inventory: $5,000.00
       * Lease rejection damage claim: $186,646
       * Pre-petition employee claims: Debtors shall pay directly
         to employees
       * Landord: Highland Ridge Rehab Center, L.L.C.
       * Proposed New Operator: Highland Ridge Rehab Center,
       * Effective Date: June 30, 2001, or such later date on
         which conditions to transfer are satisfied
       * Treatment of Medicare Provider Agreement: reject
       * New Operator's Share of HCFA Global Settlement: $13,300

(Sun Healthcare Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

SURGE COMPONENTS: Receives Notice Of Non-Compliance From Nasdaq
Surge Components, Inc. (NASDAQ SC: SPRS; Boston Stock Exchange:
SRD) announced that the Company has received notification from
the staff of The Nasdaq Stock Market that it is not in
compliance with the maintenance requirements of the Nasdaq
SmallCap Market. There can be no assurance that Surge will be
able to achieve compliance with Nasdaq's requirements and that
its common stock will remain listed on the Nasdaq SmallCap
Market. The effects of delisting would include more limited
information as to the market prices of Surge's common stock,
less liquidity for its common stock and less news coverage of
Surge. Delisting may adversely affect investors' interest in
Surge's securities and materially adversely affect the trading
market and prices for such securities and Surge's ability to
issue additional securities or to secure additional financing.
The maintenance requirement issue is in addition to the
previously disclosed Nasdaq inquiry as to the "questionable"

The Company also announced the resignation of James A. Miller
and Election of Lawrence Chariton to the Board of Directors

Effective as of July 25, 2001, James A. Miller has resigned his
position as a member of the Board of Directors.

Mr. Miller cited the lack of appropriate or relevant information
given to him, specifically the filing of Surge's last two
quarterly reports without his advice, review or approval, as
reasons for his resignation. Surge disputes this contention and
has correspondence between Ira Levy, President of Surge, and Mr.
Miller, which evidences Mr. Miller's receipt and opportunity to
comment on Surge's last quarterly report prior to the filing
of such quarterly report.

Surge also announced that on August 1, 2001, Lawrence Chariton
was elected as a member of the Board of Directors to fill the
vacancy left by Mr. Miller's resignation. Mr. Chariton graduated
Hofstra University in 1979 with a Bachelor's Degree in
accounting. For the last 25 years, Mr. Chariton has worked as a
sales manager for Linda Shop, a retail jewelry business, and is
involved in charitable organizations benefitting the State of

                     About the Company

Surge Components, Inc. is a supplier of electronic products and
components. These products include capacitors and discrete
components. The Company's products are typically utilized in the
electronic circuitry of diverse products, including automobiles,
cellular telephones, computers, consumer electronics, garage
door openers, household appliances, power supplies and
smoke detectors. Surge's products are sold to both original
equipment manufacturers and to distributors of Surge's product

The Company's Challenge/Surge, Inc. subsidiary engages in the
electronic components and products broker distribution business.
Challenge purchases name brand electronic components and
products, typically from domestic manufacturers and authorized
distributors, to fill specific customer orders. These devices
are typically utilized in a number of diverse products,
including automobiles, cellular telephones, computers, consumer
electronics, garage door openers, household appliances, power
supplies and smoke detectors. Challenge purchases these
components and products in the open market on the best available
terms and generally keeps small inventories. Challenge's
revenues are principally derived from the mark-up on the sale of
these products. During the latter part of 1999, Challenge began
selling new audible product lines which require maintaining
higher inventory levels for these speaker, fan and buzzer
products. Challenge has added sales representative organizations
throughout the United States, as well as some distributors, to
help develop this new line of business.

TITANIUM METALS: Reports Second Quarter Losses
Titanium Metals Corporation (NYSE: TIE) reported a loss before
special items for the second quarter of 2001 of $2.3 million,
compared to a loss before special items in the second quarter of
2000 of $10.1 million. TIMET's net income for the second quarter
of 2001 was $29.6 million, compared to a net loss of $9.5
million, for the same quarter in 2000.

Sales of $120.0 million in the second quarter of 2001 were 10%
higher than the year-ago period. This resulted principally from
the net effects of a 5% increase in mill product sales volume, a
3% decrease in mill product selling prices (expressed in U.S.
dollars using actual foreign currency exchange rates prevailing
during the respective periods) and changes in product mix. In
billing currencies (which exclude the effects of foreign
currency translation), mill product selling prices decreased 1%.
Melted product (ingot and slab) sales volume increased 15% and
melted product selling prices increased 4% from year-ago levels.
As compared to the first quarter of 2001, sales were slightly
lower reflecting a 4% decrease in mill product sales volume, a
1% increase in mill product selling prices (expressed in U.S.
dollars), and changes in product mix. In billing currencies,
mill product selling prices increased 2%. Melted product sales
volume in the second quarter of 2001 increased 1% compared to
the first quarter of 2001, while selling prices increased 2%.
TIMET's backlog at June 30, 2001 was approximately $300 million,
compared to $290 million at March 31, 2001 and $160 million at
June 30, 2000.

As previously reported, the Company reached a settlement in
April 2001 of the litigation between TIMET and Boeing related to
the parties' 1997 long term purchase and supply agreement.
TIMET's results for the second quarter of 2001 includ pre-ta
income related to the Boeing settlement of $62.7 million. Of
this amount, $73.0 million ($82.0 million cash received at
settlement less $9.0 million of legal fees) is reported as other
operating income and $10.3 million of related profit sharing and
other costs is included as a component of selling, general,
administrative and development expense.

The Company recently completed a study of certain manufacturing
assets and determined that such assets have been impaired.
Accordingly, the Company recorded a pretax impairment charge to
cost of sales of $10.8 million in the second quarter of 2001.
The Company also completed an assessment to estimate the range
of loss it might incur in connection with the previously
reported tungsten matter. As a result, the Company recorded an
additional estimated pretax charge to cost of sales of $2.8
million in the second quarter of 2001 related to this matter.
J. Landis Martin, Chairman and CEO of TIMET said "Operating
results in the second quarter of 2001, before special items,
continued to improve in line with our expectations. Selling
price increases and higher operating levels are driving margin
improvement that should allow TIMET to return to operating
profitability. We expect shipments to increase through the
balance of this year, particularly for aerospace quality
titanium products, and are opening discussions with our
customers on non-LTA orders for delivery in 2002."

TRANSFINANCIAL: Releases Second-Quarter Results
TransFinancial Holdings, Inc. (AMEX:TFH), a holding company with
operating businesses in financial services, reported results for
the second quarter and the six months ended June 30, 2001.

TransFinancial reported a second-quarter 2001 consolidated net
income on continuing operations of $467,000, or $0.14 per share,
on operating revenues of $3.9 million. For the second quarter of
2000, TransFinancial reported a consolidated net loss on
continuing operations of $1,133,000, or $0.31 per share, on
operating revenues of $1.3 million. The net loss on discontinued
operations for the second quarter of 2000 was $2,423,000, or
$0.74 per share. For the first six months of 2001,
TransFinancial reported a consolidated net income on continuing
operations of $832,000, or $0.25 per share, on operating
revenues of $7.5 million. The net loss on discontinued
operations for the first six months of 2001 was $2,050,000, or
$0.62 per share. For the first six months of 2000,
TransFinancial reported a consolidated net loss on continuing
operations of $1,273,000, or $0.39 per share, on operating
revenues of $3.2 million. Discontinued operations reported a net
loss of $5,751,000, or $1.75 per share, for the first six
months of 2000.

TransFinancial's discontinued operations, Crouse Cartage Company
and Specialized Transport, Inc., are being liquidated outside
bankruptcy, but have established independent advisory committees
of creditors and are following the general processes and
procedures defined under the federal bankruptcy code. The
Company's ability to continue as a going concern is ultimately
dependent on its ability to successfully liquidate the
transportation operations and settle claims against the Company
arising from the transportation operations at amounts within the
Company's reserves. Additional information is contained in the
Company's Form 10-Q for the fiscal quarter ended June 30, 2001,
filed with the Securities and Exchange Commission.

TransFinancial reported the potential write-down of all or
substantially all of the company's recorded goodwill as a result
of a recently approved accounting standard. This standard would
become effective for the Company on January 1, 2002. Under the
new standard, any portion of goodwill which would cause the
total recorded value of a company to be in excess of the "fair
value" of that company must be recognized as a loss. Management
believes this standard may require the Company to record a
charge to earnings of approximately $8 million.

TransFinancial also announced the resignation of Timothy P.
O'Neil as director, president and CEO. Mr. William D. Cox,
Chairman, will assume the additional responsibilities of
president and CEO. "TransFinancial intends to substantially
reduce its overhead costs, including those associated with
management, directors and insurance, to assist the Company in
conserving capital and improve profitability," said Mr. Cox. In
addition Mr. Cox stated, "The annual meeting of TransFinancial
shareholders has now been set for October 19, 2001, in Lenexa,

VENCOR, INC.: Van Kampen Seeks Reimbursement Of Expenses
Van Kampen Funds (f/k/a Van Kampen American Capital), one of the
prepetition lenders and a substantial creditor in the Vencor,
Inc. cases, seeks reimbursement of $689,592.84, of which

      *  $646,121.65 is for professional fees and reimbursement
         of expenses in connection with its representatives
         Hopkins & Sutter,

      *  $21,353.54 for professional fees and reimbursement of
         expenses in connection with its representative Kaye and
         Scholer, and

      *  $22,117.65 in expenses directly incurred by Van Kampen
         (primarily for travel, lodging and food expenses.)

Van Kampen Funds acted in its matter in its capacity as one of
the largest holders of the Senior Debt Claims, and as co-
chairman of the Bank Steering Committee.

Patricia A. Staiano, the United States Trustee for Region 3,
offers the following objections:

(1) The application contains no documentation identifying the
     expenses incurred by Van Kampen for travel, lodging and
     food expenses;

(2) While Section 503(b)(3) allows reasonable compensation
     rendered by a creditor in making a substantial contribution
     in a chapter 11 case, the application fails to identify any
     extraordinary contributions provided by Van Kampen or its
     counsel in this matter other than what is expected in the
     ordinary course of business;

(3) To the extent that Applicant seeks reimbursement pursuant to
     11 U.S.C. Section 503(b)(3) or (4), Applicant must still
     comply with Local Rule 2016-2 in connection with the
     application, but the application does not comply with the
     Local Rule;

(4) The application contains line items that fail to impart
     sufficient information to allow a reviewer to determine the
     reasonableness of the compensation. The application
     constains no daily logs indicating the tasks performed by
     either counsel for the applicant;

(5) The application contains requests for reimbursement of
     counsel expenses without identifying or documenting the
     expenses incurred. The application does not explain why
     these expenses were necessary.

(6) The positions of individuals providing services, their rates
     of compensation and the number of hours worked are not

(7) The application does not identify any rates charged for

                 Supplement and Modification
                 to Application of Van Kampen

In response to the UST's objection, Van Kampen filed its
Supplement and Modification to Application for Reimbursement of
Expenses Pursuant to Sections 503(b)(3) and 503(b)(4) of the
Bankruptcy Code. In the Supplement and Modification, Van Kampen
seeks the Court's order determining that (1) Van Kampen has made
a substantial contribution to the chapter 11 cases; (2) awarding
it reimbursement in the amount of $474,288.33.

The Supplement and Modification also contains Summary Sheets
each pertaining to (i) Hopkins and Sutter's and (ii) Kaye
Scholer LLP, showing a Summary of Time Recorded in Connection
with the Rendition of Services to Van Kamper for the Period from
September 13, 1999 through January 14, 2001.

With respect to Hopkins and Sutter, the amount of fees sought is
$380,885.25. Reimbursable Expenses incurred by Hopkins total
$49,931.89. The Blended Hourly Rate for Professionals and
Paraprofessionals is $337.47.

With regard to Kaye Scholer LLP, the amount of fees sought is
$21,315.75. Reimbursable Expenses total $37.79. The Blended
Hourly Rate for Professionals is $507.28 while that for
Professionals and Paraprofessionals is $343.56.

Van Kampen also supplies charges for expenses as follows:

Duplicating:        $.12 per page
Telecommunications: $1.00 per page (no additional long distance
Computer Research:  Hopkins & Sutter's practice is to bill
                     Clients for LEXIS and Westlaw research at
                     actual cost, which does not include
                     amortization for maintenance and equipment.

(Vencor Bankruptcy News, Issue No. 31; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

WARNACO GROUP: Taps Keen Realty as Real Estate Consultant
The Warnaco Group, Inc. seeks to employ and retain Keen
Realty, LLC as their special real estate consultant in these
Chapter 11 cases, nunc pro tunc to the Petition Date.

Keen Consultants, LLC, is comprised of Keen Realty, LLC, and
Keen Strategic Advisors, LLC.  The firm offers a broad range of
services from valuing, marketing and disposing of excess real
estate and leases, as well as negotiating lease modifications,
rental reductions and lease determinations.

Stanley P.  Silverstein, Vice President of The Warnaco Group,
explains that the Debtors chose Keen because of the firm's vast
experience as real estate brokers and special real estate
consultants in many complex bankruptcy cases.  For this reason,
the Debtors concluded that Keen is qualified to act as their
special real estate consultant.

A Letter Agreement dated July 5, 2001 outlines the professional
services Keen will provide to the Debtors:

    (a) Evaluation Services: Keen will be analyzing and
        evaluating the value or liability associated with the
        properties designated by the Debtors.  With respect to
        leases, Keen will recommend whether the Debtors should
        reject, renegotiate or market the leases.

    (b) Marketing Services:  Keen shall have the sole and
        exclusive authority to offer Evaluation Properties
        designated for disposition on an "exclusive right to
        sell" basis.  Keen shall advise the Debtors of all
        offers, and the Debtors shall retain the sole and
        exclusive discretion to accept or reject any real estate
        proposal.  Keen's services may include:

          (i) review all pertinent documents and consult with the
              Debtors' counsel,

         (ii) develop and implement a marketing program, which
              may include, as appropriate, newspaper, magazine or
              journal advertising, letter and/or flyer
              solicitation, placement of signs, direct
              telemarketing, and such other marketing methods as
              may be necessary.

        (iii) communicate with potential replacement tenants,
              brokers, investors, landlords, etc.  and locate
              additional parties who may have an interest in the
              purchase of a property,

         (iv) respond and provide information to, negotiate with,
              and solicit offers from prospective purchasers and
              landlords, and shall make recommendations to the
              Debtors as to the advisability of accepting
              particular offers and settlements,

          (v) meet periodically with the Debtors, its accountants
              and attorneys, in connection with the status of its

         (vi) work with the attorneys responsible for the
              implementation of the proposed transactions,
              reviewing documents, negotiating and assisting in
              resolving problems that may arise, and

        (vii) appear in Court to testify or to consult with the
              Debtors in connection with the marketing or
              disposition of a Property.

    (c) Renegotiation of leases:  Keen shall have the sole and
        exclusive authority to represent the Debtors in the
        negotiation of lease modification agreements.  The
        Debtors shall retain the sole and exclusive discretion to
        accept or reject any real estate proposal.  With respect
        to leasehold properties designated by the Debtors for
        renegotiation services:

          (i) Keen and the Debtors will jointly establish
              negotiating goals and parameters, such as rent
              reductions, lease term modifications and other
              leasehold concessions.

         (ii) Keen will contact each landlord and will
              negotiate for modifications in accordance with such
              parameters established by the Debtors,

        (iii) Keen will work with the landlords and the
              Debtors to document accurately all lease
              modification proposals, and

         (iv) Keen will attend and participate in all court
              hearings and Creditors' Committee meetings when
              requested by the Debtors.

In return, the Debtors will compensate Keen based on the
services provided:

    (a) Evaluation Services:  $400.00 per property evaluated

    (b) Disposition of Leased Properties and Settlement of
        Landlord's Claims:

        (i) Assumption Transaction: compensation for each
            property the greater of $1,5000 (minimum transaction
            fee) or 4% of the aggregate of:

            1) the total monetary consideration paid to the
               Company on account of such assumption transaction,

            2) the amount of any "cure" amount waived in
               connection with such assumption transaction.

        (ii) Termination Transaction: In the event that a
             termination transaction results in a payment to the
             Debtors, the greater of the minimum transaction fee
             or 4% of the aggregate of 1) and 2).  If the
             landlord agrees to waive, release or otherwise
             compromise its rejection damage claim, then the
             minimum transaction fee, payable in full,
             simultaneously with the closing of the termination

             If a lease of an evaluation property is rejected by
             the Debtors, Keen's fee shall be limited to $400 for
             such evaluation property.

       (iii) Administrative claim for payment of fees and

    (c) Renegotiation of Leases:

        (i) Monetary savings: a fee for each property equal to
            the greater of:

            (a) the minimum transaction fee, or

            (b) 4% of the total rental reduction savings from the
                transaction pertaining to said property,
                calculated at 9% present value discount rate.

       (ii) Non-monetary renegotiation transaction: minimum
            transaction fee.

    (d) Expert witness fee: Keen will charge the Debtors its
        customary hourly rates:

                Moe Bordwin (Chairman)          $400
                Harold Bordwin (President)      $400
                Chris Mahoney (Vice President)  $300
                Craig Fox (Vice President)      $300
                Mike Matlat (Vice President)    $300
                Matt Bordwin (Vice President)   $300
                Dave Nielsen (Associate)        $110
                Eric Leighton (Associate)       $110

    (e) Expenses and Disbursements: All advertising, marketing,
        traveling, lodging, FedEx, postage, telephone charges,
        photocopying charges, and other expenses incurred in
        connection of the services.  Each expense item in excess
        of $500 must be approved by the Debtors prior to

Craig Fox, Vice President of Keen Realty, assures the Court that
the firm is a "disinterested person" as defined in the
Bankruptcy Code and that Keen does not hold or represent any
interest adverse to the Debtors.  According to Mr. Fox, Keen may
have represented in the past and may represent in the future
entities that are parties-in-interest in Debtors' bankruptcy
proceedings, but only in unrelated matters.

Keen discloses that it was previously, jointly retained as a co-
broker with an entity affiliated with Charles Dunn Co. Realty,
one of the Debtors' top 50 unsecured creditors.  Keen further
reveals that it has previously provided real estate consulting
services to Citibank N.A., Societe Generale, General Electric
Capital Corporation and GECC, which are lenders to the Debtors.
Keen is currently retained as consultant to Tornado Realty Trust
in connection with the Bradlees Stores bankruptcy proceeding.
Keen has also previously been jointly retained as a co-broker
with an entity affiliated with Tornado Realty Trust in the
Alexander's bankruptcy proceeding.

But Mr. Fox stressed that:

      (i) these projects had no relationship to the Debtors;

     (ii) the project has been completed for more than a year;

    (iii) the contract has expired;

     (iv) both Keen and the Charles Dunn entity have been fully
          compensated; and

      (v) no obligations or duties remain due and owing between
          Keen and the entities mentioned.

Mr. Fox adds that Keen intends to perform services with respect
to leases between Vornado and the Debtors.  According to Mr.
Fox, Keen is in the process of obtaining a written waiver of
conflicts in order to perform such services for the Debtors.
Mr. Fox also maintains that Keen has not performed any services
at any time for the Debtors and the Debtors does not owe Keen
any money.

To the extent Keen discovers any facts relating to these Chapter
11 cases, Mr. Fox promises to file a supplemental affidavit.
(Warnaco Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

WINSTAR COMMUNICATIONS: Rejecting Five Real Property Leases
Winstar Communications, Inc. seeks an order authorizing them to
immediately reject unexpired leases of nonresidential real
property and related agreements with:

    a) PCA Stoneridge Associates LP in Palo Alto, California
    b) RREEF West-V, Inc. in San Diego, California
    c) AGBRI Twin Towers in Pasadena, California
    d) 26711 Development Associates in Southfield, Michigan
    e) The Realty Associates Fund III, LP in Washington DC

James Patton, Esq., at Young Conaway Stargatt & Taylor in
Wilmington, Delaware contends that the Debtors no longer utilize
the sites leased under the Leases and have determined that these
sites are not necessary to the Debtors' ongoing operations.  The
Debtors claim that rejecting the leases can minimize unnecessary
administrative expenses and they constitute unnecessary cash
flow.  Mr. Patton states that the Debtors believe that they
cannot obtain any value for the Leases by assignment to third
parties and rejection of the lease is in the best interests of
the Debtors' estates, creditors and interest holders.

            The Realty Associates Fund III Objects

The Realty Associates Fund III, L.P. objects on the grounds that
the motion seeks an effective rejection date prior to Court
approval to reject lease and because requested effective date is
prior to the date Winstar fully vacates the property and
surrenders the keys to Fund III.

Thomas Macauley, Esq., at Zuckerman Spaeder LLP, contends that
any effective rejection date should be the later date Winstar
vacates the property or Courts enters the order authorizing
rejection of the Fund III leases.

Mr. Macauley also discloses that the Debtors have not paid any
rent for July 2001 on the Fund III leases and aggregated July
rent pro-rated for a July 19 rejection date is $140,273.38.
Fund III requests that the Court determine that this amount be
classified as administrative expense and order the Debtors to
pay the amount due. (Winstar Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

WINSTAR COMMUNICATIONS: Focuses on New Sales & Hires Blackstone
Winstar Communications, Inc. announced two actions designed to
speed its exit from Chapter 11.

First, the company will now focus its new sales efforts on small
and medium customers in its 17 major branches, its 200 premier
national accounts and the government business that the company
has won in 11 markets.

In connection with this effort, Winstar is reducing the size of
its workforce by approximately 950 employees through layoffs and
sales of non-core units. The company said its new staffing
levels will have no impact on customer service. Winstar's 30,000
business customers will continue to be supported by a strong,
responsive and focused sales and service organization as well as
technical, engineering, provisioning, and systems support to
meet their needs.

Second, in response to contacts from many interested parties,
Winstar has retained The Blackstone Group as an M&A advisor to
assist with the potential sale of or investment in the company.
Such a sale or investment would enable Winstar to emerge from
the Chapter 11 process more quickly.

"Winstar is focused on emerging from Chapter 11 as quickly as
possible while maximizing the value of our company for our
stakeholders," said William J. Rouhana, Jr., Winstar chairman
and chief executive officer. "By obtaining $175 million of
financing from a consortium of banks led by Citibank and
Bank of New York, cutting our costs and growing our core on-net
business, we are in a position to be cash flow positive this
year. In addition, working with Blackstone gives us an
opportunity to explore the sale of or an investment in the
company, providing us with flexibility to exit Chapter 11
alone or with a partner."

XO COMMUNICATIONS: Fitch Cuts Ratings To Low-B & Junk Levels
Fitch has downgraded XO Communications' ratings as follows:
senior secured rating to 'B' from 'B+', senior unsecured rating
to 'CCC+' from 'B' and convertible subordinated note rating to
'CCC- ' from 'CCC'. The Rating Outlook for this credit is

The rating downgrades reflect the increased risk of bankruptcy
due to the low degree of flexibility the company has within its
bank covenants and the negative economic and industry conditions
that could pressure the financial achievement that is required.

Moreover, they reflect the uncertainty surrounding XO's ability
to raise the capital necessary to fund the remaining portion of
its business plan. At currently low bond and stock price levels,
XO could not raise capital in the public market and it is
unlikely it will be able to raise additional bank capital.

The two-notch differential between the ratings more properly
reflects the low asset recovery values, which have fallen
dramatically this year.

As exemplified in its recent earnings announcement, the company
has experienced quarterly sequential growth since the Concentric
merger closed in the third quarter of 2000 despite a weaker
economic environment, financially stressed customers and a very
negative sentiment toward the industry.

Nevertheless, due to its recent restructuring, the company has
little flexibility within its bank covenants and must generate
the revenue targets in 2001 that have been publicly released and
more than 10% sequential revenue growth in 2002. Fitch believes
this is achievable but recognizes the increased risk of a
technical default and is concerned about the unwillingness of
its senior secured creditors to be flexible in this lending

Unless XO misses its revenue targets, Fitch will maintain its
Negative Rating Outlook until more information is released
regarding XO's debt restructuring or until the first quarter of
2002, at which time more information will be available to
determine whether or not XO will receive the capital needed to
fill its funding gap.

BOOK REVIEW: Full Faith and Credit: The Great S & L Debacle
              and Other Washington Sagas
Author:     L. William Seidman
Publisher:  Beard Books
Softcover:  300 Pages
List Price: $34.95
Review By:  Susan Pannell
Order your personal copy today at

"My friends, there is good news and bad news. The good news is
that the full faith and credit of the FDIC and the US government
stands behind your money at the bank. But the bad news is that
you, my fellow taxpayers, stand behind the US government." Take
it from L. William Seidman, former chairman of the FDIC under
Reagan and Bush, in his irreverent Washington memoir. Chosen by
Congress to lead the S&L cleanup, the author describes how the
debacle was created and nurtured and the lawsuits against
Charles Keating, Michael Milken, and Neil Bush that it spawned.

The story begins in the summer of 1973 when Seidman, then a
Grand Rapids, Michigan, businessman and managing partner of one
of the country's ten largest accounting firms, which bore his
family's name, was tapped by Nixon to be undersecretary of HUD.
Seidman had scarcely unpacked his bagswhen "the summer of 1973"
took on new meaning in Washington and across the country.
Confirmation of any of the precarious president's nominations
looked dubious in the extreme, and Seidman prepared to pack up
again. Then came a call from the office of newly appointed Vice
President Ford. Spiro Agnew, hastily departing, had left the
office in shambles. (Not least to be disposed of were large
cases of Scotch whiskey, presented to Agnew by supplicants.)
Would Seidman lend his managerial expertise for a few weeks to
help a fellow Grand Rapidan get organized?

One thing led to another in the usual Potomac way, and when Ford
advanced to the presidency, Seidman was made his assistant for
economic affairs. That job, too, was relatively short-lived, but
a decade later he returned to Washington to head the FDIC under
Reagan. What the author found was plenty disturbing. The over-
optimism of the 1970s ad 1980s- in particular, he believes, a
speculative binge of real estate investing-- followed by
recession, was resulting in numerous bank failures, more than
1,000 between 1986 and 1991. Worse, disaster loomed in the
sister agency that insured savings and loan institutions: a
majority of the nation's 4,000 S&Ls were on their way to

What caused the S&L crisis? Seidman, although a small-government
advocate, blames a combination of deregulation and cutbacks in
the oversight agencies. One of his many battles, for example,
was with OMB, which sought to cut the FDIC's bank supervision
staff just as it had tried to reduce the number of S&L
examiners. But he finds a silver lining in the near catastrophe:
proof of resilience. The diversity of the US financial system is
also its strength.

Seidman's memoir is as much about life inside the Beltway as it
is about financial crises, making this book, first published in
1990, no less entertaining today. Included are lively anecdotes
of confrontations with heavy-weight White House chief of staff
John Sununu, an interview with a wild-eyed Wyoming purchaser of
FDIC property from a liquidated bank who arrived in Seidman's
office armed with a gun to register his displeasure with the
purchase (a valid objection, the author discovered), and ambush
by Secret Service agents who converged on Seidman as he opened
his window and leaned out to watch the president's helicopter
take off.


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
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contained herein is obtained from sources believed to be
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