TCR_Public/010807.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

             Tuesday, August 7, 2001, Vol. 5, No. 153


AMERICAN TOWER: S&P Revises Outlook to Negative
AMF BOWLING: Rejecting 10 Vacant Bowling Center Leases
ARMSTRONG WORLD: Enters Into Novation Agreement With GSA
BIG V: Pathmark In Talks With Lenders About Possible Buyout
BPC REORGANIZATION: Seeks Exclusivity Extension through Oct. 23

BRIDGE INFORMATION: Hires Boies Schiller As Special Counsel
BUHRMANN N.V.: S&P Puts Ratings on Watch After Weak Q2 Results
COMDISCO INC.: Honoring Prepetition Tax Obligations
CREDIT CARD CENTER: Tidel Gives Update On Bankruptcy Proceedings

DELTATHREE: Fails To Comply With Nasdaq's Listing Requirement
DIAL CORPORATION: S&P Downgrades Ratings To Low-B's
EMPRESA ELECTRICA: Liquidity Issues Worsen
ENVIRO-RECOVERY: Board Fires Nesmith As CEO, J. Tull Takes Over
FURRS SUPERMARKETS: Closes Stores Excluded From Fleming Purchase

GERALD STEVENS: BofA Increases Credit Facility to $11.5 Million
GREATE BAY CASINO: Assets Insufficient To Pay HCC Debt
HOME HEALTH: Exclusive Period Extended To September 28
KELLSTROM: KAV Defaults On Joint Venture Credit Facility
KEYSTONE CONSOLIDATED: S&P's Debt Ratings Fall to D From CC

L.L. KNICKERBOCKER: Court Sets September 4 Hearing On Asset Sale
LERNOUT & HAUSPIE: Lionbridge Overbid In Auction, To Collect $1M
LIVEPERSON INC.: Receives Nasdaq's Notice of Non-Compliance
MARINER HEALTH: Asks For Sixth Extension of Exclusive Periods
MOSLER INC.: Security Firm Ceases Operations And Liquidates

OWENS CORNING: Rejects ProLogis Lease Agreement
PACIFIC GAS: Creditors' Committee Retains PricewaterhouseCoopers
PRO AIR: Court To Continue Plan Confirmation Hearing On August 8
RENCO METALS: Files Chapter 11 Petition in S.D. New York
RENCO METALS: Case Summary & 16 Largest Unsecured Creditors

RHYTHMS NETCONNECTIONS: Fitch Drops Senior Debt Rating To D
RSL COM: Dancris Telecom Acquires Pittsburgh Wholesale Division
SCHWINN/GT: Paying Prepetition Employee Benefits & Obligations
SCHWINN/GT: Huffy Bid & Bidding Protections Request Accepted

SUN HEALTHCARE: SunBridge Rejects Management Pact with GF/Mass
USG CORPORATION: Hires Jones Day As Lead Counsel
V3 SEMICONDUCTOR: QuickLogic Completes Acquisition
WARNACO GROUP: Moves to Assume and Assign SG Cowen Agreement
WEIRTON STEEL: S&P Junks Corporate & Senior Debt Ratings

WINSTAR COMMUNICATIONS: Selling Professional Service Assets


AMERICAN TOWER: S&P Revises Outlook to Negative
Standard & Poor's revised its outlook on U.S.-based
communications company American Tower Corp. (AMT) to negative
from stable.  At the same time, the double-'B'-minus corporate
credit, single-'B' senior unsecured debt, and the preliminary
single-'B'-minus preferred stock ratings on AMT were affirmed.
The double-'B' senior secured debt ratings on related entities
American Tower Inc. and American Tower L.P were also affirmed.

The outlook revision reflects the significant decline in
operating cash flow at AMT's Verestar unit, which is causing
consolidated credit protection measures to be weaker than
anticipated. In addition, AMT has made an entry into the tower
leasing business in Brazil, an undertaking that adds additional
operating risk.

The current ratings continue to be supported by AMT's solid
tower leasing performance both in the domestic market and in
Mexico, the stable and recurring nature of tower cash flow
streams, and favorable growth prospects in wireless
communications. The leasing of newly acquired or constructed
towers is the key driver of AMT's business model. The company
added .41 broadband-equivalent tenants in the second quarter
ending June 30, 2001, which is a healthy organic growth rate.
Tower margins, before corporate expense, were strong at about
51% during the quarter. Despite general economic weakness,
wireless carrier capital expenditure among the major operators
does not appear to have been materially reduced.

Margins in the service business are weaker than those of the
core tower business, and the revenue stream is less predictable.
It remains an important part of the business mix, however.
Services revenue in the second quarter was $110.4 million and
EBITDA was $12.3 million, representing an EBITDA margin of about

Internationally, the company has extended beyond Mexico into
Brazil, with a small transaction to purchase 156 towers from
fixed wireless and wireline operator Global Village Telecom
Ltda. (GVT). This was the first tower deal in Brazil, and could
lay the groundwork for future transactions. Operating risks
include the credit quality of GVT, and economic and currency
risks in Brazil.

As previously indicated in a profit warning on June 21, 2001,
AMT reported weak operating results at its Verestar teleport
business in the second quarter. This was largely due to
integration and technology issues associated with of one of
Verestar's recent acquisitions. Furthermore, the market for data
and Internet opportunities has weakened. New management has been
put in place in an attempt to stabilize the situation.

AMT's consolidated EBITDA rose to $60 million in the second
quarter, up from $43 million for the same period in 2000.
Consolidated EBITDA margins of 23% are good, considering the
heavy investment in sales, general, and administrative expenses
needed to support the company's rapid growth, and the lower
profitability at Verestar and the services division. Total debt
stood at about $3.5 billion, and cash balances were $560

Standard & Poor's expects AMT to exercise its option on an
incremental $500 million of bank debt, which would fund its
current business plan. Some financial flexibility exists with
regard to the new tower construction program, which could be
scaled back to preserve liquidity. Maintenance capital
expenditure is modest at between $30 million and $40 million per

                     Outlook: Negative

In order to maintain the current ratings, AMT will have to bring
debt to cash flow into the high single digits over the next few
years. This could be achieved through increasing tower cash
flows, which are largely recurring and predictable, and by
maintaining stable debt levels. Future debt-financed
acquisitions or additional weakness in any of AMT's business
segments would delay potential deleveraging, and pressure
ratings further, Standard & Poor's said

AMF BOWLING: Rejecting 10 Vacant Bowling Center Leases
Prepetition, AMF Bowling Worldwide, Inc. formulated a
restructuring program, designed to reduce costs, improve cash
flow and enhance long term competitiveness.  The Debtors closed
and vacated ten poor-performing bowling centers in the United
States, concluding that those locations had no reasonable
expectation of generating adequate cash flow:

       Center No. 219
            Crown Lanes
            40 Kingston Road
            Baltimore, MD 21220
                 Lease Date: 11/01/1997
                 Lease Expiration: 06/30/2007
                      Landlord: Hawthorne, Inc.
                                PO Box 4308
                                Timonium, MD 21094

       Center No. 80
            Hoosier Lanes
            8939 East 38th Street
            Indianapolis, IN 46226
                 Lease Date: 01/24/1997
                 Lease Expiration: 05/31/2007
                      Landlord: N Eastwood Shop Ctr LLC
                                c/o Walpert Properties Inc.
                                11457 Olde Cabin Rd., Ste 200
                                St. Louis, MO 63141

       Center No. 562
            6149 Sunrise Blvd.
            Citrus Heights, CA
                 Lease Date: 08/13/1974
                 Lease Expiration: 12/31/2000
                      Landlord: Birdcage Properties LP
                                P. O. Box 41125
                                Santa Ana, CA 92799-1125

       Center No. 502
            Amos Lanes
            3442 Cleveland Ave
            Columbus, Ohio 43224
                 Lease Date: 10/01/1996
                 Lease Expiration: 06/30/2007
                      Landlord: Amos Shopping Ctr Co.
                                c/o William R. Roth & Associates
                                395 Library Park South
                                Columbus, OH 43215

       Center No. 97
            Antioch Lanes
            5300 N.E. Chateau Trafficway
            Kansas City, MO 64119
                 Lease Date: 04/30/1988
                 Lease Expiration: 06/30/2007
                      Landlord: Curry Investment Company
                                2700 Kendallwood Parkway
                                Suite 208
                                Gladstone, MO 64119-2083

       Center No. 588
            Sunnyside Lanes
            5693 E. Kings Canyon Road
            Fresno, CA
                 Lease Date: 04/18/1983
                 Lease Expiration: 03/31/2008
                      Landlord: Sunnyside Investments
                                P. O. Box 7965
                                Fresno, CA 93747

       Center No. 333
            Arbutus Lanes
            4510 Highview Avenue
            Baltimore, MD 21229
                 Lease Date: 07/18/1958
                 Lease Expiration: 08/30/2033
                      Landlord: John Hopkins University
                                3400 N Charles Street
                                Greenhouse Annex
                                Baltimore, MD 28218-2693
                                Attn: Jeffrey H. Koenig

       Center No. 356
            University Lanes
            2031 University Boulevard
            Adelphi, MD 20783
                 Lease Date: 02/20/1959
                 Lease Expiration: 06/30/2004
                      Landlord: Riggs Plaza Shopping Center
                                c/o The Jaffe Group
                                5454 Wisconsin Ave., Suite 1265
                                Chevy Chase, MD 20815

       Center No. 334
            1626 E. Joppa Road
            Baltimore, MD 21286
                 Lease Date: 08/12/1958
                 Lease Expiration: 06/30/2003
                      Landlord: Joppa Associates
                                c/o Marc Blum
                                253 East Redwood St.
                                1200 Garrett Bldg.
                                Baltimore, MD 21202
                                     (Improvement Landlord)
                                Donald Zang
                                1312 Midmeadow Road
                                Towson, MD 21286
                                     (Ground landlord)

       Center No. 521
            Lewis & Clark
            15820 Pacific Hwy. S.
            Seattle, WA 98188
                 Lease Date: 08/13/1992
                 Lease Expiration: 08/31/2002
                      Landlord: Sterling Realty Organization
                                600 106th Ave., NE, Suite 200
                                Bellvue, WA 98009-1723

By motion, the Debtors seek entry of an order, pursuant to
11 U.S.C. Sec. 365(a), authorizing rejection of these Ten Leases
nunc pro tunc to the Petition Date.

Section 365(a) of the Bankruptcy Code, Marc Abrams, Esq., at
Willkie Farr & Gallagher relates, authorizes a debtor-in-
possession, subject to the court's approval, to reject any
executory contract or unexpired lease of the debtor if rejection
is a reasonable exercise of its business judgment and if such
rejection benefits the debtor's estate. Sharon Steel Corp. v.
National Fuel Gas Dist. Corp., 872 F.2d 36, 39-40 (3d Cir.1989);
In re Bildisco, 682 F.2d 72, 79 (3d Cir. 1982), aff'd, 465 U.S.
513 (1984); In re Patterson, 119 B.R. 59 (E.D. Pa. 1990). It is
enough if the debtor determines in its business judgment that a
benefit will be realized. Sharon Steel Corp., 872 F.2d at 39
(citing In re Wheeling-Pittsburgh Steel Corp., 72 B.R. 845, 846
(Bankr. W.D. Pa. 1987)).

The business judgment standard, Mr. Abrams continues, requires
that the court approve the debtor's business decision unless
that judgment is the product of bad faith, whim, or caprice.
Lubrizol Enterprises v. Richmond Metal Finishers, 756 F.2d 1043,
1047 (4th Cir. 1985), cert. denied, 475 U.S. 1057 (1986).  The
Debtors submit that these Lease Rejections are beneficial to
their estates and creditors.  The Debtors have determined in
their business judgment that the Leases are not necessary for
their continued operations and do not have market value
sufficient to warrant their continuing administrative costs.
Specifically, the Debtors believe the Leases have no assignment
value in light of the poor condition and disadvantageous
location of the leased premises.  Based on their extensive
experience with comparable real estate, it is the Debtors'
business judgment that the rent under most Leases is above-
market.  The Leases serve no useful purpose for the Debtors and
the Debtors' estates will benefit by eliminating immediately any
unnecessary administrative rent accrual and other obligations
associated with these Ten Leases. (AMF Bankruptcy News, Issue
No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)

ARMSTRONG WORLD: Enters Into Novation Agreement With GSA
Mark D. Collins, Deborah E. Spivack, and Rebecca L. Booth of the
Wilmington firm of Richards Layton & Finger PA, acting for
Armstrong World Industries, ask Judge Farnan to approve novation
of a contract with General Services Administration. The Debtors
tell Judge Farnan that prior to the Petition Date, in
approximately June of 1998, AWI entered into a contract with the
United States of America, represented by various contracting
officers of the General Services Administration, for the sale
and supply of certain miscellaneous insulation products and
roofing felt to the GSA. The GAS Contract was performed by AWI's
Insulation Products division.

Also prior to the Petition Date, on juke 6 2000, AWI sold all of
its assets and certain liabilities comprising AWI's Insulation
Products division to Armacell Holding GmbH. While the sale and
purchase agreement relating to the Armacell sale does not
specifically address the assignment of specific business
contracts relating to such business, the agreement provides for
the sale of the entire Insulation Products segment of AWI's
business, including all of AWI's manufacturing facilities
relating to such business.

Following the sale of the Insulation Products division to
Armacell, AWI had no ability to continue performing its
obligations under the GSA Contract. Consistent with the basic
premise of the transaction between AWI and Armacell - that
Armacell was purchasing AWI's Insulation Products division -
Armacell assumed AWI's obligations under the GSA Contract and
began, on or about June 28 2000, to ship goods to the GSA in
accord with the terms of the GSA Contract. Although the GSA
continued to accept such goods, it refused to pay Armacell for
the goods, advising Armacell that, because the assignment of the
GSA Contract did not comply with the technical requirements of
the applicable Federal Acquisition Regulations, the GSA was
prevented from recognizing the validity of the assignment and
was, therefore, unable to pay Armacell for the product that it
had produced, shipped and invoiced to the GSA until such
agreement was properly assigned. At the same time, the GSA was
insisting upon continued compliance with the GSA Contract,
threatening to declare a default, and hold AWI liable for breach
if Armacell did not continue to produce and ship products under
the GSA contract. As of April 23, 2001, Armacell had shipped and
invoiced to the GSA, but had not been paid for, a total of
$158,357.34 of products.

Notably, although the GSA Contract expired by its own terms on
June 30, 2001, the GSA has taken the position that it cannot pay
Armacell for the products previously shipped and invoiced
without a formal novation of the GSA Contract. Moreover, the GSA
has required, in order to execute such a novation, that AWI
guarantee payment of all liabilities and the performance of all
of Armacell's obligations under the GSA Contract. Thus, Armacell
has requested that AWI execute the required novation agreement
so that Armacell can get paid for its outstanding invoices.

In exchange for AWI's agreement to enter into the novation
agreement, however, Armacell has agreed to fully indemnify AWI
for any and all liabilities that may be incurred by AWI in
accordance with the novation or the guarantee, and to provide
AWI with a backstop guarantee for the indemnification
obligations from its corporate parent entity, Armacell
International, GmbH. In addition, Armacell has agreed to add AWI
to its general liability insurance policy as an additional
insured with respect to the GSA Contract and any obligations
arising in connection therewith.

As a result of the foregoing, AWI, Armacell, and the GSA would
like to enter into, upon approval of this Court, a Novation
Agreement for the purpose of assigning all of AWI's duties and
obligations under the GSA Contract to Armacell, Upon entry into
the Novation Agreement, Armacell has agreed to enter into an
indemnification agreement under which Armacell will fully
indemnify AWI for any liability that it might incur in
connection with the Novation Agreement and the guarantee of
Armacell's performance by AWI. Armacell has already provided AWI
with (i) a copy of a certificate of insurance showing AWI as an
additional insured on Armacell's general liability insurance
with respect to the GSA Contract, and (ii) an executed guarantee
of the Indemnification Agreement from Armacell International.

By Motion, therefore, AWI asks Judge Farnan for his approval of
its entry into the Novation Agreement and its acceptance of the
supporting guarantees, indemnification, and insurance
protections. AWI argues that this transaction represents a
reasonable business judgment on its part. Following the sale of
the Insulation Products division AWI could not have performed
its obligations under the GSA Contract. Instead, after such
sale, Armacell timely performed all of the obligations under
that contract, thereby protecting AWI from any breach of
contract claims that could have been asserted by the GSA against
AWI had the products required to have been supplied under the
GSA Contract not been timely delivered.

In any other situation, the other party to the contract - which
continued to accept and order goods from the new party - would
likely be stopped from refusing to pay for the goods it
received. In this case, however, the GSA can rely upon the
technical requirements associated with the assignment of
government contracts to justify its refusal to recognize
Armacell as the new party performing under the GSA Contract.
This has resulted in tremendous inequity to Armacell, which has
produced and shipped nearly $160,000 worth of goods to the SA,
and has reduced AWI's exposure for breach of the GSA Contract,
but which has not been paid for the goods it shipped. To remedy
this inequity and avoid any claims by Armacell that AWI is
somehow responsible for satisfying Armacell's claims against the
GSA, AWI believes it is necessary to enter into the Novation

Moreover, AWI believes that the exposure to AWI as a result of
the guarantee contained within the Novation Agreement is
minimal. The GSA Contract already has expired by its own terms,
although there are still some additional goods to be produced
and shipped to the GSA. As a result, AWI believes that there is
little risk of claims arising under the Novation Agreement.
Nevertheless, to further protect itself against potential
claims, AWI has required Armacell to execute the Indemnification
Agreement, provide AWI with a guarantee of Armacell's
obligations under the Indemnification Agreement from Armacell
International, and add AWI as an additional insured to its
general liability insurance policy. Thus, AWI believes that
entry into the Novation Agreement will have little or no
practical effect on AWI or its obligations and liabilities going
forward. In light of these facts, AWI submits that entry into
the Novation Agreement and the Indemnification Agreement is in
the best interests of AWI's estate and creditors, and is within
AWI's sound business judgment. (Armstrong Bankruptcy News, Issue
No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)

BIG V: Pathmark In Talks With Lenders About Possible Buyout
Pathmark Stores, Inc. (Nasdaq:PTMK) confirmed it has had
discussions with representatives of the prepetition secured
lenders to Big V Supermarkets about acquiring the Big V chain of
supermarkets out of bankruptcy for in excess of $200 million.

On August 2, 2001 the Secured Lenders filed a request that the
Bankruptcy Court overseeing Big V's Chapter 11 proceedings
modify Big V's exclusive right to file a plan of reorganization.
The Secured Lenders' request, if granted, would permit them to
file a plan of reorganization based on a sale of the Big V
business. They also requested that the Bankruptcy Court direct
Big V to provide information and access to its management in
order to enable Pathmark to perform due diligence.

Big V Supermarkets, Inc. operates 32 supermarkets principally in
the lower Hudson River Valley of New York and the Trenton area
of New Jersey.

Pathmark Stores, Inc. is a regional supermarket company
currently operating 143 supermarkets primarily in the New York-
New Jersey and Philadelphia metropolitan areas. Additional
information about Pathmark is available at

BPC REORGANIZATION: Seeks Exclusivity Extension through Oct. 23
BPC Reorganization Corp., debtor, seeks a further extension of
its exclusive periods to file a plan of reorganization and
solicit acceptances thereto. A hearing on the motion will be
held before the Honorable Gregory M. Sleet, Wilmington, DE on
August 29, 2001 at 10:00 AM.

The debtor seeks an extension of its exclusive periods to file a
plan of reorganization for approximately 90 days, through and
including October 23, 2001, and extending the debtor's exclusive
periods to solicit acceptances to any such plan for
approximately 90 days through and including December 24, 2001.

On August 8, 2000, the court approved the comprehensive asset
acquisition proposal submitted by a joint venture formed by
iParty Retail Store Corp., Hilco Trading Co., Inc. and The Ozer
Group, LLC. iparty acquired title to substantially all of the
debtor's assets at 33 retail locations and at the debtor's
existing corporate offices.

Since the closing of the Transaction, a variety of post-closing
disputes have arisen between the debtor, iParty and Hilco/Ozer.
The ultimate outcome of these disputed matters will have a
material effect on creditor distributions and on the debtor's
ability to confirm a plan herein. The debtor nevertheless
believes that given sufficient additional time, and with the
benefit of the plan building blocks now in place, a strong
foundation for the promulgation of a plan now exists, and a
consensual plan of reorganization/liquidation for the debtors is

The debtor is represented by Paul Traub, Steven E. Fox and Maura
I. Russell of Traub, Bonazcquist & Fox LLP and Laura Davis Jones
and Bruce Grohsgal of Pachulski, Stang, Ziehl, Young & Jones,

BRIDGE INFORMATION: Hires Boies Schiller As Special Counsel
Bridge Information Systems, Inc. sought and obtained from Judge
McDonald authority to employ Boies, Schiller & Flexner LLP, nunc
pro tunc to the Petition Date, as their special counsel.

David M. Unseth, Esq., at Bryan Cave LLP, in St. Louis,
Missouri, explains that one issue in these proceedings is the
status of the contracts between one of the Debtors and each of
Cantor Fitzgerald Securities Corporation and Market Data
Corporation. According to Mr. Unseth, the Debtors' New York
bankruptcy counsel, Cleary, Gottlieb, Steen & Hamilton is unable
to represent the Debtors because Cantor Fitzgerald asserts that
Cleary Gottlieb has a conflict arising from a prior

So, the Firm is asked to provide assistance to Debtors only with
respect to issues concerning MDC and Cantor Fitzgerald, which
assistance may involve the following:

     (1) engaging in negotiations with representatives of Cantor
         Fitzgerald and MDC;

     (2) drafting documents in connection with such negotiations;

     (3) representing Debtors in court proceedings concerning any
         claims by or against Cantor Fitzgerald and/or MDC.

The Firm will not directly participate in the conduct of the
bankruptcy proceedings.

Robin A. Henry, a member of the Firm, says the Firm will seek
compensation for its services on an hourly basis and will
maintain detailed records of any actual and necessary costs and
expenses incurred in connection with the aforementioned
services. The current hourly rates charged by the Firm are:

              Robin Henry               $520
              Other partners            $520
              Associates                $290 - $350

Mr. Henry assures the Court that the Firm does not hold or
represent any interests adverse to that of the estate, or
Debtors, in the matters upon which the Firm is to be engaged.
(Bridge Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

BUHRMANN N.V.: S&P Puts Ratings on Watch After Weak Q2 Results
After the announcement of disappointing second-quarter results
by Netherlands-based office products supplier Burhmann N.V.,
Standard & Poor's placed its double-'B' long-term corporate
credit and senior secured debt and single-'B'-plus subordinated
debt ratings on Buhrmann on CreditWatch with negative

The CreditWatch placement reflects the group's underperformance,
particularly in its North American office supplies division and
its European paper merchanting division.

In the six months ended June 30, 2001, operating profits at
Buhrmann fell by 25% to EUR 167 million ($146.9 million) from
EUR 222 million. Profits were affected by lower office supplies
sales in North America due to the persistent downturn in the
economy, as a result of which Buhrmann's customers have shifted
to buying lower-margin products. The adverse shift in product
mix and lower volumes for paper merchanting in Europe have also
contributed to the decline. As a result, EBITDA net interest
coverage was 2.4 times in the first half of 2001, which is very
weak for the ratings.

Standard and Poor's will hold discussions with Buhrmann's
management in the near future to review the group's strategies
for improving its weakened financial profile and recover from
the downturn in the office supplies and paper merchanting
markets. The CreditWatch status is expected to be resolved in
the next four to six weeks, Standard & Poor's said.

---------------------------- -----------------------------
Standard & Poor's lowered its corporate credit rating on
Burlington Industries Inc. to single-'B' from single-'B'-plus.
The senior unsecured debt rating was lowered to triple-'C'-plus
from single-`B'-minus. In addition, the shelf registration
rating was lowered to preliminary triple-'C'-plus from
preliminary single-'B'-minus.

The outlook is negative.

Total rated debt is about $400 million (including shelf debt).
The downgrade reflects Burlington's expected earnings softness
for the remainder of fiscal 2001, and the anticipated negative
impact on already weak profitability and cash flow measures.
However, the company has been successful in reducing its debt
burden, primarily through working capital initiatives and asset
sales. The earnings weakness is principally due to continued
softening in the textile market with lower sales and profits in
many of Burlington's operating segments, and higher energy costs
and production curtailment in some of the firm's operations.

Ratings for Burlington incorporate the company's still-heavy
debt burden, as well as very competitive and cyclical global
industry conditions. Further, the apparel fabric segment is
subject to fashion risk. These factors are tempered by
Burlington's leading and diversified textile manufacturing
positions in the apparel and interior furnishing markets.
Burlington has committed to paying down debt by $100 million
this year and reducing working capital requirements, especially
inventory levels. To date, the firm has made progress on these
initiatives, reducing debt by $77 million and inventory levels
by approximately $89 million. However, the firm faces extremely
difficult market conditions, which Standard & Poor's believes
will not improve over the intermediate term. Apparel operations
continue to be negatively impacted by lower volumes in both the
performance wear and casual wear divisions, mainly due to the
increase in low-priced Asian imports, a slowdown in new orders,
and lower synthetic exports. At the same time, interior
furnishing results are being affected by slowdown at the retail
level. Although the commercial carpet segment's market share has
increased, margins continue to be pressured due to difficult
industry conditions.

Financial measures continue to be weak, with EBITDA to interest
of about 1.7 times (x), total debt to EBITDA of about 6.8x, and
an EBITDA margin of about 8.4% for the past 12 months ended June
30, 2001. Standard & Poor's does not expect significant
improvement in financial measures in fiscal 2002. The heavy
capital spending of recent years will decline in fiscal 2001 and
beyond, to the $25 to $30 million range, as Burlington has
completed construction of its Mexican facilities. Internal cash
generation is expected to fund these outlays and allow the
company to continue its focus on reducing debt levels. Proceeds
from any asset sales will be used for further debt reduction.
Still, although the company was in compliance with its bank
covenants at June 30, 2001, the firm might need to secure an
amendment or waiver at some future date.

                    Outlook: Negative

The ratings could be lowered if credit measures continue to
decline, or if the firm's financial flexibility is further
impaired, Standard & Poor's said.

COMDISCO INC.: Honoring Prepetition Tax Obligations
Comdisco, Inc. seeks the Court's authority to pay pre-petition
sales, use, and similar "trust fund" taxes to the respective
taxing authorities.

John Wm. Butler, Jr., Esq., at Skadden Arps Slate Meagher &
Flom, in Chicago, Illinois, relates that the Debtors incur
various taxes that were paid in on time prior to Petition Date.

Mr. Butler argues that payment of taxes is necessary to avoid
potential administrative difficulties and unnecessary
governmental action. Mr. Butler emphasizes that it would be in
the best interest of the Debtors estates and consistent with the
reorganization policy to eliminate the possibility of lawsuits.
Mr. Butler adds that taxes are afforded priority status in
payment under the Bankruptcy Code. Though the timing of the
payment will be affected, Mr. Butler swears, the Debtors will
still pay the appropriate amounts due to the taxing authorities.
(Comdisco Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

CREDIT CARD CENTER: Tidel Gives Update On Bankruptcy Proceedings
Tidel Technologies, Inc. (Nasdaq:ATMS) reported on the status of
the bankruptcy proceedings of Credit Card Center ("CCC"),
formerly Tidel's largest customer, and the refinancing of
Tidel's $18 million 6% subordinated convertible debentures.

Management has been diligently pursuing Tidel's claim of
approximately $27 million as a principal secured creditor in the
CCC Chapter 11 proceedings for the past two months. Tidel is
represented by three different legal teams in New York,
Pennsylvania and Texas, as well as a New York-based financial
consulting firm. In the most recent hearing on the matter on
July 27, 2001 in Philadelphia, the bankruptcy court allowed the
continued use of cash collateral to fund CCC's operations and
set the next hearing for August 15, 2001, at which time CCC
expects to submit proposals for the sale of the company to
prospective buyers. Action on all other material motions pending
before the court has been deferred until that date.

CCC has now filed its formal financial schedules with the
bankruptcy court indicating total assets of $57 million and
total liabilities of $78 million. Preliminary data previously
furnished by CCC had indicated assets of $34 million and
liabilities of $87 million. Tidel is currently reviewing the
filings to estimate amounts to be realized from the liquidation
of assets securing its claim. Based on these findings, the
company will establish a reserve for any amounts deemed to be

Another matter of importance is the status of Tidel's $18
million 6% subordinated convertible debentures. As previously
reported, Tidel has been working with the holders of the
subordinated debt, Montrose Investments Ltd. with respect to $15
million and Liberty Acorn Trust with respect to $3 million, to
effect a restructuring. The holders had previously deferred
taking any action with respect to the "put right" feature of the
indebtedness, but both holders have now exercised their "put
rights". Currently, Tidel is obligated to prepay the entire
principal amount of $18 million, together with any accrued but
unpaid interest, on or before August 27, 2001. Notwithstanding
these actions, Tidel is continuing discussions with the debt
holders as to restructuring. In this connection, Tidel has
engaged Banc of America Securities LLC to review financing
alternatives and assist in the discussions with the debt
holders. Tidel does not presently have the funds to cover the
prepayment, and there can be no assurance that the funds
necessary to prepay the obligation will become available.

Tidel also announced that full financial results for its third
quarter ended June 30, 2001 will be reported on or about August
14, 2001.

Tidel Technologies, Inc. is one of the nation's leading
manufacturers of automated teller machines and cash security
equipment designed for specialty retail marketers. To date,
Tidel has sold more than 30,000 retail ATMs and 115,000 retail
cash controllers in the U.S. and 36 other countries. More
information about the company and its products may be found on
the Internet at

DELTATHREE: Fails To Comply With Nasdaq's Listing Requirement
deltathree, Inc. (Nasdaq: DDDC) announced it has received a
notice from Nasdaq, stating the Company's common stock had not
maintained a minimum bid price of $1.00 over a period of 30
consecutive trading days as required under Nasdaq Marketplace
Rule 4450(a)(5). As such, the Company has 90 calendar days from
the date of noncompliance to bring the share price back within
the minimum bid requirements. Should the Company not achieve
compliance within the allotted time frame, it would receive a
notice stating its stock is subject to delisting. At that time,
the Company has the option to appeal the decision to the Nasdaq
Listing Qualifications Panel. Pending the outcome of the appeal,
the stock would continue trading on the Nasdaq National Market.
If the appeal process was unsuccessful, the stock would likely
trade on the OTC Bulletin Board. deltathree is evaluating
appropriate steps in an attempt to bring the Company in
compliance within the 90 day period.

DIAL CORPORATION: S&P Downgrades Ratings To Low-B's
Standard & Poor's lowered its ratings on The Dial Corp. All
ratings remain on CreditWatch with developing implications,
where they were placed Oct. 3, 2000. Developing implications
mean that the ratings could be raised, lowered, or affirmed,
depending on the outcome of Standard & Poor's review.
About $527 million in total debt was outstanding on June 30,

The downgrade reflects Dial's narrow product portfolio and weak
financial profile. The company's credit protection measures
remain weak for the current rating despite the recent
improvement in financial performance. In addition, Standard &
Poor's believes that Dial will continue to be challenged over
the intermediate term by the highly competitive environment in
which it operates, given its small size in relation to other
players and the maturity of the U.S. consumer products market.
Dial's ratings remain on CreditWatch because of the company's
Aug. 3, 2001, announcement that it will continue to consider
potential opportunities to sell all or part of the business to
maximize long-term shareholder value. Management originally made
this statement in September 2000, which led to the CreditWatch
listing. Should management pursue the option of selling the
company, ratings on Dial could be raised, lowered, or affirmed
depending on the business and financial strength of the
acquiring company. When a transaction or strategic plan is
announced, Standard & Poor's will evaluate its impact on credit

Dial's investment-grade rating is based on the company's
portfolio of household and personal care brands (Purex, Dial,
Renuzit, and Armour), which maintain relatively solid market
positions in their respective categories. Even so, Dial's core
categories are mature and highly competitive. Reflecting these
challenges, Dial had pursued growth in the late 1990s through
international expansion and acquisitions. However, this strategy
proved to be unsuccessful, which resulted in new management's
focus on strengthening core U.S. operations to grow the

Dial's credit protection measures (adjusted for operating leases
and one-time costs) weakened materially for the trailing 12
months ended June 30, 2001. Pretax interest coverage fell to
about 2.3 times (x) from 6.9x at Dec. 31, 1999, while total debt
to EBITDA increased to about 3.2x from 1.8x over the same
period. Standard & Poor's anticipates that credit ratios will
show improvement and remain in line with the revised rating over
the intermediate term.

    Ratings Lowered And Remaining On CreditWatch Developing

     The Dial Corp.                       TO              FROM
       Corporate credit rating            BBB-/A-3        BBB/A-2
       Senior unsecured debt              BBB-            BBB
       Commercial paper                   A-3             A-2
       Shelf registration:
        Senior unsecured debt   prelim.   BBB-    prelim. BBB
        Subordinated debt       prelim.   BB+     prelim. BBB-

EMPRESA ELECTRICA: Liquidity Issues Worsen
Empresa Electrica del Norte Grande S.A. (EDELNOR) has been
informed by its majority shareholder that, concurrent with its
second quarter after-tax charge of US$ 57 million, Mirant
Corporation does not intend to make additional cash infusions
into the Company unless it can be assured that it will be repaid
in the near term. Mirant has agreed, however, to defer repayment
of certain past due amounts of more than $2 million owed to it
by EDELNOR as a way to mitigate EDELNOR's on-going liquidity
problems. Additionally, Mirant has stated that at the present
time it is difficult to envision receiving such assurances of
repayment in the absence of an advanced sales agreement for the

EDELNOR completed the sale of an office building in Antofagasta
in June for approximately US$1.7 million. Discussions have also
been held regarding the sale of certain sub-transmission assets
in the cities of Arica and Iquique. However, these discussions
are not progressing and it is uncertain whether alternative
buyers can be identified in the near term.

Additionally, EDELNOR has requested authority from the Comision
Nacional de Energia (CNE) to remove from service certain diesel
generators that, along with other equipment, occupy land
adjacent to the Pacific shoreline in Antofagasta. Once this
removal is authorized, EDELNOR plans to solicit offers for this
property. However, due to certain related contracts that do not
expire until December 31, 2001, it is unlikely that a final
closing on this property will take place before first quarter of
calendar year 2002.

These developments place additional pressure on EDELNOR's cash
liquidity situation. Cash flow is being managed carefully and
such efforts will be extremely important going forward. At this
time, EDELNOR believes that it should, in the near term, be able
to manage the timing of receipts and disbursements to enable it
to meet its financial obligations when due, through and
including the September 15th loan interest payment. However, no
assurance can be given that it will be able to do so.
Without a financial restructuring, it is anticipated that
liquidity will continue to be a difficult and on-going problem.

ENVIRO-RECOVERY: Board Fires Nesmith As CEO, J. Tull Takes Over
Enviro-Recovery, Inc. (Pink Sheets:EVRE) announced that on
Wednesday, July 25, 2001, its Board of Directors terminated the
employment of Bruce Nesmith.

Mr. Nesmith, the former Chief Executive Officer of Enviro-
Recovery, Inc., was terminated due to certain of his actions,
which were determined by the Board of Directors to have not been
in the best interests of the Company.

In a separate matter, John K. Tull, was elected President and
Chief Executive Officer of Enviro-Recovery, effective July 25,
2001. Mr. Tull has been involved in Chicago banking for over
twenty-five years and is currently the owner of J.K. Tull &
Associates, Ltd., a merger and acquisition firm.

Customers, vendors, and investors with questions about the above
discussed matters or any other matters regarding Enviro-Recovery
and Superior can get more information on the Enviro-Recovery web
site at http://www.timelesstimber.comor by calling Caz Neitzke
at 1-888-OLD-LOGS.

FURRS SUPERMARKETS: Closes Stores Excluded From Fleming Purchase
Steve Mortensen, President and COO of Furrs Supermarkets,
announced that 17 Furrs Supermarkets locations will be excluded
as part of Furrs' purchase agreement with Fleming Companies,

The following stores will be closed on August 7, 2001:

      * Furrs, 9348 Dyer/Wren, El Paso, TX
      * So:Lo, 201 San Pedro SE, Albuquerque, NM
      * Furrs, 1210 Main St., Andrews, TX

The following stores will be closed on August 9, 2001:

      * Furrs, 4201 Central/Atrisco NW, Albuquerque, NM
      * Furrs, 205 Highway 70 West Sudderth, Ruidoso, NM
      * Furrs, 809 West Pierce, Carlsbad, NM

The following stores will be closed on August 12, 2001:

      * So:Lo, 1720 Bridge SW, Albuquerque, NM
      * Furrs, 1300 S. Main/McGaffey, Roswell, NM
      * Furrs, 2208 Big Springs/Scarbrough, Midland, TX

The following stores will be closed on August 14, 2001:

      * Furrs, 1700 East 20th St., Farmington, NM
      * Furrs, 108 Juan Tabo/Central, Albuquerque, NM
      * Furrs, 3100 Lee Trevino/Pebble Hills, El Paso, TX
      * La Feria, 8115 North Loop, El Paso, TX

The following stores will be closed on August 16, 2001:

      * Furrs, 102 Caldwell/Reinken, Belen, NM
      * Furrs, 206 Mills Ave., Las Vegas, NM
      * Furrs, 900 West 2nd St./Vinon, Roswell, NM
      * La Feria, 317 S. Main St., Anthony, TX

On June 29, the U.S. Bankruptcy Court approved the purchase by
Fleming of 66 Furrs Supermarkets locations in New Mexico and
West Texas. Under the agreement, Fleming may exclude up to 27
stores from the final transaction. The purchase price of $57
million included all real estate, equipment leases, contracts
and licenses. Inventory -- for an additional value of $50
million -- was included in the purchase.

"We made extensive efforts to find buyers for these locations so
we could keep them open," Mortensen said. "Because no buyers
were found, we made the decision to close -- an unfortunate but
standard course of business when a company is in Chapter 11
bankruptcy protection."

Where applicable, Furrs will work with the United Food &
Commercial Workers Union on relocation options for employees at
affected stores.

"Our thoughts are with our associates and the communities
affected by this decision," he added. "Furrs philosophy was
always to operate as a community partner. This involvement will
be missed."

"We know our Furrs associates are among the industry's finest
workers, and their loyal service to Furrs is a testament to
their professionalism."

GERALD STEVENS: BofA Increases Credit Facility to $11.5 Million
Gerald Stevens Inc. (OTCBB:GIFTE) reached an agreement in
principle with Bank of America to continue to support the
company's Chapter 11 reorganization by increasing its debtor-in-
possession credit facility to $11.5 million from $5.5 million.
The $6 million increase, which is subject to definitive
documentation and Court approval, will be available to fund the
company's cash requirements through November 2, 2001.  The
company believes that the line of credit, plus its cash flow
from operations, will enable it to continue to conduct business
without interruption, and allow the company to continue to
promptly pay vendors in full as to post-petition obligations.

John G. Hall, president and CEO of Gerald Stevens, said, "We are
pleased to have our lender's continued support as we take the
actions necessary to help us reduce our debt by selling certain
operations and reconfiguring our existing operations in certain

Separately, the company announced that based on its pre-petition
secured and unsecured debt levels, its current post-petition
debt level, its expected additional post-petition debt
requirements, and the legal priorities in bankruptcy, it
believes that its bankruptcy proceeding will result in no value
remaining from the bankruptcy estate for holders of its common

                     About Gerald Stevens

Gerald Stevens Inc. is the largest specialty retailer and
marketer of floral products in the United States. The company
operates a network of approximately 260 floral specialty retail
stores; an Internet business that handles retail orders 24 hours
a day, seven days a week; and National Flora, a leading national
floral marketing company with premium-placed advertisements in
Yellow Page directories. Gerald Stevens also owns its own import
and sourcing operation in Miami.

GREATE BAY CASINO: Assets Insufficient To Pay HCC Debt
Greate Bay Casino Corporation (OTC Bulletin Board: GEAA)
reported net income of $197,000, or $0.04 per share, for the
second quarter of 2001 compared to a net loss of $1.5 million,
or $0.30 per share, for the second quarter of 2000. Revenues for
the second quarter of 2001 amounted to $10.4 million compared to
revenues of $4.1 million for the second quarter of 2000. The
increase in revenues and net income was due to a dramatic
increase in software installation revenues at Advanced Casino
Systems Corporation (ACSC), Greate Bay's sole remaining
operating subsidiary.

For the six months ended June 30, 2001, Greate Bay reported a
net loss of $738,000 on revenues of $16.9 million compared to a
net loss of $4.1 million on revenues of $4.9 million for the
comparable six months of 2000. The improvement in operating
results for the six months is attributable to the previously
mentioned increase in ACSC software installation revenues.

Greate Bay's only remaining operating activity is the
development, installation and maintenance of casino systems by
ACSC. At June 30, 2001, Greate Bay and its subsidiaries had debt
outstanding to Hollywood Casino Corporation (HCC) consisting of
demand notes and accrued interest thereon totaling $9.7 million
and a 14.875% promissory note due 2006 and accrued interest
thereon totaling $50.2 million. Semi-annual interest payments of
approximately $3.5 million attributable to the 14.875% secured
promissory note become payable commencing in August 2001. ACSC's
operations do not generate sufficient cash flow to provide debt
service on the HCC notes and, consequently, Greate Bay is
insolvent. Greate Bay is currently negotiating with HCC to
restructure its obligations and, in that connection, has entered
into certain standstill agreements with HCC. Under the
standstill agreements, all payments of principal and interest
due from HCC during the period from March 1, 2000 through
September 1, 2001 with respect to a note have been deferred
until October 1, 2001 in consideration of HCC's agreement not to
demand payment of principal or interest on Greate Bay's
obligations to HCC. The fair market value of Greate Bay's assets
is substantially less than its existing obligations to HCC, and
accordingly, management anticipates that any restructuring of
Greate Bay's obligations will result in the conveyance of all of
its assets (or the proceeds from the sale of its assets) to HCC,
resulting in no cash or other assets remaining available for
distribution to Greate Bay's shareholders. Any restructuring of
Greate Bay's obligations, consensual or otherwise, will require
it to file for protection under federal bankruptcy laws and will
ultimately result in the liquidation of Greate Bay.

HOME HEALTH: Exclusive Period Extended To September 28
By order of the US Bankruptcy Court, District of Delaware,
entered on July 24, 2001 by the Honorable Mary F. Walrath, Home
Health Corporation of America, Inc., et al. is granted a further
extension of time during which they have the exclusive right to
file a plan or plans of reorganization through September 28,
2001. Further, the debtors are granted an extension of
time to solicit acceptances of their plan or plans of
reorganization through November 27, 2001, during which period no
one else may file a plan of reorganization.

By separate order the court ordered that the time within which
the debtors may assume or reject their unexpired leases is
extended for an additional 90 days or until November 12, 2001.

KELLSTROM: KAV Defaults On Joint Venture Credit Facility
Kellstrom Industries, Inc. (NASDAQ: KELL) and Aviation Sales
Company ("AVS") established a joint venture ("KAV") on December
1, 2000 which acquired substantially all of the inventory of
Aviation Sales Distribution Services Company.

As part of that transaction, KAV entered into an exclusive
consignment agreement with Kellstrom for the sale of KAV's
inventory over five years. The inventory purchase was funded by
KAV through a senior credit facility for approximately $105.5
million and through seller-financing. AVS and Kellstrom posted
letters of credit in favor of the lender under the KAV senior
credit facility, in the amounts of $8.5 million and $6.5
million, respectively. The KAV senior credit facility is secured
by a pledge of KAV's inventory, a collateral assignment of the
consignment agreement and other collateral.

Kellstrom announced that KAV's senior lender has advised KAV
that it is not in compliance with certain of the financial
covenants contained in KAV's senior credit facility resulting in
a default under such facility. Except for limiting future
advances for certain limited KAV operating expenses, the lender
has not exercised remedies afforded to it under the KAV senior
credit facility, although it has reserved its right to exercise
all such remedies. Such remedies include, among other things,
(i) foreclosure upon the inventory, assets and other collateral
securing the loan, (ii) drawing upon the AVS letter of credit
and the Kellstrom letter of credit, (iii) accelerating amounts
due under the loan and (iv) terminating the consignment
agreement between Kellstrom and KAV.

A default under the KAV senior credit facility does not result
in a default under the terms of Kellstrom's senior credit

Zivi R. Nedivi, President and Chief Executive Officer of
Kellstrom commented that, "Kellstrom continues to actively
market and sell KAV's inventory consistent with the terms of the
consignment arrangement. KAV's senior lender continues to work
with KAV to monitor the situation."

Kellstrom is a leading aviation inventory management company.
Its principal business is the purchasing, overhauling (through
subcontractors), reselling and leasing of aircraft parts,
aircraft engines and engine parts. Headquartered in Miramar,
Florida, Kellstrom specializes in providing: engines and engine
parts for large turbo fan engines manufactured by CFM
International, General Electric, Pratt & Whitney and Rolls
Royce; aircraft parts and turbojet engines and engine parts for
large transport aircraft and helicopters; and aircraft
components including flight data recorders, electrical and
mechanical equipment and radar and navigation equipment.

KEYSTONE CONSOLIDATED: S&P's Debt Ratings Fall to D From CC
Standard & Poor's lowered its corporate credit and senior
secured debt ratings on Keystone Consolidated Industries Inc. to
`D' from double-'C' and removed the ratings from CreditWatch.
The downgrade follows the company's missed August 1, 2001, $4.8
million interest payment on its 9-5/8% senior secured notes due
2007, which was a result of insufficient liquidity.

L.L. KNICKERBOCKER: Court Sets September 4 Hearing On Asset Sale
The L.L. Knickerbocker Co., Inc. previously reported the filing
with the United States Bankruptcy Court of a motion for order
approving overbid procedures and topping fee in connection with
a proposed sale of substantially all of the company's assets.
The United States Bankruptcy Court held a hearing on the Motion
for July 31, 2001.

At the hearing, the Court approved the Motion as modified in
open court. As a result, there will be a hearing on sale of
substantially all of the Company's assets and to consider
overbids on September 4, 2001 at 9:30 A.M.

The overbid procedures include funding a $480,000 deposit by
August 29, 2001, an initial overbid of at least $6,180,000, and
subsequent overbids in additional $300,000 increments. All
interested bidders should contact Paul Couchot at Winthrop
Couchot Professional Corporation of Newport Beach, California
for specific information.

The L.L. Knickerbocker Co., Inc. is a multi-brand collectible
products, gift, toy and jewelry company that designs, develops,
produces and markets products over diverse distribution
channels. The Company's products are sold through independent
gift and collectible retailers, department stores, electronic
retailers, Internet, and international distributors. The Company
is a major supplier of collectible products and fashion jewelry
to the leading electronic retailer.

LERNOUT & HAUSPIE: Lionbridge Overbid In Auction, To Collect $1M
Lionbridge Technologies, Inc. (Nasdaq: LIOX), a provider of
solutions for the worldwide deployment of technology and
content, announced that it was overbid in the auction process to
acquire Mendez SA from Belgium-based Lernout & Hauspie (L&H).
Mendez is the localization and translation division of L&H with
approximately $80 million in annual revenue.

As previously disclosed on July 3, Lionbridge announced its
agreement to acquire Mendez for $27 million, subject to
applicable U.S. and Belgian bankruptcy laws, including the
auction held on August 2. At the auction, and as announced,
Bowne & Co., Inc. successfully bid $44.5 million to acquire
Mendez. The agreement is subject to the approval of the U.S.
Bankruptcy Court in Delaware and The Commercial Court in Ieper,
Belgium. The U.S. Bankruptcy Court has scheduled a hearing for
August 7, 2001. Lionbridge will receive $1 million as a
termination fee upon the closing of Bowne's transaction, and
could still acquire Mendez should Bowne's acquisition not close.

"A good manager knows enough to walk away from a transaction
when the price exceeds the value that can be justified," said
Rory Cowan, Lionbridge chairman and CEO. "By remaining
disciplined, we exercised sound business judgement and fiscal
responsibility. I regret not having the opportunity to work with
Florita Mendez and her outstanding team and wish them success."

                      About Lionbridge

Lionbridge Technologies, Inc. provides solutions for worldwide
deployment of technology and content to global 2000 companies in
the technology, life sciences and financial services industries.
Lionbridge testing and compatibility services, globalization
solutions and multilingual content management technologies help
clients reduce cost, speed time to market and ensure the
integrity of global brands. Based in Waltham, Mass., Lionbridge
maintains facilities in England, Ireland, The Netherlands,
France, Germany, China, South Korea, Japan, Taiwan, Brazil and
the United States. To learn more, visit

LIVEPERSON INC.: Receives Nasdaq's Notice of Non-Compliance
LivePerson, Inc. (Nasdaq:LPSN), a leading Application Service
Provider (ASP) of technology facilitating real-time sales and
customer service for companies doing business on the Internet,
received a letter from The Nasdaq Stock Market, Inc. on July 31,
2001, containing a Nasdaq Staff Determination that LivePerson
failed to comply with the minimum bid price requirement for
continued listing set forth in Nasdaq Marketplace Rule
4450(a)(5), and that its Common Stock is, therefore, subject to
delisting from The Nasdaq National Market.

LivePerson has requested a hearing before a Nasdaq Listing
Qualifications Panel to appeal the Staff Determination
concerning the minimum bid price requirement. According to
Nasdaq procedures, the hearing date will be set, to the extent
practicable, within 45 days of the request, and the Company's
Common Stock will continue to trade on The Nasdaq National
Market pending the Panel's decision.

                       About LivePerson

LivePerson -- is a leading
Application Service Provider (ASP) of technology facilitating
real-time sales and customer service for companies doing
business on the Internet. The LivePerson service enables online
businesses to communicate with Internet users in real time,
thereby enhancing the online experience. With LivePerson
Exchange, consisting of Chat, FAQ, Email and Document
Management, LivePerson offers clients the opportunity to
increase sales, lower customer service costs and increase
responsiveness to customer needs. LivePerson is headquartered in
New York City, with offices in San Francisco, London and Tel

MARINER HEALTH: Asks For Sixth Extension of Exclusive Periods
If the HEALTH Debtors' exclusive period during which to file a
plan of reorganziation were to terminate at this juncture, the
HEALTH cases would be burdened, no doubt, with multiple
competing plans of reorganziation, protracted litigation,
unnecessary delay, and enormous administrative costs. The HEALTH
Debtors ask Judge Walrath for a sixth extension of their
exclusive periods to dates to be determined at a hearing on
August 22. By application of Del.Bankr.L.R. 9006-2, the HEALTH
Debtors' exclusive period during which to file a plan of
reorganization is automatically extended through the conclusion
of that August 22 hearing. (Mariner Bankruptcy News, Issue No.
17; Bankruptcy Creditors' Service, Inc., 609/392-0900)

MOSLER INC.: Security Firm Ceases Operations And Liquidates
Mosler Inc., an integrator of security systems and services, has
ceased all operations in order to engage in an orderly
liquidation of its assets.

The company said that it has been operating with a large debt
burden for some time. Additionally, Mosler has faced a number of
operational challenges related to the unsuccessful
implementation of a new computer system and the integration of
its acquisitions made over the last several years.

Effective immediately, substantially all of the approximately
1,800 Mosler employees have been terminated. The company has
retained only a small core group of employees to assist in the
liquidation process.

Mosler said that it explored a number of actions, including a
sale of the company and various restructuring alternatives. The
company said that despite its best efforts, it has been
determined that an orderly liquidation of the business became
its only alternative.

In terminating its operations, the management of Mosler
expressed its sincere appreciation to the employees of the
company for their hard work and dedication and to Mosler
customers for their many years of loyalty.

OWENS CORNING: Rejects ProLogis Lease Agreement
Owens Corning leases property located at 5730 Dividend Drive in
Indianapolis, Indiana, from ProLogis North Carolina Limited
Partnership.  The Lease Agreement requires the Debtors to pay
$7,560 per month through March 2003.  The Debtors have no use
for the property and they are unable to find an assignee willing
to take over their lease obligations.

Accordingly, the Debtors sought and obtained bankruptcy court
authority, pursuant to 11 U.S.C. Sec. 365, to reject the lease
as of July 31, 2001. (Owens Corning Bankruptcy News, Issue No.
14; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PACIFIC GAS: Creditors' Committee Retains PricewaterhouseCoopers
The Official Committee of Unsecured Creditors in Pacific Gas and
Electric Company's chapter 11 cases sought and obtained
permission from Judge Montali to retain PricewaterhouseCoopers
LLP as its accountants and financial advisors during the
Debtor's chapter 11 case, nunc pro tunc to April 11, 2001.
Specifically, Committee Co-Chairs Clara Strand and Kenneth E.
Smith tell the Court, the Committee will look to PwC for:

       (a) assistance in the review of financial related
disclosures required by the Court, including the Schedules of
Assets and Liabilities, the Statement of Financial Affairs and
Monthly Operating Reports;

       (b) assistance with a review of the Debtor's short-term
cash management practices;

       (c) advice and guidance with respect to utility accounting
and electric and gas utility operating elements, including
elements of rate making, cost recovery and the financial impact
of regulatory decisions;

       (d) assistance and advice with respect to the value of the
Debtor's operating assets and making recommendations regarding
the highest and best use, operation, and ultimate disposition of
such assets;

       (e) assistance in reviewing finanical information
distributed by the Debtor to creditors and others, including,
but not limited to, cash flow projections and budgets, cash
receipts and disbursement analysis, analysis of various asset
and liability accounts, and analysis of proposed transactions
for which Court approval is sought;

       (f) attendance at meetings and assistance in discussions
with the Debtor, regulators, State agencies, mortgage holders
and other secured lenders in this chapter 11 case, the U.S.
Trustee, other parties in interest and the professionals hired
by the same, as requested;

       (g) assistance in the review and/or preparation of
information and analysis necessaryfor the confirmation of a Plan
of Reorganization in this chapter 11 case;

       (h) assistance in the preparation and evaluation of
potential litigation;

       (i) assistance in the discharge of the Committee's duties
and functions in this case, including, but not limited to,
compilation of material required for court testimony; and

       (j) rendering such other general business consulting or
such other assistance as the Committee or its counsel may deem
necessary that are not duplicative of services provided by other
professionals in this proceeding.

PwC Partner Thomas E. Lumsden leads the engagement from PwC's
San Francisco office.

Mr. Lumsden reminds the Court that PwC is one of the Big Five
accounting firms.  PwC is a global accounting firm and
represents many of the Debtor's creditors in matters wholly
unrelated to PG&E's chapter 11 cases.  Mr. Lumsden assures Judge
Montali that PwC will not represent any party other than the
Committee in connection with PG&E's chapter 11 case while this
chapter 11 case pends.

Mr. Lumsden discloses that PwC has been asked by the
Participants' Committee appointed in the California Power
Exchange chapter 11 case pending before the U.S. Bankruptcy
Court for the Central District of California to provide it with
various services. Specifically, PwC will:

       (1) make recommendations to the Participants' Committee
concerning the allocation of default chargebacks,the return of
letters of credit and the distribution of funds held in
custodial, trust or escrow accounts or otherwise available for
distribution by the CalPX;

       (2) assist the Participants' Committee in analyzing the
continuing pre-confirmation business plan for the CalPX, the
cost thereof, the adequacy of staffing and the funding for such

       (3) assist the Participants' Committee in analysing the
proposed budget and the feasibility of the operations of the
post-confirmation vehicle and the development of a funding model
for that vehicle; and

       (4) advise the Participants' Committee regarding the
billing and settlement procedures used and adopted by the CalPX.

During the year prior to the Petition Date, Mr. Lumsden advises,
PwC received $756,673 from PG&E Corporation's Bank Group for
financial advisory services.

For postpetition services to the Committee, PwC will bill at its
customary hourly rates:

            Partners                          $550 to $650
            Managers/Directors                $350 to $540
            Associates/Senior Associates      $175 to $365
            Administration/Paraprofessionals   $75 to $150

Mr. Lumsden indicates that PwC is reserving the right to
petition for a success fee at the conclusion of this chapter 11
case. (Pacific Gas Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

PRO AIR: Court To Continue Plan Confirmation Hearing On August 8
On July 3, 2001, the US Bankruptcy Court, Western District of
Washington at Seattle held a hearing to consider confirmation of
the plan of reorganization for Pro Air Inc. d/b/a Pro Airlines.

The court resolved all confirmation issues except the issue of
feasibility under Section 1129(a)(11) and issues with respect to
the breadth and timing of the discharge, injunction and third
party release provisions in the Plan. The court has continued
the plan confirmation hearing until August 8, 2001. At the
continued hearing the court will consider the unresolved
confirmation issues.

The debtors are represented by Ryan, Swanson & Cleveland, PLLC.

RENCO METALS: Files Chapter 11 Petition in S.D. New York
Renco Metals, Inc. and its wholly-owned subsidiary, Magnesium
Corporation of America (Magcorp), have filed voluntary petitions
to reorganize their businesses under Chapter 11 of the United
States Bankruptcy Code. The filings were made in the United
States Bankruptcy Court for the Southern District of New York.

Magcorp has reached an agreement with its existing working
capital lender and, subject to court approval, expects to have a
formal debtor-in-possession facility in place shortly. Magcorp
believes that the facility will provide ample funding to
maintain normalized business relationships with its vendors and
uninterrupted supply of products to its customers and for
necessary capital expenditures.

While Magcorp has been able to meet its short term debt
obligations, liquidity problems arising primarily from price
pressures created by foreign imports have prevented Magcorp from
generating sufficient profits to enable Renco Metals to service
its long term debt. Magcorp believes that such foreign imports
are unfair and illegal and is involved in proceedings before the
United States International Trade Commission to enforce existing
trade laws. Preliminary relief has been granted in these
proceedings with final decisions due later this year.

Despite competitive pressures, Magcorp has continued to invest
in the modernization of its Rowley production plant. Magcorp has
successfully begun the installation of new electrolytic cell
technology which Magcorp anticipates, when completed by January
2002, will reduce chlorine emissions by 95% and significantly
increase manufacturing efficiencies.

Renco Metals and Magcorp have been negotiating with an informal
committee of holders of Renco Metals' 11.5% Senior Notes due
2003 following Renco Metals' default on a semi-annual interest
payment due January 1, 2001. These discussions have not yet
resulted in a mutually acceptable restructuring agreement. Renco
Metals and Magcorp look forward to continuing these discussions
with a view towards reaching a consensual restructuring plan.
Renco Metals and Magcorp filed the Chapter 11 petitions to
maximize the companies' going concern value for the benefit of
their creditors and equity holders.

RENCO METALS: Case Summary & 16 Largest Unsecured Creditors
Lead Debtor: Renco Metals, Inc.
              30 Rockefeller Plaza
              New York, NY 10112

Debtor affiliate filing separate chapter 11 petition:

              Magnesium Corporation of America

Chapter 11 Petition Date: August 2, 2001

Court: Southern District of New York (Manhattan)

Judge: Robert E. Gerber

Bankruptcy Case Nos.: 01-14311-reg and 01-14312-reg

Debtors' Counsel: Joseph H. Smolinsky, Esq.
                   Chadbourne & Parke, LLP
                   30 Rockefeller Plaza
                   New York, NY 10112
                   (212) 408-5100
                   Fax : (212) 541-5369

Total Assets: More than $100 Million

Total Debts: More than $100 Million

List of Debtor's 16 Largest Unsecured Creditors:

Entity                        Nature of Claim     Claim Amount
------                        ---------------     ------------
State Street Bank and Trust   Indenture Trustee   $150,000,000
Company as Indenture Trustee  of 11-1/2%
Corporate Trust Center        Senior Notes due
225 Asylum Street             2003 issued under
Hartford, Connecticut 06103   that certain
Contact: Greg Donovan         Indenture dated
p-860-244-1845                as of July 1, 1996
f-860-244-1897                (the "Senior Notes")

Bear Stearns Securities       Registered Holder Of $51,986,000
Corp.                         Senior Notes
One Metrotech Center North
4th Floor
Brooklyn, New York 11201-3862
Contact: Vincent Marzella
p-212 272-0302
f-212 272-0316

Chase Bank of Texas, N.A.     Registered Holder    $33,244,000
P.O. Box 2558                 of Senior Notes
Three Mellon Bank Center
Room 153-3015
Houston, Texas 77252-8009
Contact: Debbie Lorenzo
p-713 216-4488
f-713 216-6931

State Street Bank and         Registered Holder    $23,660,000
Trust Company                 Of Senior Notes
1776 Heritage Dr.
No. Quincy, MA 02171
Contact: Joseph J. Callahan
p-617 985-6453
f-617 537-5004

The Bank of New York          Registered Holder    $18,116,000
925 Patterson Plank Rd.       of Senior Notes
Secaucus, New Jersey 07094
Contact: Cecile LaMarco
p-201 319-3066
f-201 319-3073

Chase Manhattan Bank          Registered Holder    $10,100,000
4 New York Plaza              of Senior Notes
13th Floor
New York, New York 10004
Contact: Orma Trim
p-212 623-6174
f-212 623-4691

Jefferies & Company, Inc.     Registered Holder     $7,114,000
Harborside Financial Center   of Senior Notes
705 Plaza 3, 7th Floor
Jersey City, NJ 07303-0469
Contact: Nicholas Pallotto
p-212 336-7162
f-212 336-7353

State Street Bank             Registered Holder     $2,190,000
- Trust Custody               of Senior Notes
225 Franklin Street, MA
Boston, MA 02110
Contact: David Paldino
p-617 654-4915
f-617 654-4690

Citibank/Private              Registered Holder     $1,540,000
Banking Division              of Senior Notes
333 West 34th Street, 5th Floor
New York, New York 10001
Contact: Russell Zale
p-212 615-9841
f- 212-615-8013

FunB-Phila. Main              Registered Holder       $500,000
123 South Broad Street        of Senior Notes
Philadelphia, Pennsylvania 19109
Contact: Diane Gallagher
p-215 670-4614
f-215 670-4705

Boston Safe Deposit and       Registered Holder       $450,000
Trust Co.                     of Senior Notes
c/o Mellon Bank N.A.
Pittsburgh, Pennsylvania 15259
Contact: Constance Holloway
p-412 234-2929
f-412 234-7244

Brown Brothers Harriman       Registered Holder       $400,000
& Co.                         of Senior Notes
63 Wall Street, 8th Floor
New York, New York 10005
Contact: Robert Davide
p-212 493-7946
f-212 493-5559

Citibank, N.A.                Registered Holder       $300,000
3800 Citicorp Center Tampa    of Senior Notes
Building B/Floor 1
Tampa, Florida 33610-9122
Contact: David Leslie
p-813 604-1193
f-813 604-1155

The Northern Trust Company    Registered Holder       $200,000
801 S. Canal                  of Senior Notes
Chicago, Illinois 60607
Contact: Jarvis A. McKee
p-312 630-1828
f-312 444-3882

Merrill Lynch, Pierce Fenner  Registered Holder       $155,000
& Smith Safekeeping           of Senior Notes
4 Corporate Place
Piscataway, New Jersey 08854
Contact: Veronica E. O'Neill
p-201 557-2620
f-631 254-7750

Prudential Securities         Registered Holder        $45,000
Incorporated                  of Senior Notes
111 8th Avenue, 4th Floor
New York, New York 10011
Contact: Antonia Lopez
p-212 776-8161

RHYTHMS NETCONNECTIONS: Fitch Drops Senior Debt Rating To D
Fitch has downgraded Rhythms NetConnections' rating from `CCC'
to `D', which applies to its 12 3/4% senior notes due 2009, 13
1/2% senior discount notes due 2008 and 14% senior notes due

On Aug. 2, 2001, the company voluntarily filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in
the Southern District of New York. As of Aug. 1, Rhythms had
approximately $133 million of unrestricted cash and cash
equivalents. Approximately $839 million of senior notes payable
were outstanding at March 31, 2001.

Rhythms has entered an agreement with noteholders that own more
than 60% of the principal amount of the company's notes
establishing a process for the reorganization of the company, or
if that fails, liquidation of the company.

Fitch believes Rhythms senior unsecured creditors will likely
recover less than 50% of the value of their obligations, based
on the $133 million of cash and cash equivalents at Aug. 1,
2001, and the approximately $254 million of net property, plant
and equipment at March 31, 2001.

Rhythms is a DLEC that provides multiple DSL technologies to
large enterprises, telecommunication carriers and their ISP
affiliates and other ISPs. The company operates an overlay
network, leasing the majority of its network capacity from the
ILECs and WorldCom.

Standard & Poor's lowered its ratings on Rhythms NetConnections
Inc. to 'D' and removed them from CreditWatch negative.

The downgrade follows Rhythm's filing for Chapter 11 bankruptcy
protection on Aug. 2, 2001. The company had unrestricted cash of
about $133 million at the time of the filing. At the end of
first quarter of 2001, total debt was about $839 million with an
annualized EBITDA loss of about $542 million. Rhythm's auditor
had previously express doubt about the company's ability to
continue as a going concern.

Rhythms was one of several companies that initially planned to
take advantage of the growing demand for high-speed access to
the Internet by offering DSL network solutions to the business
market. The original plan of these companies was to rely heavily
on a combination of debt and equity for funding until they
became cash flow positive after several years. However, a
slowing U.S. economy, increased failures among 'new economy'
companies, and an effective shutdown of the capital markets to
firms with riskier profiles have made it extremely difficult for
these companies to remain funded to the point of becoming self-

     Ratings Lowered And Removed From CreditWatch Negative

     Rhythms Netconnections Inc.                       TO    FROM

       Corporate credit rating                         D     CCC
       $290 mil. 13.5% senior unsecured disc. notes    D     CCC-
       $325 mil. 12.75% senior unsecured  notes        D     CCC-
       $300 mil. 14% senior unsecured notes            D     CCC-

RSL COM: Dancris Telecom Acquires Pittsburgh Wholesale Division
Dancris Telecom L.L.C. has purchased the wholesale division of
RSL COM U.S.A. Inc. located in Pittsburgh.

Dancris executed an agreement to acquire the operating assets of
RSL's wholesale division. RSL has filed protection under Chapter
11 of the U.S. Bankruptcy code. This is the third bankruptcy
acquisition for Dancris in 2001. Dancris will continue to
operate the wholesale business as a separate business unit.

"The acquisition of RSL is concurrent with Dancris' strategy to
add wholesale service to its current product mix," said Mickey
Rao, chief executive officer of Dancris Telecom.

"The acquisition not only provides Dancris with additional
facilities to expand its global network infrastructure but also
quality personnel in the areas of network operations center,
provisioning, least cost routing, purchasing, engineering,
switch site management and credit management."

"Dancris will continue to fuel its market growth through both
direct sales and acquisitions that provide synergies with our
core competencies," said Peter Stazzone, chief financial officer
of Dancris.

Dancris also announced that Jim Kohosek, RSL's senior vice
president of wholesale, will become president of Dancris.
Kohosek will have responsibility for the overall operations of
the entire company including wholesale, pre-paid, long distance,
operator services and Internet access.

"In addition to providing Dancris with network infrastructure
and quality personnel at all levels of the organization, the
combination of these two companies has significant benefits to
Dancris customers and vendors," said Kohosek. "The combined
traffic for both international and domestic terminations will
enable Dancris to offer higher volume levels to its limited
number of vendor partners.

"These strong partner relationships will enhance our ability to
pass along the highest quality services in the industry, at very
competitive prices for our customers."

Founded in 1995, Dancris Telecom L.L.C. is a leading facilities-
based international carrier that provides a broad range of
telecommunications services designed to meet the unique needs of
wholesale and retail customers worldwide, including pre-paid
calling cards, long distance communications, operator services
and Internet services.

In addition to their corporate headquarters in Scottsdale,
Dancris has offices located in Tampa, Fla.; Los Angeles; San
Luis Obispo, Calif.; Beijing, China and now, with the addition
of RSL, Pittsburgh.

Dancris established a joint venture company -- the
Beijing/Dancris Technology Developing Co., LTD -- allowing it to
serve the largest population base in the world. The 2001 edition
of "Ranking Arizona-The Best of Arizona Business" ranked Dancris
as the No. 2 telecommunications company in the state of Arizona,
ahead of Sprint and WorldCom.

SCHWINN/GT: Paying Prepetition Employee Benefits & Obligations
Schwinn/GT received Bankruptcy Court approval to, among other
things, pay pre-petition employee benefits, employee wages and
other employee obligations during its voluntary restructuring
under Chapter 11.

In addition, the Court approved a consensual motion with the
banks and Unsecured Creditors Committee to allow the Company to
continue using cash collateral pursuant to its projected budget
to fund the operations of the business.

The Court also granted approval for the Company to honor
customer warranties for its Fitness Division. The Company also
informed the Court of its intention to seek approval to honor
Cycling Division warranties during the Chapter 11 process.

"We are extremely pleased that Court approved all the motions
that we put before it today," said Jeff Sinclair, Schwinn/GT's
chief executive officer.

He added, "We view the consensual agreement with the banks and
our major constituents to use our operating cash rather than
incurring additional debt as a very positive step. They
recognize that our business has performed above projections, and
we now have sufficient internally-generated funds to pay post-
petition employee obligations, as well as the ongoing needs of
our Fitness Division well into September, including the ramp-up
of inventory levels for the upcoming season.

"Because we do not have an immediate need for debtor-in-
possession (DIP) financing, we have decided to negotiate a more
favorable long-term DIP agreement that would fund the Company
through the Holiday Season and into the new year," Sinclair

"Today's order also allows us to pay pre-petition employees
benefits and obligations. Our employees have been patient and
understanding since the filing, and we are very pleased that we
can now pay those obligations that were unfortunately
interrupted," Sinclair added.

Schwinn/GT filed voluntary petitions for reorganization under
Chapter 11 on July 16, 2001, in the United States Bankruptcy
Court for the District of Colorado in Denver. The filing was
made to facilitate the sale of the Company's Cycling Division in
accordance with Section 363 of the U.S. Bankruptcy Code.

SCHWINN/GT: Huffy Bid & Bidding Protections Request Accepted
Huffy Corporation (NYSE: HUF) confirmed that the United States
Bankruptcy Court for the District of Colorado has issued an
order accepting Huffy Corporation's contract with Schwinn/GT
Corp. as the baseline bid for certain cycling assets of
Schwinn/GT Corp. and approving the bidding protections and
breakup fee requested by Huffy Corporation. The order authorizes
an auction for the sale of the cycling assets and establishes
the timetable and guidelines for the submission of additional

Concurrently, the accelerated waiting period required under the
Hart-Scott-Rodino Act expired at 11:59 PM Thursday, August 2,
2001 without comment, allowing a sale to Huffy Corporation to
proceed without further Federal Trade Commission or Department
of Justice action or approval.

Commenting on the decision by the Bankruptcy Court, Don Graber,
Chairman, President and CEO said, "We are pleased by the Court's
decision. We are particularly sensitive to Schwinn and GT
employees, customers and suppliers in this time of uncertainty.
The apparent rapid deterioration of business fundamentals is
concerning to all involved. Huffy Corporation is dedicated to
continuing to work closely with the Court and creditors to bring
this process to a speedy conclusion."

Chris Snyder, President of Huffy Bicycle Company added, "We are
excited about our multi-channel distribution strategy for
Schwinn(R) and GT(R) products and are confident that both
customers and consumers will benefit from enhanced

Huffy Corporation (NYSE: HUF) is a leading provider of consumer
and retail services and a leading supplier of bicycles and home
basketball equipment.

SUN HEALTHCARE: SunBridge Rejects Management Pact with GF/Mass
SunBridge is the manager of two nursing homes located in
Commonwealth of Massachusetts - (i) Quaboag On The Common and
(ii) Springside of Pittsfield pursuant to a Management Agreement
with GF/Mass.

GF/Mass contends that SunBridge is in default of the Management
Agreement for monthly financial reporting requirements, among
other things. GF/Mass may terminate the Agreement unilaterally
as early as January 13, 2001, which is only about half a year
away, but GF/Mass wants to terminate the Management Agreement as
soon as possible.

SunBridge disputes GF/Mass' claims of default but agrees to an
early termination by way of a Settlement Agreement because it is
only about five and a half months time before GF/Mass can
unilaterally terminate the Management Agreement and the
Settlement Agreement contemplates a buyout of the Management

The Settlement Agreement provides that:

(1) SunBridge will reject the Management Agreement, pursuant to
     section 365 of the Bankruptcy Code, effective upon the later
     of July 15, 2001 or 2 days after the date upon which the
     Court approves the Settlement Agreement;

(2) GF/Mass will pay SunBridge the sum of $50,000 in full and
     final satisfaction of any obligations and/or compensaton due
     to the manager under the Management Agreement;

(3) GF/Mass will pay SunBridge all base management fees due
     through June 30, 2001 in the total amount of $63,920;

(4) The parties agree that after June 30, 2001, SunBridge will
     not have any obligation to provide services and GF/Mass will
     not have any obligation to pay base management fees;

(5) GF/Mass will reimburse SunBridge for all salaries and
     employee benefits due and payable to the Facilities'
     administrators. As of June 30, 2001, the salary amounts
     payable total $34,512. The parties acknowledge that
     additional benefits and salary will be due for the period
     through the Termination Date;

(6) SunBridge and GF/Mass mutually release each other from any
     liability under the Management Agreement or otherwise
     related to the operation of the Facilities;

(7) To the extent applicable, SunBridge will comply with
     obligations under the section of the Management Agreement
     entitled "Manager's Obligations After Termination" including
     the obligation to deliver copies of all books and records
     and to remain available for 90 days to consult with and
     advise GF/Mass regarding the operation and maintenance of
     the Facilities.

The Debtors believe that the Settlement Agreement is fair and
reasonable and in the best interests of the Debtors, their
estates and their creditors.

Accordingly, the Debtors seek the Court's authority to enter
into the Settlement Agreement and rejection of the Management
Agreement. (Sun Healthcare Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

USG CORPORATION: Hires Jones Day As Lead Counsel
USG Corporation sought and obtained authority from Judge Newsome
to employ Jones, Day, Reavis and Pogue as their lead counsel in
these chapter 11 proceedings and to represent them in all
aspects of their reorganization.

The Debtors say Jones Day is well suited for the type of
representation because USG needs and has experience in all
aspects of the law that may arise in these cases.  Jones Days'
Bankruptcy/Restructuring Practice Area comprises 50 attorneys
practicing nationwide.  Jones Day's attorneys played a
significant role in many of the largest and most complex cases
under the Bankruptcy Code, including USG's 1993 chapter 11 case.

Paul E. Harner, Esq., says Jones Day is familiar with USG's
businesses and financial affairs. Prior to the Petition Date,
Jones Day assisted the Debtors in their attempts to deal with
asbestos liabilities of the Debtors' without resorting to
chapter 11. Eventually Jones Day helped prepare and commence
these cases. Jones Day's professionals have worked with the
Debtors' management and become familiar with most aspects of the
Debtors' businesses. Therefore, Jones Day has the relevant
experience to aid the Debtors and provide effective and
efficient service.

Specifically, Jones Day will:

     (a) advise the Debtors of their rights, powers and duties as
         debtors and debtors in possession under chapter 11 of
         the Bankruptcy Code;

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

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

     (d) advise the Debtors with respect to, and assist in the
         negotiation and documentation of, financing agreements
         and related transactions;

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

     (f) advise the Debtors regarding their ability to initiate
         actions to collect and recover property for the benefit
         of their estates;

     (g) counsel the Debtors in connection with the formulation,
         negotiation and promulgation of a plan of reorganization
         and related documents;

     (h) advise and assist the Debtors in connection with any
         potential property dispositions;

     (i) advise the Debtors concerning executory contract and
         unexpired lease assumptions, assignments, and rejections
         and lease restructurings and recharacterizations;

     (j) assist the Debtors in reviewing, estimating, and
         resolving claims asserted against the Debtors' estates;

     (k) commence and conduct any and all litigation necessary or
         appropriate to assert rights held by the Debtors,
         protect the assets of the Debtors' chapter 11 estates or
         otherwise further the goal of completing the Debtors'
         successful reorganization;

     (l) provide corporate governance, litigation, and other
         general non-bankruptcy services for the Debtors as
         requested by the Debtors; and

     (m) perform all other necessary or appropriate legal
         services in connection with these chapter 11 cases on
         behalf of the Debtors.

Jones Day will bill for its professionals' services at its
customary hourly rates:
       Professional            Position    Location       Rate
       ------------            --------    --------       ----

       David G. Heiman         Partner     Cleveland    $600/hour
       Daniel E. Reidy         Partner     Chicago      $490/hour
       Richard I. Werder, Jr.  Partner     Cleveland    $460/hour
       Robert J. Graves        Partner     Chicago      $445/hour
       Paul E. Harner          Partner     Chicago      $450/hour
       Kevin D. Orr            Of Counsel  Washington   $395/hour
       Brad B. Erens           Associate   Chicago      $360/hour
       Ray C. Schrock          Associate   Chicago      $230/hour
       Ann Marie Bredin        Associate   Chicago      $225/hour
       Ilana Glazier           Associate   Chicago      $175/hour
       Daniel B. Prieto        Associate   Chicago      $175/hour
       Bradley C. Brasser      Associate   Chicago      $175/hour

Prior to the Petition Date, the Debtors provided Jones Day with
two retainers in the aggregate amount of $1,150,000 for services
rendered or to be rendered and for reimbursement of expenses.
The retainer has been applied on account of legal fees and
expenses incurred in representing the Debtors in contemplation
of, and in connection with, these chapter 11 cases. As of the
Petition Date, approximately $750,000 of the Retainer remained
unapplied. During the year immediately preceding the Petition
Date, the Debtors also made payments to Jones Day totaling

The Retainer and Prepetition Payments originated from the
Debtors' operating cash.

Mr. Harner assures the Court that, other than in connection with
these cases, Jones Day has no connection with the Debtors, their
creditors, the United States Trustee or any other party with an
actual or potential interest in these chapter 11 cases.  Mr.
Harner goes on to say that Jones Day does not represent, and has
not represented, any entity other than the Debtors in these
chapter 11 cases.  He states that in matters unrelated to these
cases, Jones Day has worked with certain of the Debtors' other
professionals, such as Debtors' co-counsel, Richards Layton, and
Debtors' claims and noticing agent Logan & Company, Inc.

Mr. Harner discloses, out of an abundance of caution, that in
matters unrelated to these cases, Jones Day currently represents
entities that (i) are or may be creditors in these cases, (ii)
are or may be co-defendants of the Debtors in pending litigation
or (iii) are or may be otherwise directly or indirectly
affiliated with creditors or parties of interest in these cases:

       * Jones Day acts as general bankruptcy counsel for LTV
Steel Corporation, a creditor on the Debtors' consolidated list
of top 50 unsecured creditors, in LTV's current chapter 11
proceedings. Jones Day has not represented LTV or the Debtors in
any way regarding LTV's claims against the Debtors and won't in
the future.

       * Jones Day has served as primary outside counsel to R.J.
Reynolds Tobacco Company and certain of its affiliates in a
variety of lawsuits associated with alleged injuries suffered by
plaintiffs or others stemming from exposure to tobacco smoke and
products. Certain companies and trusts that have paid claims of
individuals alleging personal injury from asbestos are among
plaintiffs in these matters. These companies are seeking
reimbursement from RJR and other tobacco companies for some or
all of the amounts paid to asbestos claimants. Jones Day won't
represent the Debtors if they ever decide to sue RJR for
reimbursement. Also, Jones Day will not defend RJR if any of the
Debtors sue RJR while Jones Day is representing the Debtors.
Any other creditors of the Debtors or various other parties
potentially adverse to the Debtors have only been represented by
Jones Day in matters unrelated to the chapter 11 cases. Since
Jones day has more than 1,400 attorneys and 2,000 other
employees, it is possible that certain Jones Day attorneys or
employees hold interests in mutual funds or other types of
investments that may own the Debtors' securities.

Mr. Harner says he is convinced that Jones Day is a
"disinterested person" as defined in 11 U.S.C. Sec. 101(4) and
is confident that he and the Firm hold no interest adverse to
the Debtors. (USG Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

V3 SEMICONDUCTOR: QuickLogic Completes Acquisition
QuickLogic Corporation (Nasdaq:QUIK), the pioneer of ESP
(Embedded Standard Product) technology, said it has completed
the acquisition of certain assets of V3 Semiconductor, Inc., a
manufacturer of Application Specific Standard Products (ASSPs)
that enhance high-speed data throughput within
telecommunications and Internet infrastructure systems.

Under terms of the agreement dated April 17, 2001, QuickLogic
acquired certain assets of Toronto-based V3 on August 1, 2001
for approximately 2.5 million shares of QuickLogic common stock
valued at US$11.3 million.

"When we announced the definitive agreement in April, we said
that we believed the companies had strong synergies that would
help drive QuickLogic's evolution from a component company to
one that offers subsystems and system-level solutions," said Tom
Hart, chairman, president and CEO of QuickLogic. "Since then,
the hard work and goodwill of the talented people at both
companies have begun to produce real improvements in our
existing ESP product lines, as well as to move us further toward
our goal of producing viable alternatives to ASICs. I believe
that QuickLogic's strategic, technical and product capabilities
are stronger than ever."

                   Acquisition Background

V3 filed for relief under Chapter 11 of the bankruptcy laws on
May 22, 2001 in the Northern District of California. It is
anticipated that all creditors will be paid in full and that the
remaining shares of QuickLogic common stock in the transaction
will be distributed to V3's shareholders.

                   About QuickLogic

QuickLogic Corporation introduced the Embedded Standard Product
(ESP) architecture in 1998, creating a new class of
semiconductor devices that combine the guaranteed performance
and lower cost of standard products with the flexibility and
time-to-market benefits of programmable logic. Since then,
QuickLogic has developed more than 100 ESP solutions for OEMs in
such markets as telecommunications and data communications;
video/audio, graphics and imaging; instrumentation and test;
high-performance computing; and military systems. For more
information on the company and its products, please go to

WARNACO GROUP: Moves to Assume and Assign SG Cowen Agreement
Prior to the Petition Date, The Warnaco Group, Inc. entered into
an agreement to engage SG Cowen Securities Corporation as its
financial advisor and investment banker. The Debtors sought SC
Cowen's help in selling the assets owned and controlled by
Lejaby S.A.S, and/or selling Lejaby's capital shares, and/or any
other transaction where the control of or a material interest in
Lejaby are transferred to the purchaser.

According to Shalom L. Kohn, Esq., at Sidley Austin Brown &
Wood, in New York, New York, Lejaby is a French manufacturing
partnership. It is a wholly owned subsidiary of Warnaco
Netherlands B.V. and Warnaco Holland B.V. Both Warnaco companies
own 50% each of the outstanding shares of stock in Lejaby.

Warnaco Holland is a wholly owned subsidiary of Warnaco B.V.
Warnaco B.V. also owns 98% of the outstanding shares of stock in
Warnaco Netherlands.

Warnaco B.V. is a direct wholly owned subsidiary of one of the
Debtors, Warnaco Inc., which is also a direct wholly owned
subsidiary of Warnaco.

Lejaby, Warnaco Netherlands, and Warnaco Holland are not debtors
in these Chapter 11 cases, Mr. Kohn explains.

Because Warnaco does not directly own Lejaby, the Debtors
believe it is more appropriate for Lejaby's direct parent
companies to facilitate the marketing and sale of Lejaby or its

The Debtors seek authority to assume and assign the SG Cowen
Agreement to Warnaco B.V. The Debtors and SG Cowen have agreed
to release Warnaco from all its obligations to SG Cowen upon the
assignment of the agreement to Warnaco B.V. At the same time, SG
Cowen has agreed to reimburse the $200,000 retainer it received
from Warnaco. Mr. Kohn explains it will now be Warnaco B.V.'s
obligation to will pay SG Cowen the retainer. SG Cowen also
agrees to waive all its claims against Warnaco arising under the
agreement. The parties further agree to modify SG Cowen
compensation schedule. Mr. Kohn says the new fee schedule will
provide lower compensation to SG Cowen at sales prices below
$150,000,000 and provide greater compensation if the sale price
exceeds $150,000,000. The Debtors believe this scheme will
increase SG Cowen's incentive to maximize the sales price of
Lejaby, which will benefit the Debtors' estates. (Warnaco
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

WEIRTON STEEL: S&P Junks Corporate & Senior Debt Ratings
Standard & Poor's lowered its ratings on Weirton Steel Corp.
The current outlook is negative.

The downgrade reflects the worse-than-expected erosion of the
company's liquidity and the strong likelihood that remaining
availability will be insufficient to meet the company's near-
term working capital, debt service, and capital expenditure

For the second quarter ending June 30, 2001, total liquidity of
$55 million was measurably below Standard & Poor's expectations
and down from $105 million at March 31, 2001. Plagued by
depressed conditions in the steel industry, Weirton's EBITDA for
the second quarter was a negative $38 million. For the six
months ending June 30, 2001, excluding the effects of noncash
charges, write-offs and assets write-downs, Weirton's net loss
was $109 million. With conditions in the steel industry unlikely
to improve for the next few quarters, it is highly unlikely that
the company will still be solvent by the end of the fiscal year.

                     Outlook: Negative

It is unlikely the company will have sufficient availability to
meet its near-term obligations. The ratings will be lowered
should the company fail to meet these obligations, Standard &
Poor's said.

                      Ratings Lowered

      Weirton Steel Corp.                 To         From
         Corporate credit rating         CCC         B-
         Senior unsecured debt           CCC         B-

WINSTAR COMMUNICATIONS: Selling Professional Service Assets
Winstar Wireless, Inc. and other Debtors in possession files a
motion for order approving:

      a) Asset purchase agreement between Winstar Wireless and
         Sayers Group LLC,

      b) Authorizing sale of assets free and clear of liens,
         claims and encumbrances,

      c) Authorizing Winstar Wireless to assume and assign
         certain executory contracts and unexpired leases,

      d) granting related relief.

Winstar Wireless intends to assume, sell and assign
substantially all of the executory contracts and unexpired
leases related to its Professional Service division.

In connection with this motion, Tierney, Watson & Healey, a
professional law corporation, with principal place of business
at San Francisco, California, expresses objection to the
assumption and assignment of its agreement with Winstar.

Brian S. Healey, a partner with the said law corporation, claims
that Debtor induced it to switch providers on the promise that
it would install high-speed internet access through a direct
satellite dish to be installed at the top of TWH's office
building. He asserts that Winstar did not install such satellite
dish and the internet connection provided by Winstar was only
marginally faster than it's previous provider. Mr. Healey also
states that Winstar also promised that the switch in service
provider would be without additional cost. However, he claims
that TWH was in fact billed $280 by the previous provider for
the transfer of service plus $1,462.07 in unused services of the
previous provider.

Mr. Healey contends that Winstar is indebted to TWH for the
penalties it incurred amounting to a total of $1,742.07 and
further requests that the Winstar's agreement to provide
internet service to TWH not be assumed and be rejected. (Winstar
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


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.

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