TCR_Public/010824.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

            Friday, August 24, 2001, Vol. 5, No. 166

                           Headlines


ABRAXAS PETROLEUM: Sells $10M Canadian Assets to Up Liquidity
ADVANCED GLASSFIBER: S&P Fears Need to Amend Bank Covenants
ALLIS CHALMERS: Q2 Net Loss Widens to $271K Due To Market Plight
AMERICAN ECO: Asks Court to Compel Accounting from GECC
AMES DEPARTMENT: S&P Gives D Ratings Following Chapter 11 Filing

AMF BOWLING: Panel Balks at Blackstone Fees & Indemnification
AMRESCO CAPITAL: Gets Delisting Notice After Filing Delinquency
AT HOME CORP.: Dismisses Ernst & Young as Independent Auditors
BENEDEK COMMS: S&P Junks Credit Ratings on Liquidity Concerns
BOYSTOYS.COM: Cures All Mechanics' Liens & Retains Lease

COMDISCO INC.: Court Okays Hiring of Arthur Andersen as Advisor
CYGNION CORP: Seeks Further Extension of Exclusivity Periods
EGGHEAD.COM: Withdraws Nasdaq Delisting Appeal
ENCHIRA BIOTECHNOLOGY: Subject to Nasdaq Delisting on August 29
FINOVA GROUP: Sets Up Omnibus Claim Objection Protocol

FINOVA GROUP: Berkadia to Extend Loan Using $6 Billion Facility
FRUIT OF THE LOOM: U.S. Trustee Balks At Sealing E&Y Disclosure
GENESIS HEALTH: Gets Okay to Assume PPS-GBMC Deal as Modified
GNI GROUP: U.S. Trustee Reconstitutes Creditors' Committee
GOLDEN OCEAN: Seeks Entry of Final Decree Effective August 8

HYNIX SEMICON.: S&P Airs Concerns Over Severe Liquidity Crunch
INSIGHT HEALTH: S&P Expresses Concerns Over Hefty Debt Burden
INTERNET COMMERCE: Revenues Up & Losses Continue in 2nd Quarter
KEYSTONE CONSOLIDATED: Noteholders Agree to Defer Right Exercise
LAIDLAW INC.: Court Okays Hiring of Logan as Claims Agent

LERNOUT & HAUSPIE: Dictaphone Panel Retains Lafili as Counsel
LOEWEN: Agrees to Assume Lease of Real Property in Virginia
MAXICARE HEALTH: Parent Co. May See Nothing from Dispositions
MIDWAY AIRLINES: Lacks Enough Cash to Satisfy Obligations
MISSISSIPPI CHEMICAL: Fitch Sees Need to Reduce Hefty Debts

MONEY'S FINANCIAL: Court Enters Order Confirming Joint Plan
NEXTWAVE: Appeals Court Refuses Delay in Handing over Licenses
NMT MEDICAL: Using Proceeds from UK Asset Sale to Repay Debts
ORBITAL SCIENCES: Plans To Raise Capital & Refinance Obligations
OWENS CORNING: Toyota Wants Decision on Forklift Leases -- Now

PACIFIC GAS: Court Extends Time for Plan Filing to December 6
PILLOWTEX CORP.: CIT Seeks Stay Relief or Adequate Protection
PLANET HOLLYWOOD: Red Ink Flows Again & SEC Filings are Delayed
PSINET INC.: Travis County Objects to Exclusion of Lien Payments
SAFETY-KLEEN: Files First Omnibus Objections to Proofs of Claim

SIMON WORLDWIDE: Pledges Cooperation with Inquiry into Games
TRISM INC.: Padlocks Specialized Big & Heavy Transport Division
TRITON ENERGY: Fitch Pulls Out BB- Rating Affecting $500 in Debt
VENCOR: UST Says Van Kampen's Supplement Violates Court Rules
VIATEL INC.: Level 3 Picks-Up Transatlantic Network Assets

WASHINGTON GROUP: Financial Woes Self-Inflicted, Raytheon Says
WATTS HEALTH: S&P Assigns 'R' Rating on Financial Strength
W.R. GRACE: National Medical Weighs-In on Fresenius Litigation
WINSTAR COMMS: Gets Court Approval to Reject Deal with Fibernet

BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of
             Eastern Airlines


                           *********


ABRAXAS PETROLEUM: Sells $10M Canadian Assets to Up Liquidity
-------------------------------------------------------------
Abraxas Petroleum Corporation (AMEX:ABP) said that successful drilling,
cost effective operations, and improved prices all contributed to Abraxas
meeting analysts' guidance results.

For the quarter ended June 30, 2001, a 75% improvement, compared to
the prior year period, in both cash flow (after interest) and losses
resulted
in $.28 cash flow per share and $.05 net loss per share.

The Company is said to be also working aggressively to both restructure
its debt to bring interest costs down and improve its balance sheet as well
as continue to reduce operating costs. All of which augurs well for Abraxas'
future.

Bob Watson, Company CEO, commented,  "In south Texas we drilled
a successful offset to our previously announced Dimon #1 well confirming
our 3D seismic interpretation and setting up additional offset locations.
This well, the Pettus #3, is currently producing at 3 MMcfe per day with
3000# of flowing tubing pressure."

Watson commented on other U.S. operations,  "In west Texas two
Montoya wells are now producing from our drilling agreement with EOG
Resources, Inc. (NYSE:EOG) and two more wells are expected to be
drilling in the second half.  On our 100% owned Oates S.W. Montoya
play, 3D seismic has been interpreted and one or two old well bores
have been identified as re-entry  candidates to test the Montoya and
Devonian formations in this field at a much lower cost than drilling new
wells.  Operations will commence on the first of these re-entry
candidates shortly.

"In Wyoming, the interpretation of our 3D seismic survey is complete
and four zones have been identified that are potentially productive in our
Brooks Draw area.  Permitting has begun on two vertical wells that will
allow us to confirm the 3D seismic interpretation and test multiple zones."

On Canadian operations, Mr. Watson stated, "Based on our 3D seismic
acquired over the winter, over 50 locations have been identified in our
core areas of Caroline and Pouce Coupe. Drilling has commenced in both a
reas since break-up in June and we have successfully drilled and evaluated
4 wells, with 2 wells currently drilling.

"Operations have been slowed by an extremely wet summer in Alberta
but the first of these wells is expected to be on production in each of
these areas shortly.  In Ladyfern, we were successful in a recent lease
sale in acquiring additional acreage within our 3D seismic survey that
could add up to 2 additional locations to the 4 locations planned for
this winter drilling season.  Firm capacity has been contracted for on a
planned pipeline expansion in anticipation of our drilling program this
winter."

As previously announced, Abraxas commenced its tender on August
1 for the remaining shares of its 48.3% owned Canadian subsidiary Grey
Wolf Exploration Inc. (TSE:GWX).  The tender will expire on September 5,
2001, unless extended or withdrawn.

The Company also completed approximately $10 million of asset sales
in Canada during the quarter and in the third  quarter expects to close
on another approximate $10 million of non-core asset sales in Canada.

These asset sales combined with the tender for Grey Wolf are another
step in the restructuring of the Company's balance sheet that will improve
liquidity and earnings going forward and allow Abraxas to continue to
improve its cost structure while focusing on its portfolio of drilling
projects in its core areas.

For the balance of 2001, the Company expects to continue its successful
exploitation activities in the United States and in Canada and looks
forward to its winter drilling program in the Ladyfern area. At the same
time the Company will continue to review ways to improve its balance
sheet and pare costs in order to maintain liquidity and enhance
shareholder value.


ADVANCED GLASSFIBER: S&P Fears Need to Amend Bank Covenants
-----------------------------------------------------------
Standard & Poor's lowered its ratings on Advanced Glassfiber
Yarns LLC.

The outlook is stable.

The downgrade is the result of significant declines in sales and earnings
due to poor market conditions in electronics end markets. A rapid
recovery is not expected due to the worldwide economic slowdown
and oversupply conditions within the electronics industry.

As a result, Advanced Glassfiber's financial performance is likely to remain
weak, which may necessitate amendments to financial covenants in its bank
loan agreement during the next several months.

The ratings reflect Advance Glassfiber's good position in the technically
demanding manufacture of glass fibers, offset by a relatively narrow
product mix, sales to cyclical end markets, customer concentration,
and an aggressive financial profile.

Aiken, S.C.-based Advance Glassfiber is a leading global supplier of
glass yarns used in a variety of applications including: printed circuit
boards, roofing materials, filtration equipment, and reinforced tapes.

Advanced Glassfiber's majority (51%) owner is unrated France-based
Porcher Industries Group (Porcher), which also owns 100% of BGF
Industries Inc. (B+/Stable/--), one of Advanced Glassfiber's major
customers. The remainder of Advanced Glassfiber is owned by Owens
Corning. Advanced Glassfiber relies on Owens Corning for critical
support in the supply of specialized equipment and other areas.

No disruption in operations related to Owens Corning's bankruptcy
has been experienced or is expected.

Although cost reductions have kept operating margins (before depreciation)
fairly stable near 30%, lower sales volumes and a negative product mix
shift are depressing earnings. Financial performance could come under
increased pressure if sales to industrial and construction end markets
(which
have held up relatively well so far) slow.

Also, with about a quarter of sales in currencies other than the U.S.
dollar,
results continue to be penalized by adverse exchange rates. Debt levels
are not expected to increase significantly, as free operating cash flow
should be aided by reductions in inventory (which had been built up in
advance of production cutbacks) and lower capital spending.

As a result, credit protection measures should remain in a range acceptable
for the lowered ratings, with debt to EBITDA in the 4 times to 5x range,
EBITDA interest coverage averaging about 2x, and funds from operations
to debt averaging between 10% and 12%.

                      Outlook: Stable

The ratings assume successful renegotiation of bank covenants, assuring
continued access to liquidity. Operating performance is expected to
produce results in line with the lowered ratings.

                      Ratings Lowered

         Advanced Glassfiber Yarns LLC     To    From

           Corporate credit rating         B+    BB-
           Senior secured bank loan rating B+    BB-
           Subordinated debt rating        B-    B


ALLIS CHALMERS: Q2 Net Loss Widens to $271K Due To Market Plight
----------------------------------------------------------------
Allis Chalmers Corporation posts results of operations for 2001 and 2000
reflect the business operations of OilQuip. The operations of Houston
Dynamic Service, Inc., an Allis Chalmers subsidiary which is involved in
the machinery repair and service business, is included from the date
of the Merger on May 9, 2001.

During the period February 4, 2000 (Inception) to December 31, 2000,
OilQuip was in the developmental stage. OilQuip's activities for 2000
consisted of developing its business plan, raising capital and negotiating
with potential acquisition targets.

Therefore, the results for operations for 2000 had no sales, cost of
sales, or marketing and administrative expenses that would be reflective
of the ongoing company.

Three months ended June 30, 2001:

Sales in the second quarter of 2001 totaled $2,001,000 in line with
expectations. The reason for the increase from the prior year was
the Merger in May 2001.

Pro forma sales in the second quarter of 2001 totaled $2,563,000 a
significant decrease from $3,069,000 in the second quarter of 2000.
Sales at HDS decreased to $1,222,000 compared with $1,598,000
in the prior year.

HDS continues to be affected by volatile market conditions that prevail
in the oil-related fields of refining, processing, chemicals and
petrochemical
operating throughout the Gulf Coast.
Sales at MCA decreased to $1,341,000 compared with $1,471,000
in the prior year due to difficulties experienced by MCA customers
in obtaining drilling permits.

The permitting process has now returned to a normal schedule.

The Company incurred a net loss of $271,000 in the second quarter
of 2001 compared with a loss by OilQuip of $111,000 in the same
period of 2000.

Six months ended June 30, 2001:

Sales in the first six months of 2001 totaled $2,607,000. The reason
for the increase from the prior year was the Merger in May 2001.

Pro forma sales in the first half of 2001 totaled $4,999,000, a slight
decrease from $5,208,000 in the first half of 2000. Sales at HDS increased
to $2,559,000 compared with $2,422,000 in the prior year. HDS
continues to be affected by volatile market conditions that prevail in
the oil related fields of refining, processing, chemical and petrochemical
operating throughout the
Gulf coasts.

Sales at MCA decreased to $2,440,000 compared with $2,786,000 in
the prior year due to difficulties experienced by MCA customers in
obtaining drilling permits. The permitting process has now returned to
a normal schedule.

The Company incurred a net loss of $541,000 in the first half of
2001 compared with a loss by OilQuip of $172,000 in the same
period of 2000.

The Company incurred a pro forma net loss of $704,000 for the
six months ended June 30, 2001.


AMERICAN ECO: Asks Court to Compel Accounting from GECC
-------------------------------------------------------
American Eco Holding Corp., et al. seeks a court order directing
General Electric Capital Corporation to provide an accounting
pursuant to the terms of an April 4, 2001 Consent Order lifting
the automatic stay.

In March the debtors filed a motion seeking authorization to use
GECC's cash collateral beyond the DIP Expiration Date. AS a
consequence of negotiations following the motion, the debtors
and GECC entered into a Consent Order lifting the automatic
stay.

The stay order requires GECC to liquidate its collateral in a
commercially reasonable manner. The stay order also provides
that GECC will provide the debtors and Committee with a written
accounting on the 15th day of each month commencing May 15,
2001.

The debtors claim that GECC merely lumps all "collections" and
"costs" without providing any detail as to the source of the
recoveries or the basis of the costs incurred and/or paid.

The debtors are represented by Michael S. Etkin and Bruce
Buechler of Lowenstein Sandler PC and Laura Davis Jones, Bruce
Grohsgal and Michael R. Seidl of Pachulski, Stang, Ziehl, Young
& Jones PC.

A hearing on the motion will be held on August 28, 2001 at 8:30
AM before the Honorable Sue L. Robinson, Wilmington, DE.


AMES DEPARTMENT: S&P Gives D Ratings Following Chapter 11 Filing
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Ames
Department Stores Inc. to 'D' from triple-'C'-plus and lowered
its senior unsecured debt rating to 'D' from triple-'C'-minus.

The downgrade follows the company's filing of a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Ames's sales and cash flow have been negatively affected by the
company's small position relative to the national discounters,
heightened competition in a tough retail environment,
difficulties related to its 1999 acquisition of Hills Stores, a
heavy debt burden, and very limited financial flexibility.

Ames has $4 billion in annual sales and operates 452 discount
department stores in the Northeast, Mid-Atlantic, and Midwest.


AMF BOWLING: Panel Balks at Blackstone Fees & Indemnification
-------------------------------------------------------------
The Official Committee of Unsecured Creditors objects to the
application of AMF Bowling Worldwide, Inc. to employ & retain
Blackstone Group L.P. as Financial Advisors to the Debtors.

The Committee believes that the present indemnification and fee
provisions are unreasonable because they:

   a. insulate Blackstone from its own negligence;

   b. create a fee structure that does not provide proper
      incentives to Blackstone;

   c. guarantee a fee to Blackstone without knowing how much
      work Blackstone will actually perform for the Debtors and
      without regard for the quality or results of its efforts
      on the Debtors behalf; and

   d. reduce the recovery to unsecured creditors by requiring
      fee to be paid in lump sum immediately after restructuring
      is complete.

Jonathan L. Hauser, Esq., at Troutman Sanders Mays & Valentine
in Richmond, Virginia, tells the Court that the Committee
objects to the agreement that the debtors indemnify Blackstone
against any "losses, claims, damages, expenses and liabilities"
unless judicially determined to result from bad faith, gross
negligence or willful misconduct of Blackstone.

The agreement further provides that Blackstone's liability
shall, in no event, exceed amount of fees received under the
Engagement Letter. The collective effort of this provision is to
absolve Blackstone from any meaningful responsibility for its
own negligence and prevent the Debtor from obtaining money
damages to which they may be entitled in the event of such
negligence.

Mr. Hauser relates that the Committee also objects to
Blackstone's proposed compensation. The monthly $200,000 fee is
objectionable because it is payable without regard to the amount
of work Blackstone performs during any particular month.

The $7,000,000 restructuring fee is objectionable because it is
payable regardless of how much work Blackstone performs or the
recovery the Debtors' creditors receive pursuant to the
restructuring. Moreover, the Committee strongly objects to the
provision in the Engagement Letter that Blackstone's
compensation is not subject to review by the Court.

The Committee suggests the Application be approved only if:

   (a) a new indemnification provision is substituted to make
       Blackstone liable for its own negligence and require
       Blackstone to pay full amount of damages due;

   (b) the monthly advisory fee is credited against the
       restructuring fee;

   (c) the restructuring fee is tied to the success of the
       restructuring -- measured by creditor recovery;

   (d) the restructuring fee should be payable over 12 to 18
       months following consummation of a plan of reorganization
       rather than payable immediately; and

   (e) the restructuring fee should be required to be approved
       by the Court at a Final Fee Hearing to ensure that
       Blackstone is not inappropriately compensated.

Mr. Hauser points-out that Blackstone's relationship with the
Debtors has been more than that of an advisor and client. Mr.
Hauser observes that investment partnerships managed by
Blackstone invested in AMF Bowling, Inc., and currently own
10.1% of AMF Bowling's common stock. Mr. Hauser adds that a
Blackstone partner served on the Board of Directors of the
Debtors from 1996 through May 30, 2001, just before the filing
of the Chapter 11 cases. (AMF Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


AMRESCO CAPITAL: Gets Delisting Notice After Filing Delinquency
---------------------------------------------------------------
AMRESCO Capital Trust (Nasdaq: AMCTE) announced that on August
16, 2001 it received a Nasdaq Staff Determination letter stating
that the company had failed to comply with the filing
requirements for continued listing set forth in Marketplace Rule
4310(c)(14) and that its securities were, therefore, subject to
delisting from The Nasdaq National Market.

The company has requested a hearing with a Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance that the Panel will grant the company's
request for continued listing.

As a result of the company's filing delinquency, Nasdaq changed
the company's trading symbol from AMCT to AMCTE effective August
20, 2001.

As previously communicated, the company is liquidating its
assets under a plan of liquidation and dissolution. Shareholders
approved the liquidation and dissolution of the company on
September 26, 2000. To date, the company has made five
liquidating distributions totaling $10.60 per share.


AT HOME CORP.: Dismisses E&Y and Taps PwC as New Auditors
---------------------------------------------------------
At Home Corporation on August 15, 2001, dismissed Ernst & Young
LLP as the Company's independent auditors.

The Company said that the report of Ernst & Young LLP on the
Company's consolidated financial statements for the fiscal year
ended December 31, 2000 dated January 24, 2001 (except for the
second and third paragraphs of Note 1, as to which the date is
August 14, 2001) contained no adverse opinion or disclaimer of
opinion. At Home also said that it was not qualified or modified
as to audit scope or accounting principles, but such report
contained an explanatory paragraph describing conditions that
raise substantial doubt about the Company's ability to continue
as a going concern as described in Note 1 to the consolidated
financial statements.

The decision to change independent auditors was approved by the
Company's Audit Committee, Board of Directors and the Company's
stockholders.

           Engagement of New Independent Auditors

At Home has engaged PricewaterhouseCoopers LLP as the Company's
new independent auditors to audit their financial statements,
effective August 16, 2001.

Prior to the engagement of PricewaterhouseCoopers LLP, At Home
had not consulted with PricewaterhouseCoopers LLP during their
two most recent fiscal years and through the date of this report
in any matter regarding either:

   (A) the application of accounting principles to a specified
       transaction, either completed or proposed, or the type of
       audit opinion that might be rendered on our financial
       statements, and neither was a written report provided to
       the Company nor was oral advice provided that
       PricewaterhouseCoopers LLP concluded was an important
       factor considered by At Home in reaching a decision as to
       the accounting, auditing or financial reporting issue, or

   (B) the subject of either a disagreement or a reportable
       event described in Item 304(a)(1)(v) of Regulation S-K.

At Home spokeswoman Alison Bowman tells The Wall Street Journal
that the reason for its decision to dismiss Ernst & Young
was "benign" and that the Company's plan to switch auditors
"has nothing to do with us disagreeing with [E&Y]. It's because
AT&T uses PwC and our results wrap up into theirs, so it's easier
to use the same auditors."


BENEDEK COMMS: S&P Junks Credit Ratings on Liquidity Concerns
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit ratings on
Benedek Communications Corp. and its subsidiary, Benedek
Broadcasting Corp. to double-'C' from triple-'C'-plus. Standard
& Poor's ratings on all rated debt and preferred stock are also
lowered.

All ratings remain on CreditWatch, where they were placed with
negative implications on June 7, 2001 based on liquidity and
covenant-compliance concerns.

The downgrades follow Benedek's disclosure that senior secured
bank lenders will likely prohibit the Nov. 15, 2001, interest
payment on the 13.25% senior subordinated discount notes, even
in the event that the bank group waives the June 30, 2001,
covenant noncompliance.

Benedek has indicated that refinancing would be unattractive and
that it will attempt to negotiate a deferral of cash interest
payments on the discount notes.

If the company does not make the cash interest payment on the
notes and is unable modify its obligation to pay cash interest,
noteholders will be entitled to accelerate their debt and
exercise their remedies.

Benedek expects its proposed bank agreement amendment will
require it to sell assets in order to bring the company into
compliance with financial covenants under the current facility,
as of Dec. 31, 2002. Such transactions would most likely include
TV stations in the company's largest markets.

While many of Benedek's stations are VHF with first-or second-
place ratings, they are in smaller markets, which are generally
less attractive than larger markets. The currently weak TV
station business environment, which has resulted from the
advertising slowdown, also suggests that any station sales
will be at depressed cash flow multiples and therefore
unattractive to Benedek.

Standard & Poor's will continue to monitor the situation as the
company proceeds with bank and noteholder negotiations.

         Ratings Lowered & Remaining on CreditWatch
               with Negative Implications

         Benedek Communications Corp.        To    From

          Corporate credit rating            CC    CCC+
          Senior subordinated debt           C     CCC-
          Preferred stock rating             C     CC


         Benedek Broadcasting Corp.

          Corporate credit rating            CC    CCC+
          Senior secured bank loan rating    CC    CCC+


BOYSTOYS.COM: Cures All Mechanics' Liens & Retains Lease
--------------------------------------------------------
BoysToys.com, Inc. (OTC Bulletin Board: GRLZ), an entertainment
holding company, recently moved in bankruptcy court to assume
and continue its long-term lease on the Boys Toys' club location
in San Francisco.

The landlord opposed that motion. In doing so the landlord
contended that the lessee under the lease is not BoysToys.com
but rather the Company's wholly owned and non-bankrupt
subsidiary, RMA of San Francisco, Inc., which operates the club.

Shortly afterward, on August 8, 2001, the landlord served RMA
with:

   (i) a three-day notice to pay the same $100,000 lien claim
       which the landlord had previously demanded from
       BoysToys.com, Inc., and

  (ii) a ten-day notice to remove a mechanics' lien filed by
       R.L. Door & Co.

That lien was the last remaining of several expired mechanics'
liens that the landlord had earlier demanded that BoysToys.com
remove.

Management has long considered BoysToys.com, Inc. to be the
lessee under the lease. But Management recognized that the
landlord's latest maneuverings presented an opportunity:

   (a) to immediately cure the two remaining breaches under the
       lease,

   (b) to thereby block the landlord's multiple attempts to
       terminate the lease,

   (c) to resolve the dispute over the lease in the
       shortest possible time, and

   (d) to minimize the litigation expense needed to protect the
       Company's interest in the lease.

The Company has therefore agreed to and accepted the landlord's
contention that the Company's wholly owned subsidiary RMA of San
Francisco is the lessee under the lease.

On Friday August 10, 2001, within the time allowed under the
three-day notice, RMA of San Francisco, Inc. tendered the
$100,000 lien-claim amount to the landlord.

On Monday August 13, 2001, within the ten-day-notice period,
R.L. Door & Co. agreed to execute and record a release of its
mechanics' lien. Hence, it is the Company's position that all
breaches asserted by the landlord have been timely cured. The
Company can now submit its re-organization plan to the court and
is confident it will emerge successful from its Chapter 11
filing.


COMDISCO INC.: Court Okays Hiring of Arthur Andersen as Advisor
---------------------------------------------------------------
Convinced that it is for the best interests of Comdisco, Inc.,
Judge Barliant authorizes the Debtors to employ Arthur Andersen
LLP as financial advisor.

Norman P. Blake, Jr., CEO of Comdisco, reveals that the Debtors
chose Arthur Andersen because of its considerable expertise in
assisting companies both inside and outside of bankruptcy. Mr.
Blake adds that Arthur Andersen has provided them tax advisory
services since 1986.

Thus, the firm is familiar with the Debtors' accounting systems
and business operations as well as the specific financial issues
that the Debtors now face.

A Retainer Agreement dated June 13, 2001, outlines the
professional services Arthur Andersen will perform:

   (a) reviewing financial and other information as necessary to
       maintain an understanding of the Debtors' operations and
       financial position;

   (b) assisting the Debtors in connection with financial '
       reporting matters resulting from the bankruptcy and
       restructuring, and any reports required by the Court;

   (c) reviewing cash or other projections and submissions to
       the Court of reports and statements of receipts,
       disbursements and indebtedness;

   (d) assisting the Debtors with the preparation for, and
       negotiations with, lending institutions and creditors;

   (e) assisting the Debtors with formulating a plan of
       reorganization and accompanying disclosure statement;

   (f) consulting with the Debtors' management and counsel in
       connection with other business matters relating to the
       activities of the Debtors;

   (g) assisting the Debtors with the preparation of a
       liquidation analysis;

   (h) providing expert testimony as required;

   (i) assisting the Debtors in preparing communications to
       employees, customers and creditors;

   (j) working with accountants and other financial consultants
       for the banks, committees and other creditor groups;

   (k) providing tax advisory services to the Debtors and their
       affiliates in accordance with ordinary course agreements
       with the Debtors;

   (l) assisting the Debtors with the preparation of Schedules
       of Assets and Liabilities and the Statements of Financial
       Affairs; and

   (m) providing such other financial and business consulting
       services as required by the Debtors and their legal
       counsel.

Arthur Andersen will charge the Debtors its customary hourly
rates, which range from:

     Partners and Principals  $425 - $550
     Managers and Directors   $300 - $425
     Associates               $200 - $300
     Analysts                 $125 - $200

With respect to State and Local Tax Engagements, Andersen
receives fees based upon a percentage in the range of 20% to 25%
of the cash savings achieved through reductions in the Debtors'
various state and local tax obligations, or similar value-added
fee arrangements.

The Debtors will reimburse Arthur Andersen for reasonable out-
of-pocket expenses billed in conjunction with its monthly
professional fee statements.

Prior to the Petition Date, the Debtors paid Andersen $1,382,789
for its financial advisory services and reimbursed $59,983 in
expenses. Andersen began serving as financial advisor to the
Debtors on or about June 13, 2001.

Andersen also received a retainer of $250,000 from the Debtors
for professional services to be rendered and expenses to be
charged in connection with its services. This will be applied
against post petition fees and expenses that are allowed by this
Court.

Jerry L. Turner, a partner in Arthur Andersen LLP, assures the
Court that:

   (a) Neither Arthur Andersen nor any professional at Arthur
       Andersen holds or represents an interest adverse to the
       Debtors' estates.

   (b) Arthur Andersen is not or was not a creditor, an equity
       security holder or an insider of the Debtors, except that
       Arthur Andersen has previously rendered tax and financial
       advisory services to the Debtors for which it has been
       compensated.

   (c) Neither Arthur Andersen nor any professional at Arthur
       Andersen is or was an investment banker for any
       outstanding security of the Debtors.

   (d) Neither Arthur Andersen nor any professional at Arthur
       Andersen is or was, within 3 years before the Petition
       Date, an investment banker for a security of the Debtors,
       or an attorney for an investment banker in connection
       with the offer, sale or issuance of any security of the
       Debtors.

   (e) Neither Arthur Andersen nor any professional at Arthur
       Andersen is or was, within 2 years before the Petition
       Date, a director or officer of the Debtors or of an
       investment banker of the Debtors.

   (f) Arthur Andersen does not have an interest materially
       adverse to the interest of the estates or of any class of
       creditors or equity security holders, by reason of any
       direct or indirect relationship to, connection with, or
       interest in the Debtors or an investment banker specified
       in the foregoing paragraphs or for any other reason.
       (Comdisco Bankruptcy News, Issue No. 3; Bankruptcy
       Creditors' Service, Inc., 609/392-0900)


CYGNION CORP: Seeks Further Extension of Exclusivity Periods
------------------------------------------------------------
Cygnion Corporation will file a motion requesting an order
further extending for sixty days the exclusivity periods by
which the debtor has the exclusive right to propose and obtain
acceptances of a plan of reorganization.

The debtor has been actively marketing all of its assets. The
debtor received an offer to purchase certain of its assets for
in excess of $300,k000 from Santa Fe computer Products. The
court approved the sale in April, 2001.

The debtor continues to explore the sale of the remaining
inventory of CyberGenie kit components and headsets and/or the
potential for assembling and selling additional completed kits,
possibly to Santa Fe.

WK, the debtor's largest shareholder, holds a $3 million claim
based on loans made to the debtor. WK maintains that repayment
of its loans to the debtor is secured by a UCC-1 Financing
Statement encumbering substantially all of the debtor's assets.

Absent a favorable resolution of the sale motion and sale
hearing, it is difficult for the debtor to propose a plan
treatment for WK.

An asset purchase agreement in the case is scheduled for
September 6, 2001.

Valence Semiconductor, Inc. has offered $600,000 for furniture
and fixtures.

The debtor believes that it must locate a new buyer and resolve
the dispute with WK prior to formulating its plan. Therefore the
debtor believes that a brief extension of the exclusivity
periods will provide sufficient time to resolve the issues and
formulate a successful plan.

Philip E. Strok of Albert, Weiland & Golden LLP represents the
debtor.


EGGHEAD.COM: Withdraws Nasdaq Delisting Appeal
----------------------------------------------
Egghead.com(R), Inc. (Nasdaq: EGGSQ) notified Nasdaq that the
Company has withdrawn its request for a hearing to appeal the
Nasdaq staff determination to delist the Company's common stock.

The Company also would not pursue the reverse split action
approved by its Board of Directors in June. Following its
delisting as a Nasdaq National Market security, the Company does
not expect its common stock to be traded on the OTC bulletin
board.

"With our sale of assets to Fry's Electronics pending Bankruptcy
Court approval, the Egghead.com site remains active; however, at
the conclusion of this process, the company will no longer exist
as a public entity," said Egghead.com President and CEO Jeff
Sheahan. "As a result, there is no reason to appeal the
delisting."

                      About Egghead.com

Egghead.com, Inc. is an Internet direct marketer of technology
and related products. With an emphasis on Small- to Medium-sized
Business (SMB) customers, Egghead.com offers a wide range of
products from computer hardware and software, consumer
electronics and office products, to sporting goods and vacation
packages.

Its Clearance, After Work and Auction formats offer bargains on
excess and closeout goods and services. Egghead.com is located
on the Internet at http://www.egghead.com


ENCHIRA BIOTECHNOLOGY: Subject to Nasdaq Delisting on August 29
---------------------------------------------------------------
Enchira Biotechnology Corporation (Nasdaq: ENBC) received a
Nasdaq Staff Determination on August 21, 2001, indicating that
the Company fails to meet the minimum bid price requirement and
market value of public float requirement for continued listing
set forth in Marketplace Rules 4450 (a)(2) and 4450 (a)(5), and
that its common stock is, therefore, subject to delisting from
The Nasdaq National Market on August 29, 2001.

The Company will request a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff's determination. There
can be no assurance that the Panel will grant the Company's
request for continued listing.

The Company's request for a hearing with the Panel will stay the
delisting of the Company's Common Stock pending the Panel's
decision.

The hearing with Nasdaq is expected to occur within 45 days of
the Company's request, but could occur later.

At the hearing, Enchira will request additional time to resolve
the arbitration with Maxygen and will submit a plan detailing
how it intends to raise its stock price above the $1.00 minimum
and raise its public float over $5 million.

If Nasdaq denies the Company's appeal, shares of the Company's
common stock may be traded on The Nasdaq SmallCap Market,
subject to certain minimum listing requirements, or on the Over-
the-Counter Bulletin Board. The next step in the arbitration
process with Maxygen is the final hearing before the arbitrator
considers an appropriate remedy.

This hearing is scheduled to take place by the end of August
2001.

In the event that the Company's common stock is delisted from
The Nasdaq National Market, the holders of the Company's Series
B Preferred Stock may be entitled to have their shares of Series
B Preferred Stock redeemed at $50.00 per share. If such right is
triggered, and all holders of Series B Preferred Stock elect to
exercise their redemption right, the Company would be required
to pay the holders of Series B Preferred Stock approximately
$15.6 million in the aggregate.

Dr. Peter Policastro, President and Chief Executive Officer of
Enchira noted, "The Company's stock valuation has been severely
affected by the continued arbitration proceedings with Maxygen."

Dr. Policastro continued, "We are trading at levels that do not
take into account the potential of the Company's technologies or
other assets within the Company. The Company's current valuation
is also grossly out of proportion with the valuation of its peer
companies, and is in fact, trading at less than cash value. We
feel the proceeding with Maxygen, which we hope will be resolved
within the next several months, has gravely harmed us.
Therefore, we are pursuing avenues available to us to protect
our shareholders, including a reverse split if it becomes
necessary."

Enchira Biotechnology is applying proprietary, directed
evolution techniques to accelerate development and
commercialization of new products for the pharmaceutical,
industrial enzyme and ag-bio markets.

Additional information is available at the Company's website:
http://www.enchira.com


FINOVA GROUP: Sets Up Omnibus Claim Objection Protocol
------------------------------------------------------
The volume of claims filed in the chapter 11 cases of the FINOVA
Group, Inc. is extremely high, Janet M. Weiss, Esq., at Gibson,
Dunn & Crutcher LLP, tells Judge Walsh. Without counting the
claims of the indenture trustees for the Debtors' Debt
Securities or the agent banks for the Debtors' Bank Claims --
which represent the vast majority of the Debtors' debt
obligations in these cases -- more than 5,000 claims were filed
against the Debtors' estates.

The general Bar Date for filing proofs of claim was not until
July 13, 2001, just one month prior to confirmation. Because of
the speed with which the Debtors' Plan was confirmed, just over
5 months after the commencement of these cases and one month
after the Bar Date, the Debtors have had very little time to
process these claims as yet.

In order to ensure that the claims resolution process will be as
streamlined as possible, thereby allowing distributions upon
valid claims as quickly as possible after the Effective Date,
the Debtors request that the Court enter an Order that will
establish uniform procedures for objections to claims:

     A. Step One -- Debtors' Objections

Under the proposed procedures and the Plan, the Debtors will
file and serve objections to claims based on any grounds
permitted by the Bankruptcy Code or Rules within 60 days after
the Effective Date of the Plan. In addition, supplemental
Objections on different grounds may be filed against particular
claims notwithstanding that such claims are also the subject of
a pending or previously resolved Contemporaneously herewith, the
Debtors have filed a Preliminary Omnibus Objection to Claims for
Purposes of Allowance, which interposes an objection to any
claim, other than a Bank Claim and Debt Securities Claim (as
defined in the Plan):

     (i) that is not listed on the Schedules,

    (ii) that is listed on the Schedules as contingent,
         unliquidated or disputed, or

   (iii) as to which a proof of claim is filed in an amount
         greater than the amount listed on the Schedules, where
         such amount is not listed as contingent, unliquidated
         or disputed, minus any amounts that have been paid or
         setoff since the Petition Date.

In addition, the Preliminary Objection also interposes an
objection to the Bank Claims and the Debt Securities Claims only
to the extent such claims exceed the Undisputed Claim Amount.

     B. Step Two -- Responses to Objections

In accordance with sections 102(1), 105, 502(b) of the
Bankruptcy Code, and Rules 3007, 9019 and 9029 of the Bankruptcy
Rules, the holder of a claim that is the subject of an Objection
must file a written response to the Objection in order to
contest the Objection.

The Response must:

     (i) provide a concise statement setting forth all legal and
         factual reasons why such claim should not be
         disallowed, reclassified or otherwise treated in light
         of the Objection, and

    (ii) include copies of all documents (not already attached
         to the proof of claim objected to) supporting the
         Response.

The Claimants will be encouraged to file Responses which are
short and specific by procedures, because under the proposed
procedures they will retain the right to file additional
pleadings if the Objection must be resolved by the Court. The
Claimant must file and serve a Response within 20 days after the
service of the Objection or such Claimant's claim will be
disallowed, reduced, reclassified or otherwise treated, in
accordance with the relief requested in the Objections, without
further notice or hearing.

     C. Step Three -- Negotiation Period

In an effort to resolve disputed claims on an informal basis,
and to avoid burdening the Clerk with inquiries from claimants,
the Debtors will include in their Objections the name, address
and phone number of the appropriate attorney for the Debtors
whom claimants may contact to discuss the Objection. 14.

If a Response to the Objection is timely filed, the Debtors
will review the Response and enter into negotiations with the
respondent toward the potential consensual resolution of the
claimant. If, in its Response, the respondent fails to include
copies of all documents supporting the claim, the respondent
shall have 10 days from a written request by the Debtors to
provide such documentation. If the respondent fails to respond
to the Document Request within 10 days of the written request,
the claim that is the subject of the Document Request will be
automatically disallowed, reduced, reclassified or otherwise
treated in accordance with the relief requested in the
Objection, without further notice or hearing as if a Response
had never been filed.  15. After a review of claims as to which
Responses are filed, the Debtors will amend or withdraw their
Objections to claims to the extent that communications with
Claimants and their Responses lead the Debtors to conclude that
such claims, as stated by the claimants in their proofs of claim
or portions thereof, are valid. The Debtors and Claimants may
also file stipulations in the event a consensual resolution of a
claim is reached.

     D. Step Four -- Hearing, If Necessary

If a Claimant timely files and serves a Response complying with
the above described procedure, and if the Claimant and the
Debtors are unable to agree upon a consensual treatment of the
subject claim within 30 days after filing of the Response (or,
if a Document Request is served, within 30 days after compliance
with the Document Request) then either party may schedule a
hearing with respect to the Objection and the Response, which
hearing may be combined with other hearings on claims objections
and other matters heard at omnibus hearing dates or held on such
other dates as this Court may order.

In order to encourage streamlined and efficient Objections and
Responses, the Debtors propose that the filing of such pleadings
be without prejudice to the parties' rights to file appropriate
supplementary pleadings in the event that a hearing on a
particular claim is necessary. These procedures are not intended
to affect the burden of proof or the burden of persuasion that
would otherwise be applicable in such a hearing.

The Debtors submit these procedures are designed to ensure the
efficient and cost-effective disposition of the objections to
claims by providing a simple and streamlined procedure for their
resolution. If approved, the procedure will facilitate the
expeditious reconciliation of claims filed against the Debtors,
while reducing unnecessary expense and effort by the Debtors,
their creditors, other parties in interest and this Court.
(Finova Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


FINOVA GROUP: Berkadia to Extend Loan Using $6 Billion Facility
---------------------------------------------------------------
FleetBoston Financial's Fleet Securities unit has successfully completed
the syndication of the $6 billion securitization facility for Berkadia LLC.
Berkadia, a joint venture between Berkshire Hathaway Inc. and Leucadia
National Corp., will use the proceeds from the facility to fund a loan
to Finova Capital Corp., as part of Finova Group, Inc.'s bankruptcy
reorganization plan, which became effective on August 21, 2001.

"Fleet's capital market capabilities were essential to completing this
transaction," said Warren E. Buffett, Chairman, Berkshire Hathaway Inc.
"They've been a great resource in my 30-year association with them,
and they delivered outstanding results in this very important deal."

Fleet acted as sole arranger for the transaction; 17 other institutions
participated in the deal.

"We're very pleased to have led this financing for Berkadia. This
transaction is one of the largest securitizations ever arranged," said
Timothy
J. Conway, Managing Director, head of Capital Markets at
FleetBoston Financial. "We raised in excess of $6 billion in the global
capital markets at attractive
pricing levels for the issuer through an innovative structure
which provides very competitive returns for investors."

By the time of closing, Berkadia's requirements were for $5.6 billion
in financing.

FleetBoston Financial is the seventh-largest financial holding company
in the United States. A diversified financial services company with
assets exceeding $200 billion, Fleet offers a comprehensive array of
innovative financial solutions to 20 million customers in more than 20
countries and territories.

Among the company's key lines of business are: corporate banking,
including capital markets/investment banking and commercial finance;
retail banking, with nearly 1,700 branches and more than 3,800 ATMs
in the Northeast; investment services, including nationwide brokerage;
and full-service banking through more than 250 offices in Latin America.

FleetBoston Financial is headquartered in Boston and listed on the New
York Stock Exchange (NYSE: FBF) and the Boston Stock
Exchange (BSE: FBF).


FRUIT OF THE LOOM: U.S. Trustee Balks At Sealing E&Y Disclosure
---------------------------------------------------------------
Patricia A. Staiano, Esq., the United States Trustee for Region
III, objects to Fruit of the Loom, Ltd.'s request to file E&Y's
supplemental disclosure under seal.

Ms. Staiano points to Rule 2014(a) of the Federal Rules of
Bankruptcy Procedure:

"An order approving the appointment of attorneys, accountants,
appraisers, auctioneers, agents or other professionals shall be
made only on application of the trustee of committee. The
application shall be filed and, unless the case is a chapter 9
municipality case, a copy of the application shall be
transmitted by the applicant to the United States Trustee. The
application shall state the specific facts showing the necessity
for the employment, the name of the person to be employed, the
reasons for the selection and to the best knowledge of the
applicant, all of the person's connections with the debtor,
creditors, any other party in interest, their respective
attorneys and accountants, the United States trustee or any
person employed in the office of the U.S. trustee. The
application shall be accompanied by a verified statement of the
person to be employed setting forth the person's connections
with the debtor, creditors, any other party in interest, their
respective attorneys and accountants, the U.S. trustee or any
person employed in the office of the U.S. trustee."

In addition, Federal Rule of Bankruptcy Procedure 9018 provides:

"On motion or on its own initiative, with or without notice, the
court may make any order which justice requires (1) to protect
the estate or any entity in respect of a trade secret or other
confidential research, development, or commercial information,
(2) to protect any entity against scandalous or defamatory
matter contained in any paper filed in a case under the Code, or
(3) to protect governmental matters that are made confidential
by statute or regulation. If an order is entered under this
rule without notice, any entity affected thereby may move to
vacate or modify the order, and after a hearing on notice the
court shall determine the motion.

As the party seeking relief, Fruit of the Loom, has the burden
of demonstrating (as a threshold matter) that the generic
provisions of Rule 9018 can be used to trump E&Y's obligation to
disclose connections pursuant to Rule 2014(a).

Ms. Staiano argues that Fruit of the Loom does not cite a single
published or unpublished opinion which supports the far-fetched
notion that Rule 9018 can be used to modify Rule 2014(a), a rule
that is grounded in the strong, compelling presumption of open
access to judicial records and proceedings in civil matters.

Even assuming Fruit of the Loom is successful in making the
threshold showing, the firm still has the burden of
demonstrating that the information sought to be sealed in the
Supplemental Affidavit is the type of information that is
entitled to protection.

Based on the information known to the UST, the proposed
Supplemental Affidavit indicates (at most) that E&Y has a
connection with an unidentified party who may be involved in an
event related to the Debtors. The details and parameters of the
event are also unspecified. The type of event involved is an
event that occurs in nearly every Chapter 11 case. To the extent
that Fruit of the Loom believes that a reader of the
Supplemental Affidavit who is "in the know" may draw inferences
regarding the possible nature of the event or the identity of
the party, such belief merely serves to indicate that the
allegedly confidential information is already in the public
domain and therefore not entitled to protection.

Furthermore, if Fruit of the Loom is successful in demonstrating
that the supplemental affidavit contains material which may be
protected under section 107(b) and Rule 9018, the relief granted
should be narrowly tailored to protect such material - the
entire document should not be filed under seal where a few lines
may be redacted.

The UST believes that the contents of the Supplemental Affidavit
do not justify the extraordinary relief requested.

E&Y and Fruit of the Loom apparently believe that Ms. Staiano
means business. To pacify her, James J. Doyle, partner at E&Y,
submits a redacted affidavit with several lines obscured by
black marker. Mr. Doyle states that in connection with his
firm's retention by Fruit of the Loom, E&Y requested the names
of entities which may have had a connection with Debtors. The
retention affidavit set forth the connections which were known
to E&Y. E&Y committed to advise the Court if additional
relationships became known to E&Y.

Mr. Doyle states that E&Y currently serves as auditors for a
publicly traded company that is potentially interested in
purchasing certain assets from Fruit of the Loom. E&Y cannot
reveal the identity of the potential purchaser at this time, as
it is a publicly traded company and its interest in the proposed
transaction may be material non-public information not to be
selectively disclosed.

In order for the potential purchaser to pursue the proposed
transaction, it is essential that it have access to services
that can only be provided by its auditors. If E&Y were not able
to provide such services, the potential purchaser would either
have to forego the transaction or replace E&Y as it auditors-a
difficult and costly transition.

As a result, while the retention affidavit states that "E&Y will
not accept any engagement which would require E&Y to represent
an interest adverse to Debtors in any way relating to the
matters in connection with which E&Y is to be engaged in these
Chapter 11 cases," E&Y hereby modifies that statement to make
clear that it intends to provide the services described in this
affidavit to the potential purchaser.

The services E&Y proposes to render to the potential purchaser
are unclear as the vast majority of the text is obscured with
black ink. However, E&Y assures the Court that it will establish
appropriate internal procedures to ensure that E&Y employees and
professionals providing services for Fruit of the Loom will not
compromise the interests of the potential purchaser and vice
versa.

Mr. Doyle informs the Court that Fruit of the Loom has consented
to E&Y's provision of services to the potential purchaser and
the potential purchaser has approved the arrangement as well.
(Fruit of the Loom Bankruptcy News, Issue No. 36; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


GENESIS HEALTH: Gets Okay to Assume PPS-GBMC Deal as Modified
-------------------------------------------------------------
To retain the benefits derived from a Joint Venture known as
PPS-GBMC which is in jeopardy due to the Genesis Health
Ventures, Inc.'s filing for bankruptcy and holding of Joint
Venture funds in the amount of $681,032 (the Cure Amount), the
Debtors sought and obtained the Court's approval of a settlement
with GBMC which involves assumption of the Operating Agreement
with modifications and payment of the Cure Amount.

On or about October 15, 1996, Professional Pharmacy Services,
Inc., a wholly-owned subsidiary of GHV and a Debtor in these
chapter 11 cases, and GBMC Agency, Inc., an entity unrelated to
the Debtors, formed a limited liability company known as PPS-
GBMC Joint Venture, LLC. by way of an Operating Agreement, as
amended by the First Addendum to Operating Agreement for PPS-
GBMC Joint Venture, LLC, dated as of October 1, 1998. The
Debtors have been advised that Agency is directly affiliated
with GBMC which is one of the largest hospitals in the Greater
Baltimore, Maryland area.

The Joint Venture owns and operates two retail pharmacies on the
campus of the Greater Baltimore Medical Center. The Debtors
derive several substantial benefits from their involvement in
the Joint Venture.

First, the Joint Venture is a high volume, high margin pharmacy
which produces considerable amounts of profit annually, fifty
percent of which inures to the benefit of PPS. It produces an
estimated annual positive cash flow of $275,000, and an
estimated annual earnings before interest, taxes, depreciation,
and amortization (EBITDA) of $520,000.

Second, PPS receives a management fee of 3% of the net sales of
the Joint Venture which results in approximately $144,000 in
annual revenues to PPS. In addition to the direct benefits, the
Debtors enjoy an extremely lucrative global relationship with
GBMC. In fact, GBMC represents a significant strategic partner
for the Debtors as it is one of the largest referring hospitals
to the Debtors' inpatient operations in Maryland.

Moreover, the Debtors provide discharge planning services to
GBMC for which the Debtors receive substantial added revenues.

After GHB filed for bankruptcy, Agency and GBMC raised certain
issues with the Debtors concerning the impact of the Debtors'
filing of their chapter 11 cases on their respective
relationships.

Specifically, the Operating Agreement contains Bankruptcy
Default Provisions pursuant to which the voluntary filing of a
chapter 1l case by a member of the Joint Venture may cause the
dissolution of the Joint Venture at the non-defaulting party's
option. Thus, Agency and GBMC asserted that the Debtors' filing
of their chapter 11 cases triggered the Bankruptcy Default
Provisions of the Operating Agreement.

The Debtors, on the other hand, maintain that the provisions
contained in section 365(e)(1) of the Bankruptcy Code render the
Bankruptcy Default Provisions unenforceable.

In addition, while the Operating Agreement provides that the
funds and operations of the Joint Venture must be segregated
from the funds and operations of PPS and from those of any other
entity related to PPS, until recently, the funds and operations
of the Joint Venture were combined with those of GHV. As of the
Commencement Date, GHV held $681,032 of the Joint Venture's
funds which is due and owing to the Joint Venture (the Cure
Amount).

These issues threatened the lucrative global relationship the
Debtors maintained with GBMC. Negotiations among the Debtors,
Agency, and GBMC took place and the parties ultimately reached a
settlement of all outstanding issues.

First, the Debtors have agreed to assume the Operating Agreement
with modifications. Second, within thirty days after the entry
of the Court's order approving this Motion, GHV will pay the
Cure Amount to the Joint Venture.

Agency, on the other hand, will (i) waive its rights under the
Bankruptcy Default Provisions, and (ii) concurrent with payment
of the Cure Amount, execute an agreement extending the term of
the Operating Agreement for an additional five years, until
December 31, 2006.

The Debtors tell the Court that "assumption of the Operating
Agreement, as modified, will afford PPS with (i) a fifty percent
share of the Joint Venture's annual profits which is estimated
at an annual positive cash flow of $275,000, and an annual
EBITDA of $520,000, and (ii) a management fee of three percent
of the Joint Venture's gross sales estimated at $144,000 on an
annual basis, for an additional five years, until December 31,
2006."

After reviewing the alternatives, the Debtors have determined in
the exercise of their business judgment that the Settlement is
in the best interest of their estates and creditors.
(Genesis/Multicare Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


GNI GROUP: U.S. Trustee Reconstitutes Creditors' Committee
----------------------------------------------------------
The United States Trustee reconstitutes the Official Committee
of Unsecured Creditors appointed in The GNI Group, Inc., et al.,
chapter 11 proceeding.   The seven-member panel consists of:

   1. Loeb Partners Corporation
      c/o Robert Grubin
      61 Broadway, 24th Floor
      New York, NY

   2. State Street Research & Management Co.
      c/o Michael Rolnick
      One Financial Center
      31st Floor
      Boston Mass 02111

   3. Conseco Capital Management, Inc.
      c/o Carl Mabry and Eric Johnson
      11825 N. Pennsylvania Street
      Carmel, Indiana 46032

   4. CBSL Transportation services, Inc.
      c/o Edwin P. Bunyea
      4750 S. Merrimac Avenue
      Chicago, IL 60638

   5. Rhodia, Inc.
      c/o Doreen Wilson-Bailey
      259 Prospect Plains Road
      Cranbury, NJ 08512

   6. Air Products & Chemicals Inc.
      7201 Hamilton Blvd.
      Allentown, PA 18195

   7. The Bank of New York
      c/o Romano Peluso
      101 Barclay Street - 21W
      New York, NY 10286


GOLDEN OCEAN: Seeks Entry of Final Decree Effective August 8
------------------------------------------------------------
Golden Ocean Group Limited, et al. filed a motion seeking entry
of a final decree in the case effective August 8, 2001. The plan
became effective on about October 10, 2000.

The plan has been consummated and the Reorganized debtors have
processed all claims and have made pro rata payments in
accordance with the confirmed plan to holders of allowed claims.

The debtors are represented by Latham & Watkins, Los Angeles, CA
and Pachulski, Stang, Ziehl, Young & Jones, PC, Wilmington, DE.


HYNIX SEMICON.: S&P Airs Concerns Over Severe Liquidity Crunch
--------------------------------------------------------------
Standard & Poor's placed its single-'B' long-term corporate
credit ratings on Korea-based Hynix Semiconductor Inc. (Hynix)
and its subsidiary Hynix Semiconductor Manufacturing America
Inc. on CreditWatch with negative implications.

The CreditWatch placement reflects Standard & Poor's heightened
concerns over the severity of Hynix's liquidity difficulties in
the face of a recent plunge in the price of dynamic random-
access memory products--the company's mainstay business.

Korea Exchange Bank, Hynix's main creditor bank, is reported to
be discussing a new financial assistance package with the
company's other creditor banks.

Standard & Poor's will review its ratings on Hynix and Hynix
Semiconductor Manufacturing America as details of the
refinancing package become available.

   Ratings Placed On CreditWatch With Negative Implications:

      Hynix Semiconductor Inc.
                 Corporate credit rating          B

      Hynix Semiconductor Manufacturing America Inc.
                 Corporate credit rating          B
                 Senior secured debt              B


INSIGHT HEALTH: S&P Expresses Concerns Over Hefty Debt Burden
-------------------------------------------------------------
Standard & Poor's affirmed its ratings on Insight Health
Services Corp. and removed the ratings from CreditWatch, where
they were placed on Feb. 2, 2001 given the company's exploration
of strategic alternatives.

The company recently signed a definitive agreement to be
purchased for $470 million in a leveraged buyout transaction.
Ratings on the proposed financing will be forthcoming when the
specifics on the financing are determined.

Standard & Poor's will withdraw the ratings on the existing bank
debt and subordinated debt when they are retired as the deal is
expected to close sometime in mid-September.

The outlook is stable.

The speculative-grade ratings on Insight reflect its leading
position in the mobile and fixed site imaging services field,
offset by concerns regarding its niche position in a narrow
field and heavy debt burden.

Newport Beach, Calif.-based Insight Health Services Corp. is one
of the nation's leading independent diagnostic-imaging services
companies, providing diagnostic-imaging and management services
in 30 states, through a network primarily consisting of 84
mobile and 68 fixed-site MRI facilities.

It has a meaningful presence in 11 regions, with core markets
that include California, Texas, New England, the Midwest, and
the Southeast.

Over the past several years, MRI has become a definitive
diagnostic tool and an acceptable first-line diagnostic
procedure that ultimately reduces overall health care spending.

This recognition has led to double-digit industry volume growth
in the number of scans. Operators, like Insight, benefit from
increasing volume, particularly considering their high fixed-
cost structure.

Operating margins at 40% and high cash flows support a high
degree of leverage and interest burden. Still, given this
leverage, Standard & Poor's remains concerned with the pressures
to contain health care spending as this business is highly
dependent on third-party reimbursement from the government and
managed care firms.

Insight had been highly levered because of prior ownership
changes.

Presently, The Carlyle Group and GE Medical Systems will sell
their approximate two-thirds ownership in the company to a group
led by J.W. Childs, The Halifax Group, and management for $468
million. This will be funded primarily with debt, although the
equity partners will infuse approximately $100 million in new
equity.

Still, under this capitalization plan, funds flow to total debt
is expected to average about 15% and interest coverage is
expected to be about 2.7x, both consistent with the current
rating.

                        Outlook: Stable

Standard & Poor's does not expect the rating to change over the
intermediate term, as the company must continue to successfully
operate under a heavy debt burden in a challenging health care
environment.

     Ratings Affirmed & Removed From CreditWatch

       Insight Health Services Corp.

          Corporate credit rating B+
          Senior secured bank rating B+
          Subordinated debt B-


INTERNET COMMERCE: Revenues Up & Losses Continue in 2nd Quarter
---------------------------------------------------------------
Internet Commerce & Communications (OTC Pink Sheets: ICCX), a
national e-commerce/Web solutions and connectivity company, is
reporting that revenue for the second quarter 2001 was up 11%
compared to the second quarter 2000, to $13.0 million.

The company is currently operating under protection of Chapter
11-bankruptcy code.

Gross profits for the quarter were $5.9 million, an improvement
of 2% over the same time period in 2000. SG&A for the second
quarter was $6.8 million, compared to $9.5 million for the
second quarter in 2000, reflecting a 28% decrease. Operating
Income for the Company in the second quarter was ($940)
thousand.

In the same period in 2000, Operating Income was ($3.7) million,
thus the company showed a 75% improvement in 2001.

Year-to-date revenue is $27.0 million, which is a 14% increase
over the first six months of 2000. Gross profits for the Company
are $11.2 million for the first and second quarters. This is a
13% increase over same period in 2000. SG&A declined 20%,
decreasing from $17.6 million for 2000 to $14.0 million in 2001.
Year-to-date Operating Income is ($2.9) million, showing a
63% improvement from the same period in 2000.

Douglas Hanson, IC&C's Chairman and CEO, said, "Even though the
company felt it necessary to file for protection under Chapter
11, we have seen a tremendous improvement in our year over year
results. We have experienced a very good quarter and continue to
see improvements. Our SG&A decreased 20%, and our revenue
increased 11% proving that we are making strides in our
operating performance."

Hanson further stated, "Our transaction with EarthLink remains
on schedule but we will not see the cash from that transaction
until the fourth quarter. I am continually gratified with the
way our employees perform their duties and work to bring
excellent services to the small and mid-size business market."

          About Internet Commerce & Communications

Denver-based Internet Commerce & Communications is a national e-
commerce and connectivity company, focusing on fully integrated
solutions for small and medium-sized enterprises (SME's).

The Company specializes in e-business applications; consulting,
hosting, co-location, and web solutions, including design and
marketing; and high-speed access, including DSL service. For
more information about IC&C, visit http://www.iccx.net


KEYSTONE CONSOLIDATED: Noteholders Agree to Defer Right Exercise
----------------------------------------------------------------
Keystone Consolidated Industries, Inc. (NYSE: KES) announced
that, pursuant to its previously reported consent solicitation,
holders representing more than 75% of the principal amount of
its $100 million 9 5/8% Senior Secured Notes have agreed to
defer the exercise of such holders' right to accelerate the
payment of the Notes pursuant to the acceleration provisions of
the governing indenture and to defer directing the Trustee of
the Notes to take any action or exercise any remedy available to
the Trustee prior to November 1, 2001, as a result of Keystone's
failure to make the interest payment on the Notes due August 1,
2001.

As previously announced, Keystone has received an agreement from
its primary revolving credit lender to forbear remedies
available to it solely as a result of Keystone's failure to make
the August 1, 2001 interest payment on the Notes.

Keystone continues to evaluate possible restructuring
alternatives to improve its overall financial condition,
including the potential conversion of the Notes to equity
securities of Keystone.

In this regard, Keystone has entered into discussions with
financial advisors to assist the Company in the process of
evaluating possible restructuring alternatives.

Keystone Consolidated Industries, Inc. is headquartered in
Dallas, Texas. The company is a leading manufacturer and
distributor of fencing and wire products, carbon steel rod,
industrial wire, nails and construction products for the
agricultural, industrial, construction, original equipment
markets and the retail consumer.

Keystone is traded on the New York Stock Exchange under the
symbol KES.


LAIDLAW INC.: Court Okays Hiring of Logan as Claims Agent
---------------------------------------------------------
Judge Kaplan concurs with Laidlaw Inc.'s observation that the
Clerk is not be equipped to effectively and efficiently docket
and maintain proofs of claim that will be filed by Laidlaw's
thousands of creditors, potential creditors and other parties-
in-interest.

To effectively and efficiently receive, docket, maintain,
photocopy and transmit proofs of claim, the Debtors will employ
an independent third party as an agent of the Court.

By this Application, the Debtors sought and obtained Judge
Kaplan's permission to employ and retain Logan & Company, Inc.
as its claims and balloting agent.

Logan is a data processing firm that specializes in claims
processing, noticing and other administrative tasks in Chapter
11 cases.

Specifically, Logan will:

   (a) serve as the Court's notice agent to mail notices to
       estate's creditors and parties-in-interest,

   (b) provide computerized claims, objection and balloting
       database services,

   (c) provide expertise and consultation and assistance in
       claim and ballot processing and with other administrative
       information related to the Debtor's bankruptcy cases,
       including assisting in preparation of the Debtor's
       schedules and statement of financial affairs.

The Debtors believe that Logan's assistance will expedite
service of 2002 notices, streamline claims administration
process and permit Debtors to focus on their reorganization
efforts.

At the Debtor's or the Clerk's Office's request, Logan agrees
to:

   (a) Relieve the Clerk's Office of all noticing under any
       applicable rule or bankruptcy procedure and processing
       of claims including:

         (i) Initial notice of filing;
        (ii) 341(a) meeting of creditors
       (iii) Bar date;
        (iv) Objections to claims;
         (v) Notice of any hearings on a disclosure statement
             and confirmation of a plan of reorganization;
        (vi) Other miscellaneous notices to any entices, not
             necessarily the creditors, that the Debtors or
             Court may deem necessary for an orderly
             administration of the Chapter 11 cases.

   (b) At any time, upon request, satisfy the Court that Logan
       has the capability to efficiently and effectively
       notice, docket and maintain proofs of claim;

   (c) Mail a notice of bar date approved by the Court for
       filing of proof of claim and a form for filing proof of
       claim to each creditor notified of the filing;

   (d) File with the Clerk's Office a certificate of service,
       within 10 days after each service, which includes a copy
       of the notice, a list of persons to whom it was mailed
       and the date mailed;

   (e) Maintain all proofs of claim filed;

   (f) Maintain official claims registers by docketing all
       proofs of claim on a claims register, including, but not
       limited to the following information:

         (i) the name and address of the claimant and agent, if
             agent filed proof of claim;
        (ii) the date received;
       (iii) the claim number assigned;
        (iv) the amount and classification asserted by such
             claimant;

   (g) Receive and maintain original proofs of claim in correct
       claim number order, in an environmentally secure area
       and protect the integrity of these original documents
       from theft and/or alteration;

   (h) Transmit to the Clerk's Office an official copy of the
       claims registers and provide Clerk's Office with any
       information regarding the claims register upon request;

   (i) Maintain an up-to-date mailing list for all entities
       that have filed proofs of claim, which shall be
       available upon request of a party in interest or the
       Clerk's Office;

   (j) Be open to the public for examination of the original
       proofs of claim without charge during regular business
       hours;

   (k) Record all transfers of claims pursuant to Fed. R.
       Bankr. P. 3001(e) and provide notice of the transfer as
       required by Fed. R. Bankr. P. 3001(e);

   (l) Act as the Debtors' solicitation agent in respect of any
       plan of reorganization and to receive and tabulate
       ballots in connection therewith;

   (m) Make all original documents available to the Clerk's
       Office on an expedited basis;

   (n) Comply with applicable state, municipal, and local laws,
       orders, regulations, and requirements of Federal
       Government Department and Bureaus; and

   (o) Promptly comply with such further conditions and
       requirements as the Clerk's Office may hereafter
       describe;

In addition, Logan will also assist the Debtors with:

     (i) the preparation of their schedules, statements of
         financial affairs and master creditor lists, if
         necessary, and any amendments thereto; and

    (ii) if necessary, the reconciliation and resolution of
         claims.

Kathleen M. Logan, president of Logan & Company, assures Judge
Kaplan that:

   (a) Logan is not employed by the Government and shall not
       seek any compensation from the Government;

   (b) By accepting employment in the case, it waives any rights
       to receive compensation from the Government;

   (c) It is not an agent of the United States and is not acting
       on behalf of the United States;

   (d) It will not misrepresent any fact to the public; and

   (e) It will not employ any past or present employees of the
       Debtors for work involving the Debtors' chapter 11 cases.

Logan will charge the Debtors' standard prices for its services,
expenses and supplies at the rates or prices in effect on the
day such services and supplies are provided. Logan also agrees
not to increase its prices, charges, and rates for a period of
one year from the date of this agreement.

The Debtors will pay Logan for any necessary and reasonable
incurred out-of-pocket expenses for transportation, lodging,
meals and related items. The Debtors agree to make an advance
payment to Logan to be applied to the final billing in an amount
equal to $100,000.

At the end of each calendar month, Logan will submit an invoice
to the Debtors. The amount invoiced is due and payable upon
receipt.

If any amount is unpaid as of 30 days from receipt of the
invoice, the Debtors will pay a late charge, which is 1 and 1/2%
interest of the amount unpaid. But in case the invoiced amount
is disputed, the Debtors shall send Logan a notice within 10
days from receipt. (Laidlaw Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


LERNOUT & HAUSPIE: Dictaphone Panel Retains Lafili as Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Dictaphone
Corporation asks Judge Wizmur to approve its retention of
Lafili, Van Crombrugghe & partners as special Belgian counsel
for the Dictaphone Committee to assist and represent it in the
Concordat.

The Dictaphone Committee also asks that Judge Wizmur enter an
order authorizing the Dictaphone Committee to retain Lafili
effective as of February 28, 2001, as the Dictaphone Committee's
special Belgian counsel for the purpose of providing advice to
the Dictaphone Committee on Belgian law in connection with
various litigation, corporate mergers and acquisitions,
intellectual property, labor law, tax law, finance law,
and securities matters pertinent to the Concordat.

Lafili is described by the Committee as a highly esteemed
Belgian law firm with considerable experience in representing
entities involved in concordat proceedings.

Due to Lafili's substantial expertise and knowledge in the field
of insolvency and restructuring and the Dictaphone Committee's
need for on-going legal advice concerning the Concordat, the
Dictaphone Committee believes that retention of Lafili as
special counsel is in the best interests of the Dictaphone
Committee and Dictaphone's creditors.

Francis Vanhoonacker is the Lafili attorney who will be
primarily responsible for the representation of the Dictaphone
committee. Although the Dictaphone Committee has employed
Cadwalader Wickersham & Taft as its primary attorneys in these
chapter 11 cases, Lafili is intimately familiar with Belgian
laws, rules and practices concerning the Concordat and is
therefore able to assist Cadwalader in representing the
Committee.

The professional services to be rendered by Lafili will include:

   (a) Litigation of any and all issues in connection with the
       Concordat, including trial (other than those that may be
       pending before this Court, which Cadwalader will handle);
       and

   (b) Such other matters and advice as the Dictaphone Committee
       may request from time to time in connection with Belgian
       issues.

Subject to Court approval, Lafili will charge for its legal
services on an hourly basis in accordance with its ordinary and
customary hourly rates in effect on the date services are
rendered.

The hourly rate charged by Lafili professionals differ based
upon, among other things, such professional's level of
experience. The current hourly rates charged by Lafili are
approximately $200 to $350 per hour for partners, and $100 to
$200 per hour for associates.

Mr. Francis Vanhoonacker avers that Lafili is a disinterested
person with respect to this case, and neither holds nor
represents any interests adverse to the Committee on the matters
for which employment is sought. (L&H/Dictaphone Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)


LOEWEN: Agrees to Assume Lease of Real Property in Virginia
-----------------------------------------------------------
As previously reported, the Mullins Family filed a motion in
2000 seeking the Court's authority to compel The Loewen Group,
Inc. to assume or reject a Memorandum of Understanding or in the
alternative, that the Movants be released from the noncompetion
convenants contained in certain agreements referenced in the
Memorandum of Understanding.

The Mullins Family told the Court that the Debtors had defaulted
on payment but with neither assumption nor rejection of the
Agreement, the Mullins Family was obliged not to compete.

The parties later resolved the matter by way of a Stipulation
and Order approved by the Court. Pursuant to the Stipulation and
Order, the Debtors would not make any further payments under,
and will not attempt to enforce any noncompetition covenants set
forth in the Memorandum of Understanding or the Noncompetition
Agreements between LGII and various members of the Mullins
Family.

The Stipulation and Order also states that the Lease Agreement,
dated May 10, 1994, by and between the Mullins and LGII is a
separate, freestanding unexpired lease of nonresidential real
property that is not integrated with the Memorandum of
Understanding, and the Debtors will neither make any further
payments nor attempt to enforce any noncompetition covenants set
forth in the Memorandum of Understanding and the Noncompetition
Agreements entered in 1994 with the members of the Mullins
Family.

Recently, John T. Mullins and Barbara A. Mullins (the Landlord)
filed a motion to compel the Debtors to assume or reject the
Lease.

The Debtors objected on the grounds that they were unable to
fully assess the costs and benefits of assuming the Lease,
including in particular the purchase option provisions of the
Lease.

After negotiations between the parties, the Court entered an
order providing that, if the Debtors do not file a motion to
assume or reject the Lease on or before August 1, 2001, the
lease will be deemed rejected.

Given this, the Debtors filed a motion dated August 1, 2001 for
assumption of the Non-residential real property lease with John
T. Mullins and Barbara A. Mullins, pursuant to section 365 of
the Bankruptcy Code.

The Lease pertains to real property located in Fredericksburg,
Virginia. The Debtors currently operate a funeral home business
on the Property. The term of the lease runs from May 10, 1994
through May 31, 2004. The annual rent under the Lease is the
greater of (a) eight percent of the annual gross revenues less
cash advances and discounts generated at the Property or (b)
$240,000.

The Lease also provides that LGII has the option to purchase the
Property at the end of the term of the Lease in May 2004 for
$3.5 million.

In the event that LGII does not exercise the Purchase Option,
the Mullins have the option to compel LGII to purchase the
Property for $3.5 million within 90 days following the initial
term of the Lease.

The Debtors have determined, in their business judgment, that
the Property is integral to their ongoing business operations.
The funeral home business operated by the Debtors on the
Property provides them with significant cash flow.

Furthermore, the Debtors do not believe that any monetary
defaults exist under the Lease, and accordingly, no cure amounts
will need to be paid in connection with the assumption of the
Lease. The Debtors have determined that the cash flow generated
by the Property and the value of the Property justify their
potential expenditure of $3.5 million to purchase the Property
in the year 2004 pursuant to the Purchase Option.

Therefore, the Debtors have concluded, in the exercise of their
business judgment, that it is in the best interests of their
estates and creditors to assume the Lease. (Loewen Bankruptcy
News, Issue No. 44; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


MAXICARE HEALTH: Parent Co. May See Nothing from Dispositions
-------------------------------------------------------------
Maxicare Health Plans Inc. (OTCBB:MAXIQ) announced its operating
results for the second quarter of fiscal year 2001, ended June
30, 2001.

For the second quarter of 2001, the company reported a net loss
of $4.9 million, compared with a net loss of $4.7 million for
the second quarter of 2000. The operating losses were
attributable to sharply increased healthcare expenses that
exceeded the company's ability to increase its premiums.

The net loss for the quarter was reduced by the extent to which
the consolidated losses of the Indiana HMO and Maxicare Life and
Health Insurance Company through May 3, 2001, exceeded the
company's investment in those subsidiaries.

Total premium revenues for the second quarter of 2001 decreased
34.9% to $120.9 million, compared with $185.7 million in the
second quarter of 2000.

Commercial premiums for the 2001 second quarter decreased 33.0%
to $73.1 million, compared with $109.0 million last year,
reflecting the placement of the Indiana HMO and MLH into
rehabilitation, the sale of the Louisiana HMO and an increase of
$6.4 million in California commercial revenue.

Medicaid premiums decreased 42.5% to $26.2 million, due to the
placement of the Indiana HMO into rehabilitation. Medicare
premiums for the quarter decreased 30.6% to $21.6 million,
reflecting the termination of the Louisiana business and the
Indiana Medicare business, which contributed Medicare revenue of
approximately $1.0 million and $8.7 million, respectively, to
the June 2000 quarter.

For the six months ended June 30, 2001, the company reported a
net loss of $23.3 million, or ($2.39) per share (basic and
diluted), compared with net loss of $4.6 million, or ($1.29) per
share (basic and diluted), for the same period in 2000.

Total premium revenues for the six months ended June 30, 2001,
decreased 25.0% to $276.8 million, compared with $369.2 million
for the same period in 2001.

Commercial premiums for the six months ended June 30, 2001,
decreased 17.4% to $179.5 million, compared with $217.2 million
last year, reflecting the placement of the Indiana HMO and MLH
into rehabilitation, the sale of the Louisiana HMO and an
increase of $13.2 million in California commercial revenue.

Medicaid premiums decreased 41.2% to $53.9 million, due to the
placement of the Indiana HMO into rehabilitation. Medicare
premiums decreased 28.1% to $43.4 million, reflecting the
termination of the Louisiana business and the Indiana Medicare
business, which contributed Medicare revenue of approximately
$2.2 million and $17.0 million, respectively, to the six
months ended June 30, 2000.

On May 4, 2001, the company's Indiana subsidiary, Maxicare
Indiana, was placed into rehabilitation by the Indiana
Department of Insurance, effectively removing control of its
operations and assets from the company.

The Indiana subsidiary also owns Maxicare Life and Health
Insurance Company (MLH), which offered preferred provider
organization (PPO), point of service (POS) and life insurance
products in both Indiana and California. MLH has also been
removed from the company's control.

On May 25, 2001, Maxicare (California), the company's California
operating subsidiary, filed for bankruptcy. Maxicare
(California) offered commercial coverage, and Medicare and
Medicaid coverage in California.

The company has previously announced that it had signed an
agreement to assign its Los Angeles County Medi-Cal (Medicaid)
contract to Care 1st Health Plan for $15 million and to assign
its Sacramento-area Medi-Cal contract to Molina Healthcare of
California for $900,000.

Maxicare earlier announced that it would cease offering Medicare
coverage in California as of Aug. 31, 2001. The company is
actively pursuing alternatives in regards to the disposition of
Maxicare's commercial operations in California, which represent
the last of its remaining operating businesses.

However, the company cannot give assurance that the assignment
agreements already announced will receive the necessary
approvals, including that required by the Federal Bankruptcy
Court and the California Department of Managed Health Care, or
that any potential disposition of its commercial membership
would obtain such necessary approvals.

In addition, there can be no assurance that any of the
transactions already announced or any potential disposition of
commercial membership will generate sufficient liquidity to
enable the transfer of funds to the parent company, Maxicare
Health Plans Inc.

The company stated that it was working with the California
Department of Managed Health Care to assure continuity of care
and smooth transition of its membership to alternate service
providers.

                         About Maxicare

Maxicare Health Plans Inc., headquartered in Los Angeles, is a
managed healthcare company, with operations in California.


MIDWAY AIRLINES: Cash Need is Critical & New Financing Rumored
--------------------------------------------------------------
Midway Airlines' financial statements as of June 30, 2001 and
for the three and six-month periods then ended were prepared
assuming the Company will continue as a going concern which
contemplates the realization of assets and satisfaction of
liabilities and commitments in the normal course of business.

As reflected in its results statement, the Company incurred a
net loss for the six months ended June 30, 2001 of $15.3
million.

The Company's cash and cash equivalents at June 30, 2001, and
its projected 2001 operating cash flows will not be sufficient
to allow the Company to satisfy its aircraft purchase
indebtedness obligations and other obligations.

During the second quarter of 2001, business traffic declined
significantly due to general economic conditions. Travel by
employees of selected Midway customers declined by as much as
75% by quarter-end, resulting in a unit revenue decline of 17%.
This decline in business traffic has continued into July and
August, and is expected to continue into the future.

This resulted in a material deterioration in the Company's
earnings and cash flow, which severely strained the Company's
liquidity.

As of June 30, 2001, the Company was in violation of the
financial covenants of its bank credit facility. The Company
sought, but did not receive a waiver under those covenants, and
lenders declined to make further advances to the Company which
were needed by the Company to make required pre-delivery
deposits on certain aircraft on order.

The Company's aircraft financiers declined to make the advances
necessary to permit the Company to take delivery of a Boeing
737-700 aircraft that was scheduled for delivery on August 16,
2001 because of the Company's deteriorating financial condition.

As a result of this aforementioned deterioration in economic
conditions and operating results, the Company filed a voluntary
petition under Chapter 11 of the United States Bankruptcy Code
on August 13, 2001.

The Company sought Chapter 11 protection in order to facilitate
an orderly restructuring of the Company. In connection with the
Chapter 11 filing, the Company has ceased operating all four of
its F100 aircraft and thirteen of its twenty-four CRJ aircraft.

The Company will continue operating all twelve of its Boeing
737-700 aircraft and eleven CRJ aircraft during the immediate
future, although that may change.

In connection with the Chapter 11 filing, the Company terminated
approximately 700 of its approximately 2700 employees and plans
further reductions in the workforce to approximately 50% of the
pre-Chapter 11 filing levels. Service on seven routes has been
discontinued, with frequency reductions in 18 other routes.
Additional cancellation of two routes will occur by the end of
August 2001.

The events which caused the Company to seek protection under
Chapter 11 of the United States Bankruptcy Code also caused the
Company to reclassify all long- term debt obligations in the
aggregate amount of $130.3 million into current maturities of
long-term debt and capital lease obligations on the
Balance Sheet as of June 30, 2001. As a result of the Company's
recurring losses, working capital deficiency, the Chapter 11
filing and circumstances relating to this event, including the
Company's debt structure and current economic conditions,
realization of assets and liquidation of liabilities are subject
to significant uncertainty. These matters, among others, raise
substantial doubt about the Company's ability to continue as a
going concern.

Management recognizes that the Company must obtain additional
funds to enable it to meet its obligations. The Company and its
advisors are currently evaluating strategic alternatives to
improve the Company's liquidity and capital resources. There can
be no assurance that the Company will be able to improve its
liquidity and capital resources.

The Company continues to operate business and manage its
operations as debtor-in-possession.  Rumor has it that Midway
secured some form of debtor-in-possession financing earlier this week.


MISSISSIPPI CHEMICAL: Fitch Sees Need to Reduce Hefty Debts
-----------------------------------------------------------
Fitch lowered Mississippi Chemical's senior secured debt rating
to 'B+' from 'BB-' and lowered the company's senior unsecured
debt rating to 'B-' from 'B+'.

The senior secured debt rating of 'B+' applies to the company's
$200 million senior secured bank facility due 2002 and the
senior unsecured debt rating of 'B-' applies to the company's
$200 million of outstanding senior unsecured notes due 2017.

The Rating Watch Negative has been removed and a Negative Rating
Outlook has been assigned.

The current ratings reflect recent financial performance as well
as the long-term value of the company's current assets, domestic
fixed assets and Trinidad-based assets.

The Rating Watch Negative status has been removed; however,
there is still the potential for noteholders to be negatively
impacted by restrictions associated with the senior secured
credit facility that would be triggered by continued unfavorable
commodity market volatility.

The shift from a one-notch to a two-notch differential between
the senior secured credit facility and the unsecured notes
reflects increased balances under the company's secured credit
facility, the recent fourth amendment to the credit facility and
the manner in which proceeds from significant asset sales must
be directed towards debt reduction.

Mississippi Chemical experienced unusually poor operating
margins in the most recent quarter ended June 30, 2001, due to
volatile natural gas costs and weak product prices. A wet spring
planting season, low crop prices and high fertilizer prices have
combined to reduce demand as farmers planted less corn and
bought more imported fertilizer this year.

For the quarter ending June 30, 2001, Mississippi Chemical
generated EBITDA of negative $11.6 million.

The company's total debt as of June 30, 2001, was approximately
$386 million, up from $330 million at June 30, 2000.

The company had $12 million in cash and $21 million available
under the secured credit facility ($33 million in liquidity),
down from $74 million in liquidity at June 30, 2000.

Inventory builds and weak sales volumes have contributed to
higher debt levels than would have been expected if working
capital had been reduced seasonally. Weak earnings have also
contributed to negative cash flow and debt addition.

Credit-protection measures in the quarter ended March 31, 2001,
particularly EBITDA coverage, had improved recently; however,
much of this improvement was the result of the realization of
gains from selling natural gas hedges.

As of June 30, 2001 natural gas hedges were in a loss position.
Going forward, the Negative Rating Outlook reflects the
continued uncertainty faced by both secured and unsecured
creditors.

Mississippi Chemical is a leading producer of nitrogen,
phosphate, and potash fertilizers. The company sells its
products to industrial and agricultural users primarily in the
southern US, although it also exports to Asia, Africa, and Latin
America.

Mississippi Chemical's nitrogen fertilizers (60% of sales)
include anhydrous ammonia, ammonium nitrate (Amtrate), and
urea for application on crops. Its phosphate segment produces
diammonium phosphate fertilizer (DAP).

Mississippi Chemical operates production plants in Louisiana,
Mississippi and New Mexico, as well as in Trinidad and Tobago
(just north of Venezuela) through its Farmland MissChem joint
venture.


MONEY'S FINANCIAL: Court Enters Order Confirming Joint Plan
-----------------------------------------------------------
On July 25, 2001, the Honorable John C. Akard, US Bankruptcy
Court, District of Delaware, entered an order confirming the
Joint Plan of Reorganization Under Chapter 11 for Money's Foods
US Inc. and its affiliated debtors, dated May 31, 2001.

Co-counsel to the debtors are Edwin J. Harron and Brendan
Linehan Shannon of Young Conaway Stargatt & Taylor LLP,
Wilmington, DE and Michael A. Rosenthal PC of Gibson Dunn &
Crutcher LLP, Dallas, Texas.


NEXTWAVE: Appeals Court Refuses Delay in Handing over Licenses
--------------------------------------------------------------
The U.S. Court of Appeals for the District of Columbia  refused to
delay forcing the FCC to hand-over certain wireless licenses to
NextWave Telecom Inc.  Michael Wack, NextWave Telecom Deputy
General Counsel, issued this statement following that ruling:

     "Today's ruling puts strong additional wind behind NextWave's
efforts to continue its network buildout and move further down the
road to completing its successful reorganization. The Court's ruling
that the FCC's legal arguments do not present an issue worthy of
Supreme Court review underscore the fact that additional litigation
serves no purpose other than to hamper NextWave's efforts to provide
consumers with advanced wireless services and the benefits of competition."


NMT MEDICAL: Using Proceeds from UK Asset Sale to Repay Debts
-------------------------------------------------------------
NMT Medical Inc.'s revenues for the three months ended June 30,
2001 increased 7.0% to $9.8 million from $9.2 million for the
three months ended June 30, 2000. Product sales increased 7.1%
to $9.6 million compared to $9.0 million.

An approximately $1.1 million increase in CardioSEAL(R) Septal
Occluder product sales was partially offset by an approximately
$500,000 decrease in product sales from the neurosciences
business unit.

License fees and royalties for the three months ended June 30,
2001 increased 2.1% to $197,000 from $193,000 for the three
months ended June 30, 2000.

Interest income for the three months ended June 30, 2001
decreased by 20.0% to $46,000 from $57,000 for the three months
ended June 30, 2000. This decrease is primarily attributable to
the use of $1,000,000 in cash for repayments of the subordinated
note in January and April 2001 and reduced money market
interest.

Revenues for the six months ended June 30, 2001 increased 5.1%
to $20.2 million from $19.2 million for the six months ended
June 30, 2000. Product sales increased 5.5% to $19.8 million
compared to $18.8 million.

An approximately $2.0 million increase in CardioSEAL(R) Septal
Occluder product sales was partially offset by an approximately
$100,000 decrease in vena cava filter sales and a $900,000
decrease in product sales from the neurosciences business unit.

License fees and royalties for the six months ended June 30,
2001 decreased 9.3% to $401,000 from $442,000 for the six months
ended June 30, 2000 due to reduced sales by Boston Scientific
Corporation of the Company's stent products.rates.

Interest income for the six months ended June 30, 2001 increased
to $128,000 from $67,000 for the six months ended June 30, 2000.

This increase is primarily attributable to increased cash
balances derived principally from the net proceeds, after debt
repayments, from the sale of the U.K. operations of the
Company's neurosciences business unit in April, 2000.

Net income for the three and six months ended June 30, 2001 was
$366,901 and $613,005, respectively.  In the same periods of
2000 net losses were $(8,701,201) and $(8,633,095),
respectively.


ORBITAL SCIENCES: Plans To Raise Capital & Refinance Obligations
----------------------------------------------------------------
Revenues for Orbital Sciences Corporation for the quarter ended
June 30, 2001, were $118,648, with net income of $66,571.  In
the same quarter of 2000 revenues were $144,750, with net losses
of $42,129.

For the six months ended June 30, 2001, revenues were $220,673,
with net income of $45,006.  In the six months ended June 30,
2000, revenues were $282,519, with net losses of $68,653.

The Company incurred net losses from continuing operations for
the quarter and six months ended June 30, 2001, of $24,178 and
$46,701, respectively.

The Company expects to incur a net loss for the year ending
December 31, 2001 before considering gains or losses from asset
sales.

As of June 30, 2001, the company had $51.1 million of
unrestricted cash and cash equivalents and current liabilities
exceeded current assets by $7.4 million. The Company's
accumulated deficit was $419.5 million as of June 30, 2001.

The Company's liquidity has been, and continues to be,
constrained.

To meet its capital and operating requirements, the Company sold
its interests in three businesses in 2001, and has entered into
a definitive agreement to sell another of its operating
divisions.

Management's plans also include restructuring business
operations by consolidating operations and related systems and,
if appropriate, through reducing the Company's work force and
otherwise lowering expenses.

The Company also intends to raise additional debt and/or equity
capital and refinance existing debt obligations. The Company has
commenced initial efforts to replace its current senior credit
facility.

The Company may also consider the sale of additional non-core
assets. Management expects this strategy will generate
sufficient liquidity to satisfy the Company's obligations;
however, the Company's ability to continue as a going concern is
contingent upon the its successful implementation of the
foregoing strategy on a timely basis.


OWENS CORNING: Toyota Wants Decision on Forklift Leases -- Now
--------------------------------------------------------------
Toyota Motor Credit Corporation files a motion for an order
fixing the time by which the Debtors must assume or reject
unexpired leases or relief from automatic stay.

Toyota Motor Credit Corporation, a vehicle manufacturing and
leasing company, had previously entered into lease agreements
with the Debtors whereby Toyota leases certain forklifts to the
Debtors. The lease provides that at maturity date of the lease
contract, the forklifts shall be returned to Toyota.

The lease also requires the Debtors to perform all maintenance,
service & repair of the forklifts at its own expense and for the
Debtor to maintain insurance on the forklifts.

The said leases require monthly payments to Toyota as rent but
as of the current date, rental for thirty-three forklifts is in
default amounting to a total of $25,379.89.

Robert T. Auglur, Jr., Esq., attorney for Toyota, argues that it
is appropriate for the Debtors to determine whether it will
assume or reject the Forklift leases because Toyota will duffer
economic harm that cannot be safeguarded and the potential
injury to Toyota outweighs Debtors' interest in utilizing the
forklifts.

Mr. Auglur contends that forklifts are maintenance sensitive and
if regular maintenance is not performed, forklifts quickly
depreciate in value and subject tot ruin. Mr. Auglur discloses
that Toyota has been unable to inspect the forklifts and has not
received reports on regular maintenance from the Debtors.

Mr. Auglur argues that Toyota's interest in the forklifts is not
adequately protected and any interest that the Debtors have in
utilizing the forklifts cannot outweigh the potential injury to
Toyota.

Furthermore, Mr. Auglur adds that the Debtors are entitled to
relief because the Debtors have no equity interest in the
forklifts and they are not necessary for an effective
reorganization. (Owens Corning Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


PACIFIC GAS: Court Extends Time for Plan Filing to December 6
-------------------------------------------------------------
Paul S. Aronson, Esq., at Milbank, Tweed, Hadley & McCloy,
relates that five members of the Official Committee of Unsecured
Creditors of Pacific Gas & Electric Company and all of the
Committee's Professionals organized a Plan Working Group to
pursue with vigor everything that's required to obtain
confirmation of a plan of reorganization that delivers full and
immediate repayment to PG&E's creditors.

The Plan Working Group has had numerous face-to-face meetings
with PG&E, and the Group realizes that there are many variables
and complexities that must be resolved before the parties can
put a confirmable plan of reorganization on the table.

While the Committee would have like to see only a short 60-day
extension of PG&E's exclusive period, the Committee recognizes
that is unrealistic. Accordingly, the Committee tells Judge
Montali, the Committee supports the Debtors' request.

The Official Committee of Participant Committee tells Judge
Montali that while PG&E may be talking with the Creditors'
Committee, it hasn't heard one word from the Debtor. If PG&E
really wants to propose a plan that has broad creditor support,
the Participants' Committee suggests it should be invited to
meetings with the Creditors' Committee and the Debtors.

Marc S. Cohen, Esq., at Kaye Scholer LLP, notes that he had a
telephone conversation with lawyers at Milbank about two months
ago, and that's the extent of the Participants' Committee's
involvement in the process to date.

With no formal objection to the Debtor's request before the
Court and because "the Court does not independently object" to
the Debtor's request, Judge Montali rules that the Debtor's
exclusive period during which to propose and file a plan of
reorganization is extended until December 6, 2001.

In the event that the Debtor does file that plan, PG&E's
exclusive period during which to solicit acceptances of that
plan is extended until February 4, 2002. (Pacific Gas Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


PILLOWTEX CORP.: CIT Seeks Stay Relief or Adequate Protection
-------------------------------------------------------------
Under a Loan and Security Agreement dated June 1996, Opelika
Industries, Inc. granted CIT Group/Equipment Financing (CIT) a
first priority security interest in and lien on certain
Equipment.

According to Jennifer A.L. Kelleher, Esq., at Reed Smith LLP,
CIT was able to perfect its security interests and liens in and
on the Equipment by filing Uniform Commercial Code Financing
Statements in appropriate jurisdictions.

In connection with the Agreement, Ms. Kelleher relates, Opelika
gave CIT a Promissory Note dated July 1996 in the original
principal amount of $6,854,999.

On that same day, Leshner Corporation also executed and
delivered a certain Guaranty Agreement to CIT. Leshner
unconditionally guaranteed all of Opelika's present and future
payment and performance obligations to CIT.

Under the terms of the Agreement and the Note, Ms. Kelleher
notes, Opelika agreed to pay CIT monthly payments in the
principal amount of $125,132.38 plus interest. If Opelika failed
to pay its monthly obligations, it constitutes an event of
default. And this was what exactly happened, Ms. Kelleher says.

Since Petition Date, Ms. Kelleher informs the Court, Opelika
failed to make any payments to CIT. As of July 25, 2001, Opelika
owes CIT a substantial amount of $1,012,790. But because of the
automatic stay, Ms. Kelleher says, CIT is prevented from
pursuing its rights and remedies against Opelika.

When CIT conducted an inspection of Opelika's facilities in
Opelika, Alabama; Phoenix City, Alabama; and Hawkinsville,
Georgia (where the Equipment is supposed to be located), CIT
discovered that a substantial portion of the Equipment was no
longer there.

Ms. Kelleher relates that the Equipment has either been
converted or disposed of without CIT's permission, which is
in violation of the Agreement, the Note, the Bankruptcy Code,
and applicable law.

According to Ms. Kelleher, the orderly liquidated value of the
Converted Equipment is $1,117,042 while the orderly liquidated
value of the Remaining Equipment is $538,905.

Ms. Kelleher argues that CIT is entitled to relief from the
automatic stay because the value of the Remaining Equipment is
less than the amounts owed to CIT. Ms. Kelleher adds the value
of the Remaining Equipment also continues to decline without any
corresponding reduction in the indebtedness owed to CIT.

On top of that, CIT does not know if Opelika maintained
insurance policies on the Remaining Equipment or kept the
collateral in good condition as required by the Agreement.

CIT also contends that the Court should lift the automatic stay
since the Opelika has no equity in the Remaining Equipment and
neither is the Remaining Equipment necessary to an effective
reorganization.

But should the Court rule otherwise, CIT maintains that Opelika
should be compelled to cure all arrearages and pay CIT monthly
adequate protection payments equal to the amounts provided in
the Agreement and the Note.

And as a result of the conversion or wrongful disposition of the
Converted Equipment, CIT contends that they are entitled to a
super-priority administrative expense claim in the amount of the
value of the Converted Equipment.

In sum, CIT requests Judge Robinson to enter an Order:

   (a) (i) terminating the automatic stay to permit CIT to take
           possession of the Remaining Equipment and to
           exercise and enforce all of its rights and remedies
           against the Remaining Equipment in accordance with
           the provisions of the Agreement, the Note, and
           applicable law;

      (ii) directing Opelika to make the Remaining Equipment
           available to CIT within 3 days after the entry of
           the Order at a time and place designated by CIT;

     (iii) directing Opelika to maintain the Remaining
           Equipment in good condition and to maintain proper
           insurance coverage on the Remaining Equipment in
           accordance with the terms of the Agreement until it
           is returned to CIT; and

      (iv) granting CIT an allowed super-priority
           administrative expense claim in the amount of
           $1,117,042 and directing Opelika to pay such
           claim to CIT within 3 days after the entry of the
           Order; or, in the alternative,

   (b) (i) directing Opelika to cure all arrearages and to
           pay to CIT monthly adequate protection payments
           equal to the amounts provided for in the Agreement
           and the Note and to maintain the Remaining equipment
           in good condition and to maintain proper insurance
           coverage on the Remaining Equipment in accordance
           with the terms of the Agreement and the Note; and

      (ii) granting CIT an allowed super-priority
           administrative expense claim in the amount of
           $1,117,042 and directing Opelika to pay such
           claim to CIT within 3 days of the entry of the
           Order; and (Pillowtex Bankruptcy News, Issue No. 11;
           Bankruptcy Creditors' Service, Inc., 609/392-0900)


PLANET HOLLYWOOD: Red Ink Flows Again & SEC Filings are Delayed
---------------------------------------------------------------
Planet Hollywood International Inc. initiated several
transactions during the thirteen weeks ended July 1, 2001,
including the May 7, 2001 licensing of four of the Company's
domestic restaurants to an affiliated company and the recording
of a non-cash impairment charge of approximately $3.7 million
related to the write-down of long-lived assets of one of the
Company's domestic restaurants.

The Company, its officers and management have been spending
substantial amounts of time in connection with finalizing the
accounting treatment and disclosures associated with these
transactions.

The Company has been unable to incorporate all of this
information into the Company's form 10-Q for the period ended
July 1, 2001 prior to the filing deadline.  Therefore, there
will be a delay in such filing.

The Company's reorganization and restructuring of indebtedness
completed in May of fiscal 2000 created significant changes in
results of operations for the period ended June 25, 2000
compared to the period ended July 1, 2001.

The transactions associated with the Company's Plan of
reorganization resulted in the Company recording an
extraordinary gain on debt forgiveness for the period ended June
25, 2000 of approximately $173 million.

For the thirteen weeks ended July 1, 2001 the Company
anticipates a loss from operations and a net loss of $11.2
million and $12.7 million, respectively. For the twenty-six
weeks ended July 1, 2001 the Company anticipates a loss from
operations and a net loss of $22.5 million and $23.3 million,
respectively.


PSINET INC.: Travis County Objects to Exclusion of Lien Payments
----------------------------------------------------------------
Travis County raises objection because the PSINET, Inc.'s motion
to sell real property in Austin, Texas for $7 million makes no
mention of the payment of the secured ad valorem tax liens for
2001 retained by Travis County in the estimated amount of
$67,695.97, which will be assessed on the real property of the
Debtor.

Travis County explains that under Section 32.01 of the Texas
Property Tax Code a lien attached to the subject real property
to secure payment of all taxes, penalty and interest ultimately
imposed.

Therefore, Travis County objects to the Debtors' motion to sell
the real property free and clear of all iens, claims, interests
and transfer taxes to the extent that PSINet intends to sell the
real property that is encumbered by ad valorem tax liens.

Travis County tells Judge Gerber that the Debtor should be
ordered to pay all property taxes in the approximate amount of
$67,695.97 at the time of the closing of the sale or immediately
thereafter.


SAFETY-KLEEN: Files First Omnibus Objections to Proofs of Claim
---------------------------------------------------------------
Safety-Kleen Corporation and its related and subsidiary Debtors
present Judge Walsh with their first omnibus objections to
proofs of claim filed against these estates.

In making these objections, the Debtors ask Judge Walsh to enter
orders disallowing and expunging each of the disputed claims as
duplicates of already existing claims, as amended or superseded
claims, as late-filed, or as "equity" claims, and by treating
certain "blank" claims as filed in the amounts set out in the
Schedules.

The Debtors remind Judge Walsh that, by his earlier Order, he
had set October 31, 2000, at 4:00 p.m. as the last date and time
for the filing of proofs of claim against these estates.

Notice of this bar date was mailed to all known creditors and
published in the national editions of The Wall Street Journal
and The New York Times.

In addition, the bar date for governmental units was established
as December 6, 2000, at 4:00 p.m. The Debtors advise Judge Walsh
that, to date, approximately 16,903 proofs of claim have been
filed against these estates in the bankruptcy proceedings.

In the ordinary course of their businesses, the Debtors maintain
books and records that reflect, among other things, the Debtors'
liabilities and respective amounts owed to their creditors. The
Debtors and their advisors have begun a review of the proofs of
claim and the books and records, and for the reasons stated,
have determined that certain claims are subject to objection on
one or more grounds.

                    Duplicate Claims

Certain claims are said by the Debtors to be subject to
objection as duplicative because the claimants that filed these
claims filed two or more proofs of claim against the same
Debtors asserting the same liability in the same amount.

The Debtors object to these claims and ask Judge Walsh to order
them disallowed and expunged in their entirety.

If the Debtors' objections are sustained, proofs of claim by
these claimants will survive and remain on the claims registry,
subject to the Debtors' right to object to the surviving claims
in the future on any grounds allowed under bankruptcy or non-
bankruptcy law.

The Debtors tell Judge Walsh that the claimants will not suffer
any prejudice by having these duplicate claims disallowed and
expunged because their surviving claims - asserting the same
liability in the same amount against the same Debtor - will
remain on the claims registry after the duplicate claim is
expunged.

The Debtors report that if the requested relief is granted, the
duplicate claims which remain will total 179 in number and
$11,601,925.46 in amount, with the same number and amount of
claims disallowed.

               Amended and Superseded Claims

The Debtors object to other proofs of claim where they believe
the claims have been amended or superseded by a clam filed
subsequently by the same claimant against the same Debtor for
the same liability, but for a different amount. According, the
Debtors object to these claims and ask Judge Walsh to order them
disallowed and expunged from the claims registry in their
entirety.

If the Debtors' objections are sustained, proofs of claim by
these claimants will survive and remain on the claims registry,
subject to the Debtors' right to object to the surviving claims
in the future on any grounds allowed under bankruptcy or non-
bankruptcy law.

The Debtors tell Judge Walsh that the claimants will not suffer
any prejudice by having these amended or superseded claims
disallowed and expunged because their surviving claims -
asserting the same liability in the same amount against the same
Debtor - will remain on the claims registry after the amended or
superseded claim is expunged.

The Debtors report that this group includes objections to 76
proofs of claim totaling $10,273,425.31, and that if the relief
is granted, a total of 76 proofs of claim in number and
$7,125,906.28 will remain in the claims registry.

                  Late-Filed Claims

The Debtors say that proofs of claim in this group are claims
that were filed after the bar date established by Judge Walsh's
Order, or after the governmental claims bar date, as the case
may be. The Debtors object to these claims and ask Judge Walsh
to order that they be disallowed and expunged in their entirety.

The Debtors report to Judge Walsh that the proofs of claim to
which objection is made on the ground of late filing total 462
in number and $34,038,313.85 in amount.

                      Equity Claims

The Debtors describe these claims as based solely on a
claimant's ownership interest in or possession of any of the
Debtors' common stock or other equity securities.  As such,
these claims do not constitute "claims" within the meaning of
the Bankruptcy Code.  The Debtors therefore object to these
proofs of claim and ask that Judge Walsh order them disallowed
and expunged in their entirety.

The Debtors report that objections are made to proofs of claim
on this basis totaling 142 claims for a dollar amount of
$656,498.09.

                  Blank-Filed Claims

The Debtors' claims and noticing agent, Trumbull Services
Company, mailed out proofs of claim forms to all of the Debtors'
known creditors, including those creditors listed in the
Debtors' Schedules of Assets and Liabilities.  The proof of
claim form sent to the scheduled creditors was preprinted with
the amount of the scheduled claim in the upper right-hand
corner.  However, the form still required that the creditor
complete the remainder of the information requested on the proof
of claim form, including the amount such creditor claimed
against the Debtor.

Some creditors who received this proof of claim form merely
signed the form and returned it without providing the requested
information.  Specifically, the Debtors cite the absence of the
amount of the claim.  The Debtors tell Judge Walsh that their
believe that these creditors did so to express their agreement
with the pre-printed and scheduled amount.  The Debtors have
therefore objected to these proofs of claim which did not assert
an amount and did not assert that the claim was unliquidated or
that the amount was unknown.  The Debtors ask Judge Walsh to
order that each such claim be treated as if it had been filed
in an amount equal to the amount scheduled for such claim by the
Debtors in their Schedules of Assets and Liabilities.

The Debtor reports that the total number of proofs of claim in
this group is 105, and there is no change in the dollar amounts.


SIMON WORLDWIDE: Loses McDonald's Contract & 65% of Revenues
------------------------------------------------------------
Simon Worldwide, Inc. (Nasdaq: SWWI) discloses that McDonald's
had terminated its 25-year relationship with Simon Marketing,
Inc., effective immediately, following a sweepstakes security
breach. Simon, founded in 1976, generated 65% of its
total net sales of $768.4 million in 2001 and 77% of its total
net sales of $217.6 million in this year's first half from
conducting the McDonald's Happy Meal promotions.

Simon says it will work closely with investigators and McDonald's
Corporation to address the situation made public Tuesday concerning
promotional games administered by the company's main operating
subsidiary, Simon Marketing, Inc., on behalf of McDonald's.

Executives of Simon Worldwide were notified for the first time
Tuesday morning of this matter, and Simon Worldwide made an
immediate commitment to cooperate fully with both McDonald's and
all investigating agencies.

Simon Worldwide also announced that it is in the process of
retaining a nationally respected law firm to conduct an
independent review and facilitate Simon Worldwide's work with
McDonald's and with investigators.

Allan Brown, Simon Worldwide's Chief Executive Officer, said,
"We have long valued our 25-year relationship with McDonald's.
We have just learned of this situation and we do not yet know
all of the facts, but we are determined to work with McDonald's
and investigators to get the truth to the public as quickly as
possible."

Simon Worldwide's CEO Allan Brown said: "We share McDonald's
shock at today's allegations. The more than 400 employees of
Simon Worldwide have also been victimized by the alleged actions
of one employee, and everyone at our company is determined to do
whatever we can to repair our relationship with McDonald's and
to maintain our relationships with Simon Worldwide's other
clients."

CEO Allan Brown concluded: "We commend the work done by law
enforcement investigators in this matter. Simon Worldwide is
absolutely committed to the integrity of the games that we
administer, and we will work closely with law enforcement to
ensure that all of the facts are made known."

Simon Worldwide is a diversified marketing and promotion agency
with offices throughout North America, Europe and Asia. The
company works with some of the largest and best-known brands in
the world and has been involved with some of the most successful
consumer promotional campaigns in history.

Through its wholly owned subsidiary, Simon Marketing, Inc., the
company provides promotional agency services and integrated
marketing solutions including loyalty marketing, strategic and
calendar planning, game design and execution, premium
development and production management. Simon is one of the
world's largest creators, developers and procurers of
promotional games and toys.


TRISM INC.: Padlocks Specialized Big & Heavy Transport Division
---------------------------------------------------------------
TRISM, Inc. (OTC Bulletin Board: TSMX) is closing its
Specialized Division immediately. This Division, which is
engaged in the transportation of heavy weight and over-
dimensional materials, as well as general freight, will cease
picking up shipments as of the close of business today and will
effect an orderly delivery of all shipments in transit to their
destination points.

The Company is currently in discussions with its equipment
lenders to reschedule certain equipment payments and to return
excess tractors. In order to further reduce costs and generate
cash to pay down debt obligations which are currently in
default, the Company will also close terminal facilities, sell
trailers and terminate substantially all driver and non-driver
personnel associated with the Heavy Haul Division.

TRISM will continue to operate its Secured Division which
specializes in the transportation of munitions, explosives and
hazardous waste.

TRISM, Inc., headquartered in Kennesaw, Ga., is one of the
nation's largest transporters of secured materials.


TRITON ENERGY: Fitch Pulls Out BB- Rating Affecting $500 in Debt
----------------------------------------------------------------
Fitch has withdrawn Triton Energy Ltd.'s (Triton) senior
unsecured debt rating following Triton's acquisition by Amerada
Hess Corporation. Fitch had rated Triton's senior unsecured
notes 'BB-'.

The withdrawal affects approximately $500 million in debt.


VENCOR: UST Says Van Kampen's Supplement Violates Court Rules
-------------------------------------------------------------
The Supplement and Modification to Application for Reimbursement
of Expenses Pursuant to Sections 503(b)(3) and 503(b)(4) of the
Bankruptcy Code filed by Van Kampen fails to conform to the
Rules of the Bankruptcy Court and the UST Guidelines, the U.S.
Trustee tells the Court.

The UST requests the Court hold Van Kampen to the highest
standard of compliance with the Rules of the Bankruptcy Court
and the UST Guidelines. "The applicant has already reduced its
request for reimbursement of expenses from $689,592.84 to
$474,288.33 allegedly due to an arithmetic error. This error may
not have been identified save for the UST's initial review and
objection to the Application," the UST reminds Judge Walrath.

The Application, the Supplement and the representation made by
Benjamin Mintz, Esquire on behalf of Van Kampen at a hearing
held before the Court, all fail to identify any substantial
contribution made by professionals at Hopkins and Sutter other
than Mr. Solow, the UST notes. At the hearing, Mr. Mintz
represented that the substantial contribution made by Van Kampen
was the participation by Michael Solow of Hopkins and Sutter and
later of Kaye Scholer LLP, in the negotiation of certain
agreements between the Debtor and Ventas, and between the Debtor
and the United States Department of Justice.

The UST draws Judge Walrath's attention to the request for fees
in the amount of $56,912.75 for professional services provided
by professionals and para-professionals from Hopkins and Sutter
other than Mr. Solow, and in the amount of $6,544.00 for
professional services provided by professionals from Kaye
Scholer LLP, other than Mr. Solow. If substantial contributions
were made by professionals other than Mr. Solow, it is incumbent
upon the applicant to identify with specificity any activities
that contributed to the substantial contribution and the benefit
to the estate of that activity, the UST avers. Accordingly, the
UST takes the position that the Application and Supplement fail
to carry the burden required by section 503(b) in this regard.

The UST notes that a daily log of the activities of the
applicant's professionals is absent in the original application
and the one included in the Supplement fails to comply with the
Rules of the Court or the UST Guidelines.

Specifically, the UST draws the Court's attention to the
following in the Supplement:

   (A) Approximately 248 line item entries regarding Michael
       Solow's activities while he was employed by Hopkins &
       Sutter containg descriptions that are vague and/or
       lumped. These entries are so vague as to preclude a
       determination if they contributed a benefit to the
       estate. Telephone conversations and conferences fail to
       identify the subject matter discussed. No description
       identifies the benefit to the estate derived from the
       activity. The UST calculates the requested reimbursement
       for the vaguely described and lumped activities as
       $293,659.36.

   (B) Approximately 13 line items for Michael Solow while he
       was employed by Kaye Scholer LLP contain descriptions of
       activities that are vague and/or lumped. These entries
       are so vague as to preclude a determination if they
       contributed a benefit to the estate. Telephone
       conversations and conferences fail to identify the
       subject matter discussed. No description identifies the
       benefit to the estate derived from the activity. The UST
       calculates the requested reimbursement for the vaguely
       described and lumped activities as $13,426.25. These
       items fail to comply with the Rules of the Bankruptcy
       Court or the UST Guidelines.

   (C) The Supplement contains numerous entries for tasks that
       are duplicative of tasks performed by members of the
       Creditor's Committee or professionals retained by the
       Creditor's Committee with the approval of the Court.

   (D) The Supplement contains entries for numerous discussions
       between Van Kampen personnel and Mr. Solow with no
       identification of the benefit to the estate of the
       discussions. The applicant fails to carry its burden for
       reimbursement under section 503(b) for these requests.

Accordingly, the United States Trustee requests that this Court
deny or reduce the requested Application commensurate with her
objection. (Vencor Bankruptcy News, Issue No. 32; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


VIATEL INC.: Level 3 Picks-Up Transatlantic Network Assets
----------------------------------------------------------
Level 3 Communications, Inc. (Nasdaq: LVLT) acquired the
transatlantic network of Viatel, Inc. A federal judge overseeing
Viatel's Chapter 11 bankruptcy proceedings approved Level 3's
purchase on August 21, 2001, and the transaction was closed on

Specifically, Level 3 has purchased from Viatel two fibers on
the "Yellow" submarine cable connecting London and New York.
This is the same fiber pair that Level 3 sold to Viatel in April
2000. Level 3 now owns and controls 50% of the fibers on the

Under the terms of the transaction, Level 3 retains all cash
payments already made by Viatel under the April 2000 contract,
including $94 million paid to Level 3 at the end of last year.
In return for the Yellow fiber pair, Level 3 has released Viatel
from debts registered with the bankruptcy court totaling approximately
$9 million. Viatel has also transferred 20
gigabits of capacity on the separate transatlantic cable known
as "AC-1" to Level 3.

"We believe this transaction will create value for us, and we
continue to look for opportunities as they develop in the
current market environment," said Kevin O'Hara, Level 3's
president and chief operating officer.

O'Hara said that Level 3 continues to take a strategic approach
in managing its inventory of undersea network assets. "With this
transaction, we have effectively cut in half our cost basis for
transatlantic capacity," O'Hara said. "Our objective is to
ensure we have the appropriate amount of low-cost bandwidth
available to connect our terrestrial networks as we continue to
expand our international customer base."

                  Transaction Summary

The key provisions of the Level 3-Viatel transaction approved by
the judge overseeing Viatel's bankruptcy include:

   - Level 3 retains the cash payments already received from
     Viatel under Level 3's original sale of transatlantic fiber
     announced in April 2000, including $94 million received by
     Level 3 at the end of last year.

   - Viatel has transferred ownership of its fiber pair on the
     Yellow cable back to Level 3.  Level 3 now owns 50 percent
     of the fiber on that cable.

   - Viatel has transferred backhaul fiber and 20 gigabits of
     capacity on the AC-1 transatlantic cable to Level 3.  Those
     assets were originally sold to Viatel under the April 2000
     contract.

   - Level 3 has released Viatel from debts it registered with
     the bankruptcy court totaling approximately $9 million.
     Level 3 has also paid Viatel $100,000 in cash.

   - Level 3 will provide Viatel with two unprotected 2.5-
     gigabit wavelengths on the Yellow cable.  Viatel will pay
     $500,000 in cash to Level 3 to cover one year's operation
     and maintenance charges on the wavelengths and other costs.

                About Level 3 Communications

Level 3 (Nasdaq: LVLT) is a global communications and
information services company offering a wide selection of
services including IP services, broadband transport, colocation
services and the industry's first Softswitch based services. Its
Web address is http://www.level3.com


WASHINGTON GROUP: Financial Woes Self-Inflicted, Raytheon Says
--------------------------------------------------------------
A series of failures and errors in judgment by Washington Group
International (WGI) management put WGI into bankruptcy according
to papers filed today in U.S. Bankruptcy Court for the District
of Nevada by the Raytheon Company (NYSE: RTN).

According to the filing, Raytheon has evidence that will
demonstrate that WGI's financial setbacks were not brought on by
the transactions with Raytheon, but instead resulted from WGI
management's inability to manage a large and complex acquisition
that more than doubled its size, combined with its failure to
generate new business, control costs and effectively manage its
financial affairs.

This evidence includes WGI's own documents and statements.

Raytheon's filing is in response to the lawsuit filed by WGI on
August 3, 2001 alleging that the sale of Raytheon's engineering
and construction business to Washington Group in 2000
constituted a fraudulent transfer.

"We think that Washington Group's lawsuit is nothing more than a
public relations ploy to divert attention from the real reasons
that they are again in bankruptcy and to avoid their obligations
to Raytheon," said Neal Minahan, senior vice president and
general counsel of Raytheon.

Mr. Minahan continued, "The subsidiaries Raytheon sold to
Washington Group were solvent, and Washington Group was not
rendered insolvent by this transaction. Contrary to the
defamatory public statements made by WGI and its officers,
Raytheon's actions were legal and appropriate at every juncture
of this transaction."

WGI, its officers, directors and advisers, which included Credit
Suisse First Boston, Arthur Anderson, Bain & Company, and
Batchelder & Company, engaged in an extensive due diligence
process that extended from September 1999 to July 2000.

Raytheon will demonstrate that, as a result of this process,
WGI, its officers, directors and advisers completely understood
the financial statements and financial condition of the
engineering and construction business it was purchasing, and
indeed renegotiated more favorable terms in the acquisition
agreement as a result of that awareness.

"We don't think there was a problem with this transaction,"
Minahan said. "If there was a problem, we think Washington Group
should be pursuing claims against its directors and officers,
financial and accounting advisers, and lenders who oversaw
Washington Group's due diligence and structured and arranged the
financing for Washington Group in connection with the sale."

On a related point, Raytheon also announced that on August 21st
in a court hearing in the bankruptcy proceedings, WGI has
stipulated that Raytheon would be entitled to vote in the
bankruptcy proceeding as an unsecured creditor, and its vote
would be in the amount requested by Raytheon.

"We are also pleased, notwithstanding Washington Group's prior
statements that Raytheon was not a net creditor and would never
vote in the bankruptcy proceeding, that Raytheon will be entitled
to a significant vote," said Minahan.

With headquarters in Lexington, Mass., Raytheon Company is a
global technology leader in defense, government and commercial
electronics, and business and special mission aircraft.


WATTS HEALTH: S&P Assigns 'R' Rating on Financial Strength
----------------------------------------------------------
Standard & Poor's assigned its 'R' financial strength rating to
Watts Health Foundation (WHF).

This rating action reflects the California Department of
Insurance's recent seizure of WHF, a 34-year-old Inglewood,
Calif.-based nonprofit doing business as UHP Healthcare.

The company has $59 million in debt and is $10.5 million below
its net equity, one of the department's primary financial
solvency indicators. WHF was an HMO that provided coverage to
96,000 people in San Bernardino, Orange, and Los Angeles
counties. The company provided these services under the UHP
Healthcare name.

An insurer rated 'R' is under regulatory supervision owing to
its financial condition. During the pendency of the regulatory
supervision, the regulators may have to power to favor one class
of obligations over others or pay some obligations and not
others.

The rating does not apply to insurers subject only to
nonfinancial actions, such as market conduct violations.


W.R. GRACE: National Medical Weighs-In on Fresenius Litigation
--------------------------------------------------------------
National Medical Care, Inc., represented by William H. Suddell,
Jr., and Eric D. Swartz of the Wilmington firm of Morris Nichols
Arsht & Tunnell, responds to the Joint Motion to prosecute
fraudulent conveyance claims, saying that in their joint motion
the Asbestos Committees of W.R. Grace Co. seek authorization to
challenge as fraudulent conveyances certain transfers made in
connection with two complex corporate transactions: a 1996
transaction involving the combination with NMC of the worldwide
dialysis business of Fresenius AG, and a 1998 transaction
involving the combination of the Debtors' packaging business
with Sealed Air Corporation.

Although Fresenius takes no position on whether this Court
should empower the Asbestos Committees to evaluate or pursue the
alleged fraudulent transfer claims, we do believe that the joint
motion mischaracterizes the factual background of the Fresenius
transaction, obscures the legal and factual impediments to the
successful assertion of a fraudulent conveyance claim based on
the Fresenius transaction, and avoids altogether discussing the
enormous burden that this litigation will impose on the Debtors
and their estates.

Accordingly, NMC urges the Court to acknowledge the role the
Debtors will need to play in the resolution of the novel
theories that the Asbestos Committees seek to present, and to
insist that such litigation go forward, if at all, in this
Court, so that the Court can closely monitor the litigation and
ensure that all of the interests of the estates are properly
protected.

First, Mr. Suddell says bluntly that the Asbestos Committees
have mischaracterized the 1996 transaction between Grace and
Fresenius. While NMC intends to defend itself vigorously in any
adversary proceeding in this Court alleging fraudulent transfer
claims, it would, of course, be premature for NMC to present its
defense on the merits before a complaint has even been filed.
Nonetheless, the mischaracterizations contained in the joint
motion of the Asbestos Committees require a short response that
accurately sets forth the circumstances of the Fresenius
transaction.

In particular, Mr. Suddell suggests that Judge Farnan should
view "with great skepticism" the suggestion of the Asbestos
Committees that the 1996 Fresenius transaction was designed to
shield NMC from asbestos liability.

To the contrary, at the time of the 1996 transaction NMC and
certain of its affiliated subsidiaries were the targets of
criminal and civil investigations being conducted by various
agencies of the federal government, which investigations related
to allegations regarding certain billing and reimbursement
practices. Among the potential penalties NMC and its
subsidiaries faced as a result of the investigation were
substantial fines, civil penalties, forfeitures, and exclusion
from participation in all federal health care programs.

In the 4 years that followed the Fresenius transaction, Grace
remained a profitable, solvent and well-capitalized company.
During that same time, NMC bore the burdens, disruptions, and
expense of the various federal and state criminal and civil
investigations.

To date, these investigations have cost NMC and its affiliates
well in excess of $500 million in penalties and expenses, and
related private civil litigation still continues. No doubt that
is why during the 4 years following the Fresenius transaction
not a single creditor sought to attack the transaction as
"fraudulent" or to impose liability on NMC or its affiliates for
the conduct of Grace. To put it quite bluntly, for those four
years it appeared to most that Grace may well have gotten the
better of the deal between these large and sophisticated
companies.

It is only after significant changes in circumstances - now that
Fresenius has resolved substantial portions of its reimbursement
litigation and Grace has faced an unforeseeable explosion in
"meritless asbestos claims" - that the Asbestos Committees seek
to revise history and claim that the 1996 transaction was
fraudulent in purpose and effect.

To mount this attack, the Asbestos Committees seek not only to
ignore the realities that were known and reasonably foreseeable
as of 1996, but they try to avoid any mention of the significant
financial strength demonstrated by Grace in the years
immediately following the Fresenius transaction.

Second, Mr. Suddell says that Grace obtained the highest and
best value for NMC. As of the end of 1995, Grace-Conn. owned all
the outstanding common stock of NMC, which was a large provider
of dialysis services and products throughout the United States.
Grace-Conn. in turn was wholly owned by W. R. Grace & Co., a New
York corporation.

Beginning in the fall of 1995, Grace-N.Y. and its affiliated
companies engaged in arms-length negotiations with several
entities relating to the possible sale or merger of NMC.

Ultimately, Grace decided that the best value could be obtained
by negotiating a reorganization that would result in the tax-
free combination of NMC with the worldwide dialysis businesses
of Fresenius AG, a German corporation with its principal place
of business in Bad Homburg, Germany.

The 1996 transaction was structured in such a way as to provide
maximum ax benefits to Grace. As a result of this structure,
consideration was paid both directly to Grace-Conn. and to Grace
shareholders. Ultimately, however, the Fresenius entities paid
over $4 billion in cash and stock for NMC. Of that, Grace-Conn.
received a tax-free cash distribution of approximately $2.1
billion.

Moreover, and perhaps equally important, Grace-Conn. received
from the Fresenius entities an indemnity agreement which assured
that Grace would not bear any of the potential liability arising
out of the ongoing investigations of NMC.

In addition to receiving over $2 billion in tax-free cash at the
time of the transaction, Grace-Conn. remained a solvent, well-
capitalized entity long after the Fresenius transaction.

For over four years after the transaction, Grace continued to
pay its debts as they came due, obtained hundreds of millions of
dollars in unsecured lines of credit from some of the world's
most sophisticated financial institutions, paid millions of
dollars in dividends, paid hundreds of millions of dollars in
asbestos settlements, and maintained a significant market
capitalization (over 41.4 billion 18 months after the
transaction, and approximately $1.2 billion a full 3 years after
the transaction.

To say that the Asbestos Committees will be pursuing novel
theories to argue that such a company was rendered insolvent or
undercapitalized as of 1996 is an understatement.

Although the structure of the Fresenius transaction may have
been complicated, this transaction did not constitute a
fraudulent transfer under applicable law. That said, this Court
should be mindful of the degree to which any fraudulent
conveyance claim relating to the Fresenius transaction
necessarily will require significant involvement and attention
by the Debtors.

In his final point, Mr. Suddell says that litigation of the
fraudulent transfer claims will require significant involvement
of Grace. The joint motion makes clear that whatever entities
the committees might ultimately elect to sue, it is the conduct
of Grace that they really wish to challenge.

The joint motion suggests that the Asbestos Committees will
claim that Grace had a fraudulent purpose in entering into these
transactions, and that the effect of one or both of the
transactions was to render Grace insolvent or undercapitalized.
Accordingly, the fraudulent conveyance litigation necessarily
will focus on the intentions and conduct of Grace management,
the financial condition of Grace, and the reasonably foreseeable
asbestos liabilities of Grace at the time of the transactions.

All of this information is unavailable to either NMC or Sealed
Air, and thus it is to Grace personnel and documents that all of
the parties will turn for the primary factual information in
this case.

Thus, the issue of who should prosecute the fraudulent transfer
claims is not the only matter that must be resolved before
litigation can be commenced. There remains the outstanding issue
of where the fraudulent transfer claims would be litigated. NMC
joined in Grace's motions in both the Abner and Woodward cases
seeking to transfer the litigation to Delaware.

Litigation of the fraudulent transfer claims in a forum other
than the forum in which the underlying reorganization is going
forward will unnecessarily complicate and delay Grace's
reorganization. Because the fraudulent transfer claims are based
on Grace's alleged intent and financial condition at the time of
the transactions, much of the burden of defending the fraudulent
transfer claims will require the involvement of Grace and will
impose a significant burden on the company.

As Grace has stated in another litigation, many of the witnesses
who would provide key testimony in any fraudulent transfer
litigation are the same individuals who will be integral to
Grace's successful reorganization. Litigating the fraudulent
transfer claims in the same court as the bankruptcy proceeding
will ensure that the litigation of those claims will be resolved
expeditiously and without unnecessarily delaying Grace's
reorganization.

Moreover, Mr. Suddell says, Judge Farnan has a direct interest
in preventing any unnecessary waste or expense in the conduct of
any fraudulent conveyance litigation. Because NMC and Sealed Air
both have indemnification rights against Grace, which the
Debtors have acknowledged in court and in their filings, the
unnecessary continuation or expansion of any fraudulent
conveyance litigation could result in additional administrative
expenses for the estates.

Once the Court makes the initial determination as to who should
prosecute the fraudulent transfer claims, some modifications of
the automatic stay and/or a preliminary injunction may be
required in order to allow the parties effectively and fairly to
litigate the relevant issues.

Having politely pointed out all these water hazards and reminded
Judge Farnan of his duty, NMC suggests with equal courtesy that
if the Court decides to authorize the Asbestos Committees to
pursue these actions, he require that the actions be brought in
this bankruptcy court "where such litigation can be resolved
fairly, efficiently, and with due regard to the interests of all
constituencies to this bankruptcy proceeding". (W.R. Grace
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


WINSTAR COMMS: Gets Court Approval to Reject Deal with Fibernet
---------------------------------------------------------------
As part of their attempts to reduce operational costs and
increase profitability, the Debtors sought and obtained the
Court's approval to reject its Business Services Agreement with
Fibernet Equal Access, Inc.

Pauline K. Morgan, Esq, at Young Conway Stargatt & Taylor, of
Wilmington, Delaware, relates that the Business Agreement allows
Winstar to use Fibernet's existing infrastructure in four
buildings in New York City.

However, the said buildings are not being utilized by the
Debtors' ongoing business operations. She further adds that the
Agreement obligates the Debtors to pay Fibernet an initial
$100,000, plus monthly charges totaling thousands of dollars per
month, causing an unnecessary drain on their limited cash
resources.

Judge Farnan ruled that the Agreement be rejected and is clearly
appropriate to assist the Debtors in their reorganization and
ultimate emergence from chapter 11. (Winstar Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)


BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of
             Eastern Airlines
-----------------------------------------------------------
Author: Aaron Bernstein
Publisher: Beard Books
Softcover: 272 Pages
List Price: $34.95
Review by Susan Pannell
Order your copy today at
http://amazon.com/exec/obidos/ASIN/1893122131/internetbankrupt

Barbara Walters once referred to Frank Lorenzo as "the most
hated man in America." Since 1990, when this work was first
published and Eastern Airlines' troubles were front-page news,
there had been many worthy contenders for the title.
Nonetheless, readers sensitive to labor-management concerns,
particularly in the context of corporate restructuring, will
find in this book much to support Barbara Walters'
characterization.

To recap: For a few brief and discordant years, Frank Lorenzo
was boss of the biggest airline conglomerate in the free world
(Aeroloft was larger), combining Eastern Continental, Frontier,
and People Express into Texas Air Corporation, financing his
empire with junk bonds. TAC ultimately comprised a fleet of 452
planes and 50,000 employees, with revenues of $7 billion.

But Lorenzo was lousy on people issues, famously saying, "I'm
not paid to be a candy ass."  The mid-180's were a bad time to
take that approach. Those were the years when the so-called
Japanese model of management, which emphasized cooperation
between management and labor, was creating a stir. The Lorenzo
model was old school: If the unions give you any trouble, break
'em.

That strategy had worked for him at Continental, where he'd
filed Chapter 11 despite the airline's $60 million in cash
reserves, in order to exploit a provision  in the Bankruptcy
Code allowing him to abrogate his contracts with the unions. But
Congress plugged that Loophole by the time Lorenzo went to the
mat with Charles Bryan, IAM chapter president. Lorenzo might
have succeeded in breaking the machinists alone, but when flight
attendants and pilots honored the picket line, he should have
known it was time to deal. He didn't.

Instead he tried again for a strategic advantage through the
bankruptcy courts, by filing Chapter 11 in the Southern District
of New York where bankruptcy judges were believed to be more
favorably disposed toward management than in Miami where Eastern
is headquartered, Eastern had to hide behind the skirts of its
subsidiary, Ionosphere clubs, Inc., a New York Corporation, in
order to get into SDNY. Six minutes later, Eastern itself filed
in the same court as a related proceeding.

The case was assigned to Judge Burton Lifland, whom Eastern's
bankruptcy lawyer, Harvey Miller, knew well, but Lorenzo was
mistaken if he believed that serendipitous lottery assignment
would be his salvation. Judge Lifland a year later declared
Lorenzo unfit to run the airline and appointed Martin Shugrue as
trustee.

Most hated man or not, one wonders whether the debacle was all
Lorenzo's fault. Eastern unions, in particular the notoriously
militant machinist, were perpetual malcontents, and Charlie
Bryan was an anti-management zealot, to the point of
exasperating even other IAM officers.

The book provides a detailed account of the three-and-a-half
period between Lorenzo's acquisition of Eastern in the autumn of
1986 and judge Lifland's appointment of the trustee in April
1990. It includes the history of Eastern's pre-Lorenzo
management, from World War I flying ace Eddie Rickenbacker to
astronaut  Frank Borman.


                           *********

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Each Friday's edition of the TCR includes a review about a book
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.

                          *********

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

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

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

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