TCR_Public/010906.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

          Thursday, September 6, 2001, Vol. 5, No. 174


360NETWORKS: Seeks Approval to Reject Willeys Sale Contract
AMES DEPT.: Court Okays Payment on $2.5MM In Shippers' Claims
AMF BOWLING: Court Okays Arthur Andersen as Debtor's Accountants
ARMSTRONG HOLDINGS: Injury Claimants Tap Tersigni as Advisor
AVIATION SALES: Gil West Appointed As New EVP & COO

BRANDSELITE: Files Under Canadian Bankruptcy & Insolvency Act
BRIDGE INFO: Court Okays Sale of Telerate to Moneyline for $10MM
BRIDGE INFORMATION: Moves to Reject 7 Warehouse Leases
CHINA CONVERGENT: Violates Nasdaq's Net Tangible Asset Rule
COMDISCO: Court Okays Proposed Interim Compensation Procedures

CONSUMERS PACKAGING: Court Approves Asset Sale to Owens Illinois
CONTINUCARE INCORPORATED: Frost Discloses 50.4% Equity Stake
COVAD COMMS: Moves to Set Oct. 29 as Bar Date for Filing Claims
DANKA BUSINESS: Annual General Meeting Slated for Oct. 9
ENVISIONET: Sells Assets to Microdyne for $10.7 Million

GENESIS HEALTH: Lays-Out Case for Confirmation of Joint Plan  
GLOBAL TELESYSTEMS: Europe Unit Bank Waiver Extended to Sept. 17
HARNISCHFEGER: Resolves Grade & Corby's SERP-Related Claims
HEARME: Annual Stockholders Meeting Moved to September 28
ICG COMMS: NetAhead Moves to Reject 3 Telecommunications Leases

LOEWEN GROUP: Court Approves Sale of Assets to Denco for $2.25MM
LOOK COMMS: Seeks Protection Under CCAA to Firm Up Refinancing
LTV CORP: Court Okays Modified USWA Pact, Subject to Revisions
MADGE NETWORKS: Likely to Seek Hearing Before Nasdaq Panel
MESA AIR: Inks Deal with Raytheon to Lift Default Status

MONTANA POWER: Shareholders Convene to Weigh Options on Sept. 14
NETWORK COMMERCE: Moves Annual Shareholders' Meeting to Nov. 8
OWENS CORNING: National Union Funds Employee Claim Settlement
PACIFIC GAS: U.S. Trustee Amends Creditors' Committee Membership
PAYLESS CASHWAYS: Negotiations For Liquidation Funding Continue

PILLOWTEX: Court Allows Debtor to Pay Pension Benefit Claims
PSINET INC: Court Approves Sale of HK Assets for $19 Million
RELIANCE GROUP: Insurance Commissioner Targets Deloitte & Touche
SACO SMARTVISION: Talks with CIBC on $15MM Loan Workout Collapse
SEDONA CORP: Fails to Comply with Nasdaq Capital Requirements

UNIFORET: Extends Downtime at Pulp Mill for an Indefinite Period
USG CORP: Seeks Extension of Lease Decision Period to Feb. 28
VLASIC FOODS: Requests Exclusive Period Extension to Oct. 29
W.R. GRACE: Property Claimants Gripe About Bar Date Motion
WARNACO GROUP: Moves to Assume and Assign Grant Avenue Lease

WHEELING-PITTSBURGH: Danieli Seeks Relief to Recover Gas Cleaner


360NETWORKS: Seeks Approval to Reject Willeys Sale Contract
Last March 30, 2001, 360networks inc. entered into a land
purchase agreement with Raymond E. Willey and Tamara A. Willey.  
At that time, the Debtors wanted to buy a real estate property
located at 1315 10th Street in Modesto, California with an area
of 0.96 acres for the sum of $575,000.  So they paid the Willeys
a deposit of $30,000.

But now, Shelley C. Chapman, Esq., at Willkie Farr & Gallagher,
relates, the Debtors no longer want to close the Sale Contract.
According to the Debtors, the Willeys can sell the Modesto
property so long as the Willeys return their Deposit and grant
them release from the Sale Contract.

By this motion, the Debtors ask Judge Gropper for authority to
reject the Sale Contract in order to recover their Deposit and
obtain a release.

Ms. Chapman argues that the settlement is justified because the
Debtors will gain access to $30,000 in cash and obtain a release
for rejecting a sale contract that no longer fits in the
Debtors' business plan and has no meaningful independent value
for assumption and assignment.  

Ms. Chapman notes that the Settlement Agreement is fair and
equitable, in the best interests of the Debtors' estate and
creditors, thus, it should be approved by the Court. (360
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

AMES DEPT.: Court Okays Payment on $2.5MM In Shippers' Claims
Ames Department Stores, Inc. presents the Court with a motion
seeking authority to satisfy pre-petition claims of certain
common carriers and distributors.

David H. Lissy, Esq., Senior Vice President and General Counsel
of Ames Department Stores, Inc., relates that the Debtors employ
a number of common carriers and pay various duties and taxes for
their local and imported products to be distributed and
delivered to their customers.  

Mr. Lissy details the Debtors' total pre-petition Carrier
Obligations, as of Commencement Date:

      1) Freight Forwarder Charges  --  $   80,000
      2) Freight Broker Charges     --  $  850,000
      3) Foreign Transport Charges  --  $  250,000
      4) Common Carrier Charges     --  $1,300,000

Mr. Lissy anticipates that the failure to pay any Customs Duties
will result in the refusal, by the U.S. Customs Service, to
clear any imported but unreleased Foreign Goods.  

Moreover, without the ability to pay any pre-petition Foreign
Transport Charges, Mr. Lissy states that overseas carriers,
storage facilities, and port authorities may refuse to release
the Foreign Goods, thereby impeding the shipment of merchandise
to the Debtors' distribution centers and stores.  Similarly,
absent payment of any outstanding Freight Broker's Fee, the
Freight Brokers likely will refuse to perform the services
necessary to effect the release of the Foreign goods to the

In addition, if the Debtors do not pay the Common Carrier
Charges, Customs Duties, Foreign Transport Charges, Freight
Broker Charges, and Freight Forwarder Charges, the merchandise
held by the Common Carriers, Freight Broker, and Freight
Forwarders may be subject to possessory liens under applicable
state law.  

Mr. Lissy relates that typically, state laws grant
an entity that furnishes services or materials with respect to
goods, such as a common carrier, a possessory lien on such goods
to secure payment for such charges and related expenses, if such
entity retains possession of the goods at issue.

Moreover, Mr. Lissy adds that if the Debtors do not pay the
Common Carrier Charges, Foreign Transport Charges, Freight
Broker Charges, and Freight Forwarder Charges, the Common
Carriers, Freight Broker, and Freight Forwarders likely will
refuse to deliver the Debtors' merchandise, thereby disrupting
the Debtors' business operations.

Mr. Lissy discloses that the Debtors have approximately
$56,000,000 of goods currently in transit subject to Common
Carrier Charges, Customs Duties, Foreign Transport Charges,
Freight Broker Charges, and/or Freight Forwarder Charges. Mr.
Lissy contends that the Debtors would be severely prejudiced if
they were unable to obtain promptly these goods due to any
unpaid Common Carrier Charges, Customs Duties, Foreign Transport
Charges, Freight Broker Charges, and/or Freight Forwarder
Charges. The Debtors submit that such amounts would be de
minimis in comparison to the value that the Debtors' estates
will receive from an uninterrupted supply of goods.

Finding that the relief requested is necessary and in the best
interest of the Debtors and their estates and creditors, Judge
Gerber authorized the Debtors to pay a total of $2,480,000 in
undisputed pre-petition Common Carrier Charges, Foreign
Transport Charges, Freight Broker Charges, and Freight Forwarder
Charges in the customary trade terms and conditions.  

Judge Gerber also orders to discharge the liens, if any, the
Common Carriers, Freight Forwarders, Freight Brokers, and U.S.
Customs Service have on the goods in their possession. (AMES
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

AMF BOWLING: Court Okays Arthur Andersen as Debtor's Accountants
Judge Adams granted AMF Bowling Worldwide, Inc.'s application to
employ Arthur Andersen LLP.

He also authorized the Debtors to enter into these modified
indemnification agreements and procedures:

(a) The Debtors are authorized to indemnify Arthur Andersen for
     any post-petition claim arising from, or related to its
     engagement, but not for any claim arising from post-
     petition services not provided for in the Engagement
     Agreements. No indemnification of is authorized for any
     pre-petition claim, but Andersen has the discretion to file
     a proof of claim in the amount it deems sufficient.

(b) The Debtors shall have no obligation to indemnify Andersen
     for any claim that is either judicially determined to have
     arisen from Andersen's negligence or settled by the Court
     not to be valid for reimbursement.

(c) If, before filing of reorganization plans and closing of
     these cases, Andersen believes it is entitled to payment of
     any engagement and reimbursement amounts, including
     advancement of defense costs, Andersen must file an
     application before this Court before approval of such

(d) The Debtors shall have no obligation to indemnify Andersen
     for any claim that is brought by any of the Debtors, or in
     behalf of the Debtors, by the Official Committee of
     Unsecured Creditors or the United States Trustee. This
     provision applies only to those causes of action which
     derive from or through the Debtor and not to any actual
     third party claims.

(e) The liability of Arthur Andersen is not limited by the
     amount of its fees or by the type of damages sought. (AMF
     Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
     Service, Inc., 609/392-0900)

ARMSTRONG HOLDINGS: Injury Claimants Tap Tersigni as Advisor
The Official Committee of Asbestos Personal Injury Claimants of
Armstrong Holdings, Inc. asks Judge Farnan to approve, nunc pro
tunc to February 1, 2001, the employment of L. Tersigni
Consulting PC as accountant and financial advisor to the

Tersigni will provide services to the Committee which include:

       (a) Development of oversight methods and procedures so as
           to enable the Committee to fulfill its
           responsibilities to monitor the Debtors' financial

       (b) Interpretation and analysis of financial materials,
           including accounting, tax, statistical, financial;
           and economic data, regarding the Debtor and other
           relevant parties; and

       (c) Analysis and advice regarding additional accounting,
           financial, valuation and related issues that may
           arise in the course of these proceedings.

Tersigni will be compensated on an hourly basis to be paid by
the Debtor.  Mr. Tersigni's hourly rate is $395, while the other
professionals that Tersigni will employ, if needed, will be
compensated on the basis of an hourly rate schedule:

                   Managing Director Level              $395
                   Director Level                       $300
                   Senior Manager Level                 $275
                   Manager Level                        $225
                   Professional Staff Level             $150-175
                   Paraprofessional Level               $75

For the period beginning October 16, 2000, and through December
31, 2000, Mr. Tersigni provided services to the committee
through his former firm, Goldstein Golub Kessler LLP, a
partnership of certified public accountants of which Mr.
Tersigni was a principal.  

Mr. Tersigni assures Judge Farnan and the Committee that he will
remit to GGK any portion of the fees generated by services
rendered during that period which are payable to GGK.  No reason
is offered for the requested nunc pro tunc employment.

Mr. Loreto T. Tersigni assures Judge Farnan that Tersigni
Consulting is a disinterested person, and holds no interest
adverse to the Debtor and its estate for the matters for which
Tersigni Consulting is to be employed, and has no connection to
the Debtor, its creditors, or its related parties.  

However, Tersigni has and will continue to conduct an ongoing
review of its files to ensure that no conflicts or other
disqualifying circumstances exist or arise.  If any new facts or
relationships are discovered, Tersigni will supplement its
disclosure to the Court.  

He says that, effective January 1, 2001, he formed and became
the principal of L. Tersigni Consulting PC to provide expert
accounting and financial advisory services in bankruptcy and
complex litigation matters. (Armstrong Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AVIATION SALES: Gil West Appointed As New EVP & COO
Aviation Sales Company (NYSE:AVS) announced that Gil West has
been appointed Executive Vice President and Chief Operating
Officer of the Company, effective immediately.  In his new role,
Mr. West will oversee the Company's maintenance and repair
operations, working closely with the Company's President, Ben
Quevedo, and with the senior management of the Company's MR&O

Mr. West has recently relocated to Greensboro, North Carolina,
where he will oversee the Company's operations from the
headquarters of the Company's heavy airframe maintenance

Mr. West, age 40, has over 17 years of experience in the
aviation industry and, since 1996, has been an executive at
Northwest Airlines. In his most recent position as Northwest's
Vice President of Engine and Component Technical Operations, Mr.
West managed over 2,000 Northwest maintenance employees in
Northwest's Minneapolis and Atlanta maintenance facilities, as
well as managing outside vendor maintenance operations. Prior to
joining Northwest, Mr. West served in various managerial
positions with United Airlines, Rohr Industries, Sundstrand
Corporation and Boeing Commercial Aircraft.

Roy T. Rimmer, Jr., Chairman and CEO of Aviation Sales Company,
stated: "We are very excited to have Gil join our Company and
our senior management team. Gil brings to our organization
significant managerial skills and experience in the operation of
MR&O facilities, and we are confident that he will contribute
significantly towards the improvement of our operations. We
also expect that Gil's prior experiences as a senior executive
of a large airline will provide us additional and valuable
perspective as we work hard to satisfy the MR&O requirements of
our airline customers."

Mr. West added: "I am very excited about joining the Company and
I look forward to working closely with the Company's employees
and management. I believe that with the talent and continued
hard work of our employees, we will maintain the Company's
position as the leader in the airframe heavy maintenance market,
as well as enhance the Company's financial performance by
providing industry leading quality and delivery performance."

Aviation Sales Company is a leading independent provider of
fully integrated aviation maintenance, repair and overhaul
(MR&O) services for major commercial airlines and maintenance
and repair facilities. The Company currently operates four MR&O
businesses: TIMCO, which, with its five locations, is one of the
largest independent providers of heavy aircraft maintenance
services in North America; Aerocell Structures, which
specializes in the MR&O of airframe components, including flight
surfaces; Aircraft Interior Design, which specializes in the
refurbishment of aircraft interior components; and TIMCO Engine
Center, which refurbishes JT8D engines.

The Company also operates TIMCO Engineered Systems, which
provides engineering services to our MR&O operations and our

                            *  *  *

Standard & Poor's lowered its corporate credit and subordinated
debt ratings on Aviation Sales Co. to 'D' from triple-'C'-plus
and triple-'C'-minus, respectively, after the Company failed to
make the interest payment due on Aug. 15, 2001, on $165 million
8.125% subordinated notes maturing in 2008.

The nonpayment, according to the rating agency, was part of an
agreement with the holders of a majority of the notes to
exchange the principal mostly for new notes, with PIK interest,
and 15% of the equity in the restructured company.

The terms are significantly different from those of the rated
$165 million notes.

BRANDSELITE: Files Under Canadian Bankruptcy & Insolvency Act
Brandselite International Corporation has announced that it has
filed a Notice of Intention to make a proposal under the
Bankruptcy and Insolvency Act. The filing, done with the support
of its major secured creditor, the Laurentian Bank of Canada,
allows the company 30 days to explore restructuring options.

"The filing gives us an opportunity to find an equity investor
and to ensure the continuation of the business into the future,"
said Douglas Redhead, Vice President, Finance, and Chief
Financial Officer of Brandselite. "We plan to work through this
period of restructuring the debt and to carry on serving
our customers."

Brandselite International Corporation, which was established in
1986 and went public in 1993, is a creator, marketer and
distributor of proprietary products on a worldwide basis. It is
also a marketer and distributor of premium brand-name
fragrances, cosmetics, liquor products and luxury gift items to
duty-free retailers.

The company is headquartered in Richmond Hill, Ontario and its
shares are traded on the Toronto Stock Exchange under the symbol

BRIDGE INFO: Court Okays Sale of Telerate to Moneyline for $10MM
President & CEO Jon Robson and executive team assure Telerate
customers of commitment to seamless transition; announce a broad
product development strategy to deliver a full range of leading
market data and trading applications

Jon Robson, CEO of MoneyLine Network, Inc., responding to the
approval given by the U.S. bankruptcy court last Friday for
MoneyLine's acquisition of the global assets of Telerate, Inc.
and Bridge Information Systems, Inc. assets in Europe and Asia
Pacific, assured customers of continued service backed by a
commitment to the highest standards of support.

"Our clients will benefit from a proven technology and a
significant global network, combined with one of the richest
traditions in financial content aggregation. MoneyLine is built
on the belief that in doing business the customer's way,
responding to changing industry demands and investing in best-
of-breed content and technology, we can enable global
institutions to achieve the broadest possible reach to their
communities, while at the same time controlling costs," said

Robson also said that part of the company's strategy is to renew
Telerate's traditional focus on fixed income, foreign exchange
and derivatives content and services for capital markets
participants. In addition, MoneyLine will be creating a new
generation of content and transactional products combining the
two company's competitive advantages.

MoneyLine's purchase of Telerate was reached in an agreement
with Bridge Information Systems, Inc., (BRIDGE(R)). In the deal,
MoneyLine will pay BRIDGE $10 million for the Telerate
subsidiary and its assets in Europe and Asia, along with other
BRIDGE assets, including Telerate Channel, BRIDGE workstation
assets in Europe and Asia, and the Bridge Trading Room System
(BTRS). In addition, MoneyLine will contribute $5 million to the
operating expenses of these businesses. BRIDGE filed for
bankruptcy last February.

MoneyLine Network, Inc. is a leading provider of hosted
Internet-based transactional services, real-time and historical
content, and applications. Content partners include Dow Jones
Newswires, GovPX, Garban-Intercapital plc, IFR Thomson, S&P,
Interactive Data, Market News International, MCM, and global
exchanges. Several major financial services and communications
companies including ABN Amro, Bank of America, Garban-
Intercapital plc, Global Crossing, Merrill Lynch, and Thomson
Financial back MoneyLine. The firm, established in 1998, is
headquartered in New York City.

With the most advanced and open technologies, Telerate helps
financial professionals make informed decisions. Bridge and
Telerate offer superior content choices including the most
complete and dynamic source of capital markets information.

Telerate services are distributed across the Savvis Network, one
of the world's largest ATM-managed IP networks. The company's
products embody a philosophy of openness and flexibility,
providing more choices in a variety of cost-effective solutions

BRIDGE INFORMATION: Moves to Reject 7 Warehouse Leases
Bridge Information Systems, Inc. asks Judge McDonald for
authority to reject these warehouse leases:

Counterparty                    Leases
------------                    -----
Professional Installers, Inc.   4204 N. Union, St. Louis   

Hanover                         Manhattan Warehouse
                                 Maspeth Warehouse
                                 Jersey City Warehouse
                                 North Bergen Warehouse
                                 Brooklyn Warehouse
                                 Newark Warehouse

According to David M. Unseth, Esq., at Bryan Cave, it is in the
Debtors' best interests to reject these leases because the
maintenance of these leases is only draining the Debtors $21,500
per month of unnecessary expenditures.  Besides, Mr. Unseth
notes, these warehouse leases are not essential for the Debtors'
successful reorganization.  The Debtors can live without these
leases, Mr. Unseth says.

Aside from authorizing the rejection of these leases, the
Debtors also want the Court to require the counterparties of the
leases to pay over to the Debtors any and all amounts paid by
the Debtors for goods and/or services provided subsequent to the
rejection date.

                 Professional Installers Object

Professional Installers Inc. (PII) currently warehouses certain
property for the Debtors and claims a warehouseman's against the
Debtors' property in its possession.  If the Court rejects the
lease and allow the Debtors to remove the property, Scott
Greenberg, Esq., at Sandberg, Phoenix & von Gontard, says PII
would lose its lien on any of the property.

PII asks Judge McDonald to deny the Debtors' motion.  Or, then
at least protect PII's warehouseman's lien against the Debtors'
property in its possession. (Bridge Bankruptcy News, Issue No.
14; Bankruptcy Creditors' Service, Inc., 609/392-0900)

CHINA CONVERGENT: Violates Nasdaq's Net Tangible Asset Rule
China Convergent Corporation Limited (Nasdaq: CVNG) (Australia:
CBC; Frankfurt: OLSA) announced that it received a letter from
The Nasdaq Stock Market indicating that as of September 6, 2001
its American Depository Receipts will be subject to formal
delisting based upon Marketplace Rules 4300 and 4330(a), unless
the Company successfully appeals the determination before a
Nasdaq Listing Qualifications Panel.

In its letter, the Nasdaq staff concluded that the Company did
not have a reasonable basis for including on its balance sheet
for the year ended December 31, 2000, its largest asset, which
is an approximate US$731 million value attributed to the "know-
how" related to the Company's project to provide two-way
broadband interactive multimedia technology and services
through the public cable television network to users in China.
If this asset were to be written off, the Company would not
qualify with the minimum US$4 million net tangible assets or
minimum $10 million shareholders' equity requirement for
continued listing on The Nasdaq National Market.

The Company has decided to appeal the decision. The Company's
ADRs will continue to be traded on the NNM pending the appeal.
There can be no assurance the Panel will grant the Company's
request for continued listing.

If the appeal is unsuccessful and the Company's ADRs are
delisted from the NNM, the Company plans to have such ADRs
quoted on the Over-The-Counter Bulletin Board. The decision by
Nasdaq will have no effect on the Company's day to day business

Hong Kong based China Convergent is a China media investor,
which owns a majority interest in the Century Vision Network
project, a recently launched multiple system operator of digital
IP based interactive broadband cable television networks. CVN
has also acquired an interest in the China Digital Broadcast
Corporation, a joint venture approved by the State
Administration for Radio, Film and Television, China's
administrative authority for content, broadcast networks and
foreign film imports.

The Beijing based joint venture will develop a centralized
digital data center and broadcast platform for storing
classified state, provincial and city information, as well as
sub-centers for the exchange of information using the fiber
optic networks of local cable systems throughout China. China
Convergent's strategy is to create a national alternative to
China's telecom monopoly of providing narrowband Internet access
and services by capitalizing on China's 90 percent penetration
rate for household television access, cable's two to one
penetration advantage over fixed-line telephones and SARFT's
broadband network, which is the only network out of China's four
national fiber optic networks with extensive last mile

China Convergent's shares are also traded on the Australian
Stock Exchange (Australia: CBC) and the Frankfurt Stock

COMDISCO: Court Okays Proposed Interim Compensation Procedures
At Comdisco, Inc.'s behest, Judge Barliant put his stamp of
approval on an Administrative Order Establishing Procedures for
Interim Compensation and Reimbursement of Expenses of

The Compensation Procedures will permit each professional to
present a detailed statement of services rendered and expenses
incurred by the professional for the prior month.  Under the
Administrative Order, all professionals may seek payment of
compensation and reimbursement of expenses:

    a) On or before the last day of the month following the
       month for which the compensation is sought, each
       professional will submit a monthly statement to:

         1) Debtors at Comdisco, Inc., 6111 North River Road,
            Rosemont, Illinois, 60018 (Attn: Robert Lackey)

         2) Counsel to the Debtors, Skadden, Arps, Slate,
            Meagher & Flom (Illinois), 333 West Wacker Drive,
            Suite 2100, Chicago, Illinois 60606 (Attn: John Wm.
            Butler, Jr.)

         3) Counsel to the Debtors' post-petition lenders,
            Jones, Day, Reavis & Pogue, 77 West Wacker, Chicago,
            Illinois 60601 (Attn: Richard A. Chesley)

         4) Counsel to any official committee appointed in these

         5) The United States Trustee, 227 West Monroe St.,
            Suite 3350, Chicago, Illinois 60606.

      Each such person receiving such a statement will have 20
      days after the monthly statement date to review the

   b) At the expiration of the 20-day period, the Debtors will
      promptly pay 90% of the fees and 100% of the disbursements
      requested in such statement, except such fees and
      disbursements as to which an objection has been served.  
      Any professional who fails to submit a monthly statement
      shall be ineligible to receive further payment of fees and
      expenses as provided herein until such time as the monthly
      statement is submitted.  The first statements shall be
      submitted and served by each of the professionals by
      August 31, 2001 and shall cover the period from the
      commencement of this case through July 31, 2001.

   c) In the event that any of the Debtors, the US Trustee, the
      Debtors' post-petition lenders or the Committee has an
      objection to the compensation or reimbursement sought in a
      particular statement, such party shall, within 20 days of
      the Monthly Statement Date, serve upon the respective
      professionals and other persons designated to receive
      monthly statements, a written notice "Notice of Objection
      to Fee Statement" setting forth the precise nature of the
      abjection and the amount at issue.  Thereafter, the
      objecting party and the professional whose statement is
      objected to shall attempt to reach an agreement of the
      objection within 20 days after the receipt of such
      objection, the objecting party may file its objection with
      the Court and serve such objection on the respective
      professional and other parties designated to receive
      monthly statements parties listed above and the Court
      shall consider and dispose of the objection at the nest
      interim fee application hearing.  The Debtors will be
      required to pay promptly those fees and disbursements that
      are no the subject of a Notice of Objection to Fee

   d) Approximately every 4 months, each professional shall file
      with the Court and serve on the parties designated to
      receive monthly statements, on or before the 45th day
      following the last day of the compensation period for
      which the compensation is sought, an application for
      interim court approval and allowance of the compensation
      and disbursement of expenses requested for 4 prior months.  
      The first such application shall be filed on or before
      January 14, 2002 and shall cover the period from the
      commencement of these cases through November 30, 2001.  
      Any professional who fails to file an application when due
      shall be ineligible to receive further interim payment of
      fees or expenses as provided herein until such time as the
      application is submitted.

   e) The pendency of an application for a Court order for
      compensation or reimbursement of expenses, and the
      pendency of any Notice of Objection to Fee Statement or
      other objection shall not disqualify a professional from
      the future payment of compensation or reimbursement of
      expenses set forth above.  Neither payment of nor failure
      to pay, in whole or in part, monthly interim compensation
      and reimbursement as provided herein shall bind any party-
      in-interest or this Court with respect to the final
      allowance of applications for compensation and
      reimbursement of professionals. (Comdisco Bankruptcy News,
      Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-

CONSUMERS PACKAGING: Court Approves Asset Sale to Owens Illinois
Consumers Packaging Inc. (TSE: CGC) announced that Mr. Justice
Farley of the Ontario Superior Court of Justice has approved the
previously announced sale of substantially all of its Canadian
assets to Owens Illinois, Inc. (NY: OI). Closing of the
transaction is scheduled for late September, 2001 and remains
subject to the receipt of regulatory approvals.

The Court also extended its order under the Companies' Creditors
Arrangement Act (CCAA), continuing the stay of legal proceedings
against the Company in respect of its Canadian operations until
October 1, 2001. The Company has been operating since May 23,
2001under the Companies' Creditors Arrangement Act.

The Company announced on August 3 that it had signed a letter of
intent with OI to sell substantially all of its Canadian glass
producing assets for approximately $235 million (Canadian).
Under the proposed transaction, OI will assume all liabilities
under the pension and employee benefit plans of the Canadian

"We intend to restructure or sell all remaining assets of
Consumers Packaging before the end of the year," said Brent
Ballantyne, Chief Restructuring Officer and Chief Executive
Officer. "The proceeds from the OI sale and the remaining assets
will not provide sufficient cash to repay secured and unsecured
creditors in full, and are not expected to leave the Company's
shareholders with any residual value.

"Once all assets are sold and all known claims against the
Company are verified, the final amount available to unsecured
creditors will be known and recovery payments made."

The fourth report to the Court by KPMG, which has acted as the
monitor, provided a preliminary estimate of the recoveries to
various creditors once all assets are sold and certain tax and
administrative matters are concluded. In its report, KPMG
estimates the cash recoveries of secured creditors will be 45-
52%, while unsecured creditors will receive between 4-10% of
outstanding liabilities after all residual assets are sold.

"The estimates are subject to quantification of unsecured claims
and confirmation of the validation of security held by secured
creditors," KPMG says in its report.

"Our process to deal with the financial situation was thorough,"
said Mr. Ballantyne. "We believe that the OI transaction and the
sale of the residual assets will provide the maximum recovery
that can be achieved at this time, and is in the best interests
of all stakeholders of Consumers Packaging.

"For creditors, it will mean recoveries higher than could be
obtained with other proposals received or through liquidation.
For employees, OI has agreed to assume all employees at current
wage rates and benefit levels and all liabilities under existing
pension arrangements. For suppliers, OI is the largest glass
manufacturer in the world with technological leadership in the
industry, and will be a great customer for many years to come
because of its financial and operating strengths. For customers,
OI will be a reliable supplier."

Consumers Packaging employs approximately 2,400 people in
Canada. It manufactures and sells glass containers for the food
and beverage industry. It supplies packaging products for the
Canadian juice, food, beer, wines and liquor industries from
three plants in Ontario (Toronto, Brampton and Milton), and one
each in Quebec (Montreal), New Brunswick (Scoudouc) and
British Columbia (Lavington).

Visit the company web site at:

CONTINUCARE INCORPORATED: Frost Discloses 50.4% Equity Stake
Dr. Phillip Frost, M.D., Frost-Nevada, Limited Partnership, and
Frost-Nevada Corporation beneficially own 50.4% of the
outstanding common stock of Continucare, Inc.  

The aggregate purchase price of the 13,889,755 shares of common
stock of Continucare and the $797,162 principal amount of the
convertible notes of the Company purchased by the Partnership
and the 62,900 shares of common stock of the Company purchased
by Phillip Frost, M.D. was $1,395,500.50 and $25,926.94,

The source of funds used by the Partnership and Dr. Frost in
making these purchases were working capital and personal funds,
respectively. No portion of the consideration used by the
Partnership nor Dr. Frost in making the purchases described
above was borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the shares.

As the sole limited partner of the Partnership and the sole
shareholder of Frost-Nevada Corporation, the general partner of
the Partnership, Dr. Frost may be deemed a beneficial owner of
the shares. Record ownership of the shares may be transferred
from time to time among any or all of Dr. Frost, the Partnership
and Frost-Nevada Corporation.

Accordingly, solely for purposes of reporting beneficial
ownership of the shares each of Dr. Frost, the Partnership and
Frost-Nevada Corporation will be deemed to be the beneficial
owner of shares held by any of them.

                            *  *  *

Continucare Corporation (AMEX:CNU), a leader in the field of
providing outpatient healthcare services through managed care
arrangements and home healthcare services in the Florida market,
has concluded a restructuring of its outstanding $10 million 7%
Convertible Subordinated Notes due 2002.

As a result of the restructuring, $6.2 million of the Notes have
been purchased by six investors, including entities controlled
by Dr. Frost, a director of the Company, and Spencer Angel,
President and CEO of the Company.

These repurchased Notes were immediately exchanged for an
aggregate amount of 6.2 million shares of the Company's common
stock and new notes in the aggregate principal amount of
$912,195, which mature October 31, 2005, bear interest at 7%
(payable semi-annually) and are convertible into shares of the
Company's common stock at a conversion rate of $1.00 per share.

The six investors also purchased 9.6 million shares of common
stock held by these selling Noteholders.

Holders of the remaining $3.8 million of outstanding Notes have
agreed to restructure various terms of the Notes which, among
other things, extend the maturity date to October 2005, reduce
the conversion rate from $2.00 to $1.00 per share, provide for
quarterly interest payments, and cure all prior defaults under
the Notes.

Continucare Corporation, headquartered in Miami, Florida, is a
holding company with subsidiaries engaged in the business of
providing outpatient physician care and home healthcare

COVAD COMMS: Moves to Set Oct. 29 as Bar Date for Filing Claims
Covad Communications Group, Inc. seeks an order establishing
October 29, 2001, as the final date by which all pre-petition
creditors must file a proof of claim or proof of interest in the
above-captioned chapter 11 case and approving the form and
manner of the notice thereof.

Laura Davis Jones at Pachulski Stang Ziehl Young & Jones P.C. in
Wilmington, Delaware states that the circumstances of this case
justify fixing the Bar Date as requested herein as it is
essential to ascertain, as soon as possible, the nature, extent
and scope of the claims asserted against the Debtor.  

The Debtor proposes that the Notice of the Deadline will be
served by mail on all parties identified on the Debtor's list of
creditors promptly after approval of this Motion and also
proposes to publish the said Notice.  

Ms. Jones says that the Deadline would apply to all creditors
whose claims arose prior to the Petition Date, and each and
every claim assertable by such persons or entities, whether
filed as general unsecured, priority, or secured status.

The following persons and entities may, but need not file proofs
of claim:

A. any person who, or entity which, has already properly filed
    a proof of claim against the Debtor with the Clerk of the
    Bankruptcy Court for the District of Delaware;

B. any person or entity whose claim is listed in the Schedule
    of Liabilities, to be filed with this Court not later than
    August 20, 2001, in an amount and/or manner with which such
    person or entity agrees, and which claim is not listed in
    the Debtor's Schedule of Liabilities as disputed, contingent
    or unliquidated;

C. Claims previously allowed by order of the Court;

D. Claims allowed, as administrative expense.

The Deadline, for any person or entity whose claim arises from,
or as a consequence of, the rejection of an executory contract
or unexpired lease shall be as follows:

A. if the Court has entered an Order fixing the date by which
    such claims must be filed, the Order shall govern;

B. if the Court has not entered an Order fixing the date by
    which such claims must be filed, then the Claims Bar Date
    shall be the later of (a) the Deadline, or (b) 30 days from
    the date of service of the Order rejecting said contract or

Any person or entity, whose claim: (a) is not listed in the
Debtor's Schedule of Liabilities; (b) is listed in the Debtor's
Schedule of Liabilities in an incorrect amount; (c) is listed in
the Debtor's Schedule of Liabilities as disputed, contingent or
unliquidated, or (d) who disputes the amount of the claim as
indicated in the Debtor's Schedule of Liabilities, who desires
to participate fully in the Debtor's cases and share in any
distribution will be required to file a proof of claim on or
before the Deadline.

Any creditor who fails to do so:

A. will not, with respect to any such claim, be treated as a
    creditor of the Debtor for the purpose of voting and
    distribution; and

B. shall be forever barred from:

      (1) filing a proof of claim with respect to such claim;

      (2) asserting such claim against the Debtor and its estate
          and property;

      (3) voting on any plan; and

      (4) participating in any distribution in the Debtor's
          chapter 11 case on account of such claim.

Given the factual complexities of the instant case, the Debtor
proposes to provide actual, written notice to the following

A. Vendors - all vendors with whom the Debtor has conducted
    business within the two years before the Petition Date
    readily identifiable from a review of Debtor's books and

B. Employees and Unions - all employees and unions who have
    worked for the Debtor within the last year before the
    Petition Date readily identifiable from a review of Debtor's
    books and records.

C. Customers - any customer who has conducted business with
    Debtor within the two years before the Petition Date readily
    identifiable from a review of Debtor's books and records.

D. Parties to any litigation - any party and counsel of record,
    with whom litigation was pending as of the Petition Date.

E. Current and past insurance carriers - any current insurance
    carrier of the Debtor and all carriers used by the Debtor
    within the two years before the Petition Date readily
    identifiable from a review of Debtor's books and records.

F. Directors and Officers - any current and past Director and
    Officer of the Debtor who served within three years before
    the Petition Date.

G. Bondholders and accounts payable creditors - all known pre-
    petition holders of the Notes and creditors listed on the
    Debtor's accounts payable ledgers as of the Petition Date.

H. Taxing authorities - all taxing authorities for the places
    where the Debtor conducted business within the three years
    before the Petition Date readily identifiable from a review
    of Debtor's books and records.

I. Affiliates - all the Debtor's affiliates.

Given the period of time contemplated by the Debtor, Ms. Jones
claims that creditors and interest holders would have more than
sufficient notice, time and opportunity to file their proofs of

Ms. Jones asserts that the Bar Date Notice will:

   (i) advise creditors whether they must file a proof of claim;

  (ii) alert such creditors to the consequences of failing to
       timely file a proof of claim;

(iii) specify the form to be used in filing a proof of claim;

  (iv) set forth the Bar Date;

   (v) set forth the address to which proofs of claim must be
       sent for filing; and

  (vi) notify such creditors that proofs of claim must be filed
       with original signatures and not by facsimile. (Covad
       Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
       Service, Inc., 609/392-0900)

DANKA BUSINESS: Annual General Meeting Slated for Oct. 9
The 2001 annual general meeting of Danka Business Systems PLC
will be held on Tuesday, October 9, 2001 at 11 a.m. (London
time) at the Grosvenor House Hotel, Park Lane, London W1K 7TN.

The formal business of the meeting, will include resolutions
proposing: (1) and (2) re-election of directors; (3) re-
appointment of the Company's auditors; (4) authorizations for
the Company's directors to allot ordinary shares; (5)
authorizations to disapply pre-emption rights; (6) and (7)
amendments to Company articles of association; (8) amendments to
the 1999 share option plan and (9) approval of a new long term
incentive plan, the Danka 2001 Long Term Incentive Plan.

Danka's progress will be reported upon and comments made on
matters of current interest.

The Company is one of the world's largest independent suppliers,
by revenue, of photocopiers and office imaging equipment.  It
primarily markets these products and photocopier services, parts
and supplies direct to  customers in approximately 30 countries.  
Most of the products that it distributes are manufactured by
Canon, Heidelberg, NexPress, Ricoh and Toshiba.

Throughout Europe, the Company also markets private label
photocopiers, facsimile machines and related supplies directly
to customers under its Infotec trademark.  In addition, it  
markets photocopiers and related parts and supplies on a
wholesale basis to independent dealers through our international

On June 29, 2001, the Company completed a three part financial
restructuring plan that reduced and refinanced our indebtedness
to provide us with liquidity on a long-term basis.  The three
parts of the plan were:

     .  the sale of Danka Services International business,

     .  an exchange offer for its 6.75% convertible subordinated
        notes due April 1, 2002, and

     .  the refinancing of its senior bank debt.

The Company sold DSI to Pitney Bowes Inc. for $290.0 million in
cash, subject to adjustment depending on the value of DSI's net
assets on closing.  The Company used the net proceeds of DSI to
repay part of its senior bank debt, to finance cash payable
under the exchange offer, to finance the costs of the exchange
offer and to finance costs associated with the refinancing of
its senior bank debt.

The Company accepted tenders from holders of a total of $184.0
million in aggregate principal amount (92%) of the 6.75%
convertible subordinated notes pursuant to the exchange offer
for $24.0 million in cash and approximately $112.1 million in
new notes with extended maturities.

It refinanced the remaining balance of its senior bank debt
through an amended and restated credit facility with its
existing senior bank lenders. The facility consists of $100.0
million revolver, $190.0 million term loan and $30.0 million
letters of credit commitments.

For the three months ended June 30, 2001, operating earnings
from continuing operations decreased to a loss of $1.2 million,
compared to earnings of $15.3 million in the prior year
comparable quarter.  Excluding a $6.0 million charge for the
exit of facilities in the current year's first quarter and a
$8.2 million credit for the reversal of restructuring reserves
in the comparable quarter of the prior year, earnings from
operations declined $2.3 million due to lower gross profit
margins that were only partially offset by lower operating

The Company has a $320.0 million credit facility with a
consortium of international bank lenders through March 31, 2004.
The credit facility requires that it complies with minimum
levels of adjusted consolidated net worth, cumulative
consolidated EBITDA, a ratio of consolidated EBITDA to interest
expense, and maximum levels of capital expenditures.  The
covenants are effective for its second quarter ending September
30, 2001.

As of June 30, 2001, it owed approximately $240.0 million under
the credit facility.  The available unused commitments as of
June 30, 2001 are $50.0 million under the revolving credit
facility and $2.5 million under the letter of credit facility.

The credit facility limits the Company from incurring other
significant indebtedness beyond certain agreed upon limits. It
was incurring interest on its indebtedness under the credit
facility during the first quarter ended June 30, 2001 at a
weighted average rate of 7.64% per annum. Effective interest
rates under the new credit facility are LIBOR, plus 5 percent.

The interest rate will increase by 0.5% on December 29, 2001,
June 29, 2001 and quarterly thereafter. The term component of
the facility requires, principal installments of $5.0 million in
fiscal year 2002, $16.0 million in fiscal year 2003, and $24.0
million in fiscal year 2004, with payment due in full on March
31, 2004.

The Company's indebtedness under the credit facility is secured
by substantially all of its assets in the United States, Canada,
U.K., the Netherlands and Germany.  The credit facility contains
negative and affirmative covenants which restrict our ability to
incur additional indebtedness and create liens, prohibit the
payment of dividends, other than payment-in-kind dividends on
its participating shares, and require the Company to maintain
certain financial ratios.  

The Company is not permitted to make any acquisitions of
businesses, except with the approval of our bank lenders.  It
cannot dispose of any of its assets outside the ordinary course
of business without the approval of bank lenders.  On June 30,
2002, it is required to pay its banks a fee equal to 1.5% of the
total commitment under the credit facility and on June 30, 2003
a fee equal to 4.0% of the current commitment.

ENVISIONET: Sells Assets to Microdyne for $10.7 Million
RCW Mirus announced that it assisted its client, ENVISIONeT
Computer Services, Inc., in a sale to Microdyne Outsourcing Inc.
of Torrance, California.  ENVISIONeT engaged Mirus after filing
for bankruptcy in June.

"RCW Mirus did a great job for us," said John Donnelly the CEO
of ENVISIONeT. "Their team achieved a very successful outcome
under difficult circumstances."

"We're pleased that we were able to recover significant value
for the creditors," said Jamie Grant, the lead investment banker
on the transaction. "Despite ENVISIONeT's situation, we
developed significant interest for the Company and were able to
secure written offers from eight prospective buyers in the first
two weeks. After helping the Company secure short-term financing
in July, we ran an orderly sale process which ended successfully
this week with the sale to Microdyne."

Microdyne Outsourcing Inc. is a subsidiary of L-3
Communications. It paid $10.7 million for the assets of
ENVISIONeT, following a bidding process that involved several
suitors and lasted for several weeks.

RCW Mirus provides investment banking solutions to middle market
corporations in targeted technology and manufacturing
industries. Mirus delivers merger advisory, private equity
raising, fairness opinions and valuation services to middle
market entrepreneurs, corporations and professional financial
investors. Additional information about the firm is available on
Mirus' web site

GENESIS HEALTH: Lays-Out Case for Confirmation of Joint Plan  
Genesis Health Ventures, Inc.'s legal team, led by Michael F.
Walsh, Esq., and Gary T. Holtzer, Esq., at Weil, Gotshal &
Manges LLP, and Multicare's lawyers, led by Marc Abrams, Esq.,
and Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher, lay-out
their case in support of confirmation of the companies' Joint
Plan of Reorganization, as Amended.

The Debtors and their professionals represent that the Plan
should be confirmed because it complies with all applicable
provisions of the Bankruptcy Code and the Bankruptcy Rules, and
all creditor constituencies overwhelmingly support confirmation
of it.

The Plan is the culmination of extensive, good faith
negotiations among the Debtors and their major creditor
constituencies and has the full support of:

           * the Genesis Creditors' Committee;
           * the Genesis Senior Lenders;
           * the Multicare Creditors' Committee;
           * the Multicare Senior Lenders.

The legal team notes that, of the thousands of creditors,
shareholders, and parties in interest in these eases, only a
handful of substantive and/or technical objections to
confirmation of the Plan have been filed, some of which have
been consensually resolved.

The team presents the Court with the Debtors' Omnibus Response
to Objections to Confirmation, concurrently with the Memorandum
of Law in support of confirmation. In particular, the team notes
that the central issue before the Court in connection with
confirmation of the Plan is the valuation of the Genesis
enterprise and, to a lesser extent, the Multicare enterprise.

GMS and Grimes have asserted that the Debtors have grossly
undervalued the Genesis enterprise, the effect of which is to
give the Genesis Senior Lenders a greater than 100% recovery
under the Plan. Led by the GMS Group LLC and Mr. Charles L.
Grimes, the class of claims of holders of public subordinated
debt of Genesis, has voted to reject the Plan.

The Debtors believe, based upon the current tabulation, that
this is the only Class that has voted to reject the Plan (other
than Classes with single secured creditors that the Debtors

The Debtors' legal professionals tell the Court that GMS and
Grimes are wrong.

The value of the Genesis enterprise is $1,325,000,000, the
professionals represent, based on the analysis of William C.
MeGahan (Vice Chairman of UBS Warburg - the financial advisor
for Genesis).  

This amount is the midpoint in the range of values
($1,200,000,000 to $1,450,000,000) established by UBS Warburg in
their most recent valuation analysis, dated August 2001, of the
Genesis enterprise. The range of enterprise values specified in
the April Valuation was $1,000,000,000 to $1,250,000,000
(midpoint of $1,125,000,000).

The professionals demonstrate to the Court that, at that
valuation, the Genesis Senior Lenders will receive only an
82.36% recovery on their claims. The 78.89% recovery for the
Genesis Senior Lenders specified in the Disclosure Statement
did not include postpetition interest as part of the claims of
those lenders.

The enterprise value required to provide a 100% recovery to the
Genesis Senior Lenders under the terms of the Plan is
approximately $1,548,000,000, the professionals demonstrate to
the Court. Thus, the magnitude of the shortfall is almost $225

The valuation of the Genesis and Multicare enterprises is also
central to the objections lodged by certain personal injury
claimants, who contend the Plan unfairly discriminates against
them by subordinating a portion of their claims - their punitive
damage claims only - to other unsecured claims.

They also are wrong, the Debtors' professionals tell the Court.

The enterprise value of the Genesis Debtors and the Multieare
Debtors is insufficient to satisfy the Claims of the Genesis
Senior Lenders and the Multicare Senior Lenders. Under the
absolute priority rule, general unsecured creditors are not
entitled to receive any distribution, the legal team represents.

Notwithstanding that rule, the team argues, the Genesis Senior
Lenders and the Multicare Senior Lenders have allocated a
portion of their respective distributions under the Plan to
Classes G4 and M4 (Genesis General Unsecured Claims and
Multicare General Unsecured Claims, respectively) and Classes G5
and MS (Genesis Senior Subordinated Note Claims and Multicare
Senior Subordinated Note Claims, respectively) in settlement of
all issues relating to confirmation.

The fact that the senior secured lenders of the Debtors chose
not to allocate a portion of their recovery to unsecured,
contingent, punitive damage claims does not constitute unfair
discrimination under section 1129(b), the legal team

The unresolved objections (including those of GMS and Grimes),
being singularly devoid of merit, should be overruled, and the
Plan should be confirmed, the legal team represents.

The Plan has three fundamental premises, the legal team tells
the Court.

First, it significantly reduces the amount of debt in the
Debtors' capital structures by distributing most of the value
under the Plan in the form of common stock. This deleveraging
will allow the Debtors to maximize the return on the Plan
Securities. It will also assure that the Debtors' future cash
flows are sufficient to handle the proposed debt burden.

Second, the Plan provides for value - in the form of common
stock and warrants - to be distributed to the holders of allowed
unsecured claims. Under the rule of absolute priority, no
enterprise value would be available to provide any distribution
to unsecured classes.

The Plan represents a negotiated settlement among the Debtors,
the Genesis Creditors' Committee, the Genesis Senior Lenders,
the Multicare Creditors' Committee, and the Multicare Senior
Lenders, which provides significant recoveries for holders of
allowed unsecured claims.

Finally, the proposed merger of Genesis and Multicare is
intended to accomplish several objectives. Most importantly, the
Genesis Debtors and the Multicare Debtors currently benefit from
significant operating synergies because of the contractual
management and service agreements between them.

The proposed merger will "lock in" those values by assuring that
Genesis and Multicare will not be split in the future. The
merger also allows the Debtors to distribute a single equity
security of a larger overall enterprise to their respective
creditors. The Debtors believe such an equity security will be
more liquid and will attract more interest in the public markets
from investors and research analysts. The improved trading
market should benefit those creditors who do not want to hold
common stock. The proposed merger also has made it easier to
arrange the significant amount of exit financing that is
required in these chapter 11 cases.

Inasmuch as the administrative claims at the Genesis Debtors far
exceed those at the Multicare Debtors, the merger provides
additional benefit to the estates of the Genesis Debtors, the
legal team represents on behalf of the Debtors.

In particular, the Debtors represent that the Plan fully
complies with all applicable requirements of the Bankruptcy
Code. The Memorandum addresses each requirement in seriatim as

             I. Burden of Proof under Section 1129

To obtain confirmation of the Plan, the Debtors must demonstrate
that the Plan satisfies the provisions of section 1129(a) of the
Bankruptcy Code by a preponderance of the evidence. The Debtors
represent that the preponderance of evidence they presented show
that all the subsections of section 1129 of the Bankruptcy Code
have been satisfied with respect to the Plan.

             II. Merger of Genesis and Multicare

Pursuant to the Plan, Multicare will merge with a newly-created,
indirect subsidiary of Genesis ("Newsub"). Both Multicare and
Newsub are Delaware corporations. Sections 303(a) and (b), in
conjunction with section 251, of the Delaware General
Corporation Law provide that any corporation may make
fundamental corporate changes, including a merger or
consolidation, without further action of its directors or
shareholders, so long as such changes are pursuant to a plan of
reorganization approved by order of a court of competent
jurisdiction. Del. Code Ann. tit. 8, sections 251, 303. In
addition, the Plan provides for the creditors of Genesis who
will receive common stock of Genesis and the creditors of
Multicare who would otherwise receive the common stock of
Multicare to become shareholders of Multicare immediately before
the merger occurs. By voting for the Plan, those creditors are
consenting to the merger. The merger, which will take place on
the Effective Date, is governed by the Plan of Merger. The
effect of the merger will be an immediate exchange of the new
common stock of Multicare for cash and Restructuring Securities
of Genesis (New Senior Notes, New Convertible Preferred Stock,
New Common Stock, and New Warrants).

Based on the votes received to accept the Plan, all Delaware
corporate law requirements have been met.

             III. Section 1129 of the Bankruptcy Code

      (A) Section 1129(a) of the Bankruptcy Code

  (1) The Plan Complies with All Applicable Provisions of the
      Bankruptcy Code

Under section 1l29(a)(1) of the Bankruptcy Code, a plan must
"compl[y] with the applicable provisions of [the Bankruptcy
Code]." 11 U.S.C. section 1l29(a)(l).

As demonstrated below, the Plan complies fully with the
requirements of both sections, as well as with all other
provisions of the Bankruptcy Code.

(a) Classification of Claims and Interests

     Section 1122 of the Bankruptcy Code authorizes multiple
     classes of claims or interests as long as each claim or
     interest within a class is substantially similar to other
     claims or interests in that class. 11 U.S.C. section 1122.
     The legislative history of section 1129(a)(l) explains that
     this provision encompasses the requirements of sections
     1122 and 1123 governing classification of claims and
     contents of the plan, respectively.

     The Plan provides for separate classification of Claims and
     Equity Interests in 19 Classes based upon differences in
     the legal nature and/or priority of such Claims and Equity
     interests. Debtor in Possession Credit Agreement Claims,
     Other Administrative Expense Claims, and Priority Tax
     Claims are not classified and are separately treated. Each
     of the Claims or Equity Interests in each particular Class
     is substantially similar to the other Claims or Equity
     Interests in such Class.

(b) Contents of Plan

     Section 1123(a) of the Bankruptcy Code sets forth seven
     requirements with which every chapter 11 plan must comply.

     The Plan fully complies with each such requirement:

         -- Section 3 of the Plan designates Classes of Claims
            and Classes of Equity Interests as required by
            section 1123(a)(l).

         -- Under the Bankruptcy Code, Administrative Expense
            Claims and Priority Tax Claims need not be
            classified and must only be designated. Accordingly,
            Administrative Expense Claims, Priority Tax Claims,
            and Claims under the Debtors' Revolving Credit and
            Guaranty Agreement are designated in Section 2 of
            the Plan.

         -- Section 4 of the Plan specifies the Classes of
            Claims that are not impaired under the Plan and the
            treatment of each Class of Claims and Equity
            Interests as required by sections 1123(a)(2) and
            1123(a)(3), respectively.

         -- The treatment of each Claim or Equity Interest in
            each particular Class is the same as the treatment    
            of each other Claim or Equity Interest in such Class
            as required by section 1l23(a)(4).

         -- Sections 5, 6, 7, 8, and 10 and various other
            provisions of the Plan set forth the means for
            implementation of the Plan as required by section
            1123(a)(S), including the deemed consolidation of
            the Genesis Debtors and the Multicare Debtors, and
            the merger of Genesis and Multicare.

         -- Section 5.13 of the Plan provides that the Amended
            Certificate of incorporation for Reorganized Genesis
            and the amended certificates of incorporation for
            each of the other Reorganized Debtors that are
            corporations shall prohibit the issuance of
            nonvoting equity securities, to ensure compliance
            with section 1123(a)(6).

         -- Section 5.12 of the Plan contains provisions with
            respect to the manner of selection of directors of
            the Reorganized Debtors that are consistent with the
            interests of creditors, equity security holders, and
            public policy in accordance with section 1123(a)(7).

     Section 1123(b) sets forth the permissive provisions that
     may be incorporated into a chapter 11 plan. Each provision
     of the Plan is consistent with section 1123(b).

     The Plan provides in Section 4 that, Classes G1-1 through
     G1- 12, G3, G6, M1-1 through M1-6, M3, and M6 are rendered
     unimpaired and Classes G1-13 through Gl-17, G2, G4, G5, G7,
     G8, G9, G10, G1l, Ml-7, M2, M4, M5, M7, and M8 are
     impaired, as contemplated by section 1123(b)(2).

     Section 8 of the Plan provides for the assumption,
     assumption and assignment, or rejection, as appropriate, of
     the executory contracts and unexpired leases of the Debtors
     not previously assumed, assumed and assigned, or rejected
     (or for which the motions for assumption or rejection are
     pending) under section 365 of the Bankruptcy Code as
     contemplated by section 1123(b)(2).

     Sections 5.15 and 5.16 of the Plan provide for compromises
     and settlements, pursuant to Bankruptcy Rule 9019, of (i)
     claims by the United States of America, acting through the
     United States Department of Health and Human Services, the
     Centers for Medicare and Medicaid Services f/k/a the Health
     Care Financing Administration, the Office of Inspector
     General, the Department of Justice, and other agencies or
     departments of the United States against the Genesis
     Debtors and (ii) claims between the Genesis Debtors and the
     Multicare Debtors, respectively.

(c) Deemed Consolidation

     Section 5.1 of the Plan provides that, for purposes of
     distributions to Classes G2, G4, and G5, the Genesis
     Debtors will be considered to be a single legal entity.
     Similarly, for purposes of distributions to Classes M2, M4,
     and M5, the Multicare Debtors will be considered to be a
     single legal entity (although separate from the Genesis
     Debtors). (The Plan does not consolidate the Genesis
     Debtors with the Multicare Debtors. The Plan of Merger
     combines the two companies once each company has been
     recapitalized consistent with its own enterprise value.)

     This "deemed" consolidation has three major effects. First,
     it eliminates the Genesis Intercompany Claims and the
     Multicare Intercompany Claims from the treatment scheme.
     Second, it eliminates guaranties of the obligations of one
     Genesis Debtor by another Genesis Debtor and one Multicare
     Debtor by another Multicare Debtor. Finally, each claim
     filed in Classes G2, G4, and G5 against any of the Genesis
     Debtors or in Classes M1, M4, and M5 against any of the
     Multicare Debtors would be considered to be a single claim
     against the consolidated Genesis Debtors or the
     consolidated Multicare Debtors, respectively.

     Notably, the deemed consolidation will not affect the legal
     organizational structure of the Reorganized Debtors,
     the modification or reinstatement of Claims in Classes Gl
     and Ml, guaranties or the grants of collateral in
     connection with any financing entered into, or New Senior
     Notes issued, on the Effective Date or pursuant to any
     contract or lease that is assumed under the Plan, or
     distributions out of any insurance policies or proceeds of

     The deemed consolidation of their respective estates is
     warranted in light of the criteria established by the
     courts in ruling on the propriety of substantive
     consolidation in other cases.

     The two critical factors considered in assessing the
     entitlement to substantive consolidation are (i) whether
     creditors dealt with the Genesis Debtors or the Multicare
     Debtors as a single economic unit and did not rely on their
     separate identity in extending credit or (ii) whether the
     affairs of the Genesis Debtors or the Multicare Debtors are
     so entangled that consolidation will benefit all creditors.

     the United States Bankruptcy Court for the District of
     Delaware rendered an unpublished letter decision in 1996
     with respect to a motion for substantive consolidation in
     the chapter 11 cases of Smith Corona Corp., et al, Ch. 11
     Case No. 95-788 (HSB) (Bankr. D. Del. Oct. 18, 1996). The
     court also referenced the "entanglement" and "substantial
     identity" factors adopted by the Second Circuit in
     Augie/Restivo and stated that the factors to consider
     include: (i) the necessity of consolidation due to the
     interrelationship among the debtors; (ii) whether the
     benefits from consolidation outweigh the harm to creditors;
     and (iii) prejudice resulting from not consolidating the
     debtors. 962 F.2d at 799.

        (i) Substantial Identity/Interrelationship/Entanglement

     The instant facts demonstrate a substantial identity and an
     extensive interrelationship, interdependence, and
     entanglement between and among the Genesis Debtors,
     considering the integrated healthcare networks with little
     correlation between the names of the centers and the names
     of the legal entities that technically own such facilities,
     the organization of their books and records, the filing
     with the Bankruptcy Court of their statement of financial
     affairs, schedules of assets and liabilities, and schedules
     of executory contracts and unexpired leases on a partially
     consolidated basis, the large amount of intercompany claims
     that are difficult to reconcile and the lack of formality
     of separate corporate entities between business units. As
     such, the Genesis Debtors participate in a unified cash
     management system (which includes non-Debtor subsidiaries)
     which would make it extremely difficult to confirm a plan
     of reorganization for individual Genesis Debtors. Other
     than the fact that Genesis has an institutional pharmacy
     business and Multicare does not, all the factors concerning
     substantial identity, interrelationship, and entanglement
     set forth as to the Genesis Debtors apply with equal force
     to the Multicare Debtors.

        (ii) Harm or Prejudice to Creditors/Reliance Upon
             Separate Credit

     The vast majority of the Claims against the Genesis Debtors
     are at the parent level - i.e., all the Claims in Classes
     G2 and G5, as well as the majority of the Claims in Class
     G4. The Claims of the Genesis Senior Lenders (Class G2) are
     also at substantially all the other Genesis Debtors and are
     secured by substantially all the assets of those entities.
     Therefore, as to each of these Genesis Debtors, no economic
     value would remain for individual unsecured creditors.

     The Genesis Senior Lenders and the Multicare Senior Lenders
     dealt with the Genesis Debtors as a single economic unit
     and the Multicare Debtors as a single economic unit,
     respectively, and did not rely on the separate identities
     of the individual Debtor entities in extending credit. The
     secured claims of the Genesis Senior Lenders at each of
     these subsidiary Genesis Debtors would leave no value for
     any Genesis General Unsecured Claims against such
     subsidiary Genesis Debtor.

     These courses of dealing and the expectations of the
     holders of the Genesis Senior Lender Claims and the
     Multicare Senior Lender Claims justify consolidation in the
     chapter 11 cases.

     Moreover, all financial information disseminated to the  
     public by the Genesis Debtors and the Multicare Debtors is
     prepared and presented on a consolidated basis. As a
     result, creditors cannot demonstrate that they relied upon
     the separate identity of one or more Debtors in extending

     Having relied upon the creditworthiness of the Genesis
     Debtors and the Multicare Debtors, respectively, each as a
     unit, such creditors should be entitled to satisfaction of
     their claims from two single pools of assets.

     Absent deemed consolidation, the Genesis Debtors and the
     Multicare Debtors would be required to disentangle their
     respective operations and businesses, which would be

     Moreover, absent deemed consolidation, creditors would only
     be entitled to receive equity of each individual Debtor
     entity (if anything at all). Under the Plan, creditors are
     receiving equity in Genesis which will trade publicly and
     allow creditors to realize value more readily.

        (iii) Deemed Consolidation is Solely for Purposes of the
              Plan, Without Which the Debtors and Creditors
              Would Be Unduly Prejudiced

     Following confirmation of the Plan, the legal and corporate
     structures of Genesis, Multicare, and their Debtor and non-
     Debtor subsidiaries will remain intact and unaffected.

     A limited consolidation, for plan purposes only, is
     necessary to avoid adverse tax consequences that a
     permanent consolidation could entail.

     Lastly, deemed consolidation in these chapter 11 cases will
     promote judicial economy and ease of administration and
     minimize the costs of administration of the Debtors'
     chapter 11 cases.

  (2) The Debtors Have Complied With the Provisions of the
      Bankruptcy Code

Section 1129(a)(2) of the Bankruptcy Code requires that the plan
proponents "compl[y] with the applicable provisions of [the
Bankruptcy Code]." 11 U.S.C. section 1129(a)(2).

The Debtors submit that they have complied with the applicable
provisions of title 11, including the provisions of sections
1125 and 1126 regarding disclosure and plan solicitation:

      -- the Disclosure Statement was approved by order, dated
         July 13, 2001 (the "Solicitation Order"),

      -- each holder of a Claim or Equity interest received the
         solicitation materials required by the Solicitation
         Order, as set forth in the Declaration of Laura DiBiase
         Certifying the Acceptances and Rejections of the
         Debtors' Joint Plan of Reorganization (the "Voting

      -- The Debtors did not solicit acceptance of the Plan by
         any creditor or equity interest holder prior to the
         transmission of the Disclosure Statement.

      -- Under section 1126, only holders of Allowed Claims in
         impaired Classes of Claims that will receive or retain
         property under the Plan on account of such Claims may
         vote to accept or reject the Plan. In accordance with
         section 1126 of the Bankruptcy Code, the Debtors
         solicited acceptances of the Plan from the holders of
         all Allowed Claims in each Class of impaired Claims
         that are to receive distributions under the Plan.

  (3) The Plan Has Been Proposed in Good Faith and Not by Any
Means Forbidden by Law

Section 1129(a)(3) of the Bankruptcy Code requires that a plan
be "proposed in good faith and not by any means forbidden by
law." The good faith standard requires that the plan be
"proposed with honesty, good intentions and a basis for
expecting that a reorganization can be effected with results
consistent with the objectives and purposes of the Bankruptcy
Code." In the "context of a chapter 11 plan, courts have held
[that] a plan is to be considered in good faith 'if there is a
reasonable likelihood that the plan will achieve a result
consistent with the standards prescribed under the [Bankruptcy]
Code." In re PPI Enters. (US,), Inc., 228 B.R. 339 (Bankr D.
Del. 1998) (quoting In re Toy & Sports Warehouse, Inc., 37 B.R.
at 149)). The primary goal of chapter 11 is to promote the
restructuring of the debt obligations of a debtor. Congress has
recognized that the continuation of the operation of a debtor's
business as a viable entity benefits the national economy
through the preservation of jobs and continued production of
goods and services).

The Plan accomplishes this goal by providing the means through
which the Debtors may continue to operate as a viable entity. In
addition to fulfilling the rehabilitative function of the
Bankruptcy Code, the Plan also allows creditors and equity
interest holders to realize the highest possible recoveries
under the circumstances. The Plan is the result of extensive
arm's-length negotiations among the Debtors, the Genesis Senior
Lenders, the Multicare Senior Lenders, the Genesis Creditors'
Committee, the Multicare Creditors' Committees, and other
parties in interest. The support of the Plan by the Genesis
Creditors' Committee and Multicare Creditors' Committee reflects
their acknowledgment that the Plan provides fundamental fairness
to general unsecured creditors. Inasmuch as the Plan promotes
the rehabilitative objectives and purposes of the Bankruptcy
Code, the Plan has been filed in good faith and the requirements
of section 1l29(a)(3) are satisfied.

  (4) The Plan Provides that Payments Made by the Debtors for
      Services or Costs and Expenses are Subject to Court

Section 1l29(a)(4) requires that certain professional fees and
expenses paid by the plan proponent, the debtor, or a person
receiving distributions of property under the plan, be subject
to approval by the Court as reasonable. 11 U.S.C. section
1129(a)(4). Section 1129(a)(4) has been construed to require
that all payments of professional fees which are made from
estate assets be subject to review and approval as to their
reasonableness by the Court. See River Village Assocs., 161 B.R.
at 141; Resorts Int'l, 145 B.R. at 475; Elsinore Shore, 91 B.R.
at 267-68.

Pursuant to the interim application procedures established under
section 331 of the Bankruptcy Code, the Court authorized and
approved the payment of certain fees and expenses of
professionals retained in the Reorganization Cases. All such
fees and expenses, as well as all other accrued fees and
expenses of professionals through the Effective Date, remain
subject to final review for reasonableness by the Court under
section 330. In addition, pursuant to sections 503(b)(3) and
(4), the Court must review any application for substantial
contribution to ensure compliance with the statutory
requirements and that the fees requested are reasonable.

Lastly, all payments to be made in connection with the Effective
Date or which otherwise are required to be disclosed, including
any amounts to be paid to officers and directors, will be
disclosed at the Confirmation Hearing.

  (5) The Debtors Have Disclosed or Will Disclose All Necessary
      information Regarding Directors, Officers, and Insiders

Section 1l29(a)(5) of the Bankruptcy Code requires that the plan
proponent disclose the identity and affiliations of the proposed
officers and directors of the reorganized debtors; that the
appointment or continuance of such officers and directors be
consistent with the interests of creditors and equity security
holders and with public policy; and that there be disclosure of
the identity and compensation of any insiders to be retained or
employed by the reorganized debtors. 11 U.S.C. section

The employment of officers and directors by Reorganized Genesis,
as described above, is consistent with the interests of
creditors and equity security holders and, indeed, is essential
to the ongoing viability of the Debtors' businesses. The current
and continuing officers of the Debtors are intimately familiar
with the businesses of the Debtors and are needed to maintain
critical business relationships with lenders, suppliers,
customers, and other parties. In fact, the employment of
officers and directors by Reorganized Genesis as contemplated by
the Plan has the support of the holders of the Genesis Senior
Lender Claims and the Multicare Senior Lender Claims, the
Genesis Creditors' Committee, and the Multicare Creditors'

The Debtors have disclosed the identity of the individuals to
serve on the initial board of directors of the Reorganized
Debtors. The Debtors have disclosed that senior management of
Genesis immediately prior to the Effective Date will continue
their positions in Reorganized Genesis. The Debtors have also
disclosed the nature of the compensation currently paid to their
officers and directors.

  (6) The Plan Does Not Contain Rate Changes Subject to the
      Jurisdiction of Any Governmental Regulatory Commission

Section 1129(a)(6) of the Bankruptcy Code requires that any
regulatory commission having jurisdiction over the rates charged
by the reorganized debtor in the operation of its businesses
approve any rate change provided for in the plan. 11 U.S.C.
section 1129(a)(6).

This provision is inapplicable in the instant case. The Plan
does not provide for rate changes subject to the jurisdiction of
any governmental regulatory agency by the Reorganized Debtors.
Hence, regulatory approval is unnecessary under the terms of the

  (7) The Plan Is in the Best Interests of A11 Creditors of and
      Interest Holders in the Debtors

Section 1129(a)(7) of the Bankruptcy Code requires that a plan
be in the best interests of creditors and stockholders. The best
interests test focuses on individual dissenting creditors rather
than classes of claims. See Bank of Am. Nat'l Trust & Sav. Ass'n
v. 203 N. LaSalle St. P'ship, 526 U.S. 434 (1999). It requires
that each holder of a claim or equity interest either accepts
the plan or will receive or retain under the plan property
having a present value, as of the effective date of the plan,
not less than the amount such holder would receive or retain if
the debtor were liquidated under chapter 7 of the Bankruptcy

Under the best interests test, the court "must find that each
[non-accepting] creditor will receive or retain value that is
not less than the amount he would receive if the debtor were
liquidated." 203 N. LaSalle, 526 U.S. at 440; United States v.
Reorganized CF&I Fabricators, Inc., 518 U.S. 213, 228 (1996). As
section 1129(a)(7) makes clear, the liquidation analysis applies
only to nonaccepting impaired claims or equity interests. If a
class of claims or equity interests unanimously accepts the
plan, the best interests test automatically is deemed satisfied
for all members of that class.

In the instant case, the best interests test is satisfied as to
each impaired Claim and Equity interest. As to Classes which
have unanimously accepted the Plan, the best interests test is
automatically deemed satisfied for all holders of Claims of such

A chapter 7 liquidation of the Debtors' estates would result in
zero distribution to unsecured creditors and equity interest
holders in the Reorganization Cases. Under the Plan, however,
Claims in Classes G4, G5, M4, and M5 will receive New Common
Stock and New Warrants, with an estimated recovery of over 12%
based on the most recent valuations of the Debtors.

As set forth in the Liquidation Analyses, the value of the
Debtors' assets in a chapter 7 case would be substantially
eroded as a result of the liquidation of such assets that might
be required under chapter 7 and its "forced sale" atmosphere.
Moreover, the increased costs associated with a liquidation
under chapter 7 would substantially reduce the proceeds
available for distribution. These costs would include, among
other things, administrative fees and costs payable to a trustee
in bankruptcy and professional advisors to such trustee and
substantial increases in claims which would be satisfied on a
priority basis or on parity with creditors in the Reorganization
Cases. In the context of the erosion of the asset values and the
increased costs and delay associated with a chapter 7 case,
confirmation of the Plan provides each rejecting creditor and
interest holder with a recovery that is not less than such
holder would receive in a chapter 7 liquidation of the Debtors.

  (8) Voting Results

Section 1129(a)(8) of the Bankruptcy Code requires that each
class of impaired claims or interests accept the plan, as
follows: "With respect to each class of claims or interests -
(A) such class has accepted the plan; or (B) such class is not
impaired under the plan." 11 U.S.C. section 1129(a)(8).

The Debtors believe that the Plan has been accepted by creditors
holding well in excess of two-thirds in amount and one-half in
number in each of the Classes entitled to vote under the Plan,
except for Class G5.

  (9) The Plan Provides for Payment in Full of All Allowed
      Priority Claims

Section 1129(a)(9) of the Bankruptcy Code requires that persons
holding allowed claims entitled to priority under section 507(a)
receive specified cash payments under the plan. Unless the
holder of a particular claim agrees to a different treatment
with respect to such claim, section 1129(a)(9) of the Bankruptcy
Code sets forth the treatment the plan must provide. 11 U.S.C.
section 1129(a)(9).

Pursuant to Sections 2 and 4 of the Plan, and in accordance with
sections 1129(a)(9)(A) and (B), the Plan provides that all
A1lowed Administrative Claims under section 503(b) of the
Bankruptcy Code and all Allowed Genesis Priority Non-Tax Claims
and Allowed Multicare Priority Non-Tax Claims under section
507(a) (excluding Priority Tax Claims under section 507(a)(8)
described below) will be paid in full, in Cash, on the later of
the Effective Date and the date such Claims become Allowed
Claims, or as soon thereafter as is practicable.

Pursuant to Section 2 of the Plan, Allowed Administrative Claims
representing liabilities incurred in the ordinary course of
business by the Debtors, including tax liabilities, or
liabilities arising under loans or advances to or other
obligations incurred by the Debtors, to the extent authorized
and approved by the Court if such authorization and approval was
required under the Bankruptcy Code, shall be paid in full and
performed by the Reorganized Debtors in the ordinary course of
business in accordance with the terms and subject to the
conditions of any agreements governing, instruments evidencing,
or other documents relating to, such transactions.

Thus, the requirements of section 1129(a)(9)(B) of the
Bankruptcy Code are satisfied.

Lastly, the Plan satisfies the requirements of section
1129(a)(9)(C) of the Bankruptcy Code in respect of the treatment
of Priority Tax Claims under section 507(a)(8).

  (10) At Least One Class of Impaired Claims Has Accepted the

Section 11 29(a)( 10) of the Bankruptcy Code requires the
affirmative acceptance of the Plan by at least one Class of
impaired Claims, "determined without including any acceptance of
the plan by any insider." 11 U.S.C. section 1129(a)(l0).

The Plan clearly satisfies this requirement.

  (11) The Plan is Not Likely to be Followed by Liquidation or
       the Need for Further Financial Reorganization

Section 1129(a)(11) of the Bankruptcy Code requires that the
Court determine that the Plan is feasible as a condition
precedent to confirmation. The feasibility test set forth in
section 1129(a)(l1) requires the Court to determine whether the
Plan is workable and has a reasonable likelihood of success. The
purpose of the feasibility test is to protect against visionary
or speculative plans. However, just as speculative prospects of
success cannot sustain feasibility, speculative prospects of
failure cannot defeat feasibility. The mere prospect of
financial uncertainty cannot defeat confirmation on feasibility

Applying the above standards of feasibility, courts have
identified the following factors as probative: (1) the adequacy
of the capital structure; (2) the earning power of the business;
(3) economic conditions; (4) the ability of management; (5) the
probability of the continuation of the same management; and (6)
any other related matters which will determine the prospects of
a sufficiently successful operation to enable performance of the
provisions of the plan.

Based on the Debtors' analysis of their ability to fulfill their
obligations under the Plan, the Debtors have prepared
projections of their financial performance for each of the five
fiscal years in the period ending fiscal year 2006. Based on the
Projections and the Exit Financing Facility in place, the
Debtors will be able to fulfill all their obligations under the
Plan. The Debtors will be able to make all payments required
pursuant to the Plan and sustain a viable operating entity. The
Debtors are confident that they will be able to repay or
refinance any and all of the then-outstanding indebtedness under
the Plan at or prior to the maturity of such indebtedness.
Accordingly, confirmation of the Plan is not likely to be
followed by liquidation or the need for further reorganization
of the Debtors.

  (12) All Statutory Fees Have Been or Will He Paid

Section 1129(a)(12) requires the payment of" [a]ll fees payable
under section 1930 [title 28, the United States Code], as
determined by the court at the hearing on confirmation of the
plan." 11 U.S.C. section 1129(a)(12). Section 507 of the
Bankruptcy Code provides that "any fees and charges assessed
against the estate under [section 1930,] chapter 123 of title
28" are afforded priority as administrative expenses.

In accordance with sections 507 and 1129(a)(12) of the
Bankruptcy Code, the Plan provides that all such fees and
charges payable will be paid in Cash on the Effective Date and
thereafter as may be required. The United States Trustee has
objected to the Plan based upon, inter cilia, the Debtors'
failure to pay fees allegedly due under section 1930 of title
28. The Omnibus Response addresses this objection.

  (13) The Plan Adequately and Properly Treats Retiree Benefits

Section 1129(a)(13) of the Bankruptcy Code requires a plan to
provide for retiree benefits at levels established pursuant to
section 1114 of the Bankruptcy Code.

The Plan provides that, on and after the Effective Date, the
Reorganized Debtors will continue to pay all "retiree benefits"
(as defined in section 1114(a) of the Bankruptcy Code), at the
level established pursuant to section 1114(e)(1)(B) or 1114(g)
at any time prior to confirmation of the Plan, for the duration
of the period the Debtors have obligated themselves to provide
such benefits.  Accordingly, the Plan satisfies the requirements
of section 1129(a)(l3) of the Bankruptcy Code.

  (14) The Plan Satisfies The "Cram Down" Requirements Under
       Section 1129(b) of the Bankruptcy Code

Section 1129(b) of the Bankruptcy Code provides a mechanism
(known colloquially as 'cram down") for confirmation of a plan
of reorganization in the circumstances where the plan is not
accepted by all impaired classes of claims. Under section
1129(b), the court may "cram down" a plan over the dissenting
vote of an impaired class or classes of claims or interests as
long as the plan does not "discriminate unfairly" and is "fair
and equitable" with respect to such dissenting class or classes.

       (i) The Plan Does Not Discriminate Unfairly

Section 1129(b)(1) does not prohibit discrimination between
classes. Rather, it prohibits discrimination that is unfair. The
weight of judicial authority holds that a plan unfairly
discriminates in violation of section 1129(b) of the Bankruptcy
Code only if similar claims are treated differently without a
reasonable basis for the disparate treatment.

As between two classes of claims or two classes of equity
interests, there is no unfair discrimination if (i) the classes
are comprised of dissimilar claims or interests, or (ii) taking
into account the particular facts and circumstances of the case,
there is a reasonable basis for such disparate treatment. Under
these standards, the Plan does not "discriminate unfairly" with
respect to impaired Classes of Claims and Equity Interests that
have voted or are deemed to reject the Plan.

* Classes G5 and M5

Class G5, which is comprised of Genesis Senior Subordinated Note
Claims, and Class M5 which is comprised of Muiticare Senior
Subordinated Note Claims, are separately classified because,
pursuant to the subordination provisions of the respective
indentures, recoveries on such Claims must be distributed to
holders of Genesis Senior Lender Claims in Class G2 and
Multicare Senior Lender Claims in Class M2 (collectively, the
"Senior Lender Claims"), respectively, until such holders are
paid in full plus interest. As holders of Senior Lender Claims
are not paid in full under the Plan, holders of Claims in
Classes G5 and M5 would not be entitled to receive any
distributions under the Plan, absent agreement by the holders of
the Senior Lender Claims.

Additionally, the treatment afforded holders of Claims in
Classes G5 and M5 minors the treatment afforded holders in
Classes G4 (Genesis General Unsecured Claims) and M4 (Multicare
General Unsecured Claims). The holders of the Genesis Senior
Lender Claims and Multicare Senior Lender Claims have agreed to
provide a portion of the value to which they would otherwise be
entitled to holders of unsecured claims in Classes G4 and G5 and
Classes M4 and M5, respectively. Pursuant to this agreement, as
set forth in the Plan, the holders of Claims in Class G5 will
share 4.12% of the New Common Stock and 62.19% of the New
Warrants with the holders of Claims in Class G4, such that both
Class G4 and Class G5 will receive an estimated recovery of
12.38%. Similarly, the holders of Claims in Class M5 will share
2.50% of the New Common Stock and 37.81% of the New Warrants
with the holders of Claims in Class G4, such that both Class M4
and Class M5 will receive an estimated recovery of 12.38%.

Thus, not only does the Plan does not discriminate unfairly with
respect to the impaired Classes G5 and M5, but it does not
discriminate at all with respect to these Classes.

* Classes G7 and M7

The Plan provides that no property will be distributed to the
holders of allowed Claims in Classes G7 (Genesis Punitive Damage
Claims) and M7 (Multicare Punitive Damage Claims).

However, for two reasons, such treatment does not constitute
unfair discrimination.

First, based on the valuation analyses performed by the
financial advisors for the Debtors and a strict application of
the absolute priority rule, no recovery would be available for
any unsecured classes. However, as a negotiated matter, the
Genesis Senior Lenders have agreed to give up a portion of the
value that they would receive if absolute priorities were
enforced to the holders of unsecured claims in Classes G4 and
G5. Similarly, the Multicare Senior Lenders have agreed to give
a portion of their value to the holders of unsecured claims in
Classes M4 and M5. Neither the Genesis Senior Lenders nor the
Multicare Senior Lenders have agreed to give up value for the
benefit of entities asserting punitive damage claims against the
Debtors (Classes G7 and M7). Nothing in the Bankruptcy Code
prohibits one class of creditors from giving a portion of its
recovery to some, but not all, other classes. The prohibition on
unfair discrimination applies to the Debtors, not to creditors.

Second, assuming, arguendo, that general unsecured creditors
were entitled to receive some recovery under the Plan, which
they are not, there is a rational basis for the disparate
treatment of Classes G7 and M7 from Classes G4 and M4,
respectively. Punitive Damage Claims are dissimilar from other
general unsecured claims. General unsecured claims in Classes G4
and M4 (including litigation claims) are claims based upon
actual compensatory loss, while Punitive Damage Claims in
Classes G7 and M7 are intended to punish or make an example of a
wrongdoer. Because the enforcement of punitive damages against
an insolvent debtor in chapter 11 will diminish the return to
other unsecured creditors rather than punish the debtor,
disparate treatment of Punitive Damage Claims in Classes G7 and
M7 claims is eminently reasonable.

Accordingly, while the Plan "discriminates" against Classes G7
and M7, it does not "discriminate unfairly."

* Classes G8, G9, GlO, G1l, and M8

The Plan provides that holders of Equity Interests in Classes
G8, G9, GlO, and G1l will receive no property and will be
cancelled on the Effective Date. Because each Class of Equity
Interests will be treated identically, the Plan does not
unfairly discriminate against these Classes. Class M8 is the
only Class consisting of the common equity interests in
Multicare. Holders of Equity interests in Class M8 also will
receive no property and will be cancelled on the Effective Date.
Inasmuch as Class M8 represents the only Equity Interests of
Multicare classified under the Plan, the Plan, a fortiori, does
not discriminate unfairly as between any holders of the Equity
Interests of Multicare.

Based upon the foregoing, the Plan does not "discriminate
unfairly" with respect to any impaired Classes of Claims or
Equity Interests.

       (ii) The Plan is Fair and Equitable

Section 1129(b) of the Bankruptcy Code sets forth the definition
of the phrase "fair and equitable." 11 U.S.C. section
1129(b)(2). In addition to the requirements enumerated in
section 1129, cases have interpreted the "fair and equitable"
standard to include the requirement that no class senior to the
dissenting class can receive more than a 100% recovery on its
allowed claims.

Class G5 voted to reject the Plan and various classes are deemed
to reject. Based on the section 1129 standards and the facts in
the affidavits submitted in support of confirmation of the Plan,
the Plan satisfies the "fair and equitable" test for each of
those Classes.

* Class G5

Under the Plan, holders of Genesis Senior Subordinated Note
Claims in Class G5 will receive a proportionate allocation of
(i) 1,689,147 shares of New Common Stock and (ii) New Warrants
to purchase 2,835,645 shares of New Common Stock, based on the
aggregate amount of Allowed Claims in Classes G4 and G5. The
shares of New Common Stock allocated to Classes G4 and G5
represent approximately 4.12% of the total shares of New Common
Stock to be issued and outstanding on the Effective Date,
subject to dilution from stock issuances after the Effective
Date. Under the Plan, each class of claims or interests that are
junior in right of priority to the claims in Class G4 receive no
property on account of their claims or interests. Subclass G1-
16, which also voted against the Plan, is a subclass of Genesis
Other Secured Claims consisting solely of THCI Mortgage Holding
Company LLC. THCI has objected to confirmation of the Plan. The
Debtors have resolved THCI's objection to the Plan for purposes
of confirmation of the Plan as to all creditors other than THCI.
The resolution is addressed more particularly in the Omnibus

Therefore, the Plan satisfies the test specified by section

In addition, no class senior to Class G5 will receive more than
a 100% recovery.

Genesis would have to have an enterprise value that exceeds
$1,548,000,000 - the value at which holders of claims in Class
G2 would receive a 100% recovery. This amount is approximately
$225 million higher than the midpoint of the range of enterprise
values for Genesis and is approximately $100 million greater
than the highpoint of that range of values.

* Classes Deemed to Reject the Plan

The "fair and equitable" rule is satisfied as to each holder of
a Claim or Equity Interest in the Classes deemed to have
rejected the Plan (Classes G7, G8, G9, GlO, G1l, M7, and M8).

Classes G7 and M7 are comprised of holders of Punitive Damage
Claims. No creditor or equity interest holder junior in right of
priority to holders of Punitive Damage Claims will receive or
retain any property on account of their Claims or Equity
Interests. Accordingly, the requirements of section
1129(b)(2)(B) are satisfied with respect to Classes G7 and M7.

Classes G8, G9, G10, and G1l, and Class M8 are comprised of
Equity interests in Genesis and Multicare, respectively. As the
holders of Claims against the Debtors will not be paid in full
pursuant to the Plan, holders of Equity Interests will receive
or retain no property under the Plan on account of their equity
interests. Inasmuch as no other equity interest holder will
receive or retain any property under the Plan, the Plan
satisfies the absolute priority rule of section 1129(b)(2)(C) of
the Bankruptcy Code with respect to holders of Equity Interests.

Finally, in determining whether a plan is "fair and equitable,"
courts consider additional factors to those set forth in section
1129(b). For example, courts look to whether the holders of
claims that are senior to the claims of a dissenting class are
receiving more than 100% of their claims. In the instant case,
the holders of Claims in Classes G2 (Genesis Senior Lender
Claims) and M2 (Multicare Senior Lender Claims) are receiving an
approximate recovery of 82.36% of their Claims. Moreover,
Classes G4, G5, M4, and M5 are receiving an approximate recovery
of 12.43% of their Claims. On this basis, the Plan is "fair and
equitable" in all respects.

              IV. The Genesis/Multicare Settlement

The Plan incorporates two significant settlements under
Bankruptcy Rule 9019:

(a) a "Government Settlement" among the Genesis Debtors and the
     United States of America acting through the United States
     Department of Health and Human Services, the Centers for
     Medicare and Medicaid Services f/k/a the Health Care
     Financing Administration, the Office of the Inspector
     General, the Department of Justice, and other agencies or
     departments of the United States concerning the resolution
     of certain claims asserted by such agencies against the
     Genesis Debtors; and

(b) the "Genesis/Multicare Settlement," between Genesis and its
     direct and indirect subsidiaries, on the one hand, and
     Multicare and its direct and indirect subsidiaries, on the
     other hand, regarding any and all claims against each

Pursuant to Section 5.16 of the Plan, the Debtors are seeking
approval of the Genesis/Multicare Settlement in connection with
confirmation of the Plan. The Government Settlement was
finalized only recently. Therefore, in order to give parties an
opportunity to review that settlement, the Debtors intend to
file a motion for its approval following the Confirmation

(a) The Genesis/Multicare Settlement

     (1) Relationship between Genesis and Multicare

         Prior to October 1997, The Muiticare Companies, Inc.
         was publicly-owned and not affiliated with the Genesis

         Genesis, The Cypress Group, L.L.C., TPG Partners II,
         L.P., and Nazem, Inc. formed Genesis ElderCare Corp.
         (GEC) to acquire The Multicare Companies, Inc. Through
         a tender offer and merger transaction, GEC, one of the
         Multicare Debtors, acquired 100% of the outstanding
         stock of The Multicare Companies, Inc. Genesis owns
         43.6% of the common stock of GEC. Genesis ElderCare
         Network Services, Inc. ("Genesis Network"), a Genesis
         Debtor, manages GEC pursuant to a management services
         agreement, dated as of October 7, 1997 (the "Management

         The Management Agreement provides, inter alia, that
         Multicare is obligated to pay Genesis Network a
         Management Fee of 6% of Multicare's net revenues for
         services provided under the Management Agreement,
         provided that payment of such fee in respect of any
         month in excess of the greater of (i) $1,991,667 and
         (ii) 4% of Multicare's consolidated net revenues for
         such month, shall be subordinate to the satisfaction of
         Multicare's senior and subordinate debt obligations
         and/or not be payable at all if there is a default
         under such obligations (such excess, the "Subordinated
         Management Fee"). Services provided by Genesis to
         Multicare under such agreements include operational
         oversight and management of Multicare's inpatient
         facilities, rehabilitation, pharmacy, medical supply,
         and other operational services, as well as accounting
         and financial and corporate administrative services.

         The Genesis Debtors also provide other essential
         services to the Multicare Debtors pursuant to a series
         of agreements between the Debtors. In accordance with
         the understandings between Genesis and Multicare's then
         independent boards, the prices under the ancillary
         agreements were to be adjusted each year to reflect
         changes in the marketplace and the market median rate
         charged by Genesis for similar goods and services
         provided to other parties.

         In addition to the management services agreement,
         Genesis (through Genesis ElderCare Rehabilitation
         Services, Inc., a Genesis Debtor) is the predominant
         provider of inpatient and outpatient rehabilitation
         services for Multicare's facilities; Genesis also is
         currently the predominant provider of institutional
         pharmacy services for Multicare's facilities.

         In November 1999, as part of an overall restructuring
         of the financial obligations of Genesis and Multicare,
         Genesis became the effective controlling shareholder of
         Multicare. On November 15, 1999, a stockholders
         agreement was amended to provide, among other things,
         that all shareholders in Multicare other than Genesis
         will grant to Genesis an irrevocable proxy to vote
         their shares of common stock of Multicare on all
         matters to be voted on by shareholders, including the
         election of directors and omit the requirement that
         specified significant actions receive the approval of
         at least one designee of each of Cypress, TPG, and
         Genesis. At that time, the independent members of the
         board of directors of Multicare resigned. At no time
         since that change in control were any changes made to
         the management services and other agreements that were
         beneficial to Genesis. Within seven months after the
         change in control, both Genesis and Multicare filed
         these chapter 11 cases.

         As Multicare has no corporate infrastructure and relies
         upon Genesis to provide operational oversight and
         accounting, financial, and corporate administrative
         services, the independent Director was hired in April
         2000 to review and evaluate Multicare's relationships
         with Genesis. Multicare's board of directors now
         consists of two members of Genesis's board of directors
         (Messrs. Michael Walker and Richard Howard), one
         Genesis officer (Mr. George Hager), and one independent
         director and officer unaffiliated with Genesis (Ms.
         Beverly Anderson or the "Independent Director"). Each
         of Multicare's officers (other than the Independent
         Director) is also an officer of or affiliated with

         To assist the Independent Officer in performing its
         duties, Multicare retained Ernst & Young and E&Y
         Capital Advisers to conduct a comprehensive review and
         analysis of the related party transactions between
         Genesis and Multicare.

         The Independent Director, utilizing the findings and
         recommendations of E&Y, thereafter engaged in
         negotiations with Genesis management regarding the
         terms of the related party relationships to reflect
         current market conditions. Ultimately, Multicare and
         Genesis agreed to modifications of the related party
         business and contractual relationships that resulted in
         an annualized cost savings to the Multicare Debtors of
         approximately $l2 million.

         However, new contracts have not actually been entered
         into due to the proposed merger of Genesis and

(2) Claims Between and Against the Genesis Debtors and the
     Multicare Debtors

     As of the Commencement Date approximately $36 million in
     Subordinated Management Fees and approximately $57 million
     on account of pharmacy, rehabilitation, and other ancillary
     services provided by Genesis to the Multicare Debtors
     remained outstanding. Since the Commencement Date,
     Multicare paid all management fees due and owing under the
     Management Agreement as well as all claims relating to
     Genesis's provision of pharmacy, rehabilitation, and other
     ancillary services to the Genesis Debtors. The Multicare
     Debtors have not paid any of the Subordinated Management
     Fee, as such portion is subject to the prior payment in
     full of the Multicare's prepetition senior and subordinated
     debt which are not being paid in full under the Plan.

     In connection with the Independent Director's investigation
     and evaluation of all the relationships between the Genesis
     Debtors and the Multicare Debtors, the Multicare Debtors,
     with the assistance of their legal and financial advisors,
     evaluated various defenses to the claims asserted by
     Genesis, including that, with respect to:

     (a) the Subordinated Management Fees, such claims are not
         valid obligations and/or are subordinate to the prior
         satisfaction of Multicare's senior and subordinated
         debt obligations, and

     (b) the claims related to the pharmacy, rehabilitation, and
         other ancillary services provided by Genesis to
         Multicare, such claims constitute an equity
         contribution rather than a debt obligation by virtue of
         the control exercised by Genesis over Multicare.

     The Multicare Debtors also evaluated potential claims held
     by Multicare against Genesis (including claims based on,
     among other things, (i) the virtual control exercised by
     Genesis over the Multicare Debtors and the allegation that
     Genesis operated Multicare for its own rather than
     Multicare's benefit, and (ii) the theory that transactions
     between and services provided Genesis to Multicare may be
     tainted with a conflict of interest and that Multicare may
     have been charged by the Genesis at rates in excess of

     The Multicare Debtors also evaluated many of the claims and
     allegations made by the Multicare Committee in its motion
     requesting the appointment of a trustee in the Multicare
     Debtors' cases, in which the Multicare Committee asserted,
     inter alia, that based upon its and its financial and legal
     advisors' review of the Genesis and Multicare

         (a) a gross conflict of interest existed and that
             Multicare is being run by Genesis for Genesis and

         (b) Genesis overcharges Multicare by approximately $27
             million on an annual basis (approximately $15
             million more than the cost reductions negotiated by
             Genesis and Multicare).

     The Debtors and the Multicare Committee consensually
     resolved the Trustee Motion, which has been withdrawn
     pending the Court's consideration of the Plan. Part and
     parcel of the Multicare Committee's agreement to support
     the Plan and withdraw the Trustee Motion was the agreement
     of the Genesis Debtors and the Multicare Debtors to waive
     and release claims against one another.

(3) Summary of the Genesis/Multicare Settlement

     Pursuant to the Settlement, the Genesis Debtors and the
     Multicare Debtors will setoff their claims against one
     another and waive and release any and all claims against
     one another that they may have as of the date of the
     settlement agreement in excess of such setoff.

     The Debtors believe that the Genesis/Multicare Settlement
     represents a fair and equitable settlement of the claims
     between the parties and satisfies the standards for
     approval of settlements under Bankruptcy Rule 9019 and
     applicable law.

     One of the reasons is that, litigating the claims between
     the two estates would not provide any meaningful benefit to
     the creditors of the winning side. This results from the
     fact that such claims would share pro rata with hundreds of
     millions of dollars of other prepetition unsecured claims
     against the losing debtor (including, in a nonconsensual
     restructuring, the deficiency claims of the Genesis and
     Multicare Senior Lenders) and the recoveries under the Plan
     provide for a relatively small stock and warrant
     distribution. Given the small recovery that would be
     available to the prevailing party, the Debtors do not
     believe that the significant expense and delay in
     litigation could be justified.

     Indeed, in these cases, there is not enough enterprise
     value to provide a full recovery to the holders of the
     Genesis and Multicare Senior Lender Claims. Thus, in the
     absence of a consensual restructuring, the absolute
     priority rule would preclude the distribution of any value
     to junior classes, including to holders of unsecured
     claims. However, in order to facilitate a consensual
     restructuring under the Plan (which includes the terms of
     the Genesis/Multicare Settlement), the Genesis and
     Multicare Senior Lenders have agreed to permit a relatively
     small percentage of value to which they are entitled to be
     made available to junior classes. This value would not be
     available in the event the Plan were not confirmed.

     With respect to the substance of the claims, the Management
     Agreement itself provides that the Subordinated Management
     Fee is not payable unless Multicare's senior and
     subordinated debt obligations are paid in full. Full
     payment of these claims obviously is not occurring in these
     cases, thus it cannot reasonably be argued that
     approximately half of Genesis's claims against Multicare
     are not valid.

     With respect to the balance of Genesis's claims against
     Multicare, the Multicare Debtors have asserted numerous
     defenses and counterclaims. Although the total amount of
     the counterclaims is difficult to quantify, at least with
     respect to the allegation of overcharging, that the Genesis
     Debtors and the Multicare Debtors renegotiated the terms of
     the agreements is evidence that the contracts were well

     Importantly, the Genesis/Multicare Settlement is an
     integral component of the largely consensual plan that has
     been negotiated in these cases. Here, the settlement is
     supported by each of the major constituencies in these
     cases. It is supported by the Genesis Committee and the
     Multicare Debtors. The settlement also is supported by the
     Genesis Senior Lenders and the Multicare Senior Lenders. In
     fact, only GMS has objected to the reasonableness of the
     proposed Genesis/Multicare Settlement and, even then, only
     in a passing reference to it in a footnote to GMS's
     objection to the Plan.

     Indeed, as set forth above, the settlement was one of the
     primary components of the Debtors' settlement of the
     Trustee Motion. (Genesis/Multicare Bankruptcy News, Issue
     No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

GLOBAL TELESYSTEMS: Europe Unit Bank Waiver Extended to Sept. 17
Global TeleSystems, Inc. (OTC:GTLS; NASDAQ; EUROPE:GTSG;
Frankfurt:GTS) announced that Deutsche Bank, Dresdner Bank and
Bank of America, which are providing financing to GTS's Global
TeleSystems Europe Holdings B.V. subsidiary, have agreed to
further extend the waiver of any defaults under their facility
caused by GTS's election to not make interest payments on GTS
Europe's publicly-traded debt while the company works toward a
debt restructuring plan with bondholders.

The current waiver has now been extended through 17 September
2001. GTS and the Bank Group continue their discussions, aimed
at replacing the current financing agreement with a longer-term
financing facility.

HARNISCHFEGER: Resolves Grade & Corby's SERP-Related Claims
Jeffrey T. Grade and Francis M. Corby each filed claims against
Harnischfeger Industries, Inc. based on the respective
Termination and Release Agreements. The parties agreed on
certain of the claims filed but were previously in dispute over
the amounts due Grade and Corby under the SERP.

Grade filed Claim No. 5429 as a general unsecured claim against
HII in the amount of $9,322,388.00. Corby filed Claim No. 5437
as a general unsecured claim against HII in the amount of

The Debtors contended that Claim No. 5429 should be a general
unsecured prepetition claim against HII in the amount of
$5,341,967.80, and Claim No. 5437 should be a general unsecured
prepetition claim against HII in the amount of $2,963,767.80

The contention was related to amounts under the SERP. While
Grade asserted an amount of $5,919,563.00 and Corby asserted an
amount of $2,046,086.50 due under the Supplemental Retirement
and Stock Funding Plan (SERP), the Debtors reckoned the maximum
amount of Grade's SERP-related claim at $2,491,842.80 and that
of Corby at $889,979.80. The dispute arises from the value of
the HII stock used in the calculation and the methodology in
calculation. On May 24, 1999, the date of departure of Grade and
Corby, HII stock traded at nearly $10 per share. At the time of
distribution in October 1999, HII stock had a value of $1.25 per

After much negotiation, briefing, and a hearing before the
Court, the Parties have agreed that Claim No. 5429 should be
reduced and allowed in the amount of $5,416,267.80 against HII
and Claim 5437 should be reduced and allowed in the amount of
$3,018,067.80 against HII.

Pursuant to the Parties' stipulation and agreement, which has
been approved by the Court:

(a) The portion of Claim No. 5429 relating to the LTCP is
     $3,254,425.00. The Debtors and Corby agree that the portion
     of Claim No. 5437 relating to the LTCP is $2,278,087.50.

(b) That portions of Claim No. 5429 and Claim No. 5437 relating
     to the SERP should be calculated according to the terms of   
     the SERP upon termination of employment for "Good Reason."

(c) The portions of Claim No. 5429 and Claim No. 5437 relating
     to the SERP consist of the "Stock Benefit Supplement" due
     to Grade and Corby. The Stock Benefit Supplement is the
     Projected Benefit Obligation minus the "Market Value" of
     the "Stock Benefits" and the "Schedule A Stock."

         -- The PBO for Grade under the SERP is $7,333,559. The
            PBO for Corby under the SERP is $2,225,989. These
            PBOs are the result of actuarial calculations
            conducted by Towers Perrin.

         -- The Stock Benefits for Grade are the 405,974 shares
            of stock that were held in a Rabbi Trust in Grade's
            name as of May 24, 1999. The Stock Benefits for
            Corby are the 115,330 shares of stock that were held
            in a Rabbi Trust in Corby's name as of May 24, 1999.

         -- The Schedule A Stock for Grade is the 103,498 shares
            of stock distributed to Grade in October 1998. The
            Schedule A Stock for Corby is the 28,409 shares of
            stock distributed to Corby in October 1998.

         -- The Market Value of each share of stock comprising
            the Stock Benefits and the Schedule A Stock is
            $9.5034 and is based on the average closing price of
            HII's stock on the New York Stock Exchange Composite
            Tape for the thirty calendar day period immediately
            preceding May 24, 1999.

(d) Numerically, the SERP-related portion of Claim No. 5429
     (Grade) is calculated as $7,333,559 - ($9.5034 x (405,974 +
     103,498))= $2,491,842.80.

     Numerically, the SERP-related portion of Claim No. 5437
     (Corby) is calculated as $2,255,989 - ($9.5034 x (115,330 +
     28,409)) = $889,979.80.

(e) In addition to the amounts relating to the SERP and the
     LTCP, the Debtors and Grade agree that he is due $70,000
     relating to other benefits owed to him under the  
     Termination and Release Agreement. Similarly, the Debtors
     and Corby agree that he is due $50,000 relating to other
     benefits owed to him under the Termination and Release

(f) Grade has received a lump sum payment of $400,000 pursuant
     to Section 2(d) of the Termination and Release Agreement.
     This payment is credited against the amounts due. Corby has
     received a lump sum payment of $200,000 pursuant to Section
     2(d) of the Termination and Release Agreement. This payment
     is credited against the amounts due.

(g) Thus, the Debtors and Grade agree that Claim No. 5429 is
     reduced and allowed as a general unsecured claim against
     HII in the amount of $5,416,267.80.

(h) The Debtors and Corby agree that Claim No. 5437 is reduced
     and allowed as a general unsecured claim against HII in the
     amount of $3,018,067.80.

(i) The distribution procedures set out in the Plan apply to
     Claim No. 5429 and Claim No. 5437.

The Debtors and Grade and Corby also agree that these amounts
are the entire amounts owed to Grade and Corby. Grade and Corby
agree not to bring any further claims against any Reorganizing
Debtor for compensation arising from their employment or
services rendered prior to the effective date, including but not
limited to, amounts due under the SERP and the LTCP.

In summary, the Debtors and Grade and Corby agree that:

       (A) Claim No. 12242 is expunged.

       (B) Claim No. 12243 is expunged.

       (C) Claim No. 5429 is an allowed general unsecured claim
           against HII in the amount of $5,416,267.80.

       (D) Claim No. 5437 is an allowed general unsecured claim
           against HII in the amount of $3,018,067.80.

       (E) Neither Grade nor Corby may file a claim against HII  
           or any other Reorganizing Debtor relating to
           compensation arising from their employment or
           services rendered prior to the effective date,
           including but not limited to, amounts due under the
           SERP and the LTCP.

The Reorganizing Debtors have determined that further litigation
of this dispute would be time consuming and costly and that the
outcome is uncertain. Therefore, the Reorganizing Debtors
believe that entry into the Stipulation is in the best interests
of their estates and creditors.

The Reorganizing Debtors note that the Beloit Liquidating Trust
has filed a Complaint against Grade and Corby seeking to void
certain portions of the pre-petition Termination and Release
Agreements with Grade and Corby. HII believes this Complaint has
no merit and that it is appropriate to enter this stipulation
notwithstanding the pendency of the Complaint. (Harnischfeger
Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

HEARME: Annual Stockholders Meeting Moved to September 28
HearMe (OTCBB:HEAR.OB), announced that it plans to hold its
Annual Meeting of Stockholders, previously scheduled for August
30, 2001, on Friday, September 28, 2001.

At the meeting HearMe will, among other matters, seek approval
of the Company's Plan of Liquidation and Dissolution, which was
recently unanimously approved by the Board of Directors.

The Annual Meeting of Stockholders is scheduled to take place at
10:00 AM PDT in the Sheraton Sunnyvale Hotel, 1100 N. Mathilda
Avenue, Sunnyvale, California.

HearMe has filed a definitive proxy statement with the
Securities and Exchange Commission outlining details of the plan
and the Company's timeline for a wind down of normal business
operations. Due to the adjourned meeting, the record date for
the meeting remains June 1, 2001, and stockholders of record as
of such date will be entitled to notice of and to vote at the
meeting or by proxy and should receive a copy of the proxy
materials via mail.

On July 30, 2001, HearMe announced plans for an orderly wind
down of business operations, including a potential sale of the
assets and settlement of liabilities, with the objective of
returning any remaining capital to stockholders.

As part of the wind down efforts, the Company recently announced
that it would not pursue a 10-for-1 reverse stock split and a
withdrawal of its request for review of a NASD staff
determination to discontinue trading of the Company's common
stock on the Nasdaq National Market based on the Company's
minimum bid price. HearMe common stock is now trading on the OTC
Bulletin Board under the symbol HEAR.OB.

HearMe (Nasdaq:HEAR) develops VoIP application technologies that
deliver increased productivity and flexibility in communication
via next generation communications networks. The Company's PC-
to-phone, phone-to-phone, and PC-to-PC VoIP application platform
offers innovative technology and turnkey applications that
simplify the process of bringing differentiated, enhanced
communications services to market.

Communications services supported or enhanced by HearMe
technology include VoIP-based conferencing, VoIP Calling, and
VoIP-enabled customer relationship management (CRM). Founded in
1995, HearMe is located in Mountain View, California, and is
located on the Internet at

ICG COMMS: NetAhead Moves to Reject 3 Telecommunications Leases
ICG NetAhead, Inc., asks that Judge Walsh permit them to reject
3 leases of commercial real property used for telecommunications
sites, effective on August 31, 2001, the date on which the
Motion is filed.

The Debtor says it has determined that these sites are not
necessary to its ongoing operations, but nonetheless remain
currently obligated under these respective leases and/or
executory contracts.  

In the Debtor's business judgment, it is no longer necessary or
in the Debtor's best interests to maintain these sites.  The
rent and other expenses due under these agreements constitute an
unnecessary drain on the Debtor's cash flow. The rent and
expenses for the leases and contracts included in this
Motion total approximately $2,208.56 per month.  By rejecting
these leases and/or contracts, the Debtor can minimize
administrative expenses.

Moreover, the Debtor does not believe that it can obtain any
value for the leases and/or contracts by assignment to third
parties, so that rejection of these leases/contracts is in the
estates', the creditors' and the interest holders' best

The Debtor seeks to cause the rejection to be effective as of
the date of the filing of this Motion and waives any right to
withdraw the Motion.  As of the filing of the Motion, the Debtor
has sent a letter to each landlord or contracting party stating,
among other things, that the premises are abandoned.  

The Debtor promises it will pay any postpetition amounts due
within ten days of entry of an Order granting this Motion.

The leases to be rejected are:

Site Address          Notice Address                 
------------          --------------                ------
3475 West Shaw        Regulator Properties          ICG NetAhead
Suite 105             P. O. Box 9086
Fresno, CA            San Rafael, CA

60 S. Redwood Road    Diamond Properties            ICG NetAhead
Suite 201             c/o CB Richard Ellis
Salt Lake City, UT    2755 E. Cottonwood Pkwy #100
                      Salt Lake City, UT

400/402 BNA Drive     Highwoods Properties          ICG NetAhead
Suite 108             2120 West End Avenue
Nashville, TN         Suite 100
                      Nashville, TN

(ICG Communications Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  

LOEWEN GROUP: Court Approves Sale of Assets to Denco for $2.25MM
The motion by DMA Corporation and other Debtors to sell assets
related to 11 Sale Locations in Tennessee was granted with
modifications after Judge Walsh entertained both the Debtors'
request and the objection by John G. and Betty S. Smith seeking
to protect their interest in certain pledged real property that
is part of the whole package to be sold.

The Sale Locations are:

Funeral Homes:

(1) Burris Funeral Home, Inc., Highway 127 South, Crossville,
     TN 38555;

(2) Family Service Group, Inc., 1017 Oak Ridge, TN 37830;

(3) Johnson Funeral Home of Church Hill, Inc., 320 Grandview
     Street, Church Hill, TN 37642;

(4) Weaver Funeral Home, Inc., 20059 North Alberta Avenue,
     Oneida, TN 37841;

(5) Weaver Funeral Home, Inc., 101 Alberta Avenue, Oneida, TN


(1) DMA Corporation, doing business as Dandridge Memorial   
     Gardens (5528), Highway 70, Dandridge, TN 37725;

(2) DMA Corporation, doing business as McMinn Memory Gardens
     (2043), 1739 County Road 561, Athens, TN 37303;

(3) Family Funeral Service Group, Inc., doing business as
     Anderson Memorial Gardens & Chapel Mausoleum (2071), 640,
     Oliver Springs Highway, Clinton, TN 37716;

(4) Kingston Memorial Gardens, Inc., doing business as Roane
     Memorial Gardens, Inc. (5854), Lawnville Road, Kingston, TN

(5) Sweetwater Valley Memorial Park, Inc., doing business as
     Sweetwater Memory Gardens, Inc. (5741), 1838 Highway 11
     North Sweetwater, TN 37874.

The Selling Debtors, all Tennessee corporations, are:

(1) Burris Funeral Home, Inc.
(2) Family Funeral Service Group, Inc.
(3) Johnson Funeral Home of Church Hill, Inc.
(4) Weaver Funeral Home, Inc.
(5) DMA Corporation
(6) Kingston Memorial Gardens, Inc.
(7) Roane Memorial Gardens, Inc.
(8) Sweetwater Valley Memorial Park, Inc.

The Smiths assert claims against Debtor Burris Funeral Home,
Inc. secured by certain real property owned by Burris proposed
to be sold pursuant to the motion.

Specifically, the Smiths told Judge Walsh that at the time they
sold Burris Funeral Home to the Debtors in 1996, the parties
agreed that $600,000 would be due at closing and the other half
would be paid in monthly installements of $5,000 over 10 years
in connection with a covenant not to compete. At the same time,
Mr. Smith also entered into a consulting agreement with the
Debtors. As security for the Debtor's obligations under the
covenant not to compete and the consulting agreement, debtor
Burris Funeral Home, Inc. conveyed by deed of trust to Thomas E.
Hale, Esquire as trustee the BFHI Real Property sold by the
Smiths in connection with the sale of the business.

According to the Smiths, the BFHI Real Property was valued at
$740,000 in an appraisal commissioned by the Debtors shortly
before closing and they were owed by the Debtors $410,000 on the
covenants not to compete and $6,000 on Mr. Smith's consulting
agreement as of the petition date, so their claims total
approximately $575,000.

However, at a purchase price of $2.25 million for all five
funeral home businesses and six cemeteries, and the lack of
allocation of any specified portion of the Purchase Price to the
Business, the Smiths believe it is unlikely that the value
ultimately allocated to the BFHI Real Property will match the
value of the BFHI Real Property on a stand alone basis.

The Smiths are concerned that as a result they are not provided
with adequate protection for their interest in the BFHI Real
Property. The Smiths challenge the justification for the Debtors
to sell the BFHI Real Property free and clear of liens  and the
Debtors' business judgment in selling the Business in a bulk

Accordingly, the Smiths assert that the Debtors should not be
permitted to use any of the sale proceeds without first
adequately protecting the Smiths' interest in the proceeds.
Short of an immediate payoff, the Smiths suggest that the only
way to adequately protect the Smiths' interest is to place a
portion of the sale proceeds in a separate escrow account,
pending allowance and payment of the Smiths' claims, in an
amount sufficient to pay the Smiths' claims plus a sufficient
cushion to cover interest, late fees and costs (including
attorneys' fees) to accrue in the future.

As requested by the Debtors, the Court authorized the 8 Selling
Debtors to sell the Assets to Denco Holdings, Inc. (the Initial
Bidder) for $2,250,000 (the Purchase Price), free and clear of
all liens, claims and encumbrances and other interests asserted
in or against the Sale Locations, and to assume and assign 59
Assignment Agreements to the Purchaser upon the closing of the
proposed sale of the Sale Locations.

In connection with the sale, Neweol would sell and the Initial
Bidder would purchase certain accounts receivable related to the
Sale Locations pursuant to a purchase agreement between Neweol
and the Initial Bidder. The amount of the Neweol Allocation will
be determined immediately prior to closing in the manner set
forth in the Neweol Purchase Agreement and will be paid to
Neweol at closing, subject to certain procedures in sending

Judge Walsh makes it clear that the Purchaser is not relieved of
the obligations, if any, that it would have under applicable
nonbankruptcy law outside bankruptcy with respect to prepaid
funeral contracts being acquired from the Selling Debtors.

Addressing the Smith's objection, Judge Walsh directs that:

     "Notwithstanding the sale of the Burris Property as part of
      a sale of multiple assets of the Debtors, for purposes of
      determining the amount of the Smiths' allowed secured
      claims, the value of the Burris Property will be
      determined on a stand alone basis in accordance with the
      terms in the Court's Order with respect to this motion;

      The Debtors and the Smiths will separately and at their
      own expense, obtain an appraisal of the Burris Property,
      to be completed within 28 days after the date of the
      Order, conducted by each party's selected appraiser who is
      a licensed appraiser holding an M.A.T. designation issued
      by the Appraisal Institute.

      Upon completion of such appraisal, the Appraisers will
      issue to the respective pary an unqualified appraisal
      report for the Burris Property prepared in accordance with
      the Uniform Standards for Professional Appraisal Practice.

      Upon receipt of the Appraisal Report, each party will
      transmit a copy of the report to counsel to the other
      party by telecopier or overnight service.

      If the respective appraised values of the Burris Property
      set forth in the Appraisal Reports differ, the Debtors and
      the Smiths will promptly negotiate in good faith to
      resolve the difference and attempt to mutually agree upon
      an appraised value of the Burris Property.

      No later than seven days after the later to occur of
      delivery of the Debtors' Appraisal Report to counsel to
      the Smiths and delivery of the Smiths' Appraisal Report to
      counsel to the Debtors, counsel to the Debtors will file a
      notice, in form reasonably acceptable to the Smiths,
      setting forth: (a) whether the Debtors and the Smiths have
      agreed on the Appraised Value; (b) if an agreement has
      been reached, the amount of the agreed Appraised Value;
      and (c) if an agreement has not been reached, a hearing
      will be conducted before the Court on September 12, 2001
      at 1:30 p.m. to determine the Appraised Value,

      Subject to the provisions in the Court's Order, the
      Selling Debtors are authorized to comply with the Net
      Asset Sale Proceeds Procedures with respect to the net
      proceeds of the proposed sale of the Sale Locations. In
      the event that the Sale is consummated under the Purchase
      Agreement, a portion of the net proceeds of the sale
      transaction evidenced by the Purchase Agreement will be
      held in the Net Asset Sale Proceeds Account to satisfy any
      allowed secured claims held by the Smiths against Burris
      (the Smith Reserve) in an amount as follows: (a) the
      amount of the Appraised Value if such an Appraised Value
      has been determined in accordance with the terms of the
      Court's order, (b) if the Appraised Value has not yet been
      determined in accordance with the terms of the Court's
      Order, $625,000.

      Until the allowed amounts of the Smith Secured Claims have
      been determined and such amounts have been paid, the Smith
      Reserve will not be utilized to repay amounts under the
      Debtors' DIP financing facility or for any other purpose.

      If the Appraised Value has not been determined at the time
      that the Smith Reserve is established and $625,000 is
      therefore set aside in the Smith Reserve, the amount of
      the Smith Reserve will be reduced or increased to the
      Appraised Value when the Appraised Value is determined in
      accordance with the terms of the Court's Order.

      The allowed amounts of the Smith Secured Claims shall be
      paid from the Smith Reserve within 10 business days after
      the latest to occur of: (a) the closing of the
      transactions contemplated by the Motion, (b) the
      determination of the Appraised Value of the Burris
      Property in accordance with the terms of this Order and
      (c) the allowance of the Smith Secured Claims.

      Any excess in the Smith Reserve not paid to the Smiths
      will be released from the Smith Reserve at the time of
      payment. The allowed amount of the Smith Secured Claims
      will not exceed the amount of the Appraised Value as
      determined in accordance with the terms of the Court's

Judge Walsh makes it clear that nothing in the Order will be
deemed an adjudication of the nature, validity or amount of the
Smith Secured Claims. (Loewen Bankruptcy News, Issue No. 45;
Bankruptcy Creditors' Service, Inc., 609/392-0900).

LOOK COMMS: Seeks Protection Under CCAA to Firm Up Refinancing
Look Communications Inc. (CDNX: LKC) announces it has
voluntarily sought and obtained protection under the Companies'
Creditors Arrangement Act (CCAA) pursuant to an Order from the
Ontario Superior Court of Justice. The initial Order, as is
customary in these matters, is for a period of 30 days.

"We have taken this step in order to provide the Company with
the time and flexibility necessary to attempt to finalize
ongoing negotiations with potential new investors to secure the
required financing for a fully funded business plan, as well as
to work towards restructuring the Company's current debt," said
Michael Cytrynbaum, Chairman of the Board and interim CEO.

"Look's objective is to file a plan of arrangement for approval
by the Court with a view to beginning meetings with creditors
and trade suppliers as soon as possible."

Look's customers will remain unaffected by this announcement and
the Company confirmed that it will have sufficient funds on hand
to enable it to continue normal operations during the Initial
Order period and to make payments to suppliers and others for
authorized goods and services received after the Initial Order
was issued.

Look is committed to maintaining high service levels to
customers during this period. "The support and encouragement we
have received from our customers in recent months is extremely
gratifying and demonstrates clearly that there is room in the
Canadian market for an alternative provider of Internet and
video services," added Mr. Cytrynbaum.

Look also announces the appointment of Paul Lamontagne as
President of the Company. Mr. Lamontagne will be responsible for
planning and implementing the re-launch of its activities and
for its current ongoing operations. Mr. Lamontagne has extensive
experience in the telecommunications and media sectors and
served in the past as Executive Vice President and Chief
Operating Officer of Look's Quebec and Eastern Ontario region
during the company's commercial launch in 1998.

"Today's announcement should reassure our employees, our
customers and our suppliers that Look can emerge from the
current period as a strong competitor in both the Internet and
digital television distribution spaces and will be capable of
serving the current and future needs of customers in
both the residential and the small and medium-sized business
segments. We are most anxious to re-launch our sales and
marketing activities after being in a defensive posture for
almost a year," said Mr. Lamontagne.

                    Financial Results

The Company also reported its financial and operating results
for the second quarter and first six months of 2001. Revenue was
$19.6 million for the second quarter 2001 and $42 million for
the year-to-date, up 19% and 38%, respectively, compared to
$16.5 million and $30.5 million for the corresponding periods in

The Company generated negative EBITDA of $1.8 million for the
second quarter compared to negative EBITDA of $17.6 million for
the second quarter of 2000. Year-to-date 2001, the Company
posted negative EBITDA of $0.6 million compared to negative
EBITDA of $26.9 million for the same period in 2000.

Of the total revenue of $42.0 million for the first six months
of 2001, broadcast distribution services contributed $20.3
million, while Internet access and Web-related services
accounted for $21.7 million.

The Company's subscriber base declined in the second quarter of
2001 to approximately 251,000, or 10.0% for the quarter and 15%
since the beginning of 2001. This decline reflects mainly normal
churn that has not been offset by new customer activations due
to a lack of investment in sales and marketing. Look anticipates
a continued decline in customer counts for the balance of 2001.

At June 30, 2001, the Company had 79,300 television subscribers,
an increase of 19,200 or 32% over the same period in 2000.
Internet services subscribers totaled 171,600, comprised of
147,800 residential dial-up subscribers, 7,900 high-speed
service subscribers and 15,900 business subscribers. As a result
of the lower customer count, second quarter 2001 revenue
declined 13% from the first quarter of 2001.

Costs and expenses decreased to $67.4 million for the six months
to June 30, 2001, compared to $103.0 million for the same period
in 2000. This decline is due to the restructuring plan announced
and implemented in December 2000 and to the reduction in the
subscriber base. "We want to continue to lower our costs and
improve our productivity in order to be ready for the eventual
re-launch of the company," said Louis Villeneuve, Chief
Financial Officer of Look.

Amortization and write down of capital assets and deferred
charges increased to $24.7 million for the six months ended June
30, 2001, compared to $9.4 million for the same period in 2000.
This is attributable to the increase in capital assets related
to network expansion and to the more than 200% increase in the
number of television subscriber installations performed since
January 1, 2000.

Net loss for the second quarter of 2001 was $15.9 million
compared to a net loss of $45.2 million for the same period last
year. For the first six months of 2001, net loss was $30.8
million (before a gain on the sale of the Company's interest in
Inukshuk Internet Inc.) compared to a net loss of $79.8 million
last year.

Reflecting the gain on the sale of the Inukshuk interest, net
earnings for the first six months of 2001 were $114.2 million
compared to a net loss of $79.8 million for the six months ended
June 30, 2000.

                      Subsequent Events

On July 31, 2001, Microcell paid the outstanding balance of sale
of $50 million for the Company's interest in Inukshuk. This sum
was used to repay portions of Tranches A and B of the credit
facility. Following such repayments, a total of $98.3 million
was outstanding under the facility. This amount was due and
payable but was not paid on August 2, 2001.

The Company's banks called the loan on August 9, 2001 and on
August 16, 2001, BCE Inc. and Telesystem Ltd, the guarantors of
the facility, paid the entire sum to the banks. BCE and
Telesystem received an assignment of the banks' rights under the
credit agreement and the security thereunder, and agreed to
subordinate their security to any other lender under a financing
arrangement with Look that is reasonably acceptable to them. The
deadline for payment by the Company of all amounts owing by it
was extended to August 25, 2001 and, subsequently, for a last
and final time, until September 7, 2001.

On August 20, 2001, the Company terminated the employment of
approximately 125 employees to reduce costs. This measure will
assist the Company in its efforts to return to a positive EBITDA
position in the future.

In view of its current and anticipated financial position, the
state of negotiations with new investors and the impending
September 7, 2001 deadline for the repayment of amounts owing to
BCE and Telesystem, the Company made the decision to file for
protection under the CCAA. There can be no assurance that Look
will successfully conclude current negotiations with new
investors or reach agreement with creditors and trade suppliers
under a plan of arrangement.

In view of the CCAA filing, Look will postpone the Annual
Meeting of Shareholders scheduled for September 14, 2001.

Look Communications (CDNX: LKC) is a leading wireless broadband
carrier, delivering a full spectrum of communications services
including digital television distribution, high-speed and dial-
up Internet access and Web-related services. Through its
advanced MDS technology (Multipoint Distribution System) Look
provides superior digital entertainment services to homes across
Quebec and Ontario.

Look's Internet service has established itself as one of
Canada's largest independent service providers offering both
high speed and dial-up Internet access, in addition to other
Web-based applications, to consumers and businesses throughout
Canada. For more information on Look, visit the company's Web
site at

LTV CORP: Court Okays Modified USWA Pact, Subject to Revisions
Represented by Michael Yetnikoff and Rosanne Ciambrone of the
Chicago firm of Bell Boyd & Lloyd LLC, and Jonathon M. Yarger of
the Cleveland office of Korhman Jackson & Krantz, the Official
Committee of Equity Security Holders objects to the Debtors'
Motion for approval of a Modified Labor Agreement with the
United Steel Workers of America.  The Committee tells Judge
Bodoh that the MLA is a watershed event in this case which
would, if approved, significantly affect distributions to
creditors and equity holders in this case.  Indeed, the
Committee contends, the MLA would provide the USWA with a 20%
ownership interest in reorganized LTV, as well as 20% of its
cash flow, thus dictating the terms of any plan of
reorganization, with the protections of the Bankruptcy Code.  
The Committee complains that the MLA would also grant the USWA
significant corporate governance rights without compliance with
the Debtors' Certificate of Incorporation, By-Laws or Delaware

Moreover, while the Debtors state that: Modification to the
parties' collective bargaining agreements and retiree benefit
plans" are necessary to allow the Debtors to restructure, the
Debtors do not explain why this is so and have failed to
quantify in the MLA Motion either the costs of the MLA or the
benefits the MLA confers on the estates.  For these reasons, the
MLA should not be approved.

The Committee argues that the MLA is a "sub rosa" plan.  The
Code does not authorize the debtor to short-circuit the
requirements of a reorganization plan by establishing the terms
of the plan in connection with a proposed transaction.  Where a
transaction dictates the terms of a reorganization plan, the
parties and the court must scale the hurdles as erected in
chapter 11, including disclosure requirements, voting, the best
interests of creditors test, and the absolute priority rule.  

Further, the MLA grants the USWA the right to designate two
board members.  It also grants the USWA representation on all
committees and approval rights over certain investments.  In
granting the USWA such extensive corporate governance rights,
the MLA contravenes the Debtors' bylaws, the Debtors'
Certificate of Incorporation, and Delaware law.

       The Official Committee of Noteholders Objects Too

Represented by Joseph McDonough and James McLean of the
Pittsburgh firm of Manion McDonough & Lucas, PC, and joined by
Lisa G. Beckerman and Robert J. Stark of the New York office of
Akin  Gump Strauss Hauer & Feld LLP, the Official Committee of
Noteholders makes a limited objection to the Debtors' Motion for
a modified labor agreement with the United Steelworkers of

The Noteholders Committee says it applauds the Debtors and the
Official Committee of Unsecured Creditors for their "yeoman's
effort towards consensual resolution" of the Debtors' earlier
Motion to reject the CBAs and modify retirement benefits.  The
Noteholders Committee also acknowledges the complexity of the
Debtors' compensation/benefits issues and the tireless efforts
of those who worked so hard to find creative solutions to these

That said, . . .

Since the proposed settlement with the USWA was shared with the
Noteholders' Committee, the Committee has tried to meet the
efforts of the settling parties by laboring to fully understand
the terms of the settlement.  This is not an easy task.  The
Noteholders' Committee did not participate in the negotiations
or the financial modeling that went into the formulation of the
settlement and therefore it does not have the knowledge base to
fully appreciate the economic ramifications of the settlement -
a complex and far-reaching agreement - or the revisions to the
Debtors' original business plan necessitated by the settlement.  

Although the Noteholders' Committee's financial advisor and
counsel have been working with the Debtors and their
professionals, hoping to become more comfortable with the terms
of the settlement, it will not be in a position to truly
understand the economic impact of the settlement and the
Debtors' revised business plan for some time in the future.

Preliminary information provided to the Noteholders' Committee
by the Debtors reveals that the settlement materially deviates
(by $318 million) from the cost-savings thought to have been
necessary under the Debtors' original business plan simply to
maintain enterprise viability.  The Noteholders' Committee was
under the impression that the Debtors were compelled to achieve
at least the compensation/benefits cost-savings provided for in
the original business plan because the Debtors have thus far
failed to achieve some of the other cost-savings initiatives
provided for under the original business plan.  

Indeed, the Debtors previously made the point time and
again, in pleadings with this Court and during discussions with
the Noteholders' Committee, that they had to strictly adhere to
the original business plan as a matter of life or death.

As a more immediate matter, however, there are aspects of the
settlement that are facially inappropriate and should not be
sustained by the Court.  These provisions do not directly relate
to the Debtors' pension and benefits issues, but rather appear
to be value "kickers" to "incentivize" the Union to settlement
the Debtors' previous Motion.  In particular, under the

       (a) The Debtors' hourly employees under the Union CBA
           will be entitled to a distribution of 20% of the
           reorganized Debtors' common stock under any plan of

       (b) The Debtors' hourly employees under the Union CBA
           will be entitled to 20% of the reorganized Debtors'
           quarterly profits on an on-going basis;

       (c) The Union will be entitled to a distribution of
           "special preferred stock" with the right to designate
           two members of the reorganized Debtors' board of
           directors and ensure that all committees of the board
           have at least one Union-designated director (except
           where such director would have a conflict of

       (d) The Union will have consent rights (ergo, corporate
           governance rights) respecting any investment of the
           reorganized Debtors outside the steel industry and/or
           any investment exceeding $20 million outside of basic
           steel; and

       (e) The Union is afforded consent rights regarding any
           plan of reorganization for the Debtors and may
           terminate the settlement if the Debtors propose a
           plan without the Union's consent, even if the plan is
           otherwise accepted by every part in interest and
           confirmed by the Court.

More than simply overreaching, these are terms that, under the
Bankruptcy Code, may only be provided to the Union in connection
with a plan of reorganization.  The settlement, therefore,
incorporates terms that inappropriately effectuate a "creeping"
or sub rosa plan.

Accordingly, the Committee asks Judge Bodoh to deny approval of
the settlement, at least to the extent that it seeks approval of
a sub rosa plan for the Debtors.

                    The Debtors Respond

The MLA is the product of months of difficult, arms' length
negotiations among the Debtors, the USWA, and the Official
Committee of Unsecured Creditors, and represents an important
step in the Debtors' ongoing reorganization efforts.

First, the Committees question the Debtors' business judgment in
agreeing to the MLA, and in particular, whether the terms of the
MLA will permit the Debtors to achieve a successful
reorganization for the benefit of their estates and
stakeholders.  At the MLA hearing, the Debtors say they will
present testimony and evidence demonstrating that the Debtors'
execution and implementation of the MLA represents an
appropriate exercise of their business judgment.  

Among other things, the Debtors will demonstrate that the
resolution of disputes with the USWA on the terms embodied in
the MLA is the best alternative under the circumstances and
provides the best opportunity for a successful reorganization
because it: (a) will help avoid immediate and potentially
irreparable harm to the Debtors' integrated steel businesses,
particularly in light of (i) the USWA's threatened work stoppage
if the Rejection Motion were pursued and granted, and (ii) the
Debtors' need to achieve cost savings and other benefits
contained in the MLA; and (b) will permit the Debtors to move
the restructuring process forward in a productive manner to
implement the remainder of the restructuring plan, obtain the
government loan, and address the various other outstanding
reorganization issues in these cases.

The MLA is not a sub rosa plan.  The MLA in no way binds
creditors or other parties in interest to the terms of a plan of
reorganization.  The provisions cited by the Committees are
nothing more than agreements with the USWA regarding certain
terms that would be contained in a future plan of reorganization
to be proposed by the Debtors.  Any plan containing terms
regarding future stock distribution would be subject to the
approval of stakeholders and the satisfaction of the Bankruptcy
Code's confirmation standards.  The MLA states that the profit-
sharing provisions is based on a calculation of corporate
profits (not cash flow) and, in any event, may be paid in equity
contributions to the Hourly Employee Stock Plan, rather than in
cash.  The Union's approval of a plan filed by the Debtors may
not be unreasonably withheld.  Even without this provision of
the MLA, the Debtors intend to seek the approval of all major
constituencies in these cases, including the USWA, to the terms
of a plan of reorganization, with the goal of proposing a fully
consensual pan.  Nothing in the MLA prohibits the Debtors from
proposing any particular plan of reorganization, or limits
the terms of such a plan.  If the USWA does not approve the
plan, it may terminate the MLA, and the Debtors could propose a
non-consensual plan taking that risk into account.

          The Official Unsecured Committee Responds Too

The Official Committee of Unsecured Creditors of LTV Steel
Company, Inc., through its counsel, Paul M. Singer, Eric A.
Schaffer and David Ziegler of the Pittsburgh firm of Reed Smith
LLP, responds to the objections to the MLA too.  The Committee
reports that it conducted several weeks of intense, virtually
continuous negotiations with the USWA which ultimately resulted
in a proposal that the Committee believed would meet the
Debtors' restructuring needs on terms acceptable to the USWA.  
That proposal is embodied in the MLA now before the Court.

The Committee reminds Judge Bodoh that Congress created a
framework for modification or, if necessary, rejection of
collective bargaining agreements in order to facilitate the
reorganization process.  A key element of that framework is the
requirement that a debtor "confer in good faith" with employee
representatives in an attempt to reach an agreement on mutually
satisfactory modifications to CBAs.  Viewed in context, the
objectors' complaints all relate to modifications to existing
rights and benefits under the CBAs that have been reached
after good faith negotiations among the Debtors, the Committee
and the USWA.  Approval of the MLA, negotiated in accord with
the Bankruptcy Code, is wholly consistent with the policies
underlying the Bankruptcy Code's provisions on CBAs.

While the objectors focus on modifications enhancing certain
existing rights of the USWA, they ignore the fact that the USWA
has agreed to significant concessions regarding other rights
under the CBA.  Obviously, the collective bargaining process
requires some give and take, and it is wrong to suggest that the
Debtors cannot modify rights in favor of the USWA in exchange
for concessions that the Debtors need to survive.

As an example of how the objectors ignore the context in which
the MLA is presented, their complaint that the MLA includes a
profit-sharing program and provides for issuing stock to the
USWA ignores the fact that the existing CBA already included a
provision issuing stock to employees under an Employee
Investment Program.  Similarly, while the objectors complain
that the MLA will permit the USWA to elect two members of the
Board of Directors, the current CBA gives the USWA a right to
select a member of the Board.

The objectors' argument that these provisions of the MLA
constitute a sub rosa plan is misplaced.  The issues presented
relate to collective bargaining.  The MLA is not a disguised
plan, but rather an important stepping-stone on the Debtors'
path to reorganization.  Nothing in the MLA will deprive the
objectors or any other parties in interest of the rights and
protections of the Bankruptcy Code with respect to any such

But even if the MLA was a sub rosa plan, it should be approved
under the circumstances of this case.  No party in interest has
suggested that a new agreement with the USWA is not absolutely
critical to the Debtors' survival.  The MAL is the result of
extremely difficult and protracted negotiations among the
Debtors, the Committee and the USWA. Even if there were more
time to continue negotiations -- which there is not -- the
Committee strongly believes that the MLA is the best available
agreement for the Debtors, the USWA and the Debtors' creditors.  
Given that the Debtors' continued existence as an operating
entity depends on entering into the MLA, there clearly is a
sound business purpose for authorizing the Debtor to do so at
this time.

On the facts before this Court evidencing the Debtors' critical
need to resolve these issues, there is only one sound course of
action: approve the MLA now.

              Judge Bodoh Agrees: Now is the Time

Judge Bodoh agrees that the only thing to do is to approve the
MLA, and does so by Order, subject to any additional
modifications that may be agreed to by the parties in the
context of completing final documentation.  He orders that a
final copy of the MLA is to be presented to him under seal and
delivered to the Committees subject to confidentiality
restrictions. (LTV Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-00900)

MADGE NETWORKS: Likely to Seek Hearing Before Nasdaq Panel
Madge Networks N.V. (NASDAQ NM: MADGF), a global supplier of
advanced networking product solutions, announced that on August
29, 2001 it received a Nasdaq Staff Determination indicating
that the Company fails to comply with either the net tangible
assets or the shareholders' equity requirements for continued
listing under Marketplace Rule 4450(a)(3) and that its
securities are, therefore, subject to delisting from The Nasdaq
National Market.

In addition, on June 7, 2001, Nasdaq Staff notified the Company
that the bid price of its common shares had closed below $1.00
for 30 consecutive days and no longer complied with Marketplace
Rule 4450(a)(5). The Company was granted 90 days, or until
September 5, 2001, to achieve compliance with the bid price
requirement or request a hearing.

The Company will request an oral hearing before the Nasdaq
Listing Qualifications Panel to review the Nasdaq Staff
Determination. During the review process the delisting will be
stayed pending the Panel's decision and the Company's common
shares will continue to be listed on The Nasdaq National Market.

In parallel, the Company also intends to make an application to
list its securities on The Nasdaq Small Cap Market in the
event that the appeal against the Staff Determination fails.
There can be no assurance the Panel will grant the Company's
request for continued listing on The Nasdaq National Market or
that the Company's application for listing on The Small Cap
Market will be successful.

Madge Networks N.V. (NASDAQ NM: MADGF), through its
Madge.connect subsidiary, is a global supplier of advanced
networking product solutions to large enterprises, and is the
market leader in Token Ring.

Madge Networks also has an associate company, Red-M(TM), a
leading supplier of Bluetooth(TM) wireless networking product
solutions. The Company's main business centers are located in
Wexham Springs, United Kingdom and Milpitas, California.
Information about Madge's complete range of products and
services can be accessed at

MESA AIR: Inks Deal with Raytheon to Lift Default Status
Mesa Air Group, Inc. (Nasdaq: MESA) has signed a letter of
intent with Raytheon Aircraft Company (NYSE: RTN) and Raytheon
Aircraft Credit Corporation to resolve outstanding issues
related to its Beech1900D aircraft fleet financed with Raytheon.

In the letter of intent, which is subject to definitive
documentation, Raytheon has agreed to assist Mesa in reducing
Mesa's 1900D operating expenses. Mesa and Raytheon have also
come to an agreement under which Mesa is no longer in default
under the outstanding loan agreements. Mesa currently operates
55 Beech 1900D aircraft at its wholly owned subsidiary Air
Midwest, Inc., of which 47 are financed by Raytheon.

"We are delighted to have reached this agreement with Raytheon
as this was imperative to the continued viability of our B1900D
operation. Rural communities across America have witnessed the
reduction or elimination of air services as increased government
regulation has dramatically increased operating costs for small
aircraft such as the B1900D," said Jonathan Ornstein, Chairman
and CEO of Mesa Air Group.

"Our agreement with Raytheon culminates our efforts to reduce
operating costs to offset the impact of significantly increased
federal regulation imposed over the past five years. The future
of rural aviation is now truly in the hands of our federal

Mesa Air Group was the recipient of the Professional Pilot
Magazine's Pilot & Management Teamwork Award in 1999. Air
Midwest, a wholly owned subsidiary of Mesa, has received the
Federal Aviation Administration Certificate of Excellence
Diamond Award. Mesa currently operates 126 aircraft with 1,100
daily system departures to 120 cities, 36 states, Canada and

It operates in the west and mid-west as America West Express,
the midwest and east as US Airways Express, in partnership with
Midwest Express out of Kansas City and in New Mexico under the
independent Mesa Airlines.

In addition, the company has 51 regional jets in service, 57 RJs
on firm order and holds options on another 164 aircraft. The
Company, which was founded in New Mexico in 1982, has
approximately 4,000 employees.

MONTANA POWER: Shareholders Convene to Weigh Options on Sept. 14
With increased awareness locally and nationally of Montana
Power's (NYSE: MTP) transition to a broadband telecommunications
company under Touch America, the company has received numerous
inquiries about its Special Meeting of Shareholders to be held
September 14 in Butte.

"The majority of all inquiries seek to find out the format of
the Special Shareholders' Meeting and how it will differ from
the company's Annual Meeting of Shareholders normally held in
May of each year," said Patrick T. Fleming, Montana Power's
corporate secretary. "From inquiries received by our Shareholder
Services Department, we realize some people are confused about
the focus and scope of these two very different meetings,
particularly since our May meeting was not held this year," he

Special meetings are held for significant corporate actions that
require a shareholder vote. They are very different in scope and
format from a company's Annual Meeting of Shareholders. Montana
Power's annual meeting has historically been a community event
with a prominent guest speaker, displays of the company's
products and services, and a post-meeting social, all of which
were open to the public. That is not the case with this Special
Shareholders' Meeting.

"The sole purpose of Montana Power's Special Shareholders'
Meeting is to vote on and tabulate the votes for or against the
restructuring of the company, the sale of the utility, as well
as the redemption of two issues of preferred stock," Fleming
said. "The Special Meeting is restricted to shareholders of the
company," he said, adding that the votes will be counted at the
meeting and the results announced.

"While the votes are being tabulated, Bob Gannon, Montana
Power's chairman and chief executive officer, will address
shareholders and respond to questions, bringing them up to date
on the company's transformation," Fleming explained.

"Shareholders need to understand the point of the meeting and
decide if they want to cast their votes by telephone, by
computer, by signing and returning their postage-free proxy
card, or in person," he said. Fleming added that he does not
want shareholders to travel large distances believing they will
be attending a traditional annual meeting, when, in fact, they
will be traveling to attend what should be a quick and efficient

To focus on telecommunications, the company has sold its Montana
power plants, its independent power projects, its oil and gas
assets, and its coal-mining operations, and it's selling its
electricity and natural gas distribution operations (to
NorthWestern). Montana Power's Touch America subsidiary offers
voice, data, video, and Internet services over its 18,000-mile
fiber-optic network, which covers the western half of the US.
Touch America has acquired 250,000 long-distance customers from
Qwest. It has joined the Baby Bell in a digital PCS joint
venture that operates in the western US.

As of June 30, 2001, the Company's current assets amount to
$418.2 million, as opposed to its current liabilities of $555

NETWORK COMMERCE: Moves Annual Shareholders' Meeting to Nov. 8
Network Commerce Inc. (OTCBB:NWKC), the technology
infrastructure and services company, announced that the company
will host its annual shareholder meeting Thursday, November 8,
2001 at 2:00 p.m. PT at the Doubletree Hotel, 300 112th Avenue,
S.E., Bellevue, Wash. 98004.

This revises the previously announced date.

Established in 1994, Network Commerce Inc. (OTCBB:NWKC) is the
technology infrastructure and services company. Network Commerce
provides a comprehensive technology and online business services
platform that includes domain registration, hosting, commerce,
and online marketing services. Network Commerce is headquartered
in Seattle, Wash. More information is available at

Network Commerce Inc. (Nasdaq:NWKC), the technology
infrastructure and online business services company, has been
undertaking common stock trading on the OTC Bulletin Board since
August 29, 2001.

The company's common stock was delisted from the Nasdaq National
Market when the market opened on Aug. 29, 2001. The Nasdaq
delisting occurred because the company did not meet the minimum
bid price requirement of one dollar per share for continued
listing set forth in Marketplace Rule 4450(a)(5). The company
would continue to trade as a publicly traded company under the
new trading symbol "NWKC.OB."

Network Commerce has restructured its online business services.
In doing so, its current focus is on growth in revenues and
customers, reduction of expenses and liabilities, as well as
pushing towards profitability and positive cash flows.

OWENS CORNING: National Union Funds Employee Claim Settlement
Owens Corning sought and obtained an order from the Court
approving the Release and Settlement Agreement with Claimant
Theodore A. Little, Jr.

Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware discloses that the settlement arose from the injuries
sustained by Mr. Little as a result of negligence of an employee
of the Debtors.  

On April 4, 2001, Mr. Pernick adds that claimant executed a
release and settlement agreement with the Debtors and National
Union Fire Insurance Company (NUFIC) without resorting to
litigation, the basic terms of which are:

   a) Within ten days of an entry of an order of the Court
      approving the settlement agreement which has become final
      and non-appealable, NUFIC shall pay the claimant $280,000.

   b) Beginning one year after NUFIC tenders the payment to
      claimant, NUFIC or its qualified assignee will pay the
      claimant $916.67 per month for ten years pursuant to a
      ten-year warranty.

   c) Ten years after NUFIC tenders the payment to Claimant,
      NUFIC or its qualified assignee will pay the claimant

Mr. Pernick states that the foregoing payments are to be in full
satisfaction and settlement of all present and future claims by
the Claimant against the Debtors and NUFIC.

The Debtors believe that these factors weigh in favor of the
approval of the settlement agreement:

   a) probability of success in litigation;

   b) difficulty in collecting any judgment which may be

   c) complexity of litigation involved and expenses,
      inconvenience and delay necessarily attendant to it;

   d) interest of creditors and stockholders with a proper
      deference to their reasonable views of the settlement;

The Debtors believe that the settlement agreement is favorable
to the estate because:

   a) Settlement agreement releases the Debtors and present and
      former insurers, directors, officers, agents, employees,
      successors and assigns from all future liability on
      account of the Claimants' alleged injury;

   b) Debtors' estates are not depleted because all funds to be
      aid to the Claimant are paid by NUFIC or its qualified
      assignee, not by the Debtors;

   c) Certain of the issues regarding the claimants alleged
      injury are factually complex and would require significant
      litigation to resolve and could cause the Debtors to incur
      potentially substantial legal fees, costs and expenses.
      (Owens Corning Bankruptcy News, Issue No. 15; Bankruptcy
      Creditors' Service, Inc., 609/392-0900)   

PACIFIC GAS: U.S. Trustee Amends Creditors' Committee Membership
Linda Ekstrom Stanley, the United States Trustee for Region 17,
pursuant to 11 U.S.C. Secs. Sections 1102(a) and 1102(b)(1),
makes her THIRD AMENDMENT of the list of appointments to the
Official Committee of Unsecured Creditors in Pacific Gas and
Electric Company's chapter 11 case:

(1)   Kenneth E. Smith
       PE-Berkeley, Inc.
       P.O. Box 776
       Berkeley, CA 94701
       Phone: 949/650-6301
       fax: 949/650-8412

(2)   Michael A. Tribolet
       Enron Corp. & Affiliates
       1400 Smith Street, EB 2855
       Houston TX 77002
       fax: 713/646-8525

(3)   John C. Herbert
       Dynegy Power Marketing Inc.
       1000 Louisiana Street, Suite 5800
       Houston TX 77002
       phone: 713/507-6832
       fax: 713/507-6788

(4)   Grant Kolling
       City of Palo Alto
       250 Hamilton Avenue
       P.O. Box 10250
       Palo Alto, CA 94303
       Phone: 650/329-2171 ext.3953
       fax: 650/329-2646

(5)   Tom Milne
       State of Tennessee
       11th Floor, Andrew Jackson Bldg.
       Nashville, TN 37243
       phone: 615/532-1167
       fax: 615/734-6441

(6)   David E. Adante
       The Davey Tree Co.
       1500 North Maniva
       Kent, OH 44240
       Phone: 330/673-9511
       fax: 330/673-7089

(7)   Duane H. Nelsen
       GWF Power Systems
       4300 Railroad Ave.
       Pittsburg, California 94565
       phone: 925/431-1441
       fax: 925/431-0518

(8)   Michael E. Lurie
       Merrill Lynch
       2 World Financial Center, #7
       New York, NY 10281-6100
       phone: 212/236-6480
       fax: 212/236-6460

(9)   Clara Strand
       Bank of America, N.A.
       555 South Flower Street, 11th Fl
       Los Angeles, CA 90071-2385
       phone: 213/228-6400
       fax: 213/228-6003

(10)  Anna Fallon
       Vice President
       Morgan Guaranty
       60 Wall Street, 19th Floor
       New York, NY 10260
       Phone: 212/648-9746
       Fax: 212-648-648-5005

(11)  Raymond G. Kennedy
       Pacific Investment Management Company LLC
       840 Newport Center Drive
       Suite 360
       Newport Beach, California 92660
       Phone: 949/720-6378
       Fax: 949/720-6363

Accordingly, Gary S. Bush, V.P. at The Bank of New York has left
the Committee and Raymond G. Kennedy takes his seat.

Patricia Cutler is the Assistant United States Trustee assigned
to PG&E's chapter 11 case, represented by Trial Attorneys
Stephen L. Johnson, Esq., and Edward G. Myrtle, Esq., in San
Francisco. (Pacific Gas Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   

PAYLESS CASHWAYS: Negotiations For Liquidation Funding Continue
Payless Cashways, Inc. (OTC: PCSH) officials have announced that
the company is currently in discussions with its secured lenders
as to the appropriate course of action to fund the orderly
liquidation of the company. The company expects to reach an
agreement within the next few days.

As of June 4, 2001, the company has been operating as a debtor-
in-possession, pursuant to a voluntarily filed petition to
reorganize under Chapter 11 of the Bankruptcy Code, in an
attempt to reorganize the company's business and to restructure
its debt and other liabilities.

Despite all of its efforts to obtain adequate trade credit
support, attract outside sources of capital and/or find a viable
buyer for either the company or its assets, the company was
unable to do so and does not expect to be able to do so in the

As a result of this and the continued deterioration of overall
borrowing availability and sales, the company has determined
that the most prudent course of action is an orderly liquidation
under Chapter 11 of the Bankruptcy Code.

PILLOWTEX: Court Allows Debtor to Pay Pension Benefit Claims
Prior to the Petition date, Pillowtex Corporation paid certain
on-going pension benefits to approximately 72 retirees or their
spouses.  These retirees were formerly lower-level, non-
executive, union employees at the Debtors' Thompsonville,
Connecticut plant, which closed in 1971.

Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, discloses that the monthly benefits
payable to the Pension Beneficiaries total approximately $4,875.
Although the amount of monthly benefits paid to each Pension
Beneficiary is relatively small, many of the Pension
Beneficiaries rely on this monthly stipend to meet basic needs,
and termination of the Pension Benefits may constitute a grave
hardship for these individuals.  

Furthermore, the Debtors believe that authority to pay the
Pension Benefits to the Pension Beneficiaries is important to
the morale of their current employees.  Employee morale and
support is critical to the success of the Debtors'
reorganization efforts during this early period of the Debtors'
chapter 11 cases, according to Mr. Schwartz.

Convinced by the arguments presented, Judge Robinson granted the
Debtors' motion to pay in their sole discretion the Pension
benefits owed to the Pension Beneficiaries. (Pillowtex
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)    

PSINET INC: Court Approves Sale of HK Assets for $19 Million
Winstar Communications Hong Kong Limited tells the Court that,
under certain conditions of the Winstar Agreements, Winstar
agreed to buildout a multi-million dollar wireless network for
PSINet Wireless, and PSINet HK is obligated to pay for such work
under certain performance bonds and other agreements.

Winstar objects to the motion on the basis that approval of the
Purchase Agreement prompts breaches of an Agreement Relating to
Hong Kong (the HK Agreement), between Winstar, Winstar Hong Kong
NDMO Limited and Winstar Asia NDMO Pte., Ltd., on the one hand,
and PSINet, PSINet HK and PSINet Wireless, on the other hand,
dated as of September 30, 2000, under which PSINet HK is
prohibited from selling or otherwise transferring its shares in
PSINet Wireless prior to September 15, 2002.

Since the HK Agreement includes an indemnification by PSINet in
favor of Winstar for all damages Winstar may incur from "any
default in the performance of any of the agreements or
obligations of any PSINet Company [including PSINet Wireless,
PSINet HK and PSINet], if the Purchase Agreement is approved,
Winstar will have a claim against PSINet for $45 million for
damages arising from the breach of the HK Agreement and the
other related agreements.

Such a claim, Winstar alleges, will substantially diminish the
Debtors' estates if the Sale Motion is granted.

Winstar notes that pursuant to the Purchase Agreement, PSINet
releases all obligations of PSINet HK to PSINet with respect to
the LMDS Licence, any finance facility in respect of the LMDS
License, and the security provided by PSINet for the LMDS
License or any such facility or bond and the Winstar Agreements.
Therefore, Winstar complains, by seeking approval of the
Purchase Agreement, the Debtors are effectively requiring the
termination of several substantial obligations of PSINet HK,
which will be detrimental to Winstar.

Winstar also notes that, by seeking approval of the Sale free
and clear of all interests pursuant to the Purchase Agreement,
the Debtors appear to be seeking an order which would waive
Winstar's claims or estop Winstar from asserting claims it has
as a result of the breaches of the HK Agreement as contemplated
by the Sale.

Winstar submits that section 363(f)(2) - (5) are not applicable
to the instant situation, and that since the proposed Sale
requires breaches of the pre-existing HK Agreement, and purports
to void Winstar's indemnity claim against PSINet, it does not
comply with section 363(f) of the Bankruptcy Code and should be

Winstar also requests that the deny the Debtors' request to
eliminate the automatic 10-day stay pursuant to Bankruptcy Rule
6004(g) because the purpose of Bankruptcy Rule 6004(g) is to
provide sufficient time for an objecting party to request a stay
pending appeal before the order can be implemented and the 10-
day period can only be eliminated in cases where there is no
objection to the proposed sale.

                     The Court's Order

After due deliberation at the Sale Hearing, the Court determined
that a sale of the Shares at this time to Purchaser pursuant to
11 U.S.C. section 363(b) is the only viable alternative to
preserve the value of the Shares, and maximizes the Debtors'
estates for the benefit of all constituencies, that time is of
the essence, and the relief requested is in the best interests
of the Debtors, their estates, their creditors and other
parties-in-interest, and granted the Debtors' Motion in all

Judge Gerber makes it clear that no transfer of any license or
right of the Debtors to use any software of Cisco Systems, Inc.
or its affiliates, or any equipment leased by Cisco to the
Debtors or equipment of the Debtors financed by Cisco is
accomplished by this Order.

Pursuant to the Court's order, the Debtors must comply with the
provisions of Sections 363 and/or 365 of the Bankruptcy Code in
the event the Debtors seek to assign to any third party any
rights in software licensing agreements between the Debtors and
Cisco or to transfer such equipment.

The Court's order expressly says that the provisions in it do
not prejudice the rights of Cisco, the Debtors or the Debtors'
non-debtor affiliates under any license agreements or lease or
financing agreements in existence among such parties.

Pursuant to 11 U.S.C. section 363(b), the Purchase Agreement,
the Escrow Agreement, the Global Strategic Marketing Agreement,
the License Agreement, the Network Services Agreement and the
Strategic Network Agreement, respectively, are approved in all

All objections to the Motion that are not withdrawn are
overruled or denied.

Accordingly, pursuant to 11 U.S.C. sections 363(b) and 363(f),
upon the Completion Date, under the Purchase Agreement and the
Strategic Agreements, the Shares and the Assets will be
transferred to the Purchaser free and clear of all Interests and
all Claims, with all such Interests and Claims to attach to the
net proceeds of the sale of the Shares and the Assets.

Except as expressly permitted by the Purchase Agreement and the
Strategic Agreements, as of the Completion Date, all persons and
entities are forever barred, estopped, and permanently enjoined
from asserting against Purchaser or its affiliates, successors
or assigns, their property, the Escrow Account, the Shares, or
the Assets, any Interests or Claims relating to the Debtors, the
Shares, the Assets, the operation of the Debtors' businesses or
the sale of the Shares and the Assets to Purchaser.

The transfer of the Shares pursuant to the Purchase Agreement is
a transfer pursuant to 11 U.S.C. section 1146(c) and,
accordingly, may not be taxed under any law imposing a stamp,
transfer, recording or similar tax.

In addition, the Court authorizes and directs PSINA to assume
the Assumed Agreements, in accordance with 11 U.S.C. sections
363 and 365. (PSINet Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

RELIANCE GROUP: Insurance Commissioner Targets Deloitte & Touche
In connection with the retention of Deloitte & Touche by
Reliance Group Holdings, Inc., for audit and tax services, M.
Diane Koken, Insurance Commissioner of the Commonwealth of
Pennsylvania, shows the bankruptcy court a copy of her letter
dated July 10, 2001, advising Deloitte, among other things:

      "The Rehabilitator has neither been asked to consent, nor
consented to Deloitte's participation in the bankruptcy, nor has
the Rehabilitator waived any objections to Deloitte's conflicts
in this matter. The Rehabilitator does not intend at the time to
become a party to the proceedings in the Bankruptcy Court, and
therefore does not intend to file a formal objection. However,
the Rehabilitator objects to Deloitte's participation in the
Bankruptcy proceedings, and asks that Deloitte bring this letter
containing the Rehabilitator's objection to the attention of the
Bankruptcy Court immediately."

The Rehabilitator also indicates that it is investigating D&T's
role as auditor to RGH and RIC and raises the possibility that
claims could be brought by the Rehabilitator against D&T.

Pursuant to the Rehabilitator's request, Deloitte Partner Robert
J. Bass confirms, D&T has ceased providing audit services to
Reliance Insurance.  (Reliance Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

SACO SMARTVISION: Talks with CIBC on $15MM Loan Workout Collapse
Saco Smartvision Inc. announces that it was unable to reach an
agreement with the Canadian Imperial Bank of Commerce with
respect to the restructuring of Saco's loan in the amount of
approximately $15 million.

Accordingly, the Canadian Imperial Bank of Commerce today filed
a petition for a receiving order against Saco before the
Superior Court (Quebec).  In light of its failure to reach an
agreement with the CIBC, Saco consented to the issuance of the
receiving order.

As a result, the Superior Court (Quebec) issued a receiving
order against Saco and appointed a trustee in bankruptcy,
effective immediately.

Saco's shares are listed on the Toronto Stock Exchange.

SEDONA CORP: Fails to Comply with Nasdaq Capital Requirements
SEDONA(R) Corporation (Nasdaq:SDNA) --  
-- the leading provider of Internet-based Customer Relationship
Management (CRM) solutions for small and mid-sized financial
services companies, announced that it has received a Nasdaq
Staff Determination, dated August 28, 2001, indicating that the
Company fails to comply with the minimum market capitalization
listing requirement of the Nasdaq SmallCap Market set forth in
Marketplace Rule 4310, and that its securities are, therefore,
subject to delisting.

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

Should the Company be unsuccessful in its appeal, its common
stock would commence trading on the NASD Electronic OTC Bulletin

SEDONA(R) Corporation (Nasdaq:SDNA) is the leading provider of
Customer Relationship Management (CRM) solutions for small and
mid-sized financial services companies. SEDONA's Internet-based
software, Intarsia(TM), and supporting Marketing Solution
Services enable the entire financial institution to help
identify, acquire, foster, and retain loyal, profitable

With its affordable, quick, and easy implementation, SEDONA
helps clients rapidly increase their ability to acquire and
retain customers and to improve product pricing, packaging, and
cross-selling opportunities, and to increase operational
efficiency aimed towards improving overall profitability.

SEDONA markets Intarsia together with leading solution providers
such as IBM(R) Corporation and Acxiom(R) Corporation.

UNIFORET: Extends Downtime at Pulp Mill for an Indefinite Period
Unifor^t has announced that the downtime in production at its
Port-Cartier pulp mill which started on February 16 is extended
again for an indefinite period of time. This measure is seen as
necessary because of the weak conditions that persist on the
pulp world market.

Some 120 jobs are directly affected by the suspension. Port-
Cartier sawmill operations will not be affected by the extended
suspension of production at the pulp mill.

Unifor^t Inc. is an integrated forest products company that
manufactures softwood lumber and bleached chemi-thermomechanical
pulp (BCTMP). The company operates in Quebec through its
subsidiaries located in Port-Cartier (pulp mill and sawmill) and
in the P,ribonka region (sawmill).

Unifor^t Class A Subordinate Voting shares are listed on the
Montreal and Toronto stock exchanges under the symbol UNF.A,
along with Series A Debentures under the symbol UNF.DB.

USG CORP: Seeks Extension of Lease Decision Period to Feb. 28
Pursuant to 11 U.S.C. Sec. 365(d)(4), USG Corporation asks the
Court an order extending, through and including February 28,
2002, the deadline for them to assume or reject any unexpired
nonresidential real property lease under which they are a

Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue, explains
that the Debtors have approximately 225 Real Property Leases.
Almost 200 of the Real Property Leases are with Debtor L & W
Supply Corporation. L & W is the USG subsidiary that conducts
all of the USG Companies' domestic distribution activities.

L & W stocks construction materials, delivers less-than-
truckload quantities of construction materials to job sites and
places them where they are needed, reducing or eliminating the
need for contractors to deal with them. Mr. Harner goes on to
explain that L & W operates through centers in 37 states. Most
of the centers are leased through third parties.

Busy with completion of a smooth transition to operations in
chapter 11, and meeting various administrative and reporting
obligations, the Debtors have been unable to devote time to Real
Property Lease analysis or discussing them with the relevant

Since the Real Property Leases are important to the operations
and the number of leases involved is high, the Debtors submit it
would be unwise to hold them to the original 60-day period in
which to assume or reject the Real Property Leases. So, the
Debtors request the extension through February 28, 2002, without
prejudice to the right of the Debtors to seek further

Mr. Harner elaborates that courts routinely grant extensions
under section 365(d)(4) of the Bankruptcy Code in Delaware
and extensions are uniformly granted in large and complex
chapter 11 cases such as these, and in some instances up to the
time of plan or reorganization.

Mr. Harner states the Debtors will continue to perform all of
their Real Property Leases' obligations arising from and after
the Petition Date, including payment of postpetition rent due,
as required by section 365(d)(3) of the Bankruptcy Code. There
should be little or no prejudice to the Lessors as a result of
the extension request.

The amount of prepetition arrearages under the Real Property
Leases is relatively small, as rent under many of the leases is
paid in advance. Mr. Harner sums up by saying there was only a
minimal amount of accrued but unpaid rent under such leases.

Judge Newsome will entertain the Debtors' request at a hearing
on September 20, 2001.  By application of Local Rule 9006-1, the
deadline by which the Debtors must make lease-related decisions
is automatically extended through the conclusion of that
hearing. (USG Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

VLASIC FOODS: Requests Exclusive Period Extension to Oct. 29
Vlasic Foods International, Inc. asks Judge Walrath for another
extension of the exclusive periods.  This time, they want 60
days added to their current deadlines.

The Debtors seek to extend:

    (i) their exclusive period during which to file a plan of
        reorganization through and including October 29, 2001.

   (ii) their exclusive period during which to solicit
        acceptances of that plan through and including December  
        28, 2001.

The Debtors' current exclusive period to file a plan expires on
August 29, 2001 while their current exclusive period to solicit
acceptances of a plan expires on October 29, 2001.

The Debtors believe that a 60-day extension of the Exclusive
Periods should be sufficient to permit them to prepare, file and
solicit acceptances of the Plan.

Robert A. Weber, Esq., Skadden, Arps, Slate, Meagher & Flom,
reports that the Debtors have made extraordinary progress in
these cases in the six months since Petition Date.  During this
short period, Mr. Weber says, the Debtors have already marketed
and sold their pickles, sauce and frozen foods businesses.  

In addition, Mr. Weber relates, the Debtors' non-debtor European
subsidiaries have completed sales of substantially all of their
assets.  According to Mr. Weber, the sales of these businesses
and assets constitute the basis for the plan, which the Debtors
anticipate will provide a sizable distribution to unsecured

At the same time, Mr. Weber notes that the Debtors have also
aggressively prosecuted their chapter 11 cases.  Mr. Weber
reminds Judge Walrath that the Debtors already filed an initial
version of their proposed plan of distribution last June 12,

The Debtors anticipate that they will be filing an amended
plan of distribution very soon.  Together with the plan, the
Debtors will be also be submitting a disclosure statement.  
Right after that, the Debtors will be seeking the approval and
confirmation of the plan.

Mr. Weber says the Debtors have extensively negotiated the Plan
with the Official Committee of Unsecured Creditors.  Once the
Plan is completed, the Debtors expect to get the Committee's
full support.  The Debtors are also presently engaged in
conducting an orderly wind-down of the Debtors' business
operations, including employee benefit plans, Mr. Weber adds.

The Debtors contend that the Court should grant them a 60-day
extension of each of the Exclusive Periods because, among other

    (a) the Debtors' cases are large and complex;

    (b) the Debtors have made significant progress in resolving
        issues facing their estates; and

    (c) an extension of the Exclusive Periods will facilitate
        negotiations among the various constituencies without
        prejudicing any party-in-interest.

Mr. Weber explains that the requested extension of the Exclusive
Periods will facilitate the Debtors' restructuring efforts by
allowing the Debtors to negotiate an amended plan to fairly and
efficiently treat the Debtors' thousands of creditors.  Also,
Mr. Weber claims, the requested extension of the Exclusive
Periods will not prejudice the interests of any creditors or
other parties-in-interest.  Instead, Mr. Weber says, such
extension will substantially further the Debtors' efforts to
maximize the value of their estates.

The hearing for this motion is scheduled on September 6, 2001.
The Court expects all objections and responses to be filed by
August 28, 2001.  By application of Del.Bankr.LR 9006-2, the
current deadline is automatically extended through the
conclusion of the September 6 hearing. (Vlasic Foods Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,

W.R. GRACE: Property Claimants Gripe About Bar Date Motion
The Official Committee of Property Damage Claimants of W. R.
Grace & Co. asks Judge Farnan to continue the hearing on the
Debtors' Motion and to extend the response date, pointing out
that a mere three and one-half months after the case commenced,
the Debtors ask Judge Farnan to:

       (a) set a bar date for claims of April 1, 2002;

       (b) approve a notification plan purportedly designed to
           "provide 96.9% of all men over the age of 65 years of
           age with 5.3 opportunities to see the notice and
           95.4% of all adults over the age of 35 with 4.3
           opportunities to see the notice";

       (c) approve "unprecedented" proof of claim forms;

       (d) establish triple-track discovery periods that last
           until July, 2003;

       (e) empower at least two so-called 'Litigation
           Committees' to "supplant claimants' existing

       (f) schedule multiple Daubert hearings to challenge
           scientific evidence relating to asbestos claims;

       (g) schedule multiple bench trials in lieu of jury trials
           or more traditional claims resolution facilities
           under a confirmed plan of reorganization;

       (h) schedule bench trials and hearings on motions for
           summary judgment as far out as August 2003; and

      (i) confer the right to "pick and choose property damage
          claims to be remanded to other courts".

Complaining that notice of this Motion was received late, the
Committee says that the Debtors have agreed to adjourn the
hearing and extend the response date.  Saying acidly that the PD
Committee has "formed the impression that the case management
motions are ill conceived and imprudent generally, the PD
Committee says it needs more time to object to the Debtors'
Motion and to present its own "vision" for the conduct and
management of these chapter 11 cases specifically.  

Although the Debtors claim that these procedures are used in
other cases, those other cases didn't involve property damage
claims.  So, to prevent manifest injustice, a continuance is
appropriate. (W.R. Grace Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

WARNACO GROUP: Moves to Assume and Assign Grant Avenue Lease
Authentic Fitness Retail Inc, one of the Debtors, operates a
swimwear retail store at 39 Grant Avenue, San Francisco.  AFC
rents the 1,766 square feet of ground floor space from Grant
Building Partnership.  Their lease agreement is yet to expire on
January 31, 2010.

J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, relates
that AFC's swimwear business is not so good, the store is
currently operating on a "break even" basis.

According to Mr. Trost, the Debtors' real estate consultants -
Keen Realty LLC - has been working to review and evaluate all
leasehold interests of the Debtors, particularly with respect to
leases underlying the Debtors' retail store locations.

With Keen's help, the Debtors identified Grant Avenue Lease as:

    (i) unprofitable and unnecessary for the Debtors' business
        operations, and

   (ii) having potential value for the Debtors estates if
        assumed and assigned.

Thus, Mr. Trost notes, the Debtors and Keen extensively
advertised the availability of the Grant Avenue Lease to
potential interested parties in order to obtain the optimal
price.  Mr. Trost outlines the efforts exerted by the Debtors
and Keen to advertise the availability of the Grant Avenue

    (a) engaged in extensive telephone and in-person marketing
        and solicitation over the past several weeks;

    (b) sent 3,700 flyers announcing the availability of the
        Grant Avenue Lease via facsimile to a customized,
        targeted list of prospective users and brokers;

    (c) (then) made direct calls to 100 potential users of the

    (d) forwarded a lease abstract with basic lease information
        to all parties expressing an interest in the space, and
        if requested, a copy of the Grant Avenue Lease;

    (e) continued to make follow-up calls with all prospects on
        a regular basis to answer any questions or provide
        additional information as necessary; and

    (f) caused an advertisement concerning the Grant Avenue
        Lease to be run on four different days in both the San
        Francisco and the San Jose Mercury News between the
        period of July 18, 2001 and July 31, 2001.

Of the more than 100 parties contacted by Keen, Mr. Trost
informs Judge Bohanon that 35 parties responded to the
solicitation and expressed interest in obtaining further
information.  So last August 29, 2001, the Debtors held a
telephonic auction of the Grant Avenue Lease.  Keen sent notices
of the auction to the Interested Parties, but only two attended
- Camper Atlantic Corporation and Aerogroup Retail Holdings,

Camper bid $160,000 while Aerogroup offered $155,000 for the
Grant Avenue Lease.  Camper was proclaimed the ultimate winner
and the Debtors accepted Camper's bid of $160,000 as the highest
offer, which offer is conditioned on obtaining the consent of
the Landlord to the assignment of the Grant Avenue Lease.

Shortly afterwards, AFC executed an Assumption and Assignment
Agreement with Camper.  Under the agreement, AFC will assign all
of its right, title and interest to the Grant Avenue Lease to

According to Mr. Trost, Camper Atlantic Corporation is a large
European retailer of high fashion shoes and related accessories.
After conducting an investigation on the financial condition of
Camper, the Debtors have have concluded that Camper is
financially capable of meeting the obligations under the Grant
Avenue Lease.  

They also contend that the financial condition of Camper is
enough adequate assurance to the Landlord that Camper will be
able to satisfactorily comply the lessee's obligations under the
Grant Avenue Lease.  The Debtors promise to provide the Landlord
with the information regarding Camper's financial condition and
Camper's ability to perform its obligations under the Grant
Avenue Lease before the hearing of this motion.

According to the Debtors' books and records, Mr. Trost explains
$6,323.89 (plus any accrued but unpaid post-petition rent) is
required to cure all existing defaults under the Grant Avenue

If the Court approves the Assumption and Assignment Agreement,
Camper will assume all of AFC's obligations under the Grant
Avenue Lease and will pay AFC $160,000.  At the same time, the
Debtors will satisfy the Cure Amount out of the Purchase Price
paid by Camper.

By this motion, the Debtors seek a Court order granting AFC
authority to assume and assign its entire interest as lessee in
the Grant Avenue Lease to Camper Atlantic Corporation.

Mr. Trost tells the Court that the Debtors will definitely
profit from the sale of the Grant Avenue Lease.  The assumption
and assignment of the Grant Avenue Lease will also allow the
Debtors to avoid substantial unsecured claims in connection with
rejecting the lease, Mr. Trost adds. (Warnaco Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)

WHEELING-PITTSBURGH: Danieli Seeks Relief to Recover Gas Cleaner
On January 27, 2000, Hoogovens Technical Services, Inc., entered
into an agreement with Wheeling-Pittsburgh Steel Corporation for
the design, fabrication, assembly and delivery of a new Bischoff
gas cleaning system for the Debtor's plant located at Mingo
Junction, Ohio.  All rights and interests of Hoogovens Technical
Services under the Agreement were assigned to Danieli Corus
Canada, Inc.

The Agreement provided for the Debtors to pay an aggregate
purchase price of $3,123,220.  Title to the equipment was to
pass to the Debtor to the extent that the Debtor paid for the
equipment.  The equipment was delivered to the Debtor in
accordance with the Agreement, and Danieli has fulfilled all of
its obligations under the Agreement, says Mr. Robert E. Dauer,
Jr., of the Pittsburgh firm of Meyer, Unkovic & Scott LLP.  

However, the Debtor has not made the required payments.
The unpaid balance due to Danieli under the Agremenet is

Title to the delivered equipment, which the Debtor has not paid
for, remains with Danieli, Mr. Dauer insists.

The Debtor has rejected the agreement and has informed Danieli
that the equipment is not necessary for its reorganization.  
Danieli is therefore entitled to relief from the stay.  Danieli
does not have, and has not been offered, adequate protection for
its interests in the equipment.  Accordingly, cause exists for
relief from the stay.

Further, the Debtor has no interest in the equipment as title to
the equipment has not passed to the Debtor in accordance with
the agreed upon terms in the Agreement, so that the Debtor does
not have any equity in the property.

                    WPSC Says No, No

This suggestion by Danieli of absence of title and abandonment
of use does not stop WPSC from opposing the Motion for relief
from the stay. WPSC has paid more than $2.8 million of the sums
owed under the Agreement, leaving a balance due as stated by

However, Section 11.1 of the Agreement provides that "Supplier
hereby irrevocably waives any rights it may now have or which it
may acquire in the future to file liens or charges against
Purchaser or its property with respect to Supplier's or
Purchaser's performance hereunder.  

Section 11.3 provides further that "Supplier warrants that the
equipment shall be delivered free and clear of all liens, claims
and encumbrances whatsoever."  Under the terms of this
Agreement, WPSC says Danieli didn't obtain or retain, and
expressly waived, any liens or security interest in the
equipment or other property of WPSC.

In addition, WPSC also is not aware okf any U.C.C.Rep.Serv.(CBC)
filings or other actions by Danieli Corus, prior to the Petition
Date, to perfect any asserted security interest in any property
of WPSC.  The only liens and security interests that have
attached to the equipment and related software are the liens and
security interests that were granted to secure the obligations
that WPSC owes to Citibank and other lends under the DIP

Section 4.1 of the Agreement provided that WPSC acquired legal
title to the equipment in proportion to the extent to which WPSC
made payment for the equipment.  Danieli Corus has contended
that it has retained some partial legal title to the equipment
under this provision, based on WPSC's failure to make full
payment of all sums due under the Agreement.  However, legal
title is only one indicia of ownership.  The Agreement makes
clear that the real economic ownership of the equipment, and the
risk of loss, belonged fully to WPSC.  

Thus, Section 4.1 of the Agreement provided that possession, and
the risk of loss, passed to WPSC upon delivery of the equipment
to WPSC's Mingo Junction, Ohio, site.  WPSC also was required to
obtain and pay for all permits, licenses, and taxes associated
with the equipment.

In addition, Exhibit A to the Agreement (which was not attached
to the moving papers, but which is part of the copy of the
Agreement WPSC includes) sets forth the timetable for completion
of the design, fabrication, delivery and start-up of the
equipment, along with the corresponding schedule of payments.  
Exhibit A makes clear, WPSC says, that WPSC's prepetition
payments constituted full payment for the design, fabrication
and delivery of the equipment itself.  

WPSC's remaining obligations of $303,457.31 related exclusively
to software development and start-up costs.  Thus, full payment
has been made for the equipment, and Danieli Corus has not
retained even partial legal title under Section 4.1.

Having attacked Danieli's claim to title, the Debtor now turns
to the stay relief.  In this case, by Danieli Corus' admission,
the unpaid debt to Danieli Corus pales in comparison to the
value of the equipment of over $3 million.  Plainly there is
equity in the equipment above and beyond any asserted claim by
Danieli Corus.

In addition, Danieli Corus holds no liens on the equipment and
no secured interests in the equipment.  In fact, Danieli Corus
waived any of its right to file liens or charges against WPSC or
its property.  In this regard,  Danieli Corus waived the very
relief that it now seeks through its motion.

At most, Danieli Corus' possible retention of some legal title
under Section 4.1 of the Agreement merely creates the potential
for a secured claim.  However, Danieli Corus failed to take any
of the steps required under Wet Virginia law to perfect any
secured claim.  Any unperfected security interest that Danieli
Corus theoretically might have retained is therefore voidable
and unenforceable under the Bankruptcy Code.  In addition, WPSC
reminds Judge Bodoh again that Danieli waived the assertion of
any liens or charges.

WPSC also cites West Virginia law, saying that the statutes of
that state provide that any retention or reservation by the
seller of title in goods shipped or delivered to the buyer is
limited to a reservation of a security interest.

WPSC needs this equipment as part of its reorganization efforts!
Indeed, any attempt to remove the equipment would lead to a
shutdown in WPSC's operations, and would immediately thwart
reorganization efforts. The relief sought by Danieli Corus would
also interfere with the superior rights of the DIP lenders, who
have first priority, fully perfected liens and security
interests in the relevant property.  

The requested relief would also give preferential treatment to
Danieli Corus' general unsecured claim in relation to the claims
of other general unsecured creditors.  All these results would
be contrary to the language and the purpose of the relevant
provisions of the automatic stay.

If Judge Bodoh were to allow Danieli Corus relief from the stay
to take possession of the equipment, then assets of the WPSC
estate would be diverted to the preferential payment of Danieli
Corus' unsecured claim, to the prejudice of the teat and other
creditors.  There is no "cause" for the granting of this relief.  
Danieli Corus' unsecured claim should be addressed through the
normal claim procedures in this Court, and Danieli Corus should
await such distribution as may ultimately be provided to
unsecured creditors under a plan of reorganization.

      The Unsecured Trade Creditors' Committee Objects Too

The Official Committee of Unsecured Trade Creditors of
Pittsburgh Canfield Corporation, appearing through Joseph C.
Lucci and Michael A. Gallo of the Youngstown firm of Nadler
Nadler & Burman Co., LPA, along with Marc E. Richards of the New
York firm of Balnk Enzer Greenblatt LLP as lead counsel, objects
to Danieli Corus' Motion on the same grounds as those raised by
the Debtors.

                   Danieli Fires Back!

Danieli replies to the Debtor's and Committee's citation of West
Virginia law appearing to limit retention of title to a security
interest, saying that the argument ignores the remainder of the
statute, the official comment to that section, and the import of
the Agreement, and other provisions of the U.C.C.  The cited
provision is expressly authorized to be varied by agreement, as
Danieli argues happened here.  

Further, the Debtor and Danieli expressly negated any intent to
reserve or retain a security interest.  Thus, to the extent
the statute cited by the Debtor is applicable, its provisions
have been expressly altered by the unambiguous language of the
Agreement as permitted by West Virginia law.  Accordingly,
Danieli has not retained or reserved a security interest, but
has expressly agreed with the Debtor under what conditions title
to the equipment would pass to the Debtor.  

The argument of the  Debtor and the Committee ignores West
Virginia law and the clear and unambiguous language of the

Further, the Debtor and the Committee are said by Danieli to
ignore the remaining provisions of West Virginia law and the
official comments to that U.C.C. section.  The statute further
provides that subject to these provisions and the provisions of
the article on secured transactions, title to goods passes from
the seller to the buyer in any manner and on any conditions
explicitly agreed on by the parties.  In the present case,
Danieli and the Debtor expressly agreed that title would pass
conditioned upon payment of the agreed-upon purchase price.
The Debtor and the Committee ignore the express agreed-upon
condition for the passage of title to the equipment.

The Official Comment to this statute provides that the article
deals with issues between seller and buyer in terms of step by
step performance or nom-performance under the contract for sale
and not in terms of whether or not "title" to the goods has
passed.  A second portion of this statute provides that when
payment is due and demanded on the delivery to a buyer of goods
the buyer's right as against the seller to retain or dispose of
them is conditional upon his making the payment due.  Thus, in
addition to the Agreement, the Uniform Commercial Code, as
adopted by the State of West Virginia, expressly provides that
the buyer's right or ability to retain goods is conditioned upon
payment to the seller.

               The Debtor Wants the Last Word

In a supplemental brief, WPSC seeks the last word on the dispute
with Danieli Corus.  The Debtor says that it is an
"uncontroverted fact" that the equipment is essential to the
operation of WPSC's blast furnace No. 5, one of only two blast
furnaces currently being operated by WPSC, and it would be
impossible for WPSC to operate the blast furnace without the
equipment.  WPSC also says it is an uncontroverted fact that the
equipment is vital to the effective reorganization of WPSC and
the Debtors, and that the equipment was sold to WPSC with a
partial reservation of title by Hoogovens Technical Services.

The Debtor admits that WPSC and Danieli Corus disagree over the
legal effect of Danieli Corus' partial reservation of title
under the Agreement.  Citing again the West Virginia Code law
previously quoted, WPSC says that as a matter of law Danieli
Corus' partial retention of title to the equipment constitutes
only a reservation of a security interest in the equipment, not
a retention of ownership rights to the equipment.  Since no
financing statement was recorded, Danieli Corus has no perfected
line on the equipment, is not a secured creditor, and is,
rather, the holder of a general, unsecured claim.  WPSC points
out that if Danieli Corus is entitled to relief from the stay,
it would, "a general unsecured creditor of WPSC", tae priority
over the perfected first-priority security interest of the DIP
lenders in the equipment.

To Danieli Corus' oral suggestion that it should be permitted to
repossess certain parts of the equipment which it selects having
an aggregate value up to the balance due under the Agreement,
the Debtor says it needs all of the equipment to operate the
blast furnace.  Even if Danieli Corus did have an interest in
the equipment, its interest is in a small portion in the
undivided whole.  It does not, even under its own incorrect
interpretation of the law, have a 100% interest inn selected
parts of the equipment. (Wheeling-Pittsburgh Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


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