TCR_Public/010913.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 13, 2001, Vol. 5, No. 179

                          Headlines

360NETWORKS: Embree Construction Seeks Relief From Stay
AMERICAN SKIING: Sells Sugarbush to Summit Ventures to Cut Debts
AMES DEPARTMENT: Gets Okay to Pay Prepetition Sales & Use Taxes
ASHFORD.COM: Falls Short of Nasdaq $5-Million Market Value Rule
CAPITAL ENVIRONMENTAL: Completes $33 Million Equity Investment

CLARITI: Nasdaq Moves Common Stock to OTCBB From SmallCap
COMDISCO: Seeks Extension for Removal Actions Period to Jan. 10
CONSUMER PORTFOLIO: Completes $68.5MM Securitization of Notes
COSMETICS PLUS: Hilco & Great American Start 22-Store GOB Sale
COVAD COMMS: Seeks Approval to Engage Irell as Corporate Counsel

DANKA BUSINESS: Unit Sells NY & Nevada Assets to Reduce Debts
EARL SCHEIB: Will Close 16 More Paint & Body Stores By Year-End
FINOVA GROUP: Hires Bifferato to Sue First Union
GENESIS HEALTH: Wins Court Approval for Reorganization Plan
GEOMAQUE: Renegotiating with Resource Capital for Debt Workout

GRAHAM-FIELD: Wants Lease Decision Deadline Extended to Feb. 10
HARNISCHFEGER: Seeks Disallowance of Metso Paper's $16.2M Claims
ICG COMMS: Sells Colorado Real Property to CH2M Hill For $3.7MM
INTEGRATED HEALTH: Assumes Kansas and Oklahoma Leases As Amended
INTERPLAY ENTERTAINMENT: Board Revamps & Hires Financial Advisor

J.C. PENNEY: S&P Assigns BB+ on $500MM Convertible Sub Notes
LAIDLAW INC: Court Approves Zolfo Executive Team's Employment
MCCRORY CORP: Files Chapter 22 Petition in Delaware
MCMS INC: Default On Notes Prompt S&P to Lower Ratings to D
MIDWAY AIRLINES: Suspends Flight Operations and Cuts 1,700 Jobs

MMH HOLDINGS: Delaware Court Confirms Chapter 11 Plan
MTS INC: S&P Junks Ratings Due To Hefty Repayment Requirements
NEW WORLD COFFEE: Violates Nasdaq Listing Requirements
NIAGARA MOHAWK: S&P Rates $300MM Senior Unsecured Debt at BBB-
OWENS CORNING: Unsecured Panel Hires Walsh as Special Counsel

PACIFIC GAS: Plans to Amend & Assume 51 QF Power Purchase Pacts
PILLOWTEX CORP: Taps E&Y as Financial & Restructuring Advisors
PSINET INC: Pulls Plug on Employment Contract with David Kunkel
SAFETY-KLEEN: Seeks Third Extension Of Plan Proposal Deadline
SCHWINN/GT: Sells Cycling and Fitness Units for $151 Million

SCHWINN/GT: Huffy Corporation Withdraws Bid In Assets Auction
STELLEX: Eyes Emergence from Chapter 11 by Mid-September
SUN HEALTHCARE: Asks for Exclusive Period to Run Through Nov. 7
TELESYSTEM INTL: S&P Lowers Senior Unsecured Debt Rating to D
TXU ELECTRIC: May Seek Refinancing to Initiate Tender Program

UNIFORET: Will Implement 10-Day Shutdown at Port-Cartier Sawmill
USG CORP: Injury Claimants Tap Legal Analysis as Consultant
WARNACO GROUP: Seeks Okay to Hire Bear Stearns as Advisor
WHEELING-PITTSBURGH: Panel Objects to Exclusive Period Extension
WINSTAR COMMS: Agrees With Williams to Amend 25-Year Pact

WINSTAR COMMS: Sells TV and Video & Productions Units to Regulus
XEROX CORP: Will Receive $1 Billion in Financing From GE Capital

                          *********

360NETWORKS: Embree Construction Seeks Relief From Stay
-------------------------------------------------------
Embree Construction Group Inc., a construction firm based in
Georgetown, Texas, was contracted by 360networks inc. to
construct a network facility in Lake City, Columbia County,
Florida.

Embree was the General Contractor for the project.  But since it
cannot do the work alone, Embree also hired numerous
subcontractors help work on the Lake City Facility.  After it
was completed, Embree tried to turn over possession of the
premises to the Debtors.  But until now, the Debtors have not
occupied the Lake City, according to Robert C. Malaby, Esq., at
Malaby & Carlisle.  

Mr. Malaby adds that the Debtors did not also issue a
certificate of substantial completion to Embree.  Puzzled,
Embree and its attorneys made several inquiries regarding the
Debtors' intent on the Lake City Facility.  So far, the Debtors
have ignored these queries.

Left on its own, Embree has attempted to ensure the security of
the Lake City Facility.  But Mr. Malaby explains this is
difficult to do without the Debtors taking possession and
occupying the premises.  

Mr. Malaby notes that the Debtors have provided no evidence that
the Lake City Facility is insured or otherwise protected from
damage or destruction, or that any applicable taxes on the
property have been or will be paid.

According to Mr. Malaby, the Debtors owe Embree approximately
$430,000 for construction of the Lake City Facility.  Prior to
the Petition Date, Embree filed and properly perfected liens
against the Lake City Facility.  

After conducting a lien search of the property, Embree believes
it holds the first and senior lien on the Lake City Facility.  
Mr. Malaby expresses confidence that the Debtors' lenders do not
have a pre-petition lien on the Lake City Facility.

By this motion, Embree asks the Court to grant them relief from
the automatic stay so that they could take all necessary steps
to foreclose its lien on the Lake City Facility, and then apply
the proceeds to all outstanding debt owed to Embree.  Any
remaining funds will be turned over to the Debtors, Mr. Malaby
says.

Mr. Malaby argues that the Court should grant the relief
requested because Embree's interest is not adequately protected.
According to Mr. Malaby, the Lake City Facility serves as
Embree's only collateral for the substantial construction costs
that it incurred in building the facility.  

Since the Debtors have given no indication that the Lake City
Facility is insured or that it is providing any other protection
for the facility, Mr. Malaby claims the facility is constantly
at risk of vandalism, arson or other catastrophic events that
would reduce the value of the collateral and increase the risk
that Embree would not be able to collect from its collateral.  

So unless the Debtors can provide adequate protection of
Embree's interest, Mr. Malaby insists that the automatic stay
should be modified.

Also, since the Debtors appear to have no intention of occupying
the Lake City Facility, Mr. Malaby says, Embree should be able
to foreclose the facility and use the proceeds to pay off the
debt the Debtors incurred in the construction.

                        Debtors Object

Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, contends
that Embree has failed to demonstrate any factual or legal basis
establishing cause for lifting the automatic stay.

Ms. Chapman relates that the original compensation to be paid to
Embree under the Construction Agreement was $1,494,397.  It was
an estimate of the actual cost of the work to be performed at
the property over a six-month period.  

According to Embree's amended claim of lien, Ms. Chapman notes,
the total value of the work provided at property was reportedly
$1,653,473 and as of May 15, 2001 (the last day labor, services
or materials were furnished), the Debtors allegedly had not paid
$401,136.

Ms. Chapman tells Judge Gropper that there is no reason to lift
the automatic stay because Embree's interest is adequately
protected.  Ms. Chapman explains that the Debtors maintain an
umbrella insurance policy with Aon Risk Services Inc., which
covers any property damage up to a minimum of $1,000,000.  

Also, Ms. Chapman adds, the Debtors have paid all outstanding
taxes on the Property at the time they purchased it last
December.  Since they have not yet received any tax bill for
year 2001, the Debtors believe there are no taxes due and owing
against the property as of the moment.

Ms. Chapman assures Judge Gropper that the Debtors' insurance at
the property will more than cover any necessary repairs brought
about by losses, which would reduce the value of the Property.

Ms. Chapman swears the Debtors are maintaining the property in
good repair so that there is no threat that the value of the
property is declining.

According to Ms. Chapman, the value of the materials and works
for the improvement of the property alone is worth more than
$1,600,000.  So whether the Debtors sell the property or Embree
retains a secured claim, Embree is adequately protected, Ms.
Chapman notes.

So what if the Debtors are not presently occupying the property?  
Ms. Chapman says, that argument is not relevant.  Ms. Chapman
asserts that the Debtors and their estates are entitled to the
benefit of the value of the Property whether occupied or not.

Thus, the Debtors ask Judge Gropper to deny Embree's motion.  If
the relief from stay is granted, Ms. Chapman says, the Debtors
and their estates will lose a significant asset, and at the same
time lose the opportunity to maximize any recovery associated
with the sale of the property. (360 Bankruptcy News, Issue No.
7; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


AMERICAN SKIING: Sells Sugarbush to Summit Ventures to Cut Debts
----------------------------------------------------------------
American Skiing Company (NYSE: SKI) entered into an agreement to
sell its Sugarbush Resort in Warren, Vermont to Summit Ventures
NE, Inc., a company formed by a group of local investors.

"American Skiing Company is focused on improving our financial
results and resort operations," said American Skiing Company CEO
BJ Fair.  "While we were not seeking a buyer for Sugarbush, we
believe the unsolicited offer we received from Summit Ventures
is in the best interest of American Skiing Company investors.  
The sale is consistent with our strategic plan to focus
management and financial resources on our highest growth
opportunities. Sugarbush is an outstanding resort, and we are
confident that the resort will benefit from the ownership of
Summit Ventures."

"Our team is made up of long-time Mad River Valley residents and
experienced ski industry professionals," said Thomas McHugh, CEO
of Summit Ventures.  "We know these mountains and what makes
them special, and we're committed to preserving and enhancing
the unique character of Sugarbush."

As part of the agreement, the new owners will honor Sugarbush
season passes that have already been sold for the upcoming
2001/2002 ski season. Purchasers of American Skiing Company All
East and Ski America passes may keep their passes for use at
American Skiing Company's network of resorts or may exchange
them for a Sugarbush season pass.

Mark Miller, American Skiing Company's chief financial officer,
said that although a sale of Sugarbush was not part of the
Company's original strategic plan to de-lever the company and
improve its bottom line, the sale was consistent with the
Company's policy of examining unsolicited offers to determine
whether they were in the best interest of the Company.

Net proceeds of the sale will be used to reduce American Skiing
Company's debt.  The transaction is subject to financing and
standard closing conditions, and is expected to close by the
start of the ski season.   Terms of the sale are confidential.

Headquartered in Newry, Maine, American Skiing Company is the
largest operator of alpine ski, snowboard and golf resorts in
the United States. Its resorts include Steamboat in Colorado;
Killington, Mount Snow and Sugarbush in Vermont; Sunday River
and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire;
The Canyons in Utah; and Heavenly in California/Nevada. More
information is available on the company's Web site,   
http://www.peaks.com


AMES DEPARTMENT: Gets Okay to Pay Prepetition Sales & Use Taxes
---------------------------------------------------------------
Ames Department Stores, Inc. sought and obtained authority from
the Court to pay all pre-petition Sales and Use Taxes to the
relevant Taxing Authorities.

David S. Lissy, Esq., Ames' Senior Vice President and General
Counsel, relates that in the ordinary course of business, the
Debtors are required to collect sales taxes from their customers
on a daily basis and remit them to various state and local
taxing authorities on a periodic basis.  

As of the Commencement Date, the Debtors estimate that
approximately $11,000,000 in Sales and Use Taxes is due and
owing to the Taxing Authorities.  

Moreover, Mr. Lissy adds that prior to the Commencement Date
certain Taxing Authorities were sent checks for Sales and Use
Taxes amounting to approximately $1,000,000 that may or may not
have cleared as of the Commencement Date.

Mr. Lissy contends that the Debtors' officers and directors may
be held personally liable to the extent the Debtors fail to meet
the obligations imposed on them to remit Sales and Use Taxes.

Such potential lawsuits would prove extremely disruptive for the
Debtors, for the named officers and directors whose attention to
the reorganization process is required, and for this Court,
which might be asked to entertain various requests for
injunctions with respect to the potential state-court actions
against such individuals.

Albert Togut, Esq., at Togut, Togut & Segal, LLP, notes that
Sales and Use Taxes are entitled to priority status pursuant to
the Bankruptcy Code, and therefore, must be paid in full before
any general unsecured obligations may be satisfied.  

Accordingly, Mr. Togut suggests, this request affects only the
timing of the payments of pre-petition Sales and Use Taxes and
will not prejudice the rights of other creditors or parties in
interest. (AMES Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


ASHFORD.COM: Falls Short of Nasdaq $5-Million Market Value Rule
---------------------------------------------------------------
Ashford.com (Nasdaq: ASFD), the leading e-commerce destination
for corporate and personal gifts and rewards, announced that it
has received a letter from the Nasdaq National Market extending
the company ninety days to regain compliance with the $5,000,000
minimum market value of public float (MVPF) requirement stated
in Marketplace Rule 4450 (a)(2).

In order to comply, the MVPF of Ashford.com's common stock must
achieve a $5,000,000 minimum market value or more for a minimum
of 10 consecutive days during that period. If Ashford.com fails
to meet this requirement, it will remain subject to delisting
from the Nasdaq National Market.

Ashford.com received previous notice from the Nasdaq National
Market on April 10, 2001, regarding Ashford.com's common stock
non-compliance with the $1.00 minimum bid price requirement for
continued listing on Nasdaq.

On August 24, 2001, Ashford.com appealed for continued listing
in a formal hearing and on August 27, 2001, the shareholders of
Ashford.com approved a one-for-ten reverse stock split. The
intention of the split is to bring the minimum bid price of its
common stock above $1.00 per share, in accordance with the
Nasdaq National Market's continued listing requirements.

Ashford.com is the leading e-commerce destination for corporate
and personal gifts and rewards. The company's two e-commerce
sites -- http://www.ashford.comand  
http://www.ashfordcorporategifts.com-- offer 12,000 attractive  
gifts and rewards, including watches, jewelry, fragrances,
leather accessories, diamonds, sunglasses, and writing
instruments from 300 leading brands.

Dedicated to creating an exceptional luxury shopping experience,
Ashford.com provides overnight shipping on nearly all items,
gift packaging, and a 30-day money-back guarantee on all
merchandise. It also offers the Ashford.com Protection Plus
policy, which provides outstanding product warranties,
customer privacy, and site security.

Ashford.com is headquartered in Houston, Texas.


CAPITAL ENVIRONMENTAL: Completes $33 Million Equity Investment
--------------------------------------------------------------
Capital Environmental Resource Inc. (Nasdaq: CERI) completed the
sale to a group of investors of 16.5 million shares of common
stock at a price of $2.00 per share, resulting in gross proceeds
to the Company of $33 million (approximately $52 million
Canadian).

The transaction was approved by the Company's stockholders at
the annual and special meeting of stockholders on September 6,
2001. After transaction costs, net proceeds to the Company are
approximately $27 million (before required repayments of
indebtedness under the Company's senior credit facilities
described below).

The newly issued stock represents approximately 68% of the
Company's outstanding stock (assuming the exercise of all
outstanding options and warrants of the Company).

At the annual and special meeting the Company's stockholders
also elected a new board of directors consisting of David
Sutherland-Yoest, Gary W. DeGroote, Warren Grover, Lucien
Remillard and Don A. Sanders. David Sutherland-Yoest has been
appointed Chairman and Chief Executive Officer of the Company.

The closing of the transaction brought into effect certain
amendments to the Company's senior credit facilities. The
amendments modify certain financial covenants and waive the
Company's existing defaults under the senior credit facilities.

The amendments also required that the Company prepay and
permanently reduce the size of the facilities by $16.0 million
with proceeds of the equity investment.

The amendments also changed the termination date under the
senior credit facilities to July 31, 2002 and require the
Company to obtain a binding commitment to refinance the credit
facilities by May 31,
2002.

Capital Environmental Resource Inc. is a regional integrated
solid waste services company which provides collection,
transfer, disposal and recycling services in markets in Canada.
The Company's web site is  http://www.capitalenvironmental.com


CLARITI: Nasdaq Moves Common Stock to OTCBB From SmallCap
---------------------------------------------------------
Clariti Telecommunications International, Ltd. (OTCBB:CLRI)
announced that a Nasdaq Listing Qualifications Panel concluded
that the Company's securities will be delisted from the Nasdaq
SmallCap Market effective with the opening of trading Septermber
11, 2001 because the Company fails to comply with the common
stock market capitalization requirement for continued listing
set forth in Marketplace Rule 4310(c)(2)(B)(ii).

The Company's securities are immediately eligible to trade on
the OTC Bulletin Board under the same symbol, CLRI.

Clariti Telecommunications International's ClariCAST system is a
patented method of providing digital wireless voice messaging
using the subcarrier channels of FM radio. FM channels are
prevalent throughout the world as opposed to wireless phone
standards, which vary in availability.

Clariti also offers facilities-based voice services to customers
in Australia, Europe, and the US and offers Internet services
throughout the US. The company's telephony services are based on
both circuit-switched and Internet protocol technologies. It
also has joined with Rhythms NetConnections to offer DSL
(digital subscriber line) services.


COMDISCO: Seeks Extension for Removal Actions Period to Jan. 10
---------------------------------------------------------------
Comdisco, Inc. and its debtor-affiliates seek the entry of an
order extending the period to remove actions by an additional 90
days.

The Debtors propose that the time by which they may file notices
of removal with respect to any actions pending on the Petition
Date, be extended to the later to occur of:

    (a) January 10, 2002, or

    (b) 30 days after the entry of an order terminating the
        automatic stay with respect to any particular action
        sought to be removed.

According to George N. Panagakis, Esq., at Skadden, Arps, Slate,
Meagher & Flom, in Chicago, Illinois, the Debtors require more
time to determine which of the State Court actions they will
remove.

Mr. Panagakis relates that the Debtors are parties to numerous
judicial and administrative proceedings currently pending in
various courts or administrative agencies throughout the United
States and the world.  

The actions involve a wide variety of claims, Mr. Panagakis
says.

The current deadline set by the Bankruptcy Court for the Debtors
to remove actions is October 12, 2001.  Though that is still
more than a month from now, the Debtors already anticipate that
they would need more time.  There is just too many actions
involved and a wide variety of claims for the Debtors to
evaluate which should be removed and, if appropriate,
transferred to this district.

By allowing the Debtors to have more time to ponder on these
pending actions, Mr. Panagakis says, the Court will be acting on
the best interests of the Debtors' estates and creditors.  

By allowing the Debtors to make fully informed decisions
concerning the possible removal of the actions, Mr. Panagakis
adds, the Court would be protecting the Debtors' valuable right
to economically adjudicate lawsuits pursuant to 28 U.S.C.
section 1452 if the circumstances warrant removal.  

Mr. Panagakis assures Judge Barliant that the Debtors'
adversaries will not be prejudiced by such an extension because
such adversaries may not prosecute the Actions absent relief
from the automatic stay.  Nor will the relief requested
prejudice the rights of other parties to any of the actions, Mr.
Panagakis notes. (Comdisco Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


CONSUMER PORTFOLIO: Completes $68.5MM Securitization of Notes
-------------------------------------------------------------
Consumer Portfolio Services Inc. (Nasdaq:CPSS) announced it has
completed a $68.5 million securitization.

In a private placement, qualified institutional buyers purchased
notes backed by automotive receivables. The notes, issued by CPS
Auto Receivables Trust 2001-A, consist of two classes: $44.5
million of 4.37% Class A-1 notes, and $24 million of 5.28% Class
A-2 notes.

The Class A-1 and A-2 notes, rated AAA/Aaa, were priced at par.
The ratings provided by Standard & Poor's and Moody's Investors
Services were based on the financial guaranty insurance policy
issued by Financial Security Assurance Inc.

This transaction represents the first term securitization
completed by Consumer Portfolio Services since the fourth
quarter of 1998. Substantially all of the proceeds from the
issuance of the notes have been used to reduce amounts
outstanding under the company's Revolving Note Purchase
Facility.

"Completing a term securitization is another key milestone in
the continued turnaround of the company. We continue to make
positive progress towards our previously stated goal of
reestablishing CPS as an industry leader," said Charles E.
Bradley Jr., president and chief executive officer of Consumer
Portfolio Services.

The notes were offered pursuant to Rule 144A promulgated under
the Securities Act of 1933, as amended, and they will not be
registered under the Act. Accordingly, the notes will not be
able to be offered or sold in the United States absent
registration under the Act or an applicable exemption from the
registration requirements of the Act.

Consumer Portfolio Services purchases, sells and services retail
installment sales contracts originated predominantly by
franchised dealers for new and late model used cars. The company
finances automobile purchases through more than 4,000 dealers
under contract across the United States.


COSMETICS PLUS: Hilco & Great American Start 22-Store GOB Sale
--------------------------------------------------------------
The Joint Venture of Hilco Merchant Resources and Great American
Group announced that U.S. Bankruptcy Court in New York approved
them as agents to manage the liquidation process of twenty-two
stores and one distribution center operated by Cosmetics Plus
Group. Going out of business sales commenced on September 1,
2001.

"Cosmetics Plus, a 28-year old regional chain comprised of 22
stores (18 of them in Manhattan), styled itself as the American
parfumerie . . . more upscale than drug stores and more
convenient than department stores. This will be an excellent
opportunity for consumers to find some outstanding values,"
stated Cory Lipoff, Executive Vice President of Hilco Merchant
Resources. The Cosmetics Plus stores will be closing forever
with some of the lowest prices ever seen.

Hilco Merchant Resources is the foremost industry expert in the
liquidation of retail merchandise. Hilco, a Chicago based firm
with offices in Boston, Toronto and London, is a broad-spectrum
financial resource with unparalleled asset knowledge and
expertise.

Hilco is composed of the top people in the fields of inventory,
machinery, equipment and real estate appraisal services,
machinery & equipment auction services, real estate services,
merchant resources for the redeployment of inventory,
acquisition of receivables and junior secured debt financing.
Senior management has an average of 20 years in each respective
business area and Hilco has done in excess of $15 Billion in
transactions.

Great American Group is the premier asset management company in
the United States providing strategic financial services to
successful retailers, distributors and manufacturers. Our more
traditional services include turning excess inventory into
immediate cash. Our clientele includes many of North America's
most successful and most respected retailers, distributors
and manufacturers.

Great American group has become the solution for these companies
by assisting them in analyzing and disposing of excess assets
for maximum recovery. In the past several years we have
converted $9 billion of problem inventory into cash.


COVAD COMMS: Seeks Approval to Engage Irell as Corporate Counsel
----------------------------------------------------------------
Covad Communications Group, Inc. files an application seeking to
employ and retain the firm of Irell & Manella LLP as its
corporate, securities, debt finance employee benefits and tax
counsel with regard to the filing and prosecution of its chapter
11 case.

Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones
P.C. explains that the Debtor seeks to retain I&M as its
attorneys because of I&M's extensive experience and knowledge in
the fields of corporate, securities, debt finance, employee
benefits and tax, and debtors' and creditors' rights and
business reorganizations and because of the firm's expertise,
experience and knowledge practicing before this Court.  

In representing the Debtor as corporate, securities, debt
finance, employee benefits, and tax counsel prior to the
commencement of this case, Ms. Jones adds that I&M has become
familiar with the Debtor's business and affairs and many of the
potential legal issues that may arise in the context of this
chapter 11 case.

Subject to Court approval, Ms. Jones relates that compensation
will be paid on an hourly basis, plus reimbursement of actual,
necessary expenses and other charges incurred.  The principal
attorneys and paralegals presently designated to represent the
Debtor and their current standard hourly rates are:

Attorney/Staff     Position     Expertise            Hourly Rate
-------------      --------     ---------            -----------
Ashok Mukhey       Partner      corporate securities    $490.00
Ken Heitz          Partners     general corporate       $555.00
Meredith Jackson   Partner      debt finance            $490.00
Milt Hyman         Partner      tax                     $555.00
Elliot Freier      Partner      tax                     $545.00
Tom Kirschbaum     Partner      employee benefits       $480.00
Mike Lowe          Associate    general corporate       $320.00
Bertha Crotes      Associate    general corporate       $285.00
Geoff Trachtenberg Associate    general corporate       $285.00
Yuliya Lyuboynaya  Associate    tax                     $275.00
Carol Webb Senior  Legal Assistant                      $245.00

Specifically, the Debtor will look to I&M:

A. to provide legal advice with respect to its powers and duties
   as a debtor in possession in the continued operation of its
   business and management of its properties relating to
   corporate governance, corporate securities, tax issues,
   employee benefits, asset dispositions, and matters related or
   incidental thereto;

B. to prepare, to the extent of special counsel, on behalf of
   the Debtor necessary applications, motions, answers, orders,
   reports and other legal papers relating to corporate
   governance, corporate securities, tax issues, employee
   benefits, asset dispositions, and matters related or
   incidental thereto;

C. to appear, to the extent required of special counsel, in
   Court and to protect the interests relating to the corporate
   governance, corporate securities, tax issues, employee
   benefits, asset dispositions, and matters related or
   incidental thereto of the Debtor before the Court; and

D. to perform all other legal services for the Debtor that may
   be necessary and proper in these proceedings.

Ms. Jones informs the Court that I&M has received $150,000 from
the Debtor in connection with the services it performed in
preparation of initial documents necessary to the filing of this
case and its proposed post-petition representation of the
Debtor, and which will constitute as a general retainer.  

Ms. Jones relates that I&M has outstanding unbilled fees for
services rendered from August 1, 2001 through August 14, 2001 in
the amount of $54,466.25 and unbilled costs during the same
period of $4,739.69.

Meredith S. Jackson, Esq., a partner at Irell & Manella LLP,
tells the Court that the Firm, nor any shareholder, counsel or
associate has any connection with the debtor, its creditors or
any other parties in interest herein, or its attorneys.  Ms.
Jackson adds that the Firm and certain of its shareholders,
counsel and associates may have in the past represented, and may
currently represent and likely in the future will represent
creditors of the Debtor in connection with matters unrelated to
the Debtor and this chapter 11 case but is not aware of such
representations at the present time.  

Ms. Jackson states that the Firm will be in a position to
identify any such persons or entities when a list of all
creditors of the Debtor has been reviewed and will make any
further disclosures as may be appropriate.

Ms. Jackson asserts that I&M is a "disinterested person" as
defined the Bankruptcy Code in that said firm, its shareholders,
counsel and associates:

A. are not creditors, equity security holders or insiders of the
   Debtor;

B. are not and were not investment bankers for any outstanding
   security of the Debtor;

C. have not been, within 3 years before the date of the filing
   of the Debtor's chapter 11 petition, investment bankers for a
   security of the Debtor, or an attorney for such an investment
   banker in connection with the offer, sale, or issuance of a
   security of the Debtor; and

D. are not and were not within 2 years before the date of the
   filing of the Debtor's chapter 11 petition, a director,
   officer, or employee of the Debtor or of any investment
   banker. (Covad Bankruptcy News, Issue No. 4; Bankruptcy
   Creditors' Service, Inc., 609/392-0900)    


DANKA BUSINESS: Unit Sells NY & Nevada Assets to Reduce Debts
--------------------------------------------------------------
Danka Business Systems, PLC (Nasdaq:DANKY) announced that Danka
Holding Company, its wholly-owned subsidiary, has entered into
Purchase and Sale Agreements to sell its real properties located
in Port Washington, New York, and Las Vegas, Nevada.

Danka will receive a total of $3,350,000 from the sales, less
customary closing costs. The Company anticipates that the
closing of these transactions will occur by the end of October.
The Company will use the net proceeds of the sale to reduce debt
obligations to its lenders on the properties.

Danka CEO Lang Lowrey said: "Danka has historically invested in
Real Estate, in part because of its aggressive acquisition
strategy; however, the Company has had to take recent write-
downs due to the decline in property values. We are pleased with
the progress we have made in selling these properties." Lowrey
added: "Of course, debt reduction will continue to be a priority
for Danka and the sale of these properties is an important
component of the Company's efforts."

Danka Business Systems, PLC, headquartered in London, England,
and St. Petersburg, Florida, is one of the world's largest
independent suppliers, by revenue, of office imaging equipment
and related services, parts and supplies.

Danka provides office products and services in 30 countries
around the world. For additional information about copier,
printer and other office imaging products from Danka, visit the
web site at:   http://www.danka.com


EARL SCHEIB: Will Close 16 More Paint & Body Stores By Year-End
---------------------------------------------------------------
Earl Scheib Inc. (AMEX:ESH) reported its results for the quarter
ended July 31, 2001, the first quarter of the fiscal year ending
April 30, 2002.

Net sales for the first quarter of fiscal 2002 were $14,807,000,
a decrease of 4.7% from the first quarter of fiscal 2001 net
sales of $15,536,000. This resulted from the company operating
15 fewer retail paint and body shops at July 31, 2001, compared
to July 31, 2000, and a same-shop sales decrease of 2.1% during
the first quarter of fiscal 2002 from the first quarter of
fiscal 2001.

Operating income for the first quarter of fiscal 2002 was
$291,000, a decrease of $255,000 from $546,000 in the first
quarter of fiscal 2001. The decrease in operating income was
primarily attributable to the 15 less shops, the adverse effect
of the same-shop sales decrease, operating losses at the
company's first fleet and truck center and, with the opening of
the second center, additional costs for an enhanced sales and
marketing infrastructure.

The board of directors approved a plan during the fourth quarter
of fiscal 2001 to restructure and reorganize the retail paint
and body business. The plan will be implemented over 3 years and
result in the closing of 41 shops located primarily in single-
shop areas and in markets where seasonal weather adversely
impacts operating results.

The restructuring should result in a leaner infrastructure and
ultimately allow the company to concentrate its efforts and
growth in those geographic areas, primarily the Southwest, where
it has historically been profitable.

During the first quarter of fiscal 2002, the company, pursuant
to the planned restructuring of the retail paint and body
business, sold five parcels of real estate and its corporate
office building for a net gain of $628,000 and $1,779,000,
respectively. The company expects to move into leased corporate
offices in Sherman Oaks, Calif., by the end of October
2001. During the first quarter of fiscal 2001, the company sold
two parcels of real estate for a net gain of $186,000.

Net income for the first quarter of fiscal 2002 was $1,609,000,
compared to $606,000, for the first quarter of fiscal 2001.

Chris Bement, chief executive officer and president, stated:
"The operating results for the first quarter, though below last
year, were what we expected as we commenced the restructuring of
our retail paint and body business. As of July 31, 2001, we have
closed nine shops under the restructuring plan and expect to
close at least 16 more by the end of the current fiscal year.

"We are progressing ahead of schedule, and even though closing
these shops reduced our first-quarter profitability since they
have historically contributed during the summer months, the
benefit of these closures should be realized in the late fall
and winter months, when bad weather would otherwise adversely
impact operating results.

"In addition, we have reduced administrative costs at the
operating and corporate levels, with further reductions planned
as additional shops are closed. The full benefit of these cost
reductions should be realized later in the fiscal year.

"Disappointing, however, is the decrease in same-shop sales
during the quarter, as well as not yet attaining profitability
at the initial fleet and truck center and the lack of
significant growth in our commercial coatings business. These
are important matters for the company which we are working
hard to improve."

Earl Scheib Inc., founded in 1937, is a nationwide operator of
151 auto paint and body shops located in more than 100 cities
throughout the United States.

At the end of April, the company's current liabilities stood at
$9.5 million, as opposed to current assets of $6.3 million.


FINOVA GROUP: Hires Bifferato to Sue First Union
------------------------------------------------
The FINOVA Group, Inc., sought and obtained a Court order
approving their retention of Bifferato, Bifferato & Gentilotti
as special local counsel, nunc pro tunc to July 18, 2001, to
represent debtor Finova Mezzanine Capital Inc. in connection
with adversary proceeding filed by First Union National Bank.

The Debtors' authorized representative, William J. Hallinan,
relates that the Debtors' local counsel - Richards, Layton &
Finger - is unable to represent Finova Mezzanine Capital in this
adversary proceeding because of a conflict in representation.

Mr. Hallinan notes that the Bifferato firm has considerable
experience in and knowledge of debtors', creditors' and equity
security holders' rights, business reorganizations and
bankruptcy law.

The Debtors will pay the Bifferato firm the customary hourly
rates of the Bifferato attorneys and paraprofessionals who have
been designated to represent Finova Mezzanine Capital as special
local counsel:

        Ian Connor Bifferato            $250
        Jeffrey Gentilotti              $250
        Vincent A. Bifferato, Jr.       $250
        Megan Harper                    $180
        Amy Kiefer                      $ 90

In addition, the Bifferato firm will bill the Debtors for
expenses directly incurred in connection with the services they
are to render.

Ian Connor Bifferato, a director of Bifferato, Bifferato &
Gentilotti, tells the Court that the firm has no connection with
the Debtors, their creditors, or any other party in interest
herein, or their respective attorneys and accountants except:

  (a) The Bifferato firm represented GE Aircraft Engine Services
      as local counsel in a dispute with FINOVA Capital
      Corporation in these bankruptcy cases.  The dispute has
      been resolved and the Court has approved a stipulated
      settlement.

  (b) The Bifferato firm currently represents, or has in the
      past represented, in matters wholly unrelated to these
      bankruptcy cases, these entities that may be parties in
      interest in these cases:

           (1) Wells Fargo Bank, and

           (2) Principal Life Insurance Co.

       In addition, the firm has represented clients in the past
       in matters, wholly unrelated to these bankruptcy cases,
       involving these entities that may be parties in interest
       in these bankruptcy cases:

           (1) The Bank of Nova Scotia, and

           (2) The Chase Manhattan Bank.

Mr. Bifferato assures Judge Walsh that the Bifferato firm does
not currently have or represent any interest adverse to the
Debtors or their respective estates with respect to the specific
matters for which retention is sought. (Finova Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


GENESIS HEALTH: Wins Court Approval for Reorganization Plan
-----------------------------------------------------------
Genesis Health Ventures, Inc. (OTCBB:GHVIQ.OB) and the Multicare
Companies, Inc. announced that federal bankruptcy court
overseeing the companies' chapter 11 cases has issued an opinion
approving their joint plan of reorganization, subject to certain
minor modifications.

Genesis and Multicare are in the process of submitting the joint
plan, with the required modifications, to the court for
confirmation and anticipate that their joint chapter 11 plan
will become effective by the end of September.

The joint plan provides for the merger of Genesis and Multicare
under the Genesis banner. It also provides for the issuance of
new notes, new convertible preferred stock, new common stock and
new warrants to the companies' creditors.

Under the plan, approximately 93% of the new common stock,
$242.6 million in senior notes and preferred stock with a
liquidation preference of $42.6 million will be issued to the
Genesis and Multicare senior secured creditors.

About 7% of the new common stock will be issued to the Genesis
and Multicare unsecured creditors as well as warrants to
purchase an additional 11% of the new common stock.

Holders of Genesis and Multicare pre-chapter 11 preferred and
common stock will receive no distribution and those instruments
will be canceled.

Genesis and Multicare voluntarily filed for chapter 11
protection on June 22, 2000 after drastic cuts in Medicare
reimbursement and continued underpayment by most State funded
Medicaid systems resulted in inadequate earnings to continue to
meet debt obligations under the companies' current capital
structures.

Genesis Health Ventures provides eldercare in the eastern US
through a network of Genesis ElderCare skilled nursing and
assisted living facilities plus long term care support services
nationwide including pharmacy, medical equipment and supplies,
rehabilitation, group purchasing, consulting and facility
management.

Multicare operates skilled nursing and assisted living centers
in the eastern US.


GEOMAQUE: Renegotiating with Resource Capital for Debt Workout
--------------------------------------------------------------
Geomaque Explorations Ltd. has reached agreement with its
principal lender Resource Capital Fund II LP of Denver, Colorado  
to provide time for the renegotiation of its credit and security
arrangements with the Lender under the agreement dated June 9,
2000 by September 28, 2001.

Sinking fund payments required under the Credit Agreement have,
with the agreement of the Lender, been deferred as a result of
lower than projected cash flows due to continuing lower than
planned gold production at the Company's Vueltas del Rio Mine in
Honduras.

Under the Credit Agreement, a payment to the Lender of $825,000
from the sinking fund would have been due September 30, 2001. In
conjunction with its discussions with the Lender, the Company
has prepaid $575,000 of this amount from the sinking fund.

As a result, the payment due September 30, 2001 is now $250,000.
With the Lender's concurrence, the Company is using $300,000 of
funds that would otherwise be deposited in the sinking fund
principally to fund the acceleration of construction of the
second leach pad at the Mine.

The second leach pad is being built to provide more leaching
area. This will allow sufficient time to achieve planned
leaching recoveries before the next layer of ore is placed on
the pad. Treatment of ore using this new pad will commence
before the end of the year resulting in gold production
increases being realized in the first quarter of 2002.

The Company has engaged Haywood Securities Inc. as its financial
advisor to assist with this restructuring. In order to avoid
possible conflicts of interest during these discussions, Mr.
Bruce Higson-Smith, Vice President of Resource Capital Funds has
resigned from the Board of Directors of the Company.

Geomaque Explorations Ltd. is an international mining company
that is producing gold from its Vueltas del Rio Mine in Honduras
and San Francisco Mine in Mexico, and exploring for precious
metals in the Americas.


GRAHAM-FIELD: Wants Lease Decision Deadline Extended to Feb. 10
---------------------------------------------------------------
Graham-Field Health Products, Inc. asks the Bankruptcy Court for
the District of Delaware to extend the deadline for the debtor's
decision to assume or reject lease of nonresidential real
property from October 13, 2001 to February 10, 2002.  

This is the ninth extension sought by Graham-Field for the
deadline to be moved.  

Graham-Field discloses that they have already rejected 15 leases
and has approximately 10 remaining active leases to decide on.  
The company states that their decision on the remaining leases
will depend on their long-term business plan, which is not yet
finalized to date.

                          *  *  *

Graham-Field Health Products helps patients get around, but
needs some assistance itself. A leading maker of wheelchairs,
the medical supply manufacturer filed for Chapter 11 bankruptcy
in 1999 after unsuccessful attempts to sell itself. The company
also distributes medical and surgical supplies made by such
manufacturers as Bayer, Proctor & Gamble, and Smith & Nephew.

Graham-Field, which has suffered from slow sales and problems
integrating previous acquisitions, has received infusions of
capital from First Union subsidiary Congress Financial and from
the sale of its Prism Technologies subsidiary to the unit's
management.


HARNISCHFEGER: Seeks Disallowance of Metso Paper's $16.2M Claims
----------------------------------------------------------------
Harnischfeger Industries, Inc. seeks disallowance, expungement
or reduction and allowance, as applicable of claims, pursuant to
section 502(b) of the Bankruptcy Code, 26 Claims filed against
HII/Joy/Beloit/Harnco/The Horsburgh & Scott Co. as follows:

(A) 1 Duplicate Claim (No 12080) of an unknown amount filed by
    Herbert S Cohen that should be expunged because it has been
    replaced by another Claim;

(B) 7 Claims totaling $648,831.70 that should each be expunged
    for one or more of the following reasons:

    (1) the claim is not timely filed,

    (2) the claim is a Paid Claim based on obligations that have
        been satisfied,

    (3) the claim is a No liability claim that is not
        enforceable against the Debtors or their property under
        any agreement or applicable law,

    (4) the claim is a 502(D) that should be disallowed because
        either (i) the property is recoverable from the creditor
        asserting the 502(D) Claim under section 542, 533, 550
        or 553 of the Bankruptcy Code, or (ii) the creditor
        asserting the 502(D) Claim is a transferee of a transfer
        avoidable under section 522(f), 522(h), 544, 545, 547,
        548, 549 or 724(a) of the Bankruptcy Code and the
        creditor has not paid or turned over such property for
        which the creditor is liable under section 522(i), 542,
        543, 550 or 553 of the Bankruptcy Code.

(C) Redundant Claim No. 12248 in the amount of $16,263,994.93
    filed by Metso Paper Inc. that is not enforceable because
    the Claim appears to be redundant of other scheduled or
    filed proof(s) of claims against other Debtor(s) in these
    proceedings;

(D) 11 claims totaling $945,425.98 that should be Reduce and
    Allow Claims because after thorough review, the Debtors have
    determined that these are claims filed for amounts that
    differ from the amounts reflected on the Debtors' books and
    records.

(E) 3 Warranty Claims totaling $99,265.78 that should be
    expunged on Effective Date of Plan because the Debtors are
    assuming their customer contracts under the Plan;

(F) 3 Assumed Executory Contract Claims totaling $9,231.83 that
    should be expunged 5 business days after Effective Date
    because the Debtors are assuming certain contracts under the
    Plan. (Harnischfeger Bankruptcy News, Issue No. 47;
    Bankruptcy Creditors' Service, Inc., 609/392-0900)


ICG COMMS: Sells Colorado Real Property to CH2M Hill For $3.7MM
---------------------------------------------------------------
ICG Communications, Inc., and in particular ICG Holdings, Inc.,
ask Judge Peter Walsh to authorize the sale, free and clear of
all liens or encumbrances, of real property in Englewood,
Colorado, consisting of 2.88 acres of land and a building of
approximately 30,144 square feet, to CH2M Hill, Inc.  

The building is a suburban office building located at 9605
Kingston Court, known as Maroon Circle.

The Debtors formerly used the Maroon Circle property as
additional office space to house employees and a
telecommunications hub.  

As part of the restructuring, Holdings and the other Debtors
have significantly reduced their workforce and no longer require
this space.  The Debtors have begun to consolidate many of their
smaller office spaces, such as the Maroon Circle property, to
their corporate headquarters as part of their ongoing effects to
reduce costs and expenses.  

Accordingly, the Debtors determined in their business judgment
to sell the Maroon Circle property.

David S. Kurtz and Timothy R Pohl of the Chicago firm of Skadden
Arps Slate Meagher & Flom (Illinois) as lead counsel, and Gregg
M. Galardi and Mark A. Fink of the Wilmington branch of that
firm as local counsel, tell Judge Walsh that the Debtors have
undertaken extensive efforts to market the Maroon Circle
property for sale to maximize its value.  

In early June of this year, the Debtors began the process of
marketing and soliciting interest in the Maroon Circle property.  

The Debtors engaged the services of a real estate broker, Jones
Lang LaSalle, to assist with the disposition of the property.  
JLL actively marketed the Maroon Circle property for
approximately two and one-half months, including mailing over
150 letters and brochures to potential buyers.  

Despite these efforts, JLL solicited only 3 serious offers, 2
of which were far below the appraised value of $2.9 million.  
(The appraisal of Maroon Circle property was completed by CB
Richard Ellis, Inc., on April 4, 2001.)

The third offer, from CH2M, was initially for $3.3 million.  The
Debtors, with the assistance of JLL, entered into arms-length
negotiations with the Purchaser regarding the terms of the sale
of the Maroon Circle Property. These negotiations resulted in an
agreement between the parties regarding the material terms of
the sale, including a final purchase price of approximately $3.7
million, or about twenty percent above the appraisal value.

The Maroon Circle Property is subject to a commercial note and
deed of trust, dated September 2, 1994. The Note, which is held
by the Bank of Denver, secures a loan to Holdings in the
original principal amount of $1.3 million and outstanding
principal balance as of April 30, 2001 in the amount of
$928,666.16. Pursuant to the Note, the Debtors believe
that the Bank of Denver holds a properly perfected security
interest with respect to the Maroon Circle Property.  

Accordingly, Holdings will utilize the proceeds of the sale of
Maroon Circle Property to pay the Bank of Denver any outstanding
principal and interest with respect to the Note. Therefore, the
Debtors will net approximately $2.8 million from the sale of the
property.

The Debtors assure Judge Walsh that they have evaluated the
terms and benefits of the Purchaser's offer to buy the Maroon
Circle Property, as well as the benefits of other alternatives,
including retention of the property.

In its business judgment, the Debtors determined that the
proposal from the Purchaser represents the greatest overall
benefit to the Debtors' estates for the sale of the Maroon
Circle Property.

Moreover, given the extensive marketing of the property by JLL,
the Debtors assert that neither the further marketing of the
Maroon Circle Property nor the submission of the Maroon Circle
Property to an auction process will produce any better offer.

                   Additional Terms of Sale

The Term Sheet between Holdings and the Purchaser sets out
additional terms as:

      (a) Purchase Price: $3,677,568, with an earnest money
          deposit of 5% of the purchase price paid in escrow
          upon contract execution.

      (b) Assets Included: The proposed sale will include all of
          the Debtors' right, title, and interest in the Maroon
          Circle Property, as well as the UPS system, emergency
          generator, Liebert cooling units, certain furniture,
          fixtures and the security system.

      (c) Closing: The closing of the purchase and sale of the  
          Maroon Circle Property shall be held on or before
          September 29, 2001.

      (d) Conditions to Closing: The agreement between the
          Purchaser and Holdings is subject to Judge Walsh's
          approval and completion of customary due diligence by
          the Purchaser.

The Debtors also ask that Judge Walsh order that the transfer of
title is not subject to any stamp or similar tax.  Where, as
here with this sale of surplus real estate, an asset sale
outside of a plan is necessary to confirmation of a plan at a
later date, this sale is within the exemption from tax provided
by the Bankruptcy Code. (ICG Communications Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


INTEGRATED HEALTH: Assumes Kansas and Oklahoma Leases As Amended
----------------------------------------------------------------
Integrated Health Services, Inc. sought and obtained the Court's
approval to assume five non-residential real property leases,
three for premises in Kansas and two for premises in Oklahoma,
with amendments, after negotiation with the same Landlord Health
Care Property Investors, Inc. (HCPI), pursuant to sections
105(a), and 365(a) and (b) of the Bankruptcy Code, and rule 6006
of the Bankruptcy Rules.

The leases are by and between HCPI and one of the Debtors (IHS
Acquisition No. 151, Inc., IHS-Acquisition No. 146, Inc., IHS
Acquisition No. 147, Inc., IHS Acquisition No. 157, Inc.), as
follows:

Kansas Leases

(1) The Hutchison Lease by IHS-146, related to premises located
    in the Hutchinson, Kansas, known as the Golden Plains
    Nursing Center (the Hutchinson Facility), dated as of August
    1, 1998;

(2) The Cherry Hills Nursing Lease by IHS-147, related to
    premises located in the Wichita, Kansas, known as the Cherry
    Hills Nursing Center (the Cherry Hills Nursing Facility)
    dated as of August 1, 1998:

(3) The Cherry Hills Retirement Lease by IHS-157, related to
    premises located in Wichita, Kansas, known as the Cherry
    Hills Retirement Center (the Cherry Hills Retirement
    Facility) dated as of August 1, 1998, as amended;

Oklahoma Leases:

(4) The East Moore Lease by IHS-l51, related to premises located
    in Moore, Oklahoma, known as the East Moore Nursing Center
    (the East Moore Facility) dated as of August 1, 1998, as
    amended;

(5) The Bryant Lease by IHS-151,  related to premises located in
    the Edmond, Oklahoma, known as the Bryant Nursing Center and
    the Integrated Specialty Hospital of Edmond (the Bryant
    Facility, dated as of August 1, 1998, as amended.

The Debtors negotiated with HCPI with the goal of amending the
Leases such that they would be of greater value to the Debtors'
estates.

Throughout the negotiations with HCPI, it was Debtors' view
that:

   (i) the rent under the Kansas Leases were above market
       rate and, though the Kansas Facilities were profitable,
       they could become more profitable, and therefore
       contribute greater value to the Debtors' estates, with
       reasonable rent concessions; and

  (ii) the Oklahoma Facilities, though currently unprofitable,
       can become profitable with suitable rent concessions.

These negotiations led to agreements on Lease Amendments, which
substantially reduce the rent under the Kansas and Oklahoma
Leases, require the Debtors' to assume the Kansas and Oklahoma
Leases as amended, and to affirm the associated guarantees.

(A) The Kansas Lease Amendment

    Each of the Kansas Facilities generates a profit. However,
    the previous above market rent, fixed at better times,
    prevents the Kansas Facilities from achieving maximum
    profitability. The Kansas Facilities' aggregate annualized
    earnings before interest, taxes, depreciation and
    amortization, after payment of rent ("EBITDA") is
    $877,882.00. In addition, after capital expenses, each of
    the Kansas Facilities maintains a positive cash flow. The
    Kansas Facilities' aggregate annualized cash flow (EBITDA
    minus CapEx) is $678,507.00.

    Pursuant to the Kansas Lease Amendment, the aggregate rent
    under the Kansas Leases is reduced by a total of $325,000.00
    annually, subject to upward adjustment as provided in
    section 3.1.1(b) of the Kansas Leases. If such rent
    concession had been in effect during the past year, the
    Kansas Facilities would have realized EBITDA totaling
    $1,202,882 and maintained an aggregate cash flow totaling
    $1,003,507.00.

    By reason of the foregoing, the Debtors submit that the
    Kansas Leases, each already of value to the Debtors'   
    estates, are of greater value as amended by the Kansas Lease
    Amendment. Accordingly, the Debtors' have agreed to assume
    the Kansas Leases, as amended, and affirm their associated
    guarantees to preserve the valuable Kansas Leases for the
    benefit of their estates and creditors.

(B) The Oklahoma Amendment

    Currently, the Oklahoma Facilities are unprofitable.
    However, with suitable rent concessions, the Facilities can
    become immediately or prospectively profitable and,
    therefore, enrich the Debtors' estates. The Bryant
    Facility's EBITDA is negative $529,087.00 and its annualized
    cash flow (EBITDA minus CapEx) is negative $592,837.00. The
    East Moore Facility's EBITDA is negative $664,379.00, and
    its annualized cash flow is negative $727,504.0O.

    Pursuant to the Oklahoma Lease Amendment, the annual rent
    under the Bryant Lease is reduced from $1,021,776.00 to
    $400,00.00, subject to upward adjustment as provided in
    section 3.1(b) of the Bryant Lease. In addition, pursuant to
    the Oklahoma Lease Amendment, the rent under the East Moore
    Lease is permanently reduced from $555,888.00 to $0.00. If
    such rent concessions had been in effect during the year
    past year, the Bryant Facility would have realized EBITDA of
    $92,689.00 and maintained cash flow of $28,939.00 and the
    East Moore Facility's EBITDA would have been negative
    $108,491.00, and its cash flow negative $171,616.00.

    The Oklahoma Lease Amendment causes the Bryant Facility to
    become immediately profitable.

    With respect to the East Moore Facility, the Debtors believe
    that the rent elimination implemented by the Oklahoma Lease
    Amendment provides an opportunity for the Facility to become
    profitable. However, the Debtors recognize that bringing the
    East Moore Facility to profitability may be difficult.
    Therefore, pursuant to the Oklahoma Lease Amendment, if, by
    August 31, 2001, HCPI does not locate an operator to take
    over the East Moore Facility, the Debtors may, in their sole
    discretion, at any time during the remaining term of the
    East Moore Lease, unwind operations and vacate the East
    Moore Facility, in accordance with applicable governmental
    regulations, and is so doing incur no liability to HCPI. The
    Debtors submit that it is in the best interests of their
    estates to attempt to make the East Moore Facility
    profitable given the minimal risk posed to their estates by
    virtue of the Oklahoma Lease Amendment's unwind provision.

The Court is satisfied that the negotiations are extensive and
at arm's length, and the Lease Amendments are in the best
interest of the estates and creditors and authorized the Debtors
to assume the Kansas and Oklahoma Leases, as amended, pursuant
to section 365 of the Bankruptcy Code. (Integrated Health
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   


INTERPLAY ENTERTAINMENT: Board Revamps & Hires Financial Advisor
----------------------------------------------------------------
Interplay Entertainment Corp. (Nasdaq: IPLY) announced a change
in the composition of its Board of Directors and additions to
its senior management team in advance of its annual meeting of
stockholders scheduled for September 18, 2001.

In addition to agreeing to the change in composition of the
Board of Directors, the Company also retained Europlay 1, LLC as
its exclusive advisor to effect a restructuring of Interplay.

Under an agreement reached following negotiations with
Interplay's largest stockholder, Titus Interactive, S.A., a
French video games publisher that trades on the Nouveau Marche,
Interplay has nominated a slate of individuals for election as
directors at Interplay's annual meeting of stockholders.

As part of the agreement, three of the Company's existing
directors resigned, and three new directors nominated by Titus
were elected to fill the vacancies. The new Board of Directors
consists of five individuals nominated by Titus, and two
directors, including Brian Fargo, previously nominated by
management, who will continue to serve until the annual meeting.

Europlay 1, an advisory firm lead by senior executives with over
30 years of experience in the interactive entertainment
business, has been provided a mandate to undertake a
restructuring of the company and oversee enhancement of the
management team of Interplay.

"The new team brings tremendous expertise and management skills
which we expect will enhance the ability of Interplay to improve
its operating results, relations with distributors, licensors,
developers and talented employees," according to Herve Caen,
Interplay's President.

According to Phil Adam, Vice President of Business Development
"the Company has several promising high-profile products in
development. I believe the development talent available to
Interplay is second-to-none, and the new personnel and new
perspectives we have added will help us to exploit our key
properties going forward."

Gary Dawson, Vice President of Sales and Marketing, adds,
"demand for our products has always been strong, with our new
team, we now expect to implement additional management controls
that we believe will enhance the timeliness of our shipping."

Interplay is a developer, publisher and distributor of
interactive entertainment software for both core gamers and the
mass market. The Company has been long regarded as a leader in
the action/arcade, adventure/RPG and strategy/puzzle category
with several franchise video game titles.

The Company holds licenses for interactive rights based on
popular brands including: Advanced Dungeons and Dragons, Star
Trek and Caesars Palace.

The Company currently develops and publishes products compatible
with multiple variations of the PC platform including Microsoft
Windows, and for video game consoles such as the Sony
PlayStation and PlayStation 2. The Company also develops and has
plans to publish products for the Microsoft Xbox and Nintendo
GameCube video game consoles, which are scheduled for
release in 2002.

Titus owns 100 percent of Virgin Interactive Entertainment, and
is developing product under interactive rights licenses to
several well-known properties including: Top Gun, Robocop, Xena,
and Kasparov, for certain video game platforms.

Titus currently generates half of its turnover in Europe and the
other half in North America and Asia, posted annual sales of
172.1 million euros ($156.7 million) in its 2000/01 fiscal year
ended June 30, 2001.

Interplay releases products through Interplay, Shiny
Entertainment, Digital Mayhem, Black Isle Studios, 14 Degrees
East, its distribution partners and its wholly owned subsidiary
Interplay OEM, Inc. More comprehensive information on Interplay
and its products is available through its worldwide Web site at
http://www.interplay.com

At the end of June, the Company's total liabilities stood at
$41.6 million, as compared to its total assets of $39 million.
Cash on hand amounts to $0.7 million, while its short-term debts
total $9.3 million.


J.C. PENNEY: S&P Assigns BB+ on $500MM Convertible Sub Notes
------------------------------------------------------------
Standard & Poor's assigned its double-'B'-plus rating to J.C.
Penney Co. Inc.'s planned offering of $500 million convertible
subordinated notes due 2008. The notes are to be issued under
Rule 144A to private investors with future registration rights.

At the same time, Standard & Poor's affirmed its existing
ratings on J.C. Penney

The outlook is negative.

                       Ratings Affirmed

  J.C. Penney Co. Inc.                      TO

    Corporate credit rating                 BBB-
    Senior unsecured debt                   BBB-
    Senior unsecured bank loan              BBB-
    Shelf registration          preliminary BBB-

  J.C. Penney Funding Corp.
  
    Long-term corporate credit rating       BBB-
    Short-term corporate credit rating      A-3
    Commercial paper                        A-3


Proceeds from the new notes are expected to be used to help
repay upcoming debt maturities that total $1.47 billion in
fiscals 2002 and 2003, as well as to fund working and fixed
capital additions. Pro forma cash and short-term investments
total $2.18 billion at July 28, 2001.

The ratings on J.C. Penney and its subsidiary J.C. Penney
Funding Corp. reflect the significant challenges management will
continue to face as it attempts to reverse a long trend of poor
results at the company's J.C. Penney department store and Eckerd
drug store chains.

This will be a formidable task, but some important changes were
made in 2000, including a rebuilding of the management
organization, the closing of unproductive stores, the transition
to a centralized merchandise process, the clearing and
streamlining of inventory, and a renewed focus on cost
reduction.

In 2001 management has been focusing on better merchandise
assortments, enhanced marketing, and expense reduction. At
Eckerd, near-term improvement is targeted to come from lower
front-end prices, a new store layout, and a greater emphasis on
generic prescriptions.

Some progress was made through the first half of 2001, but
department store sales, though up in a highly competitive
environment, are still being impacted by a sluggish economy.
Same-store sales from department stores were up 2.6% through
August 2001, while drug stores improved at an 8.6% rate.

The company has ample liquidity, with pro forma cash of more
than $2.0 billion and the ability to tap a $1.5 billion
revolving credit facility, which may be used until November
2002.

                   Outlook: Negative

Although Standard & Poor's believes J.C. Penney has a good
chance of successfully turning around its department store
business, the time frame involved may be lengthy. A more rapid
improvement is expected at Eckerd. Maintenance of the current
rating relies on the company's ability to generate year-over-
year improvement, despite the possibility that progress
could be impeded by a more difficult retailing environment and
intense competition.

Therefore, the rating could be lowered if the company is not
able to demonstrate that it can generate and sustain a better
operating performance.


LAIDLAW INC: Court Approves Zolfo Executive Team's Employment
-------------------------------------------------------------
Judge Kaplan authorized Laidlaw, Inc. to employ:

      * Stephen Cooper as Chief Restructuring Officer;

      * Thomas Zambelli as Restructuring Director; and

      * Rod Peckham as Assistant Restructuring Director,

nunc pro tunc as of the Petition Date, subject to certain terms
and conditions.

The Notice Parties have 10 days after receipt of the Employment
Agreements to file their objection.  If an objection is filed,
the Court will schedule a hearing to resolve the complaint.  If
there is none, the Employment Agreements shall be deemed
approved.

Judge Kaplan also ruled that the Debtors are not allowed to pay
any success or liquidation fee to The Stephen Cooper Corporation
without obtaining a Court approval. (Laidlaw Bankruptcy News,
Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)


MCCRORY CORP: Files Chapter 22 Petition in Delaware
---------------------------------------------------
McCrory Corp. and nine subsidiaries filed for Chapter 11
protection with the U.S. Bankruptcy Court in the District of
Delaware. The Company emerged from a previous Chapter 11 filing
in 1997 under the ownership of HGG Acquisition, Inc.

The company operates about 175 discount variety
stores under the names Dollar Zone, McCrory, G. C. Murphy, J. J.
Newberry, and T.G.& Y. Most of McCrory's stores are located in
the northeastern US; it also has stores in Arizona, California,
New Mexico, Oregon, Texas, and Washington. Once 1,300 stores
strong, McCrory divested more than 600 stores while under
Chapter 11 bankruptcy protection.

It exited bankruptcy in 1997 when HGG Acquisition, a firm
controlled by financier and McCrory chairman (and main creditor)
Meshulam Riklis, bought the company. (New Generation Research,
September 11, 2001)


MCMS INC: Default On Notes Prompt S&P to Lower Ratings to D
-----------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured debt, and preferred stock ratings on MCMS to 'D',
following MCMS' failure to make interest payments on its notes,
due on Sept. 4, 2001.

Ratings were placed on CreditWatch with negative implications on
July 20, 2001.

MCMS has nearly $240 million of total debt and generated less
than $5 million of EBITDA for the nine months ended May 31,
2001. The recent loss of its two largest customers, which
accounted for nearly 40% of sales, exacerbated by a collapse in
demand in communications end markets, caused severe liquidity
problems for the company.

The Nampa, Idaho-based company is a provider of electronic
manufacturing services to the networking, telecommunications,
and computer systems and is not in compliance with covenants and
has exceeded advances on its credit facility.

It has engaged a financial adviser to evaluate various
alternatives, including restructuring debt obligations.


MIDWAY AIRLINES: Suspends Flight Operations and Cuts 1,700 Jobs
----------------------------------------------------------------
Midway Airlines announced that effective immediately it has
suspended all future flight operations. This action is being
taken at this time in order to preserve the value available for
Midway's interest holders and with the recognition that
following the recent terrorist attacks demand for air
transportation is expected to decline sharply.

                    Ticketholders

Holders of tickets for future travel on Midway will be entitled
to refunds or recommendation on other air carriers. Midway will
attempt to contact all such ticket holders to make appropriate
arrangements.

                     Employees

Approximately 1,700 Midway employees will lose their jobs as a
result of this suspension of operations. Final pay will be made
to these individuals on their next regularly scheduled payday.

                     Creditors

Effective immediately, Midway will begin returning aircraft to
their lessors and will solicit purchasers for the various assets
it own or controls.

Midway anticipates paying all obligations incurred following its
Chapter 11 filing and proposing a Plan of Reorganization to deal
with all obligations which arose prior to the Chapter 11 filing.

A Midway spokesperson commented, "We are deeply troubled by the
impact this action will have on our customers, employees,
creditors and community. Unfortunately, we simply do not have
the resources necessary to permit us to reorganize in this
environment."


MMH HOLDINGS: Delaware Court Confirms Chapter 11 Plan
-----------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved the Chapter 11 Reorganization Plan of Morris Material
Handling, Inc.  

The Reorganization Plan provides for conversion of virtually all
of the Company's bank, bondholder, and other pre-petition
obligations into equity of the reorganized Company.  

Under the plan there will be no distribution to it's existing
shareholders and all existing shares will be canceled.  
Consummation of the Reorganization Plan is conditioned upon the
finalization of documentation required by the Plan, and
finalization of a $30 million loan facility to be used to fund
cash costs of exiting Chapter 11 as well as the Company's
ongoing operations.

The virtually debt-free capital structure established by the
Reorganization Plan will allow the Company the flexibility to
respond to and take advantage of the changing dynamics of its
industry.  

The Reorganization Plan will allow Morris to emerge from Chapter
11 as a leading North American supplier of through-the-air
material handling equipment and services to a broad base of
customers in manufacturing, paper and primary metal industries
through a network of company locations.
    

MTS INC: S&P Junks Ratings Due To Hefty Repayment Requirements
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured bank loan ratings on MTS Inc. to triple-'C' from single-
'B'-minus and lowered its subordinated debt rating on the
company to double-'C' from triple-'C'.

The outlook is negative.

The ratings downgrade is based on near-term financial pressures
resulting from MTS's heavy debt repayment requirements and the
expectation that the company will not be in compliance with at
least one of the covenants in its recently revised senior credit
facility.

The bank agreement requires MTS to secure financing commitments
by Oct. 1, 2001, to reduce the outstanding balance under the
credit facility to $100 million by Dec. 31, 2001. The company
had $202 million outstanding under the $210 million credit
facility on April 30, 2001.

Furthermore, if MTS is not in compliance with its credit
agreement, the banks may prohibit the company from remitting the
interest payment on its $100 million subordinated notes due on
Nov. 1, 2001.

MTS's financial flexibility is very limited. Ratings could be
lowered if the company has difficulty complying with the
scheduled reduction of borrowings available under its bank
facility.


NEW WORLD COFFEE: Violates Nasdaq Listing Requirements
------------------------------------------------------
New World Coffee-Manhattan Bagel, Inc. (Nasdaq: NWCI) received a
Nasdaq Staff Determination on September 7, 2001 asserting
violations of two rules and that its securities are, therefore,
subject to delisting from the Nasdaq National Market.

New World is filing an appeal, and has requested a hearing
before a Nasdaq Listing Qualifications Panel to review the Staff
Determination. There can be no assurance the Panel will grant
the Company's request for continued listing.

According to the Nasdaq staff, the Company violated Marketplace
Rule 4350(i)(1)(C)(ii)(b) -- issuing more than 20% of its common
stock in connection with an acquisition -- and Marketplace Rule
4350(i)(1)(D)(ii) -- issuing more than 20% of its common stock
below market or book value -- in each case without prior
stockholder approval.

"We are seeking a hearing before a Nasdaq appeal panel," said
New World Chairman Ramin Kamfar. "In addition, we are confident
we will be able to fulfill the requirements to relist our common
stock on a suitable exchange."

New World is the nation's largest bagel bakery company and a
leader in the 'fast casual' sandwich industry. The Company
operates stores primarily under the Einstein Bros and Noah's New
York Bagels brands, and primarily franchises stores under the
Manhattan Bagel Company and Chesapeake Bagel Bakery brands.

As of July 3, 2001 the Company's retail system consisted of
499 company-owned stores and 303 franchised and licensed stores
in 35 states and the District of Columbia. The Company also
operates four dough production facilities and a coffee roasting
plant.


NIAGARA MOHAWK: S&P Rates $300MM Senior Unsecured Debt at BBB-
--------------------------------------------------------------
Standard & Poor's assigned its triple-'B'-minus senior unsecured
debt rating to Niagara Mohawk Power Corp.'s $300 million shelf
drawdown due Sept. 2004.

The ratings on Niagara Mohawk Power, the electric and gas
utility subsidiary of Niagara Mohawk Holdings Inc., are on
CreditWatch with positive implications, reflecting the merger of
its parent with National Grid Group PLC, a higher-rated entity.
National Grid Group agreed to merge with Niagara Mohawk Holdings
in a $3 billion transaction, as part of its plan to increase
the size of its transmission and distribution business in the
U.S. After the merger, Niagara Mohawk Holdings will become a
subsidiary of National Grid USA.

The ratings on Niagara Mohawk Power reflect the company's
improving business profile, combined with a weak, albeit
improving, financial profile. As a result of the electric
industry restructuring in New York State, Niagara Mohawk Power
has exited the generation business to focus on transmission and
distribution operations.

The company sold its 25% interest (300 MW) in the Roseton plant,
its last fossil-fuel generation asset, to Dynegy Inc. in
January 2001 for $80 million. Niagara Mohawk Power, however,
still maintains its ownership interest in the Nine Mile Point
nuclear station (where the company's interest is approximately
1,172 MW), which is to be purchased by Constellation Nuclear LLC
by mid-2001.

Subsequent to the sale of the generation assets and the
restructuring of the purchased-power agreements, Niagara Mohawk
Power's operating risk will be materially reduced, enhancing
the company's business profile.

Niagara Mohawk Power's weak financial profile reflects the
effect of debt incurred to restructure its substantial and
costly purchased-power agreements, as directed by the master
restructuring agreement approved by the New York Public Service
Commission (PSC).

As a result, debt leverage has increased, and cash flow
protection measures are weak for the rating category. Over the
intermediate term, the financial profile is expected to
improve as Niagara Mohawk Power pays down debt and is able to
pass in rates the true cost of electricity.

In an effort to obtain timely merger approval from New York
State regulators, Niagara Mohawk Power has filed two alternate
rate plans with the New York PSC, requesting approval to reduce
transmission and distribution rates, stabilize commodity costs
for ratepayers, and establish a service-quality program and a
congestion-reduction program.

In addition, the company has ensured that its supplies are
sufficient to meet forecasted summer demand under normal weather
conditions.

National Grid Group owns and operates the transmission grid in
England and Wales, but also owns National Grid USA (the former
New England Electric System), whose major subsidiaries are
Massachusetts Electric Co., Narragansett Electric Co., and New
England Power Co. With the Niagara Mohawk acquisition, the
consolidated U.S. electric utility operations of National
Grid will be among the 10 largest in the U.S., with about 3.2
million electric and 540,000 gas customers in Massachusetts, New
York, Rhode Island, and New Hampshire.

The company's transmission system will be the largest in
the Northeast. The merger still needs the approval of the New
York PSC and is expected to close during the fourth quarter of
2001.

                           *  *  *

At June 30, 2001, Holdings and Niagara Mohawk's principal
sources of liquidity included cash and cash equivalents of
$169.2 million and $82.7 million, respectively, and accounts
receivable of $307.3 million and $264.4 million, respectively.

Holdings and Niagara Mohawk have a negative working capital
balance of $426.5 million and $568.5 million, respectively,
primarily due to long-term debt due within one year of $418.1
million at Niagara Mohawk and short-term debt of $5.0 million.

Ordinarily, construction related short-term borrowings are
refunded with long-term securities on a periodic basis. This
approach generally results in a working capital deficit.

Working capital deficits may also be a result of the seasonal
nature of Niagara Mohawk's operations as well as the timing of
differences between the collection of customer receivables and
the payments of fuel and purchased power costs.

Although the Company's total current assets of $698.8 million is
way below its total current liabilities of $1.12 billion,
Niagara Mohawk believes it has sufficient cash flow and
borrowing capacity to fund such deficits as necessary in the
near term.


OWENS CORNING: Unsecured Panel Hires Walsh as Special Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Owens Corning
files a motion authorizing the employment and retention of Walsh
Monzack & Monaco, P.A. as special counsel to the Committee.

Joel L. Klein, as attorney-in-fact of Jackson National Life
Insurance Company, co-chair of the Committee discloses that they
wish to employ WM&M for the limited purpose of representing the
designated members of the Committee as local counsel to the
extent that the Committee's Delaware counsel, Morris Nichols is
unable to do so.  

Mr. Klein adds that the Committee selected WM&M based upon the
fact that it has considerable experience and knowledge in
connection with these cases and in the field of creditor's
rights and business reorganizations.

Francis A. Monaco, Jr., a member of Walsh Monzack & Monaco, P.A.
discloses that WM&M bills its services on an hourly basis plus
reasonable out-of-pocket expenses incurred in connection with
the cases engaged in.  

The principal professionals to be retained in these cases are
Mr. Monaco, whose hourly rate is $315, and Joseph J. Bodnar and
Kevin J. Mangan, whose hourly rates are $250 and $215,
respectively.  

In addition, Mr. Monaco anticipates the engagement of one or
more associates of WM&M will work on this matter at their hourly
rates of $175 to $255.

Mr. Monaco asserts that the firm and its employees are
"disinterested persons" and does not hold interest adverse to
the Debtors or their estates.  Mr. Monaco states that in the
event that a conflict is identified in the future in
representing parties-in-interest in these chapter 11 cases, such
matter will be handled by another counsel.

Mr. Monaco discloses that WM&M has disclosed Jackson National
Life Insurance Company, GE Capital and Transport International
Pool in connection with these cases and Credit Lyonnais in the
Montgomery Ward and W.R. Grace bankruptcy cases.  Mr. Monaco
also discloses that WM&M currently represents creditors such as
Provia Software Inc., Triangle Construction, Phinney Industrial
Roofing, E.W. Marine Inc., Smith Trucking, Inc., GE Capital
Transport International Pool in matters related to the Debtors.  

He also adds that WM&M represents Bank of America, Chase
Manhattan Bank, Nationsbank, N.A. in matters unrelated to the
Debtors. Lastly, Mr. Monaco states that WM&M had previously
represented Bank of America, Chase Manhattan Bank, Nationsbank,
N.A., PNC Bank, National Association and the Sumitomo Bank,
Ltd., in matters unrelated to the Debtors. (Owens Corning
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


PACIFIC GAS: Plans to Amend & Assume 51 QF Power Purchase Pacts
---------------------------------------------------------------
Pursuant to an Order of the Court providing for a procedure to
seek approval, by Notice rather than Motion, of proposed
amendments and assumptions by Pacific Gas and Electric Company
of certain Power Purchase Agreements, PG&E gives Notice, dated
August 15, 2001 of its intention to amend and assume, pursuant
to 11 U.S.C. Section 365 and Rules 6006 and 9019 of the Federal
Rules of Bankruptcy Procedure, the PPAs between PG&E and the 51
Qualifying Facilities as listed below.

Each of the QFs operates a power generation facility and is a
counter-party to a PPA, which provides for the purchase of power
by PG&E from the respective QF.

Prior to the commencement of its bankruptcy case, PG&E failed to
pay in full the amounts due under the PPAs, resulting in pre-
petition claims for payment to the QFs.

On June 13, 2001, the CPUC issued Decision No. 01-06-015 (the
"Lynch Decision"), whereby QFs under Standard Offer Contracts
with PG&E may request that their contracts be modified to
replace the energy pricing term with a five-year average fixed
price of 5.37 cents/kWh (the "Price Modification"), as proposed
in the March 23, 2001 comments of the Independent Energy
Producers referred to in Decision No. 01-06-015.

On July 31, 2001, PG&E and each of the QFs agreed to amend each
respective PPA to replace the energy price term with the CPUC
price modification for 5 years (the "PPA Amendments").

PG&E now proposes to enter into Agreements to assume the PPAs on
the following general terms:

(a) PG&E will assume each PPA as amended, as set forth in the
    Assumption Agreements, pursuant to 11 U.S.C. Section
    365(b)(1) and (d)(2) and Rules 6006 and 9019 of the Federal
    Rules of Bankruptcy Procedure;

(b) July 31, 2001 is the effective date for PG&E's assumption of
    each PPA, providing that all conditions as set forth in
    Sections 2, 18 and 19 of the Assumption Agreements are met;

(c) If the sum of the Pre-Petition Payables is less than
    $10,000, PG&E will pay the amount of the Pre-Petition
    Payables to the QF, without interest and immediately upon
    all conditions for approval of the Assumption Agreements
    relating to such QFs being met;

(d) In instances where the sum of Pre-Petition Payables is
    greater than or equal to $10,000, upon the effective date of
    assumption of the PPAs, the Pre-Petition Payables will be
    elevated to administrative priority status and will accrue
    interest and will be paid by PG&E to the QFs upon the Plan
    Effective Date; and

(e) The QFs waive certain potential administrative and pre-
    petition claims, including any claim to receive any
    difference between a "market rate" and the contract price
    for energy and capacity delivered to PG&E from and after
    April 6, 2001 through the effective date for PG&E's
    assumption of the PPA.

PG&E believes that approval of the PPA Amendments and Assumption
Agreements is in the best interests of the estate, for several
reasons.

The PPA Amendments and Assumption Agreements permit PG&E and the
QFs to take advantage of the Price Modification, eliminating the
potential volatility of power costs over the next 5 years.

Moreover, although PG&E believes that it would have prevailed on
the issue of whether "market rates" could have been charged for
post-petition power purchases, the QFs' waiver on this issue
resolves the matter without further litigation.

The QFs included in this motion to amend and assume PPAs are:

                                                  Amount of
                                     Capacity     Pre-Petition
Qualifying Facility                   (kW)       Payables
-------------------                ----------    -------------
City of Concord                          105     $   20,984.04
Rhone-Poulenc (Stauffer Chemical)      4,000     $  112,788.08
EBMUD (Oakland)                        4,000     $    2,548.16
Bio-Energy Part                        6,000     $1,946,987.59
Sea West Energy-Seawest                   60     $      480.00
Sea West Energy-CWES                   1,500     $   11,727.93
Sea West Energy-Altech                 5,760     $   45,039.72
Sea West Energy-Western                  900     $    7,039.95
Sea West Energy-Viking                 1,560     $   12,191.93
Sea West Energy-Taxvest               10,680     $   83,519.48
Yountville Cogen Associates            3,000     $    2,673.45
Yolo County Flood & WCD                2,500     $        0.00
Sonoma County Water Agency             2,600     $  637,590.72
Bes Hydro                                400     $   25,183.70
Hammeken Hydro                           330     $    7,325.19
Indian Valley Hydro                    3,335     $   50,291.90
Owl Companies                            600     $   67,913.25
Gansner Power& Water                     275     $      487.55
James B. Peter                            15     $    5,132.09
Perry Logging                            300     $   29,807.15
T & G Hydro                              340     $   33,903.89
Sutter's Mill                            150     $   39,143.01
Arbuckle Mountain Hydro                  360     $   21,272.68
Shamrock Utilities                       200     $   33,475.89
Mega Renewables(Roaring Crk)           2,000     $  345,529.68
Mega Renewables (Hatchet Crk)          7,000     $  892,156.87
Mega Renewables (Bidwell Ditch)        2,000     $  668,574.62
Olsen Power Partners                   5,000     $  223,765.82
Mega Renewables (Silver Springs)         600     $  107,082.17
Nelson Creek Power Inc.                1,100     $   85,990.63
Hat Creek Hereford Ranch                 100     $   25,290.10
McMillan Hydro                           975     $   93,143.80
Mega Hydro #1 (Clover Creek)           1,000     $  232,138.11
Robert W. Lee                             30     $    6,465.01
NID/Scotts Flat                          850     $   30,753.22
Eagle Hydro                              550     $   39,096.70
NID/Combie North                         330     $    9,667.39
NID/Combie South                       1,500     $   60,704.47
Sierra Energy Company                    200     $    1,099.19
Placer County Water Agency               500     $   97,731.42
Swiss America                            100     $    8,532.00
Tri-Dam Authority                     16,200     $  901,513.78
Jackson Valley Irrigation Dist           455     $   34,315.25
Altamont Midway Ltd.                  12,500     $  281,854.00
Monterey Regional Water                1,740     $   35,039.12
Monterey Regional Waste Mgmt Dis       2,900     $  872,011.64
Cedar Flat Hydro                         300     $   43,402.79
Humboldt Bay MWD                       2,000     $  128,934.32
American Energy, Inc. (Wolfsen BYP)    1,000     $    1,156.31
American Energy, Inc. (San Luis Bypa)    675     $        0.00
International Turbine Research        16,000     $  533,142.56
(Pacific Gas Bankruptcy News, Issue No. 13; Bankruptcy  
Creditors' Service, Inc., 609/392-0900)    


PILLOWTEX CORP: Taps E&Y as Financial & Restructuring Advisors
--------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates seek the Court's
authority to retain and employ Ernst & Young Corporate Finance
LLC as financial and restructuring advisors in these chapter 11
cases, nunc pro tunc, to September 1, 2001.

Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell,
explains this application is merely a formality because these
are the same professionals whose retention the Court approved
several months ago.  

The Debtors earlier sought and obtained a Court order
authorizing them to retain and employ E&Y Capital Advisors LLC
as financial and restructuring Advisors.  

The scope of E&Y Capital Advisors' engagement was later
expanded, a development that was also approved by the Court.

Ms. Harris explains that Ernst & Young Corporate Finance is
actually an affiliate of E&Y Capital Advisors.  Ernst & Young
Corporate Finance was formerly known as E&Y Corporate Finance
LLC and E&Y Securities LLC.

According to Ms. Harris, Ernst & Young Corporate Finance is
registered with the U.S. Securities and Exchange Commission, and
is a member of the National Association of Securities Dealers,
Inc.

Effective September 1, 2001, Ms. Harris says, E&Y Capital
Advisors will transfer all of its operations and personnel into
Ernst & Young Corporate Finance, including its representation of
the Debtors in these chapter 11 cases.

E&Y Capital Advisors and Ernst & Young Corporate Finance intend
to execute an Assignment and Assumption Agreement, Ms. Harris
tells Judge Robinson.  

Under this agreement, E&Y Capital Advisors will assign to Ernst
& Young Corporate Finance, and Ernst & Young Corporate Finance
will assume all right, title and interest in and to all
liabilities, responsibilities and obligations under and related
to the Engagement Letters (between the Debtors and E&Y Capital
Advisors) effective September 1, 2001.

Ms. Harris assures the Court that the Debtors have provided E&Y
Capital Advisors and Ernst & Young Corporate Finance with
written consent to the Assignment of the Engagement Letters.

Ms. Harris explains all professionals and other individuals to
be employed by Ernst & Young Corporate Finance were employed by
E&Y Capital Advisors.  So basically, Ms. Harris says, all the
professionals that were retained by the Debtors as their  
financial and restructuring advisors remain the same, except
that the firm where they belong now has a different name.

The Debtors anticipate that Ernst & Young Corporate Finance will
provide the same post-petition services that E&Y Capital
Advisors had been providing, such as financial, restructuring
and transaction advisory services for the Debtors and related
advice as requested throughout the course of these chapter 11
cases.  

In particular, the Debtors expect Ernst & Young Corporate
Finance to:

(a) advise the Debtors' management with respect to available
     capital restructuring and financing alternatives, including
     recommending specific courses of action and assisting with
     the design, negotiation and implementation of alternative
     restructuring and/or transaction structures;

(b) advise management with respect to the development of its
     business and strategic plans, including financial
     projections and short-term liquidity forecasts, the
     underlying assumptions of which will be the responsibility
     of management;

(c) advise management with respect to the value of the Debtors,
     their assets or their operations;

(d) advise management with respect to the development of an
     appropriate capital structure for the Debtors' businesses;

(e) assist management with its discussions with, and in
     preparing proposals and other information for, the Debtors'
     board of directors, creditors, employees, shareholders and
     other parties-in-interest, in connection with any
     restructuring transaction contemplated by the Debtors,
     including obtaining post-petition and exit financing;

(f) provide Bankruptcy Court testimony, if required, with
     respect to any matter as to which Ernst & Young Corporate
     Finance is rendering services to the Debtors;

(g) advise the Debtors in connection with their strategy with
     regard to the Transaction; assist in analyzing the
     financial effects of the proposed Transaction; assist in
     the preparation, if necessary, of a descriptive memorandum
     regarding the Transaction; assist the Debtors in contacting
     potential buyers selected and approved by the Debtors; and

(h) advise the Debtors in their negotiations regarding the
     Transaction and such other services as requested by the
     Debtors and agreed to by Ernst & Young Corporate Finance.

Steven D. Simms, former E&Y Capital Advisors managing director
and incoming managing director for Ernst & Young Corporate
Finance, says they intend to charge for their professional
services under the terms and conditions of the Engagement
Letters and the E&Y Capital Advisors Retention Order, subject to
the Court's approval.

Mr. Simms adds that Ernst & Young Corporate Finance also intends
to apply to the Court for payment of compensation and
reimbursement of expenses in accordance with the applicable
provisions of the Bankruptcy Code.

According to Ms. Harris, the Debtors and Ernst & Young Corporate
Finance may terminate the Engagement Letters at any time, but in
any event the Engagement Letters will terminate upon the
effective date of a plan of reorganization.

Prior to Petition Date, Ms. Harris informs Judge Robinson that
the Debtors paid E&Y Capital Advisors $225,000 as retainer for
services rendered or to be rendered, and for reimbursement of
expenses.

Ms. Harris relates the entire amount of the Retainer remains
unapplied and will be transferred to Ernst & Young Corporate
Finance upon Court approval of this Application.  

With the Court's permission, Ms. Harris says, Ernst & Young
Corporate Finance will apply the Retainer to the balance of the
fees and expenses owing at the conclusion of the engagement.

During the 90 days immediately preceding the Petition Date, Ms.
Harris notes that the Debtors made payments to E&Y Capital
Advisors totaling $679,443, which shall be transferred to Ernst
& Young Corporate Finance effective September 1, 2001.

Ms. Harris reminds Judge Robinson that the Court previously
found that E&Y Capital Advisors was a disinterested person.

Mr. Simms assures Judge Robinson that Ernst & Young Corporate
Finance is not and has not been employed by any entity other
than the Debtors in matters related to these chapter 11 cases.

But if the firm should discover additional information that
requires disclosure, Mr. Simms says Ernst & Young Corporate
Finance will file supplemental disclosures with the Court
immediately.  

Mr. Simms swears that Ernst & Young Corporate Finance does not
hold nor represents any interest adverse to the Debtors or their
respective estates in the matters for which the firm is to be
retained. (Pillowtex Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)    


PSINET INC: Pulls Plug on Employment Contract with David Kunkel
---------------------------------------------------------------
PSINet, Inc. sought and obtained the Court's approval for the
rejection of an executory contract, dated June 21, 1995 between
PSINet, Inc. and David N. Kunke. The Debtors tells the Court
that the contract does not constitute a source of value for
their estates and it is in the best business interest to avoid
accruing any potential further obligations under the Contract.

The contract is related to the employment of Mr. Kunkel by
Performance Systems International, Inc. as Vice President and
General Counsel for the Company commencing July 1, 1995 for a
term of 5 years. The base salary at commencement was $150,000
per annum, to be increased to $275,000 per annum extending
through December 31, 1996 and to be increased to a minimum of
$300,000 beginning January 1, 1997.

In addition, there was a Signing Bonus of $50,000 within 14 days
of signing the Agreement, Performance Bonus of
$50,000 for the period ending December 31, 1996 and of $100,000
or
greater for subsequent years, plus Incentive Stock Options and
other benefits.

On June 24, 1997, the terms were modified. Under the amended
agreement, the term of employment was to commence on October 16,
1998 for a period of 4 years, the Base Salary was $350,000 per
annum beginning October 16, 1998 with a 5% increment beginning
on January 1, 2001 and the January 1 of each succeeding year
subject to adjustments.

The Performance Bonus was $150,000 for the period ending
December 31, 1998 and $150,000 or greater fro subsequent years.

On October 4, 1999, the agreement was amended again. Mr. Kunkel
was promoted to Vice Chairman of the Board of Directors and
Executive Vice President of the Company.

This was followed by another amendment dated September 1, 2000
pursuant to which Mr. Kunkel resigned his positions as Executive
Vice President of the Company and as Vice Chairman of the Board
of Directors, and was to be employed as Strategic Advisor to the
Chairman and Chief Executive Officer of the Company.

The term of the employment was to commence from September 1,
2000 and continue for a period of two years. The Base Salary
remained unchanged. (PSINet Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


SAFETY-KLEEN: Seeks Third Extension Of Plan Proposal Deadline
-------------------------------------------------------------
Safety-Kleen Corporation asks the Court to extend the deadline
in which the Debtors have the exclusive right to file a
reorganization plan from September 19, 2001 to January 31, 2002
and the deadline within which the debtor has the exclusive right
to solicit and obtain acceptances to the reorganization plan
filed by the debtor from November 19, 2001 to April 1, 2002.  

Safety-Kleen's reasons outlined to the Court include the
traditional given the size and complexity of their cases
arguments and "certain recent developments . . . require[ing]
additional time to determine the most effective way to maximize
the value of their estates for the benefit of all creditors; to
formulate, negotiate and file a plan that achieves this goal;
and to solicit acceptances of that plan."


SCHWINN/GT: Sells Cycling and Fitness Units for $151 Million
------------------------------------------------------------
Schwinn/GT Corp. said that the Court and interested parties have
fully considered and reviewed all bids made in regard to the
sale of Schwinn/GT's Cycling and Fitness Divisions as part of
the court-supervised auction held this week.

The joint bid presented by Direct Focus, Inc. (Nasdaq: DFXI) and
Pacific Cycle LLC for $151 million was considered to be the
highest and best offer for the assets of the Company. The sale
is subject to satisfaction of certain conditions, including the
expiration of waiting periods under the Hart-Scott-Rodino Act,
which is expected by Monday, September 17, 2001.

The sale of both the Cycling and Fitness Divisions is expected
to close no later than Friday, September 21, 2001.

At the close of the auction, Jeff Sinclair, Schwinn/GT's Chief
Executive Officer stated, "By stimulating the competitive
bidding process, Schwinn/GT has attempted to ensure that its
creditors will receive the greatest possible recovery. We will
begin working with Direct Focus and Pacific immediately to
achieve an orderly transition of the businesses."

The proceeds from the sale transaction will be held in escrow
pending further order of the Court and will be used to discharge
liabilities and satisfy creditors' claims in accordance with the
Bankruptcy Code.

Schwinn/GT filed voluntary petitions for reorganization under
Chapter 11 on July 16, 2001, in the United States Bankruptcy
Court for the District of Colorado in Denver.


SCHWINN/GT: Huffy Corporation Withdraws Bid In Assets Auction
-------------------------------------------------------------
Huffy Corporation (NYSE: HUF) confirmed that it withdrew from
the bidding in the auction in the United States Bankruptcy Court
for the District of Colorado.

Don R. Graber, Chairman, CEO and President of Huffy Corporation
said, "While we are disappointed that we will not be able to add
the Schwinn/GT brands to our current brand portfolio, I would
like to thank all of the employees of Schwinn/GT for their
dedication during an extremely trying time and for their
assistance during the sale process. Unfortunately, the levels of
bids reached a point at which Huffy Corporation believes that
the price exceeded the value of the assets and trademarks. While
we remain confident that our business model for the integration
of the Schwinn/GT would have ultimately been very successful,
the current economic environment simply will not allow for
significant overpayment in a business that has proven to be very
difficult over the past three years."

Graber concluded by saying, "In our view, in the current
economic environment, we will continue to see a variety of
opportunities to add to our existing portfolio of products and
services. With a debt free balance sheet and anticipated
increase in cash and investments as we move through the end of
the fiscal year, we are well positioned to pursue opportunities
to add to shareholder value."

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


STELLEX: Eyes Emergence from Chapter 11 by Mid-September
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware orders
that the Stellex Technologies, Inc.'s reorganization plan and
its provisions is confirmed and all objections are overruled.  

Stellex had previously applied for the Court's approval a
"stand-alone" plan of reorganization under which Stellex would
be owned by its creditors.  

With the Court's approval of the Plan, Stellex expects to emerge
from bankruptcy during the first half of September.  



SUN HEALTHCARE: Asks for Exclusive Period to Run Through Nov. 7
---------------------------------------------------------------
Sun Healthcare Group, Inc. asks the Court for authorization,
pursuant to section 1121(d) for a further extension of the
Exclusive Period during which the Debtors may file a plan of
reorganization to and including November 7, 2001, and if a plan
is filed within such time, for an extension of the Exclusive
Period to solicit acceptances of that Plan to and including
January 7, 2001.

The Debtors tell the Court that, since the previous exclusivity
hearing, they have made further progress in resolving claims and
other uncertainties that have delayed those negotiations.

The Debtors believe that they are making significant progress in
resolving issues among its creditor groups and that a consensual
plan of reorganization is likely. Additional time is needed to
complete the process towards rehabilitation and development of a
consensual plan of reorganization.

The request meets the legal standards for extending the
Exclusive Periods well, the Debtors represent, considering the
size and complexity of the cases, the progress made, the
continued effective management of business and properties, the
continued postpetition payments made, and the motivation and
purpose of seeking the extension not to pressure creditors into
accepting a Plan of Reorganization but for resolution of issues
for the filing of a consensual plan of reorganization.

The Debtors submit that the requested further 60-day extension
is well justified to enable them to continue the negotiations
for the aim of proposing a plan of reorganization (Sun
Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   


TELESYSTEM INTL: S&P Lowers Senior Unsecured Debt Rating to D
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Telesystem International Wireless Inc. (TIW) to 'SD' (selective
default) from double-'C' following the completion of an exchange
offer launched by the company on July 6, 2001.

At the same time, Standard & Poor's lowered its senior unsecured
debt rating on the company to 'D' from single-'C'. The ratings
were simultaneously removed from CreditWatch negative.

The exchange offer consisted of a combination of $195 million in
new 14% senior guaranteed notes due Dec. 30, 2003, and $50
million in cash in exchange for the existing $547 million
aggregate 10.50% and 13.25% senior unsecured notes.

The new bond will be secured by a lien on the capital stock of
TIW's Brazilian cellular operations and by a lien on the capital
stock of Clearwave N.V. held by TIW, but will be subordinated to
existing bank debt.

There has been no event of default as defined under the terms of
the indentures of the affected bonds. Standard & Poor's,
however, defines default to include cases when a new debt
security is exchanged for some or all of an existing security at
a value of less than par.

In this case, the exchange, which results in bondholders
receiving about 45 cents on the dollar, is viewed to be coercive
in light of the deep discount to the face value of the notes.

Standard & Poor's will meet with management in the very near
term to discuss its revised business plan in light of recent
events, including the recapitalization, before assigning a new
corporate credit rating and a new senior secured rating to TIW.

The new corporate credit rating is expected to be in the triple-
'C' category.

     Ratings Lowered & Removed From Creditwatch Negative

Telesystem International Wireless Inc.              TO    FROM

  Corporate credit rating                           SD    CC
  10.50% senior unsecured discount notes due 2007   D     C
  13.25% senior unsecured discount notes due 2007   D     C


TXU ELECTRIC: May Seek Refinancing to Initiate Tender Program
-------------------------------------------------------------
TXU Electric, a wholly owned subsidiary of TXU (NYSE: TXU),
discussed its restructuring and refinancing plan with analysts.

Mike McNally, chief financial officer who was accompanied by a
panel of TXU executives, led the discussion. The meeting opened
with a brief review of the corporate business model and strategy
and competitive advantages and was followed by discussion of the
proposed new corporate structure and the TXU Electric plan for
debt restructure.

The review of the business included a description of TXU
Electric's low cost, high performance transmission and
distribution (T&D) business and its world class merchant energy
business (TXU Energy).

The T&D business has advantages of a favorable market structure
that separates retail (end use) customers from the regulated
delivery business, a reasonable regulatory environment, a solid
growth and diverse service territory and excellent operational
performance.

Also described was how TXU Energy's full portfolio
merchant energy business model is differentiated from other
merchant companies through its integration of production,
trading and retail. McNally pointed out that TXU Energy has
unique competitive advantages that include a favorable market
structure for competition in Texas and a strong starting
position.

After the brief review of the unbundled businesses, McNally
introduced the corporate structure that was proposed in the
amendment to the TXU Electric business separation plan filed
with the Public Utility Commission of Texas on August 30, 2001.

The business separation plan is required by the electric
industry restructuring law passed in the 1999 Texas Legislature.
Simply stated, the law requires that TXU Electric's business be
separated into a power generation company, a retail electric
provider, and a transmission and distribution utility by January
1, 2002.

As announced on August 30, 2001 and consistent with the
provisions of the law, the new corporate structure adds
an intermediate holding company, referred to as "US Operations"
in the meeting, that will separately hold the transmission and
distribution utility and TXU Energy and its US merchant energy
subsidiaries.

The TXU International and TXU Gas companies will continue to be
separate subsidiaries of TXU.

The discussion then moved to the debt-restructuring plan. The
T&D business, which has indicative credit ratings of A3 from
Moody's Investors Service and BBB+ from Standard & Poors, will
assume TXU Electric's first mortgage bonds and related mortgage.
"US Operations" will remain obligated on the first mortgage
bonds, which will be secured by a lien on T&D assets.

Certain TXU Electric first mortgage bonds and the Capital I
(NYSE: TUEPRM) and III (NYSE: TUEPRO) Preferred Securities will
be redeemed by year-end.

The plan calls for TXU Electric's outstanding preferred stock to
remain at "US Operations". TXU Electric plans to initiate a
simultaneous taxable tender program for the TXU Electric
Debentures and TXU Electric Capital IV and V Preferred
Securities in the week of September 17, 2001.

These tender offers may be combined with consent solicitations,
if market conditions warrant. Due to the indenture terms, if
consents are not obtained, any Debentures and Preferred
Securities not tendered will be assumed by the generation
company subsidiary of TXU Energy.

The Company's tender program and the redemptions mentioned will
be funded through capital markets transactions, bank debt or
other borrowings.

Under the restructure plan, TXU Electric's tax-exempt bond
obligations will be assigned to TXU Energy, which has an
indicative credit rating of BBB+ from Standard & Poors. During
the week of September 17, 2001, TXU Electric plans to launch a
modified Dutch auction tender program for 12 series aggregating
$682 million of the pollution control revenue bonds issued by
the Brazos and Sabine River Authorities.

Program settlement will be funded by new tax-exempt bonds
issued by the Brazos and Sabine River Authorities. The balance
of the tax-exempt portfolio will be refinanced by year-end.

McNally estimated that the debt restructuring process will
result in one-time charges to TXU earnings of between $70
million and $100 million (after-tax) in the fourth quarter ended
December 31, 2001.

TXU is a global leader in electric and natural gas services,
energy delivery, merchant trading, energy marketing,
telecommunications, and other energy-related services. TXU is
one of the largest energy companies in the world with more than
$27 billion of annual revenue and $43 billion of assets. TXU is
one of the largest generators of electricity in the world and
sells 300 million megawatt hours of electricity and 2.7 trillion
cubic feet of natural gas annually.

TXU delivers or sells energy to 11 million customers primarily
in the US, Europe and Australia.

As of end of June 2001, TXU's current liabilities exceed its
current assets value by over$5 billion.  Visit
http://www.txu.com for more information on TXU.


UNIFORET: Will Implement 10-Day Shutdown at Port-Cartier Sawmill
----------------------------------------------------------------
Uniforet announced that production at its Port-Cartier sawmill
will be suspended from October 1st to October 12th, 2001
inclusively.

This measure is necessary in view of the deteriorating
conditions on the lumber market further to the preliminary
determination of a 19,3% countervailing duty on Canadian lumber
shipments to US markets.

This 10-day shutdown will reduce production by some 7,2 million
board feet, which is 4% of the sawmill's total estimated output
for 2001.

Approximately 190 employees will be affected by this temporary
shutdown. The woodlands operations will also be suspended during
the same period.

Uniforet 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).

Uniforet 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: Injury Claimants Tap Legal Analysis as Consultant
-----------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants of
USG Corporation asks the Court for permission to employ Legal
Analysis Systems, Inc. as its asbestos-related bodily injury
consultant.

Committee Member Edward Wally submits that LAS provides expert
services regarding the identification and treatment of asbestos-
related bodily injury claimants.  He states LAS principal Mark
A. Peterson's experience includes extensive analytical support
in estimating the number and time of potential asbestos-related
bodily injury claims by disease, estimation of the costs of such
compensation and consulting with asbestos trusts on claims,
procedures and estimations.

Mr. Peterson has served as expert or consultant to an asbestos-
related bodily injury committees of The Babcock & Wilcox
Company, Owens Corning Corporation, Pittsburgh Corning
Corporation, Armstrong World Industries, Inc. and many others.

The PI Committee believes the services of LAS are both necessary
and appropriate and will assist the PI Committee in the
negotiation, formulation, development and implementation of the
plan of reorganization.

Mr. Peterson, LAS Consultant, states LAS will perform services
including, but not limited to:

      - Estimation of the number and value of present and future
        asbestos personal injury claims;

      - Development of claims procedures to be used in the
        development of financial models of payments and assets
        of a claims resolution trust;

      - Analyzing and responding to issues relating to the
        setting of a bar date regarding the filing of personal
        injury claims; and

      - Analyzing and responding to issues relating to providing
        notice to personal injury claimants and assisting in the
        developments of such notice procedures.

LAS will be compensated on an hourly basis to be paid by the
Debtor:

      Mark A. Peterson - Consultant               $425.00/hour
      Daniel Relles - Statistician                $290.00/hour
      Patricia Ebener - Data Collection Expert    $200.00/hour


Mr. Peterson continues that, to the best of the PI Committee's
and LAS', LAS is a "disinterested person" within the meaning of
11 U.S.C. Sec. 101(14).  LAS holds no interest adverse to the
Debtor and its estate for the matters for which LAS has no
connection to the Debtor, its creditors or its related parties
herein. LAS will continue to review its files to ensure no
conflicts or other disqualifying circumstances exist or arise.
(USG Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


WARNACO GROUP: Seeks Okay to Hire Bear Stearns as Advisor
---------------------------------------------------------
The Warnaco Group, Inc. asks the Court for an order authorizing
the employment and retention of Bear, Stearns & Co. Inc. as
financial advisors to the Debtors.

According to Stanley P. Silverstein, Vice President of Warnaco,
the Debtors seek to employ Bear Stearns as their financial
advisors in connection with the prospective sale of any such
assets the Debtors may determine to divest.

Specifically, the Debtors seek to retain Bear Stearns as their
financial advisors because:

     (i) Bear Stearns and its professionals have an excellent
         reputation for providing investment banking services to
         debtors and creditors in bankruptcy reorganizations and
         other debt restructurings,

    (ii) the professionals of Bear Stearns have been employed as
         financial advisors in a number of other recent chapter
         11 cases to assist debtors in selling assets, and

   (iii) Bear Stearns has a leading investment banking presence
         in the apparel and retail industries in particular, and
         its senior professionals have extensive knowledge of
         and contacts in these industries, having successfully
         advised apparel and retail clients on numerous mergers,
         acquisitions, sales, restructurings and financings.

Pursuant to a Letter Agreement dated August 30, 2001, Bear
Stearns has agreed to render these services:

   (a) Advising and assisting the Debtors in developing lists of
       prospective purchasers and a strategy for the potential
       sale of certain assets (the Business Units) and/or the
       Company;

   (b) Advising and assisting the Debtors in the preparation of
       descriptive memoranda that describe the Business Units'
       operations, management, results of operation and
       financial condition and incorporates current financial
       data and other appropriate information furnished by the
       Debtors;

   (c) Assisting in contacting and soliciting interest from
       prospective parties to a Transaction;

   (d) Presenting to the Debtors' Board of Directors and
       creditors in regard to the matters described above;

   (e) Reviewing and analyzing all indications of interest and
       proposals received by the Company and assisting the
       Company in negotiations with prospective parties to a
       Transaction; and

   (f) Preparing for and participating in proceedings before
       this Court with respect to the subject matter of the
       Letter Agreement.

In consideration of their services, Bear Stearns will receive
the following compensation:

   (a) A fixed monthly fee of $150,000 (the Monthly Fee) payable
       in cash or cash equivalent on the first day of each month
       beginning in the month that the order approving the
       Letter Agreement is entered and ending upon the
       termination of the Letter Agreement; provided, however,
       that the amount of the Monthly Fee for the month in which
       the Approval Order is entered will be equal to the pro-
       rated portion of the Monthly Fee allocable to the number
       of days remaining in that months from and after the entry
       of the Approval Order.  As set forth below, the Monthly
       Fee will be fully credited against the Transaction Fees.

   (b) A Fee Schedule sets forth ranges of Transaction Values,
       together with the corresponding Fee Percentages
       applicable to such Transaction Values, that will be used
       to calculate the transaction fees payable to Bear Stearns
       (each, a Transaction fee), as specifically provided
       below:

        (i) Immediately upon the consummation of the first
            Transaction under the Letter Agreement, the Company
            will pay to Bear Stearns a cash Transaction Fee
            equal to (A) the product of (1) the Transaction
            Value, and (2) the Fee Percentage applicable to such
            Transaction Value, less (B) any Monthly Fees
            previously paid;

       (ii) Immediately upon the consummation of each
            Transaction after the first Transaction, the Company
            will pay to Bear Stearns a cash Transaction fee
            equal to (A) the average of (1) the product of (a)
            the sum of the Transaction Values for all
            Transactions consummated to the date (the Aggregate
            Transaction Value) and (b) the Fee Percentage
            applicable to the Aggregate Transaction Value, and
            (2) the sum of the products of, for each Transaction
            consummated to date except as set forth in
            subparagraph (iii) below, (a) the Transaction Value
            for each such Transaction and (b) the Fee Percentage
            applicable to each such Transaction Value, less (B)
            the total amount of Transaction Fees previously paid
            to Bear Stearns pursuant to the Letter Agreement,
            and any Monthly Fees previously paid and not yet
            credited against any other Transaction Fee;

      (iii) If two or more Transactions are consummated within a
            six-month period between the Company and a third
            party that is at least 50% owned by the same entity,
            then the Transaction Values of such Transactions
            will be aggregated as a single Transaction only for
            the purposes of calculating term (A)(2) under
            subparagraph (ii) above and term (B) under
            subparagraph (iv) below;

       (iv) In the event that, as of the termination of the
            Letter Agreement, the aggregate amount of the
            Transaction Fees paid to Bear Stearns (the Total
            Transaction Fee) is less than $3.5 million, then
            the Company will pay to Bear Stearns an amount equal
            to the difference between (A) the Total Transaction
            Fee, and (B) the sum of the products of, for each
            Transaction consummated to date except as set forth
            in subparagraph (iii) above, (1) the Transaction
            Value for each such Transaction and (2) the Fee
            Percentage applicable to each such Transaction
            Value; provided, however, that the total amount paid
            to Bear Stearns under the Letter Agreement in the
            foregoing circumstances shall not exceed $3.5
            million; and

        (v) Notwithstanding the foregoing, in no event will the
            Transaction Fee payable to Bear Stearns upon
            consummation of any Transaction be less than
            $500,000, less any Monthly Fees previously paid and
            not yet credited against any other Transaction Fee.

Mr. Silverstein explains that the term Transaction Value means
the total fair market value of all consideration paid to the
Company in connection with a Transaction and the amount of all
debt remaining on the Company's or Business Units' financial
statements.

Furthermore, Mr. Silverstein says, Bear Stearns will be entitled
to payment of the Transaction Fees earned and calculated under
the Letter Agreement upon the consummation of any Transaction
during the term, or within 18 months after the date of
termination of the Letter Agreement.

In addition, Mr. Silverstein notes, the Company will promptly
reimburse Bear Stearns for all reasonable out-of-pocket expenses
incurred by Bear Stearns, including any such expenses arising
from Bear Stearns being requested or required to testify in any
legal or regulatory proceeding; provided that Bear Stearns will
not be entitled to reimbursement of any individual out-of-pocket
expense in excess of $10,000 without having the Company's prior
consent to incur such expense.

Finally, Mr. Silverstein adds, the Company will indemnify Bear
Stearns in accordance with the indemnification provisions
attached to the Letter Agreement.

Steven Lipman, a Senior Managing Director and officer of Bear
Stearns, informs Judge Bohanon that from time to time and in the
usual course of its business, Bear Stearns and its affiliate
companies will buy and sell stock in the marketplace for
clients.

According to Mr. Lipman, Bear Stearns currently has
discretionary authority over a client account holding 1 million
shares of Warnaco stock.

Except for that, Mr. Lipman assures the Court that Bear Stearns
and its members:

    (i) do not have any connection with any of the Debtors,
        their affiliates, their creditors or any other party in
        interest, or their respective attorneys and accountants,

   (ii) are "disinterested persons," as defined in the
        Bankruptcy Code, and

  (iii) do not hold or represent any interest adverse to the
        Debtors or their estates. (Warnaco Bankruptcy News,
        Issue No. 8; Bankruptcy Creditors' Service, Inc.,
        609/392-0900)  


WHEELING-PITTSBURGH: Panel Objects to Exclusive Period Extension
----------------------------------------------------------------
The Official Committee of Unsecured Noteholders of Wheeling-
Pittsburgh Steel Corp., appearing through Lee D. Powar and Jean
R. Robertson of the Cleveland firm of Hahn Loeser & Parks LLP,
joined by lead counsels Lawrence M. Handelsman and Sherry J.
Millman of Stroock Stroock & Lavan LLP of New York, object to
the Debtors' Motion for an extension of the exclusivity periods,
saying that if this 90-day extension is granted, the Debtors
will have "unfettered control" over the reorganization process
through November 23, 2001 -- more than one year from the
inception of these cases.

Mr. Powar tells Judge Bodoh that is far too long, given the
critical juncture at which the Debtors find themselves.

Mr. Powar knows that Judge Bodoh is well aware of the severely
depressed state of the steel market.  Prices remain low and show
no signs of improving in the foreseeable future.  Costs, much of
which are fixed, remain high.  The Debtors' operating results
reflect these conditions.  

Since the beginning of these cases, through June 30, 2001, WPSC,
the primary operating entity, has lost approximately $134
million from operations.  These losses have been funded by
borrowings under the DIP financing facility and by proceeds of
dispositions of assets of WPC, loaned to WPSC under a junior DIP
facility.

The next 30 days is a critical time for these cases, the
Committee says.  The Debtors have announced that they are
engaging in negotiations with the union and are working on
additional plans to reduce costs.  While these efforts are
undertaken, availability under the DIP facility continues to
decline.  

The parties must know quickly whether these efforts have been
successful.  These estates simply cannot afford to wait 90 days
while the Debtors continue to investigate various options.  

Accordingly, the Noteholders Committee objects to any extension
of the Debtors' exclusive period for longer than thirty days, so
that Judge Bodoh can carefully monitor the process and other
parties in interest can have the ability, on an expedited basis,
to seek to put forth a plan which will yield a recovery to
creditors.

Rather than litigating the issue to death, the Debtors and the
Committees present Judge Bodoh with an Agreed Order providing
that the Debtors' exclusive period during which to propose a
plan is extended through September 24, 2001 and the Company's
exclusive solicitation period is extended through November 23,
2001. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  


WINSTAR COMMS: Agrees With Williams to Amend 25-Year Pact
---------------------------------------------------------
Williams Communications Group, Inc. has reached a bankruptcy
settlement agreement with Winstar Communications, Inc.

On April 18, 2001, Winstar Communications, Inc., the parent
company of Winstar Wireless, Inc., announced that it filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. Under
the bankruptcy settlement, the Registrant and Winstar Wireless
have amended their 1998 agreement for the Registrant's 25-year
indefeasible right to use a percentage of the wireless local
capacity of Winstar Wireless.

The amendment limits Williams Communications total capital
expenditure to the amount which was paid before March 31, 2001,
for capacity on 200 of 270 hubs or antennae sites, increases the
amount of capacity the Registrant can utilize on the 200 hubs
and cancels Registrant's remaining payments for the undelivered
hubs.

The amendment also shortens the term of the original agreement
to a 20-year term ending July, 2021 from the original
termination in December, 2023.

As noted in Williams' report on Form 8-K filed with SEC on April
23, 2001, continued developments in the bankruptcy proceedings
could still impair Williams' ability to realize or recover its
investment in the wireless hub capacity.

Under the settlement, the Registrant and Winstar Wireless
entered into a mutual release of claims against each other for
services and payments provided or made to each other prior to
June 30, 2001. The Registrant agreed to provide services to
Winstar Wireless for up to 18 months while Winstar Wireless is
under bankruptcy protection.

Payment for on-network services will be deferred and secured on
an equal and pro-rata basis with Winstar's post-bankruptcy
lenders. Any off-network services must be paid for in cash on a
monthly basis.

Winstar also released any claims over 2 fibers in which it had a
right to use and 2 fibers in which it had an option to purchase
a right to use.


WINSTAR COMMS: Sells TV and Video & Productions Units to Regulus
---------------------------------------------------------------
M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP
in Wilmington, Delaware discloses that Winstar Communications,
Inc. has actively sought to sell Winstar TV and Video Co., Inc.
(WTV) and Winstar Productions, LLC (WSP).  Mr. Cleary adds that
the Debtors have discussions with numerous potential purchasers
pursuant to the Debtors' Chapter 11 business plan to sell its
subsidiaries and/or their material assets.  

The Debtors approached several potential purchasers and were
approached by several parties that have expressed interest in
acquiring the companies.  

Ultimately, Mr. Cleary relates, the Debtors entered into a
Purchase Agreement with Regulus Capital Company, Inc., which the
Debtors believes is the highest and best offer possible for WTV
& WSP companies.

Winstar TV and Winstar Productions are direct, wholly owned
subsidiaries of Winstar New Media (WNM).  WTV is in the business
of distributing film and television entertainment products in
the classic film, performance and wellness genres.  WSP is in
the business of creating copyrights by producing and co-
producing original television programs.

Mr. Cleary contends that WTV and WSP companies must be sold
quickly to maximize their value because the Debtors' Chapter 11
cases have had a significant negative impact on the companies.

The Debtors are no longer able to finance WTV & WSP's working
capital needs thus curtailing their ability to deliver products
to the marketplace.  

Mr. Cleary states that WTV & WSP's vendors and customers are
also reducing their business activities with them and
competitors are actively soliciting key employees.

Accordingly, Mr. Cleary adds that the passage of time will
likely result in material adverse changes that would impair the
value of the companies and their value as a going concern.

Accordingly, the Debtors ask the Court to:

  a) approve an Agreement and Plan of Merger between Winstar New
     Media as Seller and Regulus Capital Company, Inc., as
     purchaser in which Regulus will acquire 100% of the equity
     shares of Winstar TV & Video, Inc. and Winstar Productions,
     LLC;

  b) authorize New Media to pay a Breakup Fee of $250,000 plus
     an Expense Reimbursement of Purchaser's actual reasonable
     costs and expenses incurred in pursuing due diligence,
     documentation and Bankruptcy Court approval of the
     transaction in the event New Media enters into an agreement
     with a party other than the Purchaser to acquire the WTV
     companies who, subsequent to the entry of an order of this
     Court, makes a higher and better offer;

Under the Purchase Agreement, 100% of the equity shares of WTV
companies will be transferred to Regulus.  In addition, Regulus
also agreed to employ all of WTV's employees on terms comparable
with their current employment arrangement with WTV thereby
avoiding the Debtors' obligation to pay in excess of $1 million
of severance costs.

The aggregate purchase price is either $4,500,000 or $5,000,000,
depending on the payment terms that the Regulus elects:

a) Under the $4,500,000 purchase price, $2,500,000 in cash will
    be payable at closing and the balance to be covered by an 8%
    promissory note for $2,000,000.  The promissory note shall
    be payable $500,000 on March 1, 2002 and the balance of
    principal and interest payable two years from the closing
    date.

b) Under the $5,000,000 purchase price, $2,000,000 in cash will
    be payable at closing and the balance to be covered by an 8%
    promissory note for $3,000,000.  The promissory note shall
    be payable $750,000 on March 1, 2002 and the balance of
    principal and interest payable two years from the closing
    date.

Under both purchase price, the note may be reduced by the amount
that working capital on July 31, 2001 is less than $3,000,000.
The Debtors' actual counsel fees associated with this
transaction will be paid directly by the purchaser and held in
escrow by the Debtors' pending an order from the Court and to be
deducted from the closing payment.

Mr. Cleary contends that the break-up fee is related to the
expenses incurred in the sale of WTV & WSP and should be
approved.  Regulus has spent substantial time and resources
reviewing the operations of WTV & WSP to lead to its decision to
purchase the companies.  

Without this process, Mr. Cleary states the Debtors would have
to employ a less orderly sale process and incur higher costs in
attracting lower purchase offers.  Mr. Cleary adds that the
contributions of the Regulus have provided a substantial benefit
to the Debtors' estates.

                  Crush Digital Objects

Crush Digital, Inc., objects to the Agreement and Plan of Merger
between Winstar New Media Company and Regulus International
Capital Co., Inc. including the Break-up Fee& Expense
Reimbursement.  

Crush Digital is a creditor of one of the company proposed to be
sold, Winstar TV & Video, Inc. in the approximate amount of
$400,000.

Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP in
Wilmington, Delaware states that Crush opposes the proposed sale
for the following reasons:

  a) Proposed sale purports to discharge the claim of Crush as
     well as other creditors holding claims against WTV & WSP,
     even though neither is a debtor in bankruptcy;

  b) proposed sale provides no mechanism or procedures for
     parties to submit competing bids;

  c) motion seeks to award a $250,000 break-up fee to Regulus if
     it fails to become the prevailing bidder or the motion is
     denied, which is unreasonable and has a chilling effect on
     any bidding;

  d) proposed order granting the motion and approving the sale
     purports to grant tax exemption; (Winstar Bankruptcy News,
     Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-
     0900)   


XEROX CORP: Will Receive $1 Billion in Financing From GE Capital
----------------------------------------------------------------
Xerox Corporation (NYSE: XRX) and GE Capital announced a
"framework agreement" for GE Capital's Vendor Financial Services
to become the primary equipment financing provider for Xerox
customers in the United States.

When completed, the agreement will enable Xerox customers to
quickly and easily obtain the Xerox equipment they need through
flexible financing solutions. For Xerox, the implementation of
the agreement will be a major step forward in its progress to
restore the company's financial strength by transitioning
equipment financing to third-party vendors.

For GE Capital's Vendor Financial Services, the transactions
will provide an avenue of current and future growth through
Xerox's extensive U.S. customer base.

The two companies also agreed to the principal terms of a
financing arrangement under which Xerox will receive from GE
Capital approximately $1 billion secured by portions of Xerox's
lease receivables in the United States.

The arrangements are subject to the negotiation of definitive
agreements and satisfaction of closing conditions, including
completion of due diligence.

"For Xerox, the significance of these landmark agreements cannot
be overstated. With the transition of U.S. equipment financing
to GE Capital, one of the world's leading financial services
companies, Xerox will transform its balance sheet by eliminating
substantial debt while ensuring that our customers receive
worldclass financing services and administrative support," said
Anne M. Mulcahy, Xerox president and chief executive officer.
"The expected $1 billion in financing will further enhance
Xerox's liquidity. This funding agreement also becomes an
interim source of customer financing for the balance of the
year."

"Our Vendor Financial Services business is dedicated to helping
companies like Xerox focus on their core business by providing
specialized financing programs backed by the financial strength
and resources of GE Capital," said Denis Nayden, chairman and
chief executive officer of GE Capital.

"This agreement affords Vendor Financial Services the
opportunity to continue its partnership with a leader in the
global document market, while further expanding its asset base
and building upon similar relationships that it has with over
100 manufacturers and 4,500 dealers."

As part of this transaction, Xerox will transition nearly all of
its U.S. customer administration operations into a new joint
venture with GE Capital Vendor Financial Services. GE Capital
will own 81 percent of the joint venture while Xerox will own 19
percent. The new company will be jointly managed by Xerox and GE
Capital, and will be headquartered in Rochester, N.Y.

"Our goal is to make the transition for Xerox's customers
flawless, while providing them with the benefits of our strong
expertise in leasing. We intend to leverage GE management
systems, digitization and e-business efforts and Six Sigma
quality processes to bring value to Xerox and its customers,"
said Bill Cary, chief executive officer of GE Capital Vendor
Financial Services. "This joint venture is an excellent example
of how we work closely with our partners and their customers to
best serve their needs."

It is anticipated that Xerox employees who work in Xerox
customer financing and administration offices - located
primarily in Rochester, Chicago, Dallas and St. Petersburg, Fla.
- will transfer to the new joint venture on January 2, 2002.
Their work, which includes operations such as order processing,
credit approval, financing programs, billing and collections, is
expected to continue in the current locations, ensuring further
continuity for Xerox customers and Xerox employees.

"Our partnership with GE Capital offers Xerox the best of both
worlds. We will continue to benefit from the knowledge and
skills of people who know our customers and business best while
maximizing GE Capital's renowned expertise in managing complex
operational processes," said Barry D. Romeril, Xerox vice
chairman and chief financial officer. "This framework agreement
and financing represent a significant milestone in the financial
turnaround of Xerox."

Last October, Xerox announced it would move to third-party
equipment financing as part of the company's turnaround strategy
to restore its financial strength and return to profitability.
Over time, this is expected to remove as much as $10 billion in
financing-related debt from the Xerox balance sheet.
Approximately 65 percent of Xerox's total debt is related to
equipment financing, close to half of which is in the U.S.

Xerox Corporation is an $18.7 billion global enterprise with
85,000 employees serving customers in 130 countries. Xerox makes
the digital world work better with an array of innovative,
document-related solutions, services and systems, including
color and black-and-white digital printers, multifunction
devices and copiers designed for offices and production-printing
environments.

GE Capital Vendor Financial Services, a global leader in
developing and providing financial solutions and services to
equipment manufacturers, distributors, dealers and their end
users, has over $16 billion in served assets worldwide. Vendor
Financial Services serves approximately 100 manufacturers, 4,500
dealers and currently has over 500,000 accounts in 33 countries.

GE Capital, with assets of more than $370 billion, is a global,
diversified financial services company grouped into six key
operating segments comprised of 24 businesses. A wholly owned
subsidiary of General Electric Company, GE Capital, based in
Stamford, Connecticut, provides a variety of consumer services,
such as credit cards and life and auto insurance; mid-market
financing; specialized financing; specialty insurance; equipment
management, and specialized services, to businesses and
individuals in 47 countries around the world. GE is a
diversified services, technology and manufacturing company with
operations worldwide.

For more information about GE Capital and Vendor Financial
Services, visit http://www.gecapital.com  For more information  
on Xerox, visit http://www.xerox.com


                          *********

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

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Wednesday's edition of the TCR. Submissions about insolvency-
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conferences@bankrupt.com.  

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

                          *********

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

Troubled Company Reporter is a daily newsletter co-published by
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Copyright 2001.  All rights reserved.  ISSN: 1520-9474.

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