TCR_Public/010925.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

          Tuesday, September 25, 2001, Vol. 5, No. 187

                          Headlines

ABRAXAS PETROLEUM: Grey Wolf Tender Offer Extended to Sept. 28
ACME METALS: Exclusive Period to File Plan Extended to October 1
AIRTRAN AIRWAYS: S&P Concerned About Reduced Air Traffic Impact
AMEDISYS: Sells 56% Interest in Hammond Surgical to Slash Debts
AMES DEPT: US Trustee Appoints Unsecured Creditors' Committee

ANCHOR GLASS: S&P Junks Ratings Due to Tight Liquidity Position
ARMSTRONG HOLDINGS: Taps Chan Galbato To Head Floor Products
ASSET SECURITIZATION: S&P Drops Class B 1997-MDVII Paper to D
BRIDGE INFORMATION: Selling 5% Interest in BRUT for $1.3MM
BROADBAND OFFICE: Court Extends Removal Period to November 5

CARBIDE/GRAPHITE: Closes Substantial Assets Sale to Questor Unit
CHINA CONVERGENT: Appeals Nasdaq Decision to Delist ADRs
COMDISCO INC: Court Extends Time to Remove Actions to January 10
CONTINENTAL AIRLINES: S&P Downgrades Equipment Trust Ratings
CONTINENTAL AIRLINES: Industry Slowdown Prompts S&P Rating Cuts

CONTINENTAL AIRLINES: Fitch Concerned About Effects of Attacks
DAIRY MART: Files for Chapter 11 Protection in S.D. New York
DAIRY MART: Chapter 11 Case Summary
DELTA AIR: S&P Drops Ratings on Grim Airline Industry Outlook
E-M-SOLUTIONS: Court Okays Sale of Assets to Sanmina for $110MM

EDISON INT'L: SoCal Edison Creditors Say Bankruptcy Is Imminent
EDWARDS THEATRES: Court Confirms Plan and $56MM Recapitalization
GARDEN WAY: Committee of Unsecured Creditors Appointed
GORGES/QUIK-TO-FIX: Court Converts Case to Chapter 7 Liquidation
HOME INTERIORS: S&P Affirms Low-B and CCC Ratings

INTERNATIONAL KNIFE: Files Chapter 11 Petition in Delaware
INTERNATIONAL KNIFE: Case Summary & Largest Unsecured Creditors
INTIRA CORP: US Trustee Appoints Unsecured Creditors' Committee
LECHTERS INC: Has Until Today to File Schedules
MARINER POST-ACUTE: Court Further Extends Exclusivity Periods

NEWCOR: Moody's Junks Ratings, Doubting Ability to Honor Notes  
NORTHWEST AIRLINES: Fitch Drops Senior Unsecured Debt to B+
OWENS CORNING: Gets Okay to Execute Houg Warehousing Agreements
PSA INC: Court To Re-Convene Confirmation Hearing On October 15
PHAR-MOR INC: Files Chapter 11 in Ohio to Restructure Operations

PHONETEL: Banking On Merger with Davel to Sustain Operations
PILLOWTEX CORP: Court Grants GE Public Finance Relief From Stay
SAFETY-KLEEN: U.S. Trustee Settles Jay Alix Employment Squabble
SAFETY-KLEEN: Seeks Approval of Texas Consent Agreement with EPA
SANLUIS CORPORACION: S&P Drops Currency Credit Ratings to D

TELESYSTEM INTERNATIONAL: S&P Drops Unsecured Debt Rating to D
TELSCAPE INTL: Secures Extension to Nov. 19 to File Schedules
US AIRWAYS: S&P Downgrades Reflect Effects of Terrorist Attacks  
U.S. TIMBERLANDS: Privatization Issue Prompts S&P Downgrades
UNITED AIRLINES: S&P Drops Ratings and Anticipates Slow Recovery

UNITED CAPITOL: S&P Assigns R Rating as Insurer Found Insolvent
VENTAS INC: Agrees to Participate in Kindred Secondary Offering
VLASIC FOODS: Bickering with Lenders Over Disclosure Statement
WINSTAR COMMS: Settles Lease-Related Claim with TST Woodland

                          *********

ABRAXAS PETROLEUM: Grey Wolf Tender Offer Extended to Sept. 28
--------------------------------------------------------------
Abraxas Petroleum Corporation (AMEX:ABP) and its wholly-owned
subsidiary, Abraxas Acquisition Corporation, announced the
exchange offer for Grey Wolf Exploration Inc. shares that
Abraxas and its wholly-owned Canadian subsidiary, Canadian
Abraxas Petroleum Limited, did not already own, has been
extended for ten days, until 5:00 pm, Calgary time, Friday,
September 28, 2001.  

A total of 5.9 million shares of Grey Wolf, representing 88% of
what Abraxas and Canaxas did not own, have now been tendered and
taken up.  Abraxas and Canaxas now own 94% of the common
outstanding shares of Grey Wolf.  

Abraxas Acquisition Co. intends to effect a subsequent
transaction to acquire the remaining Grey Wolf shares that are
not tendered pursuant to the offer.

The shares may be tendered by holders whose certificates are not
immediately available by completing a validly executed Notice of
Guaranteed Delivery in the form enclosed with the Exchange Offer
materials or a facsimile thereof.

An independent energy company engaged in natural gas and crude
oil exploration, development, and production, primarily in
western Canada, Texas (along the Gulf Coast and in the Permian
Basin), and Wyoming, Abraxas has proved reserves of 244 billion
cu. ft. of gas equivalent.

The company also owns interests in 13 natural gas-processing
plants in Canada.  Abraxas holds interests in more than 900
producing oil and gas wells.  The company has sold some of its
Wyoming assets and is focusing on producing natural gas and
developing its Canadian assets.  It owns 49% of Canadian firm
Grey Wolf Exploration and plans to buy the rest.

As of June 30, 2001, the Company posted a current ratio of 0.54
and a debt ratio of 1.052.


ACME METALS: Exclusive Period to File Plan Extended to October 1
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
Acme Metals, Inc., an extension of its exclusive periods during
which to file a plan of reorganization and solicit acceptances
of that plan to October 1, 2001 and November 29, 2001,
respectively.  

The company will use the extension to continue marketing the
Acme Steel assets, which has been temporarily delayed, and
consider the sale or recapitalization of the Company's Packaging
operations.


AIRTRAN AIRWAYS: S&P Concerned About Reduced Air Traffic Impact
---------------------------------------------------------------
Standard & Poor's lowered its ratings on AirTran Airways Inc.
Ratings remain on CreditWatch with negative implications, where
they were placed September 13, 2001.

            Ratings Lowered, Remain on CreditWatch
                with Negative Implications

                                             To          From
     AirTran Airways Inc.

     Corporate credit rating                  B-          B
     Senior secured debt                      B-          B
     (Guaranteed by AirTran Holdings Inc.)

The downgrades reflect the severe impact of sharply reduced air
traffic since the Sept. 11 terrorist attacks in New York City
and Washington, D.C., with expectations for only a slow recovery
in the coming months.  This worsens significantly an already
grim airline industry outlook, with depressed business travel
and higher labor costs. The enormity of the New York and
Washington attacks, and the resulting investigations and
possible U.S. military response, will keep the events in the
public eye for a significant period.

In addition, the attacks and surrounding sense of crisis may
undermine consumer confidence, which is already shaky following
the U.S. slowdown, further weakening the U.S. economy and demand
for air travel. Pending moves to provide federal aid to the
airlines in the form of direct grants, liability relief, and
possible other support will be important in limiting the severe
financial damage, but will not offset it entirely.

The extent of the downgrades was determined principally by:

    * The risk of a downward rating action prior to the current
      crisis, and thus how much credit "cushion" was available
      within those ratings;

    * The cash and bank lines available to AirTran Airways Inc.,
      as well as the amount of owned, unsecured aircraft that
      could be used in secured debt or sale-leasebacks to raise
      further funds; and

    * The ability of the airlines to reduce cash operating
      expenses and commitments for capital spending.

In addition, certain specific debt issues were affected to a
lesser extent, compared with the lowering of the AirTran Airways
Inc.'s corporate credit rating, or not affected at all, because
those issues are insured or were already lowered for other
reasons.

In determining the need for any further downgrades of debt
issues, Standard & Poor's will consider not only the corporate
credit ratings of AirTran Airways Inc., but also the adequacy of
asset protection for aircraft-backed debt, in light of current
and expected global industry conditions, and the effect of
mounting levels of secured debt and leases on recovery prospects
for unsecured creditors.


AMEDISYS: Sells 56% Interest in Hammond Surgical to Slash Debts
---------------------------------------------------------------
Amedisys, Inc. (OTCBB: AMED), one of America's leading home
health nursing companies,  announced that it has sold its 56%
interest in Hammond Surgical Care Center, L.C., d/b/a St.
Luke's SurgiCenter, to Surgery Center of Hammond, L.L.C., an
affiliate of Universal Health Services, Inc., for approximately
$1 million.

Net cash proceeds from the sale will be used to reduce the
amount of debt outstanding to NPF Capital, Inc., which was
issued in the December 2000 refinancing of the Columbia/HCA
debt. This divestiture represents the final step in Amedisys'
strategy to divest itself of all assets unrelated to its core
home health nursing business.

"We are pleased to announce the sale of our final surgery
center," stated William F. Borne, Chief Executive Officer of
Amedisys, Inc.

"Since the passage of the Balanced Budget Act of 1997, we have
converted non-core assets into cash of approximately $38 million
which we invested to grow our home health nursing services. All
of our resources are now solely devoted to home health care
nursing, and we expect to participate fully in the anticipated
growth of the home nursing industry in coming years. Our
strategic expansion plan anticipates both internal and external
growth initiatives."

Amedisys, Inc., a leading multi-regional provider of home health
nursing services, is headquartered in Baton Rouge, Louisiana.
Its common stock trades on the OTC Bulletin Board under the
symbol "AMED".

The Company recorded operating losses and had negative cash flow
for the year ended December 31, 1999 and the first three
quarters of 2000, during which time its operations were
primarily funded by the divestiture of certain non-core assets.

The significant losses and negative cash flow from operations
were largely attributable to the prior Medicare reimbursement
system which was effective January 1, 1998 for the Company. In
the fourth quarter of 2000 and the first quarter of 2001, the
Company reported positive cash flow and a decrease in operating
losses primarily as a result of the implementation of PPS on
October 1, 2000.

At the end of June 2001, the Company reported a current ratio of
0.36 and a debt ratio of 1.06.


AMES DEPT: US Trustee Appoints Unsecured Creditors' Committee
------------------------------------------------------------
The United States Trustee for Region II appoints these creditors
to serve on the Official Committee of Unsecured Creditors of
Ames Department Stores, Inc.:

      A. The Chase Manhattan Bank, Indenture Trustee
         Institutional Trust Services
         450 West 33rd Street, 15th Floor
         New York, New York 10001
         Attention: Mr. James R. Lewis, Vice President

      B. Mr. Paul K. Miller
         606 24th Ave. So., Ste. B-12
         Minneapolis, MN 55454

      C. GSC Partners
         500 Campus Drive, Suite 220
         Florham Park, NJ 07932
         Attention: Mr. Bradley Kane

      D. State Street Bank and Trust Co., Indenture Trustee
         2 Avenue de Lafayette
         Boston, MA 02111
         Attention: Ms. Laura L. Moran, Assistant Vice President

      E. Sara Lee Knit Products
         Retail Credit Department
         P.O. Box 2996
         Winston-Salem, NC 27102
         Attention: Mr. Grey Loggins, Credit Department

      F. VF Jeanswear LP
         400 North Elm Street
         Greensboro, NC 27401
         Attention: Mr. Michael Durant

      G. Hasbro, Inc.
         P.O. Box 200
         200 Narragansett Park Drive,
         Pawtucket, RI 02862-0200
         Attention: Ms. Judith A. Smith, VP &
         Assistant Treasurer

      H. Arlee Home Fashions, Inc.
         261 Fifth Avenue
         New York, NY 10016
         Attention: Mr. Arnold Frankel, Chairman, CEO

      I. Thomasville Furniture Industries, Inc.
         401 East Main Street
         P.O. Box 339
         Thomasville, NC 27361-0339
         Attention: Mr. D. Paul Dascoli, Senior VP, CFO

      J. Sunbeam Corporation
         2381 Executive Center Dr.
         Boca Raton, FL 33446
         Attention: Mr. Douglas Ernst, VP - Financial Services

      K. American Greetings
         One American Road
         Cleveland, OH 44144
         Attention: Mr. Art Tuttle

      L. International Business Machines Corporation
         North Castle Drive
         Armonk, NY 10504
         Attention: Mr. David Karchere, Program Manager

      M. Footstar, Inc.
         One Crosfield Avenue
         West Nyack, NY 10994

      N. Kovoner/Rosen Interests
         P.O. Box 4054
         Farmington, CT 06034-4054
         Attention: Mr. R. Michael Goman, President

(Ames Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


ANCHOR GLASS: S&P Junks Ratings Due to Tight Liquidity Position
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured debt ratings on Anchor Glass Container Corp. to double-
'C' from single-'B'-minus.

In addition, the senior unsecured debt ratings on the company
were lowered to single-'C' from triple-'C'-plus. The ratings
were removed from CreditWatch, where they were placed on Sept.
29, 1999. The outlook is negative.

At the same time, Standard & Poor's has withdrawn its ratings on
Anchor Glass' ultimate holding company, Consumers Packaging
Inc., and its related entities. Consumers Packaging's ratings
were lowered to 'D' on Feb. 2, 2001, following its failure to
make scheduled interest payments.

The downgrade reflects the expectation that Anchor Glass will
not have funding available to make an offer to repurchase its
US$150 million first mortgage bonds and its US$50 million senior
unsecured bonds at 101%, as required by its governing indentures
following a change in control event.  

On August 31, 2001, the Ontario Superior Court approved the
previously announced sale of substantially all of Consumers
Packaging's Canadian assets for C$235 million to Owens-Illinois
Inc. (BB/Negative/--).  Closing of the transaction is expected
in late September 2001, and is subject to regulatory approval.
The transaction also includes the sale of Consumers Packaging's
100% interest in Consumers U.S. Inc., Anchor Glass' immediate
holding company, which owns 59% of Anchor Glass' stock. Either
the sale of Consumers Packaging's Canadian assets or the sale of
Consumers U.S.'s stock will trigger the change of control event.

The ratings also reflect Anchors Glass' tight liquidity
position, high debt levels, and weak operating performance.
Anchor Glass' operating margins dropped significantly in 2000 to
10.6% from 13.7% the previous year. For the first six months of
2001, the company's operating margin dropped to 8%, excluding
the effect of US$26 million of write downs associated with
Consumers Packaging.

Anchor Glass' weakening operating performance is primarily the
result of increased natural gas prices, the principal fuel for
manufacturing glass, and higher freight costs due to higher fuel
prices.  The company's price recovery program for the escalating
natural gas costs, initiated during the second half of 2000, and
its overall focus on cost reduction have not been sufficient to
offset margin pressures.

Anchor Glass had total lease-adjusted indebtedness of US$552
million (including redeemable preferred shares, pension, and
postretirement liabilities), and generated lease-adjusted EBITDA
of US$28 million for the 12 months ended June 30, 2001,
including write-downs.  

EBITDA coverage of interest is below 1.0 times for the 12 months
ended June 30, 2001. The company had US$26.6 million available
on its credit facility at the end of July 2001, and estimated
that its interest, capital, and litigation expenditures will be
about US$25 million for the second half of 2001.

                         Outlook: Negative

Standard & Poor's expects that given a change of control event,
Anchor Glass will not have sufficient funding available to
execute the mandatory repurchase offer required by its
indentures. Failure to make an offer would result in an event of
default.

                          Ratings Lowered

                                 TO              FROM

Anchor Glass Container Corp.

  Corporate credit rating        CC/Negative/--  B-/Watch Neg/--
  Senior secured debt            CC              B-/Watch Neg
  Senior unsecured debt          C               CCC+/Watch Neg

                          Ratings Withdrawn

`                                 TO              FROM
Consumers Packaging Inc.
  Corporate Credit Rating        N.R.            D/--/--
  Senior secured debt            N.R.            D
  Senior unsecured debt          N.R.            D
Consumers International Inc.
  Senior secured debt            N.R.            D
   (Gtd: Consumers Packaging Inc.)


ARMSTRONG HOLDINGS: Taps Chan Galbato To Head Floor Products
------------------------------------------------------------
In April 2001, Marc R. Olivie, the President and Chief Executive
Officer of Armstrong Floor Products -- the largest division of
Armstrong World Industries, Inc. -- announced his resignation.
Subsequently AWI sought a qualified candidate to fill Mr.
Olivie's position, and has chosen Mr. Chan W. Galbato.  By this
Motion, the Debtors ask Judge Farnan for authority to employ and
enter into an employment contract with Mr. Galbato.

Immediately before joining AWI, Mr. Galbato was the President
and Chief Executive Officer of ChoiceParts, LLC, an online
marketplace serving the automotive parts industry. Prior to
being employed by ChoiceParts, Mr. Galbato was the President and
Chief Executive Officer of Coregis, a division of General
Electric that provides property and casualty insurance and risk
management services to public entities throughout the United
States. From 1987 through 2000, Mr. Galbato was employed in
various senior management capacities with General Electric,
including, executive positions with G.E. Capital, G.E. Medical
Systems, G.E. Appliances, and G.E. Transportation Systems.

As a result of his tenure with the G.E. Companies and his role
as President and CEO of ChoiceParts and Coregis, the Debtors say
that Mr. Galbato has gained significant leadership experience
that AWI believes will be invaluable to Armstrong Floor
Products, the Company and the success of the reorganization
effort. Accordingly, subject to approval by Judge Farnan, AW1
desires to enter into an employment agreement with Mr. Galbato,
pursuant to which he will be employed as President and Chief
Executive Officer of Armstrong Floor Products. The material
terms of the Galbato Agreement are:

       (a) Base Salary: Mr. Galbato's starting base salary is
           $450,000 annually.

       (b) Management Achievement Plan: Mr. Galbato will be
           eligible to participate in AWI's Management
           Achievement Plan, pursuant to which Mr. Galbato will
           receive a target bonus equal to 60% of his Base
           Salary. The actual amount of his Annual Bonus will be
           based upon operating income results for the Armstrong
           Floor Products business unit and for AWl as a whole.
           The Annual Bonus at target is guaranteed for 2001 and
           is payable in March 2002.

       (c) Long Term Incentive Plan: Mr. Galbato will be
           eligible to receive an annual long-term incentive
           award with a target present value of 200% of his
           annualized base salary.  The Long Term Incentive is
           subject to modification based upon AWI's cumulative
           corporate operating income results.

       (d) Sign-on Cash Bonus: Mr. Galbato received a cash
           payment of $200,000 upon hiring. Mr. Galbato will be
           obligated to return all of such amount if he
           voluntarily terminates his employment with AWI within
           one year from the date of hire.

       (e) Cash Retention Program: Mr. Galbato is eligible to
           participate in AWI's Cash Retention Program. Pursuant
           to the Cash Retention Program, Mr. Galbato will
           receive three cash retention payments in the amount
           of $495,000 in December 2001, December 2002, and
           December 2003 conditioned on his being employed by
           AWI at the time of each such payment. In the event
           that AWI emerges from chapter 11 prior to December
           2003, Mr. Galbato's cash retention payment for the
           year in which AWI emerges from chapter 11
           reorganization will be pro-rated. Any remaining cash
           retention payments would be cancelled.

       (f) Severance Pay Plan/Individual Change in Control
           Agreement: Mr. Galbato will be eligible to
           participate in AWI's Severance Pay Plan. Under the
           Severance Pay Plan, should Mr. Galbato be terminated
           during the pendency of AWI's chapter 11 case for
           reasons other than "cause," he will be eligible to
           receive severance benefits equal to two times the sum
           of the Base Salary and the Annual Bonus, or
           approximately $1,440,000. Subsequent to AWI's
           emergence from chapter 11, severance benefits shall
           be equal to one and one-half times the sum of Base
           Salary and the Annual Bonus.

Mr. Galbato also will be a party to a Change in Control
Agreement.  The severance payment under Mr. Galbato's Change in
Control Agreement will amount to three times the sum of the Base
Salary plus the highest bonus earned in the three years prior to
termination or the date of the Change in Control. This payment
would be contingent upon Mr. Galbato's involuntary termination
or a termination for "good reason." Good reason essentially
includes a reduction in compensation, a reduction in
responsibilities, or a relocation of the place of employment.

Any severance payments payable pursuant to the Severance Pay
Plan shall be offset by any payments made under the Change in
Control Agreement.  If Mr. Galbato is not selected to succeed
Michael D. Lockhart as Chief Executive Officer of AWI's
corporate parent, Mr. Galbato may terminate his employment with
AWI within 60 days of such event, and receive severance pay
equal to one and one-half times the sum of the Base Salary on
the date of such event and the Annual Bonus.

       (g) Benefit Plans: Mr. Galbato and his eligible
           dependents will be eligible to participate in all
           customary employee benefit plans, practices and
           policies at a level appropriate for his position.

       (h) Miscellaneous: Mr. Galbato also will be eligible to
           participate in the Company's customary benefit plans
           for executives.

The Debtors remind Judge Farnan that the Management Achievement
Plan, Cash Retention Program, Severance Pay Plan, Long-Term
Incentive Plan, and the assumption of the Change-in-Control
Agreements are part of AWI's Key Employee Retention Program, and
were approved by Judge Farnan in April 2001.

By this Motion, AWI seeks approval of Mr. Galbato's employment,
arguing to Judge Farnan that the terms of the Galbato employment
agreement are appropriate for a company of the size and
sophistication of AWI, and for an individual with Mr. Galbato's
experience and qualifications.

Although the Debtor believes that employing Mr. Galbato under
the terms of the agreement are in the ordinary course of its
business, it submits this Motion in what it describes as "an
abundance of caution". (Armstrong Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


ASSET SECURITIZATION: S&P Drops Class B 1997-MDVII Paper to D
-------------------------------------------------------------
Standard & Poor's lowered its ratings on the class B-1 and B-1H
to 'D' from triple-'C' of Asset Securitization Corp.'s
commercial mortgage pass-through certificates series 1997-MDVII
($12.49 million).  At the same time, the triple-'A' ratings on
classes A-1A and A-1B of the same series are affirmed.

Standard & Poor's did not rate any of the other classes.

The lowered ratings reflect the interest shortfall that has
occurred in classes B-1 and B-1H as a result of the fees being
paid to the special servicer, Clarion Partners, for the workout
of the Fairfield Inns loan.

The affirmations reflect the stable performance of the other six
loans and the adequate credit support for the A-1A and A-1B
class ratings.

The Fairfield Inns loan is secured by 50 crosscollateralized and
crossdefaulted mortgages on Fairfield Inn properties. This loan
is the largest in the mortgage pool and represents 33% of the
total outstanding principal balance. The Fairfield Inns loan's
debt service coverage (DSC), according to Clarion Partners, for
the 12 months ended December 31, 2000 is 0.94 times, as compared
to 1.05x for the period ending December 31, 1999. The DSC for
second quarter 2001 was 1.01x.

As part of the loan workout, the borrower's general partner,
Fairfield Inn by Marriott Limited Partnership has received
approval from the limited partners to transfer its general
partnership interest to Winthrop Financial Associates, an
affiliate of Apollo Real Estate Advisors.

Clarion Partners is currently negotiating additional workout
measures including the substitution of a new management company,
the sale of up to eight underperforming properties, and the
addition of $23 million in unsecured subordinate debt to be used
for capital improvements to the Fairfield properties.

The pool consists of seven loans collateralized by first
mortgage liens on 71 properties that are located in 19 states.
The DSC for the pool declined to 1.72x at Dec. 31, 2000 from
1.74x at Dec. 31, 1999.

                 Outstanding Ratings Lowered

Asset Securitization Corp.

     Commercial mortgage pass-thru certs series 1997-MDVII

            Class      Rating
                       To   From
             B-1       D    CCC
             B-1H      D    CCC

                 Outstanding Ratings Affirmed

Asset Securitization Corp.

     Commercial mortgage pass-thru certs series 1997-MDVII

            Class     Rating
            A-1A      AAA
            A-1B      AAA


BRIDGE INFORMATION: Selling 5% Interest in BRUT for $1.3MM
----------------------------------------------------------
BTT Investments Inc., one of the debtors in Bridge Information
Systems, Inc.'s cases, owns 5.255 common units representing
5.255% of The BRUT ECN LLC's equity ownership.  BRUT is a
company that operates an electronic communications network
through which subscribers trade equity securities that are
listed on the New York Stock Exchange and NASDAQ.

According to Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen
& Hamilton, in New York, the Debtors have been trying to sell
these assets with the help of their financial advisor, Bear,
Stearns & Company.

Unfortunately, Ms. Buell notes, the Debtors' marketing efforts
did not produce a single offer to acquire the Common Units.

Left with no alternative, Ms. Buell says, the Debtors invoked
their right to require BRUT to repurchase the Common Units,
pursuant to BRUT's Third Amended And Restated Limited Liability
Operating Agreement.  The Debtors wrote BRUT last July 30 to
inform them of the decision.

Under the Agreement, Ms. Buell explains, the Purchase Price is
equal to the resigning member's capital account as of the end of
the fiscal year that the resignation occurred.  Since BTT would
not be paid until after the close of the current fiscal year,
Ms. Buell relates, the Debtors and BRUT have agreed to transfer
the Common Units before the end of the fiscal year for the
approximate value of BTT's capital account as of August 31,
2001.  In exchange for the transfer of the Common Units, Ms.
Buell says, BRUT shall pay the Debtors $1,300,000 by wire
transfer.

The Debtors contend that the BRUT Repurchase is the best and
only option available to maximize the value of the Common Units.  
The Debtors also believe that the BRUT Repurchase is in the best
interests of their estates and creditors.

The Debtors propose to sell the Common Units free and clear of
all liens, claims and encumbrances to BRUT.  Any such liens,
claims and encumbrances will attach to the net sale proceeds
with the same validity, priority, force and effect that they had
on the Common Units prior to the Closing.  The Pre-petition
Lenders and Post-petition Lenders have liens and security
interests on the Debtors' assets.

Furthermore, Ms. Buell claims, the sale of the Common Units is
in contemplation of a plan to be confirmed, in that the net
proceeds of the sale is essential and required to fund a Chapter
11 plan for the Debtors, and so the transfer of the Common Units
should be exempt from any stamp or similar tax.

Ms. Buell argues that the BRUT Repurchase should be approved
because it does not dictate the terms of a plan or
reorganization, nor does it attempt to restructure the rights of
creditors.  The sole impact of the repurchase is to transform
the composition of the Common Units to cash, Ms. Buell says.

Moreover, Ms. Buell assures Judge Robinson that the terms of the
LLC Agreement and the decision to invoke BTT's right to require
the BRUT Repurchase was negotiated at arm's length, without
collusion, and in good faith.

In addition, Ms. Buell maintains that the 10-day automatic stay
should be eliminated to allow a sale or other transaction to
close immediately where there has been no objection to the
procedure.  Furthermore, if an objection is filed and overruled,
and the objecting party informs the court of its intent to
appeal, the stay may be reduced to the amount of time necessary
to file such appeal, Ms. Buell says.

Therefore, the Debtors ask Judge Robinson to enter an order
authorizing the Debtors' sale of the Common Units to BRUT,
pursuant to and in accordance with the terms and conditions of
the BRUT Repurchase and the LLC Agreement, free and clear of
liens, claims and encumbrances.  (Bridge Bankruptcy News, Issue
No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)    


BROADBAND OFFICE: Court Extends Removal Period to November 5
------------------------------------------------------------
The U.S. Bankruptcy Court extends the time within which
Broadband Office, Inc., may file notices of removal of related
proceedings to November 5, 2001, allowing the Company more time
to determine whether to remove pending claims and civil causes
of actions to the Bankruptcy Court for continued litigation.

Broadband Office, Inc. was originally founded by several leading
real estate companies in 1999 to provide a variety of technology
services to commercial properties across the United States.  The
Company offers voice and internet connections seamlessly
integrated into workspaces and also offered internet and network
capabilities, including webhosting, network management, and
automation services.


CARBIDE/GRAPHITE: Closes Substantial Assets Sale to Questor Unit
----------------------------------------------------------------
The Carbide/Graphite Group, Inc. (Nasdaq: CGGI) announced that
it reached a definitive agreement with Questor Management
Company and certain of its affiliates (Questor) on a transaction
whereby an affiliate of Questor will purchase substantially all
of C/G's operating assets and assume substantially all of C/G's
operating liabilities under a Section 363 asset sale pursuant to
the U.S. Bankruptcy Code.

C/G filed a petition in Pittsburgh for protection under Chapter
11 of the U.S. Bankruptcy Code to allow for the orderly
consummation of the comprehensive financial restructuring and
the Questor transaction.

C/G is also continuing discussions with the Lenders under the
Company's revolving credit facility (Bank Group) to finance the
Chapter 11 in contemplation of the transaction with Questor.
However, currently anticipated arrangements would not result in
any residual value for C/G equity interests.

Walter B. Fowler, C/G's Chairman and Chief Executive Officer,
said, "The execution of the definitive purchase agreement with
Questor and the associated Chapter 11 filing are key components
of a necessary financial restructuring program for C/G. Teamed
with Questor, we believe we can accelerate a number of process
and cost improvement initiatives that have already been started.
At this time we believe that the Questor transaction represents
the best solution available and we are hopeful that the
creditors will support the transaction. Production and product
shipments are expected to continue on a business-as-usual
basis."

Michael D. Madden, a Questor principal, said, "Industry
conditions and many other uncontrollable factors have continued
to plague C/G. However, the employees of C/G have displayed a
significant amount of creativity and perseverance during these
difficult times. Upon the consummation of the transaction with
Questor, a new company will emerge with sufficient capital
available to survive through the currently depressed steel cycle
and begin certain key capital projects that will reduce
operating costs and improve product quality. We believe the
transaction contemplated is fair and the best alternative
available to the Company at this time. It also helps ensure
the survival of a strong competitor in the graphite and calcium
carbide industries for years to come."

The Carbide/Graphite Group, Inc. and its affiliates are a major
U.S. manufacturer of graphite electrodes, needle coke and
calcium carbide products. Graphite electrodes are used as
conductors of electricity and are consumed in the Electric Arc
Furnace ("EAF") steelmaking process common to all mini-mill
steel producers.

The Company is the only manufacturer of graphite electrodes that
produces its own requirements of needle coke, the principal raw
material of graphite electrodes. The Company manufactures
needle coke through its affiliate, Seadrift Coke, LP. Calcium
carbide and derivative products, primarily acetylene, are used
in the manufacture of specialty chemicals, as a fuel in metal
cutting and welding, and for metallurgical applications such as
iron and steel desulfurization.

While C/G management has aggressively worked to lower its cost
structure and position it to capitalize on growth opportunities
going forward, several of the key factors that has negatively
impacted the Company's performance include:

     * Weakness in certain regions of the global economy, which
       caused the global demand for steel to soften and impacted
       demand for many of the Company's products since 1999.

     * The relative strength of the U.S. economy and U.S. dollar
       resulted in a high level of steel imports into the U.S.
       during 2000 and 2001. This situation resulted in the
       curtailment of steel production in the U.S., the most
       significant market for the Company's graphite electrodes
       and calcium carbide for metallurgical applications.

     * Oil prices increased drastically in 2000 and have
       remained at relatively high levels throughout 2001.
       Decant oil, a petroleum product, is the principal raw
       material in the production of needle coke.

Despite the external factors that have negatively impacted C/G's
financial results over the last two years, the Company is
positioned to generate significant growth in financial
performance, with improve market conditions, as a result of
several cost reduction and production enhancement initiatives
implemented by C/G's employees, including:

     * $100 million in capital improvements were made from 1996  
       through 1999 that have significantly improved product
       quality, production yield and cost performance.

     * Management has been working aggressively with its hourly
       work force to improve efficiency and reduce costs.  In
       fiscal 2001, all of the Company's union contracts were
       renegotiated resulting in annual savings of $4 million to
       $5 million.  Management believes there are an additional
       $5 million to $6 million of cost savings that can be
       achieved through joint projects between management and
       the unions.

     * Management intends to implement a $25 million capital
       investment in a hydrodesulfurization (HDS) complex at
       Seadrift Coke, L.P.  This project is only possible with
       the strength and capital resources of Questor and will
       significantly improve the quality of Seadrift's needle
       coke while substantially reducing raw material and
       logistical costs.  Total annual saving are estimated to
       be at least $10 million based on current production
       rates.

Mr. Fowler concluded, "We are committed to consummating a
restructuring of our finances and believe that with the
resources of Questor, we will be successful in our efforts."

The Carbide/Graphite Group, Inc. is a leading manufacturer of
industrial graphite and calcium carbide products with
manufacturing facilities in St. Marys, Pennsylvania; Niagara
Falls, New York; Louisville and Calvert City, Kentucky; and
Seadrift, Texas.


CHINA CONVERGENT: Appeals Nasdaq Decision to Delist ADRs
--------------------------------------------------------
China Convergent Corporation Limited (Nasdaq: CVNG) (Australia:
CBC; Frankfurt: OLSA) announced that on September 19, 2001, a
written appeal against Nasdaq's decision to delist the Company's
American Depository Receipts, was submitted to the Nasdaq
Listing Qualifications Panel.

Moreover, the Company announced that it is currently revaluating
the value attributed to the know-how of the Company. In line
with the global market sentiment, the value of such know-how has
fallen significantly. Once the revaluation is completed, the
Company will issue a further press release announcing the new
value of its know-how.

The Company's major shareholder, Best Fortune Capital Ltd., has
agreed to cancel an approximately US$12 million debt owed to it
by the Company in order to stabilize the Company's finances and
to remove major obstacles to obtain further financing.

Further, pursuant to US GAAP accounting treatment, a former
major subsidiary of the Company namely Prosper eVision Limited
will not be accounted for as a subsidiary of the Company. The
Company will instead account for Prosper eVision using the
equity method of accounting. The Company is in the process
of preparing and filing an amended annual report on Form 20-F
for the year ended December 31, 2000.

Hong Kong based China Convergent is a China media investor,
which owns a majority interest in the Century Vision Network
(CVN) project, a multiple system operator (MSO) of digital IP
based interactive broadband cable television networks. Content,
featuring a Chinese film library, television and film studio
production, as well as set-top box manufacturing are provided by
Prosper eVision Limited (Hong Kong stock code: 979).

CVN has also acquired an interest in the China Digital Broadcast
Corporation, a joint venture approved by the State
Administration for Radio, Film and Television (SARFT), China's
administrative authority for content, broadcast networks and
foreign film imports. The Beijing based joint venture will
develop a centralized digital data center and broadcast platform
for storing classified state, provincial and city information,
as well as sub-centers for the exchange of information using the
fiber optic networks of local cable systems throughout China.

China Convergent's strategy is to create a national alternative
to China's telecom monopoly that provides narrowband Internet
access and services by capitalizing on China's 90 percent
penetration rate for household television access, cable's two to
one penetration advantage over fixed-line telephones and SARFT's
broadband network, which is the only one of China's four
national fiber optic networks with extensive last mile
connections.

CVN has launched cable service with two of its 12 PRC joint
venture partners, who are local and provincial subsidiaries of
SARFT that administer roughly half of China 90 million cable
subscribers.


COMDISCO INC: Court Extends Time to Remove Actions to January 10
----------------------------------------------------------------
Comdisco, Inc., obtained an extension of the time within which
it may file notices of removal with respect to any actions
pending on the Petition Date through the earliest of (a) January
10, 2002, and (b) 30 days after the entry of an order
terminating the automatic stay with respect to any particular
action sought to be removed. (Comdisco Bankruptcy News, Issue  
No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)    


CONTINENTAL AIRLINES: S&P Downgrades Equipment Trust Ratings
------------------------------------------------------------
Standard & Poor's lowered its ratings on Continental Airlines
Inc.'s 1998-1 Pass-Through Trusts pass-through certificates,
1999-2 Pass-Through Trusts pass-through certificates, and 2001-2
pass-through certificates.  

The CreditWatch status on these securities is changed to
developing from negative.

Continental announced on September 17, 2001 that it would not
make $69.4 million of payments due on aircraft loans and leases
that were securitized in the three rated series of pass-through
certificates. The action has not caused an immediate default,
but will undermine investor confidence in enhanced equipment
trust certificates (EETCs), of which these certificates are an
example, and which are the U.S. airline industry's most widely
used financing instrument.

Dedicated liquidity facilities are available to pay interest due
on the EETCs ($23.0 million for 1998-1 and $25.5 million for
1999-2), and Standard & Poor's understands that such payments
were made.  Also, Continental has grace periods of five or 10
days, depending on the particular financings, in which to make
good the past-due payments. Principal payments on the EETCs
are not due until the legal final maturity of those
certificates.  

If Continental does not make payments, certificateholders could
move to place the airline in bankruptcy proceedings and
repossess the aircraft, although this process could take a
while. The liquidity facilities for EETCs are
sized to cover up to 18 months of scheduled interest payments
(typically three semiannual payments).

The 2001-2 pass-through certificates are not EETCs, as they do
not have a dedicated liquidity facility. Rather, they are
securitized junior tranches of debt in other, previously issued,
EETCs. If Continental does not make the deferred payments within
the grace period, the 2001-2 pass-through certificates will
default, although the next payment date is not until December 1,
2001, and the payment shortfall then would not be large relative
to overall debt service.

The downgrade reflects the fact that nonpayment on the aircraft
loans and leases by Continental, unless remedied within the
grace period, has already removed the initial source of credit
support that underpins the original ratings.

The remaining source of credit support is the liquidity facility
and overcollateralization by a fairly diverse pool of modern
technology planes in these EETCs. The ratings could be lowered
further if Continental does not make the deferred payments
within the grace period. Alternatively, the ratings could be
raised, although not necessarily to original levels, if the
past-due payments are made.

Continental has been more outspoken than other U.S. airlines
about the severity of the financial crisis facing the industry,
and is one of a group of airlines seeking federal aid for the
industry to avert what could be multiple airline bankruptcies if
current very depressed traffic and other adverse conditions
persist.

         Ratings Lowered, CreditWatch Implicaions Revised
             to Developing From Negative Implications:

     Continental Airlines Inc.

                                                    Ratings
                                                  To     From
     1998-1 Pass-Through Trusts
     pass-through certificates

     Series A                                      BBB  AA+
     Series B                                       BB  A+
     Series C                                       B  BBB+

     1999-2 Pass-Through Trusts
     pass-through certificates

     Series A-1 and A-2                            BBB  AA+
     Series B                                      BB+  AA-
     Series C-1 and C-2                             B+  A-

     2001-2 Class D pass-through certificates     CCC+  BBB-


CONTINENTAL AIRLINES: Industry Slowdown Prompts S&P Rating Cuts
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Continental Airlines
Inc. following the terrorist attacks. Ratings remain on
CreditWatch with negative implications, where they were placed
September 13, 2001.

The downgrades reflect the severe impact of sharply reduced air
traffic since the September 11 terrorist attacks in New York
City and Washington, D.C., with expectations for only a slow
recovery in the coming months. This worsens significantly an
already grim airline industry outlook, with depressed business
travel and higher labor costs.

The enormity of the New York and Washington attacks, and the
resulting investigations and possible U.S. military response,
will keep the events in the public eye for a significant period.

In addition, the attacks and surrounding sense of crisis may
undermine consumer confidence, which is already shaky following
the U.S. slowdown, further weakening the U.S. economy and demand
for air travel. Pending moves to provide federal aid to the
airlines in the form of direct grants, liability relief, and
possible other support will be important in limiting
the severe financial damage, but will not offset it entirely.

The extent of the downgrades was determined principally by:

    * The risk of a downward rating action prior to the current
      crisis, and thus how much credit "cushion" was available
      within those ratings;

    * The cash and bank lines available to the Company, as well
      as the amount of owned, unsecured aircraft that could be
      used in secured debt or sale-leasebacks to raise further
      funds; and

    * The ability of the Company to reduce cash operating
      expenses and commitments for capital spending.

In addition, certain specific debt issues were affected to a
lesser extent, compared with the lowering of the airline's
corporate credit rating, or not affected at all, because those
issues are insured or were already lowered for other reasons, in
the case of several pass-through certificates of Continental
Airlines Inc.

In determining the need for any further downgrades of debt
issues, Standard & Poor's will consider not only the corporate
credit ratings of Continental Airlines Inc. but also the
adequacy of asset protection for aircraft-backed debt, in light
of current and expected global industry conditions, and the
effect of mounting levels of secured debt and leases on recovery
prospects for unsecured creditors.

               Ratings Lowered, Remain on CreditWatch
                    with Negative Implications

                                             To          From

     Continental Airlines Inc.

     Corporate credit rating                  BB-         BB
     Senior secured debt                      BB-         BB
     Senior unsecured debt                    B+          BB-
     All equipment trust certificates rated   AA+         AAA
                                              AA          AA+
                                              A           A+
                                              BBB+        A-
                                              BBB         BBB+
                                              BBB-        BBB
                                              BB+         BBB-
     Preferred stock convertible bond         B-          B
     Senior secured shelf (prelim.)           BB-         BB
     Senior unsecured shelf (prelim.)         B+          BB-
     Subordinated shelf (prelim.)             B           B+


CONTINENTAL AIRLINES: Fitch Concerned About Effects of Attacks
--------------------------------------------------------------
Following the decision earlier this week to place the debt of
major U.S. airlines on Rating Watch Negative, Fitch is
downgrading the unsecured debt rating of Continental Airlines,
Inc. from 'BB' to 'B-'.

This rating action results from the unprecedented collapse in
U.S. air traffic following the terrorist attacks of Sept. 11, as
well as a belief that the amount of government assistance in the
form of direct cash reimbursement and loans now being discussed
in Washington will be insufficient to significantly alter
Continental's long-term risk profile.

The revised rating also reflects Fitch's belief that
Continental's financial position will likely be weakened
considerably when government assistance is ultimately
terminated. Also affected by this rating change are Continental
Capital Trust's TIDES preferred equity securities, which are
downgraded from 'B+' to 'CCC'.

The terrorist attacks of Sept. 11 have had a dramatic and
immediate impact on U.S. air travel demand as business and
leisure travelers have shown reluctance to fly. Beyond the
short-term impact of the complete shutdown of the air traffic
system last week, U.S. industry officials have indicated that
passenger revenues could fall by as much as 50% from pre-attack
levels over the next few weeks, with lingering effects on
bookings being felt into 2002. Under almost any scenario, a
quick rebound in passenger demand is very unlikely.

Continental's current cash balance stands at approximately $900
million. The company does not have a revolving line of credit
facility in place. Given its heavy reliance on off balance sheet
aircraft leasing, Continental's adjusted debt to capitalization
ratios are among the highest in the industry. All of these
factors raise concerns that Continental's liquidity may be
insufficient to weather an extensive downturn in industry
revenue of the magnitude now being envisioned.

On September 17, Continental stated in an SEC filing that it was
electing to delay debt service payments on two EETC issues. The
possibility exists that default covenants could be triggered if
timely payments are not made on these issues. While Fitch
considers it unlikely that a default-triggering event will occur
in connection with these payments, the probability of such
an event has increased significantly since September 11.

In addition to liquidity concerns, Fitch believes that
Continental's ability to reduce the size of its fleet quickly
will be restricted by the large number of aircraft that are
encumbered under lease or debt agreements. Of the 380 aircraft
in its fleet as of June 30, Continental leased an estimated
275 aircraft--primarily via operating leases. Of the remaining
aircraft, many are encumbered under other debt agreements, such
as enhanced equipment trust certificates (EETCs).

Continental has a limited amount of fleet flexibility that it
can exploit by pulling some older aircraft out of the schedule
quickly, but the number of owned and unencumbered aircraft is
small by industry standards.

For Continental, as for all of the major U.S. airlines, the
traffic collapse has necessitated a quick reduction in capacity.
On September 15, Continental announced that it would immediately
reduce its schedule to bring system-wide available seat-miles
(ASMs) down by 20%. The capacity cut will be accompanied by the
reduction of 12,000 jobs. The capacity reduction will allow
Continental to pull out some flight-related variable costs such
as fuel, maintenance and crew costs in a relatively short period
of time.

Continental's capacity reduction program represents an attempt
to align supply with reduced demand. The company had taken some
steps in this direction even before the attack, announcing plans
to accelerate retirement of its older and less fuel-efficient
aircraft--namely widebody DC-10s and narrowbody MD-80s. Before
the attack, Continental expected to see full-year 2001 ASM
capacity growth of about 4%.

The severity of the current cash crisis, however, has made it
necessary for Continental to cut its schedule further and to
look for ways to achieve quick reductions in operating costs.
Since airline operating budgets consist in large part of fixed
and semi-fixed cost items such as rents, airport operation costs
and overhead, achieving meaningful unit cost reduction will
be difficult in the short term.

Even with 20% of ASMs removed from the schedule, therefore,
percentage savings in total expenses will be lower. The
speed of cash outflows ultimately depends on the ability of
Continental to downsize cost structures to meet lower demand
levels over the next two to three years.

Relative to other airlines--particularly United and Delta--
Continental faces lower labor costs. With new pilot and mechanic
labor contracts not amendable until 2002, Continental has not
yet been forced to pay industry-leading wages for its employees.
This should help limit the cash impact of the current crisis.
Labor costs represent about 30% of Continental's total operating
expenses.

All airlines, including Continental, will be forced to increase
spending on security enhancements--both inside the aircraft and
at airports. While the possibility of a federal takeover of
airport security operations is under discussion in Washington,
added security measures will impact airlines' operating and
capital budgets--further undermining cash flow over the next
several quarters. Insurance costs are also expected to rise
significantly.

Continental has a large number of firm aircraft orders placed
with Boeing. A total of 36 new aircraft were scheduled for
delivery this year and 48 aircraft in 2002. To the extent that
Continental is able to negotiate delivery deferrals with Boeing,
the ASM impact of the new aircraft additions can be pushed back;
however, in the short term Continental appears unlikely to cut
off the supply of new aircraft.

A government aid package that includes direct cash payments and
loan guarantees will provide some relief for Continental.
However, it is still unlikely that the assistance will be
significant enough to offset the unprecedented fall-off in
passenger revenue and the rapid cash outflow that is affecting
all major carriers.

Under the government aid scenario now being voted upon by
Congress, Fitch believes that Continental will emerge from a
period of assistance in weaker financial condition than it had
been prior to September 11.

The City of Houston, Texas, Airport System Special Facilities
Revenue Bonds (Continental Airlines, Inc. Terminal E Project),
series 2001 are downgraded from 'BB+' to 'B' in conjunction with
the above mentioned Continental downgrade. The special
facilities bonds are inextricably linked to the credit rating
and strength of Continental, since security for the bonds is
derived primarily from airline lease payments.


DAIRY MART: Files for Chapter 11 Protection in S.D. New York
------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. (AMEX:DMC) said that it and
substantially all of its subsidiaries filed voluntary petitions
for protection under chapter 11 of the U.S. Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of
New York.

During the chapter 11 process, Dairy Mart and its stores will
continue to operate normally.

Gregory G. Landry, president and chief executive officer, said
Dairy Mart's 550 stores in seven states remain open for business
as usual, and all of the company's more than 3,800 employees
should report to work as normal. He said employees' paychecks
and benefits are protected, and management does not envision
layoffs as a result of Monday's action.

Landry said that Dairy Mart elected to seek court protection to
give it time to examine all ways in which to maximize value in
the company.

He added that the investment banking firm of Houlihan, Lokey,
Howard & Zukin has recently been retained to assist in exploring
all strategic alternatives to achieve that goal. "At this point,
however, it is far too early to predict what ultimate value, if
any, stockholders may realize. Similarly, recovery values for
subordinated debtholders and unsecured trade creditors cannot be
estimated at this time," Mr. Landry said.

On July 30, the company terminated an agreement to merge with DM
Acquisition Corp., an entity controlled by Robert B. Stein, Jr.,
the previous chairman, chief executive officer and president of
Dairy Mart. The merger could not be completed because Stein's
financing was not in place.

Accordingly, Dairy Mart's board of directors determined that
terminating the merger agreement was the best course of action
and would enable the company to focus its efforts on managing
near-term operating performance while exploring all financial
and strategic alternatives. At that time, Stein relinquished his
positions and Landry was appointed president and chief executive
officer of Dairy Mart.

"This company has been through a tumultuous period," said
Landry. "Court protection will now allow us to stabilize the
situation so that Dairy Mart's new management team can take
steps to build value and make this a better company. The
convenience-store format is one that we absolutely believe has
potential for success. However, Dairy Mart must improve store
performance and lighten the burden of its present capital
structure if we are to succeed."

Landry said that three factors made this filing the company's
only viable option. Those factors are: a heavy debt load from a
history of leveraged acquisitions; changing dynamics in the
industry that have depressed key-product profit margins; and the
termination of the previously announced sale-merger.

As part of its chapter 11 filing, Dairy Mart has filed a motion
seeking court approval to obtain a Debtor-in-Possession (DIP)
credit facility of up to $46 million with a group of lenders led
by Foothill Capital Corporation, a wholly owned subsidiary of
Wells Fargo & Company.

Pending a further hearing, Dairy Mart is seeking immediate
authorization to use up to $10.75 million of the DIP facility.
The DIP financing will be used for employee salaries and
benefits, ongoing operations and other working capital needs.

"We believe our DIP financing will provide more than ample funds
to cover the company's financial needs throughout the
reorganization period," said Landry. "Effective today, Dairy
Mart begins new relationships with its vendors and other
business partners. Our suppliers should continue to deliver as
usual. They should rest assured they will be paid promptly on
agreed-to terms for goods and services rendered from this point
forward while a plan of reorganization is developed to
restructure debt incurred before the filing."

Landry said that a number of steps had been taken in recent
weeks to help stabilize the company and prepare it for a
turnaround. These included creation of a new management team in
August 2001, consisting of six executives with significant
experience; renewed emphasis on marketing, merchandising and
store-level execution; and increased efforts to align employees
with corporate goals, including new training and communication
programs.

Dairy Mart Convenience Stores, Inc. owns or operates
approximately 550 retail stores in seven states located in the
Midwest and Southeast. For more information, visit Dairy Mart's
web site at  htpp://www.dairymart.com


DAIRY MART: Chapter 11 Case Summary
-----------------------------------
Lead Debtor: Dairy Mart, Inc.
             One Dairy Mart Way  
             300 Executive Parkway West  
             Hudson, OH 44236  

Debtor affiliates filing separate chapter 11 petitions:

             CIA Food Marts, Inc.
             Dairy Mart Convenience Stores, Inc.
             Convenient Industries of America, Inc.
             Quik Shops, Inc.
             Oscar Ewing, Inc.
             Open Pantry Properties, Inc.
             DM Risk Management Company, Inc., an Ohio
Corporation
             Lakeside Wholesale, Inc.
             The Lawson Company, a Delaware Corporation
             The Lawson Milk Company, an Ohio Corporation
             Dairy Mart Farms, Inc.
             Dairy Mart East, Inc.
             CONNA Corporation
             SNG of Southern Minnesota, Inc.
             Convenient Gasoline, Inc.
             Remote Services, Inc.
             D.M. Insurance Limited
             Food Merchandisers, Inc.
             Golden Stores, Inc.
             LMC, Inc.
             
Chapter 11 Petition Date: September 24, 2001

Court: Southern District of New York (Manhattan)

Bankruptcy Case Nos.: 01-42399-ajg through 01-42419

Judge: Arthur J. Gonzalez

Debtors' Counsel: Dennis F. Dunne, Esq.  
                  Milbank, Tweed, Hadley & McCloy LLP  
                  1 Chase Manhattan Plaza  
                  New York, NY 10005  
                  Tel: (212) 530-5000  
                  Fax: (212) 530-5219  
                  Email: ddune@milbank.com

Estimated Assets: more than $100 million

Estimated Debts: more than $100 million


DELTA AIR: S&P Drops Ratings on Grim Airline Industry Outlook
-------------------------------------------------------------
Standard & Poor's lowered its ratings on Delta Air Lines Inc.
Ratings remain on CreditWatch with negative implications, where
they were placed September 13, 2001.

The downgrades reflect the severe impact of sharply reduced air
traffic since the September 11 terrorist attacks in New York
City and Washington, D.C., with expectations for only a slow
recovery in the coming months. This worsens significantly an
already grim airline industry outlook, with depressed business
travel and higher labor costs.

The attacks and surrounding sense of crisis may undermine
consumer confidence, which is already shaky following the U.S.
slowdown, further weakening the U.S. economy and demand for air
travel. Pending moves to provide federal aid to the airlines in
the form of direct grants, liability relief, and possible other
support will be important in limiting the severe financial
damage, but will not offset it entirely.

The extent of the downgrades was determined principally by:

    * The risk of a downward rating action prior to the current
      crisis, and thus how much credit "cushion" was available
      within those ratings;

    * The cash and bank lines available to Delta Air Lines Inc.,
      as well as the amount of owned, unsecured aircraft that
      could be used in secured debt or sale-leasebacks to raise
      further funds; and

    * The ability of Delta Air Lines to reduce cash operating
      expenses and commitments for capital spending.

In determining the need for any further downgrades of debt
issues, Standard & Poor's will consider not only the corporate
credit ratings of the Company, but also the adequacy of asset
protection for aircraft-backed debt, in light of current and
expected global industry conditions, and the effect of mounting
levels of secured debt and leases on recovery prospects for
unsecured creditors.

           Ratings Lowered, Remain on CreditWatch
                with Negative Implications

                                             To          From
     Delta Air Lines Inc.

     Corporate credit rating                  BB+         BBB-
     Senior secured debt                      BB+         BBB-
     Senior unsecured debt                    BB+         BBB-

     ETC Repackaging Trust, Series 1998-1
     All equipment trust certificates rated   BB          BBB-
                                              B+          BB-

    Ratings Remain on CreditWatch with Negative Implications

     Delta Air Lines Inc.

     All equipment trust certificates rated   AAA
                                              AA-
                                              A+
                                              A
                                              BBB


E-M-SOLUTIONS: Court Okays Sale of Assets to Sanmina for $110MM
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of
California in Oakland, at a hearing on September 20, approved
Sanmina Corporation (Nasdaq: SANM) as the highest and best
bidder to purchase a substantial majority of E-M-Solutions'
domestic assets and stock in its foreign subsidiaries. Assets
included are located in the United States, Mexico and Northern
Ireland.

Both parties are in the process of completing a definitive
asset-purchase agreement.

The transaction is subject to clearance under the federal Hart-
Scott-Rodino Antitrust Improvements Act and is expected to close
in early October. The purchase price will be up to $110.65
million, subject to a post-closing audit of E-M-Solutions'
balance sheet. Not included in the transaction are E-M-
Solutions' facilities in Gretna, Virginia, Longmont, Colorado
and Monterrey, Mexico. Separate negotiations are under way for
the sale of these facilities.

At the close of the auction, Mikel Dodd, president and chief
executive officer of E-M-Solutions, said, "The competitive
bidding process and subsequent court confirmation has ensured
that creditors receive the greatest possible recovery. The
Sanmina purchase will bring continuity and stability to our
operations. Their exceptional balance sheet provides long-term
stability for our customers and suppliers moving forward. We
will begin working immediately with Sanmina to achieve an
orderly transition of business."

E-M-Solutions began marketing its assets months ago, a process
that continued following its August 2, 2001 filing for Chapter
11 protection under the U.S. Bankruptcy Code. At the time of the
filing, E-M-Solutions had agreed to be acquired by Teradyne for
approximately $85 million, but Sanmina offered the highest and
best bid during the court-supervised auction process.

E-M-Solutions (Electro Mechanical Solutions) is an
internationally recognized, electronic enclosure manufacturer
that provides value-added system assembly, integration services
and world-class supply chain management solutions to Fortune 500
original equipment manufacturing (OEM) companies.

A privately held corporation, the company had sales of $435
million in 2000 and currently employs about 2,300 people
worldwide. E-M-Solutions is based in Fremont, California and has
seven manufacturing and design facilities worldwide. For more
information, visit http://www.e-m-solutions.com


EDISON INT'L: SoCal Edison Creditors Say Bankruptcy Is Imminent
---------------------------------------------------------------
A bankruptcy filing for insolvent utility Southern California
Edison (SoCal Edison) is all but inevitable, a spokesman for a
creditors' committee tells Reuters, reporting that nearly a
dozen creditors are ready to force the Rosemead, California-
based Edison International unit into involuntary bankruptcy,
having run out of patience for the crafting of a bailout for the
utility, which ran up big debts from California's power crisis.  

Two power generators-Atlanta-based Mirant Corp. and Houston-
based Reliant Energy Inc.-are shopping for the third unsecured
creditor needed to force a SoCal Edison bankruptcy.

They have approached the City of Long Beach and others to join
them.  "To me it's not a matter of if bankruptcy is going to
occur, it's a matter of  when," said Brett Barbre, a spokesman
for a committee of Edison's and SoCal Edison's unpaid creditors.  
"We believe a bankruptcy is imminent, and it will be
involuntary." (ABI World, September 21, 2001)


EDWARDS THEATRES: Court Confirms Plan and $56MM Recapitalization
----------------------------------------------------------------
Edwards Theatres Circuit, Inc., which operates 53 theatres and
669 screens, announced that the Bankruptcy Court has confirmed
the Company's Plan of Reorganization, paving the way for its
emergence from its voluntary Chapter 11 proceeding.

Confirmation of the Plan came at the conclusion of a hearing to
assure that all reorganization requirements had been met under
the Bankruptcy Code, which included acceptance by the requisite
creditor classes.

The Company's secured lenders and general unsecured creditors
overwhelmingly accepted terms of the Plan, which includes a $56
million recapitalization investment in the theatre circuit by
The Anschutz Corporation and OCM Principal Opportunities Fund
II, L.P., a private equity fund managed by Oaktree Capital
Management, LLC.

Edwards' President Steve Coffey said that the reorganization
plan confirmed by the Court provides maximum recovery to the
Company's creditors while ensuring Edwards' viability in the
exhibition industry. "Ensuring that our secured and unsecured
creditors would be paid in full, while at the same time
establishing a realistic capital structure for the Edwards
chain, was our key objective as we examined the various
restructuring alternatives available. The Plan of Reorganization
confirmed [Monday] fulfills these goals and is a great result
for our creditors, guests and employees."

Under the terms of the Plan:

   --  Holders of the secured claims under the Company's
       existing credit facilities will be paid in full including
       pre- and post-petition interest.

   --  Holders of general unsecured claims should be paid
       between 90 percent to 100 percent of their allowable
       claims subject to certain conditions, including the total
       amount of all claims and whether they choose payment in
       notes or cash.

   --  Edwards will assume the licensing agreements between
       Edwards and various studios with respect to exhibition of
       films in Edwards Theatres and will pay in full the claims
       of those studios.

   --  In return for its $56 million investment in the Edwards
       chain, the Anschutz/Oaktree investment group will receive
       preferred stock and 51 percent of the shares in the
       reorganized company.

   --  The Edwards family will hold preferred stock and 49
       percent of the shares in the reorganized company.

   --  A new seven-member Board of Directors, composed of W.
       James Edwards III and individuals designated by the
       Anschutz/Oaktree investment group and the Edwards family,
       will assume responsibilities following Edwards Theatres'
       emergence from Chapter 11.

Edwards Theatres Circuit, Inc. and certain of its affiliates
filed voluntary petitions for reorganization under Chapter 11 of
the Bankruptcy Code in the U.S. Bankruptcy Court in Santa Ana,
California on August 23, 2000.

Headquartered in Newport Beach, California, the Company operates
53 theatres with 669 screens in Southern California, Idaho and
the Houston, Texas area.


GARDEN WAY: Committee of Unsecured Creditors Appointed
------------------------------------------------------
The United States Trustee announces the appointment of the
official committee of unsecured creditors in the chapter 11
cases of Garden Way, Inc., composed of:

   1. James E. Brenn of Briggs & Stratton Corporation
      P.O. Box 702, Milwaukee, Wisconsin 53201
      Tel: 414-259-5855 Fax: 414-259-5773

   2. Walter J. Misco of Eastern Equipment, Inc.
      P.O. Box 338, Chester, New Hampshire 03036
      Tel: 603-437-0407 Fax: 603-437-0815

   3. Roger N. Formidoni of New Hampshire Industries
      68 Etna Rd., Lebanen, New Hampshire 03766
      Tel: 603-448-1090 Fax: 603-448-5528

The Committee has retained Morris James Hitchens & Williams LLP
as its legal counsel in Garden Way's chapter 11 proceedings.

The Troy, New York-based Company designs, manufactures and sells
premium-quality outdoor power equipment for the consumer lawn
and garden market, through national retailers, independent
dealers and direct consumer distribution channels throughout
North America and Europe.  


GORGES/QUIK-TO-FIX: Court Converts Case to Chapter 7 Liquidation
----------------------------------------------------------------
U.S. Bankruptcy Judge Mary F. Walrath converted the case of
Gorges/Quik-To-Fix Foods Inc. to a chapter 7 liquidation after
the company determined it is unable to pay secured and
administrative claims, Dow Jones reports.  

In its motion to convert the case, the company admitted that
following a sale of its assets in July, amounts carved out from
sale proceeds earmarked for administrative claims aren't enough
to pay all administrative claims in full.

Also, Gorges/Quik-To-Fix's remaining assets consist primarily of
potential causes of legal action.  Judge Walrath, of the U.S.
Bankruptcy Court in Wilmington, Del., approved the conversion
with a provision that the company' s committee of unsecured
creditors be allowed to meet with the chapter 7 trustee to
explore the possibility of a further role for the committee.

The committee had objected to the company's conversion request
because it believed the committee should be allowed to control
the potential litigation, "which represents the unsecured
creditors' only hope for recovery."  If the causes of action
were unsuccessful, Gorges/Quik-To-Fix's unsecured creditors
would receive nothing.

The committee withdrew its objection once Judge Walrath agreed
to allow it to meet with the chapter 7 trustee.  

The Dallas-based manufacturer and marketer of processed beef
filed for chapter 11 bankruptcy protection on Dec. 4, 2000,
listing assets of about $141.9 million and liabilities of about
$121.2 million.  (ABI World, September 21, 2001)


HOME INTERIORS: S&P Affirms Low-B and CCC Ratings
-------------------------------------------------
Standard & Poor's affirmed its ratings for Home Interiors &
Gifts Inc. and removed them from CreditWatch where they were
placed on Nov. 30, 2000.

The outlook is now stable.

Carrolton, Texas-based Home Interiors reported $430.7 million in
total debt as of June 30, 2001.

The affirmation reflects the company's improved liquidity
position following an infusion of $96.1 million in preferred
equity from the company's current owners and recent modest
operating improvements.

The rating is based on Home Interiors' high level of business
risk associated with its direct sales business model, its
aggressive debt leverage, and weak credit measures.

Home Interiors sells decorative accessories, such as framed art,
mirrors, and candles, to over 58,000 independent sales
representatives. These representatives resell the products using
a party-plan method.

While sales declined slightly during Home Interiors' second
quarter ending June 30, 2001, orders per sales representative
rose about 6% because of a better trained and more experienced
sales force. Although the sales force headcount declined in 2001
versus 2000, with an above-average turnover of 71%, the
remaining representatives are more productive.

Home Interiors has improved its marketing function through both
process and personnel changes, emphasizing items that suit the
company's core customer.

With better marketing, stronger manufacturing, distribution
efficiencies, and an emphasis on selling internally-produced
goods, the company steadily improved its EBITDA margin in the
first half of 2001. The EBITDA margin rose to 16% for the first
half of 2001 from a low of 7% in the fourth quarter of 2000.

Capital spending, $34 million in 2000, was high, largely due to
the construction of the company's automated warehouse. As a
result, discretionary cash flow was a negative $6.1 million.

In 2001, Standard & Poor's expects that capital spending will
return to more normal levels, in the $10 million to $15 million
range. Discretionary cash flow in 2001 is likely to break even.
Going forward, with better working capital management and normal
capital spending levels, Standard & Poor's anticipates that
discretionary cash flow will improve.

During the first half of 2001, Home Interiors paid down bank
debt by $34.6 million. In July 2001, the company improved its
financial flexibility by issuing $96 million in preferred stock
in exchange for reducing debt.

Standard & Poor's expects that the dividends for the preferred
stock will be paid in kind, conserving cash. Liquidity is
adequate, with $19 million available on the revolving credit
facility as of June 30, 2001.

                        Outlook: Stable

The recent capital infusion provides the firm with sufficient
financial resources to continue to address operating challenges.

        Ratings Affirmed & Removed From CreditWatch

     Home Interiors & Gifts Inc.

        Corporate credit rating     B-
        Senior secured debt         B-
        Subordinated debt           CCC


INTERNATIONAL KNIFE: Files Chapter 11 Petition in Delaware
----------------------------------------------------------
International Knife & Saw, Inc., the leading manufacturer and
marketer of industrial machine knives and saws, together with
its parent IKS Corporation (together IKS) announced a major
financial restructuring which will eliminate substantially all
existing debt and provide up to $10 million of new financing.
The restructuring will be effected through the filing Monday of
a prenegotiated Plan of Reorganization (the Plan) with the U.S.
Bankruptcy Court in Delaware.

Frederick F. Schauder, President and CEO of IKS, announced that
the Company has signed an agreement with the holders of 70% of
IKS, Inc.'s senior subordinated debt to convert that debt into
common stock of the reorganized company. Based on the agreement
with bondholders, Schauder believes the Company has sufficient
votes to confirm the Plan and anticipates an expedited process
through the Court.

Mr. Schauder also announced that IKS's new financing will be
provided by existing creditors, assuring that the Company will
be able to maintain all operations without disruption in product
or service supply to its customers.

Finally, Mr. Schauder advised that if this Plan is confirmed as
expected, all suppliers of IKS, Inc. will be paid in full. In
addition, the company has requested immediate authority to pay
in the ordinary course its supplier obligations that arose prior
to filing, provided that those suppliers agree to provide credit
terms during the term of the bankruptcy proceeding and beyond
confirmation, that are ordinary and customary in the industry.

IKS will operate as usual during the bankruptcy proceedings. It
has enjoyed excellent relationships with its customers,
suppliers and employees, and expects to maintain such
relationships during and after completion of the bankruptcy
proceeding. The Company is confident it will emerge from the
restructuring financially sound and better prepared to sustain
and enhance its position as a market leader.

IKS is the leader in the manufacturing, servicing and marketing
of industrial and commercial knives and saws. IKS is
headquartered at 1299 Cox Avenue, Erlanger, Kentucky.


INTERNATIONAL KNIFE: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: IKS Corporation  
             Klingelnberg Corporation  
             1201 N. Market Street  
             Wilmington, DE 19801  

Debtor affiliate filing separate chapter 11 petitions:

             International Knife & Saw, Inc.
             
Type of Business: The debtor manufactures, markets, and services
                  industrial knives and saws, and its customers      
                  include distributors, original equipment
                  manufacturers, and customers purchasing
                  replacement parts and services. The debtor has
                  a leading market share in each of the major
                  sectors it serves; paper and packaging; wood;
                  metal; and plastic & recycling.

Chapter 11 Petition Date: September 24, 2001

Court: District of Delaware

Bankruptcy Case Nos.: 01-10510 through 01-10511

Debtors' Counsels: Michael L. Vild, Esq.  
                   The Bayard Firm  
                   222 Delaware Avenue  
                   Suite 900  
                   Wilmington, DE 19899
                   (302) 655-5000

                       and

                   Joel Levitin, Esq.
                   Henry P. Baer, Jr, Esq.
                   Anna C. Palazzolo, Esq.
                   Diehert
                   30 Rockefeller Plaza
                   New York, NY 10112
                   (212)698-3500

Total Assets: $43,993,000

Total Debts: $109,554,000

IKS Corporation: Largest Unsecured Creditors

Entity                        Nature Of Claim       Claim Amount
------                        ---------------       ------------

Haulux AG                     Note                    $6,436,889
Luc Hanson
Centre Etoile
5, bd de la Foire
B.P 351
L-2013 Luxembourg
Fax: 011 352
     4512 3201

Dualux AG                     Note                    $6,436,889
Luc Hanson
Centre Etoile
5, bd de la Foire
B.P 351
L-2013 Luxembourg
Fax: 011 352
     4512 3201

Ernst & Young                 Professional              $26,049
                              Services

Morris, Nichols               Office Services              $250

International Knife: Largest Unsecured Creditors

United States Trust           Bond Debt              $98,787,187
Company of New York
Timothy Shea
114 West 47th Street
New York, NY 10036-1532
Tel: (212) 852-1613
Fax: (212) 852-1626

Reynolds Lamphere             Lease                   $196,096

Ed Brent                      Deferred                $150,000
                              Compensation

Horst Brautigam               Deferred                $139,583
                              Compensation

Okaya USA Inc.                Trade Debt              $139,304

JTB Investments               Lease                   $106,335

James Reed                    Deferred                $100,000
                              Compensation

B&W industrial Grinding       Lease                   $98,000

Jowitt & Rodgers Co.          Trade Debt              $89,603

National Utility Services     Utility Service         $80,000

Universal Grinding            Trade Debt              $76,924

DB Engineering PVT LTD        Trade Debt              $76,604

Multi Metals Division         Trade Debt              $69,818

High Speed & Carbide Ltd.     Trade Debt              $66,957

Doall Industrial Supply       Trade Debt              $53,536

Kanefusa Japan                Trade Debt              $47,841

Harmetal Knives               Trade Debt              $47,841

Computrex Logistics           Trade Debt              $39,483

Carolina Power & Light        Utility                 $39,453

Yuah Lih Knive Company        Trade Debt              $38,922

Elan Financial Services       Credit Card             $31,092
                              Company

Industrial Electric           Trade Debt              $27,592
Rewinding

Carbide Alloys                Trade Debt              $24,990

Kanefusa USA, Inc.            Trade Debt              $15,390


INTIRA CORP: US Trustee Appoints Unsecured Creditors' Committee
---------------------------------------------------------------
The United States Trustee announces the appointment of the
Official Committee of Unsecured Creditors in the chapter 11
cases of Intira Corporation, composed of:

   1. Joseph Francois of Sun America Investments
      1999 Ave. of the Stars, 38th Floor, Los Angeles,
      California 90067
      Phone: (212) 458-2130     Fax: (212) 458-2970

   2. Joe Deignam of CFSC Wayland Advisers, Inc.
      12700 Whitewater Drive, Minnetonka,
      Minnesota 55343
      Phone: (952) 984-9709     Fax: (952) 984-9313

   3. Gil Alon of GE Capital Corporation
      10 Riverview Drive, Danbury,
      Connecticut 06810
      Phone: (203) 749-6545     Fax: (203) 749-4530

   4. Arthur H. Saiewitz, Esq., of Lucent Technologies
      Rm. D005, 535 Mountain Ave., New Providence,
      New Jersey 07974
      Phone: (908) 582-0833     Fax: (908) 582-0753

   5. Robin Blackwood of Verizon Select Services, Inc.
      P.O. Box 101362, Atlanta,
      Georgia 30392-1362
      Phone: (972) 718-5942     Fax: (972) 718-7634

The Committee has retained Orrick Herrignton & Setcliffe and
Walsh Monzack & Monaco as co-counsel in the chapter 11 cases of
Intira.

Intira offers a range of outsourced information technology and
network infrastructure support and hosting services such as
network and database administration, intranet and Internet
access, and network backup.  The company reported assets of
$83,700,000 and liabilities of $82,300,000 as of December 1999.


LECHTERS INC: Has Until Today to File Schedules
-----------------------------------------------
The United States Bankruptcy Court for the Southern District of
New York granted Lechters, Inc. and its debtor-affiliates
additional time to file their schedules of assets and
liabilities, statements of financial affairs and lists of
executory contracts and unexpired leases as required under 11
U.S.C. Sec. 521(1) and Rule 1007 of the Federal Rules of
Bankruptcy Procedure.  That deadline is today -- Sept. 25, 2001.

Judge Gonzales also found merit in Lechters' requests for
extensions of several other deadlines:

     * the company has until Jan. 31, 2001 to decide whether to
       assume or reject its unexpired leases of non-residential
       real property;

     * the period for removing actions has been extended to
       Feb. 18, 2002;

     * the deadline for filing a plan of reorganization has been
       moved to Jan. 31, 2002; and

     * Lechters may solicit votes on the plan through and
       including March 31, 2002.  

The leading US kitchenware retailer, Lechters operates about 325
stores in 36 states and Washington, DC.  Nearly 80% of sales
come from its full-price stores, which include Lechters
Housewares, Super Lechters, and Lechters Kitchen Place; its off-
price stores use the Famous Brands Housewares Outlet banner.  
The stores sell name-brand and private-label utensils, kitchen
gadgets, cookware, small electric appliances, and other items.
The Jewish Communal Fund (through a donation from chairman
Donald Jonas) owns 26% of Lechters.


MARINER POST-ACUTE: Court Further Extends Exclusivity Periods
-------------------------------------------------------------
Mariner Post-Acute Network, Inc. sought and obtained the Court's
authorization for a further extension of the Exclusivity Period
during which they may file a plan of reorganization by an
additional approximately 60 days to and including October 24,
2001, and if a plan is filed within such time, extending the
Exclusivity Period to solicit acceptances of the Plan to and
including December 31, 2001.

The Debtors draw Judge Walrath's attention to the progress they
have made. Based upon the progress made, the Debtors believe
they will soon be ready to file a plan of reorganization.

However, there are additional challenges to meet, the Debtors
submit, and the extension is necessary to ensure that they can
file and confirm a plan before their Exclusivity Periods expire.
In particular, the Debtors remind the Court that the Mariner
Health Debtors' reorganization will have an impact upon MPAN's
reorganization. However, process in the Health cases has been
complicated recently by the filing of a plan of reorganization
by the Health Debtors' Principal Secured Lenders, the Debtors
note.

In addition to citing the progress made, the Debtors represent
that they have met all the other legal standards for extending
their Exclusivity Periods -- their cases are large and complex,
they are not seeking to use exclusivity to pressure creditors
into accepting a Plan of Reorganization but are working with the
major constituencies to continue the good faith progress that
has been made toward a successful development of a consensual
plan of reorganization, and they are generally making required
prepetition payments and effectively managing their business and
properties.

The Debtors therefore conclude that the requested additional
extension of the Exclusivity Periods is warranted and
appropriate to afford them a full and fair opportunity to
negotiate, propose, and seek acceptance of a plan of
reorganization. (Mariner Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  


NEWCOR: Moody's Junks Ratings, Doubting Ability to Honor Notes  
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Newcor, Inc.
(Newcor) in conjunction with Newcor's failure to make timely
payment of an approximately $6.1 million interest coupon for the
company's $125 million subordinated notes issue. The rating
outlook is negative while there is approximately $135.0 million
of debt obligations affected.

Moody's said that the rating agency is uncertain whether Newcor
will be able to honor the approximately $6.1 million past-due
senior subordinated cash interest obligation prior to the expiry
of the 30-day interest grace period during early October 2001.

                   Specific Rating Actions

   * $125 million 9.375% guaranteed senior subordinated notes
     due 2008 to C from Caa1;

   * $10 million guaranteed senior secured bank term loan A due
     2003 to Caa1 from B2;

   * issuer rating to Caa3 from B3; and

   * senior implied rating to Caa2 from B2

While Newcor is not actually in default of either its bank
credit agreement or its bond indenture at the current date,
management has indicated its belief that Newcor has insufficient
availability under its borrowing base-constricted bank revolving
credit facility to both satisfy the bond interest obligation and
also maintain enough financial flexibility to continue operating
the business, Moody's said.

Furthermore, Moody's has significant concern that Newcor will
have to undergo some form some form of near-term restructuring
of its capital structure. Additionally, the ratings reflect that
Newcor's liquidity concerns are the by-product of significant
weakness that the company has experienced over the past year
across all of its primary end markets (which include the
automotive, heavy duty truck, agricultural and capital goods
markets).

Newcor, Inc. is a manufacturer of precision machined components
and assemblies for the automotive, heavy duty truck, and
agricultural vehicles industries; and is additionally a
manufacturer of custom rubber and plastic products primarily for
the automotive industry. The Company is headquartered in
Bloomfield Hills, Michigan.


NORTHWEST AIRLINES: Fitch Drops Senior Unsecured Debt to B+
-----------------------------------------------------------
Following the decision earlier this week to place the debt of
major U.S. airlines on Rating Watch Negative, Fitch is
downgrading the senior unsecured debt rating of Northwest
Airlines, Inc. (Northwest) from 'BB+' to 'B+'.

Northwest remains on Rating Watch Negative.

The rating reflects the unprecedented collapse in U.S. air
traffic following the terrorist attacks of Sept. 11, as well as
a belief that the amount of government assistance in the form of
direct cash reimbursement and loans now being discussed in
Washington will be insufficient to return Northwest to the
credit standing it had prior to last week's events.

The terrorist attacks of Sept. 11 have had a dramatic and
immediate impact on U.S. air travel demand as business and
leisure travelers have shown reluctance to fly. Beyond the
short-term impact of the complete shutdown of the air traffic
system last week, U.S. industry officials have indicated
that passenger revenues could fall by as much as 50% from pre-
attack levels over the next few weeks, with lingering effects on
bookings being felt into 2002.

Under almost any scenario, a quick rebound in passenger demand
is very unlikely.

Northwest's current cash balance, including $1.1 billion in
funds drawn on a bank credit facility, stands at approximately
$2.6 billion. Following the draw-down of the credit facility,
the company's leverage has increased, and remains high by
industry standards.  Total long and short-term debt now stands
at approximately $5.2 billion. Taking into account the high cash
burn rates that Northwest and its competitors are likely to see
over the next several weeks, Fitch believes that the strength of
Northwest's liquidity position will be eroded.

Longer term, the company will be required to service its higher
leverage position with a reduced operating profile.

One critical factor in determining the ability of airlines to
save cash is the flexibility of their fleet plans. Of 438
aircraft in its fleet as of June 30, Northwest leased an
estimated 126 aircraft--primarily via operating leases. Of the
remaining 312, less than half were encumbered under debt
agreements, such as enhanced equipment trust certificates
(EETCs).

Northwest is now in a position to retire some owned and
unencumbered aircraft that are older and less fuel efficient.
These include Boeing 727s (25 in the fleet), DC-9s (over 170 in
the fleet) and DC-10s (over 40 in the fleet). The ability
to park aircraft quickly without incurring incremental ownership
and financing costs may prove critical in adjusting to this
downturn, and provides Northwest with a flexibility advantage in
comparison with its competitors.

For Northwest, as for all of the major U.S. airlines, the
traffic collapse has necessitated a quick reduction in capacity.
Soon after the attack, the company announced that it would
immediately reduce its schedule to bring system-wide available
seat-miles (ASMs) down by 20%.

These changes should be completed by Oct. 1. This capacity
reduction will allow Northwest to pull out some flight-related
variable costs such as fuel, maintenance and crew costs in a
relatively short period of time. The company is reviewing job
reduction actions to accompany this schedule reduction. Today,
Northwest announced that a total of 10,000 jobs would be cut in
response to the crisis.

Northwest's capacity reduction program represents an attempt to
align supply with reduced demand, something the company had
taken steps to address even before September 11. By accelerating
the retirement of older and less fuel-efficient aircraft,
Northwest was on its way to cutting system ASM capacity by 3% in
the first half of 2002. Facility closings and job reductions had
also been announced.

The severity of the current cash crisis, however, has made it
necessary for Northwest to cut its schedule further and to look
for ways to achieve quick reductions in operating costs. Since
airline operating budgets consist in large part of fixed and
semi-fixed cost items such as rents, airport operation costs and
overhead, achieving meaningful unit cost reduction will be
difficult in the short term.

Even with 20% of ASMs removed from the schedule, therefore,
percentage savings in total expenses will be lower. The speed of
cash outflows ultimately depends on the ability of Northwest and
its competitors to downsize cost structures to meet lower demand
levels over the next two to three years.

Relative to its major competitors--particularly United and
Delta--Northwest faces lower labor costs. The fact that
Northwest's pilot agreement was ratified in 1998, before the
recent round of hefty pilot raises, should help limit some of
the cash outflow in this crisis. Labor costs represent about
35% of Northwest's total operating expenses.

All airlines, including Northwest, will be forced to increase
spending on security enhancements--both inside the aircraft and
at airports. While the possibility of a federal takeover of
airport security operations is under discussion in Washington,
added security measures will impact airlines' operating and
capital budgets--further undermining cash flow over the next
several quarters. Insurance costs will also rise significantly.

A major issue for Northwest looking out beyond the current
crisis is the large number of firm orders for new aircraft that
it has placed with Boeing and Airbus. These aircraft are
scheduled for delivery between now and 2006. Most of the
deliveries through 2002 have been pre-funded with EETCs, and the
remaining aircraft scheduled for delivery through 2006 have
manufacturer financing commitments in place.

Northwest has additional rights to delay some of its scheduled
deliveries from the manufacturer if necessary.

A government aid package that includes direct cash payments and
possibly loan guarantees would provide some relief for
Northwest. However, it is still unlikely that the assistance
will be significant enough to offset the unprecedented fall-off
in passenger revenue and the rapid cash outflow that is
affecting all major carriers.

Under almost any government aid scenario, Fitch believes that
Northwest will emerge from a period of assistance in weaker
financial condition than it had been prior to September 11.


OWENS CORNING: Gets Okay to Execute Houg Warehousing Agreements
---------------------------------------------------------------
Owens Corning sought and obtained an order from the Court
authorizing and approving the Debtors' execution of post-
petition lease guaranty and associated warehousing and
distribution agreements.

J. Kate Stickles, Esq., at Saul Ewing, LLP in Wilmington,
Delaware states that in the ordinary course of business, the
Debtors maintain warehouse facilities in numerous locations
around the country.  The Debtors are currently a party to a
warehouse service agreement dated July 22, 1998 and due to
expire on June 30, 2001 with Houg Enterprises, Inc., to provide
certain storage and delivery services to the Debtors in the
Denver, Colorado area.  

The Debtors have determined that it is necessary to procure new
warehouse facilities in the Denver area because the present
agreement for warehouse facilities and servicing is about to
expire.

Under the new warehousing agreement, Ms. Stickles reveals that
Houg will lease a warehouse with an area of 146,596 square feet,
located in the Colorado Trade Center from Bannock Street Limited
Partnership.  Under the agreement, Ms. Stickles states that the
Debtors will pay the lessor a rent of $3.00/sq. foot plus
operational expenses, taxes and insurance for a lease term term
of 63 months.

The terms of the new warehousing agreement are:

  (1) the Present Agreement between the Debtors and Houg, due to
      expire on June 30, 2001 will be terminated;

  (2) Houg will provide storage and warehousing services to the
      Debtors;

  (3) Houg will provide certain delivery services to the
      Debtors;

  (4) The Debtors will agree to pay certain fees to Houg on
      account of Houg's handling, storage & delivery of
      products.

In order to induce the lessor to enter in the lease, Ms.
Stickles relates that the Debtors have agreed to execute a lease
guaranty of Houg's obligations under the lease.  In the event
that Houg defaults under the lease, the guaranty permits the
Debtors, to:

(1) substitute another party for Houg with respect to the lease;

(2) assume the rights & duties of Houg with respect to the
    lease;

Ms. Stickles states that the Debtors have determined that it is
in the best interest of the Debtors and their creditors and
necessary to their business operations, to execute and deliver a
guaranty and enter into a warehouse & distribution agreement.
Without these services, Ms. Stickles claims the Debtors'
business operations in the Denver region would be severely
impacted.  

Ms. Stickles discloses that the Debtors have worked extensively
with Houg in the past and believes that it is more than capable
of satisfactorily fulfilling its obligation under the lease and
the warehouse distribution agreements.  Ms. Stickles believes
that the terms of the agreement is competitive with that of the
market and represents the lowest cost option available to the
Debtors for the said services. (Owens Corning Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


PSA INC: Court To Re-Convene Confirmation Hearing On October 15
---------------------------------------------------------------
Judge John Akard adjourned the Confirmation Hearing on PSA,
Inc.'s Joint Plan of Reorganization and ordered that the hearing
shall re-convene in the United States Bankruptcy Court for the
District of Delaware at 9:00 a.m. on October 15, 2001 before the
Honorable Erwin I. Katz.  

The Court ruled that it will temporarily allow all Payphone
Investor Claims for purposes of voting on the Plan, and directed
the company to alert holders of these claims of their right to
vote and supply them with a Supplemental Disclosure Statement.  

PSA's Joint Plan specifies the treatment of claims and provides
for the substantive consolidation and merger of PSA and its
affiliate debtors into Reorganized ETS.

    Summary of Anticipated Distributions Under the Joint Plan

Class Description   Treatment Under the Joint Plan
-----------------   ------------------------------
Administrative      - Unimpaired
Expense Claims      - Each Holder of an Allowed Administrative
                      Expense Claim shall receive:
Estimated Amount:      (i) Cash equal to the unpaid portion of
$8 Million                 such Allowed Administrative Expense
                           Claim payable on the later of the
                           Effective Date and within 30 days
                           after the date such claim becomes an
                           Allowed Claim or
                      (ii) Such other treatment as to which the
                           Debtors and such Holder shall have
                           agreed upon in writing.
                   - Estimated Recovery: 100%
                   - Holders of Administrative Expense Claims
                     are deemed to have accepted the Joint Plan.


Tax Claims          - Unimpaired
                    - Each Holder of an Allowed Tax Claim shall
Estimated Amount:     receive, at the Debtors' option:
$1,046,267             (i) Cash equal to the unpaid portion of
                           such Allowed Tax Claim payable on the
                           later of the Effective Date and
                           within 30 days after the date such
                           claim becomes an Allowed Tax;
                      (ii) Cash equal to the unpaid portion of
                           such Allowed Tax Claim, together with
                           interest thereon at an annual rate to
                           be established by the Bankruptcy
                           Court at the Confirmation Hearing,
                           payable in up to 24 equal quarterly
                           cash installments commencing on the
                           later of the first Business Day
                           following the date of assessment of
                           such Allowed Tax Claim and the
                           Effective Date; or
                     (iii) Such other treatment as to which the
                           Debtors and such Holder shall have
                           agreed upon in writing.
                   - Estimated Recovery: 100%
                   - Holders of Tax Claims are deemed to have
                     accepted the Joint Plan.


Class 1 -          - Unimpaired
Priority Non-Tax   - Each Holder of an Allowed Priority Non-Tax
Claims               Claim shall receive:
                      (i) Cash equal to the unpaid portion of
Estimated Amount:         such Allowed Priority Non-Tax Claim
$0.00                     payable on the later of the Effective
                          Date and the date such Claim becomes
                          an Allowed Claim or
                     (ii) Such other treatment as to which the
                          Debtors and such Holder shall have
                          agreed upon in writing.
                   - Holders of Other Priority Non-Tax Claims
                     are deemed to have accepted the Joint Plan.


Class 2(a) -       - Unimpaired
Secured Claim of   - Each Holder of an Allowed Secured Claim
General Motors       (Class 2(a) or 2(b)) shall receive at the
Acceptance Corp.     Debtors' option:
                       (i) Cash equal to the unpaid portion of
Estimated Amount:          such Allowed Secured Claim payable on
$484,989.76                the later of the Effective Date and
                           the date such Claim becomes an
                           Allowed Claim;
Class 2(b) -          (ii) The collateral securing such Allowed
Secured Claim of           Secured Claim in full satisfaction
Triangle Telephone         and release of such Allowed Secured
Site Leases, LLC           Claim;

Estimated Amount:    (iii) Retention of the liens securing such
$46,000.00                 claim to the extent of the Allowed
                           Secured Claim and equal monthly
                           payments commencing on the 5th day of
                           the 1st month following the Effective
                           Date and totaling the value of the
                           Allowed Secured Claim as of the
                           Effective Date;
                      (iv) Cash equal to the proceeds of the
                           sale of the collateral securing the
                           Allowed Secured Claim to the extent
                           of the value of the Holder's interest
                           in such collateral; or
                       (v) Such other treatment as to which the
                           Debtors and such Holder shall have
                           agreed upon in writing.
                   - Estimated Recovery: 100%
                   - Holders of Secured Claims are deemed to
                     have accepted the Joint Plan.


Class 3 - General  - Impaired
Unsecured Claims   - Allowed Class 3 claims will share ratably
                     in the General Unsecured Distributions.
Estimated Amount:  - Allowed Class 3 Claims and Allowed Class 4
$13,681,791          Claims will also share ratably from time to
                     time in the proceeds of the Litigation
                     Trust and each Holder of an Allowed Class 3
                     Claim shall receive its pro rata portion of
                     the Litigation Trust allocated to Class 3.
                   - Estimated Recovery: 25-55%
                   - Holders of General Unsecured Claims are
                     entitled to vote for or against the Joint
                     Plan.


Class 4 -          - Impaired
Payphone           - Each Holder of an Allowed Payphone Investor
Investor Claims      Claim shall receive its pro rata share of
                     Reorganized ETS Stock.
Estimated Amount:  - Allowed Class 4 Claims and Allowed Class 3
$375,000,000         Claims will also share ratably from time to
                     time in the proceeds of the Litigation
                     Trust, and each Holder of an Allowed Class
                     4 Claim shall receive its pro rata portion
                     of the Litigation Trust allocated to Class
                     4.

                   - Estimated Recovery: 6-16%
                   - Holders of Payphone Investor Claims are
                     entitled to vote for or against the Joint
                     Plan.
                   - Alternative Treatment for Allowed General
                     Unsecured Claims -- Any Holder of an
                     Allowed Payphone Investor Claim who, for
                     tax or other reasons, elects to reduce the
                     amount of such Claim to $1.00 shall receive
                     no Distributions under the Joint Plan.


Class 5 -          - Impaired.
Subordinated       - Subordinated Claims shall receive no
Claims               distribution and shall be extinguished.
                   - Estimated Recovery: 0%
Estimated Amount:  - Holders of Subordinated Claims are deemed
Unknown              to have rejected the Joint Plan.


Class 6 -          - Impaired
Intercompany       - All Debtor Affiliate Claims shall be
Claims               extinguished as of the Effective Date.
                   - Estimated Recovery: 0%
Estimated Amount:  - Holders of Intercomany Claims are deemed to
$81,090,909          have rejected the Joint Plan.


Class 7 - Claims   - Impaired
of Non-Debtor      - All Non-Debtor Affiliate claims shall be
Affiliates           extinguished.
                   - Estimated Recovery: 0%
Estimated Amount:  - Holders of Non-Debtor Affiliate Claims are
$825,146             deemed to have rejected the Joint Plan.


Class 8 -          - Impaired
Interests          - All Old Stock shall be cancelled.
in ETS             - Estimated Recovery: 0%
                   - Holders of Old Stock of ETS are deemed to
                     have rejected the Joint Plan.  

                 Overall Structure and Means for
                 Implementation of the Joint Plan

PSA proposes to settle the Declaratory Judgment Adversary
Proceeding by making the Payphone Investors the shareholders of
Reorganized ETS.  Upon a written motion, the Bankruptcy Court
will fix the method for calculating Allowed Payphone Investor
Claims.  

The company will try to resolve the SEC Litigation with a
settlement, which, in part, will provide that SEC will release
its claims against PSA and its affiliate debtors.  PSA also
plans to settle the Phoenix Litigation by providing the Phoenix
payphone investors with the opportunity to "opt in" and be
treated as Payphone Investors of PSA and its affiliate debtors.  
These plans are still subject to Bankruptcy Court approval.

The Joint Plan contemplates that Reorganized ETS will
incorporate in Delaware and will be formed with the merger of:
ETS Payphones, Inc.; PSA, Inc.; ETS Vending, Inc.; Americom,
Inc.; City Public Phones, Inc.; ETS Payphones of California,
Inc.; ETS Management Services, LLC; MSC National, Inc.; S and R
Telecommunications Consultants, Inc.; TSC Payphone Corp.; and
Phoenix Telecom of Puerto Rico, Inc.  

Under the Joint Plan, Reorganized ETS shall serve as Disbursing
Agent, and, as of the Effective Date, will be authorized to
issue up to 6,000,000 shares of Reorganized ETS Stock.  Five
million of the initial shares will be issued to the Disbursing
Agent for distribution in accordance with the provisions of the
Joint Plan.  

The board of directors of Reorganized ETS will consist of 3
members, including Guy A. Longobardo as Chairman and 2
additional directors to be named by the Creditors' Committee.  
Currently, the Committee anticipates naming Michael Buck and A.
Peter Lubitz as the remaining directors.  

A Litigation Trust will be created for the benefit of Holders of
Allowed Class 3 General Unsecured Claims and Allowed Class 4
Payphone Investor Claims.  It will be administered by a trustee
selected by the Creditors' Committee, and will be funded with
property and other proceeds of all claims and causes of action
of PSA or Creditors' Committee existing as of the Effective
Date.

ETS is the second largest independent payphone service provider
operating more than 50,000 payphones in the United States,
Mexico, Puerto Rico and the U.S. Virgin Islands.  It reports
more than $100,000,000 in assets and in excess of $100,000,000
in debts.  ETS Vending operates private automated teller
machines and air and vacuum machines at various locations
throughout the United States, while PSA is involved in the
wholesale distribution of payphones and payphone equipment
throughout the United States.


PHAR-MOR INC: Files Chapter 11 in Ohio to Restructure Operations
----------------------------------------------------------------
Phar-Mor, Inc. (Nasdaq: PMOR) announced that the Company and
certain of its affiliates have filed voluntary petitions under
Chapter 11 of the United States Bankruptcy Code to restructure
their operations in an effort to return to profitability.

The Company also announced that it has secured $135 million in
Debtor-In-Possession (DIP) financing through Fleet Retail
Finance, the Company's principal secured lender, which will be
used to fund the Company's operations through the reorganization
process. Pursuant to various motions filed with the U.S.
Bankruptcy Court in the Northern District of Ohio, the Company
has sought immediate authority from the Court to pay in the
ordinary course of business all employees and all post-petition
vendor charges.

The Company said that it will continue to be business as usual
at all its stores, with no changes in service, pricing,
merchandise or store hours. As part of its restructuring,
however, Phar-Mor plans to close approximately 65 of its 139
stores over the next several weeks. These stores have been
identified as either under-performing or outside the Company's
core markets.

The Company will focus continuing operations on the
approximately 74 remaining high-performing stores, while
reducing corporate overhead and solidifying its position as the
leading deep discount drugstore chain in the markets it serves.

Phar-Mor Co-Chairmen and Co-CEOs Abbey J. Butler and Melvyn J.
Estrin said, "This reorganization is necessary to rectify
operational and liquidity difficulties resulting from the
slowing economy, changes in consumer buying habits, increased
competition from larger retail chains, the geographic diversity
of some Phar-Mor locations, the reduction of credit terms by
vendors and the service of high-cost debt. The Company plans to
quickly emerge from bankruptcy with a strong regional presence
in its core markets of operation."

David Schwartz, President and COO of Phar-Mor, said, "After
weighing all the options we believe that this broad
restructuring is the best and most reliable way to position
Phar-Mor for future stability, growth and success. The
transition period will allow us to close unprofitable stores,
streamline operations, reduce overhead, and make the necessary
changes that will solidify Phar-Mor's position as the leading
high-value retailer in our core markets. Although we know it
will be difficult, we believe that with the help of our
dedicated employees, the Company will emerge from this process
in six to nine months as a healthier, more focused and efficient
company, with a firm financial footing. We will continue to
operate approximately 74 stores, each averaging over $10 million
in annual sales."

Mr. Butler said, "Phar-Mor has an outstanding record of service
and a loyal following among its many customers. This will not
change with [Monday's] filing. It will continue to be business
as usual at all stores, where we will continue to offer an
unmatched selection of traditional drug store products, general
merchandise and groceries at a great value."

Mr. Estrin said, "Senior management have committed to remain in
place and lead Phar-Mor throughout this process and beyond. They
have already made substantial progress and will continue their
efforts to: streamline the company's operations; maintain a
strategic mix of successful retail locations and Phar-Mor's
trademark level of service; and build even closer relationships
with the company's many loyal customers."

Phar-Mor is a retail drug store chain operating 139 stores under
the names "Phar-Mor," "Pharmhouse" and "The Rx Place" in 24
states. The Company's common stock is traded on the Nasdaq
National Market under the symbol "PMOR." Phar-Mor's online store
is accessible at  http://www.pharmorwebrx.com and through the  
Company's Web site at  http://www.pharmor.com


PHONETEL: Banking On Merger with Davel to Sustain Operations
------------------------------------------------------------
PhoneTel Technologies Inc.'s revenues decreased by $6,724, or
21.0%, from $29,910 for the first six months of 2000 to $23,636
for the first six months of 2001.

This decrease is primarily due to the decrease in the average
number of installed pay telephones and a decline in call volume.
The average number of installed pay telephones decreased from
36,931 for the six months ended June 30, 2000 to 34,787 for the
six months ended June 30, 2001, a decrease of 2,144, or 5.8%,
principally due to the abandonment of location contracts
relating to approximately 3,400 pay telephones in last half of
2000 offset in part by the increase in pay telephones resulting
from contracts with new and existing location providers.

Revenues from coin calls were $16,925 for the six months ended
June 30, 2000 and $13,918 for the six months ended June 30,
2001. This decrease of $3,007, or 17.8%, is due in part to the
decrease in the average number of installed pay telephones in
the first half of 2001 compared to the first half of 2000.

In addition, long distance and local call volumes and related
coin revenues have been adversely affected by the growth of
wireless communication services, which serve as an increasingly
competitive alternative to payphone usage. To a lesser extent,
coin revenue has declined due to the use of prepaid calling
cards and other types of dial-around calls.

Revenues from non-coin telecommunication services decreased by
$3,431 or 26.9%, from $12,761 for the six months ended June 30,
2000 to $9,330 for the six months ended June 30, 2001. Of this
decrease, long distance revenues from operator service providers
decreased by $2,182 or 37.7%.

This decrease is a result of the decreases in the average number
of pay telephones and the reduction in operator service revenues
caused by the continuing aggressive dial-around advertising by
long distance carriers such as AT&T and MCI Worldcom. Long
distance revenues from operator service providers have also been
adversely affected by the growth in wireless communications.

In addition, revenues from dial-around compensation decreased by
$1,249 or 17.9%, from $6,971 in the first half of 2000 to $5,722
in the first half of 2001, due to the reduction in the average
number of pay telephones and a reduction in the estimated number
of dial-around calls used to record revenues in the first half
of 2001.

In the three months ended June 30, 2001 the Company had a net
loss of $(12,786), as compared to a $(4,914) net loss in the
three months ended June 30, 2000.  The Company's net loss for
the six month period ended June 30, 2001 was $(19,003), compared
to a net loss of $(10,406) for the same period of 2000.  

The Company had a working capital deficiency, excluding the
current portion of long-term debt, of $4,013 at June 30, 2001
compared to $2,698 at December 31, 2000. This decrease in
working capital resulted primarily from a decrease in accounts
receivable.

Net cash provided by operating activities during the six months
ended June 30, 2000 and 2001 was $607 and $989, respectively.
The increase in net cash provided by operations in the first
half 2001 was primarily due to the deferral of certain interest
payments relating to the Company's Exit Financing Agreement
offset by an increase in the Company's operating loss, net of
non-cash items.

The Company has incurred continuing operating losses. The
Company was not in compliance with certain financial covenants
under its Exit Financing Agreement at December 31, 2000 and June
30, 2001 and presently has no additional credit available. In
addition, the Company has not made the monthly scheduled
interest payments from February 1 through August 1, 2001 nor the
principal payment relating to the deferred line fee that was
originally due on November 17, 2000.

As a result of certain amendments to the Company's Exit
Financing Agreement, the lenders have waived the default
relating to the Company's inability to comply with certain
financial covenants at December 31, 2000 through June 30, 2001
and have deferred or extended the due dates of the payments.

In the event the Company is unable to remain in compliance with
the Exit Financing Agreement and the lenders do not waive such
defaults, the outstanding balance could become immediately due
and payable.

The Company's working capital, liquidity and capital resources
may be limited by its ability to generate sufficient cash flow
from its operations or its investing or financing activities.
Cash flow from operations depends on revenues from coin and non-
coin sources, including dial-around compensation, and
management's ability to control expenses. There can be no
assurance that coin and operator service revenues will not
decrease, that revenues from dial-around compensation will
continue at the rates anticipated, or that operating expenses
can be maintained at present or reduced to lower levels.

In the event that cash flow from operating activities is
insufficient to meet the Company's cash requirements, there can
be no assurance that the Company's lenders will grant additional
advances under the Exit Financing Agreement or that the Company
can obtain additional financing to meet its debt service and
other cash requirements.

The Company has had discussions with its lenders who have agreed
in principal to the proposed merger with Davel and the debt
restructuring. The Company is in the process of implementing the
servicing agreement with Davel to achieve the anticipated
efficiencies and cost savings associated with the consolidation
of both companies' field office operations. ]

As part of the Company's ongoing evaluation of its payphone
base, the Company expects to remove additional payphones that
have become unprofitable. In addition, the Company is developing
alternate sources of revenue.

With the expected operational efficiencies and continued support
of its lenders, management believes, but cannot assure, that
cash flow from operations, including any new sources of revenue,
will allow the Company to sustain its operations and meet its
obligations through the remainder of 2001 or until the proposed
merger with Davel is completed.


PILLOWTEX CORP: Court Grants GE Public Finance Relief From Stay
---------------------------------------------------------------
Judge Robinson approved GE Public Finance's request for relief
from the automatic stay allowing the GE Public Finance to
enforce its rights with respect to the Equipment, including, but
not limited to taking possession of the Equipment; selling the
Equipment; and applying the proceeds of the sale to the
obligations owing to GE Public Finance.

                        Background

GE Capital Public Finance, Inc. is party to a Loan Agreement
dated July 1996 with Opelika Industries, Inc. and the Pulaski
County-Hawkinsville Development Authority.  Under the Loan
Agreement, GE Public Finance loaned $4,500,000 to Pulaski, who
in turn agreed to issue public bonds of the same amount to
finance Opelika's acquisition of certain Equipment.

To secure repayment of the Loan Agreement, Opelika agreed to
grant to GE Public Finance a first priority security interest in
all the Equipment.  This lien was perfected by GE Public Finance
by filing UCC-1 Financing Statements with the Georgia Secretary
of State.

According to Thomas D. Walsh, Esq., at McCarter & English, LLP,
in Wilmington, Delaware, Opelika paid the loan installments up
to October 2000.  But since Petition Date, Mr. Walsh says, the
Opelika failed to make its monthly payments.  As a result, GE
Public Finance was getting apprehensive that their interests
were not adequately protected.

Mr. Walsh noted that Opelika still owes GE Public Finance over
$1,350,000, while the value of the Equipment -- which continues
to depreciate -- securing the Loan Agreement was less than
$500,000.

Moreover, Mr. Walsh said it was clear that the Debtor had no
equity in the Equipment since the value of the Equipment was
$850,000 below the loan amount now owed.  Mr. Walsh added that
the Hawkinsville, Georgia plant where the Equipment was located
had already been closed by Opelika. (Pillowtex Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)    



SAFETY-KLEEN: U.S. Trustee Settles Jay Alix Employment Squabble
---------------------------------------------------------------
As reported in the Troubled Company Reporter from time-to-time,
Patricia A. Staiano, the United States Trustee for Region 3,
launched full-scale assaults against Jay Alix & Associates --
the nation's leading turnaround management firm -- in the
Safety-Kleen, Harnischfeger and Fruit of the Loom chapter 11
cases pending before Judge Walsh in Wilmington.  The U.S.
Trustee's office balked at Jay Alix professionals serving as
officers, challenged Jay Alix's disinterestedness, complained
the Firm didn't provide adequate disclosure, deposed Jay Alix
Professionals for days, demanded Herculean documentation
productions, and interposed objections to the Firm's Fee
Applications.  The U.S. Trustee focused her legal arguments on
the question of whether Jay Alix should be hired as a crisis
managers under 11 U.S.C. Sec. 363 (like any other senior
executive hired by a debtor-in-possession) or as a bankruptcy
professional under 11 U.S.C. Sec. 327 (like lawyers, accountants
and appraisers).  

Nina Novak, editor for Turnarounds & Workouts, attempted over a
year ago to figure-out what was behind the U.S. Trustee's
attack.  Ms. Novak's interviews with corporate restructuring
industry professionals conveyed confusion about the problem.  
Observers agreed the Ms. Staiano's problem wasn't Sec. 363 vs.
Sec. 327.  Official comment from Ms. Staiano's office provided
Ms. Novak with no useful insights.

After a year of bickering and wrestling, Ms. Staiano and Jay
Alix have resolved the U.S. Trustee's problem by stipulation.  
Stipulations filed in the Safety-Kleen and Harnischfeger cases
attach a protocol that describes the decision process and rules
that will determine whether a turnaround professional should be
hired as a crisis manager under Sec. 363 or as a professional
under Sec. 327.  The protocol appears to be drafted with a view
toward establishing a framework that will be useful to all
turnaround professionals in future cases (at least in Region 3),
to avoid the cost and distraction this type of litigation
interjects into a chapter 11 restructuring by a party with no
economic stake in the outcome of the case.

Frank J. Perch III, Esq., and Joseph J. McMahon, Jr., Esq.,
Trial Attorneys for the United States Trustee's office, present
Judge Walsh with their settlement motion for review and
approval:

              The Stipulation of Settlement Protocol
      for Engagement of Jay Alix & Associates and Affiliates

I.  Retention Guidelines

      A.  Jay Alix & Associates ("JA&A") is a firm that provides
turnaround and crisis management services, financial advisory
services, management consulting services, information systems
services and claims management services. In some cases the firm
provides these services as advisors to management, in other
cases one or more of its staff serve as corporate officers and
other of its staff fill positions as full time or part time
temporary employees, and in still other cases the firm may serve
as a claims administrator as an agent of the Bankruptcy Court.

JA&A and its affiliates will not act in more than one of the
following capacities in any single bankruptcy case:

     (i) crisis manager retained under Sec. 363 of the
         Bankruptcy Code,

    (ii) financial advisor retained under Sec. 327,

   (iii) claims agent/claims administrator appointed pursuant to     
         28 U.S.C. Sec. 156(c) and any applicable local rules,
         or

    (iv) investor/acquirer.

Upon confirmation of a Plan JA&A may only continue to serve in a
similar capacity. Further, once JA&A or one of its affiliates is
retained under one of the foregoing categories it may not switch
to a different retention capacity in the same case. However,
with respect to subsequent investments by Questor this
prohibition is subject to the time limitations set forth in IV.B
below.

      B. Engagements involving the furnishing of interim
executive officers' whether prepetition or postpetition shall be
provided through JA&A Services LLC ("JAS").

      C. JAS shall seek retention under section 363 of the
Bankruptcy Code.  The application of JAS shall disclose the
individuals identified for executive officer positions as well
as the names and proposed functions of any additional staff to
be furnished by JAS. In the event the Debtor or JAS seeks to
assume additional or different executive officer positions, or
to modify materially the functions of the persons engaged, a
motion to modify the retention shall be filed. The Trustee
agrees that it is often not possible for JAS to know the extent
to which full time or part time temporary employees will be
required when beginning an engagement. In part this is because
the extent of the tasks that need to be accomplished is not
fully known and in part it is because JAS is not yet
knowledgeable about the capability and depth of the client's
existing staff. Accordingly, JAS shall file with the Court, with
copies to the U.S. Trustee and all official committees a report
of staffing on the engagement for the previous month. Such
report shall include the names and functions filled of
individuals assigned. All staffing shall be subject to review by
the Court in the event an objection is filed.                          

          Affiliates of JA&A presently are System Advisory Group
(an organization that provides information services), JA&A
Services LLC (an entity that provides temporary employees),
Questor Management Company LLC (an organization that manages
Questor Partners Fund), Questor Partners Fund II, and various
side-by-side entities, which are limited partnerships that
invest in underperforming and troubled companies, and ACT Two
(an entity that owns and operates a private airplane). Future
affiliates of JA&A, if any, will be subject to the limitations
set forth herein.            

          "Executive officers" shall include but is not
necessarily limited to Chief Executive Officer, President, Chief
Operating Officer, Treasurer, Chief Financial Officer, Chief
Restructuring Officer, Chief Information Officer, and any other
officers having similar roles, power or authority, as well as
any other officers provided for in the company's bylaws.

      D.  Persons furnished by JAS for executive officer
positions shall be retained in such positions upon the express
approval thereof by an independent Board of Directors whose
members are performing their duties and obligations as required
under applicable law ("Board"), and will act under the
direction, control and guidance of the Board and shall serve at
the Board's pleasure (i.e., may be removed by majority vote of
the Board).

      E.  The application to retain JAS shall make all
appropriate disclosures of any and all facts that may have a
bearing on whether JAS, its affiliates, and/or the individuals
working on the engagement have any conflict of interest or
material adverse interest, including but not necessarily limited
to the following:

            1. Connection, relationship or affiliation with
secured creditors, postpetition lenders, significant unsecured
lenders, equity holders, current or former officers and
directors, prospective buyers, or investors;

            2. Involvement as a creditor, service provider or
professional of any entity with which JA&A or any affiliate has
an alliance agreement, marketing agreement, joint venture,
referral arrangement or similar agreement;

            3. Any prepetition role as officer, director,
employee or consultant,  but service as a pre-petition officer
will not per se cause disqualification;

            4. Any prepetition involvement in voting on the
decision to engage JA&A or JAS in the bankruptcy case, and/or
any prepetition role carrying the authority to decide
unilaterally to engage JA&A or JAS;

            5. Information regarding the size, membership and
structure of the Board so as to enable the UST and other
interested parties to determine that the Board is independent;

            6. Whether the executive officers and other staff
for the engagement am expected to be engaged on a full time or
part time basis, and if part time whether any simultaneous or
prospective engagement exists that may be pertinent to the
question of conflict or adverse interest;

            7. The existence of any unpaid balances for
prepetition services; and

            8. The existence of any asserted or threatened
claims against JA&A, JAS or any person furnished by JA&A/JAS
arising from any act or omission in the course of a prepetition
engagement.              

In no case shall any principal, employee or independent
contractor of JA&A, JAS and affiliates serve as a director of
any entity while JA&A. JAS or any affiliate is rendering
services in a bankruptcy proceeding, and JA&A, JAS and their
affiliates shall not seek to be retained in any capacity in a
bankruptcy proceeding for an entity where any principal,
employee or independent contractor of JA&A, JAS and affiliates
serves or has previously served as a director of the entity or
an affiliate thereof within two yews prior to the petition date.
During such two year period, neither JA&A, JAS or affiliates
shall have provided any professional services to the entity nor
shall any individuals associated with JA&A, JAS and affiliates
have served as an Executive Officer.

      F. Disclosures shall be supplemented on a timely basis as
needed throughout the engagement.              

      G. Where JA&A does not act as a crisis manager its
retention will be sought as a financial advisor under section
327 of the Code or as a court-appointed claims representative.

II.  Compensation

      A. Compensation in crisis management engagements shall be
paid to JAS.

      B. The application to retain JAS shall disclose the
compensation terms including hourly rates and the terms under
which any success fee or back-end fee may be requested.

      C. JAS shall file with the Court, and provide notice to
the Trustee and all official committees, reports of compensation
earned and expenses incurred on at least a quarterly basis. Such
reports shall summarize the services provided, identify the
compensation earned by each executive officer and staff employee
provided, and itemize the expenses incurred. The notice shall
provide a time period for objections. All compensation shall be
subject to review by the Court in the event an objection is
filed (i.e., a "negative notice" procedure).

      D. Success fees or other back-end fees shall be approved
by the Court at the conclusion of the case on a reasonableness
standard and shall not be pre-approved. No success fee or back-
end fee shall be sought upon conversion of the case, dismissal
of the case for cause or appointment of a trustee.

III.  Indemnification

      A. Debtor is permitted to indemnify those persons serving
as executive officers on the same terms as provided to the
debtor's other officers and directors under the corporate bylaws
and applicable state law, along with insurance coverage under
the debtor's D&O policy.

      B. There shall be no other indemnification of JA&A, JAS or
affiliates.

IV.    Subsequent Engagements

      A.  Pursuant to the "one hat" policy as stated above,
after accepting an engagement in one capacity, JA&A and
affiliates shall not accept another engagement for the same or
affiliated debtors in another capacity.

      B.  For a period of three years after the conclusion of
the engagement, Questor shall not make any investments in the
debtor or reorganized debtor where JA&A, JAS or another
affiliate has been engaged.


SAFETY-KLEEN: Seeks Approval of Texas Consent Agreement with EPA
----------------------------------------------------------------
Safety-Kleen Corporation and its affiliated and related Debtors
seek Judge Walsh's authority to enter into a consent agreement
and final order, with the EPA, the purpose of which is to settle
certain violations alleged by the EPA in a complaint filed on
March 28, 2000, in connection with a facility operated by
Safety-Kleen in Denton, Texas.

Prior to the Petition Date, the EPA filed the Complaint against
Safety-Kleen in connection with alleged violations of various
federal and state environmental regulations at the Denton
Facility. In the Complaint, the EPA sought an order that might
have disrupted or even caused the cessation of Safety-Kleen's
operations at the Denton Facility on account of such alleged
violations.

                      The Consent Agreement

The Consent Agreement calls for the payment of a civil penalty
by Safety-Kleen in the amount of $105,433.00. The civil penalty
is deemed to be an allowed general, unsecured claim in Safety-
Kleen's chapter 11 case and is to be satisfied in the same
manner as other general, unsecured claims are satisfied in any
plan of reorganization for Safety-Kleen. There are no other
affirmative obligations placed upon Safety-Kleen as a result of
the Consent Agreement.

The Consent Agreement reflects the mutual agreement of the EPA
and Safety-Kleen as to the resolution of the issues raised in
the Complaint and serves as a final compromise and settlement of
the allegations raised in the Complaint. By its terms, the
Consent Agreement requires Judge Walsh's review and approval.

      The Debtors Say: Best Interests of Estate to Settle

Bankruptcy Rule 9019 empowers this Court to approve compromises
and settlements if they are in the best interests of the
estates. In determining whether to approve a settlement, a
bankruptcy court should consider "(1) the probability of success
... (2) the difficulties associated that may be encountered in
collection; (3) the complexity of the litigation and the
attendant expense, inconvenience and delay [involved]; and (4)
the paramount interest of creditors."  Here, all four of the
above elements are satisfied.

On October 17, 2000, this Court entered an "Order Pursuant to 11
U.S.C. 105(a) and Fed. R. Bankr. P. 9019 Approving Consent
Agreement Between Certain Debtors and United States
Environmental Protection Agency".  Under the terms of the
Consent Agreement Order, this Court approved a Consent
Agreement, dated as of August 25, 2000, between the EPA and 27
debtors and debtors-in-possession in these chapter 11 cases.  

Under paragraph 100 of the Global Consent Decree, the
Debtors/respondents are precluded from discharging or impairing
certain environmental claims in these chapter 11 cases,
including claims of the type asserted by the EPA in the
Complaint. Accordingly, the EPA's actions under the Complaint
were not subject to the automatic stay.

Entry into the Consent Agreement is in the best interests of
Safety-Kleen and its estate. Rather than commencing a complete
defense against the allegations contained in the Complaint and
risking disruption of operations at the Denton Facility, Safety-
Kleen has agreed to a modest penalty that will be treated as an
allowed general, unsecured claim in its chapter 11 case.

In this way, Safety-Kleen preserves estate assets by avoiding
defense costs and eliminating the small, but very real, risk of
cessation of operations at the Denton Facility in exchange for
a relatively small civil penalty. (Safety-Kleen Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)    


SANLUIS CORPORACION: S&P Drops Currency Credit Ratings to D
-----------------------------------------------------------
Standard & Poor's lowered its local and foreign currency
corporate credit ratings on SANLUIS Corporacion S.A. de C.V. to
'D' from double-'B'-minus. Standard & Poor's does not rate any
debt issued by SANLUIS.

The ratings were lowered to 'D' to reflect SANLUIS' voluntary
decision not to honor about $8.9 million in interest payments on
its $200 million notes due 2008, despite having available funds
to meet this obligation.

The outlook on the corporate credit rating had been changed to
negative on May 9, 2001.

SANLUIS Corporacion has sprung to the top among Mexican auto
parts suppliers with its sales of leaf and coil springs and
torsion bars. The company's Rassini division makes suspension
and brake components for pickups, minivans, SUVs, and other
passenger vehicles. Its brake products include rotors, drums,
and hubs. Rassini sells its products throughout the world. Its
customers include General Motors, Ford, and DaimlerChrysler.

SANLUIS's mining division, Luismin, operates mines in central
Mexico, some of which are over 100 years old. Luismin produces
bars of dor, (90% silver/10% gold), which are used to make
jewelry, electrical conductors, and coins.


TELESYSTEM INTERNATIONAL: S&P Drops 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

                                                        TO  FROM
   Telesystem International Wireless Inc.

   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


TELSCAPE INTL: Secures Extension to Nov. 19 to File Schedules
-------------------------------------------------------------
Telscape International, Inc. persuaded the U.S. Bankruptcy Court
for the District of Delaware that an extension of the deadline
to file its schedules of assets and liabilities and statements
of financial affairs until November 19, 2001, is warranted.

The Company also has requested an extension in the assumption or
rejection of unexpired leases of nonresidential real property to
December 21, 2001.  

Telscape International is a leading integrated communication
providers serving the Hispanic markets in the United States,
Mexico and Central America, offering local and long distance
telephone, internet and pre-paid calling card services.


US AIRWAYS: S&P Downgrades Reflect Effects of Terrorist Attacks  
---------------------------------------------------------------
Standard & Poor's lowered its ratings on US Airways Group Inc.
and US Airways Inc. Ratings remain on CreditWatch with negative
implications, where they were placed Sept. 13, 2001.

The downgrades reflect the severe impact of sharply reduced air
traffic since the Sept. 11 terrorist attacks in New York City
and Washington, D.C., with expectations for only a slow recovery
in the coming months.  This worsens significantly an already
grim airline industry outlook, with depressed business travel
and higher labor costs.

The attacks and surrounding sense of crisis may undermine
consumer confidence, which is already shaky following the U.S.
slowdown, further weakening the U.S. economy and demand for air
travel. Pending moves to provide federal aid to the airlines in
the form of direct grants, liability relief, and possible other
support will be important in limiting the severe financial
damage, but will not offset it entirely.

The extent of the downgrades was determined principally by:

    * The risk of a downward rating action prior to the current
      crisis, and thus how much credit "cushion" was available
      within those ratings;

    * The cash and bank lines available the airline Company, as
      well as the amount of owned, unsecured aircraft that could
      be used in secured debt or sale-leasebacks to raise
      further funds; and

    * The ability of the airlines to reduce cash operating
      expenses and commitments for capital spending.

In determining the need for any further downgrades of debt
issues, Standard & Poor's will consider not only the corporate
credit ratings of the Company, but also the adequacy of asset
protection for aircraft-backed debt, in light of current and
expected global industry conditions, and the effect of mounting
levels of secured debt and leases on recovery prospects for
unsecured creditors.

             Ratings Lowered, Remain on CreditWatch
                  with Negative Implications

                                             To          From
     US Airways Group Inc.
     Corporate credit rating                  CCC+         B

     US Airways Inc.

     Corporate credit rating                  CCC+         B
     Senior secured debt                      CCC+         B
     All equipment trust certificates rated   A            AA-
                                              A-           A+
                                              BBB+         A
                                              BBB          A-
                                              BB+          BBB
                                              BB           BBB
                                              BB-          BB+
                                              B            BB-
     

U.S. TIMBERLANDS: Privatization Issue Prompts S&P Downgrades
------------------------------------------------------------
Standard & Poor's lowered its ratings on U.S. Timberlands
Klamath Falls LLC.  The ratings remain on CreditWatch with
negative implications, where they were placed Nov. 6, 2000.

The CreditWatch placement followed the announcement by the
management of U.S. Timberlands Co. L.P., Klamath's 99%-owner,
that it was considering taking U.S. Timberlands private.

The downgrade results from a significant deterioration in
merchantable timber volume on Klamath's properties (about
550,000 acres in Oregon) due primarily to aggressive harvest
levels. In addition, transfers of properties to an affiliate
have caused Klamath's timberland acreage to decline
somewhat.

The recent suspension of distributions to unit-holders of U.S.
Timberlands, a master limited partnership, and plans to take the
company private, if successful, should lessen cash flow
generation requirements at Klamath and give management greater
discretion over the volume and timing of timber harvests.

Nevertheless, there is a risk that Klamath's property value will
be insufficient to permit refinancing of the entire $225 million
of senior unsecured notes at their maturity in 2007.

Klamath's operations consist of growing and harvesting timber
and selling logs to third party wood processors. Oversupply
conditions and softening demand for wood products have caused
log prices to decline significantly during the past year.

This has caused the company to harvest at levels well above the
timber growth rate and management's original planned harvest
levels in order to generate sufficient cash to meet operating
requirements, interest payments and unit-holder distributions. A
rapid recovery in log and timber pricing is not expected.

In addition to cyclicality, Klamath faces business risks
including limited product and geographic diversity and customer
concentration.

The ratings remain on CreditWatch with negative implications
pending clarification of U.S. Timberlands' new ownership and
capital structure and cash flow obligations. Additional
uncertainty stems from a class action lawsuit filed in
connection with the privatization.

              Ratings Lowered & Remaining on CreditWatch
                     with Negative Implications

                                               Ratings
U.S. Timberlands Klamath Falls LLC    To                   From
   Corporate credit rating            B                     B+
   Senior unsecured debt              B                     B+


UNITED AIRLINES: S&P Drops Ratings and Anticipates Slow Recovery
----------------------------------------------------------------
Standard & Poor's drops its ratings on United Air Lines Inc. The
downgrades reflect the severe impact of sharply reduced air
traffic since the September 11 terrorist attacks in New York
City and Washington, D.C., with expectations for only a slow
recovery in the coming months.

                                             To          From
     UAL Corp.
     Corporate credit rating                  BB-         BB+
     Preferred stock                          B-          B+
     
     United Air Lines Inc.
     Corporate credit rating                  BB-         BB+
     Senior unsecured debt                    BB-         BB+
     All equipment trust certificates rated
                                              AA          AAA
                                              A           AA-
                                              A-          A+
                                              BBB         A-
                                              BBB-        BBB+
                                              BB+         BBB
     
This worsens significantly an already grim airline industry
outlook, with depressed business travel and higher labor costs.
The enormity of the New York and Washington attacks, and the
resulting investigations and possible U.S. military response,
will keep the events in the public eye for a significant period.

In addition, the attacks and surrounding sense of crisis may
undermine consumer confidence, which is already shaky following
the U.S. slowdown, further weakening the U.S. economy and demand
for air travel. Pending moves to provide federal aid to the
airlines in the form of direct grants, liability relief, and
possible other support will be important in limiting the severe
financial damage, but will not offset it entirely.

The extent of the downgrades was determined principally by:

    * The risk of a downward rating action prior to the current
      crisis, and thus how much credit "cushion" was available
      within those ratings;

    * The cash and bank lines available to United Air Lines, as
      well as the amount of owned, unsecured aircraft that could
      be used in secured debt or sale-leasebacks to raise
      further funds; and

    * The ability of United Air Lines to reduce cash operating
      expenses and commitments for capital spending.

In determining the need for any further downgrades of debt
issues, Standard & Poor's will consider not only the corporate
credit ratings of the United Air Lines, but also the adequacy of
asset protection for aircraft-backed debt, in light of current
and expected global industry conditions, and the effect of
mounting levels of secured debt and leases on recovery prospects
for unsecured creditors.

Ratings remain on CreditWatch with negative implications, where
they were placed Sept. 13, 2001.


UNITED CAPITOL: S&P Assigns R Rating as Insurer Found Insolvent
---------------------------------------------------------------
Standard & Poor's assigned its 'R' financial strength rating to
United Capitol Insurance Co.

This rating action reflects the order of conservation served by
Illinois Director of Insurance Nathaniel Shapo on Sept. 12,
2001, because of the Department of Insurance's determination
that United Capitol was insolvent by more than $1 million.

The order of conservation allows the director to preserve the
assets of the company for creditors and claimants.

United Capitol is a wholly owned subsidiary of United Capitol
Holding Co. Inc., which is wholly owned by Frontier Insurance
Co. Frontier Insurance Co. was placed under voluntary
rehabilitation by the New York Department of Insurance on Aug.
27,2001. These companies are subsidiaries of Frontier Insurance
Group Inc.

An insurer rated 'R' is under regulatory supervision owing to
its financial condition. During the pendency of the regulatory
supervision, the regulators may have the power to favor one
class of obligations over others or pay some obligations and not
others. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations.


VENTAS INC: Agrees to Participate in Kindred Secondary Offering
---------------------------------------------------------------
Ventas, Inc. (NYSE:VTR) has said that its Board of Directors
declared a regular quarterly cash dividend of $0.22 a share
payable on October 1, 2001 to shareholders of record on
September 21, 2001. Ventas, Inc. has approximately 68.9 million
shares of common stock outstanding.

                Ventas Reaffirms Dividend Guidance

Ventas confirmed its dividend guidance of $0.88 a share for
2001. Should taxable net income be higher or lower than the
Company's projections, it will likely make a one-time adjustment
to the portion of its 2001 dividend expected to be announced in
December 2001.

The Company added that the dividend for the fourth quarter of
2001 may be satisfied by a distribution of a combination of cash
or other property or securities, including the Company's stock
in its primary tenant Kindred Healthcare, Inc. (OTCBB:KIND).

Ventas owns 1,498,500 shares of Kindred stock it received on
April 20, 2001 when Kindred successfully emerged from
bankruptcy.

        Ventas to Participate in Kindred Secondary Offering

Ventas also said that Kindred has filed a registration statement
to distribute approximately $50 million of its common equity
currently held by its largest shareholders, including Ventas.
Ventas has agreed to participate in the secondary offering to a
maximum of 100,000 shares of Kindred stock. In connection with
the secondary offering, Kindred has also registered to offer for
sale $100 million in common shares that will be newly issued by
Kindred.

"Kindred's strong second quarter earnings results and the
turnaround in the long term healthcare sector underscore an
attractive future for our tenant. We are pleased to be able to
support Kindred's effort to create liquidity in its common
equity," Ventas President and CEO Debra A. Cafaro said.

Ventas, Inc. is a real estate investment trust whose properties
include 44 hospitals, 216 nursing facilities, and eight personal
care facilities in 36 states.


VLASIC FOODS: Bickering with Lenders Over Disclosure Statement
-------------------------------------------------------------
Morgan Guaranty Trust Company of New York, as administrative and
collateral agent for certain lenders, and The Chase Manhattan
Bank, as syndication agent for the Pre-Petition Secured Parties
contend that Vlasic Foods International, Inc.'s Disclosure
Statement fails to set forth sufficient information to permit
creditors in all classes to vote on an informed basis.

Mark D. Collins, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, adds the Disclosure Statement also fails
to describe specifically the claims of the Pre-Petition Secured
Parties and fails to describe specifically the treatment to be
accorded the Senior Secured Claims.

Mr. Collins notes the Plan states that the Senior Secured Claims
are unimpaired and therefore purports to deny voting rights to
such claims.  But the Plan fails to provide, and the Disclosure
Statement fails to disclose, specifically that:

  (a) full contract rate interest, at the default rate, is to be
      paid on the Senior Secured Claims consisting of unpaid
      principal interest under the Pre-Petition Credit
      Agreement;

  (b) the Cash Collateral Order will remain in effect until the
      Senior Secured Claims, including all contingent claims for
      indemnification and related costs and expenses, are paid
      in full; and

  (c) that the Senior Secured Claims are allowed and unimpaired.

If the Plan does not so provide, and the Disclosure Statement
does not so disclose, then, Mr. Collins argues, the Senior
Secured Claims are impaired and entitled to vote.  According to
Mr. Collins, the Senior Secured Claims may be expected to vote
against the Plan.

Mr. Collins explains the Pre-Petition Secured Parties are senior
secured creditors pursuant to a pre-petition credit agreement
dated September 1998, among Vlasic Foods International, Inc. and
the Pre-petition Secured Parties, and related guaranty
agreements, security agreements and mortgages.  Substantially
all of the Debtors' assets were pledged as collateral to the
Pre-petition Secured Parties pursuant to the Pre-petition
Agreements, Mr. Collins notes.

As of Petition Date, Mr. Collins claims, the Debtors were
jointly and severally liable to the Pre-petition Secured Parties
in the total principal amount of $318,700,000 in respect of
revolving and term loans made by the Pre-petition Secured
Parties pursuant to the Pre-petition Credit Agreement.  

This debt continues to accumulate, Mr. Collins informs Judge
Walrath.

According to Mr. Collins, the Debtors also failed to pay the
Pre-petition Secured Parties an estimated $125,000 for expenses
and indemnification costs.  These expense and indemnification
claims will likely continue to grow.

Although an interim distribution of $323,616,449 - including
$318,700,000 on account of principal, $446,794 on account of
interest; and $4,469,655 on account of fees and costs - has been
made on a provisional basis to the Pre-petition Secured Parties,
Mr. Collins says, this did not pay in full the total amount of
principal and accrued interest and fees outstanding on the
interim distribution date.  The Pre-petition Secured Parties
assert that the unpaid interest balance, plus interest on it
accrued through a recent date, is approximately $2,343,000.

Mr. Collins argues that the Pre-petition Secured Parties are
entitled to retain their interest in the Collateral.  The Senior
Secured Claims are also entitled to subordination rights with
respect to the Holders and the Participants, Mr. Collins adds.

According to Mr. Collins, the Disclosure Statement is defective
because it fails to properly describe the nature and amount of
the Senior Secured Claims; fails to disclose the specific
treatment of such claims; fails to mention their subordination
rights; and purports to extinguish the vote of such claims.
(Vlasic Foods Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


WINSTAR COMMS: Settles Lease-Related Claim with TST Woodland
------------------------------------------------------------
Winstar Communications, Inc. present the Court with a settlement
agreement between Winstar Wireless Inc., and TST Woodland, LLC.

Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor in
Wilmington, Delaware discloses that TST Woodland, LLC, and
Winstar Wireless Inc. (WWI) entered into a Deed of Lease on
August 18, 1999.  

Under the lease agreement, WWI agreed to lease from TST the
Waterview I building in Woodland Park, Herndon, Virginia and TST
granted WWI certain rights and options with respect to other
parcels of land at Woodland Park.

Under the lease agreement, WWI is required to provide a security
deposit and pursuant to such clause, WWI submitted a Letter of
Credit issued by the Bank of New York dated May 25, 2000 in the
aggregate amount of $10,121,146.  

The lease also stipulates that in case WWI is in bankruptcy or
defaults in the terms of the lease, TST has the right to notify
the bank issuing the Letter of Credit to apply the proceeds for
any amount with respect to which WWI is in default.

Ms. Morgan states that WWI has never occupied the property and
does not intend to and because it has no present or future plans
for such property, it intends to reject the lease.  As a result
of the nonpayment of rent and rejection of the lease, Ms. Morgan
states that TST asserts that it would have the right to draw
under the Letter of Credit and also alleges that WWI is in
breach of certain provisions of the Lease.

To resolve their differences, WWI & TST have been in
negotiations to enable TST to benefit from the Letter of Credit
prior to the rent commencement date in exchange for reducing the
amount of such draw.  

Under the settlement agreement TST will agree to draw the full
amount under the Letter of Credit $10,121,146 and pay $2.1
million to WWI in settlement of any disputes arising under the
lease. (Winstar Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

                          *********

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

A list of Meetings, Conferences and Seminars appears in each  
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to  
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
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.  

For copies of court documents filed in the District of Delaware,  
please contact Vito at Parcels, Inc., at 302-658-9911. For  
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &  
Consulting at 207/791-2852.

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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.  Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 301/951-6400.

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