TCR_Public/010928.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

          Friday, September 28, 2001, Vol. 5, No. 190

                          Headlines

AIR CANADA: Immediate Liquidity Risk Spurs S&P to Drop Rating
ALGOMA STEEL: Gains Extension of CCAA Protection to October 12
AMF BOWLING: Panel Seeks Bar Date Extension to File Claims
APPLETON PAPERS: S&P Assigns BB Corporate Credit Ratings
ARMSTRONG HOLDING: Property Claimants Hire Tersigni for Advice

BUILDNET: MH2 Acquires Majority of Assets at Bankruptcy Auction
CARBIDE/GRAPHITE: Enters Deal with Lenders for $135M Facility
COMDISCO: Committee Taps Gardner Carton as Local Counsel
CONTINENTAL AIRLINES: Expects to Avert Over 1,000 Furloughs
CONTINENTAL AIRLINES: Chairman and CEO Forego Salary and Bonuses

DOBSON COMMS: S&P Revises Outlook On Possible Merger & Workout
ENCOMPASS SERVICES: S&P Concerned About Expected Low H2 EBITDA
EXODUS COMMS: Nasdaq Requests for Information & Halts Trading
EYE CARE: S&P Downgrades Ratings On Limited Finance Flexibility
FACTORY CARD: Wants Lease Decision Deadline Extended to Jan. 31

FRIEDE GOLDMAN: Retaining Houlihan Lokey as Financial Advisor
GENESIS HEALTH: Moves to Settle Qui Tam Actions for $2.1 Million
ISPAT MEXICANA: S&P Drops Rating on Trust No. 96-1 to B+
KNOWLEDGE HOUSE: Intends to Reorganize Under Canadian BIA
MARINER POST-ACUTE: Genesis Offers $60MM for Pharmacy Business

MERRILL LYNCH: Fitch Junks 3 Classes of Series 1999-C1 Notes
MINDSET INTERACTIVE: Taps Jeffers For Corporate Legal Services
NAB ASSET: Files For Chapter 11 Protection in N.D. Texas
NAB ASSET: Chapter 11 Case Summary
NATIONAL RECORD: Creditors Still Hope That A Buyer Will Surface

NEXTERA ENTERPRISES: Expects to Face Nasdaq Delisting
NEXTWAVE: LCC Sells Stock and Receivables Position for $21.4MM
OWENS CORNING: Seeks Okay to Hire SLG As Insurance Consultant
OWENS CORNING: Gets Approval to Share Asbestos Claim Information
PACIFICARE HEALTH: Fitch Concerned About Poor Operating Results

PACIFIC GAS: Summary & Overview of Joint Plan of Reorganization
PACIFIC GAS: FTB Files for Tax Claims Totaling $22 Million
PHASE2MEDIA: US Trustee Appoints Unsecured Creditors' Committee
PILLOWTEX: Gets Approval to Pay Prepetition Real Property Taxes
PSINET INC: CISCO Wants Stay Relief to Enforce Equipment Rights

RELIANCE: Regulator Gripes About Ordinary Course Professionals
RENAISSANCE CRUISES: Files For Chapter 11 Protection in Florida
RENAISSANCE CRUISES: Chapter 11 Case Summary
SAFETY-KLEEN CORPORATION: Red Ink Continues to Flow in Q2
STANDARD MEDIA: Sells Assets to AOL and IDG For $1.4 Million

SWEETHEART CUP: S&P Keeps Negative Outlook on Assigned Ratings
TELEPANEL SYSTEMS: Will Get Funds from VenGrowth & Royal Bank
TELESCAN INC: Cancels Appeal of Nasdaq Delisting Determination
US AIRWAYS: Commences 23% Systemwide Capacity Reduction
WAM!NET: Potential Default Prompts S&P to Further Junk Ratings

WARNACO GROUP: Wins Court's Nod to Hire Dewey as Special Counsel
WINSTAR COMMUNICATIONS: Cisco Demands Payments on Leases

* BOOK REVIEW: The Turnaround Manager's Handbook

                          *********

AIR CANADA: Immediate Liquidity Risk Spurs S&P to Drop Rating
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured debt ratings on Air Canada to single-'B'-plus from
double-'B'-minus. The ratings remain on CreditWatch with
negative implications, where they were placed Sept. 13, 2001.

The downgrade reflects a deteriorating financial profile marked
by decreased operating margins, increasing debt leverage, and
declining funds from operations.

These measures will be exacerbated by the severe impact of
sharply reduced air traffic since the Sept. 11 terrorist attacks
in New York, N.Y., and Washington, D.C., with expectations for
only a slow recovery in the coming months. 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 North American slowdown, further weakening the economy and
demand for air travel.

The immediate liquidity risk to Air Canada is buffered by a
strong cash and credit position that exceeded C$1.2 billion as
of June 30, 2001, plus a significant amount of unsecured and
marketable assets that are available for transactions to raise
further funds.

In addition, the recent moves by the federal government to
provide aid in the form of certain insurance coverage, plus
potential other direct financial support, will be important in
limiting the severe financial damage.

The airline is expected to take further action to reduce costs
in response to the decline in traffic. Further rating actions
will be dependent on the amount and form of any direct
government aid, the extent of the passenger drop-off, and the
company's progress in reducing its cost structure to the new
levels of demand.


ALGOMA STEEL: Gains Extension of CCAA Protection to October 12
--------------------------------------------------------------
Algoma Steel Inc. (TSE: ALG) announced that it has been granted
an extension of its protection under the Companies' Creditors
Arrangement Act (CCAA) and the time for the filing of a Plan of
Arrangement to October 12, 2001. The current order was to expire
on September 28, 2001. The extension was supported by all of
Algoma's stakeholders.

Hap Stephen, Algoma's Chief Restructuring Officer, said "The
short duration of this extension (two weeks) reflects the fact
that we are making good progress towards the completion and
filing of a restructuring plan for consideration by Algoma's
stakeholders."

Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is
Canada's third largest integrated steel producer. Revenues are
derived primarily from the manufacture and sale of rolled steel
products including hot and cold rolled sheet and plate.


AMF BOWLING: Panel Seeks Bar Date Extension to File Claims
----------------------------------------------------------
The Official Committee of Unsecured Creditors of AMF Bowling
Worldwide, Inc. asks the Court for an extension of the deadline
established for filing proof of claims, which has been
previously set by the Court on September 24, 2001.

Jonathan L. Hauser, Esq., at Troutman Sanders Mays & Valentine,
in Richmond, Virginia, contends that the court may extend the
time within which proofs of claim or interest may be filed for
cause shown in case creditors of a Chapter 11 debtor are
prevented from complying with the bar date by an act of God or
some other circumstance beyond their control.

Mr. Hauser informs the Court that Bank of New York has its
offices in the immediate area impacted by the World Trade Center
episode.  In light of this tragedy that has dramatically
impacted the ability of this creditor to file a proof of claim,
Mr. Hauser claims that just cause exists for this court to grant
additional time for this creditor of the Debtors to file its
proof of claim. (AMF Bankruptcy News, Issue No. 8 Bankruptcy
Creditors' Service, Inc., 609/392-0900)    


APPLETON PAPERS: S&P Assigns BB Corporate Credit Ratings
--------------------------------------------------------
Standard & Poor's assigned its double-'B' corporate credit
rating to Appleton Papers Inc. At the same time, Standard &
Poor's assigned its double-'B' bank loan rating to the company's
proposed $435 million senior secured bank credit facility. The
outlook is stable.

Employees of Appleton, through a newly formed Employee Stock
Option Plan, are planning to acquire the company for $810
million from Arjo Wiggins Appleton, a U.K. paper producer.

The purchase will be funded with cash, proceeds from the credit
facility, about $105 million of equity, $175 million in
subordinated debt, and a $140 million payment-in-kind seller
note that accretes to $305 million over eight years.

The ratings reflect Appleton Papers' leading positions in niche
specialty paper markets, a fairly stable cost base, limited
product diversity, and an aggressive financial profile.

Appleton Papers is the world's largest manufacturer of
carbonless paper, which is used in multi-part forms such as
invoices, credit card receipts, and packing slips.

The industry is modestly cyclical and very concentrated, with
Mead Corp., a larger, diversified forest products company, the
company's primary competitor. U.S. volumes have been, and are
expected to continue, declining about 9% a year due to the
development of substitute technologies.

The company expects to offset this decline with increased sales
in the growing thermal paper market (point of sales receipts,
labels, tickets, etc.), in which is it also the leader, and with
new product applications.

The company's competitive cost position stems from an on-going
focus on manufacturing efficiencies and process improvement,
limited exposure to raw material price volatility, meaningful
pulp integration, and cost-effective on-machine coating
capabilities. Product pricing is relatively stable, although
there has been some recent pricing pressure in commodity thermal
paper due to capacity additions.

Geographic diversity is limited with only about 10% to 12% of
sales outside the U.S., although the company has strong
positions in the growing Latin American carbonless market.
Appleton has strong customer relationships with diverse end
users, but is subject to some customer concentration risk.

After completing the proposed transaction, Appleton's balance
sheet will be stretched, with debt to capital of 80% and total
debt to EBITDA of 3.6 times. However, the company's financial
profile should strengthen over the next few years as free cash
flow is primarily applied toward debt reduction (no dividend
payments or acquisitions are expected). Total debt to EBITDA is
expected to average about 3x with debt to capital declining to
between 50% and 60%, appropriate measures for the ratings.
Operating margins (before depreciation and amortization) should
remain in the low-20% area aided by further shifts to higher
margin products, increased integration, and cost containment
measures.

Appleton should generate meaningful levels of free
cash flow driven by strong operating performance, moderate
capital expenditures, and minimal tax payments due to an
advantageous corporate structure.

As a result, funds from operations to total debt should range
between 25% and 30%, with cash interest coverage in the 5x to 6x
range over the intermediate term. Financial flexibility is
adequate with the $75 million revolving credit facility expected
to remain substantially undrawn.

The bank facility consists of a four-year $75 million revolving
credit facility, a $110 million term loan A maturing in 2005,
and a $250 million term loan B maturing in 2006. Term loan A
amortizes at 20% per year, term loan B has minimal scheduled
amortization, and the company is required to use 75% of excess
cash flow to permanently reduce borrowings.

The rating on the bank facility is the same as the corporate
credit rating and is based on preliminary terms and conditions.
The facility is secured by substantially all of the company's
assets, which should provide a material advantage to lenders.

However, based on Standard & Poor's simulated default scenario,
it is not clear that a distressed enterprise value would be
sufficient to cover the entire loan facility.

                       Outlook: Stable

A relatively heavy debt burden and the challenges of a declining
market limit upside ratings potential. The company's leading
market shares, stable operating margins, and modest
discretionary cash outflows cushion downside risks.

Ratings Assigned

     Appleton Papers Inc.                             Ratings
        Corporate credit rating                          BB
        Senior secured bank loan rating                  BB


ARMSTRONG HOLDING: Property Claimants Hire Tersigni for Advice
--------------------------------------------------------------
Judge Farnan approved the application of Official Committee of
Asbestos Personal Injury Claimants of the employment of L.
Tersigni Consulting PC as accountant and financial advisor to
the committee.

Tersigni will provide services to the Committee which include:

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

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

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

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

                   Managing Director Level              $395
                   Director Level                       $300
                   Senior Manager Level                 $275
                   Manager Level                        $225
                   Professional Staff Level             $150-175
                   Paraprofessional Level               $75
(Armstrong Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   


BUILDNET: MH2 Acquires Majority of Assets at Bankruptcy Auction
---------------------------------------------------------------
MH2Technologies, the leading provider of Internet-based, job-
management tools for homebuilders and other verticals, announced
that it has acquired a significant portion of the assets
belonging to BuildNet as part of that company's bankruptcy
proceedings.

Among the items acquired was FAST, one of the industry's most
popular homebuilder accounting systems. FAST was also considered
the most valuable BuildNet asset available at the auction.

    In addition, MH2 also acquired:

* Rim Data Systems, which provides integrated solutions for
   builders including Sales, Options, Design Center, Start Order
   and Warranty modules
* BuildNet trademarks and logos
* Buildnet E-Building Exchange, Buildnet Financial, Buildnet
   Express Purchasing, Buildnet Wireless and Buildnet Business
   Intelligence Systems
* Netclerk online Permit Application
* BuildNet domain names
* Trade names: BuildNet, Inc.; BuildNet; Buildnet
* Various patents related to BuildNet products and services
* Inventory materials, hardware, supplies, customer lists,
   supplier and distributor lists
* Various software licenses, leases and contracts

Maintenance and support for all products will continue
uninterrupted. "To put it simply, we acquired anything of
value," said Harold Holigan, MH2Technologies ceo and chairman of
the board. "There have been a whirlwind of confusing reports in
the last couple of days about who bought what. Our strategy has
been to listen to the builders and they have said this is what
they need. The moves we made are designed to give the  
homebuilder all the technology and software they need to improve
their efficiencies."

FAST is a fully integrated management system used by more than
250 leading builders. Users have access to a range of modules
including accounting, project management, estimating, land
development, purchasing, finance, payroll, customer service,
marketing, sales and many other areas. "FAST was obviously the
prime asset available," added Holigan.

"By integrating FAST with our highly successful MH2Supply and
MH2Build systems, we now provide a complete end to end solution
that will give builders and contractors the power to finish
construction projects faster and more efficiently."

Holigan said the FAST modules and the modules available with Rim
Data Systems will integrate seamlessly with MH2's systems, which
enable builders to schedule, communicate and collaborate at
every stage of the homebuilding process.

Rim Data Systems, also purchased in the bankruptcy sale, is a
suite of integrated solutions currently used by approximately
100 medium to large homebuilders including Centex Homes and
Standard-Pacific Homes.

Specifically, builders using Rim have access to five modules:
Sales Manager, Options, Design Center, Start Order and Warranty.

    Specific Rim applications include:

* Sales Manager - Provides tools for prospecting, home sales and
  configuration, sales status and other sales office functions.
  Provides management with sales tracking and reporting
  functions.
* Options - Provides the ability to define options with related
  subcontractor and job-costing information.
* Design Center - Contains all functionality of the Options
  module but also has the addition of flooring specifications
  and sales.
* Start Order - Contains all the functionality of the Options
  module but also has the addition of floor plan level base
  budgeting
* Warranty - Provides the builder with the ability to manage
  their customer service operations.

Several national homebuilders, such as D.R. Horton, Lennar and
Beazer, are currently using MH2Build's patent-pending technology
that allows them to develop job schedules, order and track
delivery of materials, communicate to subcontractors, and
calculate lead times and project durations from any location,
24/7. The Internet-based ASP system helps builders lower costs
and cycle times by better managing their project schedules,
personnel, and materials procurement.

Lumber and building materials suppliers and contractors use the
MH2Supply system to collect and manage data with much greater
efficiency. By using MH2Supply, suppliers can accept job orders
from homebuilders, check the status of homes under construction,
and confirm the delivery of materials and products to the job
site via mobile communications devices (PDA's).

In addition to the acquisitions, Holigan said that MH2 is
currently in negotiations with a variety of companies who are
also very interested in integrating MH2's technologies into
their products.

"The demand is growing among builders who realize that these
technologies can significantly improve their efficiencies, said
Holigan. "As the only provider that can offer the combination of
advanced technology, homebuilding experience and financial
strength, we are uniquely positioned to help the industry meet
this growing demand."

MH2Technologies offers a range of technology platforms (sales
management, options, design center, scheduling, inspection,
procurement, collaboration, warranty, and accounting systems)
that are integrated to build total solutions for the
homebuilding industry:

   * MH2 uses an open technology platform allowing all industry
     technology systems and software to communicate and
     collaborate with each other.
   * MH2Build uses the scheduling, inspection and procurement
     modules so that homebuilders and contractors can reduce
     cycle time and overhead and benefit from having more exact
     job scheduling and data from the site in real time.
   * MH2Supply is the system used by dealers, suppliers and
     subcontractors to collaborate with homebuilders and
     contractors. MH2Supply provides a system that allows
     dealers and contractors to reach each other in a real-time
     manner, have access to accurate forecasting, improve
     customer service, and reduce unnecessary inventory.
   * A key advantage of MH2Technologies services is that
     customers can get much more from their existing accounting
     and ERP systems. Since MH2 is an application service
     provider, all of the MH2 systems integrate into existing
     back office systems used by homebuilders, contractors and
     dealers.
   * MH2Technologies also provides other online solutions to
     benefit builders such as lead generation for home sales,
     building products, and other valuable home services.

MH2Technologies -- http://www.mh2.com--based in Dallas,  
provides Internet-based job management, scheduling and materials
ordering solutions. The company's strategy is to create
efficiencies in highly fragmented industries through Internet
applications and handheld, wireless devices.

The company has found huge success in the homebuilding vertical,
and has already signed and begun implementation of its systems
with over 600 homebuilders, accounting for more than 160,000
annual housing starts. In addition, dealers and suppliers with
combined sales of over $5 Billion have signed on to use the
company's technology. MH2Technologies is a privately held
company owned by Holigan Family Holdings, Ltd. and Olympus Real
Estate Partners.


CARBIDE/GRAPHITE: Enters Deal with Lenders for $135M Facility
-------------------------------------------------------------
The Carbide/Graphite Group, Inc. Announces Agreement With
Lenders for Interim Financing Section 363 Asset Sale
Contemplated Under Purchase Agreement With Questor Affiliates
Not Being Pursued by the Company

The Carbide/Graphite Group, Inc. (Nasdaq: CGGI) announced that
the lenders under its revolving credit facility have agreed to
continue to support C/G by entering into a cash collateral
agreement giving C/G continuing access to funding under its $135
million revolving credit facility.

C/G and certain banks within the Bank Group are also negotiating
final terms for additional financing in the form of a debtor-in-
possession line that is expected to be available in the very
near future. C/G expects to operate its business in the ordinary
course with the continuing support of the Bank Group.

The Company also announced that it has decided not to file a
Section 363 asset sale motion under U.S. bankruptcy law relating
to the previously announced asset purchase agreement between the
Company and Questor Management Company and certain of its
affiliates. This decision was made by the Company as a result of
the Bank Group, whose consent for the proposed transaction with
Questor was required, advising the Company that it would not
support the transaction.

Walter B. Fowler, C/G's Chairman and Chief Executive Officer,
said, "Obtaining the support of our Bank Group was a critical
step in maintaining continuity of our operations during the
initial stages of our bankruptcy process. The financing to be
provided by the Bank Group is expected to be sufficient to allow
us to complete a comprehensive financial restructuring of the
Company. The Company will be evaluating potential alternatives
from third parties, as well as a plan of reorganization with the
support of all of our creditor constituencies. We are optimistic
that a satisfactory resolution will be achieved."


COMDISCO: Committee Taps Gardner Carton as Local Counsel
--------------------------------------------------------
Satisfied that law firm Gardner, Carton & Douglas does not hold
or represent any interest adverse to Comdisco, Inc., their
estates, creditors, and other parties-in-interest, Judge
Barliant approved the Official Committee of Unsecured Creditors'
application.  

The names and hourly rates of the attorneys and  
paraprofessionals at Gardner who will be principally involved in
this case are:

      Attorneys
           Harold L. Kaplan       $450
           William J. Barrett     $380
           Melissa Glass          $200

      Paraprofessionals
           Mark R. Mackowiak      $160
           Daniel D. Northrop     $150

The Court authorized the Committee to retain and employ GC&D as
its local counsel for Comdisco's Chapter 11 cases retroactive to
July 27, 2001.  (Comdisco Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


CONTINENTAL AIRLINES: Expects to Avert Over 1,000 Furloughs
-----------------------------------------------------------
Continental Airlines (NYSE: CAL) confirmed that it expects to
avert over 1,000 furloughs through its voluntary Company Offered
Leave of Absence (COLA) program.  

The company also confirmed that, as part of last week's
furlough, it provided severance packages to furloughed employees
and honored all severance and furlough pay provisions contained
in its work rules and collective bargaining agreements, with a
total cost estimated at more than $60 million.  

It also said that all of its employees, including management,
are sharing in the financial pain of the industry downturn
through a lack of profit sharing and incentive compensation.

In an effort to reduce as many employee furloughs as possible,
Continental introduced its COLA program.  The COLA encourages
voluntary leaves of absence for non-management employees and
allows them to accept full-time work elsewhere while continuing
to receive benefits during an unpaid leave of up to one year.  
Benefits include the option to continue insurance benefits at
company rates, continuing travel privileges and credit for time
on COLA for company seniority and the employee retirement
program.  

The company also has offered an Early Out program for eligible
U.S.-based employees system-wide.

In connection with last week's furlough, the company provided
severance packages to furloughed employees while honoring all
severance and furlough pay provisions contained in its work
rules and collective bargaining agreements. The cost is
estimated to be over $60 million.  

"This furlough was one of the most painful events we have had to
experience," said Gordon Bethune, chairman and chief executive
officer.  "We believe that employees should always be treated
with dignity and respect, especially when we are forced to make
these tough decisions."

All Continental employees, including management, are sharing in
the financial pain of the industry downturn.  Profit sharing,
which has paid out over $545 million to employees over the past
six years, will not be paid this year.  Management compensation
will be dramatically reduced for 2001, since it is primarily
based on performance bonuses and incentives.  

In addition, management stock options have become worthless.  As
a result of this widespread financial pain, Continental is not
asking any of its employees for pay cuts.  Continental believes
that this policy will allow its remaining workforce to be more
effective in doing the hard work required by this crisis.

Continental also is providing continuing job placement,
including a series of outplacement seminars/workshops for
displaced co-workers in numerous cities, including Houston,
Cleveland, Newark, Denver and Los Angeles. Continental is also
working closely with representatives of many state agencies and
hiring authorities from local companies who have expressed
interest in interviewing employees.  Continental Human Resources
representatives are available at all outplacement events to
assist with benefits, resume preparation and interviewing tips.

Prior to Sept. 11, Continental was one of only two major
domestic airlines reporting profits in the first half of the
year, and was profitable in July and August.


CONTINENTAL AIRLINES: Chairman and CEO Forego Salary and Bonuses
----------------------------------------------------------------
Continental Airlines (NYSE: CAL) announced its Chairman and
Chief Executive Officer Gordon Bethune and President Larry
Kellner have elected to forego all compensation for the
remainder of the year.

"Despite the fact that we don't believe salary cuts are right
for our fellow co-workers, we think this is an appropriate
gesture for our friends who were furloughed," Bethune said.  
"These funds will be contributed to the company's operations."

In 2000, as reported in the company's Proxy statement, Bethune
made $5,518,124 and Kellner made $3,695,418.


DOBSON COMMS: S&P Revises Outlook On Possible Merger & Workout
--------------------------------------------------------------
Standard & Poor's revised its outlook on Dobson Communications
Corp. to developing from stable. At the same time, Standard &
Poor's affirmed its ratings on Dobson Communications and on unit
Dobson Operating Co. LLC.

In addition, Standard & Poor's assigned its preliminary ratings
to the company's $1 billion mixed shelf registration issued
under Rule 415. Proceeds of the shelf registration are
anticipated to be applied to general corporate purposes,
including acquisitions of licenses and related assets, working
capital, capital expenditures, and growth.

The outlook revision is based on the uncertainty following the
company's announcement that it is evaluating various strategic
alternatives that may include a potential merger, sale of all or
part of the company, restructuring, acquisition, or strategic
alliance. A developing outlook indicates that the ratings could
be raised, lowered, or affirmed, depending on the outcome of any
strategic action the company may choose to take.

If Dobson Communications enters into a merger with a stronger
entity, its ratings could be raised. However, if Dobson
Communications acquires a company and finances it primarily with
debt, its ratings could be lowered. Likewise, restructuring of
the company's debt could also lead to a downgrade.

Dobson Communications provides cellular telephone services to
rural and suburban markets in portions of Alaska, Arizona,
California, Kansas, Maryland, Michigan, Missouri, New York,
Ohio, Oklahoma, Pennsylvania, Texas, and West Virginia.

Also, through a joint venture with AT&T Wireless Services Inc.,
Dobson Communications owns a 50% interest in American Cellular
Corp., which provides cellular telephone service in rural areas
in the Midwest and East.

As of June 30, 2001, Dobson Communications' total debt
outstanding was about $1.7 billion.

Dobson Communications' rating reflects its strategic
relationship with AT&T Wireless Services, its subscriber and
EBITDA growth, and below average churn rate. These factors are
offset, somewhat, by the company's high debt leverage, which is
the result of 23 acquisitions since 1996.

The strategic relationship with AT&T Wireless includes a coast-
to-coast roaming agreement that is in effect until 2004. In
addition, Dobson Communications is AT&T's preferred roaming
partner in its markets that are adjacent to AT&T's markets.

As of June 30, 2001, the company's markets covered 7.1 million
population equivalents (pops) and subscribers totaled 705,500.
Dobson Communications' 10% penetration rate is about average for
the rural cellular industry. On a proportionate basis, including
its 50% ownership in American Cellular, subscribers totaled over
one million. More than 60% of Dobson Communications' subscriber
base has migrated to its digital platform, enabling the company
to offer more revenue-producing features.

In addition, due to the nature of its markets, the company's
churn rate of 1.8% is better than average.

In the second quarter of 2001, total revenue increased 14%
compared with the first quarter of 2001. This growth was
primarily attributable to the transition of subscribers to
higher revenue-producing digital plans, increased penetration,
and a 20% increase in roaming revenue. The decline in roaming
rates has been offset by increased roaming minutes; roaming
revenue comprised about 44% of second quarter total revenue.
AT&T Wireless accounts for about 40% of roaming revenue or about
17% of total revenue.

EBITDA for the second quarter of 2001 was about $68 million, a
31% increase compared with the first quarter, and non-lease-
adjusted EBITDA interest coverage was 1.6 times, compared with
1.2x in the first quarter.

However, in the second quarter EBITDA interest coverage on a
lease-adjusted basis was 1.3x. Debt leverage remained high, with
debt per pop of about $236 and debt to revenue of about 2.5x.
Lease-adjusted debt to EBITDA was in the 7x area, while non-
lease-adjusted debt to EBITDA was in the 6x area.

Dobson Communications' senior unsecured debt is rated two
notches below the corporate credit rating due to the significant
amount of bank debt in the capital structure. The recently
announced sale of some rural cellular properties to Verizon
Communications Inc. for $550 million is anticipated to slightly
improve debt leverage. In addition, the company's announced $80
million stock repurchase program does not materially impact
financial measures.

                     Outlook: Developing

Dobson Communications' rating is dependent on the outcome of
several strategic alternatives being evaluated by the company.
The company has indicated that these alternatives may include a
potential merger, the sale of all or part of the company, a
restructuring, acquisition, or strategic alliance.

                       Rating Assigned

     Dobson Communications Corp.                     RATING
       $1 billion shelf registration:
        Senior unsecured debt              preliminary B
        Subordinated debt                  preliminary B
        Preferred stock                    preliminary B-


                       Ratings Affirmed

     Dobson Communications Corp.                     RATING
       Corporate credit rating                         BB-
       Senior unsecured debt                           B

     Dobson Operating Co. LLC
       Senior secured bank loan
        (Guaranteed by Dobson Communications Corp.)    BB-


ENCOMPASS SERVICES: S&P Concerned About Expected Low H2 EBITDA
--------------------------------------------------------------
Standard & Poor's placed its ratings on Encompass Services Corp.
and a related entity on CreditWatch with negative implications.

At June 30, 2001, Encompass had about $937 million in debt
outstanding.

The CreditWatch listing follows the company's announcement that
its financial performance in the second half of the year will be
significantly below previous guidance of Aug. 6, 2001, (which
had been reduced from May 2001).

Encompass has indicated that continued weakness in general
industrial markets, reductions in capital spending plans in the
telecommunications and technology sectors, and the tragic events
of Sept. 11 have led to the shortfall.

Although the company has not provided new guidance for the
remainder of the year, Standard & Poor's notes that a modest
further decline in EBITDA generation could lead to financial
covenant violations under the firm's $900 million bank credit
facility.

Houston, Texas-based Encompass is the largest independent
supplier of mechanical, electrical, and janitorial services in
North America, with revenues around $4 billion.

Standard & Poor's will meet with management to discuss its
operational strategies, including its decision to discontinue
the company's global technologies group, and plans to cope with
the firm's deteriorating credit profile before taking a rating
action.

           Ratings Placed On CreditWatch Negative

     Encompass Services Corp.
       Corporate credit rating       BB
       Senior secured debt           BB
       Subordinated debt             B+

     Building One Services Corp.
       Subordinated debt rating      B+
          (Guaranteed by Encompass Services Corp.)


EXODUS COMMS: Nasdaq Requests for Information & Halts Trading
-------------------------------------------------------------
The Nasdaq Stock Market(R) announced that the trading halt
status in Exodus Communications, Inc., (Nasdaq: EXDS) was
changed to "additional information requested" from the company.

Trading in the company had been halted Wednesday at 7:47 a.m.
Eastern Time for News Pending at a last sale price of .17.
Trading will remain halted until Exodus Communications, Inc. has
fully satisfied Nasdaq's request for additional information.

For additional information about the company, please contact the
company directly or check under the company's symbol using
InfoQuotes(SM) on the Nasdaq Web site.

For more information about The Nasdaq Stock Market, visit the
Nasdaq Web site at http://www.nasdaq.comor the Nasdaq  
Newsroom(SM) at http://www.nasdaqnews.com


EYE CARE: S&P Downgrades Ratings On Limited Finance Flexibility
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Eye Care Centers of
America Inc.

The outlook is negative.

Total rated debt amounts to $340 million.

The downgrade is based on the company's weak operating
performance, limited financial flexibility, and the expectation
that the near-term difficult retail environment could further
impact Eye Care Centers' operations, potentially resulting in
bank covenant violations.

The ratings on Eye Care Centers continue to reflect high debt
leverage, thin measures of cash flow protection, and slower
short-term growth prospects for the optical retail industry.
These risks are mitigated, somewhat, by the company's
satisfactory market position in the highly competitive and
fragmented optical retail industry and favorable long-term
industry demographics.

Eye Care Centers is the fourth-largest optical retail chain the
U.S., operating 361 stores primarily in the superstore format.
The company has the number-one or number-two market share
position in most of its largest regional markets due to its
strategy of clustering store in target markets to maximize
operating efficiencies.

However, the industry's two largest operators, Cole National
Group Inc. and LensCrafters Inc., are much larger chains in
terms of sales and store locations, and thus benefit from
greater economies of scale.

Eye Care Centers' operating performance has lagged that of its
peers, with negative same-stores sales in the mid-single-digits
area in the first two quarters of 2001. While the average ticket
price remained relatively flat, the number of transactions
decreased for the six months ended June 30, 2001.  A slowing
U.S. economy and increased competition have negatively impacted
the company's revenue generation.

This trend is expected to continue in the near term, resulting
in similar negative same-store sales trends in the third quarter
of 2001. Because of this, the company has focused on cost-
reduction initiatives and has increased promotional efforts in
response to competition. The current difficult retail
environment will further challenge a significant recovery in
sales growth.

Despite stabilized EBITDA and credit protection measures through
the first half of 2001, Standard & Poor's believes that, given
Eye Care Centers' weak sales and the difficult retail
environment, the company may face challenges in meeting
financial covenants under its bank facility in future quarters.

These covenants call for improving minimum EBITDA and interest
coverage and maximum debt leverage. Although Eye Care Centers
was in compliance with bank covenants through the first half of
2001, Standard & Poor's believes the company will have to
continue to manage costs and improve sales trends to remain in
compliance.

EBTIDA coverage of interest is trending at about 1.6 times and
total debt to EBITDA remains in the high 5.0x area. Financial
flexibility is marginal, with about $13 million in availability
under the $35 million revolving credit facility.

                       Outlook: Negative

Standard & Poor's believes Eye Care Centers will continue to be
challenged to improve operations given the slowing U.S. economy.
A further reduction in liquidity or a violation of bank
covenants could result in a downgrade.

                        Ratings Lowered

     Eye Care Centers of America Inc.       TO         FROM

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


FACTORY CARD: Wants Lease Decision Deadline Extended to Jan. 31
---------------------------------------------------------------
Factory Card Outlet Corporation requests an extension of the
deadline by which it must decide whether to assume, assume and
assign, or reject leases and contracts up to the earlier of the
consummation of a chapter 11 plan of reorganization or January
31, 2002.

Daniel J. DeFrancheschi, Esq., at Richards Layton & Finger,
P.A., in Wilmington, Delaware, relates that there are 173
remaining store leases about which the Debtors need to make
decisions after having already walked-away from 49 leases.

Mr. DeFrancheschi believes that the Debtors are not in a
position to make determinations at this time with respect to
their lease due to the uncertainty on which plan of
reorganization will they follow. The requested extension will
afford the Debtors additional time to make decisions in
conjunction with the confirmation of a plan of reorganization,
Mr. Francheschi says.

Factory Card Outlet Corporation, one of the largest chains of
company-operated superstores in the card, party supply and
special occasion industry in the United States, filed for
chapter 11 protection on March 23, 1999 in the District of
Delaware. Daniel J. DeFrancheschi, Esq., of Richards Layton &
Finger, P.A., represents the Debtor in their restructuring
effort. As of February 3, 2001, the company listed $83,700,000
in assets and $97,100,000 in debt.


FRIEDE GOLDMAN: Retaining Houlihan Lokey as Financial Advisor
-------------------------------------------------------------
Friede Goldman Halter, Inc. (OTCBB: FGHLQ) plans to retain,
subject to Bankruptcy Court approval, the services of Houlihan
Lokey Howard & Zukin.

Houlihan Lokey Howard & Zukin is an international investment
banking firm providing a wide range of services including
mergers and acquisitions, financial restructuring, private
placements of debt and equity capital, business and securities
valuations, financial opinions, litigation support, and merchant
banking services.

In the last decade Houlihan Lokey Howard & Zukin's financial
restructuring professionals have consummated over $30 billion in
transactions. FGH will draw upon the firm's diverse industry
experience, extensive talent base, and resources to coordinate
and execute a successful financial restructuring.

The company also announced the appointment of Bob Shepherd to
the position of Senior Vice President, Administration. Shepherd
brings 24 years of experience in the shipbuilding and offshore
industries to the position. He succeeds Charles DeCuir who
recently resigned.

Friede Goldman Halter designs and manufactures equipment for the
maritime and offshore energy industries. Its operating units are
Friede Goldman Offshore (construction, upgrade and repair of
drilling units, mobile production units, and offshore
construction equipment), Halter Marine (construction of ocean-
going vessels for commercial and governmental markets), FGH
Engineered Products Group (design and manufacture of cranes,
winches, mooring systems, and marine deck equipment), and Friede
& Goldman Ltd. (naval architecture and marine engineering).


GENESIS HEALTH: Moves to Settle Qui Tam Actions for $2.1 Million
----------------------------------------------------------------
In connection with four qui tam actions brought against Genesis
Health Ventures, Inc. by Relators on behalf of the Unites
States, Genesis has reached a Compromise and Settlement with
United States of America and certain Relators. Accordingly, the
Debtors seek entry of an order pursuant to Rule 9019(a) of the
Bankruptcy Rules approving a settlement by and among GHV, on
behalf of its current and former affiliates, divisions, and
subsidiaries (collectively, "Genesis"); the United States of
America, acting through the United States Department of Justice
and on behalf of the Office of Inspector General of the
Department of Health and Human Services ("OIG-HHS," and
collectively with USA and USDOJ, the "United States"); and
Stuart Murphy, Dawn Warren, Michael LaRosa, Steve Barr, Douglas
Cramer, and Mary Denton (collectively the "Relators").

The Committee and Mellon Bank, NA., as agent for the Debtors'
senior lenders, support the approval of the terms of the
Settlement Agreement.

                      The Qui Tam Actions

The Qui Tam Actions allege that Genesis committed certain
actions (the "Covered Conduct") in violation of federal and
other laws, including the submission of claims for payment in
violation of the Medicare Program, Title XVIII of the Social
Security Act, 42 U.S.C. sections 1395-1395ggg.

The United States also contends that it has certain civil and
administrative claims based on the Covered Conduct.

The Qui Tam Actions filed against Genesis, are:

* United States ex rel. Murphy & Warren v. Genesis Health
  Ventures, Inc., et al., No. 98-CV-3432 (E.D. Pa.).

* United States ex rel. LaRosa v. Genesis Health Ventures, Inc.,
  et at, No. 00-CV-2003 (ED. Pa.).

* United States ex rel. Barr & Crammer v. Network Ambulance
  Services, Inc., et al., No. 3: CV-98-1552 (M.D. Pa.).

* United States ex rel. Denmon v. Genesis Health Ventures, Inc.,
  et al, No. 99-1838 (ED, Pa.).

These actions were filed by the respective Relators prior to the
Commencement Date and were disclosed to Genesis by
representatives of the United States after the Commencement
Date. Representatives of the United States have investigated the
allegations made by the Relators in the Qui Tam Actions.

Genesis tells Judge Wizmur it has fully cooperated in those
investigations and has provided significant data and other
information to the United States. Genesis contends that it did
not engage in the Covered Conduct and that the United States
does not have any claims against it based on the Covered Conduct
or otherwise on the allegations asserted in the Qui Tam Actions.

The issues and allegations underlying the Qui Tam Actions have
been the subject of extensive negotiations between Genesis and
the United States over the course of the GHV chapter 11 cases.
Based on those negotiations and on the investigations conducted
by the United States, the parties have reached a settlement
agreement.

                  The Settlement Agreement

(1) Genesis agrees to pay a total of $2,095,000.00 (the
    Settlement Amount) to the United States, which, in turn,
    will distribute $353,550.00 of the Settlement Amount to the
    Relators.

(2) Genesis agrees to pay the Relators' attorney's fees and
    costs, totaling $79,850.

(3) The United States and the Relators agree to stipulate and
    request that the Qui Tam Actions be dismissed with prejudice
    as to the Relators, with prejudice as to the United State
    for claims in the Qui Tam Actions for the Covered Conduct,
    and without prejudice to the United State for any other
    claims in the Qui Tam Actions and for any claims against
    non-Genesis defendants. (Relator Denton also agrees to
    execute a dismissal with prejudice of the pending State
    court action known as Mary C. Denton v. Silver Stream
    Nursing and Rehabilitation Center and Genesis Health
    Ventures, Inc., No. 97-07418 (Court of Common Pleas of
    Montgomery County. Pa.).)

(4) The United States releases Genesis from any civil or
    administrative monetary claim the United States may have
    under the False Claims Act, 31 U.S.C. sections 3729-3733;
    the Civil Monetary Penalties Law, 42 U.S.C. section 1320a-
    7a; the Program Fraud Civil Remedies Act, 31 U.S.C. section
    3801-3812; 42 U.S.C. section 1395(g); or common law theories
    of payment by mistake, unjust enrichment, breach of
    contract, and fraud for the Covered Conduct.

(5) OIG-HHS agrees to release and refrain from instituting,
    directing or maintaining any administrative action seeking
    exclusion from the Medicare, Medicaid, or other Federal
    health care programs against Genesis under 42 U.S.C. section
    1320a-7a, or 42 U.S.C. section 1320(a)-7(b)(7) for the
    Covered Conduct.

(6) The Relators agree to release Genesis from any liability to
    Relators arising from the filing of the Qui Tam Actions, or
    under 31 U.S.C. section 3730(d) for attorney's fees and
    costs.

(7) The Relators agree to release the United States from any
    claims pursuant to 31 U.S.C. section 3730, or arising from
    the filing of the Qui Tam Actions, and for a share of the
    proceeds of the Qui Tam Actions, and from any claims for a
    share of the Settlement Amount, and for a share of the
    proceeds of any proceeding involving an "alternate remedy"
    as that term is used in 31 U.S.C. section 3730(c)(5).

(8) The Settlement Agreement is expressly conditioned upon its
    approval by the Court.

(9) The Settlement Agreement expressly does not cover the
    following qui tam actions: United States ex rel. Scherfel v.
    Genesis Health Ventures, Inc., et al, No. 00-1178 (AJL)
    (D.N.J.) and United States ex rel Bash, et al., v.
    Neighhorcare, et al., No. 1: 99CV02250 (D.D.C.). After an
    investigation by representative of the United States, it has
    declined to intervene in these actions.

The Debtors tell Judge Wizmur they have entered into the
Settlement Agreement in order to avoid the delay, uncertainty,
inconvenience, and expense of protracted litigation of any
claims arising under the Qui Tam Actions.

The Settlement Agreement consists of a series of transactions
and agreements which, taken as a whole, reflect the global
agreement among the parties, the Debtors tell the Court.

In that light, the Debtors believe that the costs and benefits
of the transactions and agreements contained in the Settlement
Agreement must be weighed as a whole and are not meaningfully
understood as individual, independent components. As a whole,
the Settlement Agreement, in the Debtors' business judgment,
should be approved because it falls within the range of
reasonableness.

The issues involved in the Qui Tam Actions are in substantial
dispute. Although the Debtors contend that they did not engage
in the Covered Conduct and that the United States does not have
any claims against them as asserted in the Qui Tam Actions, the
Debtors cannot guarantee that their arguments would prevail if
litigation becomes necessary. The Debtors recognize that if they
were to lose such litigation, the potential financial toll could
be significantly higher than the Settlement Amount.

Moreover, an adverse result in the Qui Tam Actions could result
in additional administrative remedies by USDOJ or OIG-HHS that
could adversely affect the Debtors' participation in the
Medicare program.

Equally important, the Debtors are aware that litigation would
necessarily be complex and expensive and would require extensive
discovery, including significant document production and
numerous depositions. Such undertakings would unnecessarily
burden the Debtors' estates and divert the attention of the
Debtors' management and legal personnel at a critical stage when
the Debtors are preparing to exit from their chapter 11
reorganization process.

Moreover, the Debtors believe that the Settlement Agreement will
avoid potentially negative publicity were the United States to
prevail in the Qui Tam Actions. Furthermore, in such a highly
regulated environment as the healthcare industry, it is crucial
to the Debtors' ongoing and future viability to resolve their
disputes with those entities that regulate their businesses.

Accordingly, the Debtors believe that the Settlement Agreement,
viewed as a whole, is in the best interest of their estates and
creditors. The Debtors submit that the value of the benefit of
the Settlement Agreement to the Debtors' estates outweighs the
costs of the Settlement Agreement and the costs of the potential
litigation that would arise in the absence of the Settlement
Agreement.

For all these reasons, the Debtors submit that the Motion should
be granted. (Genesis/Multicare Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


ISPAT MEXICANA: S&P Drops Rating on Trust No. 96-1 to B+
--------------------------------------------------------
Standard & Poor's lowered its rating on the structured export
certificates of Ispat Mexicana S.A. de C.V. (Imexsa), a
subsidiary of Ispat International N.V. (Ispat), to single-'B'-
plus from double-'B'-minus. These certificates are known as
Imexsa Export Trust No. 96-1.

The rating action on Imexsa's structured export certificates
reflects the lowering of Ispat's local currency corporate credit
rating to single-'B'-plus/Stable from double-'B'-minus/Negative.  
Standard & Poor's views Ispat and its major rated subsidiaries,
Ispat Inland, Imexsa, and Ispat Sidbec, as a single economic
entity.  As such, Imexsa's local currency corporate credit
rating was also lowered to single-'B'-plus/Stable from
double-'B'-minus/Negative.  

The corporate rating action is based on a depressed situation in
the North American, and to a lesser extent, the European steel
markets, with volumes and prices below expectations during the
first half of 2001.  Furthermore, Standard & Poor's estimates
that this situation is likely to prevail at least until the
first half of 2002.

However, Ispat is expected to continue operating without
increasing its overall debt level, while continuing its cost
reduction efforts and tight control over capital expenditures
and working capital needs.

The structured export certificate transaction is based on a
long-term supply contract between Imexsa and Mitsubishi Corp.,
in which the latter is required to purchase enough shipments of
steel slabs from Imexsa at the then prevailing market price to
cover 1.3 times the maximum debt service for each quarterly debt
service period.  

Therefore, Imexsa must be able to ship to Mitsubishi Corp.
however much product is necessary to meet the amount equal to or
greater than 1.3x maximum debt service.  Imexsa has performed as
expected under its contract with Mitsubishi Corp.

Standard & Poor's general criteria applicable to most future
flow transactions views the local currency rating of Imexsa as
the best proxy for the likelihood that Imexsa will continue
operating and thus exporting steel slabs for delivery to
Mitsubishi Corp., and thus the rating on the certificates is
highly dependent on the ability of Imexsa to continue producing
and exporting steel slabs in the future as being measured by its
local currency rating.

The structured export certificates entered into early
amortization after being downgraded to double-'B'-minus on Nov.
23, 2000.


KNOWLEDGE HOUSE: Intends to Reorganize Under Canadian BIA
---------------------------------------------------------
Knowledge House Inc. (TSE:KHI) filed a notice of intention to
make a proposal under the Bankruptcy and Insolvency Act (Canada)
in order to give it the time and opportunity to reorganize its
affairs.

The notice has been accepted pursuant to the Bankruptcy and
Insolvency Act (Canada). Ernst & Young Inc. has been appointed
as trustee under the proposal provisions of the Act. The terms
of the proposal to creditors will be developed in co-operation
with the trustee.

The Company has elected to use the proposal procedures in the
Bankruptcy and Insolvency Act (Canada).  The Company on a
consolidated basis has total outstanding debt obligations of
approximately $3,000,000 which amount does not meet the
$5,000,000 threshold required pursuant to the Companies'
Creditors Arrangement Act (Canada).

Knowledge House Inc. previously announced on September 13, 2001
that it was unable to continue its operations due to a lack of
available financing and was unable to meet its payroll and other
obligations.

In commenting on the intended proposal, Dan Potter, Chair and
CEO stated "All Knowledge House stakeholders suffered a major
setback earlier this month. We are hopeful that a successful
proposal to creditors will allow Knowledge House to move forward
over the coming months and years to realize on its potential in
the education industry. It has valuable intellectual property
upon which to rebuild its business as a result of the extensive
$10 million research and development program it conducted over
the last three years."

Mr. Potter added, "We are particularly pleased that the proposal
provisions will give Knowledge House's employees, who remain
unpaid for their last two weeks of work in September, a
preferred position to obtain financial recovery."

The Company's wholly owned subsidiary, Silicon Island Art and
Innovation Centre Limited also filed notice of its intent to
make a proposal to creditors.

Knowledge House designs collaborative problem-based learning
programs and provides related services for secondary and post-
secondary education, transition to work and corporate markets.


MARINER POST-ACUTE: Genesis Offers $60MM for Pharmacy Business
--------------------------------------------------------------
Mariner Post-Acute Network, Inc. and Mariner Health Group move
the Court for an order pursuant to 11 U.S.C. Secs. 105 and 363
authorizing (a) the approval and implementation of certain Sale
Procedures; (b) a Break-Up Fee specified in the Asset Purchase
Agreement among certain of the Debtors and Genesis Health
Ventures, Inc. and NeighborCare Pharmacy Services, Inc.
(collectively, the Purchasers); and (c) the sale of the Debtors'
Pharmaceutical Business free and clear of the claims, liens and
encumbrances of Chase Manhattan Bank, in its capacity as Agent
for the MPAN Debtors' senior secured prepetition lenders and in
its capacity as Agent for the MPAN Debtors' postpetition debtor
in possession lenders (the MPAN Bank Group), and PNC Bank, N.A.,
in its capacity as Agent for the MHG Debtors' senior secured
prepetition lenders and in its capacity as Agent for the MHG
Debtors' postpetition debtor in possession lenders (the MHG Bank
Group).

After more than one year of active marketing by the Debtors of
their Pharmaceutical Business, extensive due diligence and
prolonged negotiations by the Debtors with more than one
potential buyer, the Purchasers emerged as the parties making
the highest and best initial offer for the Debtors'
Pharmaceutical Business; provided, however, that the Purchasers
have agreed that their offer may be subjected to the auction and
overbidding procedures so long as the Purchasers are afforded
certain protections consisting of the right to receive a break-
up fee and reimbursement for their reasonable fees and costs,
including reasonable attorneys' fees, and liquidated damages
under certain narrowly defined circumstances.

Under the Asset Purchase Agreement, the Purchasers will pay cash
upon closing in the amount of $42,000,000, subject to
adjustments and prorations as of the date of closing as provided
in the Asset Purchase Agreement (the Closing Payment), and up to
$18,000,000 over three years following closing based upon the
Purchasers' results of operations relating to assumed and
assigned contracts that are not with affiliates of MPAN and MHG
(the Earnout Payments).

   Background Concerning the Debtors' Pharmaceutical Business

Under the name American Pharmaceutical Services, certain of the
Debtors operate one of the largest institutional pharmacies in
the United States, consisting of thirty-three pharmacies that
provide pharmacy products and services to approximately 1,500
facilities. Included among the facilities to which such services
are provided are approximately 299 facilities that are owned or
operated by certain of the MPAN and MHG Debtors.

The Debtors' Pharmaceutical Business is comprised of an
amalgamation of entities owned and operated by both the MPAN
Debtors and the MHG Debtors, and it is the desire of the Debtors
to sell all assets that comprise the Debtors' Pharmaceutical
Business as part of one transaction.

Such a sale will require the cooperation of all the Debtors, as
well as the MPAN Bank Group and the MHG Bank Group, because the
proposed sale contemplates a transfer of the assets comprising
the Debtors' Pharmaceutical Business free and clear of claims,
liens and encumbrances, including, without limitation, the
claims and liens of the MPAN Bank Group and the MHG Bank Group,
with their liens transferring to the impounded and segregated
net proceeds of sale with the same extent, validity and priority
as such liens presently enjoy against the respective assets
which comprise the Debtors' Pharmaceutical Business.

    Suspension of Rights to Terminate APS Service Contracts

As previously reported, (see entries [00214] and [00191]), the
Court authorized APS to enter into a number of Service Contracts
with affiliated MPAN and MHG Debtors provided that, pursuant to
Paragraph 4 of those Orders, the MPAN and MHG Debtors reserved
their rights to terminate the APS Service Contracts pursuant to
a plan of reorganization confirmed prior to the sale of such
Service Contracts to third parties.

As it would materially interfere with the Debtors' ability to
market the Debtors' Pharmaceutical Business if a portion of the
assets under the APS Service Contracts being sold were to be
eliminated because of the timing of the confirmation of a plan
of reorganization for either MPAN or MHG, the Debtors request
that the Court suspend their right to terminate the APS Service
Contracts pursuant to a confirmed plan of reorganization and
order that such rights shall (a) not be exercised so long as the
Asset Purchase Agreement or any alternative sale agreement
entered into in accordance with the Order approving this has not
been terminated, and (b) be waived in connection with any sale
consummated in connection with the Bidding Procedures approved
by this Order.

                    The Sale Procedures

After extensive negotiations and as a condition to entering into
the Asset Purchase Agreement, the Purchasers have required that
the following Sale Procedures be followed if their offer is to
be exposed to an auction process to insure that the Debtors have
obtained the highest and best offer for the assets comprising
the Debtors' Pharmaceutical Business:

   (a) Notice

At least thirty days prior to the Sale Hearing, the Debtors
shall file and serve (1) notice of the auction regarding the
sale of the Debtors' Pharmaceutical Business and of the hearings
and (2) the Sale Motions, on Notice Parties such as counsel, the
U.S. Trustee, as well as, specifically with respect to this
motion, parties asserting liens and encumbrances on the assets
to be sold (Lien Creditors) and all entities who, during the
past 12 months, have expressed, in writing, an interest in
purchasing the Debtors' Pharmaceutical Business.

   (b) Provision for Initial Objection

Any objection (an Initial Objection) to the Sale Motions,
including any objection by a Contract Party to the assumption
and assignment by the Debtors of the Assigned Agreements, and
any allegation (a Statement of Defaults) that defaults exist or
must be cured as a condition to the assignment of an Assigned
Agreement, including a precise statement of the nature and
amounts of such alleged defaults, must be filed with the Court
and served upon the relevant parties so that it is received by
no later than fourteen days prior to the Sale Hearing. Failure
to do so shall be deemed to be a consent to the proposed sale of
the Debtors' Pharmaceutical Business (including an assumption
and assignment of the Assigned Agreements) to the Purchasers or
any Qualified Overhidder and to the cure amounts for the
Assigned Agreements set forth in the Sale Motion.

   (c) Initial Overbid

Any entity (other than the Purchasers) that is interested in
purchasing the Debtors' Pharmaceutical Business must submit an
Initial Overbid in conformance with the following no later than
the Objection/overbid Deadline. Any such Initial Overbid must:

      (1) Be filed with the Court and served upon counsel to the
Debtors, counsel to the MPAN Bank Group, counsel to the MHG Bank
Group, counsel to the MPAN Committee, counsel to the MHG
Committee, counsel to the Purchasers, the Contract Parties, and
the Office of the United States Trustee in a manner such that
the Initial Overbid actually is received on or before the
Objection/Overbid Deadline;

     (2) Include a definitive written agreement, duly executed
by the overbidder, which is substantially in the form of the
Generic Asset Purchase Agreement; provided, however, that such
an agreement will not be substantially in the form of the
Generic Asset Purchase Agreement if it (or any accompanying
document or understanding) (a) requires any change to any
existing pharmacy services contract, except as identically
provided in the Asset Purchase Agreement and the Generic
Purchase Agreement, (b) makes any change to the method of
calculation of the "Earnout Payments" except to increase the
amounts of such Earnout Payments, or (c) makes any change to
Paragraph 6.2 of the Generic Asset Purchase Agreement (it being
understood that other material changes may also render a bid not
substantially in the form of the Generic Asset Purchase
Agreement);

     (3) Contain terms and conditions no less favorable to the
Debtors than the terms and conditions of the Asset Purchase
Agreement;

     (4) Provide for aggregate consideration to the Debtors of
at least a $44,500,000 Closing Payment, plus at least a
$18,000,000 Earnout Payment;

    (5) Be accompanied by a cashier's or certified check in an
amount of at least $1,700,000, which deposit will be returned to
the overbidder within a reasonable period of time following the
conclusion of the hearing on the Sale Motion unless the
overbidder is ultimately confirmed as the successful buyer for
the assets at the Sale Hearing, in which case the deposit will
be applied against the Closing Payment or held by the Debtors to
collateralize any damages they may suffer in the event that such
overbidder fails to consummate the sale in accordance with the
Generic Asset Purchase Agreement;

    (6) Be accompanied by admissible evidence in the form of
affidavits or declarations establishing the overbidder's good
faith, within the meaning of section 363(m) of the Bankruptcy
Code, and its "adequate assurance of future performance"
regarding the Assigned Agreements within the meaning of section
365(f)(2)(B) of the Bankruptcy Code (the establishment of good
faith and adequate assurance of future performance shall be the
sole responsibility of the overbidder, as to which the Debtors
shall have no obligation to assist the overbidder);

    (7) Be accompanied by admissible evidence in the form of
affidavits or declarations satisfactory to the Debtors, in their
sole discretion, establishing that the overbidder is willing,
authorized, capable, and qualified, financially, legally, and
otherwise, of unconditionally performing all obligations under
the Generic Asset Purchase Agreement in the event that it is the
prevailing overbidder at the Sale Hearing; and

    (8) Shall contain no contingency or condition that does
not exist in the Asset Purchase Agreement.

   (d) Initial Overbid Deadline

Any entity that fails to submit a timely, conforming Initial
Overbid, shall be disqualified from bidding for the Debtors'
Pharmaceutical Business at the Auction.

   (e) Overbids and Supplemental Objection

In the event that one or more timely conforming Initial Overbids
are submitted by Qualified Overbidders, the parties served shall
have until 5 days prior to the Sale Hearing (the Supplemental
Objection Deadline) to file an objection, limited solely to any
new issues raised by a Qualified Overbid (a Supplemental
Objection), to the sale of the Debtors' Pharmaceutical Business
(including an assumption and assignment of the Assigned
Agreements) to any or all Qualified Overbidders. Any such
Supplemental Objection must be timely served. Failure to do so
shall be deemed to be a consent to the sale of the Debtors'
Pharmaceutical Business (including an assumption and assignment
of
the Assigned Agreements) to any and all Qualified Overbidders.

   (f) Responses

The Debtors and other parties in interest may file responses to
any Initial Objection, Statement of Defaults, or Initial Overbid
by no later than the Supplemental Objection Deadline. The
Debtors and other parties in interest may file responses to any
Supplemental Objections at or before the Sale Hearing.

   (g) Selection of Prevailing Bidders

If no timely, conforming Initial Overbids are submitted, the
Debtors shall select the Purchasers as the prevailing bidders
and shall submit the Asset Purchase Agreement to the Bankruptcy
Court for approval at the Sale Hearing.

   (h) Auction

In the event that one or more timely, conforming Initial
Overbids are submitted, the Debtors shall conduct the Auction at
which the Purchasers and all Qualified Overbidders may
participate, on a date that is one business day prior to the
Sale Hearing and at a time and place to be announced in a notice
to (i) the United States Trustee for the District of Delaware;
(ii) counsel for the MPAN Bank Group; (iii) counsel for the MHG
Bank Group; (iv) counsel to the MPAN Committee; (v) counsel to
the MHG Committee; (vi) counsel to the Purchasers; and (vii) the
Qualified Overbidders.

The Auction shall be governed by the following procedures:

        (1) All bidders shall be deemed to have consented to the
core jurisdiction of the Bankruptcy Court and to have waived any
right to jury trial in connection with any disputes relating to
the Auction and/or the sale of the Debtors' Pharmaceutical
Business. The Purchasers and all Qualified Overbidders shall be
and remain bound by their bids until the earlier of (a) 30 days
after the commencement of the Sale Hearing, or (b) such time as
a definitive sale agreement is executed by the prevailing bidder
(as approved by the Bankruptcy Court at the conclusion of the
Auction) and the Bankruptcy Court has entered an order approving
the sale to the prevailing bidder and binding it to its
definitive sale agreement. If, for any reason, such prevailing
bidder is unable or unwilling to execute a definitive sale
agreement or to perform its obligations thereunder, the Debtors,
in the exercise of their business judgment, (i) may retain the
$1,700,000 deposit of that prevailing bidder to collateralize
any damages they may suffer in the event that the prevailing
overbidder fails to consummate the sale in accordance with the
Generic Asset Purchase Agreement, and (ii) may move to sell the
Debtors' Pharmaceutical Business to the next highest bidder at
the Auction (as approved by the Bankruptcy Court) or to
Purchasers as described below, upon 5 days notice to parties
filing objections to the Sale Motion or appearing at the
hearing, provided that such bidder (other than the Purchasers)
has provided a $1,700,000 deposit and otherwise is authorized,
capable, and qualified to proceed with the sale;

      (2) Bidding will commence at the amount of the highest and
best bid submitted by a Qualified Overbidder, as determined by
the Debtors in the exercise of their fiduciary duties to their
respective estates, after consideration of the nature and
identity of the bidder, the amounts bid, the ability of the
bidder to consummate the proposed transaction, the timing of the
payments, and such other factors as may be relevant to the
determination (the Bid Review Standards);

      (3) During the course of the Auction (but not following
the conclusion of the Auction and not as a right of first
refusal), the Purchasers shall have the right to match (as
opposed to overbid) the highest bid then made at the Auction by
a Qualified Overbidder, which matching bid may on each occasion
be followed by additional bids by Qualified Overbidders. As part
of any matching or overbid, the Purchasers shall receive a
credit in the amount of $1,700,000 against the cash Closing
Payment amount of any overbid. Each other bidder at the Auction
shall match or exceed the prior highest bid in the amount of the
Closing Payment and increase either or both the Closing Payment
by at least $500,000 or the Earnout Payments by least $500,000
per year (a total of $1,500,000) above the previous bid;

     (4) Following the conclusion of the Auction and at the
time of the Sale Hearing, the Debtors shall recommend that the
Bankruptcy Court authorize and approve a sale of the Debtors'
Pharmaceutical Business (including an assumption and assignment
of the Assigned Agreements) to the entity that they determine to
have submitted the superior offer for the assets based upon the
results of the bidding following application of the Bid Review
Standards, and shall submit to the Bankruptcy Court for approval
if the Purchasers are the highest bidder, the Asset Purchase
Agreement, as modified and initialed by Purchasers, or, if a
Qualified Overbidder is hthe highest bidder, the Generic Asset
Purchase Agreement, as modified and initialed by the Qualified
Overbidder and signed by the Debtors;

     (5) At the Sale Hearing, the Debtors also may request that
the Bankruptcy Court authorize and approve a sale of the
Debtors' Pharmaceutical Business (including an assumption and
assignment of the Assigned Agreements), on a contingent and
back-up basis, to one or more other bidders at the Auction,
provided that such authorization and approval shall be
contingent upon a further order of the Bankruptcy Court in
accordance with subparagraph 9.h(l)(ii) as described above; and

    (6) If the Purchasers are, based upon an overbid, selected
by the Debtors as the winning bidders at the Sale Hearing, then
prior to the conclusion of the Auction, the Purchasers shall
submit to the Court for in camera review an entered order of the
Genesis Bankruptcy Court establishing that the winning bid was
within the parameters of the Purchaser's authority under the
Purchasers' Approval Order, or provide alternative evidence
sufficient to establish that such an approval order from the
Genesis Bankruptcy Court was not required at the time the
overbid was made.

   (i) Reservation of Rights

The Debtors shall reserve all rights to exercise their business
judgment to recommend a sale of the Debtors' Pharmaceutical
Business (including an assumption and assignment of the Assigned
Agreements) to any bidder whose bid the Debtors determine to be
in the best interests of their estates following application of
the Bid Review Standards. The Debtors further shall reserve all
rights to request, for a combined period not to exceed thirty
days, one or more continuances or recesses of the Auction or the
Sale Hearing for any reason, including the need for additional
time to ascertain the financial or other capabilities of
potential Qualified Overbidders or to resolve and/or respond to
objections regarding the assumption and assignment of the
Assigned Agreements. Each Qualified Overbidder, however, should
be prepared to make its best and final offer at the Auction and
to appear, as required, at the Sale Hearing. The Debtors shall
reserve all rights to object to and oppose any request by any
bidder or party in interest for a continuance or recess of the
Sale Hearing.

   (j) Purchasers Claims, if any, and Break-up Fees

Section 8 of the Asset Purchase Agreement shall be specifically
approved, and any claims of the Purchasers thereunder shall have
administrative status in the MPAN, MHG and Sellers' chapter 11
cases. In particular, and without limiting the enforceability of
all other provisions of Section 8 of the Asset Purchase
Agreement, in the event that the Debtors recommend and the
Bankruptcy Court ultimately authorizes a sale of the Debtors'
Pharmaceutical Business to a Qualified Overbidder, MPAN, MHG and
the Sellers shall pay the Purchasers a Break-Up Fee consisting
of $1,200,000 and reimbursement of reasonable costs and
expenses, including reasonable attorneys' fees and such other
reasonable expenses of Purchasers described in the Asset
Purchase Agreement, collectively in an amount not to exceed
$500,000 so long as on the date which is sixty days following
the conclusion of the Sale Hearing, (a) the Purchasers are not
in material breach of the Asset Purchase Agreement, and (b) the
Asset Purchase Agreement has not expired or otherwise been
terminated under circumstances that would not require payment of
the Break-Up Fee under Section 8 of the Asset Purchase
Agreement.

   (k) Overbid Approval Order

In the event that the Debtors recommend and the Court ultimately
enter an order authorizing a sale of the Debtors' Pharmaceutical
Business to a Qualified Overbidder (an Overbid Approval Order),
Purchasers shall nevertheless hold open as a back up bid the
offer contained in the Asset Purchase Agreement (without
increase for any additional bids made by Purchasers at the time
of the Sale Hearing) for a period of sixty days following the
conclusion of the Sale Hearing, which back up offer from
Purchasers may be accepted by the Debtors within such sixty-day
penod by (a) terminating the contract with the Qualified
Overbidder in accordance with its terms, (b) providing written
acceptance of the offer set forth in the Asset Purchase
Agreement, and (c) filing pleadings with the Bankruptcy Court to
confirm the sale to Purchasers in accordance with the Asset
Purchase Agreement.

   (l) Reimbursement of Costs and Expenses

The Debtors' reimbursement of reasonable costs and expenses,
including reasonable attorneys' fees and such other reasonable
expenses of Purchasers described in the Asset Purchase
Agreement, collectively in an amount not to exceed $500,000
shall be made promptly upon entry of the Overbid Approval Order,
and payment of the balance of the Breakup Fee shall be made upon
expiration of the sixty-day period following entry of the
Overbid Approval Order unless the Debtors have by that date
accepted the offer contained in the Asset Purchase Agreement, in
which case the $500,000 in reimbursement of reasonable costs and
expenses, including reasonable attorneys' fees and such other
reasonable expenses of Purchasers, theretofore paid by the
Debtors shall be returned by the Purchasers to the Debtors upon
closing of the Asset Purchase Agreement.

   (m) Adjudication of Dispute, If Any, By Bankruptcy Court

If there is a dispute regarding the Purchasers' right to the
Break-Up Fee or right to liquidated damages under the Asset
Purchase Agreement, or if the Debtors have an objection to the
amount requested by the Purchasers as reimbursement for their
fees and expenses, the reasonableness and payment of the Break-
Up Fee and such fees and expenses shall be determined by the
Bankruptcy Court without a jury trial and in a contested matter
as a "core proceeding" (as such term is defined in 28 U.S.C.
section 157 or any successor provision).

   (n) Liens and Encumbrances

Any sale to Purchasers pursuant to the Asset Purchase Agreement,
or to a Qualified Overbidder pursuant to the Generic Purchase
Agreement on terms and conditions no less favorable to the
Debtors than the Asset Purchase Agreement, shall be free and
clear of any and all liens and encumbrances held for the benefit
of the MPAN Bank Group and/or the MHG Bank Group in respect of
their respective senior secured prepetition loans or their
postpetition debtor in possession loans, with such liens and
encumbrances transferred with the same extent, validity and
priority to the impounded and segregated net proceeds of sale
(after payment of any required Break Up Fees and expenses) that
such liens and encumbrances presently enjoy in respect of the
assets comprising the Debtors' Pharmaceutical Business. The
impounded and segregated net proceeds of sale shall not be
distributed thereafter absent further order of the MPAN and MHG
Bankruptcy Courts.

   (o) Publishing of Notice

The Debtors' shall publish notice of the Auction on two
occasions in one week intervals in The Wall Street Journal
(National Edition).

   (p) Retention of Jurisdiction By Bankruptcy Court

The Bankruptcy Court shall retain jurisdiction to interpret and
enforce the terms of the Order, and shall be the exclusive forum
to hear, determine and enter appropriate orders and judgments
regarding the Bidding Procedures, and Break-Up Fee and the
proposed sale of the Debtors' Pharmaceutical Business.

                       *   *   *

The Debtors believe that a sound business justification exists
for approving the Sale Procedures and Break-Up Fee.
Specifically, the Debtors represent that:

(1) The Proposed Overbid Procedures will maximize the value of
    the Debtors' Pharmaceutical Business because such procedures
    will facilitate a competitive and fair bidding process;

(2) The Break-Up Fee Arrangements are fair and reasonable under
    the circumstances because these arrangements meet the
    standards established by the Third Circuit in O'Brien, and
    the Purchasers, which are one of the few likely and
    qualified buyers for the Debtors' Pharmaceutical Business,
    would not have bid absent the proposed break-up fee and
    expense reimubrsement arrangements;

(3) The Break-Up Fee is the product of arm's-length, good-faith
    negotiations;

(4) The Break-Up Fee will encourage fair and competitive
    bidding;

(5) The Purchasers have expended considerable time and resources
    negotiating, drafting, and performing due diligence
    activities necessitated by the sales transaction despite the
    fact that their bid will be subject not only to Court
    approval but also to overbidding by third parties;

(6) The proposed break-up fee will permit the Debtors to proceed
    with the Sale Motion and to enjoy the benefit of having the
    Asset purchase Agreement as the benchmark against which
    other bidders must base their competing offers;

(7) The Debtors believe that their Pharmaceutical Business has a
    value of at least $60,000,000 and the proposed break-up fee
    and expense reimbursement will not exceed $1,700,000 - an
    amount less than 3% of the minimum expected purchase price,
    notwithstanding that the Purchasers have expended hundreds
    of hours to the transaction.

Accordingly, the Debtors request that the Court authorize the
proposed sale of assets pursuant to Bankruptcy Code section
363(f). (Mariner Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  


MERRILL LYNCH: Fitch Junks 3 Classes of Series 1999-C1 Notes
------------------------------------------------------------
Fitch downgraded Merrill Lynch Mortgage Investors, Inc.'s
mortgage pass-through certificates, series 1999-C1, $3.0 million
class J from `B- ` to `CCC', $20.7 million class H from `B' to
`B-` and $23.7 million class G from `BB' to `BB-`. Fitch has
also placed the $7.4 million class F, currently rated `BBB-` on
Rating Watch Negative.

The following classes are affirmed: the $80.7 million class A-1,
$337.8 million class A-2 and interest only class IO at `AAA',
the $32.6 million class B at `AA', the $26.7 million class C at
`A', the $8.9 million class D at `A-`, and the $20.7 million
class E at `BBB'.

Fitch does not rate the $13.3 million class K. The rating
changes and affirmations follow Fitch's annual review of the
transaction, which closed in November 1999. The downgrades and
Rating Watch Negative placement are primarily due to expected
losses and the deterioration in the transaction's performance.

The eighth largest loan in the pool representing 3% of the
transaction has been in special servicing for over a year. This
loan, secured by four cross-collateralized and cross-defaulted
multifamily properties in Virginia, is currently over 90 days
delinquent. Subsequent to the transfer to special servicing,
ORIX Real Estate Capital Markets (OCM) as special servicer,
identified non-payment matters, including a change in borrowing
entity, certain property condition issues and alleged fraud.

In July 2001, an appraisal was performed resulting in a $5.4
million appraisal reduction. OCM is concurrently pursuing
foreclosure and giving the borrower time for a possible sale of
the properties.

In addition to this loan, Fitch has concerns with three other
loans in special servicing which comprise an additional 5% of
the transaction. These include two multifamily properties with
low year-end 2000 debt service coverage ratios (DSCR) and
property condition issues, and an office property with vacancy
and delinquency concerns. Additionally, the master servicer,
OCM, has over 13% of the transaction on their watch list.

OCM, as master servicer, collected 88% of year-end 2000
operating statements by outstanding collateral balance. The
performance of these loans has slightly deteriorated since
issuance, as evidenced by the DSCRs. The weighted-average DSCR
for these loans was 1.40 times at year-end 2000, compared to
1.41x at issuance. In addition, 8.9% of loans had DSCRs less
than 1.00x at year-end 2000 whereas at issuance, no loans were
below 1.00x.

As of the September 2001 distribution date, the collateral
balance has decreased by approximately 3% from $592.5 million to
$575.6 million. The properties are currently located in 27
states with significant concentrations in Texas (18%),
California (12%), New York (8%), Maryland (8%), and Connecticut
(7%) and consist mostly of multifamily (31%), office (28%), and
retail (24%) property types. While Fitch believes this
diversification is a positive attribute of the deal, the lack of
collateral paydown and subsequent lack of increased
subordination levels in order to absorb the expected losses is a
major concern.

Fitch analyzed the deterioration of the pool performance and
also assumed the loans of concern were to default at a higher
probability and loss severity. After expected losses on the
Virginia multifamily, the required subordination levels based on
this remodeling of the pool were higher than the current
subordination levels and were not sufficient to support the
initial ratings. As a result of this analysis, Fitch deemed it
necessary to downgrade classes G, H, and J, and place class F on
Rating Watch Negative. Fitch will closely monitor the
developments of this transaction to determine the appropriate
ratings for class F.


MINDSET INTERACTIVE: Taps Jeffers For Corporate Legal Services
--------------------------------------------------------------
Mindset Interactive Corp. (OTC Bulletin Board: MSIA), developer
of innovative marketing software utilized by some of America's
most prestigious corporations and provider of online solutions
to create brand awareness, announced it has retained the law
firm of Jeffers, Shaff & Falk, LLP, to handle its corporate
legal services, including assisting the Company in its
financings.

Jeffers, Shaff & Falk, LLP, headquartered in Irvine, Calif., is
noted for providing sophisticated corporate, securities and tax
law services to small and middle market companies. Partner Barry
D. Falk is a former attorney with the Securities and Exchange
Commission in corporate finance and enforcement; Michael B.
Jeffers has more than 25 years experience in securities
regulation and compliance. Michael E. Shaff, the third partner,
is an expert in corporate taxation.

"This firm has extensive experience in corporate and securities
law and finance, partnership law and finance, mergers and
acquisitions, and venture capital, and has proven to be
especially effective for emerging growth companies," said Vinay
Jatwani, COO and Vice President of Sales, Mindset Interactive.
"We are looking forward to their guidance and expertise in
growing our company."

Mindset Interactive has developed six products to allow
companies, from Fortune 500 entities to local businesses, to
more effectively promote their brands and to develop stronger
ties with their consumers. More information about the products
is available at the Company's corporate Web site:
http://www.mindsetinteractive.com

Mindset Interactive Corp., Irvine, California, develops
innovative software and services that enables corporations to
increase brand awareness, promote their products, and stay
connected with the customers who visit their Web sites. Mindset
Interactive products are unique and user-friendly and allow
businesses to enhance their relationships with clients both on
and off-line. More information about these products is available
at  http://www.mindsetinteractive.com

                           * * *

The Company funded operations primarily through the private
placement of debt. At June 30, 2001 the Company's principal
source of liquidity are cash balances of approximately $72,000.

Cash used in operating activities for the six months ended June
30, 2001 was $347,000.  This  was  primarily  the result of the
operating loss during the six months.

Cash provided by financing activities of $ $454,000 during the
six months ended June 30, 2001 was from the issuance of
convertible debt to be converted to units as part of the private
placement. (Note 5 to the financial statements-subsequent
events).

Cash used in investing activities was $48,307 for the six months
ended June 30, 2001.  The investing activity consisted primarily  
of the issuance of notes receivable of $50,000.

The Company is circulating a private placement effective July
15, 2001. There can be no assurance that the Company will raise
enough funds to meet its cash requirements for at least the next  
twelve months.  The company may seek additional sources of
capital or be forced to reduce its cash requirements if
sufficient funding is not raised through the placement.

In its last 10-Q Filing, the Company reported a current ratio of
0.23 to 1, and a debt ratio of 3.56 to 1.


NAB ASSET: Files For Chapter 11 Protection in N.D. Texas
--------------------------------------------------------
On September 26, 2001, NAB Asset Corporation (OTCBB:NABC), filed
a voluntary petition for bankruptcy protection under Chapter 11
of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of Texas (Case No. 01-37898).

The Company remains in possession of its assets and properties
and its business and affairs will continue to be managed by its
directors and officers, subject to the supervision and orders of
the Bankruptcy Court.

In connection with the Chapter 11 Filing, the Company previously
entered into an amended and restated Stock Purchase Agreement
with Centex Financial Services, Inc. and Stanwich Financial
Services Corp. on August 6, 2001.

Pursuant to the Stock Purchase Agreement, the Company agreed to
issue to CFS a number of shares of common stock of the Company
equal to 49.9% of the issued and outstanding post-redemption (as
described below) common stock of the Company. These shares will
be in addition to the 117,500 shares of common stock of the
Company currently owned by CFS.

Under the Stock Purchase Agreement, at closing CFS will (i) pay
to a disbursing agent an amount equal to $0.106 multiplied by
the number of shares of common stock held by the Non-Principal
Holders, and (ii) pay to the Company approximately $930,000 plus
the amount of outstanding payables of the Company.

The Non-Principal Holders include all common shareholders of the
Company other than CFS, Consumer Portfolio Services, Inc. and
Greenhaven Associates, Inc.

Consummation of the transactions contemplated by the Stock
Purchase Agreement is contingent on a number of conditions,
including without limitation, approval of the plan of
reorganization by the bankruptcy court.


NAB ASSET: Chapter 11 Case Summary
----------------------------------
Debtor: NAB Asset Corporation
        4144 N. Central Expy., Suite
        800 Dallas, TX 75204

Chapter 11 Petition Date: September 26 , 2001

Court: Northern District of Texas (Dallas)

Bankruptcy Case No.: 01-37898

Judge: Robert C. McGuire

Debtors' Counsel: Charles Mark Brannum, Esq.
                  Winstead, Sechrest & Minick
                  5400 Renaissance Tower
                  1201 Elm St.
                  Dallas, TX 75270
                  214-745-5400


NATIONAL RECORD: Creditors Still Hope That A Buyer Will Surface
---------------------------------------------------------------
Creditors hoping to get their money out of cash-strapped
National Record Mart Inc. (NRM) have agreed to a proposal that
would keep the Carnegie, Pennsylvania-based music retailer open
through Christmas in the hope that a buyer for either the whole
chain or its parts will be found, according to the Pittsburgh
Post-Gazette.  

U.S. Bankruptcy Judge M. Bruce McCullough did not sign off on
the deal worked out between NRM and the various parties because
the financing package could not be tied to the various
stipulations.  He did agree, however, to reconsider the motions
separately as soon as possible.

If the proposal stands, lender Fleet Financial Corp. would
advance NRM enough cash to stock 124 stores that are still open
for the important holiday season, when the company traditionally
has made money.  NRM was forced into bankruptcy court in June,
when five major music distributors that claimed they were owed
$18.7 million filed for involuntary chapter 7 on behalf of the
retailer. That was filing later converted to chapter 11.  (ABI
World, September 25, 2001)


NEXTERA ENTERPRISES: Expects to Face Nasdaq Delisting
-----------------------------------------------------
Nextera Enterprises, Inc. (Nasdaq: NXRA) issued the following
statement from President and Chief Executive Officer David
Schneider:

     "We remain confident in Nextera's overall business, and
reiterate our guidance of achieving operating profit before
special charges in the current quarter, with lower revenue
mainly due to seasonal softness in demand largely offset by
lower operating expenses. In addition, we are progressing
in our review of a range of strategic alternatives."

     In the second quarter of 2001, Nextera recorded an
operating profit before special charges of 2.5 million.

     Schneider concluded, "In coming days, we may receive a
letter from Nasdaq indicating that we have not satisfied the
$1.00 minimum bid price requirement for continued listing on the
Nasdaq National Market and that our common stock will be
delisted. If we receive such a letter, we intend to request a
hearing to appeal the delisting determination. Pending the
outcome of a hearing before the Nasdaq Listing Qualifications
Panel, which typically occurs within 4 to 6 weeks of a request,
Nextera stock would remain listed under the Nasdaq rules. Also,
we are aware that there have been recent reports in the news
media that Nasdaq may waive the minimum bid price requirement
for an indeterminate period of time, and we are closely
monitoring the situation."

Nextera Enterprises Inc. is a leading management-consulting firm
providing integrated solutions for today's most complex business
issues. Through its Lexecon Consulting Group, Strategic Services
Group, Sibson Consulting Group and Technology Solutions Group,
Nextera provides clients with extensive knowledge and experience
in economics, strategy, human capital and technology solutions.

Nextera has provided consulting services to more than half of
the Fortune 500 companies. The firm has offices in Boston,
Cambridge, Chicago, Los Angeles, New York, Princeton, Raleigh,
Rochester, San Francisco, London, Sydney and Toronto. More
information can be found at http://www.nextera.com


NEXTWAVE: LCC Sells Stock and Receivables Position for $21.4MM
--------------------------------------------------------------
LCC International, Inc., (NASDAQ:LCCI) a global leader in
wireless voice and data turn-key technical consulting services,
announced that during the third quarter it sold all of its
1,666,666 shares of its NextWave Telecom Inc.'s Class B common
stock and its current debt claims against NextWave, excluding
the claims of Koll Telecommunications L.L.C. and any post
petition contract rejection claims, for total gross proceeds
received in the quarter of $21.4 million.

In addition, LCC is entitled to receive an additional payment of
$2.3 million in the event NextWave affirms its obligation to
prepetition interest on LCC's debt claims.

As previously outlined in LCC's June 22, 2001 8K filing with the
Securities and Exchange Commission, LCC acquired its equity
holdings in May 1996 as a result of an investment made in
NextWave by the Company. Its debt holdings reflect monies due
for services rendered to NextWave in the 1996 time frame prior
to the carrier's filing for bankruptcy protection in 1998.

LCC continues to hold warrants on 123,356 shares of NextWave
Class B Common stock at a strike price of $3 per share.

The gross proceeds of the sale of these assets in the third
quarter are expected to yield approximately $0.62 per share that
will be reflected as one-time gains in the third quarter results
that the Company expects to report on November 5, 2001.

LCC International, Inc. is a global leader in voice and data
design, deployment and management services to the wireless
telecommunications industry. A pioneer in the industry since
1983, LCC has performed technical services for the largest
wireless operators in North and South America, Europe, The
Middle East, Africa and Asia.

The Company has worked with all major access technologies and
has participated in the success of some of the largest and most
sophisticated wireless systems in the world.

Through an integrated set of technical business consulting,
training, design, deployment, operations and maintenance
services, LCC is unique in its ability to provide comprehensive
turnkey services to wireless operators around the world.


OWENS CORNING: Seeks Okay to Hire SLG As Insurance Consultant
-------------------------------------------------------------
Owens Corning files an application for authorizing the
employment and retention of MMC Enterprise Risk's Strategic
Liabilities Group (SLG) as its insurance and risk management
consultant.

Tara L. Lattomus, Esq., at Saul Ewing LLP in Wilmington,
Delaware, discloses that Marsh & McLennan Companies, Inc. (MMC),
is a global professional services firm and a parent of a vast
array of organizations including Marsh USA Inc., the world's
leading risk and insurance services firm.   

SLG is one of the many groups within Marsh USA, Inc.,
specializing in analyzing mass tort liability and developing
management strategies.

The Debtors seek to retain SLG because:

(1) SLG has an excellent reputation for providing high quality
    insurance and risk management consulting services to the
    Debtors and creditors in bankruptcy reorganizations and
    other debt restructuring.

(2) SLG has a working understanding of the Debtors financial and
    business operations.

The Debtors contemplate that SLG will render these services:

(1) estimate insurance pricing, prepare underwriting
    prescreening document, and participate in preliminary
    negotiations with underwriters;

(2) review data from various time periods to ensure its accuracy
    for use in modeling and forecasting asbestos liability and
    develop custom forecasting procedures;

(3) provide advice regarding application of actuarial principles
    to future claims projections;

(4) execute an affidavit or other documentation and provide
    testimony as required by the Court and/or as requested by
    the Debtors on the insurance and risk management consultant
    services provided;

(5) perform all other insurance and risk management consultant
    services that may be necessary and appropriate in connection
    with the Debtors' chapter 11 cases.

Robert C. Herrick, a managing director of Marsh USA, Inc., and a
member of the Strategic Liabilities Group, discloses that he
directed the conduct of a conflict check and results reveals
that the Group has provided service to parties-in-interest in
these chapter 11 cases in matters unrelated to the Debtors and
their estates.  

Mr. Herrick asserts that the Group and all of its current
employees are disinterested persons with respect to the Debtors
and do not have connection with any entity that would be adverse
to the Debtors and their estates.  Mr. Herrick adds that the
Group and its employees do not and will not represent any entity
in connection with these chapter 11 cases.

Mr. Herrick discloses that it had previously rendered insurance
agency & brokerage and consulting services to Fibreboard
Corporation, INTEGREX Professional Services LLC, and Owens
Corning, all Debtors & related entities in these chapter 11
cases.

Mr. Herrick states that SLG have advised the Debtors in the past
with respect to placement of insurance and similar risk
management services.  SLG was compensated $97,046 for these pre-
petition services and does not have claims for the services
rendered.  

In connection with these cases, Mr. Herrick reveals that SLG
rendered post-petition services that are either unbilled or
unpaid amounting to a total of $60,000.

Mr. Herrick discloses that SLG bills its clients on an hourly
basis ranging from $200-500 based on position and title.  The
professionals expected to work on these matters together with
their hourly rates are:

     Robert C. Herrick             $500 per hour
     Richard Goldfarb              $350 per hour
     Daniel McGinnis               $290 per hour
     Pauline Simpson               $250 per hour

(Owens Corning Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  


OWENS CORNING: Gets Approval to Share Asbestos Claim Information
----------------------------------------------------------------
Owens Corning received court approval from Judge Judith K.
Fitzgerald of the U.S. Bankruptcy Court in Wilmington, Del., to
share confidential information about pending and resolved
asbestos-related claims with certain parties representing
creditors and claimants in its chapter 11 case, Dow Jones
reported.

The decision is a victory for the company because it allows the
proposed recipients to put value on pending asbestos claims and
estimate future asbestos liabilities against Owens Corning.  The
order will allow the Toledo, Ohio-based Owens Corning to
formulate a reorganization plan and solicit plan acceptances.

Owens Corning will share the information with the legal
representative for future claimants and with the committees
representing those with asbestos-related and general unsecured
claims against the company and its bankrupt affiliates.

The parties will be given access to settlement agreements and
databases containing information about pending and resolved
asbestos personal injury and property damage claims against
Owens Corning and bankrupt affiliate Fibreboard Corp.  Owens
Corning filed for chapter 11 bankruptcy protection on Oct. 5,
2000. (ABI World, September 25, 2001)


PACIFICARE HEALTH: Fitch Concerned About Poor Operating Results
---------------------------------------------------------------
Fitch affirms PacifiCare Health Systems, Inc.'s (PacifiCare or
the Company) 'BB+' senior debt rating. The Rating Outlook
remains Negative.

The rating considers the recent deterioration in PacifiCare's
operating performance, modest levels of capitalization at the
operating level, and high levels of debt refinance risk. The
Company's profitability challenges can be attributed to a
provider-driven movement away from capitated contracting and
towards shared risk contracting, as well as to a continued
poor operating environment in the Medicare + Choice marketplace.

In response to these challenges, PacifiCare has devised and
begun to implement a new corporate strategy. Executing this
strategy is a senior management team that has undergone
significant turnover during the last year, including the
hiring of a new CEO, CFO, and other key operating personnel.

Through various changes in its product portfolio, the pruning of
its target market, and a revamping of its operating platform,
Fitch expects PacifiCare's profitability to improve. However, we
project continued low levels for the remainder of 2001 and into
2002. The Company's ability to recapture returns comparable to
pre-autumn 2000 levels is uncertain.

PacifiCare maintains approximately $805 million in outstanding
debt - $705 million in bank debt and $100 million in senior
notes. This translates into a ratio of debt to total
capitalization of about 28%.

Although this level of leverage is appropriate for the rating
category in absolute terms, the structure is not: Full principal
repayment is due in 2003, most of it in January. This exposes
debt investors to a meaningful level of refinance risk, which
should be tracked closely considering the Company's recent
failed attempt at a capital restructuring. Although Fitch
recognizes this risk, we would anticipate the bank group to
again restructure its debt if other channels could not be tapped
by the Company for refinancing purposes.

Santa Ana, California-based PacifiCare is a leading US managed
care holding company that is publicly traded on the NASDAQ. As
of June 30, 2001, the Company reported total HMO membership of
3.6 million, total assets of $5.2 billion, and shareholders'
equity of $2 billion.

Although ancillary health insurance-related products are
offered, the core managed care product portfolio consists
predominantly of traditional closed-model HMO offerings. These
are offered mainly to commercial accounts and government
beneficiaries in nine states, with a meaningful concentration in
California.


PACIFIC GAS: Summary & Overview of Joint Plan of Reorganization
---------------------------------------------------------------
Pacific Gas and Electric Company and its Parent, PG&E
Corporation, present the U.S. Bankruptcy Court for the Northern
District of California with their Joint Plan of Reorganization,
dated September 20, 2001, and a Disclosure Statement in support
of the Joint Plan.

The Joint Plan contemplates that Pacific Gas will be split into
three new companies:

      Gen -- On or before the Effective Date, the majority of
             the assets associated with the Debtor's current
             generation business will be transferred to Gen and
             Gen will operate as a separate electricity
             generation company thereafter. The Debtor's
             conventional hydroelectric generation facilities
             and associated lands, irrigation district contracts
             and contracts for the purchase of power from two
             QFs operationally linked to the Gen Assets, the
             Helms Pumped Storage Facility and the Diablo Canyon
             Power Plant will be transferred to Gen and its
             subsidiaries or affiliates. Gen and its
             subsidiaries or affiliates will operate and mange
             its generation facilities and associated lands in
             accordance with FERC and NRC operating license
             conditions and consistent with sound environmental
             stewardship policies. Unlike other assets in the
             Debtor's current generation business, the Hunters
             Point Power Plant and Humboldt Bay Power Plant
             assets will remain with the Reorganized Debtor.
             This distinction is made because the Hunters Point
             Power Plant will be shut down and dismantled in the
             near future pursuant to a settlement agreement
             while the Humboldt Bay Power Plant includes a small
             non-operating nuclear power facility that is now in
             the early stages of decommissioning.  The
             Reorganized Debtor will complete the
             decommissioning activities for these facilities
             subject to existing CPUC oversight and ratemaking.
             In addition to the assets listed above, Gen and its
             subsidiaries or affiliates will also receive land,
             switchyards, step up transformers and other
             interconnection equipment and other entitlements,
             rights of way, access rights, personal, real and
             intellectual property and the business records
             necessary to operate the assets transferred from
             the Debtor's current generation business. Pursuant
             to section 365 of the Bankruptcy Code, the Debtor
             will also assume and assign to Gen certain of the
             continuing contractual obligations of the Debtor
             that are associated with the operation of the
             transferred generation business, including water
             supply contracts, after which the Debtor will be
             relieved of any obligations thereunder.

   GTrans -- On or before the Effective Date, the majority of
             the Debtor's assets associated with its current gas
             transmission business will be transferred to GTrans
             and GTrans will operate as a separate interstate
             gas transmission company thereafter. Specifically,
             the Debtor will transfer approximately 6,300 miles
             of transmission pipelines, three gas storage
             facilities and certain end-use customer service
             lines.  GTrans and its subsidiaries will receive
             all of the land, entitlements, rights of way,
             access rights, personal and intellectual property
             and the business records necessary to operate the
             Debtor's current gas transmission business.
             Pursuant to section 365 of the Bankruptcy Code, the
             Debtor will also assume and assign to GTrans
             certain of the continuing contractual obligations
             of the Debtor that are associated with the
             operation of the gas transmission and storage
             business, after which the Debtor will be relieved
             of any obligations thereunder.  GTrans will also
             enter into a contract with the Reorganized Debtor
             related to gas transmission and storage rights.

   ETrans -- ETrans will receive the majority of the assets
             generally associated with the Debtor's current
             electric transmission business and ETrans will
             operate as a separate electric transmission company
             thereafter.  Specifically, the Debtor will transfer
             approximately 18,500 circuit miles of electric
             transmission lines and cables located in
             California, which will include 1,300 circuit miles
             of 500 kV lines, 5,300 circuit miles of 230 kV
             lines, 6,000 circuit miles of 115 kV lines and
             4,000 circuit miles of 70 and 60 kV lines, and the
             towers, poles and underground conduits used to
             support the lines and cables.  In addition, ETrans
             will receive all transmission substations,
             transmission control centers and associated
             operations systems, junctions and transmission
             switching stations and associated equipment
             necessary to support the lines and cables and all
             of the other land, entitlements, rights of way,
             access rights, personal, real and intellectual
             property and the business records necessary to
             operate the Debtor's electric transmission
             business.  The Debtor's existing internal
             telecommunications backbone assets will also be
             transferred to ETrans or one of its subsidiaries or
             affiliates.  Pursuant to section 365 of the
             Bankruptcy Code, the Debtor will also assume and
             assign to ETrans certain of the continuing
             contractual rights and obligations of the Debtor
             that are associated with the operation of the
             electric transmission business, after which the
             Debtor will be relieved of any obligations
             thereunder. Such contracts include those related to
             service over the Pacific Intertie, including
             certain "EHV" transmission agreements and contracts
             for the ownership, use and coordinated operation of
             the California-Oregon Transmission Project. In
             addition, the Debtor will assume and assign to
             ETrans several interconnection agreements with
             utilities and agencies in the Debtor's service area
             and certain other entities. ETrans will also enter
             into contracts with the Reorganized Debtor to
             enable the Reorganized Debtor to continue to
             provide interconnection and transmission services
             under contracts to be assumed by the Reorganized
             Debtor, including those with (a) the Western Area
             Power Administration, U.S. Department of Energy and
             certain of its customers and (b) the City and
             County of San Francisco.

The Plan will work, PG&E and Pacific Gas tells Judge Montali in
their Disclosure Statement:

      "The value created by the Plan will provide cash and
increased debt capacity to enable the Debtor to repay its
creditors in full and restructure its existing debt. The Plan
will also create businesses that will be financially sound going
forward, thus providing the necessary assurance that the
Reorganized Debtor and the disaggregated entities will be able
to service the debt issued or reinstated under the Plan.

      "The Proponents believe that the Plan is workable, fair
and in the public interest.  The Plan provides for the continued
ownership of the Debtor's assets by California companies that
will continue to operate the Debtor's assets consistent with
sound business and environmental policies. The Plan positions
the Debtor to regain financial viability, resume procurement of
power for its retail customers, and participate actively in
Western energy markets by the end of 2002."

And, the Proponents add:

      "Without raising retail electricity rates above current
levels, the Plan provides a safe, reliable and long-term
electric supply to California's electric customers. The Plan
enables the Debtor to maintain a qualified workforce and keep
the Debtor's generating assets intact and integrated, rather
than selling them piecemeal to satisfy its debts. Finally, the
Debtor's restructured gas and electric distribution, gas and
electric transmission and generating assets will continue to be
regulated to protect the public interest.

The Debtor's Secured Debt Obligations are reinstated under the
Joint Plan and holders of Secured Claims recover 100% of what
they're owed.

Most Unsecured Creditors, with claims aggregating approximately
$6.2 billion, will receive a basket of cash and securities
projected to provide a 100% recovery:

    60% in Cash;

    40% in the form of long-term notes issued by ETrans, GTrans
        and Gen; and

    0% from a pro rata share of a $40 million placement fee;

Holders of so-called convenience claims (a claim of less than
$100,000) receive 100% payment in Cash.  Those convenience
claims total approximately $40,000,000.

The Joint Plan creates a special class for holders Chromium
Litigation Claims asserted in ten civil actions against the
Debtor pending in California courts by approximately 1,160
plaintiffs. Each of the complaints alleges personal injuries and
seeks compensatory and punitive damages in an unspecified amount
arising out of alleged exposure to chromium contamination in the
vicinity of the Debtor's gas compressor stations located at
Kettleman, Hinkley, and Topock, California.

The plaintiffs include current and former employees of the
Debtor and their relatives, residents in the vicinity of the
compressor stations, and persons who visited the gas compressor
stations. The plaintiffs also include spouses or children of
these plaintiffs who claim loss of consortium or wrongful death.  
The Debtor estimates its potential liability at $160 million.  
The aggregate after-tax amount of any liability resulting from
the Chromium Litigation will be divided among the Reorganized
Debtor, ETrans, GTrans and Gen approximately as follows: 50%,
12.5%, 12.5% and 25%, respectively.

Holders of the QUIDS receive a cash payment for all interest
accrued between January 1, 2001 and the Effective Date of the
Plan and long-terms notes from the three new entities so that
the pie the QUODS holders receive consists of a 27.5% ETrans
slice, a 19.8% GTrans portion and the 52.% balance contributed
by Gen.

PG&E Corp. retains all of its equity interests and will be
distributed as a special dividend to holders of PGE stock on the
Effective Date.

The Proponents explain that the long-term notes and long-term
subordinated notes issued by each of the Reorganized Debtor,
ETrans, GTrans and Gen will be several and independent and will
not be cross-defaulted with the corresponding long-term notes of
any of the other operating companies. The Debtor will satisfy
any Cash requirements through its current cash reserves,
proceeds of the sale of certain assets, and proceeds raised
through new debt financings consummated by each of the
Reorganized Debtor, ETrans, GTrans and Gen as of the Effective
Date.

Each of the Reorganized Debtor, ETrans, GTrans and Gen also will
establish separate working capital facilities for the purpose of
funding seasonal fluctuations in working capital, letters of
credit primarily for workers' compensation liabilities in the
event the Reorganized Debtor, ETrans, GTrans or Gen do not
secure State approval of self-funding and certain other
contingencies. The available components and amounts of these
facilities are projected to be (amounts in millions):

                        Reorganized
                          Debtor       ETrans    GTrans    Gen
                        -----------     ------    ------    ---
Available for Drawings     $500         $230       $65    $100
Letters of Credit          $400          $90       $30     $80
Total                      $900         $320       $95    $180

These amounts, the Proponents say, are estimates and may be
adjusted based on circumstances in effect as of the Effective
Date. (Pacific Gas Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)    


PACIFIC GAS: FTB Files for Tax Claims Totaling $22 Million
----------------------------------------------------------
State Controller and chair of the Franchise Tax Board Kathleen
Connell announced that FTB has filed a claim for $22 million in
federal bankruptcy court seeking payment of taxes from Pacific
Gas and Electric Company.

"Pacific Gas and Electric is taking the necessary steps to end
its financial troubles through the courts, and I am confident
the process will present a reasonable solution," said Connell.
"In the interest of taxpayers I am filing this claim to secure
tax revenue that is owed to the State by Pacific Gas and
Electric, just as any other creditor would seek to recover money
owed by the utility."

FTB filed an unsecured priority claim for a government tax debt.
The basis of the claim is an audit assessment for the years
1994, 1995, 1997 and 1999 totaling $22.3 million.

October 3 is the deadline for any creditor owed money by Pacific
Gas and Electric to file a claim.

The Franchise Tax Board collects more than $5 billion in bank
and corporation taxes annually on behalf of the state.


PHASE2MEDIA: US Trustee Appoints Unsecured Creditors' Committee
---------------------------------------------------------------
Carolyn S. Schwartz, United States Trustee for Region 2,
appoints these creditors to serve as members of the Official
Committee of Unsecured Creditors of Phase2Media's chapter 11
cases:

1.   NHL Interactive Cyber Enterprises, LLC
     1215 Avenue of the Americas
     New York, New York 10020
     Attn: Matthew Kline, Esq.
     Tele: (212) 789-2150

2.   Britannica.com
     310 South Michigan Avenue
     Chicago, Illinois 60605
     Attn: Richard Anderson
     Tele: (312) 347-7175

3.   AG.com
     3 American Road
     Cleveland, Ohio 44144
     Attn: Tammy Martin
     Tele: (216) 889-5530

4.   MaximNet, Inc.
     1040 Avenue of the Americas
     New York, New York 10018
     Counsel:
     Jacobs, DeBrauwere & Dehn LLP
     445 Park Avenue
     New York, New York 10022
     Attn: Arthur J. Jacobs, Esq., or
           Barbara J. Lipshutz, Esq.
     Tele: (212) 207-8787

5.   eUniverse, Inc.
     6300 Wilshire Boulevard, Suite 1700
     Los Angeles, California 90048
     Attn: Christopher S. Lipp, General Counsel
     Tele: (323) 658-9089 Ext. 119

6.   Hachette Filipacchi Interactions S.A.
     149-151, rue Anatole France
     92534 Levallois - Perret Cedex
     France; and

     Hachette Filipacchi Magazine
     1633 Broadway
     New York, New York 10019
     Attn: Catherine Flickinger
     Tele: (212) 767-6918

7.   Decision Consultants, Inc.
     28411 Northwestern Highway, Suite 325
     Southfield, Michigan 48034
     Attn: Frank Jerneycic, Senior Vice President
     Tele: (248) 352-8790
  
Phase2Media, Inc., an online advertising, sales and marketing
company, filed for Chapter 11 protection on July 18, 2001 in the
Southern District of New York Bankruptcy Court.  The filing came
four months after the company withdrew its request with the
Securities and Exchange Commission to sell shares publicly.  

Harold D. Jones, Esq., at Gersten Savage & Kaplowitz, represents
the Debtors in their restructuring effort.  Subject to further
extensions, the Debtors exclusive period during which to file a
plan expires, November 15, 2001.  


PILLOWTEX: Gets Approval to Pay Prepetition Real Property Taxes
---------------------------------------------------------------
Pillowtex Corporation sought and obtained a Court order
authorizing them to pay certain pre-petition real property
taxes, and to compromise and settle related claims.

The Debtors convinced Judge Robinson that the relief requested
is in the best interest of the Debtors' estates and is
appropriate under section 105(a) and (363(b) of the Bankruptcy
Code as well as Rule 9019(b) of the Federal Rules of Bankruptcy
Procedure.

But Judge Robinson emphasized that while the Debtors are
authorized to compromise and settle, and to pay, in their sole
discretion and without any further order of the Court, any claim
of a governmental unit in respect of Pre-Petition Taxes, the
Debtors should:

    (a) provide to their post-petition lenders a list of each of
        the taxing jurisdictions for the Pre-Petition Taxes that
        the Debtors propose to pay or compromise and pay; and

    (b) not pay or compromise and pay any claims in respect of
        Pre-Petition Taxes until 20 days after providing such a
        list.

Then, Judge Robinson ruled, the Debtors shall be authorized to
pay or compromise and pay any claim with respect of a Pre-
Petition Tax provided that:

    (1) such claim is secured by a statutory lien that has
        priority over all other liens imposed against the
        applicable property; and

    (2) the market value assigned to the property by the
        applicable taxing authority exceeds the Pre-Petition Tax
        to be paid or compromised and paid.

The Court further directed the Debtors to provide notice to the
DIP Lenders of any proposed payment or compromise and payment of
all other claims in respect of Pre-Petition Taxes.  According to
Judge Robinson, the DIP Lenders shall then have 10 days in which
to serve any objection to the payment or compromise and payment
of the claim.  

Judge Robinson also stressed that the objection must set forth
in writing the reason for the objection and must be served on
counsel for the Debtors and Darrell Jones, Director of Tax for
Pillowtex Corporation at 4111 Mint Way in Dallas, Texas 75237
with Facsimile number: (214) 339-4765.  

If an objection is not served within 10 days, Judge Robinson
ruled that the Debtors shall be authorized to pay or compromise
and pay thePre-Petition Tax claim.  Otherwise if an objection is
served, Judge Robinson emphasized, the Debtors shall not pay the
Pre-Petition Tax claim until the objection is resolved.  
(Pillowtex Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)    


PSINET INC: CISCO Wants Stay Relief to Enforce Equipment Rights
---------------------------------------------------------------
Cisco Systems Capital Corporation asks the Court to enter an
order modifying the automatic stay imposed by Section 362(a) of
the Bankruptcy Code, pursuant to Sections 105(a), 362(d), 363(e)
and 363(k) of the Bankruptcy Code, Federal Rules of Bankruptcy
Procedure 4001, 6004 and 9014 and Local Rules of Bankruptcy
Procedure 4001-1, 6004-1 and 9014-1:

(a) to permit Cisco to exercise all of its rights and remedies
    under applicable agreements and law with respect to
    equipment leased by Cisco to PSINet Inc. and PSINet Limited
    and used in the companies' Canadian operations; and

(b) to permit Cisco to prosecute its objection to the proposed
    sale of the Canadian operations to Telus Corporation in the
    Canadian court at the time of the sale hearing, including
    making attendant requests of the Canadian court to value the
    equipment, lift the stay, or permit Cisco to credit bid.

Cisco is also entering a credit bid to purchase the equipment at
the price ascribed to the equipment by debtors under 11 U.S.C.
section 363(k) which protects the creditor against the sale of
its collateral at an artificially low price.

Cisco does not believe that relief from the stay is necessary,
particularly in light of the scheduling of a joint hearing on
the sale motion pursuant to cross-border protocols approved by
both courts, but does so out of an abundance of caution because
Debtors have "cautioned" Cisco that Cisco will be violating the
automatic stay by presenting valuation issues and lift stay
issues to the Canadian court in the context of Cisco's sale
objection.

Cisco seeks relief from the automatic stay to recover the
property that is included in the Debtors' sale of Canadian
operations to Telus on a going concern, and otherwise exercise
its rights and remedies under applicable agreements and law.

Cisco tells the Court that Debtors purported to value the
equipment at just a fraction of the true value of $10.25
million, purposefully valuing Cisco's equipment at an
artificially low price so that they can capture the excess
proceeds as a windfall at Cisco's expense, and they rejected
Cisco's informal credit bid after the auction, Cisco screams.

Cisco's equipment cannot be included in the sale to Telus under
applicable law of the United States and Canada, Cisco's
attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. tells
the Court.

Most of Cisco's Canadian Equipment is the subject of various
Canadian Lease Documents, including a Master Agreement, various
Equipment Schedules, Canadian Software Licenses, protective
filings of notices of security interests, and other agreements,
that Cisco and PSINet Limited (one of the Debtors' Canadian
Affiliates) entered into prior to the filing of CCAA
applications by the Debtors' Canadian Affiliates, Cisco tells
the Court.

The Debtors (through PSINet Inc.) guaranteed the obligations of
PSINet Limited to Cisco under the Canadian Lease Documents by
executing a Guarantee dated January 1, 2001, in favor of Cisco.
The Canadian Master Lease specifically provides that the
Canadian Master Lease Agreement and each lease equipment
schedule be governed by the laws of the Province of Ontario,
except as the relevant Canadian Software Licenses specifically
provide that the laws of the United States and the State of
California shall apply, Cisco advises.

A fraction of the Cisco Canadian Equipment included in the
motion is subject to U.S. Leases Documents, including a Master
Agreement, the U.S. Software License and certain other related
agreements and documents, executed by Cisco and PSINet Inc.

"Under applicable United States law, debtors are strictly
prohibited from transferring software owned by Cisco to Telus,
which software is necessary to enable Telus to operate the
equipment," Cisco's attorneys assert, "And, under applicable
Canadian law, Cisco must consent to the transaction, which it
does not."

The sale will divest debtors of their Canadian businesses so
that debtors will no longer require Cisco's equipment to support
those operations. Therefore, Debtors do not require the
equipment to support continued business operations in pursuit of
an effective reorganization, and they cannot include the
equipment in the sale to Telus, Cisco's attorneys argue.

Cisco also asserts that it is entitled to relief from the
automatic stay because its interest in the equipment is not
adequately protected as the Debtors owe it approximately
$28,854,060.38 (US$18,755,139.24) with respect to the equipment.

Cisco tells Judge Gerber that prior to the auction on August 14,
2001, debtors did not offer any allocation of the purchase price
among the assets nor state a value upon which Cisco (or any
other party) could credit bid in accordance with 11 U.S.C.
section 363(k), and subsequent to the auction, Cisco learned
that Debtors purported to value the Canadian Equipment at just a
fraction of the true value.

Cisco tells the Court that the value of the equipment is
determined to be approximately $10.25 million, using
an "in-place equipment" methodology, as declared by Mr. Michael
Hicks of Cambridge Strategic Management Group (CSMG), an
equipment appraiser engaged by Cisco, but appraisals of the
Equipment obtained by the Debtors range between $300,000 and
$800,000.

Cisco tells the Court that after the auction it made an informal
proposal for a credit bid to purchase the equipment for a price
equal to the debtors' low valuation, with a concomitant
adjustment in the purchase price to permit Telus to purchase
replacement equipment but Debtors rejected it. The rejection,
Cisco alleges, undercuts the validity of Debtors' assertion
regarding the nominal value of the Canadian Equipment.

Therefore, in this motion, Cisco renews its credit bid to
purchase the equipment for $1.00 over and above the low price
ascribed by Debtors.

Cisco is also moving for relief from the stay to permit it to
prosecute its sale objection to the fullest extent in the
Canadian court.

Cisco tells the Court that it is prepared to accept the return
of the Canadian Equipment as adequate protection of its rights
and interests in such equipment.

Cisco does not believe that relief from the automatic stay is
necessary for the Canadian court to address Cisco's objection to
the sale or its related valuation motion, lift stay motion or
credit bid.

However, in the exercise of an abundance of caution, Cisco
requests that the Bankruptcy Court for the Southern District of
New York vacate the automatic stay to permit the Canadian court
to consider all of the pertinent pleadings, including objections
to the sale, valuation requests, lift stay requests and credit
bids at the time of the joint sale hearing. (PSINet Bankruptcy
News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-
0900)     


RELIANCE: Regulator Gripes About Ordinary Course Professionals
--------------------------------------------------------------
M. Diane Koken, the Pennsylvania Insurance Commissioner serving
as Rehabilitator for Reliance Insurance Company, wants Judge
Gonzalez to vacate, modify or hold in abeyance his Order
authorizing Reliance Group Holdings, Inc. to employ ordinary
course professionals.

As asserted by the Rehabilitator in a pending action, the funds
from which the Debtors propose to pay such professionals are not
property of the Debtors' estate, but rather are being held in
either a constructive or resulting trust for RIC and its
policyholders. The Debtors should not be permitted to utilize
those funds until the Constructive Trust Action is resolved.

Jerome R. Richter, Esq., at Blank, Rome, Comisky & McCauley,
reminds the Court that the Debtors have already employed a
parade of high-priced professionals:

      * First, RGH retained the law firm of Debevoise & Plimpton
as counsel. Five of the twelve attorneys and legal assistants
proposed to provide services to the Debtors have hourly billing
rates in excess of $600. In the twelve months prior to the
Debtors' bankruptcy filing, D&P received nearly $6 million in
legal fees from the Debtors for services "concerning debt
consolidation, relief under the bankruptcy law, or preparation
of a petition in bankruptcy."

      * Second, this Court authorized the retention of the
accounting firm of Deloitte & Touche.  The fees for these
services will also reach $600 per hour.  During the twelve-month
period prior to the Debtors' bankruptcy filing, D&T received
over $500,000 in fees from the Debtors.

      * Third, RGH retained Resources Connection for financial
and regulatory services, including "regulatory reporting
assistance."  Resources Connection estimates that it will charge
the RGH estate approximately $18,000 per month for these
services.

      * Fourth, Debtor has retained a second set of attorneys,
Dewey Ballantine, at an average billing rate of $465 per hour
and estimated monthly fees of $10,000, to provide "general
counseling."

      * Fifth, the Debtors have also retained the law firm of
Paul, Weiss, Rifkind, Wharton & Garrison to act as Special
Litigation Counsel. Paul, Weiss anticipates, based upon its pre-
petition retention, that its average monthly billings for its
services will be $65,326.68.

      * Sixth, Debtor has retained the public relations firm of
Gavin Anderson & Company to provide "public and investor
relations services" to the Debtors. Gavin Anderson estimates
that it will charge RGH $25,000 per month for its services.

      * Last and, from Ms. Koken's perspective, most
egregiously, RGH has retained Aon Consulting, Inc. as Employee
Benefits Consultant. According to its Retention Questionnaire,
Aon intends to provide "pension plan consulting services and
administration of flexible spending account" services to RGH,
RIC, and non-debtor RCG Information Technology, Inc. for the
estimated average monthly cost of $45,000. RGH is a holding
company with two employees, and, therefore, has little need for
employee benefits consulting services. RFS has no employees.

RIC is now under the control of the Rehabilitator and has no
need for the services of any professional retained by RGH. Any
engagement of professionals to provide services for the benefit
of RIC would be inappropriate. RCG is a non-debtor whose needs
should not be funded by the Debtors' estate.

In addition, RIC is indirectly paying for the professionals of
other parties in interest.  On July 20, 2001, this Court entered
an Order authorizing the retention of the law firm of Orrick,
Herrington & Sutcliffe as counsel for the Official Committee of
Unsecured Creditors. Orrick, Herrington anticipates that at
least seven attorneys, with hourly billing rates of up to $470,
will render services to this Committee.

On July 24, 2001, the Bankruptcy Court entered an Order
authorizing the retention of White & Case as counsel for the
Official Unsecured Bank Committee. W&C anticipates that at least
ten "attorneys and legal assistants," with hourly billing rates
from $300 to $600, will provide services to this Committee.  The
fees for these services by both firms will be paid from the
Debtors' estate.

Bankruptcy Rule 9024, Mr. Richter explains, provides that Rule
60 of the Federal Rules of Civil Procedure applies in cases
under the Bankruptcy Code with certain exceptions that are
inapplicable here. See Fed. R. Bankr. P. 9024. Rule 60(b) of the
Federal Rules of Civil Procedure provides that "[o]n motion and
upon such terms as are just, the court may relieve a party .
from a final judgment, order, or proceeding for the following
reasons: (6) any other reason justifying relief from the
operation of the judgment." See Fed. R. Civ. P. 60(b)(6). A
motion under Rule 60(b)(6) shall be made within a reasonable
time. See Fed. R. Civ. P. 60(b).

Courts have relied upon Sec. 105(a) of the Bankruptcy Code
and/or Rule 60(b)(6) of the Federal Rules of Civil Procedure to
vacate or modify prior court orders. See, e.g., State Bank of
Southern Utah v. Gledhill (In re Gledhill), 76 F.3d 1070, 1081
(10th Cir. 1996)(affirming District Court decision that
Bankruptcy Court appropriately granted Chapter 7 trustee's
motion under Rule 60(b)(6) to vacate order granting creditor
relief from automatic stay); Chrysler Capital Corp. v. Official
Committee of Unsecured Creditors (In re Twenver,Inc.), 149 B.R.
950, 954 (D. Colo. 1993) (affirming Bankruptcy Court's decision
under  105(a)of the Bankruptcy Code to reimpose automatic stay
after Bankruptcy Court had entered order lifting it); In re
Mann, 197 B.R. 634, 635 (Bankr. W.D. Tenn. 1996) (utilizing  
105(a) of the Bankruptcy Code, bankruptcy court vacated order of
discharge entered in Chapter 7 case when order of discharge was
inadvertently entered by court due to clerical mistake).

A bankruptcy court may properly restrict a debtor's use of funds
that are the subject of a constructive trust claim pending the
outcome of that claim. See In re Prime Construction Corp., 156
B.R. 176, 180 (Bankr. E.D. Va. 1993) (since party "has shown a
reasonable probability of establishing the existence of a
constructive trust I will invoke this court's equity power to
impose at least a temporary restriction on debtor's use of the
funds.").

           The Potential Harm to Policyholders

When the Ordinary Course Order was entered, this Court was not
informed that all of the Debtors' cash was the subject of the
Constructive Trust Action, and that it was the only source of
payment for any expenses of bankruptcy.  RGH has now conceded
that it has no liquid assets other than the cash that is the
subject of the Constructive Trust Action. Depending on the
outcome of the Constructive Trust Action, this cash may not be
the property of the Debtors' estate.

Thus, in order to pay the compensation and reimbursement of
expenses of ordinary course professionals (as well as the other
professionals that have been retained) or to make any other
expenditures during their Chapter 11 cases, the Debtors would
necessarily have to make payments from the disputed funds that
the Rehabilitator asserts rightfully belong to RIC and its
policyholders.

During a hearing before the Pennsylvania Bankruptcy Court on
July 20, 2001, counsel for the Debtors represented that the $95
million that is the subject of the Constructive Trust Action is
still in RGH's possession. In fact, this was untrue, as was
revealed by the Debtors' filings with this Court on August 10,
2001.  

As set forth in RGH's Chapter 11 Schedules, RGH had only
$89 million in cash on hand as of June 15, 2001, meaning it had
expended $6 million of the funds that are the subject of the
Constructive Trust Action, plus any interest earned on those
funds. Under the Debtors' proposed plan to pay professionals,
these funds will quickly continue to erode.

RGH's Statement of Financial Affairs, also filed with this Court
on August 10, 2001, shows where this money went: to some of the
same professionals who are now seeking to earn additional fees
from the Debtors' estate.  

An aggregate of over $15 million was paid by or on behalf of the
Debtors to attorneys and advisers for debt counseling or
bankruptcy advice within one year of their bankruptcy filing.
This stunning figure includes $6 million to D&P alone, $1.5
million to Orrick Herrington, and $1.7 million to White & Case.  

D&T also received over $500,000 in fees during this period. To
the extent that payments previously have been made or will be
made to ordinary course professionals prior to the return date
of this Motion, the Rehabilitator reserves the right to seek
disgorgement of such payments.

Given its complete lack of both current business operations and
any future business to reorganize, RGH has no need for the
services of these professionals at the requested levels. Judged
against the potential harm to RIC's policyholders, the interest
of the Debtors in retaining these professionals should be
afforded secondary consideration.

RIC and its policyholders would be severely prejudiced and
irreparably harmed if the Debtors were permitted to continue to
pay these and other professionals or to make any other
expenditures out of the funds that are the subject of the
Constructive Trust Action.

The Rehabilitator seeks to preserve the status quo until a
decision can be made on the merits of the Constructive Trust
Action. Until that determination is reached, it will not be
known whether the funds at issue are the property of the
Debtors' estate, or, as the Rehabilitator claims, the exclusive
property of RIC. Unless this Motion is granted, these funds will
continue to be eroded, the result of which will be an
involuntary funding of these proceedings by RIC, to the
detriment of the Rehabilitator, and ultimately, of RIC's
policyholders.

Conversely, any harm to the Debtors during a preservation of the
status quo would be minimal, since they currently have no
business operations and little need to pay the generous
professional fees requested. It would also be inequitable for
the Debtors to be permitted to consume these funds without a
determination that the funds are actually the property of the
Debtors' estate.

Given the importance of a timely decision on the merits of the
Constructive Trust Action, the Rehabilitator respectfully
requests that the Court confer with the Honorable Kevin J. Carey
of the United States Bankruptcy Court for the Eastern District
of Pennsylvania for the purpose of reconsidering the scheduling
decisions put in place on July 27,2001.

The Rehabilitator believes that under the present circumstances,
any delay in the Constructive Trust Action - including delay of
a decision on the Rehabilitator's Motion To Remand that matter
to the Commonwealth Court of Pennsylvania - would be both
extremely prejudicial to the Rehabilitator, and a detriment to
the interests of RIC's policyholders. A courtesy copy of this
Motion has been sent to Judge Carey.

Accordingly, Ms. Koken suggests, the Ordinary Course
Professional Order should be vacated, modified or held in
abeyance until the resolution of the Constructive Trust Action.
(Reliance Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)    


RENAISSANCE CRUISES: Files For Chapter 11 Protection in Florida
---------------------------------------------------------------
Renaissance Cruises, blaming the recent downturn in vacation
travel in the wake of the September 11 terrorist attacks, shut
down operations yesterday and filed for chapter 11 bankruptcy
protection, according to The Wall Street Journal.

Paul Steven Singerman of Berger Singerman, an attorney for the
Fort Lauderdale, Florida-based Renaissance, said the company had
been in the late stages of negotiating for additional financing,
but the transaction was scuttled as a result of the Sept. 11
terrorist attacks.  Singerman said cash-flow woes and the
radical decline in travel prompted the bankruptcy filing.

Last April, Malvern Maritime, a London-based investment concern
led by Norwegian ship owner and investor Peter Gram, agreed to
make a capital infusion to acquire a majority equity stake in R
Holdings, the parent of the cruise operator.

CSFB Private Equity, the global private equity arm of Credit
Suisse Group, also boosted its investment in R Holdings as part
of the deal. The investments totaled $72.5 million, including
$67 million from Malvern. (ABI World, September 26, 2001)


RENAISSANCE CRUISES: Chapter 11 Case Summary
--------------------------------------------
Debtor: Renaissance Cruises, Inc.
        350 E Las Olas Blvd #800
        Ft. Lauderdale, FL 33301

Chapter 11 Petition Date: September 25, 2001

Court: Southern District of Florida (Broward)

Bankruptcy Case No.: 01-27062

Judge: Raymond B. Ray

Debtor's Counsel: Paul Steven Singerman, Esq
                  200 S Biscayne Blvd #1000
                  Miami, FL 33131


SAFETY-KLEEN CORPORATION: Red Ink Continues to Flow in Q2
---------------------------------------------------------
Safety-Kleen Corp. filed its quarterly consolidated financial
statements for the nine months ended May 31, 2001, including
financial information for the first, second and third quarters
of fiscal 2001 with the Securities and Exchange Commission.

The results for the first nine months of fiscal 2001 reflect a
relatively consistent revenue stream for Safety-Kleen during the
period reported, and a net loss of approximately $186 million.
This loss includes unusual events of approximately $45 million
in reserves for early facility closures and approximately $42
million in expenses primarily associated with the restatement of
the Company's fiscal year 1997 - 1999 financial statements
and the audit of the fiscal year 2000 financial statements.

"Based on our cash flow from operations, and recognizing the
unusual nature of a significant portion of the loss, we believe
Safety-Kleen has a solid core business," said Company Chairman,
CEO and President Ronald A. Rittenmeyer. "This reinforces our
belief that Safety-Kleen has the potential to remain a viable
commercial entity."

"We clearly have additional changes to make, and we intend to
refine our focus on streamlining operations, growing our
customer base, and improving our bottom-line results,"
Rittenmeyer added.

Safety-Kleen announced in March 2000 that it had discovered
accounting irregularities in some previously filed financial
statements, which led to the withdrawal by its former
independent public accountant of its reports on Safety-Kleen's
consolidated financial statements for fiscal years 1997 -
1999.

The Company filed for protection under Chapter 11 of the U.S.
Bankruptcy Code on June 9, 2000 (District of Delaware Case No.
00-2303). The Company's year 2000 and restated 1997 - 1999
consolidated financial statements were issued on July 9, 2001.

"The last 16 months have been challenging," Rittenmeyer said,
"but during that time the Company has maintained normal
operations at its facilities and is running daily operations on
its own cash flow."

Rittenmeyer noted that the Company believes its credit and cash
on hand are sufficient to meet current operating, capital and
environmental liability requirements, and the Company is
negotiating additional letter of credit capacity to meet its
financial assurance requirements.

He also noted that the Company is continuing its efforts to
upgrade information systems, strengthen internal controls over
operations and service, and establish tighter controls and
procedures to help ensure the integrity of its financial data.
A complete copy of Safety-Kleen's Form 10-Q/A for the nine
months ended May 31, 2001, as filed with the SEC is available on
line at  http://www.safety-kleen.com


STANDARD MEDIA: Sells Assets to AOL and IDG For $1.4 Million
------------------------------------------------------------
Standard Media International, publisher of the defunct high-tech
magazine, The Industry Standard, yesterday sold its customer
list and other remaining assets in bankruptcy court, Reuters
reported.

The company said it sold its subscriber list to AOL Time Warner
for about $500,000 and most other remaining assets to the
publisher, International Data Group.  The total value of the
sale was $1.4 million plus certain assumed liabilities.  The
Palo Alto, Calif.-based Standard Media, which has fired most of
its staff but has continued to publish a bare-bones web site
since closing the magazine, said it was still unclear whether it
would continue to maintain a web site in the future. (ABI World,
September 25, 2001)


SWEETHEART CUP: S&P Keeps Negative Outlook on Assigned Ratings
--------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus corporate credit
rating to Sweetheart Cup Co. Inc. The outlook is negative.

At the same time, Standard & Poor's assigned its single-'B'-plus
bank loan rating to the company's $190 million senior secured
revolving credit facility and its single-'B'-minus senior
unsecured debt rating to the company's $275 million senior notes
due 2007 to be issued under Rule 144A with registration rights.

In addition, Standard & Poor's affirmed its existing ratings on
Sweetheart Holdings Inc. and The Fonda Group Inc., which will be
merged into Sweetheart Cup, as well as its ratings on SF
Holdings Inc., Sweetheart Cup's holding company parent (see list
below).

Proceeds of the new credit facility and senior notes are
expected to be used to refinance certain existing indebtedness
at Fonda and Sweetheart Holdings, improving the company's debt
maturity profile. If the refinancing is completed as planned,
Standard & Poor's will withdraw its ratings on Fonda
and Sweetheart Holdings.

The rating on Sweetheart Cup's senior unsecured debt is two
notches below the corporate credit rating because this debt will
rank junior to a considerable amount of bank debt and secured
sale-leaseback financing.

The ratings reflect a below-average business position and very
aggressive financial profile. Sweetheart Cup is a leading
provider of disposable paper, plastic, and foam food service and
food packaging products to food service distributors, fast food
chains, and retail end users. Well known brand names, broad
geographic distribution capability, and advanced printing
technologies are key strengths.

However, despite having some versatility within its niche, the
company's product range is much narrower than that of its key
competitors, which include large, diversified forest products
companies. In addition, some rivals are vertically integrated
and financially stronger. Customer concentration and raw
material cost fluctuations constitute additional risks for
Sweetheart Cup.

The company's modest operating margins are relatively stable, in
the 10% to 12% range. The integration of Sweetheart Holdings and
Fonda should produce some cost savings, somewhat offsetting
temporary increases in transportation and fuel costs and a lag
in passing on last year's resin cost increases. While demand for
the company's products has historically been fairly steady,
it felt a dip in fast food consumption when the economy turned
down earlier this year.

Debt leverage is aggressive. In its financial ratio analysis,
Standard & Poor's uses a model that capitalizes operating lease
commitments and allocates minimum lease payments to interest and
depreciation expense. Including significant capitalized
operating lease obligations and holding company debt, total debt
to EBITDA will be about 6 times, with EBITDA covering cash
interest expense roughly 2x. Interest and dividends on holding
company obligations, which have been paid in kind to date,
become payable in cash in March 2003.

Slim operating margins and high debt levels are likely to keep
funds from operations to debt below 10%. Free operating cash
flow should likewise be modest despite limited working capital
and capital spending needs.

The company is expected to continue to grow via modest
acquisitions such as the recent $21.8 million acquisition of
certain assets from Dopaco Inc. This transaction complements
Sweetheart Cup's product line and expands the firm's West Coast
operations.

The bank credit facility consists of a $190 million revolver
maturing in 2006. Availability will be determined by a borrowing
base of eligible inventory and receivables. While liquidity is
expected to be sufficient, the facility is apt to be
substantially drawn, especially during the company's annual
springtime working capital peak.

The bank loan rating, which is based on preliminary terms and
conditions, is the same as the corporate credit rating. The
credit facility will be secured by a first priority security
interest in accounts receivable and inventory, as well as
property and equipment not securing the sale-leaseback
transaction. Although the collateral should provide a material
advantage to bank lenders, distressed asset values may be
insufficient to completely cover amounts outstanding under the
fully drawn facility.

                      Outlook: Negative

The financial profile is quite weak for the ratings. Any further
deterioration in credit protection measures could lead to a
downgrade.

                         Ratings Assigned

     Sweetheart Cup Co. Inc.                             Ratings

        Corporate credit rating                             B+
        Senior secured bank loan rating                     B+
        Senior unsecured debt                               B-

                          Ratings Affirmed

     The Fonda Group Inc.

        Corporate credit rating                             B+
        Subordinated debt                                   B-

     Sweetheart Holdings Inc.

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

     SF Holdings Group Inc.

        Corporate credit rating                             B+
        Senior secured debt                                 B-


TELEPANEL SYSTEMS: Will Get Funds from VenGrowth & Royal Bank
-------------------------------------------------------------
Telepanel Systems Inc. (OTCBB:TLSXF) (TSE:TLS.), a world leader
in electronic shelf label systems for retail stores, announced
that The VenGrowth Investment Fund Inc. and Royal Bank Capital
Partners will provide funding of up to $1,500,000 to finance
company operations.

The company has also reached an agreement with VenGrowth and
Royal Bank Capital Partners to set the conversion price of the
previously restructured debt at an average of $.35 per share.

The lenders have agreed to commit further operating capital to
Telepanel Systems Inc. that will be provided from the proceeds
of proposed sales of a portion of their current holdings. The
lenders will liquidate a portion of their current holdings of
stock, and reinvest these proceeds by the purchase of new
treasury stock or new convertible debentures.

Vengrowth has also agreed to invest certain additional funds to
be injected into the company. With the substantially reduced
operating costs of the company, this potential funding will
finance Telepanel well into 2002.

In addition, the company reached an agreement on the terms on
the conversion of the existing debt facilities with Royal Bank
Capital Partners and VenGrowth. The debt is convertible at an
average rate of $.35 per share, approximately 10 cents above the
current trading price.

Previously, the debt conversion terms were to be convertible at
a market price established prior to issuance of the annual proxy
circular. The terms of the restructured debt are still subject
to the approval of the shareholders at the annual meeting. The
conversion was set at $.35 because of the recent decline in the
stock price.

"The conviction displayed by VenGrowth and Royal Bank Capital
Partners is a vote of confidence in the direction that the
company is going and reinforces my faith in the headway we are
making in the ESL market," stated Garry Wallace, President and
CEO of Telepanel. "This funding commitment and the pricing of
the conversion feature ahead of the current market price should
alleviate the concerns that investors are feeling in these
areas."

"With the level of interest, the momentum that is building and
this funding commitment, the elements are in place for Telepanel
to capitalize on the opportunities in the ESL market," he added.

"We are beginning to see some positive results from the
streamlining and cost effective structure that we have recently
implemented. There is a renewed financial interest in the newly
restructured company with this huge market potential and we are
firmly committed to responsibly using the funding to ensure
Telepanel's participation in the emergence of the ESL
Marketplace."

Wallace added, "With this new structure and cash expenses
reduced by over 60%, the financing that we raise goes a lot
further."

"As well, we are continuing to explore a number of strategic and
technical alliances that will broaden and deepen our marketing
efforts. Despite a difficult financial and economic market
place, we are seeing a number of positive signs that regarding
the future of ESL rollouts," stated Garry Wallace.

Telepanel is a leader in developing wireless electronic shelf
labeling systems for retail stores. Telepanel ESLs are placed on
the edge of store shelves to show a product's price and other
information. Prices are changed by a radio communications link
from the store's product database, to provide rapid, accurate
pricing updates.

Telepanel's systems are integrated with the leading 2.4 GHz RF
LANs which allows retailers to take advantage of their
investment in IEEE-standard in-store RF networks and extend
their use to electronic shelf labels. Telepanel wireless ESLs
are installed throughout the United States, Canada, and Europe,
with such premier supermarket chains as Adam's Super Food
Stores, A & P, Stop & Shop, Loblaws, Big Y, Reasor's, Doll's,
Brown's, Stew Leonard's, Grand Union, Wakefern, Berks,
Ellington, Port Richmond, Champion, Leclerc, Intermarche, SPAR,
and Super U, and at Universal Studios, Hollywood.

As of January 31, 2001, the Company posted a current ratio of
0.26 to 1, and a debt ratio of 3.73 to 1.


TELESCAN INC: Cancels Appeal of Nasdaq Delisting Determination
--------------------------------------------------------------
Telescan Inc. (Nasdaq/NM:TSCN) announced that it has canceled
its hearing date before the Nasdaq Listing Qualifications Panel
to review the Staff Determination to delist the Company's common
stock from the Nasdaq National Market.

Based on the current business and economic environment, the
Company no longer believes that, in the short term, it can
achieve and sustain compliance with maintenance listing
requirements to avoid delisting.

The Company's common stock will be delisted from the Nasdaq
National Market effective with the opening of business on
Wednesday, Sept. 26, 2001 and is immediately eligible to trade
on the OTC Bulletin Board(R) (OTCBB).

Houston-based Telescan provides products and services through
two sales and marketing divisions, each serving a unique market.
The Consumer Division publishes premium investment advice,
education, tools and analytics to individual investors online
through two Web properties, INVESTools.com and
WallStreetCity.com. In addition, the Consumer Division operates
a subscription marketing service and an e-mail list management
service.

As an Application Service Provider (ASP), Telescan's Business-
to-Business Division offers businesses of varying sizes an array
of online financial solutions to meet the unique requirements of
the customer's Internet business strategy, along with site
development and hosting services.

In May 2001, Telescan announced plans to merge with ZiaSun
Technologies Inc. (OTCBB:ZSUN) to become a leading provider of
investor education, financial publications and analytics
worldwide.


US AIRWAYS: Commences 23% Systemwide Capacity Reduction
--------------------------------------------------------
In response to the tragic events of Sept. 11, 2001, US Airways
announced that it would reduce capacity across its system by 23
percent.  As part of these reductions, US Airways' jet flights
at 10 airports in the Southeast and Midwest will be converted to
all US Airways Express regional jet and turbo-prop service
beginning Oct. 7, 2001.

Under this new schedule, flights in and out of Akron-Canton,
Ohio, Chattanooga, Tenn., Charleston, W.Va., Columbia, S.C.,
Knoxville, Tenn., Grand Rapids, Mich., Greenville-Spartanburg,
S.C., Huntsville, Ala., Roanoke, Va., and South Bend, Ind., will
be flown using a combination of regional jet and turbo-prop
aircraft.

"These service conversions will allow US Airways to maintain an
equivalent number of flights in each of these communities.  By
adding suitably sized aircraft in these communities, we are able
to meet existing customer demand and still provide high-quality
service using a combination of regional jet and turbo-prop
aircraft," said Gregory T. Taylor, US Airways senior vice
president - planning.

As part of its response to the sharp decline in demand as a
result of the events of Sept. 11, US Airways has decided to
retire three types of aircraft from its fleet by April -- B-737-
200s, MD-80s and F-100s.  The F-100s, with 99 seats, have been
used, in part, to provide service to many of the medium-sized
communities on the US Airways system.  

The B-737-200 is the primary aircraft for the MetroJet system,
and its retirement will lead to the cessation of MetroJet
service by December of 2001.  US Airways previously had
announced the retirement of its MD-80s by the end of 2002 and
that process now will be accelerated.  In all, 111 aircraft will
be retired under this accelerated program.

"The retirement of these aircraft will leave US Airways with a
highly efficient fleet of newer Airbus and Boeing aircraft.  
With common cockpits, efficient maintenance schedules and other
factors, US Airways will see significant cost savings as a
result of this step," Taylor said.

                        
WAM!NET: Potential Default Prompts S&P to Further Junk Ratings
--------------------------------------------------------------
Standard & Poor's lowered its rating on WAM!NET Inc.'s $208
million 13.25% senior unsecured notes due 2005 to double-'C'
from triple-'C'. The unsecured debt rating and the triple-'C'
corporate credit rating on WAM!NET remain on CreditWatch with
negative implications.

The rating action follows the company's receipt of unsecured
noteholders' consent for amendments to their indenture received
in August 2001. These amendments allow WAM!NET to borrow
additional funds required to maintain near-term liquidity.

Such additional borrowings are expected to result in a
concentration of priority obligations relative to total assets
that exceeds Standard & Poor's threshold for notching unsecured
debt two notches below the corporate credit rating.

The company is currently negotiating for receipt of a $115
million combined debt and equity facility with Cerberus Capital
Management L.P. WAM!NET indicated in its second quarter 10-Q
that, absent receipt of additional funding, it had doubts about
its ability to continue as a going concern. Without receipt of
such funding in the near term, the company will likely default.


WARNACO GROUP: Wins Court's Nod to Hire Dewey as Special Counsel
----------------------------------------------------------------
Judge Bohanon approved the application of The Warnaco Group,
Inc. and its debtor-affiliates to employ and retain Dewey
Ballantine as special counsel, effective as of July 23, 2001.

Dewey Ballantine as special counsel will render its services in:

   (i) assisting the Audit Committee in evaluating an expected
       charge to earnings and restatement of Warnaco's financial
       results for the last three fiscal years preliminarily
       estimated to aggregate $43,000,000 to correct certain
       errors discovered in Warnaco's recording of its
       intercompany pricing arrangements and accounts payable
       and account liabilities; and

  (ii) providing legal advice to the Audit Committee in support
       of the Audit Committee's ongoing oversight responsibility
       for the integrity of the Debtors' financial statements.

The Court ruled that Dewey Ballantine's fees shall be subject to
a cap of $500,000 without prejudice to the Debtors' right to
seek an increase upon application to the Court. (Warnaco
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


WINSTAR COMMUNICATIONS: Cisco Demands Payments on Leases
--------------------------------------------------------
Cisco Systems Capital Corporation moves the Court for an order
(1) requiring the Debtors to pay rent from and after June 17,
2001 under the Master Lease and Equipment Schedules, as defined
below, and (2) allowing and directing payment by Winstar
Communications, Inc. of an administrative expense claim in the
amount of the contract rent between the Petition Date and June
16, 2001.

David B. Stratton, Esq., at Pepper Hamilton LLP in Wilmington,
Delaware, tells the Court that prior to the petition date, Cisco
and the Debtors entered into a "Master Agreement to Lease
Equipment", an umbrella document establishing the terms under
which Cisco would currently and in the future lease certain
equipment to the Debtors.   

Consistent with this, the parties entered into a series of lease
schedules subsequent to the signing of the Master Lease.   

Under the Master Lease and Equipment Schedules, Mr. Stratton
explains that Cisco leases to the Debtors certain high-
technology telecommunications equipment, including switches,
routers and gateways, which Debtors utilize in connection with
the operation of their broadband network, which cannot operate
without the use of equipment leased to the Debtors by Cisco.  

Under the Master Lease and Equipment Schedules, Mr. Stratton
relates that Cisco is currently entitled to receive
approximately $276,545.19 in rental payments for each month from
the Petition Date, except in May 2001 in which rent was
$425,996.23.

Cisco requests that the Court enter its Order requiring Debtors
to immediately pay all rent due under the Master Lease and
Equipment Schedules from June 17, 2001 through the effective
date of any order authorizing assumption or rejection of the
Master Lease.  

Mr. Stratton argues that even if Debtors were to challenge
whether the Master Lease is a true lease or a financing
instrument, the Debtors are required to make timely payments of
rent.  Currently, Mr. Stratton states that a total of
$682,364.72 is owed by the Debtors pursuant to its obligations
under the Master Lease arising on or after June 17, 2001 through
August 31, 2001 while another $276,545.19 will be due as of
September 1, 2001.

Mr. Stratton contends that Cisco is entitled to the contract
rent as the reasonable benefit to the Debtors of the use of
Cisco's equipment that the Debtors have not paid Cisco since the
Petition Date.  

Mr. Stratton asserts that the Debtors should not be permitted to
continue to reap the benefit of their use of Cisco's equipment,
which is critical to the operation of Debtors' network, and
continue to generate revenues while avoiding payment of rent for
use of the equipment. (Winstar Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


* BOOK REVIEW: The Turnaround Manager's Handbook
------------------------------------------------
Author:  Richard S. Sloma
Publisher:  Beard Books
Soft cover:  226 pages
List Price:  $34.95

Review by Gail Owens Hoelscher

In the introduction to this book, the author suggests that an
accurate subtitle could be "How to Become a Successful Company
Doctor."  Using everyday medical analogies throughout, he
targets "corporate general practitioners" charged with the
fiscal health of their companies.  

As with many human diseases, early detection of turnaround
situations is critical. The author describes turnaround
situations as a continuum differentiated by length of time to
disaster: "Cash Crunch," "Cash Shortfall," "Quantity of Profit,"  
and "Quality of Profit."  

The book centers on 13 steps to a successful turnaround. The
steps are presented in a flowchart form that relates one to
another.  Extensive data collection and analysis are required,
including the quantification of 28 symptoms, the use of 48
diagnostic and analytical tools, and up to 31 remedial actions.  
(In case the reader balks at the effort called for, the
author points out that companies that collect and analyze such
data on a regular basis generally don't find themselves in a
turnaround situation to begin with!)

The first step is to determine which of 28 symptoms are plaguing
the company. The symptoms generally pertain to manufacturing
firms, but can be applied to service or retail companies as
well.  Most of the symptoms should be familiar to the reader,
but the author lays them out systematically, and relates them
to the analytical tools and remedial actions found in subsequent
chapters. The first seven involve the inability to make various
payments, from debt service to purchase commitments.  Others
include excessive debt/equity ratio; eroding gross margin;
increasing unit overhead expenses; decreasing product
line profitability;  decreasing unit sales;  and decreasing
customer profitability.

Step 2 employs 48 diagnostic and analytical tools to derive
inferences from the symptom data and to judge the effectiveness
of any proposed remedy.  The author begins by saying "...if the
only tool you have is a hammer, you will view every problem only
as a nail!"  He then proceeds to lay out all 48 tools in his
medical bag, which he sorts into two kinds, macro- and micro-
tools.  Macro-tools require data from several symptoms or assess
and evaluate more than a single symptom, whereas micro-tools
more general-purpose in function. The 12 macro-tools run from
"The Art of Approximation" to "Forward-Aged Margin Dollar
Content in Order Backlog."   The 36 micro-tools include "Product
Line Gross Margin Percent Profitability," Finance/Administration
People-Related Expenses As Percent Of Sales," and "Cumulative
Gross $ by Region."

Next, managers are directed to 31 possible remedial actions,
categorized by the four stage turnaround continuum described
above.  The first six actions are to be considered at the Cash
Crunch stage, and range from a fire-sale of inventory to
factoring accounts receivable.  The next six deal with reducing
people-related expenses, followed by 13 actions aimed at
reducing product- and plant-related expenses.  The subsequent
five actions include eliminating unprofitable products,
customers, channels, regions, and reps.  Finally, managers are
advised on increasing sales and improving gross margin by cost
reduction in various ways.

The remaining steps involve devising the actual turnaround plan,
ensuring management and employee ownership of the plan, and
implementing and monitoring the plan. The advice is
comprehensive, sensible and encouraging, but doesn't stoop to
clich, or empty motivational babble.  The author has clearly
operated on patients before and his therapeutics have no doubt
restored many a firm's financial health.

                          *********

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.

                          *********

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. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. 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.

                     *** End of Transmission ***