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       T R O U B L E D   C O M P A N Y   R E P O R T E R

          Wednesday, October 10, 2001, Vol. 5, No. 198

                          Headlines

ACKERLEY GROUP: S&P Takes Positive View of Clear Channel Deal
ARRIS GROUP: Lagging Operating Performance Spurs S&P Downgrades
AT HOME CORPORATION: Creditors Seeking New Deal To Sell Assets
COMDISCO INC: Unsecured Panel Signs-Up Ernst & Young for Advice
EBIZ ENTERPRISES: Bruce Parsons Takes Helm as Debtor's New CEO

EDISON INT'L: Mission Energy Sells 2 UK Plants for 650MM Pounds
EDISON INT'L: District Court Approves SoCal Recovery Plan
ERLY INDUSTRIES: Search For Merger Candidate Still Ongoing
EXODUS COMMS: XO Comms. Moves to Compel Decision on Contract
FEDERAL-MOGUL: Gets Okay to Fund $10M of Employee Obligations

FEDERAL-MOGUL: Canadian Unit Completes Sale of Tri-Way Operation  
FINLAY ENTERPRISES: S&P Revises Low-B Rating Outlook to Negative
GENESISINTERMEDIA: Stephen Weber Assumes Helm as Interim CEO
HARTMAX: S&P Concerned About Financial State Due to Weak Market
HAYNES INT'L: S&P Junks Ratings on Aerospace Industry Concerns

INTEGRATED HEALTH: Plan Filing Time Further Extended to Jan. 26
KSL RECREATION: Gloomy Travel Business Has S&P Taking Dim View
KOMAG INC: Western Digital Extends Purchase Pact for 3 Years
LERNOUT & HAUSPIE: AllVoice Airs Objections about Debtors' Plan
LODGENET ENTERTAINMENT: S&P Puts Low-B Ratings on Watch Negative

MATLACK SYSTEMS: Wants Lease Decision Period Extended to Nov. 24
METAL MANAGEMENT: Lower Revenues Affected By Weak Market Demand
MONTGOMERY WARD: Selling Software Licenses Online Via Bid4Assets
NETCENTIVES: Files For Reorganization Under Chapter 11
NUMATICS INC: Lower EBITDA Compels S&P to Downgrade Ratings

ORMET CORP: S&P Drops Low-B Ratings on Feeble Financial Results
PACIFIC GAS: California State Intends to Seek Stay Relief
PACIFIC GAS: Says Plan Maintains Current Regulatory Authority
PANTRY INC: Gas Price Volatility Has S&P Holding Low-B Rating
PIONEER-STANDARD: S&P Puts Low-B Ratings on CreditWatch Negative

PLANET HOLLYWOOD: Swings Into Red in Q2 As Revenues Drop
PRECISION AUTO CARE: Continues to Stay In The Red In FY 2001
PROVINCE HEALTHCARE: S&P Rates $150M Convertible Sub Notes at B-
RYERSON TULL: S&P Drops Senior Unsecured Debt to B+ from BB-
STEEL HEDDLE: US Trustee Appoints Unsecured Creditors' Committee

SUN HEALTHCARE: Wants Plan Filing Exclusivity Extended to Nov. 7
TALON AUTOMOTIVE: Expects Lower Net Sales Post-Bankruptcy
TELECORP/TRITEL: Fitch Changes Debt Ratings Outlook to Positive
THERMADYNE: S&P Drops Rating to D After Default On Facility
TOWER RECORDS: Bank Group Amends Bank Loan Agreement

USG CORP: U.S. Trustee Balks at Arthur Andersen Engagement Terms
VERDANT BRANDS: Completes Sale of Consep Assets to Repay Debts
VIASOURCE COMMS: Trading Halted After News of Cash Tender Offer
VLASIC FOODS: Union Pushes For Creation of Retiree Committee
WARNACO GROUP: Wants to Vacate Fruit Of The Loom Agreement

WHEELING-PITTSBURGH: Wrestles to Recover $3.1MM From Eichleay
WINSTAR COMMS: Secures Court Approval of Aon Service Sublease
WORLDWIDE XCEED: Court Extends Plan Filing Deadline to Oct. 12

* Meetings, Conferences and Seminars

                          *********

ACKERLEY GROUP: S&P Takes Positive View of Clear Channel Deal
-------------------------------------------------------------
Standard & Poor's placed its single-'B' long-term corporate
credit and triple-'C'-plus subordinated debt ratings for
Ackerley Group Inc. on CreditWatch with positive implications.
0
The CreditWatch listing reflects the planned acquisition of
Ackerley by Clear Channel Communications Inc. (BBB-/Stable/--)
in an all-stock deal. The value of the transaction is about $800
million, based on Clear Channel's closing stock price on October
5, 2001, and the assumption of about $294 million of Ackerley
debt.

The acquisition is expected to close in the first half of 2002.

Upon completion of the transaction, Standard & Poor's will raise
Ackerley's subordinated debt rating to double-'B'-plus and
withdraw the long-term corporate credit rating. Headquartered in
Seattle, Ackerley is a diversified media company with interests
in outdoor advertising and television and radio broadcasting.


ARRIS GROUP: Lagging Operating Performance Spurs S&P Downgrades
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Arris
Group Inc. to single-'B'-plus from double-'B'-minus. The rating
on the company's $115 million convertible subordinated notes is
lowered to single-'B'-minus from single-'B'. At the same time
Standard & Poor's withdrew its double-'B'-minus senior secured
rating on the company's credit facility.

The outlook is negative.

The ratings actions are based on lagging operating performance,
in part due to a continuing decline in transport infrastructure
spending by telecommunications operators worldwide, resulting in
weak credit measures for the rating category. Duluth, Georgia-
based Arris Group Inc., which was formed in August 2001 by the
merger of ANTEC and Arris Interactive LLC, specializes in the
design and engineering of hybrid fiber-coaxial (HFC)
architectures and the development and distribution of products
for broadband networks.

Ratings reflect heavy dependence on capital spending by
telecommunications operators, significant customer
concentration, and the ongoing developmental needs of the
company's HFC product line in a competitive business
environment. These concerns are only partially offset by
favorable long-term industry demand for HFC components and the
leadership position of Arris' cable telephony product line.

Arris' sales growth is hampered by decreased spending and
uncertainty associated with the timing of resumption of capital
spending by its largest customer, AT&T Broadband. Revenues for
the third quarter of 2001 will be in the $170 million-$180
million range, and the company expects to post an operating
loss.

Due to lower-than-expected sales, profitability measures are
likely to be weak over the near term despite management's
restructuring and outsourcing efforts to reduce its operating
cost structure. Consequently, cash flow measures are likely to
deteriorate.

The company had a little more than $115 million of convertible
notes and less than $50 million of outstanding bank debt as of
June 2001. A modest level of availability under its asset-based
$175 million credit facility provides limited financial
flexibility.

                      Outlook: Negative

Uncertainty about the timing of a recovery in Arris' core
businesses leaves ratings susceptible to a downgrade.


AT HOME CORPORATION: Creditors Seeking New Deal To Sell Assets
--------------------------------------------------------------
Bondholders and creditors of Excite@Home may try to scuttle a
$307 million offer from AT&T to buy the assets of the bankrupt
cable Internet access company, CNET News.com reported.

The Redwood City, California-based Excite@Home filed for
bankruptcy protection two weeks ago, simultaneously announcing
intentions to sell its broadband Net access business to AT&T.  
Basking Ridge, N.J.-based AT&T is Excite@Home' s largest
shareholder and has a controlling vote on its board of directors
-- a role that some call a conflict of interest.

Some investors say AT&T and Excite@Home crafted the deal without
consulting bondholders or creditors who hold more than $1
billion in outstanding debt. A committee of five large
creditors, appointed by a trustee, is leading the charge to undo
the AT&T deal, possibly by opening up Excite@Home's assets to
an auction or keeping the company independent.

Bondholders say they are discussing the possibility of keeping
Excite@Home an independent company concentrating on broadband
Internet access.  A source said discussions among the creditors
have not yet progressed to the point of talking to potential
rival buyers, but that Microsoft and EarthLink have come up as
natural potential alternatives to AT&T.

An attorney for Excite@Home said the company was satisfied with
the $307 million AT&T deal, but she noted that it is still
working with creditors to get the best return from its assets.
(ABI World, October 8, 2001)


COMDISCO INC: Unsecured Panel Signs-Up Ernst & Young for Advice
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Comdisco, Inc.
seeks the Court's authority to retain and employ as its
restructuring and accounting advisors:

    (1) E&Y Capital Advisors nunc pro tunc from July 27, 2001 to
        August 31, 2001; and

    (2) Ernst & Young Corporate Finance, nunc pro tunc from
        September 1, 2001 in these chapter 11 cases.

Stuart Gleichenhaus, managing director of Ernst & Young
Corporate Finance LLC and former managing directors of E&Y
Capital Advisors, tells Judge Barliant that E&Y Capital is
seeking to be retained in this case for the period from July 27
to August 31, 2001 to provide restructuring and accounting
advisory services to the Committee.

Effective on September 1, 2001, Mr. Gleichenhaus explains, E&Y
Capital transferred all of its operations and personnel into
Ernst & Young.  At the same time, Mr. Gleichenhaus says, Ernst &
Young started operating as a broker in addition to fulfilling
the existing engagements previously undertaken by E&Y Capital.

Mr. Gleichenhaus informs the Court that E&Y Capital also
transferred its Engagement Letter with the Debtors to Ernst &
Young effective September 1, 2001.  That's why, Mr. Gleichenhaus
says, Ernst & Young is also seeking to be retained in this case
for the period September 1 and onwards.

William J. Barrett, Esq., at Gardner, Carton & Douglas, in
Chicago, Illinois, assures Judge Barliant that the Creditors'
Committee has consented to the assignment of the Engagement
Letter from E&Y Capital to Ernst & Young.

Mr. Gleichenhaus relates that Ernst & Young is registered with
the United States Securities and Exchange Commission and each
state as a broker and is a member of the National Association of
Securities Dealers, Inc.  

According to Mr. Gleichenhaus, Ernst & Young was established
solely for the purpose of establishing an affiliate of E&Y
Capital that would be eligible to be and ultimately registered
as a broker.  Mr. Gleichenhaus tells the Court that Ernst &
Young has not at any time conducted any operations or had any
employees at any time prior to September 1 and to the
Assignment.

Mr. Barrett asserts that the retention of E&Y Capital and Ernst
& Young is in the best interest of the Creditors' Committee.  
Mr. Barrett relates that E&Y Capital was and Ernst & Young is
familiar with the Debtors' businesses and financial affairs
because E&Y Capital was previously employed prior to Petition
Date by the Bank Steering Committee of certain bank facilities
of the Debtors to perform various restructuring-related
activities, including:

    (a) analysis of the Company's short-term cash forecasts,
    (b) analysis of the Company's business plans, and
    (c) analysis of the Company's financial results, financial
        position and operations.

Through these pre-petition activities, Mr. Barrett notes, E&Y
Capital's professionals were able to work closely with the
Debtors' management, financial staff and other professionals.
And because some Committee members served on the same Steering
Committee, Mr. Barrett says, E&Y Capital have also become
acquainted with the Committee's restructuring and accounting
needs.

The Committee will look to Ernst & Young (and prior to September
1, E&Y Capital) to perform accounting analysis for the Committee
and to provide restructuring and related advice, and other
services including:

  (a) analyze the financial position of the Debtors and their
      non-debtor affiliates (including those outside the U.S.)
      with particular focus on historical transactions and cash
      flows between these entities and the assessment of current
      financial position on an entity-by-entity basis and asset
      specific basis;

  (b) analyze the Debtors' cash flow projections including but
      not limited to restructuring programs, selling, general
      and administrative structure, and other reports or
      analyses prepared by the Debtors or their professionals in
      order to advise the Committee on the viability of the
      continuing operations and the reasonableness of
      projections and underlying assumptions with respect to
      industry and market conditions;

  (c) analyze the financial ramifications of proposed
      transactions for which the Debtors seek Bankruptcy Court
      approval including, but not limited to the cash collateral
      order, assumption/rejection of leases, management
      compensation and/or retention and severance plans and
      payment of professional fees;

  (d) analyze the Debtors' internally prepared financial
      statements and related documentation, in order to evaluate
      the performance of the Debtors as compared to projected
      results on an ongoing basis;

  (e) attend and advise at meetings with the Creditors'
      Committee, its counsel and representatives of the Debtors;

  (f) evaluate the Debtors' overall tax positions as requested
      by the Committee;

  (g) prepare or review (as appropriate) analyses of the
      potential recoveries to creditors in the event of a
      liquidation of the assets of the Debtors and non-debtor
      affiliates;

  (h) assist and advise the Creditors' Committee, its counsel,
      and other advisors in its analysis of the feasibility of
      any plan(s) of reorganization or strategic transaction(s)
      relative to the potential recoveries in a liquidation;

  (i) render expert testimony on behalf of the Committee; and

  (j) provide such other services, as requested by the Committee
      and agreed by Ernst & Young (or, prior to September 1, E&Y
      Capital).

In return for these services, Ernst & Young intends to charge:

  (1) monthly hourly fees based on actual time incurred at these
      hourly rates:

           Managing Directors and Principals     $550-650
           Directors                              475-545
           Vice Presidents                        375-440
           Associates                             320-340
           Analysts                                 275
           Client Service Associates                140

      Ernst & Young's standard hourly rates are adjusted in the
      ordinary course on July 1 of each year.  The actual time
      incurred will depend upon the extent and nature of
      available information, any modifications to the scope of
      Ernst & Young's engagement, the level of work required and
      other developments that may occur as work progresses; and

  (2) the reimbursement of actual and necessary out-of-pocket
      expenses incurred by E&Y Capital or Ernst & Young in
      rendering services to the Committee.

According to Mr. Barrett, the Committee or Ernst & Young may
terminate the Engagement Letter at any time, but in any event
the Engagement Letter will terminate upon the effective date of
a plan of reorganization of the Debtors.

About 90 days immediately preceding the Petition Date, Mr.
Barrett says, the Debtors made payments to certain agents of the
Debtors' pre-petition bank facilities to cover fees and
expenses.

Mr. Barrett tells Judge Barliant that a portion of those
payments were paid to E&Y Capital amounting to $989,532 -- which
were transferred to Ernst & Young effective September 1 pursuant
to the Assignment.  As a completion of E&Y Capital's work for
the Debtors' Steering Committee, Mr. Barrett says, $3,559 of
these payments remains unapplied.  

If Judge Barliant permits, Mr. Barrett relates, Ernst & Young
intends to apply the remainder as payment for its fees and
expenses incurred pursuant to the Engagement Letter.

To the best of his knowledge, Mr. Gleichenhaus assures Judge
Barliant, neither E&Y Capital nor Ernst & Young have any
connection with the Debtors, their creditors, the United States
Trustee, or any other party with an actual or potential interest
in these chapter 11 cases or their respective attorneys, except:

  (a) E&Y Capital is not and has not been employed by any entity
      other than the Committee in matters related to these
      chapter 11 cases.

  (b) Prior to the Petition Date, E&Y Capital performed
      professional services for the Bank Steering Committee of
      certain bank facilities of the Debtors.  The Debtors do
      not owe E&Y Capital or Ernst & Young any amount for
      services performed prior to the Petition Date.

  (c) From time to time, E&Y Capital has provided limited tax
      advisory service to the Debtors.  In the 90 days preceding
      the Petition Date, no services were rendered, and as of
      the Petition Date, E&Y Capital was not owed any monies
      relating to these services.  E&Y Capital has ceased to
      provide such services to the Debtors.

  (d) E&Y currently provides personal tax and financial planning
      advisory services to Norm Blake, Chief Executive Officer
      of the Debtors.  These services have resulted in fees of
      approximately $25,000 per year for each of the two years
      prior to Petition Date;

  (e) From time to time, E&Y has provided services, and
      likely will continue to provide services, to certain
      creditors of the Debtors and various other parties adverse
      to the Debtors in matters unrelated to these chapter 11
      cases.  These services include, but are not limited to,
      restructuring advisory services on behalf of certain of
      the Debtors' secured lenders or their affiliates.  Ernst &
      Young has undertaken a detailed search to determine, and
      to disclose, whether it or E&Y Capital is or has been
      employed by any significant creditors, equity security
      holders, insiders or other parties-in-interest in such
      unrelated matters.

  (f) Piper, Marbury, Rudnick & Wolf (attorney for the Debtors)
      and Goldman Sachs & Company (transaction advisor for the
      Debtor), have provided and are currently providing
      services to Ernst & Young.  Skadden, Arps, Slate, Meagher
      & Flom have in the past provided services to E&Y Capital.

  (g) E&Y has provided and continues to provide services to
      different entities related to the Debtor.

  (h) These banks participate in E&Y's revolving credit program:
      Sun Trust Bank, Bank of America, Citigroup, Bank One,
      Chase Manhattan Bank, First Union, and Fleet Bank, N.A.

  (i) E&Y provides services in connection with numerous cases,
      proceedings and transactions unrelated to these chapter 11
      cases.  These unrelated matters involve numerous
      attorneys, financial advisors and creditors, some of which
      may be claimants or parties with actual or potential
      interests in these cases or may represent such parties.

  (j) E&Y personnel may have business associations with certain
      creditors of the Debtors unrelated to these chapter 11
      cases.  In addition, in the ordinary course of its
      business, E&Y may engage counsel or other professionals in
      unrelated matters who now represent or who may in the
      future represent, creditors or other interested parties in
      these cases.

  (k) E&Y has thousands of professional employees.  It is
      possible that certain employees of E&Y hold securities of
      the Debtors or interests in mutual funds or other
      investment vehicles that may own securities of the
      Debtors.

Mr. Gleichenhaus maintains that E&Y Capital and Ernst & Young
are both "disinterested persons" as defined by section 101(4) of
the Bankruptcy Code. (Comdisco Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


EBIZ ENTERPRISES: Bruce Parsons Takes Helm as Debtor's New CEO
--------------------------------------------------------------
EBIZ Enterprises Incorporated, a manufacturer of specialized
servers and vendor-neutral provider of Open Source products and
solutions, announced that Bruce Parsons has been appointed chief
executive officer following the resignation of Dave Shaw.

Mr. Parsons has been the president of EBIZ since EBIZ acquired
JBSi (Jones Business Systems, Incorporated) in January 2001. He
will continue to hold the office of president in addition to his
duties as CEO.

Dave Shaw resigned as CEO of EBIZ effective Oct. 5, 2001 to
concentrate on his other duties with the company. Mr. Shaw
remains a member of the EBIZ board of directors.

Bruce Parsons has more than 25 years of experience as an
entrepreneur and in sales, marketing and strategic management
roles. He was an original co-founder of JBSi in 1979. Mr.
Parsons acted as JBSi president from 1993 to 1994, and from 1995
to 1999 as executive vice president of sales and marketing. Mr.
Parsons again held the position of JBSi president from 1999
until its acquisition by EBIZ in January 2001. With JBSi, Mr.
Parsons contributed to profitable growth from $2.5 million in
revenues in 1993 to approximately $68 million in 1998.

"The challenges facing EBIZ today are great," said Parsons. "Our
recent chapter 11 filings have given us some breathing room to
restructure our company in order to make it viable for the long-
term. I welcome the opportunity to lead EBIZ though these
difficult times."

EBIZ Enterprises Incorporated --  http://www.ebizenterprises.com  
-- is a developer and provider of computer systems, software and
accessories for the business computer market. EBIZ is the
manufacturer of the Terian product line of computing platforms.
Terian systems provide the latest open architecture hardware in
appliance server and white box configurations.

EBIZ and Jones filed chapter 11 petitions on September 7, 2000,
in Phoenix.  


EDISON INT'L: Mission Energy Sells 2 UK Plants for 650MM Pounds
---------------------------------------------------------------
Edison Mission Energy (EME), a subsidiary of Edison
International (NYSE: EIX), announced the sale of its two United
Kingdom-based coal stations, Fiddler's Ferry and Ferrybridge
(FFF), to two wholly owned subsidiaries of American Electric
Power for an aggregate purchase price of 650 million pounds
sterling.  

The sale is the result of a competitive bidding process
previously announced by the company. EME expects the transaction
to close before the end of the year.  The plants were acquired
in 1999 for 1.3 billion pounds sterling.

As a result of the transaction and related currency adjustments,
EME expects to take a one-time, after-tax write-off of
approximately $1.18 billion. This investment has been a major
disappointment for EME," said Al Fohrer, EME's president and
chief executive officer.  "While the plants have run well,
given the market conditions, the operating losses and cash
requirements likely to result in the foreseeable future from the
existing debt structure were too large to maintain our ownership
position.  It is time to sell the plants, reduce our debt and
eliminate the drag on our financial performance."

Fohrer further noted that, "Although sale of these U.K. plants
will result in a significant one-time loss, their disposition
actually will result in an improvement in our credit quality and
earnings potential.  Our other 1999 acquisitions -- in
Pennsylvania, Illinois and New Zealand -- are all performing
well."

The company also announced that it had entered into contracts
for the sale of seven interests in plants in the United States
pursuant to its previously announced policy to dispose of
certain non-core U.S. assets.  Fohrer indicated that, "These
sales are above book value and, upon final closing, will
generate net proceeds to the company of approximately $460
million."

Two of these sales have already reached financial close and the
others are scheduled to do so before year's end.

Finally, the company confirmed that on September 18 it concluded
a new $750 million credit facility with eighteen lending
institutions.  The new facility includes a one-year component of
$583.3 million that expires in September 2002 and a three-year
component of $211.7 million that expires in September 2004.  The
interest rate on borrowings under the new facility is LIBOR plus
2.375%.  

Fohrer stated that, "This credit facility represents the final
piece in the program which we outlined earlier this year for
refinancing the company's short-term debt coming due in 2001.  
Except for the one-year component of the new facility, which
expires next September, the company has no other debt maturing
until 2004."

Edison Mission Energy is a subsidiary of Rosemead, Calif.-based
Edison International.  Other Edison International companies
include Edison Capital, Edison Enterprises, Southern California
Edison and Edison O&M Services.


EDISON INT'L: District Court Approves SoCal Recovery Plan
---------------------------------------------------------
Edison International announced that a U.S. District Court judge
approved a settlement between its Southern California Edison
(SoCal Edison) unit and California regulators that will allow
its utility to recover from the damage of the state's power
crisis without turning to bankruptcy or seeking a bailout from
the state legislature, according to The Wall Street Journal.

Judge Ronald Lew said Friday in his ruling that the settlement
was "fair, adequate and reasonable to the parties, the
shareholders and to the public and is not a bailout by any
means."  

Judge Lew rejected requests by consumer groups and power
generators for more time to consider the terms of the
settlement. Consumer groups had argued that the settlement
violated state law.  The settlement will allow SoCal Edison to
bill ratepayers for about $3.3 billion in back debt. (ABI World,
October 8, 2001)


ERLY INDUSTRIES: Search For Merger Candidate Still Ongoing
----------------------------------------------------------
Erly Industries is in the process of attempting to identify and
acquire a favorable business opportunity.

On March 22, 2000, the Board of Directors accepted the terms of
an agreement to provide a controlling interest of Erly's common
stock to Hudson Consulting Group, Inc. for $120,000 cash. The
company was then merged into Torchmail Communications, Inc. on
January 24, 2001, for the purpose of changing the domicile of
the Company from California to Delaware.

As part of the merger for the purpose of changing domicile, the
Company also affected a reverse-split of its outstanding shares.
Shareholders of Erly stock received 1 share of Torchmail
Communications, Inc. stock for each 100 shares of Erly stock.  
Uneven shares were rounded up.

The Company is presently seeking a merger candidate. It is
uncertain as to the Company's ability to locate an adequate
merger candidate and since the Company has relative no assets,
its ability to remain a going concern is questionable.
Currently, Hudson Consulting Group, Inc. pays expenses as
incurred by the Company.

The Company's plan of operation for the coming year is to
identify and acquire a favorable business opportunity. The
Company does not plan to limit its options to any particular
industry, but will evaluate each opportunity on its merits.
Since the Company has no operations at present, its cash needs
are minimal. The Company believes it can meet its cash needs for
the foreseeable future from its current assets or from payments
made in its behalf by Hudson Consulting Group, Inc.

The Company has no plans for the purchase or sale of any plant
or equipment during the coming fiscal year. Erly Industries was
briefly a holding company but is now, at this time, a
development stage company and currently has no employees. The
Company has no current plans to make any changes in the number
of employees.


EXODUS COMMS: XO Comms. Moves to Compel Decision on Contract
------------------------------------------------------------
XO Communications, Inc., provides local facilities-based
telecommunications services to its targeted customer base of
small and medium-sized businesses.  

In this regard, XO develops and operates high capacity, fiber
optic networks with broad market coverage in a growing number of
markets across the United States. In its switched local service
markets, XO offers its customers a bundled package of local and
long distance services and also offers dedicated transmission
and competitive access services to long distance carriers and
end users.

On or about June 19, 2001, XO and Debtor Exodus Communications,
Inc., entered into a National Master Communications Services
Agreement.  XO agrees to provide Telecommunications Services to
the Debtors for $1,716,922 per month.  

This monthly fee may increase based on an increase in the level
of Telecommunications Services provided to the Debtors and does
not include nonrecurring fees and charges also due under the
Services Agreement.  

The Debtors are in arrears on their pre-petition obligations to
XO under the Services Agreement and have not made any payments
to XO for services and products provided to the Debtors since
the Petition Date.

By motion, XO requests an entry of an order:

      (A) authorizing XO to terminate any and all
          telecommunications services to the above-captioned
          debtors and debtors in possession, effective as of
          October 16, 2001; and

      (B) compelling the Debtors to assume or reject the
          parties' National Master Communications Services
          Agreement.

Matthew G. Zaleski III, Esq., at Campbell & Levine, LLC, in
Wilmington, Delaware, tells the Court that, to date, the Debtors
have not offered XO a security deposit or provided it with other
means of adequate assurance of future performance, as required
by the Bankruptcy Code.  

The Telecommunications Services provided by XO on a monthly
basis are significant and results in significant loss exposure
of at least $2,000,000.00 per month.  Mr. Zaleski asserts that
XO should not be required to continue to bear this risk without
appropriate adequate assurance of the Debtors' future
performance under the Services Agreement.

Since the Petition Date, Mr. Zaleski states, the Debtors have
not made any payments to XO for the Telecommunications Services
or offered any form of adequate assurance for future payments.
The Debtors currently owe XO approximately $1,716,922 for
Telecommunications Services, Mr. Zaleski adds, of which
approximately $286,154 relates to services and goods provided to
the Debtors post-petition.  To the extent that the Services
Agreement constitutes an executory contract, XO requests that
the Court compel the Debtors to assume or reject the Services
Agreement at this time.

Mr. Zaleski tells the Court that the Debtors are in substantial
arrears under the Services Agreement and not only do the Debtors
owe XO a substantial sum for pre-petition Telecommunications
Services, but they have not made any attempt to pay XO for its
ongoing post-petition services and products. Mr. Zaleski asserts
that XO have to provide very valuable Telecommunications
Services to the Debtors for absolutely no consideration or
adequate protection.

In this regard, Mr. Zaleski contends that compelling the Debtors
to elect to assume or reject the Services Agreement at this time
also is appropriate because XO is entitled to adequate assurance
of future performance of the Debtors' future obligations under
the Services Agreement. Only upon assumption of the Services
Agreement, Mr. Zaleski says, will XO have any assurance that the
Debtors are committed to performing their future obligations.

Mr. Zaleski argues that anything less would expose XO to the
risk of substantial future losses resulting from the Debtors'
potential default and XO's inability to terminate the Services
Agreement immediately upon such default because of the automatic
stay imposed and the executory contract provisions of the
Bankruptcy Code.

Similarly, to the extent that XO is authorized to terminate the
provision of Telecommunications Services to the Debtors, XO
would have no further obligations to the Debtors under the
Services Agreement. Under such circumstances, Mr. Zaleski asks
the Court that the Debtors should be compelled to reject the
Services Agreement. (Exodus Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


FEDERAL-MOGUL: Gets Okay to Fund $10M of Employee Obligations
-------------------------------------------------------------
David M. Sherbin, Vice President, Deputy General Counsel and
Secretary of Federal-Mogul Corporation, informs the Court that
the U.S. Debtors employ approximately 5,000 salaried employees,
17,200 hourly employees, 172 independent sales representatives,
100 specialized personnel, and 640 contract workers, while the
English Debtors employ approximately 1,230 salaried employees,
3,370 hourly paid employees, 5 specialized personnel, 80
contract workers.  

Mr. Sherbin asserts that the continued and uninterrupted service
of the Employees is essential to the Debtors' continuing
operations and to their ability to reorganize.  To minimize the
personal hardship Employees will suffer if pre-petition
employee-related obligations are not paid when due, and to
maintain employee morale during this critical time, Federal-
Mogul seeks authority:

(1) to pay all pre-petition Employee claims for wages, salaries,
    contractual compensation, bonuses, sick pay, vacation pay
    and other accrued compensation,

(2) to make all payments for which Employee payroll deductions
    were made,

(3) to reimburse all pre-petition Employee business expenses,

(4) to make pre-petition contributions and pay benefits under
    certain Employee benefit plans,

(5) to honor workers' compensation and retiree benefits, and

(6) to pay other miscellaneous Employee-related costs.

The Debtors also request the Court to authorize and direct
applicable banks and other financial institutions to receive,
process, honor and pay all pre-petition checks and transfers
drawn on the Debtors' payroll accounts to make the foregoing
payments and seek authority to pay all processing costs and
administrative expenses related to the foregoing payments.

Mr. Sherbin presents this summary of Debtors' pre-petition
employee obligations:

  (A) Wages, Salaries & Other Compensation - The average monthly
      payroll for the U.S. Debtors' salaried and hourly
      Employees is approximately $64,000,000. The estimated
      amount of the English Debtors' accrued and unpaid payroll,
      as of the Petition Date, is approximately o2,050,000
      (US$3,020,000 million). In addition, average monthly    
      aggregate commissions paid to Independent Sales
      Representatives is approximately $244,000. The average
      annual amount paid for the services of the Contract
      Workers by the U.S. Debtors is approximately
      $18,000,000, and the average annual amount paid by the
      English Debtors is approximately o1,800,000
      (US$2,650,000).

      As of the Petition Date, the estimated outstanding amount
      owed for the services of the Contract Workers by the U.S.
      Debtors is approximately $3,000,000, and the estimated
      amount owed by the English Debtors is approximately
      o150,000 (US$221,000). The average annual amount paid for
      the services of the Specialized Personnel by the U.S.
      Debtors is approximately $7,500,000, and the average
      amount paid by the English Debtors is approximately
      o100,000 (US$145,000). As of the Petition Date, the
      estimated outstanding amount owed for the services of the
      Specialized Personnel by the U.S. Debtors is approximately
      $625,000, and the estimated amount owed by the English
      Debtors is approximately o8,160 (US$12,000).

  (B) Vacations and Sick Leave - The total annual cost to the
      U.S. Debtors for Employees' vacation time is approximately
      $56,000,000 and an estimated liability as of petition date
      of $8,000,000 and no sick leave liability. The estimated
      liability for vacation time "banked" under earlier
      vacation policy is approximately $3,700,000 as of the
      Petition Date. As of the Petition Date, the estimated
      liability for vacation time accrued by the Employees of
      the English Debtors is approximately o2,500,000
      (US$3,700,000) and estimated liability for accrued sick
      leave of o500,000 (US$736,000).

  (C) Bonus Plans - The Debtors have implemented a number of
      different cash bonus plans for different constituencies of
      employees. On the Petition Date, the approximate amount
      owing to these Employees pertaining to cash bonus plans is
      $3,700,000.

  (D) Reimbursable Business Expense - In the ordinary course of
      the Debtors' business, many Employees incur a variety of
      business expenses that are typically reimbursed by the
      Debtors, pursuant to their normal business practices. As    
      of the Petition Date, the Debtors estimate that
      approximately $800,000 in Reimbursable Business Expenses
      has been incurred by certain Employees of U.S. Debtors and
      approximately o50,000 ($73,650) in Reimbursable Business
      Expenses has been incurred by certain Employees of the
      English Debtors.

  (E) Medical and Insurance Benefits - The U.S. Debtors provide
      medical, dental and prescription drug insurance, long- and
      short-term disability insurance, life insurance,
      accidental death and dismemberment insurance, and other
      related insurance to their Employees. The average monthly
      cost for these medical and insurance benefits is
      approximately $14,000,000, of which approximately 9% is
      withheld from Employee payroll as their required
      contributions to the various benefit plans. As of the
      Petition Date, the estimated outstanding unpaid amount for
      the various medical and insurance benefits the U.S.
      Debtors provide for their Employees is approximately
      $20,000,000. The English Debtors provide private medical
      insurance, life insurance, disability insurance and other
      insurance to certain of their Employees. As of the
      Petition Date, the English Debtors owe
      approximately o30,000 (US$44,000), approximately o11,000
      (US$16,000) of which has been withheld from employees'
      paychecks for the employee's contributions.

  (F) Savings & Pension Plan - The Debtors provide their
      Employees with various savings and pension plans
      contributing an average of $16,500,000 annually. As of the
      Petition Date, the estimated liability of the U.S. Debtors
      for the U.S. Defined Contribution Plans is approximately
      $1,380,000. The U.S. Debtors also provide their Employees
      with a defined benefit pension plan, with a market value
      of $722,000,000.
      
      The English Debtors operate one defined contribution
      pension plan, the Champion Automotive Retirement Benefits
      Plan with an estimated liability of approximately o20,000
      (US$29,500) as of the petition date. The English Debtors
      also provide their Employees with four defined benefit
      plans: the T&N Retirement Benefits Scheme (1989), the STS
      Pension and Life Assurance Scheme, the STS Executive
      Scheme, and the Champion Pension Scheme. The T&N
      Retirement Benefits Scheme (1989) is by far the largest of
      the English defined benefit plans, with assets having a
      current market value of ol,200,000,000 (US$1,770,000,000).

  (F) Workers Compensation Obligations - The Debtors are
      required to maintain workers' compensation policies and
      programs and provide Employees with workers' compensation
      coverage for claims arising from or related to their
      employment with the Debtors, secured by five letters of
      intent ranging from $300,000 to just under $3 million. If
      the Debtors are unable to pay their pre-petition workers'
      compensation obligations, the Debtors expect that the
      letters of credit will be drawn, resulting in millions of
      dollars of claims against the estates. The Debtors
      estimate that the aggregate amount payable on account of
      incurred but not yet paid claims and
      IBNR claims arising prior to the Petition Date is
      approximately $35,900,000. The Debtors expect that cash
      payments related to workers' compensation claims for the
      next 12 months will be approximately $10,000,000.

  (H) Miscellaneous Payroll Deductions - The U.S. Debtors
      withhold certain amounts from their Employees' paychecks
      to make payments on behalf of Employees for, among other
      things, union dues, court orders, charitable donations,
      U.S. savings bonds, safety equipment and miscellaneous
      health related items. The U.S. Debtors believe that, as of
      the Petition Date, the amount of these miscellaneous
      deductions deducted from their Employees' paychecks but
      not yet remitted to the appropriate third-party recipients
      is insubstantial. The English Debtors withhold certain
      amounts from their Employees' paychecks to make payments
      on behalf of their Employees for, among other things,
      court orders and charitable donations. The English Debtors
      estimate that, as of the Petition Date, less than o100,000
      (US$147,000) in these miscellaneous deductions has been
      deducted from their Employees' paychecks but not yet
      remitted to the appropriate third-party recipients.

  (I) Scholarships - The Debtors sponsor ten scholarships that
      are part of the National Merit Scholar Program and which
      all children of the Employees and retirees are eligible to
      apply. As of the Petition Date, there is approximately
      $53,000 in unpaid scholarship monies relating to
      scholarships sponsored by the Debtors that have already
      been awarded to students.

  (J) Retiree Benefits - The U.S. Debtors provide retiree
      benefits to approximately 9,650 former Employees. The
      Retiree Benefits liability expense during 2000 was
      approximately $34,100,000. As of the Petition Date, the
      estimated outstanding liability of the U.S. Debtors for
      Retiree Benefits is approximately $3,600,000. Based on
      current actuarial analyses, the Debtors estimate that the
      U.S. Debtors' cumulative long-term liability for fully
      performing all of their existing Retiree Benefits on
      behalf of all retired Employees and current Employees who
      have accrued rights to the Retiree Benefits as of the
      Petition Date would total approximately $447,000,000. The
      English Debtors provide no retiree benefits directly paid
      for by the English Debtors to their Employees.

  (K) Car Allowance - The Debtors provide a car allowances to
      approximately 400 executives and key Employees. The
      Debtors' estimated annual cost for providing this Employee
      benefit is approximately $2,000,000.

  (L) Miscellaneous Executive Benefits - The Debtors provide
      miscellaneous benefits to approximately 40 of their senior
      executives, including such things as estate and tax
      planning, home security, country club membership and
      personal liability insurance policies. The Debtors'
      estimated annual cost for providing these executive
      benefits is approximately $480,000. The Debtors estimate
      that their unpaid liability under these executive benefit
      programs is insubstantial as of the Petition Date.

  (M) Other Benefits - The Debtors provide a number of other
      miscellaneous benefits to Employees. The Debtors offer
      long-term disability for salaried and certain non-union
      Employees that is self-administered and self-funded. As
      part of the regular payroll process the Debtors currently
      provide long-term disability payments to approximately 40
      Employees, resulting in an estimated monthly cost of
      $40,000. The Debtors also have a military leave policy and
      other types of leave, such as jury duty and child-bearing
      leave. Finally, the Debtors offer their Employees various
      service awards, sponsor a variety of Employee social
      functions, such as picnics and Christmas parties for
      Employees' children. The Debtors believe that the amounts
      owing on the Petition Date under all of these
      miscellaneous benefits are negligible.

Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones,
P.C., in Wilmington, Delaware, argues that any delay in paying
the employee-related compensation, deductions, reimbursement and
benefit plans described herein could severely disrupt the
Debtors' relationship with the employees and irreparably impair
the employees' morale at the very time that their dedication,
confidence and cooperation are most critical.  

Ms. Jones contends that the Debtors face the imminent risk that
their operations may be severely impaired if the Debtors are not
immediately granted authority to make the pre-petition
Employment Payments.

At this critical stage, Ms. Jones asserts that the Debtors
simply cannot risk the substantial disruption of their business
operations that would inevitably attend any decline in workforce
morale attributable to the Debtors' failure to make pre-petition
Employment Payments in the ordinary course of their businesses.

If the relief requested is not granted, Ms. Jones suggests that
the Employees would suffer great hardship and, in many
instances, financial difficulties, since these monies are needed
to enable them to meet their own personal obligations. In
addition, without the requested relief, the Debtors' stability
would be undermined by the potential threat that otherwise loyal
Employees at all levels would seek other employment.

Ms. Jones argues that few employees will continue to work for an
entity that has filed a bankruptcy petition without assurance
that they will be timely paid and the most critical employees
tend to be the ones most able to secure new positions.  
Moreover, Ms. Jones asserts, payment of the Employee Obligations
to the Employees will not significantly prejudice the other
creditors in these proceedings because a significant portion of
any such unpaid amounts would give rise to priority claims that,
in the absence of this Motion, would be paid in full under any
plan of reorganization.

Finding that the relief requested is in the best interest of the
Debtors and their estates, creditors, and other parties in
interest, Judge Robinson entered an interim order authorizing
the Debtors to fund wages and payroll taxes amounting to
$10,000,000, provided that the amount shall not be used for any
bonuses, retention payments, severance payments or incentive
payments to any senior management employees.  

Judge Robinson authorizes the Debtors to reimburse up to
$300,000 of employees' business expenses.  

Further, the Court authorizes the Debtors to fund pre-petition
bank accounts to pay $50,000 in employee medical reimbursement
checks. (Federal-Mogul Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


FEDERAL-MOGUL: Canadian Unit Completes Sale of Tri-Way Operation  
----------------------------------------------------------------
A Canadian subsidiary of Federal-Mogul Corp. (NYSE: FMO) has
sold its Tri-Way machine tool business in Windsor, Ontario,
under terms of a management buyout.  Specific terms of the sale,
which was completed September 30, were not disclosed.

Established in 1977, the facility has approximately 100
employees and houses machine tool operations associated with the
production of connecting rods and cylinder heads for the
transportation industry.  The 180,000-square-foot manufacturing
operation has annual sales of approximately $20 million. The new
owners plan to continue operating the facility under the name
Tri-Way Manufacturing Technologies Corp.

"This agreement will allow the new owners of Tri-Way to focus
their energy and resources on achieving success in a market that
is not core to Federal-Mogul's future strategic direction," said
Charles B. Grant, Federal-Mogul vice president of corporate
development and strategic planning.  "We appreciate the efforts
of the Tri-Way employees, and wish them well under the new
ownership."

A separate Federal-Mogul machining facility in Windsor, which
employs more than 60 people, is unaffected by the Tri-Way sale.

Headquartered in Southfield, Michigan, Federal-Mogul is an
automotive parts manufacturer providing innovative solutions and
systems to global customers in the automotive, small engine,
heavy-duty and industrial markets.

The company was founded in 1899.  Visit the company's Web site
at http://www.federal-mogul.comfor more information.


FINLAY ENTERPRISES: S&P Revises Low-B Rating Outlook to Negative
----------------------------------------------------------------
Standard & Poor's revised its outlook on Finlay Enterprises Inc.
and its wholly owned subsidiary, Finlay Fine Jewelry Corp., to
negative from stable.

At the same time, Standard & Poor's affirmed its ratings on
Finlay Enterprises and Finlay Fine Jewelry.

The outlook revision is based on Standard & Poor's expectation
that Finlay's operating performance will be under pressure due
to the increasingly difficult retail environment.

After a period of consistent sales growth, Finlay's sales were
impacted by the weakening economy, resulting in a comparable-
store sales decline of 5.3% for the second quarter of 2001. The
company's operating margin declined to 10.6% for the trailing 12
months ended August 4, 2001, from 11.5% in the same period the
previous year.

The margin erosion is the result of the softening retail
environment, increased marketing and promotional expenses, and
higher markdowns.

The September 11, 2001, terrorist attacks on the U.S. are likely
to compound the negative effects of a sluggish economy,
resulting in waning consumer confidence and growing economic
pressures. Due to the discretionary and economically sensitive
nature of the jewelry retailing industry, Finlay's operating
results will likely be under pressure in the coming quarters,
including the important holiday season.

Credit protection measures are expected to deteriorate from
current levels. For the quarter ended Aug. 4, 2001, debt
leverage remained high, with total debt to EBITDA at 3.0 times.
EBITDA coverage of interest expense is about 3.4x, and funds
from operations to total debt reached 18%. Financial flexibility
exists through a $275 million revolving credit facility, under
which the company had $76.6 million outstanding as of Aug. 4,
2001.

The ratings on Finlay continue to reflect the company's highly
leveraged capital structure and the inherent volatility in the
competitive and cyclical retail jewelry industry. These factors
are partially offset by the company's good market position in
this competitive and fragmented industry.

As the largest operator of licensed jewelry departments in
department stores, Finlay enjoys good purchasing power and
economies of scale. Key to the company's success is its highly
interactive partnership with its vendors, who participate in
merchandising and stock-level decisions for Finlay's more than
1,050 units. Still, the company's business profile reflects the
discretionary nature of purchases in the economically sensitive
jewelry industry. Moreover, the business is often affected by
broad competition from other jewelry retailers.

                      Outlook: Negative

Tightening consumer spending is expected to further pressure
profitability and cash flow protection measures. Inability to
maintain credit measures appropriate for the rating could result
in a downgrade.

                            Ratings Affirmed

     Finlay Enterprises Inc.            Rating

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

     Finlay Fine Jewelry Corp.

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


GENESISINTERMEDIA: Stephen Weber Assumes Helm as Interim CEO
------------------------------------------------------------
GenesisIntermedia, Inc. (Nasdaq: GENI) (Frankfurt Stock
Exchange: GIA) announced that, after a meeting of the
independent directors of the Company, Stephen A. Weber was named
interim Chief Executive Officer of GenesisIntermedia, Inc.  

He succeeded Ramy El-Batrawi, who also resigned from all other
positions within the Company including Chairman of the Board of
Directors.  The Company also announced that George W. Heyworth
resigned from the Board of Directors, concurrent with the other
management changes.

"I have concluded that current circumstances dictate that it is
in the best interest of the Company that I resign my positions.  
I have always put the needs of the Company first and foremost,
and my stepping down at this time will enable a capable
management team to continue exploring opportunities for
GenesisIntermedia, and enable Nasdaq to evaluate the Company on
its own merits.  I am convinced that the Company will fulfill
all the hopes and aspirations that I and others had for it and I
remain committed to helping the Company in any way I can,"
stated Mr. El-Batrawi.

The Company's interim Chief Executive Officer, Stephen A. Weber,
commented, "Like many businesses in the United States, the
Company has been affected by the past year's economic events as
well as recent world events. We believe that our core business
is strong, and we hope in this management transition to take all
appropriate steps to enhance the Company's financial position
and prospects."

The Company also announced that Mr. Weber and other Company
representatives met last Thursday with representatives of Nasdaq
concerning the halting of trading in the Company's shares.  
Nasdaq has sought information relating to certain transactions,
including transactions involving Ultimate Holdings, Ltd., a
substantial shareholder of the Company, and Native Nations
Securities, Inc., as well as Mr. El-Batrawi's possible role in
those transactions.  The Company has obtained Mr. El-Batrawi's
agreement to respond to Nasdaq's requests for information.

The Company also announced that the Securities and Exchange
Commission has commenced a formal investigation into certain
matters relating to the Company and trading in its securities.  
The Company is cooperating fully with the SEC in the
investigation.  Nasdaq has also raised issues relating
to the Company's continued listing.  The Company is seeking to
respond to Nasdaq's questions, but there can be no assurance
that the Company's stock will resume trading or continue to be
listed on the Nasdaq.

Mr. Weber, elected to GenesisIntermedia's board of directors in
June 2000, is one of the key innovators in the direct response
marketing community.  He is the former president of Positive
Response Television, Inc., a direct marketing company which he
founded in 1989, built and eventually took public. Under his
direction, Positive Response Television achieved annual sales of
$60 million and grew to 80 employees.  It was sold to a NYSE-
listed company in 1996.

Most recently, Mr. Weber was Chief Financial Officer of Valencia
Studios, a Valencia, California film and television studio.  At
Valencia, Mr. Weber secured funding, negotiated and facilitated
completion of strategic acquisitions and helped to bring the
company public.  He retains a seat on Valencia's board of
directors.  From 1981 to 1989, Mr. Weber was a managing partner
in a regional accounting firm in Los Angeles.  He is a graduate
of the University of Southern California.

GenesisIntermedia, Inc. is involved in several business lines
revolving around the marketing and advertising of consumer goods
and services.  The Company's main business lines are direct
sales and marketing of consumer productions, and interactive
advertising and data mining in retail malls. The Company strives
to create a portfolio of complementary business activities that
build on the Company's traditional strengths in marketing
consumer goods and services.  The Company markets through
several channels including television, new media, telemarketing
and retail.


HARTMAX: S&P Concerned About Financial State Due to Weak Market
---------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
rating and single-'B'-minus subordinated debt rating for
Hartmarx Corp. on CreditWatch with negative implications. About
$178 million in total debt was outstanding as of August 31,
2001.

The rating action follows the company's recent earnings
announcement of continued weak top-line results. Standard &
Poor's is concerned about Hartmarx's ability to improve its
financial condition in this currently soft retail environment.

Standard & Poor's expects to meet with management in the near
term to discuss the company's operating and financing
strategies.

Hartmarx is a leading U.S. manufacturer of men's tailored
clothing. The company owns and licenses a portfolio of well-
known brands, including Hart Schaffner & Marx, Hickey-Freeman,
Tommy Hilfiger, and Kenneth Cole, among others.


HAYNES INT'L: S&P Junks Ratings on Aerospace Industry Concerns
--------------------------------------------------------------
Standard & Poor's lowered its ratings on Haynes International
Inc. The current outlook is negative.

The downgrade follows the events of September 11, 2001, which
will likely lead to a cancellation or deferral of orders from
the aerospace industry, a key end market for the company.

The downgrade also reflects Haynes International Inc.'s below-
average business position as a specialty alloy producer with
high industry concentration to cyclical industries, a negative
equity base, weak cash flow generation, and limited financial
flexibility.

With approximately three-quarters of its sales derived from the
aerospace and chemical processing industries, the company's
earnings and cash flows have historically been cyclical. Driven
by improved market conditions in the aerospace, land based gas
turbine, and oil and gas industries, overall shipping volumes
and financial performance improved during the nine months
ending June 30, 2001.

Indeed, EBITDA of approximately $20 million for the first nine
months was about equal to the $21 million generated for all of
the fiscal year ending Sept. 30, 2000.

However, after recently showing signs of stabilizing following a
protracted period of difficult conditions from 1996 through
1998, the aerospace industry is expected to be adversely
affected by the terrorist attacks. The events will more than
likely lead to dramatic capacity reductions and possible
deferrals of aircraft deliveries and order cancellations, which
will reverberate throughout the aerospace supply chain and
affect demand for Haynes alloy metal.

The degree and duration of these adverse conditions are
currently unclear. Although the company's order book remains
sound, it is exposed to cancellations or order deferrals.
Moreover, sales to the chemical industry, which is tied to the
overall economy, continues to remain sluggish while the
outlook for demand from the oil and gas sector is expected to
soften given the recent downward trend in oil and gas prices.

Standard & Poor's expects the company's financial performance
and cash flow generation to rebound somewhat for the fiscal year
ending September 30, 2001, following a difficult fiscal 2000 in
which Haynes' operating cash flow was a negative $12 million.
However, a high degree of uncertainty remains following this
period.

With EBITDA barely covering interest--1.1 times during the nine
month period ending July 31, 2001--due to the company's
burdensome debt levels (Haynes' total debt was $207 million and
the company had negative equity of $101 million as of June 30,
2001), order cancellations or deferrals will undoubtedly strain
the company's already limited liquidity of $6 million and result
in deterioration in the company's key financial ratios.

Haynes is 80%-owned by Blackstone Capital Partners II Merchant
Banking Fund L.P. Since its debt leveraged acquisition of Haynes
in 1997, Blackstone has continually sought potential merger
candidates. In the wake of the failed merger attempt with Inco
Alloys International in March 1998, uncertainties remain
regarding the possibility of future mergers.

                     Outlook: Negative

The ratings would likely be lowered if order declines and
deferrals from the aerospace industry further strain the
company's limited liquidity.

                      Ratings Lowered

                                             Ratings

Haynes International Inc.           To                   From

   Corporate credit rating          CCC+                  B-
   Senior unsecured debt            CCC+                  B-


INTEGRATED HEALTH: Plan Filing Time Further Extended to Jan. 26
---------------------------------------------------------------
Pursuant to 11 U.S.C. Sec. 1121(d), Integrated Health Services,
Inc. sought and obtained a fifth order further extending their
(i) Exclusive Plan Filing Period through and including January
26, 2002, and (ii) Exclusive Solicitation Period through and
including March 28, 2002.  

In essence, the Debtors request a 120 day extension of their
Exclusive Periods, without prejudice to their right to seek
further extensions or the right of any party in interest to seek
to reduce the Exclusive Periods for cause.

The Debtors convinced the Court that the extension is well
justified, given that Exclusive Periods were intended to afford
the Debtors a full and fair opportunity to rehabilitate their
businesses and to negotiate and propose one or more
reorganization plans without the deterioration and disruption of
their businesses that might be caused by the filing of competing
plans of reorganization by non-debtor parties.

The Debtors represent that, subsequent to the Fourth Extension,
they have continued to make significant progress in their
reorganization efforts, and have undertaken substantial efforts
to conclude negotiations and formulate and hopefully confirm a
plan or plans of reorganization during the first half of 2002.

Based on their progress to date and their business and
reorganization objectives, the Debtors believe that they will
require at least an additional 120 days to achieve this goal.

In particular, the Debtors report that, with the assistance of
their financial and legal advisors, they have continued to
analyze chapter 11 strategic alternatives, including, among
other things, the possible disposition of various portions of
the Debtors' businesses. Detailed discussions and exploration of
these alternatives are well underway among the Debtors, the
Creditors' Committee, and an unofficial bank steering committee,
whose constituents by far hold the largest claims against the
Debtors' estates.

Due to, inter alia, the Debtors' desire to conclude the facility
rationalization process, which is substantially complete, and
the continuing negotiations with the United States of America
concerning a global settlement of its claims, and the relative
complexity of such negotiations as they relate to the non-RoTech
group of Debtors, the Debtors, the Committee and bank steering
committee have been focusing on developing a plan of
reorganization for the RoTech Debtors during this period.

The Debtors assessed various restructuring and reorganization
options and subsequently began work on a separate, stand alone
plan and disclosure statement for the RoTech Debtors.

It is contemplated that the parties will file a plan of
reorganization for the RoTech Debtors within the next 30 to 60
days, by January 26, 2002, the date of the requested extension
of exclusivity, positioning the RoTech Debtors for emergence by
the first quarter of 2002.

Simultaneously, the Debtors have continued to formulate and
address plan of reorganization alternatives for the remaining
Debtors, and expect to be in a position to confirm a plan or
plans for such Debtors within a reasonable time after the
emergence of the RoTech Debtors.

If this Court were to deny the Debtors' request for a further
extension of the Exclusive Periods, any party in interest would
be free to propose a plan of reorganization for each of the
Debtors. Termination of the Debtors' exclusivity would no doubt
have a monumental, adverse impact on the Debtors' business
operations and the progress of these cases and would inevitably
foster a chaotic and debilitating environment with no central
focus and explicitly conflicting interests, the Debtors
represent.

Based on factors that Courts consider in granting extensions of
exclusivity periods, the Debtors are convinced that ample cause
exists for the Fifth Extension.  (Integrated Health Bankruptcy
News, Issue No. 20; Bankruptcy Creditors' Service, Inc.,
609/392-0900)   


KSL RECREATION: Gloomy Travel Business Has S&P Taking Dim View
--------------------------------------------------------------
Standard & Poor's revised its outlook on KSL Recreation Group
Inc. to negative from positive. All ratings on the company are
affirmed.

The outlook revision reflects a weaker-than-expected operating
environment and increasingly challenging business fundamentals
for the remainder of this year and into 2002.

Material declines in both business and leisure travel are a
result of the September 11, 2001, terrorist attacks in the U.S.
Longer term visibility is fairly uncertain, as the impact on
occupancy levels and average daily rates--key drivers of
profitability--are vulnerable to slowing economic conditions and
consumer confidence and security issues related to travel.

The ratings on KSL continue to reflect the company's portfolio
of high quality assets, demonstrated track record of increasing
efficiency at acquired properties, and solid operating
performance.

Ratings also incorporate Standard & Poor's expectation that the
company, which is more than 82% owned by KKR Associates L.P., is
likely to continue making acquisitions. However, management has
successfully integrated previous acquisitions into its portfolio
and reduced leverage in a manner consistent with Standard &
Poor's expectations.

Based in La Quinta, California, KSL's resort properties include
the Desert Resorts (including La Quinta and PGA West) in Palm
Springs, California; the Doral near Miami, Florida; The
Claremont in northern California; Grand Traverse near Traverse
City, Michigan; Lake Lanier near Atlanta, Georgia; the Grand
Wailea resort in Maui, Hawaii; and the Arizona Biltmore in
Phoenix, Arizona.

Management has grown the company's cash flow base and improved
key credit statistics by increasing operating efficiency and
undertaking capital spending projects that have enhanced the
company's return on assets. Pro forma EBITDA coverage of
interest expense improved to the mid-2 times area for the twelve
months ended July 31, 2001, compared with 1.4x in fiscal
1996.

At the close of the most recent period, pro forma total debt to
cash flow was about 4x. Operating margins have been steadily
improving, and were more than 30% in the most recent quarter,
compared with 22.5% in 1996. Because of the uncertain business
fundamentals, there is some concern that interest coverage and
margins could be negatively affected over the near term, given
that upscale and luxury hotels tend to have high fixed costs,
and are particularly vulnerable to falling occupancy levels and
reductions in average daily rates.

                      Outlook: Negative

Financial performance is expected to remain vulnerable to a
difficult business environment over the near term. A material
decline in the company's credit profile, either as a result of
deteriorating operations or a debt-financed transaction, could
pressure ratings.

                          Ratings Affirmed

KSL Recreation Group Inc.                            Ratings

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


KOMAG INC: Western Digital Extends Purchase Pact for 3 Years
------------------------------------------------------------
Komag, Incorporated (OTC Bulletin Board: KMAG), the largest
independent producer of media for disk drives, announced that
Western Digital Corporation (NYSE: WDC) has agreed to extend its
Volume Purchase Agreement with the company for an additional
three year term. The VPA now provides that Komag will supply a
substantial proportion of Western Digital's disk requirements
through April 2005.

Matt Massengill, Western Digital's president and CEO said,
"Komag and Western Digital have enjoyed a long standing
relationship due to Komag's ability to deliver both technically
advanced and high quality products. We anticipate that Komag
will continue to provide these high quality products and will
support our future technology needs. In addition, we expect that
Komag will be the industry's low cost leader as they
successfully restructure their company."

"As our largest customer, Western Digital is key to our ability
to succeed," commented T.H. Tan, Komag's CEO. "Our working
relationship is the foundation upon which we are rebuilding our
company. Over the last several years we have employed a virtual
vertical integration strategy, a key in managing time to market.
We are particularly pleased with Western Digital's vote of
confidence in extending the VPA. We expect to continue our
strong partnership with Western Digital as we work through our
restructuring process and well into the future."

Founded in 1983, Komag is the world's largest independent
supplier of thin-film disks, the primary high-capacity storage
medium for digital data. Komag leverages the combination of its
U.S. R&D centers with its world-class Malaysian manufacturing
operations to produce disks that meet the high-volume, stringent
quality, low cost and demanding technology needs of its
customers.

By enabling rapidly improving storage density at ever-lower cost
per gigabyte, Komag creates extraordinary value for consumers of
computers, enterprise storage systems and electronic appliances
such as peer-to-peer servers, digital video recorders and game
boxes.

For more information about Komag, visit Komag's Internet home
page at http://www.komag.com


LERNOUT & HAUSPIE: AllVoice Airs Objections about Debtors' Plan
---------------------------------------------------------------
AllVoice Computing plc, represented by William D. Sullivan of
the Wilmington firm of Elzufon, Austin, Reardon, Tarlov &
Mondell, as local counsel, and Patrick P. Dinardo, Paul R.
Gupta, Pamela Smith Holleman, and Jeffrey E. Francis of the
Boston firm of Sullivan & Worchester LLP as lead counsel,
objects to the Joint Disclosure Statement of Lernout & Hauspie
Speech Products N.V. and Dictaphone Corp.

Holdings is a successor to Dragon Systems, Inc., a competitor of
AllVoice in the speech recognition and production technology
market. Repeating all of its allegations and arguments made in
the objections it has posed to the two sale motions, AllVoice
asks that approval of the Disclosure Statement be denied.  

Specifically, AllVoice says that the Debtors "misstate and
significantly understate" the seriousness of AllVoice's claims.  
AllVoice is mentioned only once, under the rubric "Certain Pre-
Petition Intellectual Property Lawsuits".  

AllVoice complains that the Debtors' discussion of its claims
and the procedural history of the litigation has "a tenor more
appropriate to a trial memorandum than an objective narration of
events designed to inform creditors".  

Inexplicable to AllVoice, the Debtors omit any reference to
AllVoice's claims of patent infringement from their "Summary of
Material Litigation and Related Events", and their discussion of
"Certain Risk Factors to be Considered", and the single
paragraph which addresses "Competitive Conditions for
Reorganized Dictaphone". Disclosure of the pending litigation,
without any explanation of the effect that a lawsuit may have on
the disposition of estate property or creditor claims, fails to
satisfy the standard for adequacy of information so as to permit
Judge Wizmur to approve the Disclosure Statement.

AllVoice also complains that the Plan proposes to limit L&H
Holding Class 3 claims, which include all unsecured claims
against Holdings, to a distribution not to exceed $5 million,
thereby radically understating, if not ignoring, the value of
AllVoice's proof of claim filed in the aggregate amount of $53.9
million.  Notably, the Disclosure Statement repeatedly
represents that the Holdings estate is solvent and that all
creditors will be paid in full.  In the Disclosure Statement,
this class of claims is to receive distribution in full -
unless the claims exceed $5 million, in which case distribution
is pro rata.  

AllVoice perceives this as varying treatment for this class - at
once wholly allowed and paid, then vastly discounted - as
underscored by the fact that the Debtors fail to recognize that
the post-effective date L&H entities could be required to make
subsequent distributions on these claims in excess of the
planned-for reserves.  The Debtors do not explain what will
happen in the event that their reserves are insufficient.  What
if new claims are allowed after the effective date? Are all
creditors who have ostensibly received full payment to disgorge?  
If not, how will Class 3 claims be treated consistently, and
how will the Debtors enforce this requirement?

The Disclosure Statement also states inaccurately that it is
consensual and arrived at after consultation with all major
creditor constituencies -- yet exhibits purported to be attached
to the Disclosure Statement are not and have not been made
available despite repeated requests.

The Disclosure Statement contains no valuation or financial
projections with respect to either Holdings or L&H NV, but only
as to Dictaphone. And even as to reorganized Dictaphone, there
are no post-effective date projections.

"Even had the necessary information been provided, the Debtors
have salted the Disclosure Statement with disclaimers so
sweeping as to raise doubts that any reasonable investor reading
the document could find a basis for reliance on ay such
information", Mr. Sullivan tells Judge Wizmur.

                 Confirmation Objection Preview

Further, the plans are not confirmable in any event, AllVoice
asserts. The Plan provides creditors of Holdings with less
favorable treatment than they would receive in a liquidation.  
If, as the Debtors represent, Holdings is solvent, unsecured
creditors are entitled to postpetition interest on their claims
before allowing any recovery to Holdings' parent, L&H.  Yet the
Plan does not provide of any interest -  but does provide for a
distribution to L&H.  If Holdings is not solvent, then unsecured
creditors are not entitled to any interest -  but L&H is not
entitled to receive any distribution.  

The existence of the $5 million cap means that the holders of
$173 million in unsecured claims against Holdings face a serious
and significantly lesser distribution under the plan than they
would receive in a liquidation.

The plan also includes an impermissible discharge for L&H and
Holdings. L&H and Holdings represent that theirs is not a
liquidating plan, but the contrary conclusion is inescapable.  
The Debtors admit that a liquidation can be avoided only if a
$30 million credit facility can be obtained and a joint venture
formed.  But the Disclosure Statement includes no facts,
evidence, or basis for assuming the likelihood of either
contingency.  No potential lender is named, no prospective joint
venture partner identified.  L&H and Holdings are experiencing a
"burn rate" of approximately $900,000 per week in operating
costs alone.  

It is therefore unlikely that these Debtors will be able to
engage in business after consummation of the plan - meaning by
statute they are not entitled to any discharge.  Compounding the
problem, the Plan provides that the elusive discharge is a
condition precedent to plan confirmation.  Where a plan includes
a provision explicitly in violation of the Bankruptcy Code it is
not confirmable.

Furthermore, the Plan permits the post-Effective Date entities
to retain all defenses and counterclaims, while at the same time
purporting to prevent creditors from asserting counterclaims and  
setoff rights through the discharge.

The Plans are not confirmable because the Debtors cannot show
that confirmation is not likely to be followed by liquidation or
by the need for further reorganization.  The burden of proof on
the issue of feasibility lies on the Debtors, who need show only
a reasonable probability of success.  A plan based on
impractical or visionary expectations cannot be confirmed.

AllVoice believes that none of the Debtors can show feasibility.
Issues relating to the Belgian concordat proceeding - which the
Debtors say may take up to two years to complete - are only one
facet of the problem.  While the disclosure Statement includes
the Belgian court's approval of the Debtors' reorganization plan
as a risk factor, the Plan inexplicably provides that the
Debtors may waive this essential condition.  In the event that
the Belgian proceeding is converted to a liquidation, unsecured
creditors in these cases may be worse off as they will be forced
to compete with Belgian creditors who, like the Bakers, would be
subject to mandatory subordination had the matter rested
entirely with this Court.

Moreover, to the extent that the Plan is premised on obtaining
operating capital or fixed assets from a pre- or post-Effective
Date transfer of the intellectual property assets of L&H NV or
Holdings to a third party, and such transfer implicates the
rights disputed by AllVoice, the post-Effective Date Debtors or
their successors may be stripped of the right to make, use or
sell the PowerScribe technology and any other infringing
products if AllVoice subsequently prevails on its claims.  The
Disclosure Statement does not address this risk, but insofar as
the Debtors depend upon obtaining the right to make, use or
sell infringing products, their efforts will be legally thwarted
and their plans will fail.  The Debtors cannot legally strip
AllVoice of its patent rights by merely inserting a disclaimer
in the proposed plan.  The Debtors cannot pass title to a
property which they don't own.

The Bakers' claims against Holdings have been subordinated, yet
the present Plan proposes to pay the Bakers before all senior
claimants are paid in full. Thus the Bakers' claims may not be
placed in Class 3. The Plan and Disclosure Statement do not
include anything suggesting that the Bakers' claims do not fall
into class 3 - the only class of unsecured prepetition claims in
Holdings' plan.  The plan therefore fails for improper
classification and discrimination.

The Plan erroneously classifies unsecured claims both as
impaired and able to vote, and unimpaired and unable to vote.  
Even on the most rudimentary level, the disclosure statement and
Plan cannot be approved in their present form as each is replete
with inconsistencies in its discussion of the classification and
treatment of Class 3 claims.

The Plan also violates the  Code by not providing for immediate
cash-out of creditors holding administrative priority claims on
the effective date of the plan, absent the holder's consent to
different treatment.  AllVoice is entitled to administrative
treatment of its claim for continuing postpetition infringement.  
Under the Plan, the Debtors have neither met the Code's
requirement for an immediate cash-out, or show that they have
obtained the holders' consents for a different treatment.  No
discussion is provided should a sale transfer fail to generate
sufficient funds to pay administrative claimants.

The Debtors' Plan cannot meet even a liberal application of the
statutory requirement of good faith, says AllVoice.  The Plan is
premised upon a transfer of assets without taking into account
the issue of whether any such assets, or their transfer,
constitutes infringement of AllVoice's patents.  Further, the
plan proposes to extend the process of resolving disputed claims
well beyond the effective date, while at the same time making no
provision for the payment to the holders of disputed claims any
postpetition, pre-judgment interest - and without imposing any
due diligence requirement on the Debtors with regard to the
effective resolution of disputed claims post-effective date.  
The Plan provides for the establishment of reserves for disputed
claims, not escrow accounts.  The post-effective date entities
are authorized by the Plan to determine the amount of the
reserves, to invest them in accordance with their reasonable
business judgment, and to close the reserves at their own
discretion, without order of the court.

Given the absence of information and serious questions about the
feasibility of the Plans, Judge Wizmur should reject the
Disclosure Statements. (L&H/Dictaphone Bankruptcy News, Issue
No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


LODGENET ENTERTAINMENT: S&P Puts Low-B Ratings on Watch Negative
----------------------------------------------------------------
Standard & Poor's placed its ratings on LodgeNet Entertainment
Corp. on CreditWatch with negative implications.

The CreditWatch placement is based on concern that the company's
profitability and credit profile will weaken as a result of a
material decline in travel following the terrorist attacks in
the U.S. on September 11, 2001.

As a leading provider of in room entertainment to the lodging
industry in the U.S., LodgeNet's revenue and earnings are
directly tied to occupancy rates at the lodging properties of
its customers.

Standard & Poor's believes that the terrorist attacks are likely
to result in material declines in short-term business and
leisure travel. Longer-term effects are less certain and the
extent and length of the decline in travel will depend on many
factors including any U.S. military action, confidence in travel
safety, and general economic conditions.

LodgeNet's diversified room base and high percentage of rooms in
suburban and highway locations--approximately two-thirds of its
room base--could help mitigate the impact. Continued capital
expenditures for room additions and upgrades during a period of
reduced profitability is likely to place upward pressure on debt
levels and further strain credit measures, although the company
has some discretion regarding the timing of such spending.

Resolution of the CreditWatch listing will depend on the health
and prospects for U.S. travel and on LodgeNet's performance
under difficult operating conditions.

    Ratings Placed on CreditWatch with Negative Implications

LodgeNet Entertainment Corp.                         Ratings

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


MATLACK SYSTEMS: Wants Lease Decision Period Extended to Nov. 24
----------------------------------------------------------------
Matlack Systems, Inc. and its affiliate debtors are currently
engaged in efforts to sell their assets, which may include
certain unexpired leases of nonresidential real property.  For
that reason, the Debtors ask Judge Mary F. Walrath of the U.S.
Bankruptcy Court for the District of Delaware to extend the
period within which they may decide to assume or reject
unexpired leases to November 24, 2001.  

The company assures Judge Walrath that lessors will not be
prejudiced by an extension because the Debtors have performed or
will continue to perform their obligations under the leases on
time.  In addition, any lessor may request the Court to fix an
earlier deadline for the Debtors to assume or reject its lease.  

Matlack, North America's #3 tank truck company, provides liquid
and dry bulk transportation, primarily for the chemicals
industry.  The company filed for chapter 11 protection last
March 29, 2001, in the U.S. Bankruptcy Court for the District of
Delaware, and is represented by Richard Scott Cobb, Esq., at
Klett Rooney Lieber & Schorling.  

Matlack's 10Q Report, filed with the Securities and Exchange
Commission on March 31, 2001, lists assets of $81,160,000 and
liabilities of $89,986,000.


METAL MANAGEMENT: Lower Revenues Affected By Weak Market Demand
---------------------------------------------------------------
Consolidated net sales of Metal Management Inc. decreased by
$75.6 million (31.3%) to $166.3 million during the three months
ended June 30, 2001 compared to consolidated net sales of $241.9
million during the three months ended June 30, 2000.

The decrease in consolidated net sales was primarily due to
lower volumes of ferrous and non-ferrous products sold during
the period and lower average realized sales prices for ferrous
commodities.

Ferrous sales decreased by $43.0 million (32.1%) to $90.9
million during the three months ended June 30, 2001 compared to
ferrous sales of $133.8 million during the three months ended
June 30, 2000.

During the three months ended June 30, 2001, revenues continued
to be impacted from low selling prices and weak demand from
consumers. Although unit sales of ferrous metals sold improved
from the three months ended March 31, 2001, they were 208
thousand tons, or 18%, below the unit sales of ferrous metals
sold during the three months ended June 30, 2000. Ferrous sales
were also lower due to lower average realized sales prices which
declined by $20 per ton.

Non-ferrous sales decreased by $25.9 million (30.8%) to $58.1
million during the three months ended June 30, 2001 compared to
non-ferrous sales of $84.0 million during the three months ended
June 30, 2000.

The decrease is primarily due to unit sales declining by 28.7
million pounds and a $.08 per pound decrease in average realized
sales prices, mainly in the copper and aluminum product
categories. The average selling price for the non-ferrous
product category is impacted by market conditions and the
product mix of non-ferrous metals sold. The majority of Company
non-ferrous sales are derived from copper, aluminum and
stainless steel.

Brokerage ferrous sales decreased by $2.3 million (16.4%) to
$11.9 million during the three months ended June 30, 2001
compared to brokerage ferrous sales of $14.2 million during the
three months ended June 30, 2000. The decrease was due to lower
average realized sales prices for brokerage ferrous sales which
declined by $19 per ton.

Brokerage non-ferrous sales decreased by $3.9 million (65.2%) to
$2.1 million during the three months ended June 30, 2001
compared to brokerage non-ferrous sales of $6.0 million during
the three months ended June 30, 2000.  Although average realized
sales prices for brokered non-ferrous products were $0.01 per
pound higher during the three months ended June 30, 2001
compared to the three months ended June 30, 2000, the volume of
non-ferrous metals brokered decreased by 10.1 million pounds, or
66%.

Net income was $128.6 million during the three months ended June
30, 2001 compared to a net loss of $8.3 million during the three
months ended June 30, 2000. Net income was recognized mainly due
to recording an extraordinary gain on debt cancellation of
$145.7 million.

Excluding the extraordinary gain, cumulative change in
accounting principle and reorganization costs, net loss was $6.4
million for the three months ended June 30, 2001, which
represents an improvement of $1.9 million from the period for
the three months ended June 30, 2000. The improvement is mainly
due to lower interest expense, offset by lower sales and gross
profit.

As a result of the consummation of the Company's Reorganization
Plan, Metal Management substantially reduced the amount of its
overall indebtedness. In connection with the consummation of the
Plan, approximately $189 million of Subordinated Notes
(including accrued interest therein) and other unsecured debt
will be exchanged for 9,900,000 shares of New Common Stock. As
of June 30, 2001, the Company's total indebtedness was $148.4
million.

Although the Plan resulted in a reduction in debt, further
improvements in the Company's liquidity position will be subject
to the success of initiatives it is undertaking to reduce
operating expenses and the effects on its liquidity of market
conditions in the scrap metals industry. Its uses of capital are
expected to include working capital for operating expenses and
satisfaction of current liabilities, capital expenditures, and
interest payments on outstanding borrowings.


MONTGOMERY WARD: Selling Software Licenses Online Via Bid4Assets
----------------------------------------------------------------
Bid4Assets, Inc., a full-service asset disposition and advisory
services company, today announced that it has partnered with
CONSOR Intellectual Asset Management to auction business
software licenses from former retailer Montgomery Ward, LLC
(Wards) with an original acquisition value of $30 million.  The
sealed bid sale will be held online through Oct. 25 on the
Bid4Assets Web site http://www.bid4assets.com

Assets for sale include software licenses for applications such
as CRM, database management, security and more.  Records
indicate that all licenses are current within the last 12
months, and where maintenance is not up to date, the value of
bringing the software current will be deducted from the accepted
bid by the Seller.  

Licenses are from top vendors such as Cisco, BMC, GT Software,
Information Builders, Informix, PeopleSoft, Siemens and Vertex.
Interested bidders can access due diligence information at
http://www.bid4assets.com  Information on additional software  
and enterprise systems arising from the Wards' bankruptcy may be
found at http://www.wardsit.com

Wards filed for Chapter 11 bankruptcy and ceased operations of
its entire 252-store chain after 128 years in the retail
business earlier this year.  The discount retailer appointed
CONSOR to manage the process of selling its custom and
commercial software applications.

"We are very pleased to offer such a huge inventory of software
and licenses online," said Bid4Assets President Jim Russell.  
"This sale gives businesses the opportunity to purchase the
software they need to grow at competitive prices."

Bid4Assets, Inc. --  http://www.bid4assets.com-- is a leading  
full-service asset disposition and advisory services company.  
Bid4Assets helps clients maximize asset recovery by providing a
customized sales solution tailored to each client's needs.  The
company provides both online and traditional on-location
auctions as well as a full range of advisory services such as
appraisal, valuation, inventory, audit, shipping, logistics,
marketing and settlement.  Bid4Assets has three practice groups:
Public Sector and Government, Restructuring and Bankruptcy, and
Corporate Sales.  The company is headquartered in Silver Spring,
Md., phone (301) 650-9193, fax (301) 650-9194.


NETCENTIVES: Files For Reorganization Under Chapter 11
------------------------------------------------------
Netcentives Inc. (OTC Bulletin Board: NCNT) filed a voluntary
petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code together with its subsidiaries, Post
Communications, Inc., and MaxMiles.

Netcentives intends to maintain operation of all existing
loyalty programs and services, including its ClickRewardsr,
Delta SkyMiles Shopping, and United MileagePlus Shopping rewards
networks, the Email Marketing Group and other related services
while it seeks to sell business assets in an auction expected to
occur in November.

"The filing is an important step in protecting the value of our
loyalty and email business operations and the underlying
intellectual property, patents and source code as we seek to
sell the company's business operations," stated Eric Larsen,
chief executive officer of Netcentives. "The asset auction is a
continuation of a restructuring plan announced earlier this
year in which we are now divesting assets and reviewing payables
under the guidance of the court to prioritize liabilities and
preserve cash flow for creditors and, potentially,
shareholders."

The Company also announced that it had signed a letter of intent
to sell its Email Marketing Group, formerly Post Communications,
to Plum Acquisition Corp., a company headed by Post founder Hans
Peter Brondmo. The proposed transaction is subject to
competitive bids and bankruptcy court approval. In a related
announcement, Netcentives disclosed that it had signed a
multi-million dollar patent licensing agreement with a leading
Internet media company. This agreement enables the licensee to
operate the online portion of its rewards programs under U.S.
Patents No. 5,774,870 and No. 6,009,412. These patents
demonstrate the value of the Netcentives' intellectual property
with regard to the design and implementation of Internet-based
rewards and recognition systems.

Netcentives announced it has sufficient cash on hand to finance
its operations through auction of its assets, including
supporting the company's post-petition trade and employee
obligations. The Company has retained the law firm of Binder &
Malter to represent it in bankruptcy proceedings.

San Francisco-based Netcentives Inc. is a provider of
personalized email, rewards and recognition solutions. The
company offers a broad suite of offline and online products
including email communications, sales force incentives, loyalty
and rewards solutions for retail and financial institutions.
Netcentives continues to differentiate itself through its
integrated marketing approach, which includes experienced client
service teams, leading-edge technology and expert consulting.
More than 300 companies have partnered with Netcentives to drive
their revenue and reduce costs. For more information, visit
http://www.netcentives.com


NUMATICS INC: Lower EBITDA Compels S&P to Downgrade Ratings
-----------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured debt ratings on Numatics Inc. to single-'B'-minus from
single-'B'. At the same time, the subordinated debt rating on
the company was lowered to triple-'C' from triple-'C'-plus. All
of the ratings remain on CreditWatch with negative implications,
where they were placed on June 8, 2001.

Total debt as of June 30, 2001, was $163.3 million.

The rating actions reflect Numatics' weaker-than-expected
operating performance during the past year, resulting in weak
credit protection measures, bank covenant violations,
constrained liquidity, and heightened financial risk.

The company's poor operating performance during a period of
elevated debt levels resulted in thin cash flow protection, with
EBITDA interest coverage at 1.4 times, and high debt leverage,
with total debt to EBITDA at about 7.5x for the last 12 months
ended as of June 30, 2001.

The company's weak operating performance is primarily due to the
general economic slowdown in North America, changes in product
mix, and lower fixed cost absorption as a result of lower sales
volume. Revenue fell 18.8% and EBIT dropped 31.6% in the first
six months ended June 30, 2001, compared with the same period in
2000.

Management has implemented several significant cost saving
initiatives since the beginning of fiscal 2001, including
reducing its workforce and eliminating other administrative
costs, which should provide about $10 million in annualized
savings. Such measures are expected to allow the company to
generate adequate cash flow to fund operations and meet its debt
service obligations in the near term.

In March 2001, the company received waivers with respect to
certain defaults on its bank financial covenants. The bank
lenders agreed to amend the facility to waive past defaults,
establish new bank covenants and accelerate the maturity of the
facility to July 31, 2002. Numatics has minimal liquidity of
less than $1 million in cash and only $12 million in borrowing
availability under its revolving credit facility as of June 30,
2001.

The company's recent $5.5 million interest payment on its senior
subordinated notes on Oct. 1, 2001, has further constrained its
liquidity position. Bank covenants will remain restrictive
throughout the year and the uncertainty of the company's ability
to obtain a new credit facility during the current difficult
economic environment heightens financial risk.

The Highland, Mich.-based Numatics is a leading manufacturer of
four-way pneumatic valves, actuators and other related products
provided for a broad range of applications and to a diverse
group of cyclical industries.

The company is actively seeking financing alternatives to
replace its credit facility. Standard & Poor's will closely
monitor events as they unfold to determine the effect on the
ratings. Near-term business fundamentals will remain
challenging. The failure to gain additional new financing and to
improve operating performance and credit protection measures,
would result in lower ratings, Standard & Poor's said.


ORMET CORP: S&P Drops Low-B Ratings on Feeble Financial Results
---------------------------------------------------------------
Standard & Poor's lowered its ratings on Ormet Corp. The current
outlook is negative.

The downgrade results from the expectation of continued weak
aluminum prices and demand for the foreseeable future, the
company's poor financial performance, higher debt levels,
intense competition in its fabrication division. The outlook is
negative.

Ormet's weak financial performance over the years has primarily
been the result of low aluminum prices, softening demand, and
bauxite degradation. As a vertically integrated aluminum
producer, Ormet benefits from its ability to supply the majority
of its own alumina needs, mitigating the risk of alumina supply
shocks and pricing volatility.

Nevertheless, this strategy increases the degree of operating
leverage and reduces the company's flexibility in responding to
the cyclicality inherent in the aluminum industry. The London
Metal Exchange (LME) spot aluminum price of $.58 per pound are
at a 28-month low and have failed to stabilize from the $.70 per
pound average LME price in 2000, despite approximately two
million pounds of capacity reductions in the Pacific Northwest
and Brazil.

Furthermore, barring any significant production cuts, the near-
to medium-term outlook is bleak. The terrorist attacks in the
U.S. on September 11, 2001, will undoubtedly lead to a U.S.-and
possibly global-recession, reducing demand from many of
aluminum's key end markets and inflate already ballooned world-
wide inventories.

Standard & Poor's notes that Ormet's transaction prices are
based on the Midwest transaction price, which has historically
averaged four to five cents per pound higher than the LME. Also,
the fabrication division, which accounts for slightly more than
50% of revenues, has experienced operating losses for the past
three years due to excess rolling mill capacity in the U.S. and
Canada.

As a result of these factors, Ormet has posted operating losses
(after depreciation, depletion, and amortization) over the past
two fiscal years ending December 31. Hence, EBITDA (adjusted for
the noncash portion of retiree health care expenses) to interest
coverage has been a very weak 1.19 times and 1.12 times,
respectively. The operating losses and its two-year, $40 million
capital expenditure program to address bauxite degradation
issues at its Burnside alumina facility, have resulted in debt
levels increasing to a very aggressive 98% as of June 30, 2001
(including $55 million of accounts receivable securitization).

The company has benefited recently from an increased order book
as a result of displaced demand from the capacity shutdowns in
the Pacific Northwest and the implementation of various customer
service programs and cost reduction initiatives at the Hannibal
rolling mill. Standard & Poor's expects that the company's
operating income will benefit by approximately $18 million
annually as a result of the upgrade of its bauxite processing
facilities that will allow the company to process lower grade
bauxite.

Nevertheless, these improvements will be tempered by low
aluminum prices and the yet to be determined effects of an
economic recession. Ormet's financial flexibility, however, will
benefit from reduced capital expenditures as well as
approximately $55 million of availability under its revolving
credit facility, which should be sufficient to weather a short-
term period of depressed industry conditions. Budgeted capital
expenditures are to include the installation of large anode
technology to improve the operating performance at the Hannibal
reduction facility.

                       Outlook: Negative

An extended period of weak aluminum prices and demand could
result in a downgrade.

Ratings Lowered
                                            Ratings

Ormet Corp.                         To                   From

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


PACIFIC GAS: California State Intends to Seek Stay Relief
---------------------------------------------------------
The People of the State of California, ex rel. the Department of
Water Resources (the State) file a statement of intention to
file a motion for relief from stay in light of allegedly
inadequate relief sought in the Motion by Official Committee of
CalPX for Approval of Stipulation with Pacific Gas and Electric
Company and Reliant.

Faced with a multitude of pending claims and multiple lawsuits
filed all over California and in Washington, D.C., which will
likely multiply further, the State sees the stipulation prepared
by the CalPX Committee, PG&E and Reliant as being inadequate
because, while purportedly addressing the State's concerns, the
stipulation would do nothing to consolidate the various
proceedings and to bring all claims and all potential claimants
and parties asserting damages based on the commandeering of the
BFM contracts into a single state forum unfettered by the
automatic stay.

The State points out that, not set forth in the Committee Motion
were the facts that the Victim Compensation Board had been  
attempting to consolidate the numerous claims before it at the
State's request, that the Committee had failed to take
sufficient steps to prosecute the individual claims as a group
claim, that the State had requested clear identification of all
potential claimants against the State and on whose behalf such
claims were filed, and that the State had requested global
relief from stay for all parties to proceed as necessary in
litigating to conclusion the actions related to the
commandeering of the BFM contracts.

The Committee fails to address the need to consolidate the
Multi-Headed Commandeering Litigation, the State criticizes. As
set forth in the Committee Motion, the State alerted the Victim
Compensation Board in writing to the possibility that the Victim
Compensation Board's summary rejection of the claims against the
State -- a prerequisite to the claimants' attempting to pursue
these claims in state court -- could be subject to challenge in
the PG&E and CalPX bankruptcy cases as a violation of the
automatic stay in light of Gruntz v. County of Los Angeles (In
re Gruntz), 202 F.3d 1074 (9th Cir. 2090). To prevent a
subsequent challenge under In re Gruntz seeking to void the
Victim Compensation Board's summary rejection of the claims, the
State strongly recommended that relief from the automatic stay
in the PG&E and CalPX bankruptcy cases be obtained.

Further, the State believes that global relief from stay for all
parties involved in the commandeering litigation is as necessary
as consolidation of that litigation for the efficient resolution
of the multitude of pending claims against the State and for
judicial economy to ensure that the State not be exposed to
multiple lawsuits seeking conflicting or duplicative relief.

Unfortunately, the Committee and PG&E made no effort to resolve
these concerns or even to consult with the State on the
stipulation, the State charges.

With respect to the multiple lawsuits and claims, the State
notes that:

       -- the State is now the subject of approximately 33
separate claims and lawsuits in four different fora seeking
damages for the commandeering of the BFM contracts "possessed"
by PG&E and by Southern California Edison Company (SCE). The
claimants include CalPX, the Committee, PG&E, SCE, Reliant, and
approximately 30 other participants whose interests the
Committee is supposed to represent.

       -- even as the CalPX claims for the commandeering of the
BFM contracts "possessed" by PG&E and SCE are being pursued,
these two utilities are pursuing their own claims against the
State for the commandeering of these BFM contracts, thereby
subjecting the State to conflicting or duplicative litigation
and double recoveries.

       -- numerous other participants, whose interests the
Committee purportedly represents, have filed their own suits and
claims against the State, further clouding the role of the
various plaintiffs and claimants and magnifying the possibility
of duplicative recoveries.

       -- CalPX, PG&E, SCE, and approximately 30 other
participants have filed claims against the State before the
Victim Compensation Board.

       -- The Committee, again on behalf of CalPX, has sued the
State in Los Angeles Superior Court.

       -- PG&E has sued the State in San Francisco Superior
Court.

       -- Reliant has sued the State in Los Angeles Superior
Court.

       -- Tucson Electric Power Company has brought an action
against the State before the Federal Energy Regulatory
Commission in Washington, D.C., in which many of the above-
listed claimants have intervened.

       -- Duke Energy Trading and Marketing has commenced
litigation regarding the commandeering of the BFM contracts in
the District Court for the Central District of California (this
matter is now on appeal before the Ninth Circuit after dismissal
by the District Court).

       -- These lawsuits will probably multiply, as the
Committee admits in the Committee Motion.

The Committee recognizes, as stated in its Motion: "The various
claims against the State that may be asserted by CalPX and PG&E
arise under state law and federal non-bankruptcy law, and can be
more readily and expeditiously litigated outside of the
Bankruptcy Court." But that admission requires greater relief
from the automatic stay than the Committee seeks, the State
asserts.

Contrary to the suggestion in the Committee Motion, the State
takes that position that it is not a virtue that the stipulation
is expressly inapplicable to any actions in which CalPX or PG&E
is a defendant. By not allowing all parties involved in the
multi-headed commandeering litigation to pursue their rights on
an equal footing, the Committee Motion seeks relief that is
inadequate to litigate these competing non-bankruptcy claims
"readily and expeditiously", the State contends.

Accordingly, the State is in the process of filing its own
motion for relief from the automatic stay in the PG&E case Court
and in CalPX's bankruptcy case for the defensive purpose of
amending its state court Complaint for Declaratory Relief in
state court to join PG&E and CalPX as party defendants, along
with SCE, Reliant, and all other known non-debtor potential
claimants.

As the Committee's petition filed with the Judicial Council on
July 27, 2001, to coordinate the three State inverse
condemnation actions into a single coordinated case seeks only
to join three of the 93 entities the Committee has identified as
having a potential interest in the commandeered BFM contracts,
the State believes that, even if the Committee was successful in
its petition for coordination, the State's need to proceed with
its own declaratory relief action remains compelling, as the
State would continue to be exposed to multiple or otherwise
inconsistent recoveries and judgments from actions initiated by
others who are not joined in the Committee's State action for
inverse condemnation, but who have been identified by the
Committee as having an interest in the commandeered BFM
contracts.

The purpose of the declaratory relief action will be to
consolidate all litigation against the State now pending in
various fora and to adjudicate what, if any, recovery there
shall be from the State, and the entitlement thereto, for the
commandeering of the BFM contracts.

In connection with its motion, the State expects PG&E and the
Committee to take seriously their representation in the
Committee Motion and Stipulation appended thereto that they
shall attempt in good faith to resolve consensually any issues
pertaining to the application of the automatic stay in
connection with their respective state court actions against the
State.

The State makes it clear that, by making this special and
limited appearance, the State is not objecting to or requesting
a hearing on any motion pending before the Court, is not making
a claim against the bankruptcy estate, is not voluntarily
invoking the jurisdiction of the Bankruptcy Court, and is not
waiving its sovereign immunity. This Statement of Intention, the
State indicates, is solely a preliminary and courtesy notice to
the Court, the Committee, the Debtor and other parties in
interest.

                       Opposition By PG&E

PG&E tells the Court that, along with a number of other parties,
PG&E has sued the State for just compensation for the taking of
its property because early this year, the Governor of the State
of California seized certain forward contracts belonging to PG&E
for the purchase of electricity. These contracts have been
valued at hundreds of millions of dollars. The State now seeks
relief from the automatic stay to pursue another action seeking
declaratory relief with respect to substantially identical
issues filed in the Sacramento Superior Court in order to pursue
these and other claims against PG&E (the Sacramento Action).

The State claims that judicial economy and the efficient
administration of justice would be served by allowing its
pursuit of the Sacramento Action because it will "consolidate
all litigation against the State now pending in various fora and
to adjudicate what, if any, recovery shall be awarded, and the
entitlement thereto, based upon the commandeering of the [block
forward market] contracts."

PG&E contends that there are at least three reasons why this
request should not be granted:

-- First, notwithstanding the State's  representation to
   the Court that it makes no claim against PG&E's estate, the
   Sacramento Action asserts a claim for recovery of amounts
   paid by the State for power purchases by the DWR.
   Specifically, in its Prayer for Relief in the Sacramento
   Action, the State seeks a "declaration that if the State is
   found liable for an amount to be determined by the Court,
   then this amount should he offset by payments already made by
   DWR for electricity received under the commandeered [block
   forward market] contracts." PG&E points out that the State is
   essentially seeking to pursue litigation claims against
   PG&E's bankruptcy estate in another court rather than
   resolving this matter through the claims adjudication process
   in PG&E's bankruptcy case. Further, the State has failed to
   mention, let alone seek relief from stay to pursue such
   claims against PG&E.

-- Second, the lifting of the stay is not necessary to resolve
   the State's allegation that it is subject to particular
   hardship by being forced to defend itself against
   "approximately 33 separate competing claims" in lawsuits in
   "at least four different fora" and that such hardship would
   be cured by relief from stay. The averred hardship is
   illusory as a petition to coordinate all superior court
   proceedings relating to the block forward energy contracts is
   currently in progress. Thus, the averred basis for the
   State's motion-to bring all parties who may have an interest
   in the litigation regarding these contracts into one forum
   for adjudication is already being resolved. Coordination will
   serve to bring all state court proceedings regarding the
   block forward contracts (including the Sacramento Action)
   under the supervision of a single judge who can ensure that a
   party, such as the State, is not subject to multiple
   judgments or inconsistent rulings.

-- Finally, the State's argument that relief from stay will
   promote the aims of judicial economy and the efficient
   administration of justice and of the estate is belied by the
   facts. Judicial economy will be promoted by the coordination
   proceedings, which the State has opposed, rather than
   allowing the State to bring yet another proceeding in another
   forum, PG&E argues.

   Specifically, PG&E tells the Court that, in July 2001, PG&E,
   the PX Committee, and Reliant each filed inverse condemnation
   actions against the State. PG&E did so in San Francisco
   Superior Court, and the PX Committee and Reliant did so in
   Los Angeles Superior Court. In light of the common issues of
   fact and law the PX Committee filed a Petition for
   Coordination with the Judicial Counsel on July 27, 2001 to
   coordinate all of these inverse condemnation actions (the
   Coordination Petition). Both PG&E and Reliant agreed that
   coordination was warranted. The State actively opposed the
   Coordination Petition.

   On September 10, the State filed the Sacramento Action
   against Edison and all PX participants seeking, inter alia,
   declaratory relief with respect to the seizure of the BFM
   contracts. Neither PG&E nor the PX were named as parties to
   the Sacramento Action.

   At a hearing on September 21, 2001 before Judge Kuhl of the
   Los Angeles Superior Court, the PX Committee indicated that
   it would file an amended petition for coordination that would
   include the Sacramento Action. At the September 21 hearing,
   the State agreed to stipulate to summary dismissal of the
   administrative claims before the Board, and PG&E and the PX
   Committee agreed in principle to formulate (subject to their
   clients' respective approval) appropriate stay relief so that
   all inverse condemnation claims seeking compensation for
   losses arising out of the seizure of the BFM contracts could
   be coordinated and determined in a single forum. PG&E did not
   agree, however, to relief from stay so as to permit the State
   to pursue claims, including counterclaims or setoff claims,
   against PG&E's bankruptcy estate. Likewise, PG&E did not
   agree to consent to stay relief to allow the Sacramento
   Action to proceed in its amended form (i.e., with PG&E as a
   named defendant). Based on the parties' agreement, the Los
   Angeles Superior Court set a briefing schedule which includes
   a further hearing on the amended coordination petition and
   venue issues on October 12, 20O1. As of the date of this
   Opposition, the parties are currently engaged in discussions
   regarding a potential stipulation with respect to
   coordination of all state court inverse condemnation
   proceedings, including the Sacramento Action and the
   appropriate scope of stay relief, and have not reached
   agreement on these issues.

   Furthermore, on September 21, 2001, the State subjected
   itself to the bankruptcy claim adjudication process by filing
   an administrative claim against PG&E's estate regarding the
   same subject matter - electricity purchases by the State
   Department of Water Resources (DWR), PG&E asserts. In
   addition, the State has publicly stated that it intends to
   file additional claims against PG&E's bankruptcy estate. In
   no way does the State promote judicial economy and the
   efficient administration of the estate by bringing a claim in
   the Sacramento Action, which it apparently has also put
   before the Bankruptcy Court and which the Bankruptcy Court
   will presumably determine in the ordinary course of claims
   adjudication in this bankruptcy case.

   The State's commencement of another action against PG&E on an
   overlapping subject matter in state court is clearly no
   conducive to judicial economy and the efficient resolution of
   the PG&E bankruptcy case.

PG&E tells Judge Montali that the State's request for relief
from stay to add PG&E as a defendant in the Sacramento Action,
in lieu of the coordinated proceeding, is simply an improper
attempt to interfere with the state court coordination
proceedings and try to secure for itself a more favorable venue
for litigating PG&E's inverse condemnation claims.

PG&E asks the Court to deny the State's Motion. (Pacific Gas
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)    


PACIFIC GAS: Says Plan Maintains Current Regulatory Authority
-------------------------------------------------------------
The following is being issued by John Nelson, Director of the
News Department of Pacific Gas and Electric Company:

It should probably come as little surprise that consumer
activists, public power advocates, and others have criticized
the company's Plan of Reorganization (POR).  Generally, these
criticisms fall into two broad categories:  1) The objective of
the plan is to get out from under regulation, and 2) the plan is
somehow not in the interest of customers and/or only in the
interest of the company's shareholders.  Both criticisms are
false.  It is helpful to provide some of the facts from the POR
which directly address these arguments.

Any objective analysis must take into consideration the fact
that there are only three ways to raise the funds necessary to
pay off the energy debts and resolve Pacific Gas and Electric
Company's Chapter 11 case:  1) Raise rates or get a state
bailout; 2) Sell off assets to out-of-state generators; or 3)
Reorganize and refinance those assets, but keep them in the
California. Pacific Gas and Electric Company has chosen to
pursue the third option.

              Getting Out From Under Regulation

MYTH:  The plan is an attempt by PG&E to escape regulatory
control.

FACT:  The plan maintains the current regulatory authority for
virtually all aspects of the business.  There is no reduction in
regulatory oversight.

-- The CPUC will continue to regulate Pacific Gas and Electric
Company, including retail electric and natural gas rates.  In
fact, the vast majority of current utility assets will continue
to remain under CPUC regulation.

-- The Federal Energy Regulatory Commission (FERC) already has,
and will continue to have jurisdiction over the licenses for the
hydroelectric assets, and the rates, terms and conditions of
service provided by the electric transmission business.

-- Diablo Canyon Power Plant will continue to be regulated by
the Nuclear Regulatory Commission, and the same highly qualified
team that has made it one of the safest, best-run plants in the
country will continue to do so.

-- The only regulatory change our plan proposes is for FERC to
assume jurisdiction over rates for the power from the company's
generation assets, which were moving toward FERC regulation
already, and over the rates, terms and conditions of service for
the gas transmission system, which in most other states are
already FERC-regulated, and in California is voluntarily under
CPUC regulation.

These few changes are critical to our ability to repay our
creditors without asking the Court for a rate increase or the
State for a bailout, because the investors who will underwrite
our refinancing will require them.

To recap, electric transmission is already FERC-regulated; gas
transmission is FERC-regulated in every other state and is
voluntarily under CPUC regulation in California; and power
generation was declared by the state to become FERC-regulated
after March 2002.

MYTH:  The Plan "violates" state law (ABx 6), which prohibits
the sale of utility assets until 2006, and other regulatory
provisions.

FACT:  Of the three ways to restore California's utilities to
credit worthiness (rate hike/bailout, asset sale,
reorganization/refinancing), ALL would require a collision with
state law.  Every viable solution that has been proposed would
require some provision of state law or regulation to be changed,
or set aside.  For example:

-- Every version of the rate increase and state bailout plan
that had been contemplated in Sacramento for Southern California
Edison required comprehensive legislative action and regulatory
approvals - yet no one claimed they "violate" state law.

-- The settlement agreement between the Public Utilities
Commission (CPUC) and Southern California Edison required the
CPUC to ignore its past interpretation of state law, which it
previously defended all the way to the state Supreme Court.  In
fact, when a similar plan was proposed by California's utilities
last fall, the CPUC said it would violate the law, and could not
be done.  The CPUC has now used the federal court preemption to
overrule its own decisions and state Supreme Court
interpretation of AB 1890.

-- Raising retail electricity rates in order to pay off the debt
would require legislative action and/or regulatory approval.

-- Selling assets to out-of-state generators or other third-
parties would require legislative action and regulatory
approval, or a court preemption of those requirements.

-- PG&E's plan only asks the court to allow a transfer of
ownership notwithstanding any otherwise applicable non-
bankruptcy law [as provided for in Bankruptcy Code Section
(1123(a)(5))], which only directly relates to this ABx 6
provision.

In fact, PG&E's Plan of Reorganization provides a path with one
of the least amounts of conflict with state law and regulation
of any of the possible options.

It is also important to note that this five-year ban on asset
transfers (contained in ABx 6) was hurried into place at the
height of the energy crisis, as the state was grappling with
ways to keep power flowing to customers.  The bill was
introduced and signed into law in less than a week (introduced
on Jan. 11th, signed on Jan 18th), and is widely perceived to
have serious Constitutional flaws.  Even so, it is possible that
transferring assets from within one part of the corporation to
another may not even fall within AB 6X's prohibition.

In any event, the purpose of AB 6X was to keep these assets
committed to California for five years.  Our plan would achieve
that same objective for a period twice as long, and provide a
stable pricing structure at the same time.

Finally, it should be hard for critics to claim this provision
is inviolate, since the State was able to "violate" it simply
through a gubernatorial executive order this past July (D-44-
01), allowing sale of the Kern Power Plant to a third party to
mitigate the effects of California's energy crisis.

Effect on Customers, Shareholders

MYTH:  The plan is not in the interest of customers, and is good
only for shareholders.

FACT:  No one who has a full understanding of the POR can
legitimately make this claim. Under the plan:

-- Customers will not be asked for a rate increase, subsidy, or
surcharge to fund this plan.

-- Customers will not be asked to fund or approve any form of
state bailout; neither will taxpayers.

-- Customers will benefit from a stable, reliable, and
affordable source of power for more than a decade, through the
nickel-a-kilowatt-hour contract between the utility and the new
generation company -- a rate much cheaper than the state is
paying under its contracts, and better than comparable market
prices. Moreover, customers will not have to pay the cost of
unexpected repairs or maintenance needs at these power plants,
like they currently do under the CPUC's current cost-of-service-
based regulatory structure.

-- Customers will continue to receive all of the same reliable
utility customer services they currently receive from Pacific
Gas and Electric Company.

-- Customers -- and all Californians -- benefit because safety
and environmental regulatory oversight will remain exactly as it
is currently, including for the hydroelectric system and Diablo
Canyon nuclear power plant.

-- The plan does not reimburse our shareholders for the $9
billion that they paid to buy power for PG&E customers during
the energy crisis.

-- The utility will keep another $1 billion in tax refund money
that shareholders voluntarily sent to the utility this past
spring to help pay operating costs.

-- Shareholders -- many of them retirees and others on fixed
incomes -- will not be reimbursed for nearly a year of dividend
payments they have lost since last fall.  Neither will they be
able to look forward to resumption of dividend payments at any
time in the near future.

In sum, as a result of this plan, customers will sacrifice
nothing, face no risks, and in fact will be protected from rate
increases.  PG&E shareholders have lost over $10 billion.  They
will be left with assets they already owned, but which will have
a significantly higher debt level than before the crisis began,
in order to pay our customers' energy bills.

MYTH:  The Corporation is "stealing" valuable assets that belong
to, or should be shared with, its customers, not just
shareholders.

FACT:  This line of criticism is based on the false claim that
customers own the utility's power plants, or at least are co-
owners with shareholders. This simply isn't true.  The people
who invested the capital to build these power plants --
shareholders -- are the owners of these assets.  There is no
federal, state or local law, nor any piece of regulation at any
level, which holds otherwise.

Some are confusing ownership with the fact that monopoly utility
assets historically have been pledged to serve the public.  In
return for monopoly market structure and a low but steady return
on their investment, the company and its investors accepted an
obligation to serve all customers and agreed to dedicate these
assets to public service. In no way does this compact confer
upon the public any ownership interest in these assets.

Throughout California's energy crisis, which drove PG&E into
bankruptcy, the company's investors kept up their end of the
bargain.  They did so even though their rate of return was
crushed down to 6.7 percent since 1996, and even though they
were forced to pay $9 billion in customer energy bills in 2000
without being reimbursed, lost nearly a year's worth of
dividends since last fall, and voluntarily gave $1 billion to
the utility to keep it afloat, this past spring.

What cannot be overlooked is the fact that the state put these
generation assets on a path away from monopoly, and toward a
competitive market -- that's one of the principal tenets of
California's deregulation law, which remains on the books and in
force.  However, rather than seeking to move these assets
straight to market (which could be done, under bankruptcy law),
the POR lays out another strategy -- one which combines the best
elements from the previous monopoly structure (stability for
customers, long-term fixed prices), and from the competitive
market model (all risks born by investors, with opportunity to
earn a return), to arrive at a structure that protects consumers
and can restore the company to credit worthiness.

In order to enable PG&E to pay its creditors and exit
bankruptcy, the Plan of Reorganization provides for the transfer
of shareholder-owned assets from one part of PG&E Corporation to
another, so they can be leveraged and the funds used to pay off
the company's debt.

You can't steal what you already own, and shareholders already
own these assets.  Under the plan, the company is using its
assets to pay off its debts, without asking customers for a
dime.

MYTH:  PG&E's parent company is getting the "crown jewels" of
generation and transmission at fire sale prices.

FACT:  The POR does not involve the sale of assets by the
utility to another part of the Corporation; rather, the
transaction is a transfer of ownership from one subsidiary to
another.  Given the fact that there is no sale, any discussion
of a "price" for these assets is meaningless.

Again, the Corporation already owns these assets, it is merely
transferring them from one subsidiary to another, not selling
them.  Then, PG&E Corporation will leverage them with new and
refinanced debt, taking their debt-to-equity ratio to much
higher levels than allowed by the CPUC.  Then, it would be up to
shareholders to assume the risk of being able to pay off that
debt.

The only other solution to get more cash out of these assets is
to sell them to third parties, and that is not a preferred
alternative from the standpoint of Northern California
customers, our employees, environmental stewardship or other
public policy objectives.

MYTH:  The POR is an attempt to raise prices for hydro and
nuclear power far above what it costs to generate the power,
which could ultimately increase retail rates.

FACT:  The company's generation assets are already scheduled to
shift to market-based rates, under AB 1890.  The law holds that
these plants are to be valued no later than December 31, 2001.  
(In fact, they should have been valued over a year ago, but the
CPUC has failed to do so.)  Under state law, the price they earn
for their generation will be based on their market value, once
it is determined.  (AB 6X did not repeal this basic premise of
AB 1890.)

Under the POR, rather than subject customers to pure, market-
based price volatility, all of this generation would be
contracted back to the utility at a low, stable price, averaging
5 cents/kWh, over the life of a 12-year contract.  This is the
same stabilization strategy the state has pursued, in its effort
to stabilize prices going forward.  This nickel-a-kilowatt price
must be put into context:

-- This average rate of 5 cents/kWh is about 20 to 30% below the
average rates under the long-term contracts signed by the
California Department of Water Resources (DWR) in August, after
wholesale power prices had stabilized. (The rates are as much as
50% to 60% below those under the initial contracts DWR signed.)

-- It is more than 40 percent cheaper than the price Qualifying
Facilities currently receive for their power, under contracts
approved by the CPUC just a few months ago.

-- Five cents is the price that TURN proclaimed would be just
and reasonable for power contracts going forward, in a proposal
they made public last fall.  (In fairness to them, they don't
think utilities should get five cents/kwh, but they're fine with
everyone else getting that much.)

-- In the CPUC's January draft guidelines for setting
reasonableness standards for long-term contracts between
utilities and generators, five cents/kwh is the price the CPUC
was going to declare would be just and reasonable.

Some critics claim that these assets should be on a strict "cost
of service" basis.  This is not the panacea that some have
claimed. Cost-of-service regulation resulted in Californians
paying rates that were 50 percent higher than the rest of the
nation's for two decades.  Moreover, under cost-of-service
pricing, any facility/system repairs or major overhauls would be
paid for by customers, and any environmental mitigation ordered
by FERC during hydro relicensing would be borne by ratepayers.

Historically, cost-of-service pricing has proven to be "pass
through" regulation that can cost ratepayers more.  A "stated
price" contract such as that included in the POR, shifts risk to
the generation company without the pricing volatility of the
marketplace for customers.

Conclusion

The energy crisis has been with us now for nearly a year-and-a-
half. California's utilities, businesses, and policy makers have
been engaged in trying to fashion solutions for much of that
time, with some successes, and some failures.

The bottom line is that PG&E's plan works. It protects customers
from volatility and rate increases, it doesn't ask for a state
bailout, and it pays off the company's debts.  It is a positive
step toward returning stability to California's energy
situation.


PANTRY INC: Gas Price Volatility Has S&P Holding Low-B Rating
-------------------------------------------------------------
Standard & Poor's revised its outlook on The Pantry Inc. to
negative from stable.

At the same time, Standard & Poor's affirmed its double-'B'-
minus corporate credit and senior secured bank loan ratings, and
its single-'B' subordinated debt rating on the company.

The outlook revision reflects the company's operating challenges
in the weakening U.S. economy. The Pantry has announced that its
fourth quarter earnings will be well below previous estimates
due to lower gasoline margins resulting from higher wholesale
gasoline costs and a subsequent lag in competitive retail
pricing.

Standard & Poor's believes gasoline price volatility will
continue due to events relating to the September 11 terrorist
acts and the weakening U.S. economy, potentially impacting
credit protection measures further. However, The Pantry
maintains sufficient liquidity and has implemented cost savings
initiatives and reduced acquisition activity. These actions
should help offset some of the potential operating volatility in
future quarters.

The ratings on The Pantry reflect its participation in the
competitive and highly fragmented convenience store industry,
significant exposure to the volatility of gasoline prices,
increasing cigarette costs resulting from tobacco legislation,
and an aggressive acquisition strategy. These risks are
mitigated by a leading position in the industry and improved
operating efficiencies in recent years.

Sanford, N.C.-based The Pantry is a leading convenience store
operator of more than 1,300 stores in the Southeast. The company
competes in the highly fragmented convenience store industry in
which the top five chains account for about 23% of the market.
Significant gasoline price volatility can negatively affect
margins because of decreased demand and the fact that companies
are not always able to pass on cost increases to the customer.

Significant wholesale gasoline price increases in fiscals 2000
and 2001 negatively affected The Pantry's operations. Standard &
Poor's believes gasoline price volatility may continue due to
the aftermath of the September 11 terrorist acts and the
weakening U.S. economy. The company has slowed acquisitions in
2001 and implemented cost-saving measures in response to the
challenging operating environment. In addition, the company's
non-fuel product segments, which represent about 40% of sales,
typically have less volatility and higher margins than gasoline.
However, these margins could be negatively impacted by
increasing cigarette costs because the company may not be able
to fully pass these increases on to customers.

The Pantry's aggressive growth strategy, evidenced by the
acquisition of more than 900 locations since 1997, should resume
as operating conditions improve. Through its growth, The Pantry
has established leading positions in its regional markets, which
provide some operating benefits over smaller competitors.

Because of the weakening U.S. economy, lease-adjusted EBITDA
coverage of interest is expected to decline to the low-2 times
area in 2001 from the mid-2x area in 2000 and 1999. Total debt
to EBITDA is in the mid-4x area. Financial flexibility is
provided by a $45 million revolving credit facility.

                        Outlook: Negative

Standard & Poor's expects The Pantry will continue to face a
challenging operating environment in fiscal 2002 due to the
weakening U.S. economy and the aftermath of the events of
September 11. The ratings could be lowered if credit measures
continue to be negatively affected. However, The Pantry
maintains sufficient liquidity and has implemented cost savings
initiatives and reduced acquisition activity, which should help
offset some potential operating volatility.


PIONEER-STANDARD: S&P Puts Low-B Ratings on CreditWatch Negative
----------------------------------------------------------------
Standard & Poor's placed its ratings on Pioneer-Standard
Electronics Inc. on CreditWatch with negative implications. The
CreditWatch listing reflects Pioneer's recent announcement that
it expects to report a loss of $0.15-to-$0.20 per share on sales
of about $588 million for the quarter ended September 30, 2001.

Although Cleveland, Ohio-based Pioneer has a good position in
the North American region, the company faces significantly
larger competitors in an increasingly global industry. In
addition, spending declines in information technology and
economic weakness will continue to pressure near-term
revenues and operating profitability.

Pioneer has responded to contracting revenues with cost-cutting
actions. In addition, contracting working capital levels have
enabled the company to reduce debt levels by more than $100
million since December 31, 2000.

Standard & Poor's will evaluate the company's competitive
position and prospects for near-term earnings recovery before
resolving the CreditWatch.

Ratings Placed on CreditWatch with Negative Implications

     Pioneer-Standard Electronics Inc.

       Corporate credit rating             BB
       Senior unsecured debt               BB
       Shelf debt prelim sr unscrd/sub     BB/B+

     Pioneer-Standard Financial Trust

       Preferred stock                     B


PLANET HOLLYWOOD: Swings Into Red in Q2 As Revenues Drop
--------------------------------------------------------
Planet Hollywood International, Inc.'s total revenues decreased
from $45.4 million for the second quarter ended June 25, 2000 to
$36.4 million for the thirteen weeks ended July 1, 2001, a
decrease of $9.0 million, or 19.9%.   

The decrease in total revenues was attributable to approximately
$4.5 million of declines related to the closing or licensing of
seven restaurants subsequent to the beginning of second quarter
2000, a decline of approximately $3.4 million related to the
Planet Movies by AMC joint venture dissolution and ceasing of
operations of the Columbus, Ohio location,  and $1.1 million of
declines in other income primarily related to reduced
promotional revenue.

Food and beverage sales and merchandise sales derived from
Company-owned restaurants, as well as theatre, are referred to
as "Sales."  Sales decreased 18.3% from $43.2 million for second
quarter 2000 to $35.3 million for second quarter 2001. The
decrease in Sales was primarily  due to the closing or licensing
of seven restaurants during fiscal 2000 and 2001 and the Planet
Movies by AMC joint venture dissolution.  

Food and beverage sales for all restaurants comprising the
Company's same restaurant base were $27.6 million for second
quarter 2000 compared to $27.3 million for second quarter 2001.  
Domestic same restaurant food and  beverage sales, however,
increased from $19.0 million in second quarter 2000 to $20.2
million in second quarter 2001.  

The increase in domestic restaurant food and beverage sales
resulted  primarily from positive comparable same restaurant
sales for the Company's newly relocated New York restaurant and
the effect of the Company's updated menu which was implemented
in first  and second quarters 2001.  

Merchandise sales for restaurants comprising the Company's same
restaurant base were $7.8 million for second quarter 2000 and
$7.2 million for second quarter 2001.  The decline in same
restaurant merchandise sales was primarily due to declines in
customer traffic and merchandise capture rates.

Total revenues decreased from $88.9 million for the twenty-six
weeks ended June 25, 2000 to $69.6 million for the twenty-six
weeks ended July 1, 2001, a decrease of $19.3 million, or 21.7%.  
The decrease in total revenues was attributable to approximately
$8.3 million of declines related to the closing or licensing of
ten restaurants during fiscal 2000 and 2001, a decline of
approximately $6.1 million related to the Planet Movies by AMC
joint venture  dissolution and ceasing of operations of the
Columbus, Ohio location, $2.1 million of declines in
consolidated same restaurant sales and $2.8 million of declines
in other income primarily related to a $2.0 million fee received
for the licensing of a domestic restaurant and $0.5 million of
declines related to a promotional agreement.

Sales decreased 19.7% from $83.6 million for the twenty-six
weeks ended June 25, 2000 to $67.2 million for the twenty-six  
weeks ended July 1, 2001. The decrease in Sales was primarily
due to the closing of six restaurants in fiscal 2000, the Planet
Movies by AMC joint venture dissolution, the licensing of four
restaurants early in the second quarter 2001 and a decline  in
sales in the restaurants comprising the Company's same
restaurant base.  

Food and beverage sales for all restaurants comprising the
Company's same restaurant base were $52.5 million for the
twenty-six weeks ended June 25, 2000 compared to $50.9 million
for the twenty-six weeks  ended July 1, 2001.  The decline in
same restaurant food and beverage sales was primarily due to
declines in customer traffic in the Company's foreign
restaurants.  

Domestic same restaurant food and beverage sales increased from
$35.4 million in the twenty-six weeks ended June 25, 2000 to
$36.6 million in the twenty-six weeks ended July 1, 2001.  The
increase in domestic restaurant food and beverage sales resulted
primarily from positive comparable same restaurant sales for the
Company's newly relocated New York restaurant and the effect of
the  Company's updated menu which was implemented in first and
second quarters 2001.

Merchandise sales for restaurants comprising the Company's same
restaurant base were $13.9 million for 2000 and $12.6 million
for 2001.  The decline in same restaurant merchandise sales was
primarily due to declines in customer traffic and average
spends.

The Company's net loss for the thirteen weeks ended July 1, 2001
was $12.679 million, as compared with the same thirteen week
period of 2000 when net income was $133,882.  For the twenty-six
week period ended July 1, 2001, Planet Hollywood International
experienced a net loss of $23.303 million, as compared with the
net gain of $120.561 million for the same twenty-six period of
2000.


PRECISION AUTO CARE: Continues to Stay In The Red In FY 2001
------------------------------------------------------------
During fiscal year 2001, Precision Auto Care, Inc. continued
experiencing cash flow difficulties.

In an effort to return the Company to positive cash flow and
profitability, the Board of Directors approved a series of
initiatives by management which called for refinancing bank debt
facilities, the disposition of certain assets and restructuring
of the Company.

That debt refinancing and sale of certain assets had a positive
impact on cash flow and enabled the company to reduce past due
trade payables. The Company will continue to divest itself from
non-strategic businesses and assets.

During fiscal year 2001, the Company made significant reductions
to its payroll costs and cut costs in other areas as well. For
example, one of the Company's manufacturing facilities, a plant
in Cedar Falls, Iowa was closed down and its operations were
consolidated with the Company's manufacturing facility in
Mansfield, Ohio.

The Company intends to sell the facility in Cedar Falls, Iowa to
raise additional operating capital. The Company also replaced
the management of the manufacturing facilities in an effort to
operate the plants more profitably.

In the event that the Company is unable to generate revenues
sufficient to cover operating expenses or raise additional
capital, the Company may be unable to satisfy its liabilities
and therefore would be unable to sustain its operations at the
current level, which could result in the Company, among other
things, further reducing discretionary expenses and liquidating
certain assets.

Revenue for the twelve months ending June 30, 2001 (Fiscal Year
'01) was $23.2 million compared to $33.8 million for fiscal year
2000, a decrease of $10.6 million, or 31%. Franchising revenue,
manufacturing revenue, and Company Center Operations were all
lower than last year by the following amounts, $2.3 million,
$5.3 million, and $3.0 million, respectively.

Franchising revenues were $13.2 million in FY01 compared to
$15.5 million in FY00, a 15% drop from the prior fiscal year.
The decrease in franchise royalties was due primarily to the
reduction in the number of stores in the Company's franchise
system and the fact that there were fewer new stores sold at
FY01 than in FY00. Manufacturing revenues decreased $5.3
million, or 41%, to $7.7 million in FY01 compared to $13.0
million in FY00. The decrease was due in part to a $2.1 million
decline in the Company's car wash and modular building sales,
$5.2 million in FY01 vs. $7.3 million in FY00.

Also contributing to the decline in manufacturing revenue was
the fact that the Company's auto parts and supplies sales were
down $2.0 million, or 77%, from $2.6 million in FY00 to $600,000
in FY01. Manufacturing revenues from Worldwide Drying Systems,
which were $1.8 million in FY00, decreased by $700,000, or 39%,
to $1.1 million in FY01 and is attributed to management's
decision to dispose of this entity.

The Company's Mexican operation also experienced a $300,000
decline in manufacturing revenues from $1.1 million in FY00 to
$800,000 in FY01, a 27% decrease. Company center revenues were
$2.0 million in FY01, a decrease of $3.0 million from the prior
year. This decrease was attributed to management's decision to
sell the remainder of its company stores operated in the United
States during FY01.

The Company recognized an operating loss of $16.7 million in
FY01 which represents an increase in the operating loss of $1.1
million which is a 7.7% increase over the FY00 loss of $15.5
million. This increase is due primarily to the increase in the
impairment charge of $4.6 million and a decrease in the
contribution margin of $1.7 million in addition to a $1.0
million increase in G&A costs. Conversely, there was a $4.7
million decrease in other operating expenses, a $800,000
decrease in bad debt costs and a $500,000 decrease in
depreciation and amortization costs which offset this decline.

The Company recorded a loss of $18.9 million for the twelve
months ending June 30, 2001 compared with a net loss of $18.4
million for the prior year.


PROVINCE HEALTHCARE: S&P Rates $150M Convertible Sub Notes at B-
----------------------------------------------------------------
Standard & Poor's assigned its single-'B'-minus rating to
Province Healthcare Co.'s $150 million convertible subordinated
notes, issued under rule 144A with registration rights and due
2008. At the same time, Standard & Poor's affirmed its single-
'B'-plus corporate credit and single-'B'-minus subordinated debt
ratings.

The outlook is stable.

The speculative-grade corporate credit rating on Brentwood,
Tennessee-based Province Healthcare reflects the company's
strong market position in small, non-urban markets, offset by
its relatively small revenue base and only modestly diversified
hospital portfolio.

Province Healthcare owns or leases 15 acute care hospitals with
more than 1,600 licensed beds in 10 states. The company has been
built through a string of hospital acquisitions, beginning in
1996. Province focuses on small, nonurban markets with a minimum
population of 20,000, where the company can establish a leading
competitive position.

Province's hospitals are typically either the sole, or primary,
hospital providers in their service areas. Management's program
to improve the financial performance of acquired hospitals
includes expanding the scope of services, improving hospital
operations, and recruiting new physicians. Province's strong
same-store admission trends are indicative of the success of
these business strategies.

Still, Province's limited size and potential for operating
vulnerability remain overriding credit concerns. The company's
acquisition pace has recently accelerated, and plans to maintain
a pace of acquiring two to four hospitals annually. While the
integration of acquired facilities appears to have gone well so
far, the effective control and expansion of its growing
operations will be an ongoing challenge.

Furthermore, the company has significant revenue concentration
in a small number of facilities and is highly dependent on
governmental payors, with more than 70% of revenues derived from
government payors. The company remains vulnerable to the
expected moderation of the currently strong managed-care pricing
environment, and to the future uncertainties of government
payments to hospitals in a weakened economy.

                         Outlook: Stable

The rating incorporates the expectation of a modest debt-
financed acquisition program, and subsequent increase in
leverage.


RYERSON TULL: S&P Drops Senior Unsecured Debt to B+ from BB-
------------------------------------------------------------
Standard & Poor's lowered its senior unsecured debt rating on
Ryerson Tull Inc. to single-'B'-plus from double-'B'-minus and
removed the issue from CreditWatch.

All other ratings on the company are affirmed. The outlook is
negative.

The downgrade of the senior unsecured notes reflects the
structural subordination of the notes and the company's
inability to obtain the necessary upstream guarantees to
mitigate the junior position of the notes in its capital
structure, given that the notes were issued at the
parent/holding company level, and the assets are essentially
located at the operating subsidiaries.

The ratings on Ryerson continue to reflect its leading business
position in the metals processing and distribution market and
its moderate financial policy. Ryerson is the leading metals
processing and distribution company in North America, with about
11% market share and about $2.8 billion in revenue. The top five
players control about 30% of this fragmented market.

Ryerson's leading market position, national distribution
network, and order entry systems should provide additional
opportunities for market share growth and customer concentration
over the longer term. Ryerson's operations are extremely working
capital-intensive, resulting in a high degree of profitability
and cash flow volatility. Although the company serves highly
cyclical end-use markets, it benefits from a high variable cost
structure in comparison with both primary metals producers and
end-users of processed metals.

Ryerson's financial performance for the quarter ended June 30,
2001, continued to deteriorate precipitously due to poor demand
from its key manufacturing sectors, which are highly cyclical.
Indeed, for the quarter ended June 30, 2001, the company's
EBITDA declined to $8.5 million from $22 million for the quarter
ended June 30, 2000, while EBITDA to interest coverage declined
to 1.0 times from 3.2x.

Beginning in early 2000, Ryerson built up inventory levels in
anticipation of increased customer demand. After that period,
the metals sector experienced a dramatic increase in imports
that reduced average selling prices for many steel product lines
and pressured margins. Although the company has realized
approximately $45 million in cost reductions from management
initiatives, the benefits were more than offset by the
sequential decline in volumes and selling prices caused by
weakened demand.

Ryerson used $142 million of approximately $200 million in
proceeds from an accounts receivable securitization to redeem
bonds maturing on July 16, 2001. Although the company enhanced
its debt maturity schedule, financial flexibility has somewhat
diminished, as the company's most liquid assets are now
encumbered. Since September 30, 2000, the company has
significantly cut back capital spending, reduced inventories by
$250 million, and reduced debt by $100 million.

By year-end 2001, operating cash flow (after changes in working
capital) as a percentage of total debt (adjusted for the
accounts receivable securitization), should approach 20%, versus
12% for the 12 months ended June 30, 2001. The operating cash
flow to debt ratio is expected to benefit from some additional
modest improvement in working capital management.

Nevertheless, weak market conditions are expected to persist
into 2002. As a result, financial performance is expected to
remain weak for the near term.

                      Outlook: Negative

The ratings could be lowered if demand remains at current poor
levels for a prolonged period and if volumes and selling prices
do not begin to recover in the near to intermediate term.

           Rating Lowered and Removed from CreditWatch

                                        Rating
     Ryerson Tull Inc.              To          From

        Senior unsecured debt       B+          BB-

                     Ratings Affirmed

     Ryerson Tull Inc.                        Ratings

        Corporate credit rating                 BB
        Senior secured bank loan rating         BBB-


STEEL HEDDLE: US Trustee Appoints Unsecured Creditors' Committee
----------------------------------------------------------------
United States Trustee Patricia A. Staiano of Region 3 appoints
five entities to the Official Committee of the Unsecured
Creditors for Steel Heddle Group, Inc.'s chapter 11 cases:

     Bank of New York
     Attn: Romano I. Peluso
     101 Barclay Street, 21W
     New York, New York
     Tel: 212-815-3251
     Fax: 212-815-5915

     Southwire Company
     Attn: E. Chandler Barrett, Esq.
     One Southwire Drive
     Carrollton, Georgia 30119
     Tel: 770-832-5704
     Fax: 770-832-5374

     Global Wire, Inc.
     Attn: Thomas Ragion
     77 Anthony Street
     Jewett City, Connecticut 06351
     Tel: 860-376-2516
     Fax: 860-376-3042

     Sun America Investments, Inc.
     c/o Ashby & Geddes
     222 Delaware Avenue
     Wilmington, Delaware 19801
     Tel: 302-654-1888
     Fax: 302-654-2067

     OCM Principal Opportunities Fund, LP
     c/o Ashby & Geddes
     222 Delaware Avenue
     Wilmington, Delaware 19801
     Tel: 302-654-1888
     Fax: 302-654-2067

George M. Conway, III, Esq., is the trial attorney assigned to
Steel Heddle Group's bankruptcy cases.

Steel Heddle Group, Inc., a pioneer and innovator in weaving
machine accessories for 103 years, filed for Chapter 11
protection on August 28, 2001 in the Delaware Bankruptcy Court.  
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young &
Jones, represents the Debtors in their restructuring effort.  
Subject to further extensions, the Debtors exclusive period
during which to file a plan expires on December 26, 2001.  

As of July, Steel Heddle Group and its bankrupt affiliates
reported $64,300,000 in assets and $176,000,000 in debt.


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

The Debtors tell the Court that, since the previous exclusivity
hearing, they have made further progress in resolving claims and
other uncertainties that have delayed those negotiations. The
Debtors believe that they are making significant progress in
resolving issues among its creditor groups and that a consensual
plan of reorganization is likely. Additional time is needed to
complete the process towards rehabilitation and development of a
consensual plan of reorganization.

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

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


TALON AUTOMOTIVE: Expects Lower Net Sales Post-Bankruptcy
---------------------------------------------------------
Net sales of Talon Automotive Group, Inc., for the second
quarter period ended June 30, 2001 were $73.4 million compared
to $82.6 million for the three month period ended July 1, 2000.
This represents a decrease of $9.2 million, or 11.2%, as
compared to the prior year. The decrease was primarily due to
lower Chrysler LH/LHS/300M volumes and DaimlerChrysler's
phasing-out of various parts supplied by the Company.

For the six-month period ended June 30, 2001, net sales were
$136.6 million compared to $168.3 million for the same period in
the prior year. This represents a decrease of $31.7 million, or
18.9%, compared to the same period in 2000. This decrease was
primarily due to lower DaimlerChrysler LH/LHS/300M volumes, a
decrease in production by the OEM's to decrease the inventory
held by their dealers, resulting in lower sales to the OEM's,
and DaimlerChrysler's phasing-out of various parts supplied by
the Company.

Management does not believe the Company will lose any of its
current contracts or forecasted business as a result of the
Company's bankruptcy proceedings. However, management does
believe, based on current and forecasted economic conditions and
the anticipated reluctance of major customers to award new
business to the Company in view of the Company's bankruptcy
proceedings, that net sales for the current year will be
significantly less than net sales in 2000.

For the three month period ended June 30, 2001, the Company's
net loss was $4.443 million, as compared to the net loss of
$2.754 million for the similar period of 2000.  


TELECORP/TRITEL: Fitch Changes Debt Ratings Outlook to Positive
---------------------------------------------------------------
Fitch placed TeleCorp Wireless and Tritel PCS debt ratings on
Rating Watch Positive following the announcement of the proposed
acquisition of TeleCorp PCS, Inc. by AT&T Wireless Services, Inc
(AWS).

TeleCorp PCS, Inc. is a holding company for the TeleCorp
Wireless and Tritel PCS (Tritel) subsidiaries.

Debt affected by this announcement includes TeleCorp Wireless'
'B+' rating assigned to its $560 million senior secured credit
facility and the 'B-` rating assigned to its $575 million
11-5/8% senior subordinated discount notes due April 15, 2009
and $450 million 10 5/8% senior subordinated notes due 2011.

Additionally, the debt affected at Tritel includes the `B+'
rating assigned to its $560 million senior credit facility and
its 'B-' rating assigned to its $372 million 12 3/4% senior
subordinated discount notes due 2009 and $450 million 10 3/8%
senior subordinated notes due 2011.

The transaction value is approximately $4.7 billion including
debt assumption and is expected to close by second quarter of
2002. Fitch has affirmed its `BBB' senior unsecured rating of
AWS.

This acquisition significantly enhances AWS' overall national
footprint due to the addition of 16 top 100 markets. Operational
synergies would include EBITDA margin enhancements by bringing
roaming traffic on-network, volume equipment procurements for
handsets and network, an expanded use of AWS' Digital One Rate
pricing plan and national advertising campaigns.

The acquisition would also accelerate TeleCorp PCS, Inc.
GSM/GPRS deployment in several major markets that are adjacent
to those where AWS plans to deploy its new GSM/GPRS network.
TeleCorp Wireless' GSM/GPRS rollout had been scheduled to begin
in late 2002 while Tritel's rollout was to begin in 2003.

Fitch's existing ratings of TeleCorp Wireless and Tritel reflect
the belief that both companies will reach EBITDA breakeven,
absent the impact of a more severe economic downturn,  in the
third quarter of 2002, continue to successfully execute
management's revised operating strategies and benefit from their
spectrum position and affiliate agreements with AWS.

AWS has significant financial flexibility within its current
rating category. The company has produced very strong credit
protection measures for its current rating and has a large cash
balance resulting from its spin-off from AT&T. The transaction
as envisioned will significantly reduce AWS' current financial
flexibility.

This evaluation includes the prospect that the company will
complete the Nextwave spectrum purchase through its Alaskan
Native Wireless partnership for $2.3 billion, which is net of
its previous $300 million payment. It is also expected that AWS
will need to fund a cash shortfall in 2002 due to high capital
expenditures reflecting its 3G evolution path and its fixed
wireless business. Nevertheless, leverage should remain
consistent with the current rating category.

It is expected that AWS will continue to produce strong EBITDA
growth for the next several years that will allow for a
strengthening of credit protection measures. AWS has a variety
of other financing alternatives if additional funding is
necessary, such as monetizations of its tower portfolio,
international interests and other assets. The company also has
an unused $2.5 billion commercial paper program.


THERMADYNE: S&P Drops Rating to D After Default On Facility
-----------------------------------------------------------
Standard & Poor's lowered its bank loan rating on Thermadyne
MGF. LLC to 'D' from double-'C' and removed the rating from
CreditWatch where it was placed May 15, 2001.

About $350 million of bank debt is affected.

The rating actions follow the company's announcement that it
elected not to pay its principal payment on September 30, 2001,
associated with its bank credit facility. The company is
currently in a forbearance period with its lending
group, which expires Oct. 31, 2001.

The parent company, Thermadyne Holdings Corp., had previously
failed to make its May 1, 2001, interest payment on its 10.75%
subordinated notes due 2003.

St. Louis, Mo.-Thermadyne occupies solid market positions in the
manufacture of a wide variety of cutting and welding equipment
and supplies. Markets are mature, cyclical, and subject to
intense pricing pressures.

The company continues to experience weak domestic market
conditions as a result of the soft industrial economy. In
addition, Thermadyne continues to be impacted by soft
international markets and unfavorable foreign currency exchange
rates.


TOWER RECORDS: Bank Group Amends Bank Loan Agreement
----------------------------------------------------
MTS, Incorporated, dba Tower Records, the world's largest
independent entertainment software retailer, announced the
completion of an amendment to its bank loan agreement with its
consortium of 11 banks led by JP Morgan Chase.

The original loan agreement, with accelerated pay down schedule
has been significantly amended to provide Tower Records greater
credit availability. Prior to the amendment, credit available
under the facility was $195 million from October 1 through
December 31, and $100 million thereafter.

Following the amendment, Tower's credit facility will be $205
million through December 31 and $195 million through April 2002.

Michael Solomon, President and CEO for Tower Records said, "We
are delighted with our new bank deal, which provides our company
with good financial flexibility to maintain operations. We will
continue to implement the solid business plan we put into
effect, in order to meet industry and economic challenges. As a
music retailer with 40 years in the business, we are committed
to our business partners, our customers, and to ensuring that
Tower Records thrives."

Since 1960 Tower Records has been recognized and respected
throughout the world for its unique brand of retailing. Founded
in Sacramento CA, by current Chairman Russ Solomon, the
company's growth over 4 decades has made Tower Records a
household name.

Tower Records owns and operates 173 stores worldwide with 57
franchise operations in 5 countries. The company opened one of
the first Internet music stores on America Online in June 1995
and followed a year later with the launch of TowerRecords.com.  
The site was named "Best Music Commerce site" by Forrester
Research in Fall 2000.

The recent founding of Tower Records own exclusive and
independent record label 33rd Street has enabled the retailer to
release popular and niche hit driven music, while placing great
emphasis on both marketing and artist development.

Tower Records' commitment to introducing its customers to the
latest trends in new product lines is paramount to the
organization's retail philosophy. Tower forges ahead with the
development of exciting shopping environments, espousing diverse
product ranges, artist performance stages, personal electronics
departments, and digital centers.  Tower Records maintains its
commitment to providing the deepest selection of packaged
entertainment in the world merchandised in stores that celebrate
the unique interests and needs of the local community.


USG CORP: U.S. Trustee Balks at Arthur Andersen Engagement Terms
----------------------------------------------------------------
Patricia A Staiano, the United States Trustee for Region III,
interposes an objection to USG Corporation's Application to
Employ Arthur Andersen as Auditors and as Tax, Accounting and
Compenstion Advisors.  The U.S. Trustee complains that:

      - The proposed terms of the engagement contain
indemnification and limitation of liability provisions that are
inconsistent with prior decisions of this Court, see In re
United Cos. Fin. Corp.,241 B.R. 521 (Bankr.D.Del 1999) and In re
Dailey International, Inc. No. 99-1233 PJW (Bankr.D.Del. July 1,
1999) and/or are otherwise inconsistent wiht the debtors'
fiduciary duties and with notions of bankruptcy professionalism.

      - The terms of engagement are incompletley and
inadequately described inasmuch as only one engagement letter is
attached to the Application and that leter refers to only a
subset of the proposed duties. The affidavit of Mr. Kohn refers
at 8 to other engagement letters, but they have not been
disclosed.

      - The Application indicates that certain aspects of AA's
work are to be compensated on a fixed fee basis. The UST does
not object to the concept of flat or project billing per se, but
the terms must be disclosed. However, the Application does not
clearly disclose which services will be billed on a fixed fee or
project basis and does not close the proposed fees.

      - The UST objects to any provisions of the engagement
letters that purport to divest the Court of primary jurisdiction
over the engagement and the compensation to be paid to AA
thereunder.

The UST says that she reserves the right to conduct discovery
regarding the Application and reserves the right to amend the
Objection to assert such other grounds as may become apparent
upon factual discovery.

The UST asks the Court enter an order denying the Application,
or conditioning approval of the Application upon modifications
consistent with these requests. (USG Bankruptcy News, Issue No.
9; Bankruptcy Creditors' Service, Inc., 609/392-0900)


VERDANT BRANDS: Completes Sale of Consep Assets to Repay Debts
--------------------------------------------------------------
The business and assets of Consep, Inc., the sole remaining
operating unit of Verdant Brands, Inc., were sold for the
benefit of Consep's creditors in an auction that was completed
in July 2001.

In early 2001, all of Consep's assets were assigned to a trustee
that had been retained by Verdant Brands' senior secured lender
to oversee the operations of Consep pending a sale of its
business.

The proceeds from the sale of the Consep assets were applied by
the trustee to the repayment of the outstanding balance owing to
Consep's senior secured creditor. A small amount of excess sales
proceeds has been retained by the trustee to cover expenses of
sale, and any remaining amount will be paid to unsecured
creditors of Consep, although the amount of any such payments
will not be material.

With the sale of Consep, Verdant Brands has no continuing
business operations and the Board of Directors has determined to
complete the winding up of the Company's affairs and to
discontinue all operations.

The proceeds received by Verdant Brands from the sale of its
operating businesses over the past 9 months have been applied to
the payment of secured indebtedness, expenses of sale and
operating expenses.

No cash or other assets will be available for distribution to
unsecured creditors or shareholders of Verdant Brands or its
affiliated corporations on the termination of business.


VIASOURCE COMMS: Trading Halted After News of Cash Tender Offer
---------------------------------------------------------------
Viasource Communications, Inc. (Nasdaq: VVVV), a leading
nationwide broadband technology deployment organization,
received notification that trading in Viasource common stock was
halted following a press release purporting to announce a cash
tender offer for all the outstanding shares of common stock
of Viasource.  

The Company identified in the press release as the offeror,
Extreme Networks, Inc., has denied making any such offer.  An
unknown person apparently circulated the press release
fraudulently.

Viasource (http://www.viasource.net)is a leading independent  
enabler of advanced broadband and other wired and wireless
communications technologies to residential and commercial
customers in the United States.  The Company provides outsourced
installation, fulfillment, maintenance and support services to
leading cable operators, direct broadcast satellite operators
and other broadband Internet access providers, including DSL and
fixed wireless companies.

The Company also provides network integration and installation
services to a variety of other companies.  The Company's
services are focused on the "last mile," defined as the segment
of communications that connects the residence or commercial
customer.  The Company is the only provider of these services
with a nationwide footprint, currently employing over 2,500
employees around the United States.


VLASIC FOODS: Union Pushes For Creation of Retiree Committee
------------------------------------------------------------
Motivated by Vlasic Foods International, Inc.'s motion to
terminate certain retiree medical benefit plans, the United Farm
Workers, Inc., moves for the appointment of an official
committee of retirees.

United Farm Workers is the collective bargaining representative
for certain former employees of the Debtors, and all United Farm
Workers retirees, according to Henry A. Heiman, Esq., at Heiman,
Aber, Goldlust, & Baker, in Wilmington, Delaware.

Mr. Heiman reminds Judge Walrath that the United Farm Workers
filed an objection to the termination motion, which is set for a
hearing this October 11, 2001.  Meanwhile, Mr. Heiman reports,
the Debtors have already unilaterally terminated certain drug
prescription benefits associated with the Union Employee Plan.

The termination motion affects 3 retiree classes -- Union
Employees, Non-Union Hourly Employees and Salaried Employees --
and the United Farm Workers unquestionably represents only a
fraction of all these affected individuals, Mr. Heiman tells the
Court.  In addition to different classifications, Mr. Heiman
notes, the affected retirees are geographically diverse, with
job sites in California, Southeastern Pennsylvania and Indiana.  
Most of the affected individuals lack sophistication and lack
command of the English language, Mr. Heiman says.  None of them
can even afford the financial burden to individually contest the
termination motion, Mr. Heiman adds.

In short, Mr. Heiman states, the affected individuals are
largely a group of low-income retirees, for whom the benefits of
the health plans comprise an important part of their ability to
survive in old age.  Although they are diverse in the manner of
their relationships to the Debtors and their geographical
placement, Mr. Heiman avers, they have uniform interests through
the shared characteristics of each subject health plan, and in
their general lack of resources or sophistication in legal
matters.  They comprise a class of creditors and parties-in-
interest that can be exploited all too easily by the Debtors or
other creditor interests in the absence of joint representation,
Mr. Heiman asserts.

Thus, under the present circumstances, Mr. Heiman contends that
the appointment of a Retiree Committee is necessary.  By
providing for appointment of such committees, Mr. Heiman says,
the Court will prevent the Debtors from steamrolling the
affected individuals with the termination motion.

Although the United Farm Workers is eager to serve as a member
of any Retiree Committee that may be appointed, Mr. Heiman
explains, the United Farm Workers cannot serve as the exclusive
representative of all affected individuals.  Also, Mr. Heiman
adds, the United Farm Workers expects that the Workers Committee
of Campbell Fresh, which also represents some union employees,
would likewise decline serving as exclusive representative for
all affected individuals.

If the Court won't appoint a Retiree Committee, Mr. Heiman
notes, all affected retirees may not be able to fully
participate in these proceedings.  Mr. Heiman observes that it
is still not known whether there are other retiree benefit plans
that the Debtors intend to maintain, modify or terminate.  On
the other hand, Mr. Heiman says, appointment of a Retiree
Committee would facilitate full disclosure and review on these
points, and equitable treatment of all retiree groups.

Mr. Heiman explains that the appointment of a Retiree Committee
works much like a class action to provide dis-empowered and
isolated individual claimants with meaningful due process, and
to promote efficient judicial administration of similar claims.
Such protections are particularly necessary in this case, Mr.
Heiman adds, where the Debtors have not been entirely
forthright.

The disputes concerning the "change-in-control" provisions of
the subject health plans also mandate the appointment of a
Retiree Committee, Mr. Heiman further argues.  In addition, Mr.
Heiman says, there are other legal and factual questions
regarding the Debtors' termination motion that require
consideration through a Retiree Committee.

For these reasons, the United Farm Workers and its member
retirees ask the Court for an order:

    (i) authorizing appointment of a Retiree Committee comprised
        of appropriate representatives, including the UFW as a
        representative of UFW retirees, in connection with all
        benefit and health plans maintained by the Debtors for
        the benefit of the retirees; and

   (ii) staying any action by the Debtors to modify or terminate
        any Vlasic retiree plan until such Retiree Committee has
        had an appropriate opportunity to review all Vlasic
        retiree plans and circumstances in connection therewith
        and to file any appropriate responses. (Vlasic Foods
        Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
        Service, Inc., 609/392-0900)


WARNACO GROUP: Wants to Vacate Fruit Of The Loom Agreement
----------------------------------------------------------
The Warnaco Group, Inc. and Fruit of the Loom, Inc., are parties
to a License Agreement dated August 1991, according to Shalom L.
Kohn, Esq., at Sidley Austin Brown & Wood, in New York, New
York.  Pursuant to the License Agreement, Mr. Kohn explains,
Fruit of the Loom granted the Debtors the right to manufacture,
distribute and sell certain licensed articles bearing Fruit of
the Loom's trademarks. This License Agreement will expire at the
end of the year, Mr. Kohn notes.

But last April, Mr. Kohn informs the Court, Fruit of the Loom
notified the Debtors that it intends to terminate the License
Agreement because the Debtors allegedly failed to cure certain
defaults.  The Debtors strongly denied Fruit of the Loom's
allegations and challenged Fruit of the Loom's right to
terminate the License Agreement in proceedings before Judge
Walsh in the U.S. Bankruptcy Court for the District of Delaware
in FTL's chapter 11 cases.  

After extensive negotiations, the dispute was later resolved
when Fruit of the Loom and the Debtors entered into an
settlement pact.  According to Mr. Kohn, this Settlement
Agreement provides that the Debtors make certain payments to
Fruit of the Loom.  The Agreement also permits the Debtors to
sell inventory, bearing Fruit of the Loom's tradenames in its
possession through and including October 31, 2001 in the United
States, and through and including December 31, 2001 in Canada
and Mexico, Mr. Kohn adds.

As of October 4, Mr. Kohn relates, the Debtors has disposed of
all or substantially all of the inventory bearing Fruit of the
Loom's tradenames in its possession.  Furthermore, Mr. Kohn
adds, the Debtors have made all payments required under the
Agreement with the exception of a payment in the amount of
$1,212,500 due last October 1, 2001.  Mr. Kohn asserts no future
performance of any obligation is required of Fruit of the Loom
under the Agreement.

Mr. Kohn contends that the Debtors' termination of performance
under, and the immediate rejection of, the Agreement is
beneficial to the estates because the Debtors will no longer
make the October 1, 2001 payment to Fruit of the Loom.  Thus,
the Debtors seek the Court's authority to reject the Agreement.
(Warnaco Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  


WHEELING-PITTSBURGH: Wrestles to Recover $3.1MM From Eichleay
-------------------------------------------------------------
Prior to the Petition Date, Eichleay Corporation agreed to
provide Wheeling-Pittsburgh Steel Corp. with goods and services
in connection with various projects at WPSC's Mingo Junction,
Ohio, plant.  These projects included (i) replacing a 300-ton
vessel which holds scrap and molten iron over which oxygen is
blown to drive off carbon and make steel from iron; (ii) a hot
strip mill quick work roll change project; (iii) a crane girder
project; and (iv) a ladle turret bearing project, and (v) other
similar projects.

In connection with these projects, Michael E. Wiles, Esq., and
Richard F. Hahn, Esq., at Debevoise & Plimpton, explain, WPSC
paid Eichleay a total of $3,104,847.24 in a series of payments
from August 21, 2000, to November 13, 2000.

In connection with these projects, in October 2000, Citibank NA
issued: (a) its Irrevocable Letter of Credit to WPSC in the
amount of $1,113,100, and (b) its Irrevocable Letter of Credit
to WPSC in the amount of $610,000.  In connection with the
Projects, again in October 2000, Citibank NA issued its
Irrevocable Letter of Credit to WPSC in the amount of $928,250.  
Eichleay is the beneficiary of these letters of credit. WPSC
previously pledged certain of its property to Citibank NA as
collateral to secure all indebtedness owed to Citibank,
including the letters of credit.

            The Payments Are Preferential Transfers

WPSC tells Judge Bodoh that all of the transfers to Eichleay
were made within 90 days of the Petition Date, for the benefit
Eichleay as a creditor of WPSC, and was made because of an
antecedent debt owed by WPSC to Eichleay.  WPSC says that each
of the transfers was made while it was insolvent, and that the
transfers each enabled Eichleay to receive more than it would
receive if the case had been brought as a liquidation
proceeding, none of the transfers had been made, and Eichleay
received a distribution from the liquidation estate.  

For these reasons, WPSC says it should be able to avoid and
recover each of these transfers. Further, because Eichleay has
refused to return these monies to WPSC, Eichleay's claim against
WPSC in the approximate amount of $1,803,381.52 should be
disallowed.

             The Letters of Credit Were Preferential

As to the letters of credit, WPSC makes the same allegations
regarding the date and effect of issuance of the secured letters
of credit, and likewise claims a right to recover the value of
these letters as Eichleay made various draws under the letters
of credit which, in the aggregate, totaled the full amount of
the letters.  Since WPSC claims Citibank was "oversecured",
these draws "resulted in a diminution in the assets of WPSC's
estate."  

Further, because Eichleay has refused to return these monies to
WPSC, Eichleay's claim against WPSC in the approximate amount of
$1,803,381.52 should be disallowed on this ground as an
alternative.

               Eichleay Liable As Initial Transferee

As a third basis for recovery, WPSC claims that Eichleay was the
initial transferee of each of the payments and draws, or the
person for whose benefit the transfers and draws were made.  
WPSC's transfer of its property to Citibank NA as collateral to
secure each of the letters of credit was to or for the actual
benefit of Eichleay.  Consequently, WPSC says it is entitled to
recover from Eichleay: (a) an amount equal to the aggregate
amount of all of these transfers and draws for the benefit of
WPSC's estate, and (b) an amount equal to the aggregate amount
of the proceeds of the letters of credit for the benefit of
WPSC's estate.

            WPSC Can Avoid Eichleay's Mechanics' Liens

The Debtor's fourth ground for recovery is more elaborate and
aimed at Eichleay's asserted mechanic's lien.  On March 26,
1999, WPSC says that Eichleay contractually agreed with WPSC
that Eichleay waived its right to file liens against the real
property of WPSC in connection with its work on the projects. In
September and October 2000, WPSC modified its agreements with
Eichleay and allowed it to have and file mechanics' liens
against WPSC's property to secure amounts owing to Eichleay by
WPSC in connection with Eichleay's work on the projects. On
January 10, 2001, Eichleay filed three separate mechanics' liens
against property of WPSC in connection with Eichleay's work on
the projects.   The aggregate amount of the Mechanics' Liens as
claimed by Eichleay is $1,831,150.00.

WPSC says its agreement to allow Eichleay to have a mechanics'
lien to secure amounts owing to Eichleay WPSC in connection with
Eichleay's work on the projects was made within ninety days of
the Petition Date. WPSC's agreement to allow Eichleay to have a
mechanics' lien to secure amounts owing to Eichleay by WPSC in
connection with Defendant's work on the Projects is said by the
Debtor to have constituted a transfer of WPSC's property to
Eichleay.  Consequently, WPSC's agreement to allow Eichleay to
have a mechanics' lien to secure amounts owing to Defendant by
WPSC in connection with Eichleay's work on the projects
constitutes, WPSC says, an avoidable preferential transfer to
Eichleay under the Bankruptcy Code and therefore, WPSC may avoid
the mechanics' liens.

                    WPSC Overpaid Eichleay

WPSC also alleges as a ground for recovery that it overpaid
Eichleay. Prior to the Petition Date, WPSC overpaid Eichleay in
the amount of at least $484,000.00 in connection with the
projects for work that was never fully performed by Eichleay.  
WPSC says the overpayment constitutes property of WPSC's estate
which WPSC says is being wrongfully withheld by Eichleay.  The
overpayment constitutes a matured debt pursuant to 11 U.S.C.  
542(b), and Eichleay, says WPSC, has failed to turn over all
amounts owing to WPSC with respect to the overpayment.
Therefore, the Debtor says Eichleay is obligated to turn over to
WPSC all amounts owing to WPSC with respect to the overpayment.

WPSC repeats that Eichleay never earned the Overpayment, and
won't return the money. As a result, WPSC says it has suffered
damages in the amount of at least $484,000.00, plus costs and
expenses, including, without limitation, reasonable attorneys'
fees.

                       Relief Requested

WPSC requests that Judge Bodoh enter a money judgment in WPSC's
favor and against Eichleay:

       (a) for a judicial determination avoiding the payments in
the aggregate amount of $3,104,847.24, with interest to the full
extent permitted by law;

       (b) for a judicial determination avoiding the proceeds of
the Letters of Credit in the aggregate amount of $2,651,350,
with interest to the full extent permitted by law;

       (c) granting judgment in WPSC's favor and against
Eichleay in the amount of $5,756,197.24, with interest to the
full extent permitted by law;

       (d) for a judicial determination avoiding: (1) the
agreement to allow Eichleay to have a mechanics' lien to secure
amounts owing to Eichleay by WPSC in connection with Eichleay's
work on the projects and (2) the mechanics' liens;

       (e) ordering Eichleay to immediately pay, in cash, an
amount equal to the aggregate amount of the transfers received
by it;

       (f) ordering Eichleay to immediately pay, in cash, an
amount equal to the aggregate amount of the proceeds of the
Letters of Credit;

       (g) disallowing the claim of Eichleay to the extent that:
(i) the transfers of WPSC's property to Defendant are found to
be preferential and (ii) Eichleay fails or refuses to turn over
such property to WPSC;

       (h) ordering Eichleay to immediately turn over to WPSC
the amount of the overpayment in the total amount of at least
$484,000, with interest to the full extent permitted by law;

       (i) granting judgment in favor of WPSC and against
Eichleay in the amount of the overpayment, with interest to the
full extent permitted by law;

       (j) awarding WPSC, to the fullest extent permitted by
law, all costs (including attorneys' fees) incurred in the
commencement and prosecution of this adversary proceeding.

                      Eichleay Responds

Represented by each of Leonard F. Spagnolo, David E. White, and
Brian A. Lawton of the Pittsburgh firm of Thorp Reed & Armstrong
LLP, Eichleay admits receipt of the payments and draws under the
letters of credit.  However, Eichleay tells Judge Bodoh that the
October letters of credit do not comprise the "totality of the
evidence regarding the October letters of credit transactions".  
Further, Eichleay notes in an aside that after the last of the
October letters of credit was issued, the parties voluntarily
reduced the face amount of that letter of credit from $928,250
to $273,250, or a reduction by $655,000.

Eichleay denies that the aggregate of its draws under the
letters of credit totaled the full face amounts of the letters
of credit.

While Eichleay generally denies the legal conclusions stated by
the Debtors as their grounds for recovery, it states that the
Debtors' complaint "fails to state a claim upon which relief can
be granted", in that each basis for recovery fails to state all
of the elements of a prima facie case.   Further, Eichleay says
that principles of estoppel bar any recovery from it, and that
an accord and satisfaction and/or novation also bar recovery.

Further, Eichleay says that principles of recoupment and/or
setoff preclude the Debtor from any recovery - and brings a
third-party action against Citibank and Citicorp USA, Inc.  In
conclusion, Eichleay asks that Judge Bodoh award it judgment
against WPSC for its attorneys' fees and costs. (Wheeling-
Pittsburgh Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  


WINSTAR COMMS: Secures Court Approval of Aon Service Sublease
-------------------------------------------------------------
Winstar Communications, Inc. sought and obtained an order
approving a Sublease Agreement and Guaranty between Winstar and
Winstar Wireless and authorizing the assumption and assignment
of a certain nonresidential property lease by Aon Service
Corporation.

Timothy Graham, Executive Vice President & General Counsel of
Winstar Communications, relates that because of significant
reductions in the Debtors' workforce since the filing of these
cases, the majority of the leased premises is unoccupied. He
says that the Debtors have been negotiating with the Landlord to
reduce the amount of space subject to the Lease and with the  
Bank of New York about a possible assignment or sublease of the
Premises. However, he says, both efforts have not resulted into
any binding agreement.

Following the tragic collapse of the WTC, the Debtors have
received offers form several parties to lease the unoccupied
office space, among them Aon Service Corporation, an industry
leader in risk management and human capital consulting services.
Aon was a tenant of the World Trade Center in New York City.
After the destruction of the twin towers last September 11, Aon
has been urgently seeking office space to relocate its New York
offices and its 1100 displaced employees to minimize disruption
to its business.

Winstar's World Headquarters, consists of 10 floors and
approximately 257,000 square feet, at 685 Third Avenue, New
York, New York, leased from the California State Teachers
Retirement System under a Lease Agreement running from October
30, 1998 until July 31, 2014.

Mr. Graham tells the Court that the Debtors have determined that
Aon's offer, which contemplates a rent-free sub-tenancy by the
Debtors of the space it currently occupies and a long-term
purchase of Winstar's telecommunications services, represents
the highest and best offer for the unoccupied space in the
building.

Mr. Graham says that Aon and Winstar are currently negotiating a
Master Services Agreement to provide Aon and its customers with
telecommunications services and participate in their disaster
restoration planning and programs. Aon will be allowed to
advertise such programs using the Winstar name and logos and
Winstar will be paid up-front fees of approximately $5.3 million
for organizational set-up and other expenses, apart from
$800,000 for communications equipment collocation rights.

Pauline K. Morgan, Esq., at Young Conway Stargatt & Taylor, in
Wilmington, Delaware contends that this Sublease and Assignment
will eliminate all administrative expenses in maintaining the
lease, recoup its out-of-pocket costs incurred in removed
mechanics liens. Maintaining the Leases constitute an
unnecessary drain on the Debtors' cash flow. Ms. Morgan
discloses that the Debtors pay rent under the Lease the amount
of $39.44/sq.ft. per year or approximately $850,000 per month.

These rental payments, Ms. Morgan says, will be reimbursed for
amounts actually paid by the Debtors, not to exceed $450,000, in
obtaining the release of mechanics liens and out-of-pocket costs
in connection with the transaction, not to exceed $200,000.
Additionally, as established in the assignment agreement, Aon
will assume the costs with leased furniture in the premises.

Judge Farnan approved the Debtors' Motion and ordered that:

a) The assumption and Assignment Agreement and Sublease
   Agreement is authorized and approved and the Lease is assumed
   and assumed, as of September 20, 2001.

b) No consent of the Landlord shall be required to effectuate
   the sublease by Winstar to the Subtenant or the assignment of
   the Lease and the Sublease to Aon.

c) Any claims of the Landlord for actions or inactions occurring
   prior to the effectiveness of the Assignment, and all other
   claims for additional consideration arising from the
   consummation of the assignment and assumption shall remain
   solely with Winstar and shall not be the responsibility of
   Aon.

d) The Debtors are authorized and directed to pay the Landlord
   on the Effective Date all cure amounts.

e) The Debtors are authorized and directed to pay on the
   effective Date the sum of $170,000 for the payment of
   unbilled cure amounts to Fried Frank Harris Shriver &
   Jacobson to e held in escrow, on terms and conditions
   satisfactory to Winstar, the Landlord and the escrow agent.

f) As a condition precedent to the effectiveness of the
   Assignment and Assumption Agreement, Aon shall pay Winstar
   all the up-front fees under the Master Services Agreement
   for organization, set-up and other expenses in the
   approximate amount of $5,300,000 and for certain
   communications equipment collocation rights in the
   approximate amount of $800,000.

g) Upon Effective Date, Aon is authorized to deliver to the
   Landlord a letter of credit or other security in a form and
   an amount sufficient to satisfy the requirements of the
   Lease. Upon receipt of the letter, the Landlord is directed
   to return to Winstar their letter of credit in the
   approximate amount of $4,878,701.42, as such letter of
   credit may have been increased or educed by draws thereunder
   from time to time.

h) Winstar and Aon shall have no right, title and interest in
   and to the rights of first offer or any similar rights in
   connection with any space in the Building which is available
   now or which becomes available after the Date of this Order;
   provided that Aon shall retain any such rights as to any
   such space which shall become available or leasing after the
   date which is 8 months from this Order.

i) All liens on the Premises created, caused or permitted by the
   Debtors or related to any action or inaction prior to the
   Effective Date must be satisfied and removed as of record
   prior the Effective Date.

j) On or prior to the Effective Date, Aon Corporation will
   execute an unconditional guaranty in favor of the Landlord
   guarantying the obligations of Aon on terms satisfactory to
   the Landlord. (Winstar Bankruptcy News, Issue No. 15;
   Bankruptcy Creditors' Service, Inc., 609/392-0900)   


WORLDWIDE XCEED: Court Extends Plan Filing Deadline to Oct. 12
--------------------------------------------------------------
Worldwide Xceed Group, Inc. obtained an extension of its
exclusive periods from the U.S. Bankruptcy Court for the
Northern District of Illinois.  It now has until October 12,
2001 to file a reorganization plan.  Judge John H. Squires also
rescheduled the company's deadline for soliciting acceptances of
the plan to December 11, 2001.  

Worldwide Xceed Group, now known as Liquidating WXG, Inc.,
provided strategic consulting and digital solutions services to
such companies as Starbucks, WebMD, and DoubleClick.  

The company filed for chapter 11 protection on April 30, 2001 in
the U.S. Bankruptcy Court for the Northern District of Illinois
(Eastern Division), and is represented in its restructuring
efforts by Jeff J. Marwil, Esq., at Katten Muchin Zavis and
Kass, in Chicago.  

As of February 28, 2001, the company listed $73,743,000 in
assets and $19,895 in debt.  The Bankruptcy Court approved the
sale of substantially all of the company's assets to eSynergies
last July.


* Meetings, Conferences and Seminars
------------------------------------
October 12-16, 2001
   TURNAROUND MANAGEMENT ASSOCIATION
      2001 Annual Conference
         The Breakers, Palm Beach, FL
            Contact: 312-822-9700 or info@turnaround.org

October 16-17, 2001
   International Women's Insolvency and Restructuring
   Confederation (IWIRC)
      Annual Fall Conference
         Orlando World Center Marriott, Orlando, Florida
            Contact: 703-449-1316 or
                 http://www.inetresults.com/iwirc
              
October 28 - November 2, 2001
   IBA Business Law International Conference
   Including Insolvency and Creditors Rights Sessions
      Cancun, Mexico
         Contact: +44 (0) 20 7629 1206
            http://www.ibanet.org/cancun

November 15-17, 2001
   ALI-ABA
      Commercial Real Estate Defaults, Workouts, and
      Reorganizations
         Regent Hotel, Las Vegas
            Contact:  1-800-CLE-NEWS or http://www.ali-aba.org

November 26-27, 2001
   RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
      Seventh Annual Conference on Distressed Investing
         The Plaza Hotel, New York City
            Contact 1-903-592-5169 or ram@ballistic.com

November 29-December 1, 2001
   American Bankruptcy Institute
      Winter Leadership Conference
         La Costa Resort & Spa, Carlsbad, California
            Contact: 1-703-739-0800 or http://www.abiworld.org

December 7 and 8, 2001
   American Bankruptcy Institute
      ABI/Georgetown Program "Views from the Bench"
         Georgetown University Law Center, Washington, D.C.
            Contact: 1-703-739-0800 or http://www.abiworld.org

January 31 - February 2, 2002
   American Bankruptcy Institute
      Rocky Mountain Bankruptcy Conference
         Westin Tabor Center, Denver, Colorado
            Contact: 1-703-739-0800 or http://www.abiworld.org

January 11-16, 2002
   Law Education Institute, Inc
      National CLE Conference(R) - Bankruptcy Law
         Steamboat Grand Resort, Steamboat Springs, Colorado
            Contact: 1-800-926-5895 or
                 http://www.lawedinstitute.com

February 28-March 1, 2002
   ALI-ABA
      Corporate Mergers and Acquisitions
         Renaissance Stanford Court, San Francisco, CA
            Contact: 1-800-CLE-NEWS or http://www.ali-aba.org

March 3-6, 2002 (tentative)
   NORTON INSTITUTES ON BANKRUPTCY LAW
      Norton Bankruptcy Litigation Institute I
         Park City Marriott Hotel, Park City, Utah
            Contact:  770-535-7722 or Nortoninst@aol.com

March 8, 2002
   American Bankruptcy Institute
      Bankruptcy Battleground West
         Century Plaza Hotel, Los Angeles, California
            Contact: 1-703-739-0800 or http://www.abiworld.org

March 20-23, 2002
   TURNAROUND MANAGEMENT ASSOCIATION
      Spring Meeting
         Sheraton El Conquistador Resort & Country Club
         Tucson, Arizona
            Contact: 312-822-9700 or info@turnaround.org

April 10-13, 2002 (tentative)
   NORTON INSTITUTES ON BANKRUPTCY LAW
      Norton Bankruptcy Litigation Institute II
         Flamingo Hilton, Las Vegas, Nevada
            Contact:  770-535-7722 or Nortoninst@aol.com

April 18-21, 2002
   American Bankruptcy Institute
      Annual Spring Meeting
         J.W. Marriott, Washington, D.C.
            Contact: 1-703-739-0800 or http://www.abiworld.org

April 25-27, 2002
   ALI-ABA
      Fundamentals of Bankruptcy Law
         Rittenhouse Hotel, Philadelphia
            Contact:  1-800-CLE-NEWS or http://www.ali-aba.org

May 13, 2002 (Tentative)
   American Bankruptcy Institute
      New York City Bankruptcy Conference
         Association of the Bar of the City of New York
         New York, New York
            Contact: 1-703-739-0800 or http://www.abiworld.org

June 6-9, 2002
   American Bankruptcy Institute
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Michigan
            Contact: 1-703-739-0800 or http://www.abiworld.org

June 27-30, 2002
   NORTON INSTITUTES ON BANKRUPTCY LAW
      Western Mountains, Advanced Bankruptcy Law
         Jackson Lake Lodge, Jackson Hole, Wyoming
            Contact: 770-535-7722 or Nortoninst@aol.com

July 11-14, 2002
   American Bankruptcy Institute
      Northeast Bankruptcy Conference
         Ocean Edge Resort, Cape Cod, MA
            Contact: 1-703-739-0800 or http://www.abiworld.org

August 7-10, 2002
   American Bankruptcy Institute
      Southeast Bankruptcy Conference
         Kiawah Island Resort, Kiawaha Island, SC
            Contact: 1-703-739-0800 or http://www.abiworld.org


October 9-11, 2002
   INSOL International
      Annual Regional Conference
         Beijing, China
            Contact: tina@insol.ision.co.uk or
                 http://www.insol.org

October 24-28, 2002
   TURNAROUND MANAGEMENT ASSOCIATION
      Annual Conference
         The Broadmoor, Colorado Springs, Colorado
            Contact: 312-822-9700 or info@turnaround.org

December 5-8, 2002
   American Bankruptcy Institute
      Winter Leadership Conference
         The Westin, La Paloma, Tucson, Arizona
            Contact: 1-703-739-0800 or http://www.abiworld.org

April 10-13, 2003
   American Bankruptcy Institute
      Annual Spring Meeting
         Grand Hyatt, Washington, D.C.
            Contact: 1-703-739-0800 or http://www.abiworld.org

December 3-7, 2003
   American Bankruptcy Institute
      Winter Leadership Conference
         La Quinta, La Quinta, California
            Contact: 1-703-739-0800 or http://www.abiworld.org

April 15-18, 2004
   American Bankruptcy Institute
      Annual Spring Meeting
         J.W. Marriott, Washington, D.C.
            Contact: 1-703-739-0800 or http://www.abiworld.org

December 2-4, 2004
   American Bankruptcy Institute
      Winter Leadership Conference
         Marriott's Camelback Inn, Scottsdale, AZ
            Contact: 1-703-739-0800 or http://www.abiworld.org


The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday.  Submissions via
e-mail to conferences@bankrupt.com are encouraged.  

                          *********

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 240/629-3300.

                     *** End of Transmission ***