TCR_Public/011023.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

           Tuesday, October 23, 2001, Vol. 5, No. 207

                          Headlines

360NETWORKS: Impossible to Timely File Monthly Operating Reports
360NETWORKS: H1 Sales Plummet After Fiber Pact Renegotiations
AMF BOWLING: Worldwide Presents Amended Plan of Reorganization
ANC RENTAL: Travel Slump Prompts Closure of Charlotte Center
ALARIS MEDICAL: S&P Raises Junk Ratings After Refinancing Plan

AMERICAN CLASSIC: Nasdaq Halts Trading Until More Info Provided
AMERICAN CLASSIC: Affiliates File Separate Chapter 11 Petitions
AMTRAK: Cato Study Suggests Privatization to Cut Flow of Red Ink
ARCHIMEDES FUNDING: Fitch Affirms Class D Notes' Rating at BB-
AT HOME CORP: Reaches Provisioning Agreement with AT&T Broadband

BETHLEHEM STEEL: Seeks Approval to Hire Greenhill As Advisors
BROADBAND WIRELESS: Moves Dist. Ct. to End Federal Receivership
C-PHONE CORP: Files for Dissolution in New York State Court
CONSUMERS PACKAGING: Q2 Net Loss Balloons to $131.4 Million
DAIRY MART: Gets Court's Final Approval of $46MM DIP Financing

EIS FUND: Shareholders Nix Plan for Liquidation & Replace Board
ETOYS.COM: Will Return to Business as KB Toys Unit
EARTHCARE: Selling Solid Waste Division for $42 Million to GWC
EXODUS COMMS: XO Wants Automatic Stay Modified to Allow Set-Off
FANTOM TECH: Won't Make Interest Payment on Trimin Loan

FEDERAL-MOGUL: Wants to Continue Use of Existing Bank Accounts
GENESIS HEALTH: Court Approves MPAN Pharmacy Bidding Rules
GLOBAL TELESYSTEMS: Agrees to Combination with KPNQwest
INTEGRATED HEALTH: Rotech & HAC Enter Stipulation to Lift Stay
KELLSTROM INDUSTRIES: S&P Drops Ratings After Missed Payment

KOMAG INC: Nasdaq Delists Convertible Bonds Due January 2004
LAIDLAW: Judge Walsh Rejects Safety-Kleen's Move to Change Venue
LERNOUT & HAUSPIE: Selling Kurzweil Educational Assets for $2MM
LERNOUT & HAUSPIE: SpeechWorks Offers to Buy Technology Assets
MARINER POST-ACUTE: Seeks Eighth Extension of Exclusive Periods

MCLEODUSA: Scraps Dividend Payment on Series A Preferred Stock
OWENS CORNING: Court Okays Stipulation Re Inter-Creditor Issues
PACIFIC GAS: Gets Approval to Assume 15-Year Gaylord Gas Pact
PACIFIC GAS: Deems DWR's Revenue Requirement as "Positive Step"
PENNZOIL-QUAKER: Fitch Concerned About Weakening Credit Profile

POLAROID CORP: Gets Okay to Pay Prepetition Employee Obligations
QUALITY STORES: Noteholders File Involuntary Chapter 11 in MI
QUALITY STORES: Weighing Options to Continue Restructuring
RELIANCE: Asks Court to Fix Dec. 31 Bar Date for Proofs of Claim
SNV GROUP: Cuts 53% of Staff After Filing for CCAA Protection

SAFETY-KLEEN: Wants Approval of 2nd Consent Agreement with EPA
SHOPKO STORES: Refinancing Risks Compel Fitch's Low-B Ratings
SPINNAKER: S&P Drops Ratings to D After Missing Interest Payment
SUN HEALTHCARE: Wants to Pay Martin's $505K Mechanic's Lien
TELEX COMMS: 10-1/2% Note Exchange Offer Extended to Friday

USG CORP: U.S. Trustee Asks Court to Appoint Fee Auditor
WARNACO GROUP: Unsecured Panel Hires Jaspan as Special Counsel
WHEELING-PITTSBURGH: Applauds ITC Ruling On Steel Industry Probe

                          *********

360NETWORKS: Impossible to Timely File Monthly Operating Reports
----------------------------------------------------------------
The operating guidelines established by the U.S. Trustee to
ensure proper administration of chapter 11 cases require debtors
to file verified, periodic financial statements and operating
reports not later than the 15th calendar day following the end
of each calendar month, covering all transactions by the debtor-
in-possession.

Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New
York, tells the Court that prior to the Petition Date, the
Debtors already had a reporting system to produce internal
monthly financial statements and operating reports.  However,
Ms. Chapman says, these internal reports are not available to
management to review until the 15th day following the end of
each month.  Verifying the information in the internal reports
and conforming these to the guidelines' requirements require
approximately 2 weeks, Ms. Chapman adds.

Thus, to avoid the high costs and complication of altering
360networks inc.'s internal reporting system, the Debtors
request that the Court extend the deadline for filing periodic
financial statements to the 30th calendar day following the end
of each calendar month. (360 Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


360NETWORKS: H1 Sales Plummet After Fiber Pact Renegotiations
-------------------------------------------------------------
360networks, inc., a fiber optic network services provider that
is restructuring under creditor protection in Canada and the
United States, announced its financial results for the period
ended June 30, 2001.

Revenue, including sales contract adjustments, for the first six
months of 2001 was $17 million, compared with $234 million for
the same period in 2000. Revenue for the three months ended June
30, 2001 was a negative $63 million, compared with $158 million
for the same period in 2000.

The decreases are due to the renegotiation of a number of dark
fiber contracts. Revenue of $102 million that was previously
recorded on a percentage of completion basis has been reversed
and replaced with revenue from the renegotiated contracts. These
adjustments reflect various terms and conditions, including
exchange or return of network segments and some price revisions.

"We successfully renegotiated several contracts to best meet our
customers' needs and accelerate our cash collections, but this
resulted in the reduction of GAAP revenue," said Vanessa
Wittman, chief financial officer of 360networks.

The company incurred a gross loss of $154 million for the first
six months of 2001, compared with a gross profit of $87 million
for the same period in 2000. Gross loss was $172 million for the
second quarter of 2001, compared with a gross profit of $58
million in the second quarter of 2000.

Selling, general and administrative expenses were $112 million
for the first six months of 2001, compared with $36 million for
the same period in 2000, and $67 million for the second quarter
of 2001, compared with $24 million for the same period in 2000.
The increases are due primarily to the addition of sales,
product and network services personnel in late 2000 and early
2001 as the company's business shifted from constructing
networks and selling dark fiber to providing network and other
services.

In June 2001, 360networks reduced its workforce by approximately
800 positions as part of efforts to lower operating expenses and
conserve capital. This reduction, combined with further
downsizing, has resulted in a 70% decrease of the company's
workforce.

The company recently conducted an extensive evaluation of its
assets and operations. As a result of the downturn in the
telecommunications and data communications markets, 360networks
has reduced significantly the value of its assets and
operations. Accordingly, the company has recorded a provision
for asset impairment of $4.4 billion for the first six months of
2001. The company will continue to evaluate the value of its
assets while under creditor protection. In addition, the company
recorded a provision for bad debts of $163 million for the first
half of 2001 against accounts receivable that may not be
collectable.

Earnings before interest, taxes, depreciation, amortization,
stock-based compensation and minority-based interest (EBITDA)
was a loss of $429 million for the first six months of 2001,
compared with a gain of $51 million for the same period in 2000.
EBITDA for the second quarter of 2001 was a loss of $399
million, compared with a gain of $34 million in the second
quarter of 2000.

Net loss was $5.1 billion ($6.28 per share) for the first half
of 2001, compared with $149 million ($0.33 per share) for the
same period in 2000. Net loss was $5 billion ($6.13 per share)
for the second quarter of 2001, compared with $104 million
($0.19 per share) in the second quarter of 2000. The losses in
2001 were due primarily to the asset impairment provision, the
renegotiation of contracts, bad debt allowances and
reorganization costs.

"We continue to provide optical and colocation services to
customers throughout the United States and Canada while we
reorganize our business and work with our creditors on an
emergence plan," said Jimmy Byrd, chief operating officer of
360networks. "Our cash needs have been significantly reduced and
we are making good progress toward cash flow breakeven."

The company is operating currently with a budget approved by
secured lenders to the end of this year. 360networks is in
compliance with a budget requirement to maintain a minimum cash
balance of $100 million.

360networks will file its second quarter 2001 financial
statements and the related management's discussion and analysis
with securities commissions in Canada and the United States by
October 25, 2001.

360networks offers optical network services to
telecommunications and data communications companies in North
America. The company's fiber optic network includes terrestrial
segments and undersea cables in North America, the Atlantic and
South America.

On June 28, 2001, the company and several of its operating
subsidiaries voluntarily filed for protection under the
Companies' Creditors Arrangement Act (CCAA) in the Supreme Court
of British Columbia. Concurrently, the company's principal U.S.
subsidiary, 360networks (USA) inc., and 22 of its affiliates
voluntarily filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York. Insolvency proceedings for several
subsidiaries of the company have been instituted in Europe and
Asia.

For more information about 360networks, visit http://www.360.net


AMF BOWLING: Worldwide Presents Amended Plan of Reorganization
--------------------------------------------------------------
AMF Bowling Worldwide, Inc. presents the Court with an Amended
Plan of Reorganization.  Convenience claims, previously
classified as Class 7 claims are eliminated.  The Amended Plan
revises the classification and treatment of claims to now
provide:

Class Description           Treatment
----- -----------           ---------
  1   Other Secured Claims  Such treatment that either:

                            A. leaves unaltered the legal,
                                equitable or contractual rights
                                to which the holder of such
                                Allowed Other Secured Claim is
                                entitled, or

                             B. leaves such Allowed Other
                                Secured Claim the Bankruptcy
                                Code. Any Allowed Claim based on
                                any deficiency Claim by a holder
                                of an Allowed Other Secured
                                claim will be treated as &
                                Allowed Unsecured Claim and will
                                be classified as Class 4 Claim.

2   Senior Lender Claims   A pro rata share of the Senior
                            Lender Distribution, comprised of:

                            A. the Senior Lender Cash Payment

                            B. 10,000,000 shares of New AMF
                               common stock

                            C. the Senior Lender Facility Notes

                            D. the New AMF Notes.

                            The Senior Lenders will also
                            receive pro rata share of the
                            Senior Lender Origination Fee.

   3    Priority Non-tax    Unless otherwise agreed, cash in an
        Claims              amount equal to the claim.

   4    Unsecured Claims    pro rata share of the ratable class
                            4 portion of the New Warrants

   5    Tort Claims         To the extent that any portion of a
                            tort claim is not an insured claim,
                            a pro rata share of the ratable
                            class 5 portion of the new
                            warrants. Any portion of a tort
                            claim that becomes an allowed claim
                            and is an insured claim will be
                            paid in the ordinary course of
                            business directly or indirectly by
                            the applicable carrier to the
                            extent of such insurance.

   6   Senior Subordinated  pro rata share of the ratable class
       Note Claims          6 portion of the New Warrants

   7    Interdebtor Claims  No distribution

   8    AMF affiliate claims Allowed affiliates claims will be
                             reinstates on terms and conditions
                             reasonable satisfactory to
                             reorganized AMF.

   9    Equity Interests    No distribution.  All Equity
                            Interests will be AMF Holdings and
                            WINC will cancelled as of the
                            effective date.

  10    Existing Securities  No distribution.
        Law Claims

  11    510(c) Claims        No distribution
(AMF Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)    


ANC RENTAL: Travel Slump Prompts Closure of Charlotte Center
------------------------------------------------------------
In the wake of the tragic September 11 events and the
corresponding impact on the travel industry, ANC Rental
Corporation (Nasdaq:ANCX) gave 60 days notice of its intention
to close its Charlotte, North Carolina reservation center, which
currently employs approximately 260 people. This notification is
in keeping with the Worker Adjustment and Retraining Act.

"Naturally, we regret having to take this action but today's
travel environment, combined with an already softening economy,
make this move unavoidable," said ANC CEO and Chairman Michael
S. Egan. "The closing will be transparent to our customers,
since their calls will be routed to our centers in Boca Raton,
Charleston, and Salt Lake City," he added.

ANC Rental Corporation (Nasdaq:ANCX), headquartered in Fort
Lauderdale, is one of the world's largest car rental companies
with annual revenue of approximately $3.5 billion in 2000. ANC
Rental Corporation, the parent company of Alamo and National,
has more than 3,000 locations in 66 countries and employs
approximately 19,000 associates worldwide.

Earlier this month, the Company reached agreements with its
lenders to suspend certain financial covenants and to defer a
principal payment of $70 million that would have been due
October 1, 2001. The financial covenants have been suspended
through November 15, 2001 and the principal payment has been
deferred to November 30, 2001.


ALARIS MEDICAL: S&P Raises Junk Ratings After Refinancing Plan
--------------------------------------------------------------
Standard & Poor's raised its ratings on ALARIS Medical Inc. and
its operating company, ALARIS Medical Systems Inc., and removed
them from CreditWatch with positive implications, where they
were placed September 10, 2001, following the company's
announcement of its planned refinancing of its operating
company's existing bank facility.

At the same time, Standard & Poor's affirmed its single-'B'-plus
senior secured debt rating on ALARIS Medical Systems. In
addition, Standard & Poor's withdrew its single-'B' senior
secured bank loan rating, since proceeds from the senior secured
notes have repaid this debt.

The action follows completion of ALARIS' bank loan refinancing,
which has increased the company's financial flexibility.

The outlook is stable.

The speculative-grade rating for ALARIS and its holding company
reflect its leading positions in competitive niche businesses
offset by its heavy debt burden.

San Diego, Calif.-based ALARIS manufactures products such as
intravenous pumps to control the flow of solutions, drugs, and
nutritionals into patients' circulatory systems; related
accessories; and patient-monitoring devices. ALARIS remains a
market leader in its niche areas. Contracts with large domestic
group-purchasing organizations and the recurring nature of
proprietary consumable products, representing about 65% of
sales, provide some earnings stability. Moreover, management's
ongoing efforts to improve manufacturing processes, reduce
costs, and launch new products have aided the company's business
prospects.

Nevertheless, competition is strong, since ALARIS vies with
several companies with significantly greater financial
resources, and these companies have the ability to offer a wider
variety of medical products to health care purchasers. In
addition, given ALARIS' limited product diversity, pricing and
competitive pressures are expected to continue to challenge the
company. Still, while ALARIS' capital structure continues to
be dominated by debt, the company will now be in a position to
expand its business and maintain credit protection measures
consistent with its rating.

Standard & Poor's expects funds from operations to lease-
adjusted debt and cash flow coverage of cash interest to average
about 10% and 2 times, respectively.

         Ratings Raised and Removed from CreditWatch
                with Positive Implications

                                           Ratings
                                        TO        FROM
     ALARIS Medical Systems Inc.
        Corporate credit rating          B+       B
        Subordinated debt rating         B-       CCC+
        Senior secured bank loan rating  NR       B

     ALARIS Medical Inc.
        Corporate credit rating          B+       B
        Senior unsecured debt rating     B-       CCC+
        Subordinated debt rating         B-       CCC+
     
                       Ratings Affirmed

     ALARIS Medical Systems Inc.
        Senior secured notes rating      B+
     

AMERICAN CLASSIC: Nasdaq Halts Trading Until More Info Provided
---------------------------------------------------------------
The Nasdaq Stock Market(R) announced that the trading halt
status in American Classic Voyages Co., (Nasdaq: AMCV; AMCVP)
was changed to "additional information requested" from the
company.  Trading in the company had been halted Thursday,
October 18, at 13:07:37 p.m. Eastern Time for News Pending at
last sale prices of .46 for AMCV and 2.10 for AMCVP.  

Trading will remain halted until American Classic Voyages Co.
has fully satisfied Nasdaq's request for additional information.

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


AMERICAN CLASSIC: Affiliates File Separate Chapter 11 Petitions
----------------------------------------------------------------
Court: District of Delaware

Chapter 11 Petition Date: October 22, 2001

Entity                                Case No.
------                                --------
Great Ocean Cruise Line, L.L.C.       01-10959
Great AQ Steamboat, L.L.C.            01-10960
Cape May Light, L.L.C.                01-10961
Cape Cod Light, L.L.C.                01-10962
Great River Cruise Line, L.L.C.       01-10963
Delta Queen Coastal Voyages, L.L.C.   01-10964
DQSC Property Co.                     01-10965
Cruise America Travel, Incorporated   01-10966
AMCV Cruise Operations, Inc.          01-10967
Cat II, Inc.                          01-10968
Great Independence Ship Co.           01-10969
The Delta Queen Steamboat Co.         01-10970
Great Hawaiian Properties Corporation 01-10971
Ocean Development Co.                 01-10972
AMCV Holdings, Inc.                   01-10973
DQSB II, Inc.                         01-10974
Great Hawaiian Cruise Line, Inc.      01-10975
American Hawaii Properties            01-10976
Corporation
Great Pacific NW Cruise Line, LLC     01-10977


Debtor's Counsel: Francis A. Monaco, Jr., Esq.
                  Joseph J. Bednar, Esq.
                  Walsh, Monzack & Monaco, P.A.  
                  1201 Orange St., Ste 400  
                  Wilmington, DE 19801
                  Tel: 302 656-8162  
                  Fax: 302-656-2769  

                        -and-

                  David S. Heller, Esq.
                  Joseph S. Athanas, Esq.
                  Timothy A. Barnes, Esq.
                  Latham & Watkins
                  Suite 5800, Sears Tower
                  Chicago, IL 60606
                  Tel: 312-876 7700


AMTRAK: Cato Study Suggests Privatization to Cut Flow of Red Ink
----------------------------------------------------------------
Cato Study Says Reform Committee Should Pull Plug on Amtrak; No
End in Sight for 30 Years of Red Ink, Privatization a Solution

The Amtrak Reform Council, charged with executing a
congressional mandate to reorganize the government-owned rail
system if it doesn't turn a profit by 2002, might vote as early
as Friday last week to find whether the ailing train service
would meet its goal.

In the new Cato Institute study, "Help Passenger Rail by
Privatizing Amtrak," former council member Joseph Vranich and
Edward L. Hudgins, director of regulatory studies at Cato, argue
that Amtrak would not meet the deadline. "It is time for the
council to make this finding official and begin the mandated
process of restructuring and liquidation," they say.

Amtrak has always run at a loss since its creation 30 years ago,
collecting more than $25 billion in taxpayer subsidies, the
authors write. And if it is not reorganized, the authors say, it
will continue to hemorrhage. For example, following the Sept. 11
attacks trains reported a spike in ridership, but perversely,
some in Congress proposed a $15-billion "emergency" aid package
because of the increase.

"One reason for Amtrak's abysmal showing is that the trains run
late," the authors say.  "Some Amtrak trains are slower than the
trains our great-grandparents rode in the early 1900s."

Although Amtrak has reported that its punctuality has improved,
Vranich and Hudgins charge that they have tinkered with
schedules, artificially padding time at the end of a line, to
give the appearance of on-time performance.

Such padding is part of a series of Amtrak "credibility crises"
that the authors outline, including broken promises about its
new Acela Express, exaggerated ridership gains, and its use of
stealth subsidies.

"A government-owned Amtrak whose debt is at record levels and
whose costs continue to rise will never be solvent," Vranich and
Hudgins argue.  They explore the routes to an Amtrak alternative
and explain how no fewer than

40 countries around the world are replacing government railways
with more efficient franchised private operators.


ARCHIMEDES FUNDING: Fitch Affirms Class D Notes' Rating at BB-
--------------------------------------------------------------
Fitch affirms the ratings of the liabilities of Archimedes
Funding III, Ltd. (Archimedes) including the 'BBB' rating of the
class C notes and the 'BB-' rating of the class D notes. This
affirmation removes the class C notes and the class D notes from
Rating Watch Negative.

These notes were placed on Rating Watch Negative on Oct. 8, 2001
due to the potential impact of the events of Sept. 11, 2001 on
the portfolio assets.

After careful consideration of the portfolio, specifically those
assets included in industries that Fitch believes to be high
risk, Fitch has determined that Archimedes's exposure to
obligors in these industries is much less than originally
suspected.

Approximately 5.15% of the portfolio is invested in obligors
classified in the gaming, lodging and restaurant, and air
transportation industries that may continue to be impacted by
the fallout from the events of September 11. Of this exposure,
roughly 1/3 of the obligations are trading at or close to par.
Fitch will continue to monitor the exposure to these credits
closely.


AT HOME CORP: Reaches Provisioning Agreement with AT&T Broadband
----------------------------------------------------------------
AT&T Broadband and Excite@Home reached a pact that allows AT&T
Broadband to resume deploying high-speed Internet service to new
customers, Dow Jones reported.

AT&T Broadband, a unit of AT&T Corp., said it would begin
provisioning new customers Thursday, October 18, 2001. As
reported, Excite@Home said it has reached new agreements with
some of its cable partners to resume taking on new subscribers
during bankruptcy proceedings, reversing a decision made last
week. (ABI World, October 18, 2001)


BETHLEHEM STEEL: Seeks Approval to Hire Greenhill As Advisors
-------------------------------------------------------------
Bethlehem Steel Corporation seeks the Court's authority to
employ Greenhill & Company LLC, as their financial advisors,
effective as of Petition Date.

Leonard M. Anthony, Bethlehem's Senior Vice President, Chief
Financial Officer and, Treasurer, relates the Debtors selected
Greenhill as their financial advisors because of the firm's
extensive experience with and knowledge of the Debtors'
businesses and financial affairs.  

According to Mr. Anthony, Greenhill has been performing
financial advisory services for the Debtors since June 15, 2001.  
Since that time, Mr. Anthony notes, Greenhill has perform a
number of services for the Debtors including, among other
things:

  (i) review and analysis of the business, operations,
      properties, financial condition and prospects of the
      Debtors;

(ii) evaluation of the Debtors' debt capacity in light of their
      projected cash flows; and

(iii) assistance in the determination of an appropriate capital
      structure for the Debtors.

Also, Mr. Anthony explains, Greenhill is well qualified to serve
as the Debtors' financial advisors because its restructuring
professionals have extensive experience in advising debtors and
other constituents in chapter 11 cases.  In fact, Mr. Anthony
relates, Greenhill has served as consultants and financial
advisors to numerous debtors and creditors in restructurings
involving, among others: Amresco, Regal Cinemas, Inc., United
Artists Theatre Circuit, Inc., AmeriServe Food Distribution,
Inc., US Office Products, Inc. and Weblink Wireless, Inc.

In these chapter 11 cases, the Debtors will look to Greenhill
for these financial advisory services:

(A) General Financial Advisory Services

      (i) to the extent it deems necessary, appropriate and
          feasible, review and analyze the business, operations,
          properties, financial condition and prospects of the
          Debtors;

     (ii) evaluate the Debtors' debt capacity in light of its
          projected cash flows;

    (iii) assist in the determination of an appropriate capital
          structure for the Debtors;

     (iv) determine a range of values for the Debtors on a going
          concern basis and on a liquidation basis;

      (v) advise and attend meetings of the Debtors' Boards of
          Directors;

     (vi) if necessary, participate in hearings before the Court
          with respect to matters upon which Greenhill has
          provided advice.

(B) Restructuring Services

     If the Debtors pursue a Restructuring:

      (i) provide financial advice and assistance to the Debtors
          in developing and seeking approval of a chapter 11
          plan;

     (ii) provide financial advice and assistance to the Debtors
          in structuring any new securities, other consideration
          or other inducements to be offered and/or issued under
          the Plan;

    (iii) assist the Debtors and/or participate in negotiations
          with entities or groups affected by the Plan; and

     (iv) assist the Debtors in preparing documentation required
          in connection with the Plan.

(C) Sale Services

     If the Debtors pursue a Sale:

      (i) provide financial advice and assistance to the Debtors
          in connection with a Sale, identify potential
          acquirors and, at the Debtors' request, contact such
          potential acquirors;

     (ii) assist the Debtors in preparing a memorandum (with any
          amendments or supplements); and

    (iii) assist the Debtors and/or participate in negotiations
          with potential acquirors.

Prior to the filing of these cases, Mr. Anthony informs Judge
Lifland, the Debtors paid Greenhill $810,000 for Pre-petition
Services rendered and expenses incurred.

In the course of these chapter 11 cases, the Debtors propose to
pay Greenhill:

  (a) a $175,000 Monthly Advisory Fee;

  (b) a $12,000,000 Transaction Fee; and

  (c) in the event of a sale of all or a substantial portion of
      the Debtors' assets, a Sale Transaction Fee, which may be
      credited against the Transaction Fee.

Aside from the monthly rates, Greenhill also intends to charge
the Debtors for all additional reasonable and necessary expenses
incurred.  This includes, among other things: mail and express
mail charges, special or hand delivery charges, photocopying
charges, and travel expenses.

Michael A. Kramer, Managing Director of Greenhill & Company LLC,
assures the Court Greenhill does not holds any interest adverse
to the Debtors, their estates, their creditors or any other
party-in-interest in the matters for which Greenhill is proposed
to be retained, except that:

  (i) prior to commencement of these cases, Greenhill rendered
      Pre-petition Services; and

(ii) Greenhill may have rendered services to and may continue
      to render services to or use the services of, certain of
      the Debtors' creditors, professionals or other parties-in-
      interest in matters wholly unrelated to these cases.

Similarly, Mr. Kramer admits that Greenhill's partners and
principals may have business associations with some of the
Debtors' creditors or other parties-in-interest.  But these
associations have no connection with these proceedings, Mr.
Kramer emphasizes.

"To the best of my knowledge, information and belief, the only
such party-in-interest is EDS Corporation, for which Greenhill
provides ongoing strategic financial advisory.  Greenhill's
advisory services to EDS Corporation are limited to investment
banking services and shall have no bearing on or connection to
these proceedings," Mr. Kramer discloses.

Accordingly, Mr. Kramer swears, Greenhill is a "disinterested
person," as defined in section 101(14) and as required by
section 327(a) of the Bankruptcy Code.

Moreover, Mr. Kramer tells Judge Lifland that Greenhill intend
to update and expand its ongoing relationship search for
additional parties-in-interest.  If any new relevant facts or
relationships are discovered, Mr. Kramer says, Greenhill will
promptly file a supplemental affidavit. (Bethlehem Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


BROADBAND WIRELESS: Moves Dist. Ct. to End Federal Receivership
---------------------------------------------------------------
Broadband Wireless International Corporation (OTC Bulletin
Board: BBAN) announced Peter Bradford, the Federally appointed
Receiver for the company has filed a report with the Federal
Court providing a review of the activities of the Receivership
and requesting the court immediately rule to end the  
Receivership and allow the company to transition formally into
reorganization.

The report was filed on October 16.  Company officials
anticipate the court will act quickly in reviewing the filing
and set a hearing prior to the end of the month to issue a final
ruling on the matter.


C-PHONE CORP: Files for Dissolution in New York State Court
-----------------------------------------------------------
C-Phone Corporation (OTCBB: CFON) announced that, following the
unanimous recommendation of its Board of Directors, a petition
seeking the dissolution of C-Phone was filed last month with the
New York State Supreme Court, County of New York (Index No.
117769/01).

As a result, the Court has issued an Order to Show Cause on a
Petition for Dissolution of a Corporation Pursuant to Section
1102 of the Business Corporation Law, which is currently
returnable on November 16, 2001.

C-Phone is a New York corporation and such action is permitted
under the New York Business Corporation Law when a majority of
directors determines that dissolution would be beneficial to
shareholders. Previously, C-Phone solicited its shareholders to
vote for such dissolution at a Special Meeting scheduled for
September 7, 2001, which was adjourned to September 12, 2001. As
previously announced, the number of shares present at the
Special Meeting did not constitute a quorum sufficient to
conduct business.

Paul Albritton, President and Chief Executive Officer of C-
Phone, stated, "In spite of our efforts to get shareholders to
vote, including the distribution of an explanatory proxy
statement and the retention of a soliciting agent, only about
35% of the approximately 9 million outstanding shares voted.
Even though proxies were solicited in opposition to management's
proposals, 89% of the shares submitted voted in favor of the
proposed dissolution. Under all of the circumstances, C-Phone's
directors felt that the appropriate action was to seek judicial
dissolution."

C-Phone also announced that, at the end of September, two
shareholders commenced a litigation against C-Phone, its current
and previous directors, its current and certain previous
executive officers and its outside legal counsel in the United
States District Court for the Northern District of Illinois,
Western Division, alleging that certain actions previously taken
by the various defendants were, among other things, in violation
of various federal securities laws and rules.

Under C-Phone's Certificate of Incorporation and By-Laws,
similar to other public companies, C-Phone is required to
indemnify its current and previous directors and executive
officers for all expenses incurred in defending the litigation,
unless it is determined that such persons violated their legal
responsibilities to C-Phone.

Mr. Albritton stated, "It is unfortunate that the litigation,
which we believe is without legal merit, has been commenced
since the cost of defending the action is required to be borne
by C-Phone, which will further deplete the limited resources
otherwise available for distribution to C-Phone shareholders
upon the dissolution of C-Phone. C-Phone intends to vigorously
defend the litigation."


CONSUMERS PACKAGING: Q2 Net Loss Balloons to $131.4 Million
-----------------------------------------------------------
Consumers Packaging Inc. (TSE: CGC) released its financial
results for the three-month period ended June 30, 2001.

The results include the Canadian glass manufacturing operations,
which were sold to Owens Illinois, Inc. for $230 million cash
after the reporting period on October 1, 2001.   During the 2001
second quarter, the Company did not consolidate the results of
Anchor Glass Container Corporation in its financial statements
as in prior periods and is now accounting for its investment by
the equity method.

The Company has been operating since May 23, 2001 under the
Companies' Creditors Arrangement Act (CCAA).

For the 2001 second quarter, the Company had a net loss of
$131.4 million compared with a net loss of $2.4 million in the
2000 second quarter.  Revenue in the latest period totaled
$184.7 million, reduced from the year-earlier total of $435.3
million, which included the results of Anchor.

For the 2001 first half, the Company had a net loss of $164.4
million, compared with a loss of $5.5 million. Revenue during
the 2001 first half totaled $594.4 million, down from $802.0
million reflecting the de-consolidation of Anchor's results as
of April 1, 2001.

Results for the 2001 second quarter include write offs of:

     * $28.5 million, representing the book value of an
       investment in a glass manufacturing facility in the
       Ukraine;

     * $54.8 million in the value of its investment in Anchor;
       and

     * $36.1 million in its investment in the Glenshaw glass
       manufacturing operation in Pennsylvania.

Following the sale of the Company's Canadian glass manufacturing
assets on October 1, all outstanding principal and accrued
interest under Canadian existing bank operating credit
facilities were repaid.

The Company is continuing with its efforts to restructure or
sell its remaining assets. Visit the company Web site:
http://www.consumersglass.com


DAIRY MART: Gets Court's Final Approval of $46MM DIP Financing
--------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. announced that the U.S.
Bankruptcy Court has approved its entire $46 million Debtor-in-
Possession (DIP) credit facility. Dairy Mart had received
interim approval of the DIP facility on September 26, for use of
up to $10.75 million.

Court approval of the DIP facility enables the company to
continue to pay for employee salaries and benefits, ongoing
operations and other working capital needs.

Gregory G. Landry, president and chief executive officer, said,
"We are pleased to have received final approval from the court
on the entirety of this funding. And, we are very grateful and
appreciative for the support we are receiving from all our
stakeholders - banks, creditors, suppliers and employees. Their
support has been crucial to our continued operation over the
last few weeks."

Landry said that suppliers are shipping to Dairy Mart's nearly
550 stores. He also noted that same-store sales have increased
during September and October.

Dairy Mart's DIP financing is provided by a group of lenders led
by Foothill Capital Corporation, a wholly owned subsidiary of
Wells Fargo & Company. A key use of the facility is payments to
vendors on agreed-to terms for goods and services rendered after
Dairy Mart's bankruptcy petition.

On September 24, 2001, Dairy Mart and substantially all of its
subsidiaries filed voluntary petitions for protection under
chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York. The case
is being heard by Judge Arthur Gonzalez.

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

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


EIS FUND: Shareholders Nix Plan for Liquidation & Replace Board
---------------------------------------------------------------
The Board of Directors of EIS Fund (NYSE: EIS) announced the
preliminary results of the votes cast at the Annual
Shareholder's Meeting for EIS Fund.

Based upon the preliminary results, it appears that shareholders
voted to replace the current Board with a slate of directors
headed by Ralph W. Bradshaw. It also appears that the proposed
Plan for Liquidation was rejected, as was the proposal to
replace the investment advisor.

In addition, the proposal to amend the Fund's certificate of
incorporation to change the Fund's name to "EIS Fund, Ltd."
appears to have been rejected. However, it appears that the
majority of shares were voted in favor of appointing
PriceWaterhouseCoopers, LLP, as the Fund's independent
accounting firm for the coming year.

Assuming the preliminary results are confirmed, the current
Board of EIS Fund stated that it will turn over control of the
Fund to the newly elected Board at the Fund's Annual
Shareholder's Meeting, at which time the certified results of
the voting will be announced. The Annual Meeting is scheduled to
be reconvened on Oct. 30, 2001, at 11:00 a.m., at the offices of
Kramer Levin Naftalis & Frankel, LLP, 919 Third Avenue, 41st
Floor, Conference Room B, New York City.

EIS Fund is the name under which Excelsior Income Shares, Inc.,
a closed-end bond fund organized under the laws of New York,
does business.


ETOYS.COM: Will Return to Business as KB Toys Unit
--------------------------------------------------
Bankrupt eToys Inc. received approval from the U.S. Bankruptcy
Court in Wilmington, Delaware to sell "strictly toy inventory"
from two warehouses in California and Virginia for $1.25
million, TheDeal.com reported.

Judge Mary Walrath approved a stalking-horse agreement that
eToys had crafted with toy maker Bobby Wilkerson Inc. of
Stuttgart, Arkansas.

Also, eToys will return to business as a subsidiary of longtime
toy retailer KB Toys. "We're happy to announce the grand
reopening of the new eToys store," a note on the KB Toys web
site said.  KB Holdings, the parent company of KB Toys, bought  
eToys' inventory, web address and the rights to eToys' name
earlier this year as part of the bankruptcy proceedings. In
July, the defunct e-tailer sent a message to former customers,
urging them to shop at KB's site. (ABI World, October 18, 2001)


EARTHCARE: Selling Solid Waste Division for $42 Million to GWC
--------------------------------------------------------------
EarthCare Company (OTC Bulletin Board: ECCO) announced that it
has signed a letter of intent to sell its Solid Waste division
for $42 million to a private company, General Waste Corporation,
which is owned by Donald F. Moorehead, Jr., EarthCare's
Chairman.  

The transaction would result in a $5 million reduction of the
company's senior debt, and the return to EarthCare of $18.9
million in the aggregate of face value of its Series A preferred
stock and principal amount of its 12% Subordinated Notes due
March 30, 2008.  

General Waste will also assume approximately $18.1 million in
other indebtedness of EarthCare's Earth Resource Management
subsidiaries, which conducts its solid waste business.  General
Waste will also issue to EarthCare a warrant to acquire 8% of
General Waste's common stock as of the closing.  

This transaction, which is subject to the approval of lenders
and the negotiation of definitive agreements, does not require
approval of EarthCare's shareholders and is expected to close
before the special shareholder meeting relating to the sale of
EarthCare's EarthLiquids division.  

EarthCare Company expects to complete the sale of its Solid
Waste division during the fourth quarter of 2001, subject to
normal terms and conditions, including negotiation of a
definitive agreement and completion of financing by General
Waste Corporation.

EarthCare also announced that it plans to sign a definitive
acquisition agreement later this month with U.S. Filter Recovery
Services (Mid-Atlantic), Inc. for the sale of its EarthLiquids
division.  On August 6, 2001, EarthCare signed a non-binding
letter of intent with U.S. Filter Recovery Services to sell its
EarthLiquids division for cash consideration of $35 million.
EarthCare estimates that there will be a $1.1 million working
capital adjustment, as of October 1, 2001, which will result in
a decrease of the purchase price.  

In addition, EarthCare may receive additional contingent
payments of up to $5 million to the extent that the price of
used oil sold by certain of EarthLiquids' pre-acquisition
locations exceeds $0.56 per gallon in the future.  The company
expects that U.S. Filter Recovery Services will hold back
approximately $4.9 million of the purchase price for a period,
which is expected to be 12 months after the closing of the sale,
to satisfy certain indemnification obligations, including
indemnification for expenses related to compliance with
environmental matters, should they arise.  

The company expects to complete this transaction, subject to
shareholder and lender approval, the completion of due diligence
procedures and the signing of a definitive acquisition
agreement, during the fourth quarter of 2001.  EarthCare plans
to use the proceeds from this sale to repay its senior credit
facility. EarthCare plans to hold a special shareholder meeting
in November or December of 2001 relating to the sale of its
EarthLiquids division.

EarthCare also announced that it is in the process of
negotiating an agreement to sell its EarthAmerica southern U.S.
service centers in Dallas and Houston, Texas, Austell, Georgia
and Orlando, Florida, to a strategic buyer for $4.0 million, of
which approximately $1.4 million will be held back for up to
seven months to cover potential indemnification obligations for
general claims and for working capital adjustments.  The company
expects to close this transaction during the fourth quarter of
2001.

Mr. Moorehead stated, "I believe that the sale of the Solid
Waste division, along with the planned sales of our EarthLiquids
division and our EarthAmerica southern U.S. service centers, are
in the best interests of the company and our shareholders.  We
will continue to evaluate other strategic alternatives to
improve our operating performance and capital structure."

EarthCare also announced that it is in default under its senior
credit facility as a result of its failure to complete the sale
of its EarthLiquids division by September 30, 2001 and the
failure to meet certain financial and other covenants.  In
addition, EarthCare anticipates that it will not have sold all
the components of its EarthAmerica division by October 31, 2001,
and may not be able to complete the sale of its Solid Waste
division by

October 31, 2001.  EarthCare's failure to sell either of these
divisions by October 31, 2001 will cause an additional default
under its senior credit facility.  EarthCare is in the process
of negotiating a fifth amendment to its senior credit facility
and does not believe that its senior lenders have a present
intention to accelerate its outstanding indebtedness.

EarthCare also announced that it has filed a preliminary proxy
statement with the Securities and Exchange Commission relating
to the planned sale of its EarthLiquids division and to a
planned change in the number of authorized common shares.


EXODUS COMMS: XO Wants Automatic Stay Modified to Allow Set-Off
---------------------------------------------------------------
Prior to the Petition Date, in connection with the day-to-day
operation of their businesses, XO Communications and Exodus
Communications, Inc. regularly engaged in transactions under an
XO Services Agreement and an Exodus Services Agreement.  Many,
if not all, of these transactions were conducted on credit
terms.  At the Petition Date, XO computes that it owes $110,484
to Exodus and Exodus owes approximately $1,430,768 to XO.

By this Motion, XO seeks an order modifying the automatic stay
to allow XO to set-off one claim against the other.  The effect
of the Setoff will be to reduce the XO Claim by $110,484 and the
Exodus Claim to zero.

Matthew G. Zaleski, Esq., at Campbell & Levine, LLC, in
Wilmington, Delaware, tells the Court that XO has a valid and
enforceable right of setoff with respect to the XO and Exodus
Claims and as a consequence, cause exists to modify the
automatic stay to allow XO to effectuate the Setoff.

Mr. Zaleski claims that XO meets the requirements to establish a
right of setoff, such as:

      (a) the existence of a debt owed by the creditor to the
          debtor that arose prior to the commencement of the
          bankruptcy case;

      (b) the existence of a claim of the creditor against the
          debtor that arose prior to the commencement of the
          bankruptcy case;

      (c) the debt and claim are mutual obligations; and

      (d) the right of setoff exists under non-bankruptcy law.

Mr. Zaleski informs the Court that the Exodus Claim and the XO
Claim each arose or relates to the period prior to the Petition
Date and involves debts owed between the same parties in the
same capacity.

In addition, Mr. Zaleski contends that California law and New
York law, which govern the Exodus Services Agreement and the XO
Services Agreement, provide parties with a right of setoff.
Accordingly, Mr. Zaleski asserts that the automatic stay imposed
should be modified to allow XO to set off the Exodus Claim
against the XO Claim. (Exodus Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


FANTOM TECH: Won't Make Interest Payment on Trimin Loan
-------------------------------------------------------
Fantom Technologies Inc. Fantom Technologies Inc. (TSE: FTM;
NASDAQ: FTMTF) announced that James Meekison has resigned as a
director of the Company. Mr. Meekison is the Chairman and a
director of Trimin Capital Corp., one of the Company's lenders.

The Company determined not to make the interest payment due on
its loan with Trimin on October 1, 2001 and, due to the
resulting conflict of interest, Mr. Meekison advised that he
could not continue as a director of the Company.

Fantom lead the appliance business into an age of bagless
vacuums with its dual-cyclonic cleaners, which use a removable,
washable, plastic part to collect dirt. In addition to its
FANTOM-brand full-size, upright, and cannister cleaners, the
company is developing a cordless vacuum and a line of countertop
water-purification systems. Assembled at its two plants in
Ontario and South Carolina, Fantom's vacuums are sold mostly
through US and Canadian retailers, but also through catalogs, TV
shopping networks, infomercials, and the Internet.


FEDERAL-MOGUL: Wants to Continue Use of Existing Bank Accounts
--------------------------------------------------------------
The United States Trustee for Region III requires that all
chapter 11 debtors close all existing bank accounts upon filing
of the petition and open new debtor in possession accounts in
certain financial institutions designated as authorized
depositories by the U.S. Trustee.  These requirements are
designed to provide a clear line of demarcation between pre and
post-petition claims and payments, and help to protect against
the inadvertent payment of pre-petition claims by preventing the
banks from honoring checks drawn before the Petition Date.

While Federal-Mogul Corporation acknowledge that the U.S.
Trustee's requirements serve a useful function in the vast
majority of chapter 11 cases, the application of those
requirements to the instant case will create significant and
undue hardship on the Debtors. Consequently, the Debtors seek a
waiver of the requirement that the Debtors open new accounts.

In the ordinary course of business, David M. Sherbin, the
Debtors' Vice president and Deputy General Counsel, tells the
Court that the Debtors use over 70 different bank accounts in
their Cash Management System. To avoid substantial disruption to
the normal operation of their businesses and provide a seamless
transition to post-petition operations, Mr. Sherbin contends
that the Debtors should be permitted to continue to use the Bank
Accounts as the Courts have routinely permitted debtors to
utilize their existing bank accounts, finding that such relief
is entirely consistent with applicable provisions of the
Bankruptcy Code.

To protect against the possible inadvertent payment of pre-
petition claims, James E. O'Neill, Esq., at Pachulski Stang
Ziehl Young & Jones, P.C., in Wilmington, Delaware, says that
all banks at which the Debtors hold accounts and from which the
Debtors make payments by check have been advised not to honor
checks issued prior to the Petition Date, except as otherwise
ordered by the Court. Mr. O'Neill informs the Court that the
Debtors have instituted internal cut-off procedures to draw the
necessary distinctions between pre and post-petition obligations
and payments without the need to close the Bank Accounts.

Mr. Sherbin informs the Court that the Debtors also have small
petty cash accounts at several locations used for the purchase
of small office supplies and other materials that may be needed
on an emergency basis. Although these cash transactions are
miniscule in relation to the total cash that runs through the
Cash Management System, Mr. Sherbin explains that they provide
various locations with the flexibility to solve small local
problems quickly and efficiently. Consequently, the Debtors
request that the Court allow such cash transactions to continue
post-petition. Mr. O'Neill contends that such relief has been
granted in cases of similar size and complexity to the instant
case. (Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


GENESIS HEALTH: Court Approves MPAN Pharmacy Bidding Rules
----------------------------------------------------------
The U.S. Bankruptcy Court in Wilmington, Delaware approved
bidding procedures for the pharmacy assets held by bankrupt
Mariner Post-Acute Network Inc. and its bankrupt unit, Mariner
Health Group Inc., Dow Jones reported.

Under the deal, Genesis would pay $42 million in cash for the
pharmacy operation and up to $18 million in so-called earnout
payments. The company would make the payments over a three-year
period following the closing. Under the bidding rules,
challengers to the Genesis deal would have to pay at least $44.5
million at closing and at least $18 million in earnout payments.
Court papers say if one or more timely bids are submitted, an
auction would be held for Genesis and the other bidders.

Mariner Health Group is a wholly-owned unit of the Atlanta-based
Mariner Post-Acute Network. On January 18, 2000, the companies
filed for chapter 11 bankruptcy protection, with the parent
company listing assets of $1.3 billion and liabilities of $2.7
billion.  Genesis emerged from its own chapter 11 on October 2,
after merging with fellow long-term care provider Multicare Cos.
(ABI World, October 18, 2001)


GLOBAL TELESYSTEMS: Agrees to Combination with KPNQwest
-------------------------------------------------------
Global TeleSystems, Inc. (OTC: GTLS; NASDAQ EUROPE: GTSG;
Frankfurt: GTS) announced that it has signed a definitive share
purchase agreement with KPNQwest (NASDAQ: KQIP).

Under the terms of the agreement, KPNQwest will acquire (i)
Global TeleSystems Europe B.V., which owns and operates Ebone,
Europe's leading broadband optical and IP network service
provider; and (ii) GTS's Central European operating companies,
which are the leading alternative provider of voice and data
communications in Central Europe.

KPNQwest will acquire these companies through the issuance of
approximately E210 million of new senior convertible bonds and
the assumption of bank debt and capital lease obligations upon
closing.

Robert Amman, Chairman and Chief Executive Officer of GTS,
commented: "GTS and KPNQwest make a formidable combination. We
believe that this new company can lead the data revolution in
Europe. The many valuable facets of GTS - its assets, its
customers, and most significantly, its talented people - will be
a great addition to KPNQwest. We expect this new combined
company to thrive."

Amman continued: "This transaction represents the completion of
the consensual restructuring process that we began late last
year. As the total consideration from KPNQwest is far less than
our outstanding bond liability, we greatly regret that no value
can accrue to our preferred and common shareholders. Given
current market valuations, we nevertheless feel that this
agreement represents a fair value for the operations and assets
of GTS and presents the best opportunity to create as much value
as possible for our bondholders while continuing to deliver on
our commitments to customers, employees, suppliers and
partners."

GTS has reached agreements with the informal committees
representing the holders of GTS's and GTS Europe's publicly
traded bonds with respect to the terms of the transaction with
KPNQwest, and the allocation of KPNQwest Senior Convertible
Notes. Approximately 67 percent of the approximately E1.1
billion outstanding principal amount of the publicly traded
Senior Notes at GTS Europe, approximately 78 percent of the
approximately E116 million outstanding principal amount of the
Senior Notes at GTS, and approximately 35 percent of the
approximately E362 million outstanding principal amount of
Convertible Debentures issued by GTS have signed forbearance
agreements, committing them to support the proposed transaction
subject to certain terms and conditions.

"The high level of participation and support demonstrated by the
GTS and GTS Europe bondholders in the form of signed forbearance
agreements demonstrates the bondholders' collective support for
the proposed transaction and allocation of value," commented
Irwin Gold, Senior Managing Director of Houlihan Lokey Howard &
Zukin, financial advisor to GTS and GTS Europe.

To ensure the binding nature of the sale agreement on all
bondholders, GTS expects that the transaction will be
effectuated through a "pre-arranged" court proceedings by GTS
and GTS Europe under United States bankruptcy laws, and a
corresponding application by GTS Europe for "surseance" and
"deposition for composition" in the Netherlands. Approval of the
U.S. plan is subject to, among other things, acceptance by more
than one-half in number and two-thirds in dollar amount of
voting bondholders in the requisite classes. Approval of the
Dutch plan is subject to, among other things, approval by two-
thirds in number and three-quarters in value of the GTS Europe
bondholders participating in the proceedings. None of the
operating subsidiaries of GTS will be involved in either court
proceeding and both the Dutch and US plans will call for all
vendor claims of GTS's operating subsidiaries to be paid in the
normal course. The transaction also may require approval by the
European Commission, and is expected to close during the first
quarter of 2002.

                     Interim Funding

To fund the Company's operations prior to closing, GTS has
reached an interim financing agreement with Deutsche Bank,
Dresdner Bank and Bank of America, and investment funds and
accounts managed by Oaktree Capital Management LLC, an affiliate
of one of its bondholders. Under this agreement, the Bank Group
and a group of bondholders underwritten by Oaktree will provide
up to E100 million of secured financing beyond that provided
under GTS's existing E150 million bank facility.

                 Allocation of Consideration

Pursuant to the agreement between the Company and its
bondholders, of the approximately E210 million of new senior
convertible notes to be issued by KPNQwest, the following
allocations will apply: approximately E40-55 million principal
amount will be distributed to bondholders participating in the
interim financing agreement based upon the peak interim
borrowings; approximately E5.3 million principal amount will be
allocated to the GTS Convertible Debentures (along with part of
the allocation outlined below will result in a total allocation
to the GTS Convertible Debentures of E10.0 million principal
amount); the remaining net amount of the new senior convertible
bonds will be allocated 76 percent to the GTS Europe bondholders
and the remaining 24 percent (less the approximately
E4.7 million principal amount required to increase the
allocation to the GTS Convertible Debentures to E10.0 million
principal amount) will be allocated to the holders of the GTS
Senior Notes.

In addition, the holders of the GTS Senior Notes will receive
GTS's retained investments in Ventelo, Ltd, the Company's
reorganized Business Services voice operations unit that was
divested by the Company earlier this year.

GTS is the parent company of Ebone, the leading broadband
optical and IP network service providers in Europe, and GTS
Central Europe, one of the leading providers of voice and data
services across the region. Ebone's fibre optic network extends
more than 25,000 kilometres, reaching virtually all major
European cities. Ebone also operates one of Europe's leading IP
networks, serving approximately 25% of all European Internet
users. With operations in North America and in 50 European
cities, Ebone delivers tailored networking services to
telecommunication carriers, service providers and large European
enterprises with intensive data requirements. GTS Central Europe
has operations in the Czech Republic, Slovakia, Poland, Hungary
and Romania. For further information, please visit us at
http://www.gts.com  or  http://www.ebone.com


INTEGRATED HEALTH: Rotech & HAC Enter Stipulation to Lift Stay
--------------------------------------------------------------
To pursue State Court Litigation, specifically, to dismiss
Integrated Health Services, Inc. from the State Court Action in
which the Debtors were named as Co-Defendants in relation to
their purchase of the assets of The Quest Companies (former
franchisees of Home Americair of California (HAC)), including
the ownership and operation of former HAC franchises, HAC on the
one hand, and Debtors Centennial Medical Equipment, Inc. (a
wholly owned subsidiary of Rotech) and Rotech Medical
Corporation, on the other hand, sought and obtained the Court's
approval of their Stipulation For Relief From The Automatic
Stay.

                          Recitals

The purchase and sale of Quest assets, including the ownership
and operation of former HAC franchises, was made on or about
December 18, 1997, pursuant to agreements between Centennial and
the "Quest Companies". The Quest Companies were comprised of
Bradley Medical, Inc., JB Medical, Inc., Puget Medical, Inc.,
Home Med-Care Corporation, Tyler Medical, Inc., MK Medical,
Inc., BBCS Oxygen, Inc and CSB Oxygen Services, Ltd., a
California limited partnership.

The Quest Companies, former HAC franchisees who had entered into
certain Franchise Agreements with HAC, are alleged to have,
among other things, misappropriating the "Americair(R)" name,
mark and system and diluted their value to HAC and its
franchisees.

HAC is the franchisor/owner of the "Americair(R)" name and
system developed for its own use and the use of its franchisees,
which is an allegedly unique system for providing respiratory
health care equipment and services to patients in their homes
and other non-hospital environments.

As part of the Purchase Agreement, the Debtors required the
Quest Companies to put $5,000,000 of the purchase price into
escrow as security and collateral for, inter alia, any judgment
or costs incurred by the Debtors with respect to the pending or
threatened litigation between Bradley and HAC.

HAC, after being named as a Defendant in the case of Bradley
Medical Inc., et al. v. Home Americair of California, et al.,
now pending in the Superior Court of the State of California,
County of Orange as Case No. 779740 (State Court Action), filed
a Cross-Complaint against the Quest Companies. Rotech and
Centennial were added as Cross-Defendants following the sale of
assets. HAC alleged causes of action in the State Court Action
against Centennial for misappropriation of trade secrets (which
has been dismissed), federal trademark infringement (Lanham
Act), federal trademark dilution, state law trademark
infringement, state law trademark dilution, conversion,
constructive trust, intentional interference with prospective
economic advantage, unfair competition, violation of the
Washington Consumer Protection Act, violation of the Minnesota
Deceptive Trade Practices Act and civil conspiracy. HAC alleged
causes of action in the State Court Action against Rotech for
conversion, constructive trust, intentional interference with
prospective economic advantage, unfair competition and civil
conspiracy.

As a result of the filings of the Debtors' bankruptcy cases,
certain acts and proceedings against those Debtors and their
property are enjoined pursuant to 11 U.S.C. section 362 of the
Code.

               The Agreement and Stipulation

HAC and the Debtors stipulate and agree that the Debtors will be
dismissed from the State Court Action, with prejudice, and that
HAC may proceed against any and all other defendants in the
State Court Action based upon Debtors' stipulations that the
$5,000,000 escrow funds in that certain Agreement between Rotech
Medical Corporation and the Quest Companies, dated October 21,
1997, and related transactional documents (collectively, the
Purchase Agreement) is not property of either of the Debtor's
estates or of any of the other jointly administered Debtors'
estates.

The parties believe it is in their respective interests to avoid
any litigation in connection with the Bankruptcy Code 11 U.S.C.
section 362 automatic stay injunction. Accordingly, the
Stipulation and Order also provides that the Automatic Stay
shall be modified, effective July 1, 2001, for the sole purpose
of dismissing the Debtors' from the State Court Action, and
thereby permitting HAC to prosecute its State Court Action.

The Debtors covenant and agree that $5,000,000 escrow funds
referred to in the Purchase Agreement between Rotech Medical
Corporation and the Quest Companies is not property of either of
the Debtor's estates or of any of the other jointly administered
Debtors' estates.

HAC may use this Stipulation for the purpose of assisting it in
the collection of any judgment it may obtain against Bradley
Medical, Inc. and/or any of its affiliates.

The Bankruptcy Court shall retain jurisdiction to resolve any
disputes or controversies arising from or related to this
Stipulation. (Integrated Health Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


KELLSTROM INDUSTRIES: S&P Drops Ratings After Missed Payment
------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Kellstrom Industries Inc. to 'SD' from triple-'C'-plus, the
subordinated debt rating to 'D' from triple-'C'-minus, and the
senior secured (bank loan) rating to double-'C' from triple-'C'-
plus, following the company's announcement that it did not make
the Oct. 15, 2001, interest payment due on its $54 million 5.75%
convertible subordinated notes due Oct. 15, 2002.

The corporate credit and subordinated debt ratings are removed
from CreditWatch, where they were placed August 17, 2001. The
bank loan rating remains on CreditWatch with negative
implications.

Kellstrom is a leading aviation inventory management company
engaged in the purchasing, overhauling (through subcontractors),
reselling, and leasing of aircraft parts, aircraft engines, and
engine parts primarily to airlines, overhaul centers, and other
distributors. The September 11 terrorist attacks against the
U.S. have had a severe impact on the commercial aviation
industry, which represented about 75% the firm's 2000 revenues.

Standard & Poor's will monitor developments to determine their
effect on credit quality.


KOMAG INC: Nasdaq Delists Convertible Bonds Due January 2004
------------------------------------------------------------
Komag, Incorporated (OTC Bulletin Board: KMAGQ), the largest
independent producer of media for disk drives, today announced
that Nasdaq has delisted the 5 3/4% Subordinated Convertible
Bonds due January 2004 that were originally issued by HMT
Technology Corporation.

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


LAIDLAW: Judge Walsh Rejects Safety-Kleen's Move to Change Venue
----------------------------------------------------------------
Safety-Kleen Corporation and its scores of debtor-affiliates ran
to Chief Judge Peter J. Walsh in Wilmington with a pitch to
transfer Laidlaw's bankruptcy cases from the Western District of
New York to the District of Delaware.  

Judge Walsh declined Safety-Kleen's invitation.

Safety-Kleen filed their chapter 11 cases in Delaware last June
2000, while Laidlaw filed their bankruptcy cases in the Western
District of New York a year later.  Laidlaw Inc. owns about 44%
of the common stock of Safety-Kleen Corporation.

According to Mark A. Fink, Esq., at Skadden, Arps, Slate,
Meagher & Flom, in Wilmington, Delaware, Laidlaw's decision to
file in a district other than that in which its affiliates cases
are pending creates a substantial risk that both Safety-Kleen
and Laidlaw will be:

  (a) subject to inconsistent judgments over inter-related
      issues,

  (b) forced to spend significant time and resources and consume
      limited judicial resources in determining which of the
      various inter-related issues and litigation will be
      adjudicated by which court and on what time frame; and

  (c) subject to inconsistent rulings with respect to the
      application of the automatic stay to various class action
      litigation in which Laidlaw and Safety-Kleen or current
      and former officers of each are co-defendants.

Mr. Fink adds that permitting piecemeal resolution of the issues
raised in the litigation in two separate tribunals is
inefficient because the substantial claims and defenses each
Debtor has, and will, assert against each other is substantially
the same.

Further, Mr. Fink says, it will likely result in significant
duplication and multiple trials on the same issues.  It also has
the potential to result in significant appellate litigation
spawned by inconsistent rulings, Mr. Fink notes.

Mr. Fink cites Rule 1014(b) of the Federal Rules of Bankruptcy
Procedure which provides that a Court may transfer venue of an
affiliate case in order to ensure that both cases are pending in
the same tribunal.  Safety-Kleen believes that doing so in these
cases is necessary to avoid the significant unnecessary
expenditures of time, judicial resources and the various
estates' resources in attempting coordinate, or after the fact
reconcile, rulings with respect to the liquidation of the inter-
related claims and the resolution of the multitude of issues
that must be addressed between these affiliated debtors.

For the last 13 months, Mr. Fink observes that the Delaware
Bankruptcy Court has become familiar with Safety-Kleen and the
historical context between Safety-Kleen and Laidlaw that is the
factual predicate for many of the claims, defenses and issues
that both debtors will have to resolve.  

In addition, Mr. Fink informs Judge Walsh that significant
pieces of the litigation between Safety-Kleen and Laidlaw,
including Laidlaw's $6,500,000,000 claim against Safety-Kleen
and Safety-Kleen's $200,000,000 avoidance action against Laidlaw
have already been filed in the Delaware Court, have been
answered by Laidlaw.  In fact, Mr. Fink says, the Delaware Court
has entered an order governing discovery and discovery is well
underway.

Accordingly, Safety-Kleen believes that the interest of judicial
economy weigh strongly in favor of the Laidlaw bankruptcy
proceedings being transferred to the Delaware Court.

To remind Judge Walsh of the multitude of inter-related legal
issues, factual predicates and historical relationships between
Laidlaw and Safety-Kleen, Mr. Fink outlines that:

    (a) Laidlaw has asserted substantial claims against Safety-
        Kleen and Safety-Kleen has asserted and will shortly
        assert additional substantial claims against Laidlaw.
        Resolution of inter-related facts and determination of
        complex issues with respect to setoff and recoupment of
        the various overlapping claims and defenses;

    (b) Issues concerning the conduct of certain former Safety-
        Kleen offices and directors, each of whom were installed
        by Laidlaw at Safety-Kleen, and their involvement in the
        accounting irregularities at Safety-Kleen that resulted
        in the recent restatement, involving over
        $1,200,000,000, of Safety-Kleen's financial statements
        for the period during those officers' and directors'
        tenure at Safety-Kleen;

    (c) Liquidation of Laidlaw Inc.'s $6,500,000,000 proof of
        claim filed against Safety-Kleen alleging:

        (i) claims for indemnification, contribution and
            reimbursement in connection with certain litigation
            matters,

       (ii) claims against Safety-Kleen for fraudulent
            misrepresentation, fraud, securities law violations
            and related causes of action,

      (iii) insurance claims,

       (iv) guaranty claims,

        (v) environmental contribution claims,

       (vi) tax reimbursement claims, and

      (vii) additional miscellaneous claims.

    (d) Safety-Kleen's pending objection to Laidlaw's proof of
        claim seeking, among other things, a determination that
        significant portions of the claim are subject to
        subordination pursuant to section 510 of the Bankruptcy
        Code and Laidlaw's response to Safety-Kleen's objection.

    (e) Safety-Kleen's adversary proceeding pending in the
        Delaware Court against Laidlaw Inc. and certain of its
        affiliates to recover a transfer of over $200,000,000 on
        the grounds that the transfer was either a preferential
        payment or an intentional fraudulent transfer.  Laidlaw
        filed an answer to the complaint, and the parties have
        exchanged discovery requests.

    (f) The parties' agreement for a framework for moving
        forward with discovery over the pending litigation
        formalized in a protective order that the Delaware Court
        has already entered.

    (g) Safety-Kleen intends to file, prior to the bar date
        established in the Laidlaw Bankruptcy Cases, significant
        affirmative claims against Laidlaw, including claims
        based on the parties' historic contractual relationships
        and claims arising from Laidlaw's conduct in connection
        with its prior control of Safety-Kleen.

    (h) Both Safety-Kleen and Laidlaw have commenced similar
        adversary proceedings in their respective Bankruptcy
        Courts to enjoin prosecution of certain civil lawsuits
        filed by shareholders and bondholders pending against,
        among others, certain of their respective current and
        former officers and directors.  Many of these same
        securities lawsuits form the basis of Laidlaw's
        $1,000,000,000 claim against Safety-Kleen for
        indemnification, contribution and reimbursement and for
        which Safety-Kleen has sought subordination.

    (i) Laidlaw acknowledges that it would not have filed for
        bankruptcy protection but for the claims asserted by
        Safety-Kleen and that those claims are a main obstacle
        to a completely consensual reorganization process in the
        Laidlaw Bankruptcy Cases.

In addition to the numerous interrelated claims and causes of
action, Mr. Fink notes, Safety-Kleen and Laidlaw historically
have had and continue to have significant intertwined
relationships:

  (1) In May 1997, Rollins Environmental Services, Inc. acquired
      the hazardous and industrial waste operations of Laidlaw,
      Inc. in a reverse acquisition.  As a result of the reverse
      acquisition, Laidlaw, Inc. became the 67% owner of the
      "new" Rollins.

  (2) Laidlaw, Inc. renamed the company Laidlaw Environmental
      Services, Inc. and installed long time veterans of the
      Laidlaw companies as the senior operating officers of the
      company and placed three of its employees or board members
      on Laidlaw Environmental Services, Inc.'s board of
      directors.

  (3) In November 1997, Laidlaw Inc., through its subsidiary
      Laidlaw Environmental Services, Inc., announced its
      intention to acquire old Safety-Kleen.  Laidlaw adopted
      the name Safety-Kleen for the merged entity.  The Laidlaw
      veteran managers of Laidlaw Environmental Services, Inc.
      continued in senior positions at Safety-Kleen --chief
      executive officer, chief operating officer and chief
      financial officer.

  (4) Laidlaw's former chief executive officer and chairman,
      James Bullock, and chief financial officer, Leslie
      Haworth, served on the Safety-Kleen board of directors to
      serve, respectively, as board chairman and chairman of the
      audit committee.

  (5) Many of the claims Safety-Kleen has against Laidlaw relate
      to Laidlaw's prior control of Safety-Kleen, the conduct of
      the senior officers and board members Laidlaw placed at
      Safety-Kleen and its and their roles in the accounting
      irregularities that resulted in Safety-Kleen's recent
      restatement of its prior financial statements.

  (6) In the Laidlaw Bankruptcy case first day hearing,
      Laidlaw's counsel recognized that resolution of issues
      with Safety-Kleen is essential for Laidlaw.

Thus, Safety-Kleen asserts that Laidlaw's bankruptcy cases
should be transferred to the Delaware Bankruptcy Court.

               Safety-Kleen's Secured Creditors
                    Hop on the Bandwagon

Toronto-Dominion (Texas), Inc., on behalf of itself and as
Administrative Agent for 120 financial institutions that hold
approximately $1,800,000,000 in secured claims against Safety-
Kleen, submits a memorandum of law to Judge Walsh outlining
their reasons for supporting Safety-Kleen's motion:

    (i) transfer of the Laidlaw chapter 11 cases to the Delaware
        Bankruptcy Court is appropriate and consistent with
        Bankruptcy Rule 1014(b);

   (ii) transfer of the Laidlaw cases to Delaware is in the
        interest of justice and convenience of the parties:

        (a) proximity of the Delaware Court to interested
            parties than Buffalo, New York (1) parties-in-
            interest and (2) professionals engaged by the major
            parties are all located outside Buffalo, New York in
            geographic areas closer to Delaware;

        (b) location of the Laidlaw's Assets (1) both Safety-
            Kleen's and Laidlaw's businesses are national in
            scope, and (2) location of both Safety-Kleen's and
            Laidlaw's books and records is not dispositive;

        (c) transfer of venue of Laidlaw's cases would promote
            efficient and economic administration of the Estate;

        (d) substantial economic harm to Safety-Kleen and their
            creditors will result if Safety-Kleen is forced to
            recommence their litigation against Laidlaw in
            Buffalo;

Mark D. Collins, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, asserts that Laidlaw's selection of the
Buffalo Bankruptcy Court for venue purposes was arbitrary and
defensive on the part of Laidlaw.  Mr. Collins accuses Laidlaw
of avoiding the resolution in the Delaware Court of the Safety-
Kleen claims against Laidlaw.  Mr. Collins notes that the claims
of Safety-Kleen against Laidlaw are substantial and critical to
the potential reorganization of Safety-Kleen.

Mr. Collins compares that Safety-Kleen's chapter 11 cases have
been pending for almost 14 months while Laidlaw's chapter 11
cases are only a few months old.  Consequently, Mr. Collins
contends, there will be no major dislocation or inconvenience
suffered by Laidlaw by reason of the appropriate transfer of the
Laidlaw chapter 11 cases to the Delaware Bankruptcy Court.

Thus, Safety-Kleen's secured creditors urge Judge Walsh to grant
transfer of the venue of Laidlaw's chapter 11 cases.

                    Laidlaw Likes New York

Contrary to Safety-Kleen and its creditors' assertions, Laidlaw
contends that the transfer of their bankruptcy cases to Delaware
would be imprudent and wholly inconsistent with the purpose and
spirit of Bankruptcy Rule 1014(b), for a number of reasons.

Matthew G. Zaleski, III, Esq., at Campbell & Levine, in
Wilmington, Delaware, explains that the purpose of Bankruptcy
Rule 1014(b) is to transfer cases of affiliated debtors to a
single district so that they may be consolidated or jointly
administered "because their affairs are so intermingled that
administering separate cases in multiple jurisdictions would be
imprudent".  But that is not the case here, Mr. Zaleski
emphasizes, since Laidlaw and Safety-Kleen are "affiliates" in
only the most technical sense.  Although Laidlaw does hold 44%
equity stake in Safety-Kleen Corporation, Mr. Zaleski notes,
that stake has no economic or practical value.  In fact, Mr.
Zaleski tells Judge Walsh, Laidlaw has written off the entire
book value of their investment in Safety-Kleen.

In addition, Mr. Zaleski says, none of the factors that justify
a transfer of venue under Bankruptcy Rule 1014(b) are present in
this case.  Mr. Zaleski relates that Laidlaw and Safety-Kleen  
act as entirely independent enterprises, having completely
separate management, creditors, operations and books and
records.  In fact, Mr. Zaleski informs Judge Walsh, Laidlaw has
no representation whatsoever on the Safety-Kleen board of
directors or in Safety-Kleen's management contrary to Safety-
Kleen's claim that Laidlaw represent controlling shareholders of
Safety-Kleen.

Furthermore, Mr. Zaleski contradicts Safety-Kleen and its
secured creditors that transferring the venue of the Laidlaw
cases to Delaware would not serve the interests of justice or
the convenience of the parties.  Mr. Zaleski recognizes that the
resolution of the various disputes and claims between Laidlaw  
and Safety-Kleen is important to the eventual outcome of both
the Laidlaw cases and the Safety-Kleen cases.  However, Mr.
Zaleski contends, it does not justify transferring venue of
Laidlaw's entire chapter 11 cases to the Delaware Bankruptcy
Court.  In contrast to Safety-Kleen's concerns, Mr. Zaleski
tells Judge Walsh that Laidlaw has complete confidence in the
ability of the Delaware Bankruptcy Court and the New York
Bankruptcy Court to coordinate their efforts to resolve the
issues that impact both cases.  "This is something that
sophisticated courts such as these can and must do every day,"
Mr. Zaleski states.

Finally, Mr. Zaleski explains Laidlaw's "ample good reasons" for
selecting Buffalo, New York as the venue for their cases:

    (a) the close proximity of the New York Bankruptcy Court to
        Laidlaw's headquarters in Burlington, Ontario (less than
        70 miles away), as well as to many of their major
        creditors in Canada and to the Canadian court in Toronto
        with jurisdiction over companion proceedings under the
        Canadian Companies' Creditors Arrangement Act;

    (b) the New York Bankruptcy Court's general familiarity with
        cross-border issues; and

    (c) the New York Bankruptcy Court's ability (as contrasted,
        respectfully, with the Delaware Bankruptcy Court, which
        is the busiest by far in the United States) to devote
        substantial attention to the Laidlaw cases in a
        compressed time frame.

In addition, Mr. Zaleski says, the choice of the New York
Bankruptcy Court as an appropriate filing venue is supported by
virtually of Laidlaw's significant debtholders.  On top of that,
Mr. Zaleski notes that the New York Bankruptcy Court has already
invested substantial time and attention not only to
administrative matters, but also to substantive matters that
will dictate the ultimate direction of the Laidlaw cases.  Thus,
Laidlaw contends that transferring their cases to the Delaware
Bankruptcy Court at this point would undermine the progress made
to date and severely prejudice their estates and creditors by
causing substantial additional delay and expense.

In sum, Laidlaw's objections are:

    (a) granting the requested relief would be an inappropriate
        application of Bankruptcy Rule 1014(b);

    (b) the interests of justice and convenience of the parties
        clearly favors retaining venue of the Laidlaw cases in
        the New York Bankruptcy Court:

        (1) the New York Bankruptcy Court is a more convenient
            forum for interested parties in the Laidlaw cases;

        (2) transferring venue to the Delaware Bankruptcy Court
            would undermine the progress of the Laidlaw cases;

        (3) the Delaware Bankruptcy Court should respect the
            Laidlaw's choice of venue;

        (4) transferring the venue of the Laidlaw cases will not
            foster the efficient and economic administration of
            the Laidlaw cases or the Safety-Kleen Cases.

And that is why Laidlaw wants Judge Walsh to deny Safety-Kleen's
motion.

                 Laidlaw's Creditors' Committee
                      Doesn't Like Delaware

The Official Committee of Unsecured Creditors of Laidlaw
supports Laidlaw's objections.  Monica Leigh Loftin, Esq., at
Potter Anderson & Corroon LLP, in Wilmington, Delaware tells
Judge Walsh that the Laidlaw Committee is comprised of bank and
public bondholder creditors of Laidlaw who:

    (i) directly represent in excess of $3,500,000,000 of fixed
        and undisputed claims against Laidlaw, and

   (ii) firmly support venue in the Western District of New
        York.

                       *     *     *

Unfortunately for Safety-Kleen, Judge Walsh denies their motion
to transfer the venue of Laidlaw's cases to Delaware.

In his order, Judge Walsh explains that Rule 1014(b) is a
procedural rule and not one that decides rights or interests.
"The rule is not mandatory.  It provides that the Court may
determine, in the interest of justice or convenience of the
parties, which district or districts the cases should proceed,"
Judge Walsh notes.  Thus, Judge Walsh relates, even if Safety-
Kleen's and Laidlaw's cases were totally interdependent, this
alone does not require consolidation of both cases in one
district.

Judge Walsh also justifies that the convenience of the parties
is not the focus of his decision considering that both Safety-
Kleen and Laidlaw are national in scope.  Judge Walsh determines
that the present business operations of Safety-Kleen and Laidlaw
are not so intertwined that the relationship between them
requires the proceedings in one district at this time.  
According to Judge Walsh, there is no evidence that Laidlaw
continues to exercise the kind of control over Safety-Kleen's
affairs that would warrant a transfer of Laidlaw's bankruptcy
cases to Delaware.

Furthermore, Judge Walsh notes, Laidlaw has already filed its
plan and disclosure statement and the New York Bankruptcy Court
has entered a claims bar date order.  On the other hand, Judge
Walsh observes, it will likely be many months before Safety-
Kleen emerge from bankruptcy.  And in the light of the heavy
case load pending in the Delaware Bankruptcy Court, Judge Walsh
says, a transfer of Laidlaw's cases to Delaware would disrupt
the progress of Laidlaw's reorganization efforts.

"It may be necessary and appropriate to resolve the intertwined
claims between Safety-Kleen and Laidlaw in one forum at a latter
time," Judge Walsh rules.

But Judge Walsh makes it clear that the denial of Safety-Kleen's
motion is entered without prejudice to the right and ability of
Safety-Kleen and/or Laidlaw to have a procedure for resolving
the intertwined claims between Safety-Kleen and Laidlaw in one
forum addressed at a later time.

In the meantime, Judge Walsh emphasizes that Safety-Kleen and
Laidlaw's cases shall proceed in their respective courts,
subject to the possibility of a later determination to
consolidate the cases or particular proceedings in one forum,
depending upon later developments. (Laidlaw Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


LERNOUT & HAUSPIE: Selling Kurzweil Educational Assets for $2MM
---------------------------------------------------------------
L&H Holdings, Inc., as the sole shareholder of L&H Applications
USA, Inc., a non-debtor subsidiary of Holdings, Inc., Judge
Wizmur to approve the sale by Applications of all of the assets
of its Kurzweil Educational Systems Group to KESI Acquisition,
Inc., an entity owned and controlled by insiders of
Applications.  

Appearing for Holdings, Mr. Gregory W. Werkheiser and Robert J.
Dehney, of the Wilmington firm of Morris Nichols Arsht &
Tunnell, acting as local counsel, and Luc A. Despins, Allen S.
Brilliant, and Paul D. Malek, of the New York firm of
Milbank Tweed Hadley & McCloy LLP, as lead counsel, warn Judge
Wizmur that, under Delaware law, this sale may constitute
substantially all of Applications' remaining assets.   

However, the Debtor also advises that Applications owns other
assets besides Kurzweil, and expects that Applications will
continue operations after the sale.  Nonetheless, Holdings is,
from an "abundance of caution", seeking Judge Wizmur's approval
of Holdings' authorization of this sale in the event that the
Kurzweil assets are considered substantially all of the
remaining assets of Applications.  In addition, Holdings warns
that this Agreement is expressly conditioned upon Holdings'
obtaining Judge Wizmur's approval and authority for this sale.

Applications is engaged in the business of (1) the development
of voice recognition technology and related sales and marketing
efforts on behalf of other members of the Debtor group, and (ii)
the design, development, marketing, licensing, testing,
documentation, manufacture, support, maintenance and sale of
Windows- and Macintosh-based scanning and reading software
designed to assist and teach people with learning
disabilities and vision impairment.  The purchased assets relate
to the KESI business and constitute a substantial portion of the
remaining assets of Applications.

KESI was formed for the purpose of acquiring the purchased
assets and is an entity owned and controlled by a group of
Applications' employees involved in the management of the KESI
group.  This management group consists of:

         Michael Sokol, Vice President and General Manager, KESI
         Stephen Baum, Vice President, KESI
         Alice Cunningham, Financial Analst, KESI
         Mark Dionne, Director of Engineering, KESI
         Forest Dobbs, Director of Worldwide Sales, KESI

             Applications' Sales Efforts

In the spring of 2001, Holdings and the senior management of
Applications determined that the KESI business, and therefore
the purchased assets, were no longer a strategic fit with the
operations of the Debtors, and determined to sell the purchased
assets.  Holdings and its financial advisors contacted three
prospective purchasers of the purchased assets, but all of these
purchasers declined to proceed further.

Negotiations between Applications and the management group began
at this time and were, at all times, conducted at arm's length.  
The management group and Applications were represented by
separate counsel during these negotiations. Having determined
that no offers other than that of the management group were
forthcoming for the KESI assets, the management (other than the
management group) and directors of Holdings and Applications
determined that, in their business judgment, the sale of the
purchased assets to the management group was in the best
interests of Holdings and its estate, and Applications,
respectively.

Applications therefore negotiated the terms and conditions of
the Agreement for the sale of the purchased assets with the
management group.

                     The Purchase Price

The purchase price for the KESI asset is $2,000,000, of which
$1,500,000 is payable in cash at closing, and the remaining
balance of $500,000 paid by delivery to Applications of a
promissory note for that amount.  The note will bear interest at
the rate of 6% per annum and have a term of five years, and will
be secured bob all of the assets of KESI under the terms of a
security agreement to be entered into concurrently with the
closing.

The Debtor assures Judge Wizmur that she has the authority to
authorize Holdings to exercise its rights as Applications' sole
shareholder to approve the sale of the purchased assets if
Holdings demonstrates a sound business reason for this
transaction, and if she also finds that the sale is fair and
reasonable, and that the purchaser is proceeding in good faith.  
Once Holdings articulates a sound business reason, there is a
presumptions that in making this business decision the Debtor's
directors acted on an informed basis, in good faith, and in
the honest belief that the action was in the best interests of
the corporation.  This rule shields a debtor's management from
judicial second-guessing.

Since Applications is not a debtor in these cases, the sale of
its assets need not comply with these standards or the
Bankruptcy Code. Holdings' approval of the sale of the purchased
assets, however, may be required under applicable non-bankruptcy
law.  Holdings submits that the sale of the purchased assets by
Applications under the Agreement is in the best interests of
Holdings, its estate and creditors (although no reason other
than the previously stated determination to sell is provided).  

Accordingly, Holdings asks that Judge Wizmur authorize it to
give its consent to this sale to KESI. (L&H/Dictaphone
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


LERNOUT & HAUSPIE: SpeechWorks Offers to Buy Technology Assets
--------------------------------------------------------------
SpeechWorks International, Inc. (Nasdaq:SPWX), a global leader
in speech recognition and text-to-speech (TTS) technologies and
services, announced that it has submitted an offer for certain
business and technology assets of Lernout & Hauspie Speech
Products N.V.

Under terms of the offer, SpeechWorks will continue support for
several leading L&H technologies. The company also announced
that it would operate a center of technical excellence in
Belgium. The offer, comprised of a combination of cash and
SpeechWorks' stock, values the selected assets at approximately
$12.2 million.

Lernout & Hauspie filed for bankruptcy protection in the United
States late last year, and is currently pursuing similar
protection in the courts of Belgium. SpeechWorks' offer is
subject to closing conditions and to all applicable bankruptcy
procedures.

Through the power of SpeechWorksr technologies, the human voice
is all a caller needs to access instant information and conduct
transactions from any landline or wireless phone. Around the
world, customer service innovators such as Amtrak, Microsoft,
the U.S. Internal Revenue Service and Yahoo! are realizing
returns on SpeechWorks applications that consistently delight
and serve customers 24 hours a day. With over 100 partners,
SpeechWorks (Nasdaq: SPWX) delivers natural language speech
recognition, speaker verification and text-to-speech (TTS)
solutions to leading corporations, telecommunications providers
and government organizations worldwide.


MARINER POST-ACUTE: Seeks Eighth Extension of Exclusive Periods
---------------------------------------------------------------
In anticipation that the Lenders' Plan and Disclosure Statement
will be withdrawn, and that Mariner Post-Acute Network, Inc.
will be filing an alternate plan of reorganization, if the Court
approves the MOU Motion, or alternatively, in the event the MOU
Motion is not granted, a reasonable amount of time on their part
will be required to formulate and confirm a plan of
reorganization, the Debtors sought and obtained the Court's
approval for a further extension of the exclusive periods in
which to file a plan or plans of reorganization to and including
November 20, 2001, and if a plan or plans of reorganization are  
filed on or before that date, to and including January 22, 2002.

The Debtors tell the Court that they have made significant
progress in the reorganization process, and in particular, in
negotiating and seeking Court approval of the MOU and the
transactions contemplated thereby. They expect still more work
to do before a plan of reorganization can be confirmed and they
can emerge from bankruptcy.

Judge Walrath is satisfied that the Debtors have a legitimate,
reasonable, and good faith need for additional time to file a
plan of reorganization, that the Debtors are generally managing
their business effectively and preserving the value of their
assets for the benefit of creditors, and are not seeking to use
exclusivity to pressure creditors to support a plan that is
unacceptable to them.

The Debtors are hopeful that the limited extension of the
Debtors' Exclusivity Periods will encourage the negotiation and
formulation of a plan or plans of reorganization that is in the
best interests of the Debtors' creditors and estates. (Mariner
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


MCLEODUSA: Scraps Dividend Payment on Series A Preferred Stock
--------------------------------------------------------------
McLeodUSA Incorporated (Nasdaq:MCLD), the nation's largest
independent competitive local exchange carrier, announced it has
elected not to declare the quarterly stock dividend on its 6.75%
Series A Cumulative Convertible Preferred Stock that is payable
on November 15, 2001. The dividend will continue to accumulate
at the rate of 6.75% annually.

The dividend historically has been paid in shares of McLeodUSA
Class A Common Stock at a rate of $4.21875 per share of Series A
Preferred Stock owned. As of September 30, 2001, there were
1,149,375 shares of Series A Preferred Stock outstanding. While
the Company could have paid the dividend, at current share
prices the Company would have to issue over seven million new
common shares, compared to the 787,690 shares issued in the past
quarter as the Preferred dividend.

McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The company also provides data and voice
services in all 50 states. McLeodUSA is a facilities-based
telecommunications provider with, as of June 30, 2001, 383 ATM
switches, 49 voice switches, 372 collocations, 512 DSLAMs,
nearly 31,000 route miles of fiber optic network and 10,600
employees.

The company's fiber optic network is capable of transmitting
integrated next-generation data, Internet, video and voice
services, reaching 800 cities and approximately 90% of the U.S.
population. In the next 12 months, McLeodUSA plans to distribute
35 million telephone directories in 26 states, serving a
population of 59 million. McLeodUSA is a Nasdaq-100 company
traded under the symbol MCLD. Visit the company's web site at
http://www.mcleodusa.com


OWENS CORNING: Court Okays Stipulation Re Inter-Creditor Issues
---------------------------------------------------------------
Judge Fitzgerald put her stamp of approval on a Stipulation to
resolve certain inter-creditor issues between Owens Corning,
along with the Official Committee of Asbestos Claimants, the
Legal Representative for Future Claimants, and the Bank Group.

The Stipulation involves these terms and their definitions:

A. Credit Agreement refers to that certain Credit Agreement
   between and among the Debtors and its subsidiaries, as
   borrowers and guarantors, and the Banks, and Credit Suisse
   First Boston as Agent dated June 26, 1997.

B. Banks or Bank Group mean the banks, their successors and/or
   assigns, in their capacity as lenders, under the Credit
   Agreement and not in any other capacity.

C. Debentures mean those two certain debentures, dated December
   24, 1997, each in the principal amount of $501,000,000,
   issued by Owens-Corning Fiberglas Technology Inc. and IPM
   Inc. to Owens Corning.

D. License Agreement refers to that certain License Agreement
   dated as of October 1, 1991, by and between Owens Corning
   Fiberglas Corporation and Owens Corning Fiberglas Technology
   and that certain License Agreement dated April 27, 1999, by
   and between Owens corning Fiberglas Technology and Amerimark
   Building Products.

E. Subsidiary Guaranties refer to the obligations of certain
   Owens Corning subsidiaries arising from the guaranties under
   the Credit Agreement.

F. Successor Liability means any claim, basis, or theory that
   any subsidiary of Owens Corning is or should be liable for
   any personal injury or property damages caused by exposure
   to asbestos-containing material produced, sold or installed
   by Owens Corning or any other subsidiary.

G. Intercompany Transfers refer to liabilities incurred or
   other asset transfers between and among Owens Corning and
   its subsidiaries.

H. Inter-creditor Issues refer to any and all claims,
   objections, motions, adversary proceedings involving or
   related to issues of the amount, validity, enforceability,
   or priority of claims by the Bank Group against the Debtors
   and its subsidiaries.

I. Participating Parties refer to the signatories to this
   Stipulation.

The Stipulation provides that the Debtors will establish and
maintain an information and document depository in New York
City, which is currently being maintained at the offices of
Skadden Arps Slate Meagher & Flom, in New York and shall be
available during regular business hours. All information is
given out with equal access to all Participating Parties.

According to the Stipulation, this schedule shall govern the
disposition of the Inter-creditor Issues:

A. By October 29, 2001, the Debtors will file a motion to
   establish a bar date for filing of all claims, including
   intercompany claims against each of the Debtors, except for
   asbestos-related personal injury and damage claims.

B. By September 30, 2001, the Debtors will place into the
   Information Depository all non-privileged documentary
   materials identified by them as of that date are relevant to
   the Inter-Creditor Issues, some of which may be redacted.

C. Not later than October 20, 2001, the Debtors and the
   Participating Parties are authorized to serve reasonable
   written discovery requests in connection with their
   investigation of the Inter-Creditor Issues on such third
   party non-debtors as are reasonably necessary to complete
   the investigation.

D. By October 31, 2001, the Bank Group shall file a proof of
   claim in each of the appropriate individual Debtor cases for
   claims arising from the Credit Agreement.

E. By November 30, 2001, the Participating parties shall use
   best efforts to ensure that all third-party non-debtor
   document production is complete.

F. By October 20, 2001, the Debtors shall propose a list of the
   names of the persons now or previously employed with
   knowledge of the Inter-Creditor Issues along with a specific
   description of the knowledge of each. Subsequently, within
   10 days, the Participating Parties may identify additional
   persons limited to those reasonably required to investigate
   the Inter-Creditor Issues.

G. By November 15, 2001, the Debtors shall circulate a proposed
   deposition schedule. Depositions shall commence no earlier
   than November 15, 2001 and shall conclude no later than
   January 31, 2002.

Lastly, the Stipulation provides that at each omnibus hearing,
the Debtors shall provide a report regarding the status of
compliance with this Order and that any pending discovery
disputes shall also be addressed at each such hearing.
Additionally, the Participating Parties, by mutual agreement,
may extend or modify the dates earlier established without
further court approval. (Owens Corning Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


PACIFIC GAS: Gets Approval to Assume 15-Year Gaylord Gas Pact
-------------------------------------------------------------
Pacific Gas and Electric Company sought and obtained the Court's
authority for assumption of its Long-Term Intrastate Natural Gas
Transportation Service Agreement with Gaylord Container Corp.,
pursuant to Section 365(a) of the Bankruptcy Code.

The proposed assumption would allow the continuation of PG&E's
long-standing business relationship with Gaylord, which has
resulted in significant revenue to PG&E and avoided the
possibility that Gaylord would bypass PG&E's transmission system
in favor of PG&E's competitors. Further, the assumption forms
part of a reasonable compromise of Gaylord's outstanding claims
against PG&E in the Bankruptcy Court arising from another
agreement - a PPA between the parties, clearing the cloud of
potentially expensive and protracted litigation.

The Gas Agreement, entered into in 1994, is a long-term
arrangement with Gaylord by which PG&E supply Gaylord's full
requirements for intrastate natural gas transportation services
to Gaylord's facility in Antioch, California for a 15-year
period.

Effective March 1, 1998, the Gas Agreement was modified soley as
to the rates payable thereunder by the Gas Accord (CPUC-approved
market restructure). PG&E is not in default under the Gas
Agreement.

PG&E and Gaylord are also parties to a Power Purchase Agreement
(PPA) dated December 29, 1982, which provides for the sale of
power to PG&E by Gaylord from its cogeneration facility.
Previously Gaylord pursued various claims in the Bankruptcy
Court including claims for payment of a "market rate" for the
power delivered by Gaylord to PG&E after April 6, 2001, rather
than the contract price set under its PPA.

In order to compromise Gaylord's claims and thus avoid
potentially costly and protracted litigation, and to secure the
benefits of the PPA, PG&E agreed with Gaylord to amend and
assume its PPA, in accordance with the terms set out in the
Proposed Assumption Agreement. An integral part of the
compromise of Gaylord's claims was PG&E's agreement to assume
the Gas Agreement.

The Court expressly acknowledges the term of the Agreement which
requires that the CPUC approve a "pricing amendment" to the PPA
between PG&E and Gaylord on or before October 13, 2001, and
provides that if such approval is not obtained by that date, the
"Agreement", which provides for the assumption of the PPA and
the Gas Transportation Agreement, is a "nullity". (Pacific Gas
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)    


PACIFIC GAS: Deems DWR's Revenue Requirement as "Positive Step"
---------------------------------------------------------------
Pacific Gas and Electric Company issued the following statement
after the California Department of Water Resources (DWR)
released its revised revenue requirement:

"After an initial review, we are encouraged by DWR's
announcement that their revenue requirement is approximately $4
billion lower than previously estimated.   The new revenue
requirement appears to reflect the changing market conditions
that have led to lower gas and electricity prices.

"It is not yet clear how these new numbers interact with the
California Public Utilities Commission's proposed $600 million
cost shift between Northern and Southern California customers.  
We continue to support a fair and balanced distribution of costs
between all utility customers, as DWR originally proposed.

"These new figures are another positive step in resolving the
state's energy crisis.  We look forward to working with the
Governor in his on-going efforts to lower wholesale electricity
prices and bring stability back to the market for our customers.

"We hope this development will facilitate efforts by Treasurer
Angelides, DWR, and other parties to quickly and fully recover
the state's power purchase costs."


PENNZOIL-QUAKER: Fitch Concerned About Weakening Credit Profile
---------------------------------------------------------------
Fitch rated Pennzoil-Quaker State Company's (Pennzoil) expected
$250 million senior unsecured note issue `BB-`. The company's
existing senior notes, which will become secured, maintain `BB+`
ratings. The company's new $350 million secured bank revolver,
which will rank pari passu with the existing senior notes, is
rated `BB+'.

The Rating Outlook is changed to Negative from Stable. Proceeds
from the new senior unsecured offering will be used to repay
outstanding bank debt.

Fitch anticipates that Pennzoil's credit profile will remain
weak given higher operating costs for Pennzoil, lower volumes in
the lubricants and consumer products segment, and increased debt
levels. Despite the weaker credit profile, the additional
security given to the existing senior noteholders and new bank
lenders is a significant benefit and is reflected in the above
secured ratings. The level of subordinated debt included in the
capital structure also enhances the secured note holders'
positions. Security includes all U.S. intangible assets,
inventory, and accounts receivables not sold in the
securitization program.

Pennzoil-Quaker State maintains a leading 36% market share in
passenger car motor oil represented by its Pennzoil and Quaker
State brands. In addition, the company markets leading
automotive consumer products and has significant fast oil change
operations with over 2,100 Jiffy Lube service centers in the
U.S. However, operating margins have been under pressure as base
oil, Pennzoil's largest raw material component, has
significantly increased in price over the past 22 months.

Pennzoil has implemented 6 price increases over the same period
in order to recoup these higher costs however, a time lag exists
between when costs to Pennzoil increase and when Pennzoil can
implement price increases. Despite the price increases and the
company's successful restructuring program, which is expected to
generate annual savings of $200 million in 2001, Pennzoil's cost
base will remain high and continue to place pressure on margins.

In addition, volume levels have been negatively impacted by
Pennzoil's increased prices to consumers as well as by higher
gasoline prices, which results in fewer miles driven and reduces
the frequency of oil changes.

While Pennzoil has been working to drive volume through greater
channel penetration and a broadened product portfolio, volumes
remain below historical levels.

Pennzoil's total debt will be higher than previously expected
given lower motor oil volumes and reduced proceeds from asset
sales during fiscal 2001. On June 30, 2001 total debt was $1.2
billion including $236 million in bank debt.

The expected new secured bank revolver will extend the company's
maturities beyond the December 2001 expiration of the existing
bank agreement, which has a 1-year term out option. For the
twelve month's ended June 30, 2001 leverage, measured by total
debt to EBITDA, was 5.4 times and EBITDA coverage of interest
was 2.3x. The weak operating performance and continued high debt
levels have resulted in a negative rating outlook for the  
company.

Uncertainty surrounding the longer-term impact of the events of
September 11 on crude, base oil, and gasoline prices has been
heightened. Consumer behavior toward automobile travel,
maintenance, and spending are critical factors that Fitch will
continue to monitor.


POLAROID CORP: Gets Okay to Pay Prepetition Employee Obligations
----------------------------------------------------------------
Polaroid Corporation asks the Court to enter an order
authorizing them:

  (1) to pay or otherwise honor various employee-related pre-
      petition obligations; and

  (2) to continue post-petition certain employee benefit plans
      and programs in effect immediately prior to the filing of
      these cases.

(A) Compensation Obligations

   Polaroid Executive Vice President Neal D. Goldman relates the
   Debtors employ 3,500 domestic salaried and hourly paid
   workers.  Accordingly, Mr. Goldman says, the Debtors seek to
   pay $9,100,000 on account of accrued and unpaid:

       (i) salaries and wages of employees,

      (ii) amounts that the Debtors are required by law to
           withhold from employee payroll checks in respect of
           federal, state and local income taxes, including
           unemployment contributions and taxes, and social
           security and Medicare taxes; and

     (iii) amounts that the Debtors are required to directly pay
           in respect of state unemployment taxes and
           contributions on behalf of employees.

   However, Mr. Goldman emphasizes that the Debtors are not
   seeking authority to pay pre-petition vacation or severance
   obligations to Employees or former Employee unless otherwise
   ordered by the Court.  But, Mr. Goldman clarifies that the
   Debtors do seek the Court's authority to allow Employees to
   take vacations -- in the ordinary course and in line with the
   Debtors' current vacation policy.

(B) Business Expenses

   Mr. Goldman also informs the Court that the Debtors
   usually reimburse their Employees who incur a variety of
   business expenses in the ordinary course of performing their
   duties on behalf of the Debtors, e.g., travel and
   entertainment expenses.  Because the Employees do not always
   submit claims for reimbursement promptly, Mr. Goldman
   explains, it is difficult for the Debtors to determine the
   amount outstanding at any particular time.  However, Mr.
   Goldman says, the Debtors estimate that their obligations in
   respect of reimbursements to be made to Employees aggregate
   less than $400,000 as of Petition Date.  Since it is
   essential to the continued operation of the Debtors'
   business, Mr. Goldman asserts that Debtors should be allowed
   to continue reimbursing their employees for these expenses.

(C) Employee Benefits

   Like most large companies, Mr. Goldman explains, the Debtors
   have established various benefit plans and policies for their
   Employees, including medical plans, dental plans, life
   insurance and long-term disability insurance programs.

                         Medical Plans

   According to Mr. Goldman, the Debtors offer two forms of
   medical insurance for current Employees:

   (1) two experience-rated plans with Blue Cross Blue Shield;
       and

   (2) various HMO plans.

   Mr. Goldman explains that the Blue Cross Blue Shield Plans
   are self-insured plans with claims administered by Blue Cross
   Blue Shield and paid by Polaroid.  On the other hand, Mr.
   Goldman says, the HMO Plans are fully insured plans.
   Employees who participate in the Blue Cross Blue Shield Plans
   or the HMO Plans contribute to the cost of the Plans through
   payroll deductions, Mr. Goldman tells Judge Walsh.

   On the first Monday of each month, Mr. Goldman notes, the
   Debtors fund the Blue Cross Blue Shield Plans with $1,000,000
   to pay reported claims.  At the end of each quarter, Mr.
   Goldman says, Blue Cross Blue Shield reconciles the amount of
   claims actually paid by Blue Cross Blue Shield during that
   quarter against the amount deposited by the Debtors during
   the quarter.  If the Company has not deposited funds
   sufficient to cover the claims actually paid during the
   quarter, Mr. Goldman explains, the Debtors pay the shortfall.
   At any period of time, Mr. Goldman discloses, there are
   approximately three months of claims (on the average) that
   are incurred but not reported to Blue Cross Blue Shield.
   According to Mr. Goldman, those incurred but not reported
   claims total on average between $3,000,000 and $3,500,000.
   Thus, the Debtors seek the Court's authority to continue to
   make monthly payments with respect to such claims as well as
   any shortfall associated with claims incurred prior to the
   Petition Date.  Mr. Goldman tells Judge Walsh that the
   Debtors do not expect the aggregate monthly expense plus
   shortfall, if any, to exceed $3,500,000.

                          Dental Plans

   According to Mr. Goldman, the Debtors also provide their
   Employees with a dental plan.  Mr. Goldman explains that the
   Dental Plan provided by Delta Dental is a self-insured plan
   wherein the Debtors fund the Dental Plan each month for those
   claims incurred by the Employees and billed during the
   previous month.  At any period of time, Mr. Goldman notes,
   there are approximately three months (on average) of dental
   claims that have been incurred, but not reported to Delta
   Dental.  The Debtors anticipate that those three months of
   incurred but not yet billed claims total, on average, between
   $600,000 and $700,000.  Accordingly, the Debtors expect that
   they will make monthly payments of approximately the same
   amount to cover Employee dental claims that were incurred
   prior to the Petition Date.

                      Disability Insurance

   The Debtors also provide long-term disability insurance and
   other life, accidental death and disability insurance for
   their Employees.  Mr. Goldman tells the Court that the
   insurer for the long-term disability Plan is Metropolitan
   Life Insurance Company.  According to Mr. Goldman, this is a
   fully insured plan and the Debtors pay a monthly premium one
   month in arrears.  Accordingly, the Debtors ask Judge Walsh
   for authority to pay the November premium for the month of
   October, which will necessarily include pre-petition time
   periods.  Mr. Goldman relates that the total amount of the
   monthly premium for the long-term disability Plan is
   $145,000.

                        Life Insurance

   Like the long-term disability plan, Mr. Goldman notes, the
   Life Insurance Plan is a fully insured plan for which the
   Debtors pay a monthly premium one month in arrears.
   According to Mr. Goldman, the insurer for the Life Insurance
   Plan is John Hancock Insurance Company.  Earlier this year,
   Mr. Goldman relates, the Debtors' received $2,800,000 in
   proceeds from the demutualization of John Hancock.  Those
   proceeds were used to fund the Life Insurance Program, Mr.
   Goldman adds.  Currently, Mr. Goldman tells the Court that
   about $1,200,000 in demutualization proceeds remain.  And,
   Mr. Goldman says, the Debtors expect to continue to use such
   proceeds to fund the Life Insurance Plan.  Accordingly, the
   Debtors ask Judge Walsh for permission to pay their next
   premium for the Life Insurance Plan, cognizant of the fact
   that such premium is paid from the demutualization proceeds
   and not out of the Debtors' general operating funds.

               Massachusetts Compensation Program

   As required under state law, Mr. Goldman relates, the Debtors
   provide workers' compensation coverage for their
   Massachusetts employees.  With respect to those claims
   incurred prior to September 1, 2001, Mr. Goldman notes, the
   Massachusetts Workers Compensation Program is a self-insured
   program.  As a result, Mr. Goldman says, the Debtors must
   continue to pay the amounts due stemming from claims incurred
   prior to September 1, 2001 from their general operating
   funds.  On average, Mr. Goldman notes, those claims total
   $1,300,000 annually.  The Debtors are hopeful that the claim
   amounts will decrease, as those claims are resolved and the
   number of employees reduced.  Accordingly, the Debtors
   request the Court's authority to continue to pay these pre-
   petition claims under the Massachusetts Workers' Compensation
   Program.  Also, Mr. Goldman informs Judge Walsh that the
   Debtors provide workers' compensation insurance for their
   employees outside Massachusetts, which insurance is provided
   pursuant to a fully insured plan.

                       Retiree Medical Plans

   Prior to the Petition Date, Polaroid terminated its retiree
   medical benefit programs effective October 9, 2001.  This
   means that only those claims incurred prior to October 9,
   2001 will be paid pursuant to the terms of the various
   Retiree Medical Plans, Mr. Goldman explains.

   According to Mr. Goldman, Polaroid offered two forms of
   retiree medical insurance to its qualified retirees.

   Mr. Goldman relates retirees between the ages of 55 and 64
   participated in one of two types of medical programs: either
   experience-rated plans with Blue Cross Blue Shield or various
   HMO plans.  Mr. Goldman explains the Blue Cross Blue Shield
   Retiree Plans were self-insured plans with claims
   administered by Blue Cross Blue Shield and paid by Polaroid.
   On the other hand, Mr. Goldman notes, the HMO Plans were
   fully insured plans.  Mr. Goldman informs the Court that
   retirees who participated in the Retiree Plans contributed on
   average approximately 50% of the cost of the Retiree Plans
   through either a deduction from their pension check or by
   sending a check to the Debtors.

   Retirees who are over age 65 participated in one of two types
   of medical plans: a Blue Cross Blue Shield Medex Plan or
   various Senior HMO Plans, according to Mr. Goldman.
   "Retirees who participated in the Medex Plan or Senior HMO
   Plans contributed, on average, approximately 50% of the cost
   of such plan either through deductions from their pension
   check or by mailing a check to the Debtors," Mr. Goldman
   relates.

   Prior to the termination of the Retiree Medical Plans, Mr.
   Goldman notes, Polaroid funded the Blue Cross Blue Shield
   Retiree Plans and Medex Plan with approximately $1,100,000 to
   pay reported claims on a monthly basis.  Then at the end of
   each quarter, Mr. Goldman explains, Blue Cross Blue Shield
   reconciled the amount of claims actually paid during the
   quarter against the amount deposited by Polaroid during that
   quarter.  If Polaroid had not deposited funds sufficient to
   cover the claims actually billed during the quarter, Mr.
   Goldman says, Polaroid paid the shortfall.  Though the
   Retiree Medical Plans have been terminated, Mr. Goldman
   anticipates that there may be claims incurred prior to
   October 9, 2001, which have not yet been processed.

   Accordingly, the Debtors ask Judge Walsh for authority to pay
   those claims incurred under the Retiree Medical Plans prior
   to October 9, 2001.  The Debtors estimate this amount will
   not exceed $3,500,000.

(D) Administration of Employee Benefit Plans

   To facilitate the administration and maintenance of their
   books and records in respect of Employee Benefits, the
   Debtors utilize the services of professionals and consultants
   in the ordinary course of their business.  According to Mr.
   Goldman, the Debtors estimate that approximately $200,000 was
   accrued and unpaid on account of Administrative Obligations
   prior to the Petition Date.

In the light of the potential delay in obtaining a hearing date,
the Debtors want the Court to address their request to pay their
employees wages and salaries first.

David S. Kurtz, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Chicago, Illinois, asserts it is crucial that the Debtors
satisfy their pre-petition Employee payroll obligations during
the critical days following the commencement of these chapter 11
cases.  Non-payment may have dramatic and irreparable
consequences, Mr. Kurtz warns.

According to Mr. Kurtz, it would be devastating to the Debtors'
business operations and prospects for a successful
reorganization if, immediately after commencing their chapter 11
cases, they were not authorized to fund and honor their payroll
obligations to Employees.  Mr. Kurtz emphasizes that maintaining
the confidence of Employees early in these cases is necessary
and essential to the ability of the Debtors to preserve and
successfully reorganize their business.

"Thus, it is crucial that the Order be entered immediately, so
that the Debtors and their agents are authorized to pay, and the
banks are directed to honor, pre-petition employee payroll
obligations prior to a hearing on the Employee Motion," Mr.
Kurtz appeals.

Aware of the urgency and necessity, Judge Walsh authorizes the
Debtors to pay all pre-petition wages and salaries of their
employees, as well as any and all corresponding taxes, and honor
all pre-petition Employee Obligations, subject to an $18,600,000
cap.   The Court also clarifies that the Debtors are not
authorized to pay pre-petition vacation or severance obligations
to Employees or former Employees.  However, the Debtors are
permitted to allow Employees to take vacations in the ordinary
course and in line with the Debtors' current vacation policy.

Judge Walsh further authorizes the Debtors to continue post-
petition certain Employee Benefit Plans (but not the Retiree
Medical Plans) in effect immediately prior to the filing of
these cases.

Judge Walsh makes it clear that his order shall not constitute
an assumption of any Employee Benefit plan, program or contract.  
In addition, the authority to make payments and honor
obligations is subject to any requirements imposed upon the
Debtors under any approved DIP financing facility or order with
respect to the use of pre-petition lenders' cash collateral.
(Polaroid Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


QUALITY STORES: Noteholders File Involuntary Chapter 11 in MI
-------------------------------------------------------------
Triton Partners LLC, Pacholder High Yield Fund, Inc., and
Conseco Capital Management, Inc. announced that several of their
various managed funds (collectively, the "Executive Committee of
Noteholders"), which hold the 10-5/8% Senior Notes due 2007 of
Quality Stores, Inc., have commenced an involuntary chapter 11
case against the Company in the United States Bankruptcy Court
for the Western District of Michigan in Grand Rapids.

The Company had previously failed to make the October 1, 2001
interest payment on the Senior Notes in the approximate
aggregate amount of $5.8 million.  The Company shortly
thereafter coordinated the formation of a committee of certain
holders of the Senior Notes.  

The Committee was organized to facilitate negotiations between
the holders of the Senior Notes and the Company.  

In light of concerns that the Company was taking significant
operating steps without providing adequate information to the
Committee, the Executive Committee of Noteholders concluded that
the protections afforded by chapter 11 were necessary to protect
the interests of holders of the Senior Notes.  

The holders of the Senior Notes anticipate commencing in earnest
a dialog with the Company regarding the Company's business plan
and reorganized capital structure.


QUALITY STORES: Weighing Options to Continue Restructuring
----------------------------------------------------------
Quality Stores, Inc., announced that an involuntary petition
under the United States Bankruptcy Code was filed in the United
States Bankruptcy Court for the Western District of Michigan in
Grand Rapids. The involuntary petition was filed by a group of
holders of the 10 5/8% senior notes on Saturday, October 20,
2001. Under laws relating to an involuntary bankruptcy filing,
the Company is permitted to operate its business in the ordinary
course, unless the Court orders otherwise.

The Company said that it is evaluating its options as it
determines how to continue with the financial and business
restructuring that has been ongoing for several months. The
Company also continues to work with legal and financial advisors
specifically engaged to assist it in its restructuring efforts.

As part of the business restructuring, the Company also has
announced that it intends to close 133 stores. Most of the
stores to be closed are located west of the Mississippi River.
The Company intends to concentrate its efforts going forward on
core markets in the Midwest and East. Stores will remain open in
the following states: Michigan, Ohio, Indiana, New York,
Pennsylvania, New Jersey, Delaware, Maryland, Vermont,
Massachusetts, Virginia, West Virginia, and Kentucky.

The Company said that it intends to continue to pay employees'
pre-petition and post-petition wages, salaries, and benefits
without interruption.

Quality Stores, Inc. is a specialty retailer of farm and
agriculture-related merchandise with headquarters in Muskegon,
MI.


RELIANCE: Asks Court to Fix Dec. 31 Bar Date for Proofs of Claim
----------------------------------------------------------------
To establish the full range of asserted claims against Reliance
Group Holdings, Inc.'s estates, and to identify potential
disputes as to claims, Reliance asks Judge Gonzalez to:

      (i) establish December 21, 2001 as the last day for all
persons and entities, including individuals, partnerships,
corporations, estates, trusts and governmental units, to file
proofs of claim pursuant to 11 U.S.C. Sec. 501 and Rule 3003(c)
of the Federal Rules of Bankruptcy Procedure and also to
establish procedures for filing proofs of claim;

      (ii) approve a Bar Date Notice, to be sent to creditors
and other parties in interest, together with a Proof of Claim
form conforming to Official Bankruptcy Form No. 10 and
instructions relating thereto;

      (iii) approve the manner of service of the Notice of Bar
Date by a) first class regular mail and b) publication of the
Notice of the Bar Date in the publications listed below.

Lorna G. Schofield, Esq., at Debevoise & Plimpton, tells Judge
Gonzalez that Notices of Bar Date together with the Proof of
Claims forms can be mailed on or before November 7, 2001.
Therefore, creditors will have at least 40 days after they
receive Notices of Bar Date to file proofs of claim.

The Bar Date will apply to each and every claim, as defined at
11 U.S.C. Sec. 101(5), against RGH's estates, except:

      (A) Claims by a creditor who has already filed a proof of
claims with the Debtors' counsel or the Claims Agent against a
specific Debtor using a claim form that substantially conforms
to Official Bankruptcy Form No. 10;

      (B) Claims listed on the Schedules as neither "disputed"
nor "contingent" nor "unliquidated" if the creditor agrees with
the amount and classification set forth therein;

      (C) Administrative priority claims;

      (D) Claims of one Debtor against another Debtor;

      (E) Claims already allowed by a Court order.

Ms. Schofield informs potential claimants that any person or
entity whose claim arises from, or as a consequence of, the
rejection of executory contracts and unexpired leases and the
incurrence of certain taxes, pursuant to Sections 502(g) and
502(i), respectively, must file a proof of claim within 40 days
after the particular claim arises.  Thus, each proof of claim
would have to be filed within 40 days after entry of an order
approving the rejection of an executory contract or unexpired
lease or within 40 days after a tax claim arises under Section
502(i), or by the Bar Date, whichever is later.

Holders of equity interest need not file proofs of interest with
respect to the ownership of such equity interest.  Holders of
equity interest who wish to assert a claim against RGH that is
not based solely upon ownership of an equity interest will be
required to file a proof of claim on or prior to the Bar Date.

RGH proposes that the Court establish the following procedures
for the filing of proofs of claim:

      (a) Proofs of claim must be filed with the Clerk of the
Court at one of the following addresses, as appropriate:

          (I) If by mail:

            United States Bankruptcy Court
            c/o Reliance Group Holdings, Inc. Claims Processing
            P.O. Box 5177
            Bowling Green Station
            New York, New York 10274-5177

         (II) If by hand delivery or overnight courier:

            United States Bankruptcy Court
            c/o Reliance Group Holdings, Inc. Claims Processing
            One Bowling Green
            New York, New York 10004-1408

      (b) Proofs of claim will be deemed filed only when
received.

Proofs of claim will be deemed timely filed only if the proof of
claim (i) is signed, (ii) identifies the Debtor against which it
is asserted, and (iii) is actually received by the Court on or
before the Bar Date;

      (c) Proofs of claim must be received by the Court before
the Bar Date;

      (d) The Proof of claim form will indicate whether the
creditor's claim is listed on the Debtors' schedules as
disputed, contingent or unliquidated.  If a creditor's claim is
listed on the Schedules as undisputed, noncontingent and
liquidated, then the dollar amount of such claim is listed on
the Schedules will also be set forth on the proof of claim form;

      (e) Any person or entity holding claims against more than
one Debtor must file a separate proof of claims against each
Debtor individually.  Each claimant will be bound by the
designation of the particular Debtor it named in its proof of
claim;

      (f) An indenture trustee may file a claim on behalf of
known or unknown holders of securities.  In particular, holders
of the 9% senior notes due November 15, 2000, and the 9 3/4%
senior debentures due November 15, 2003, need not file their own
proofs of claim if Wells Fargo Bank Minnesota and HSCB Bank USA
as indenture trustees for the holders of the above notes,
respectively, file timely proofs of claim on their behalf.

If either Debtor amends its Schedules subsequent to the date
hereof to reduce, reclassify or schedule as "contingent,"
"unliquidated" or "disputed" any claim, such Debtor shall give
written notice to the holder of the affected claim.  Such holder
shall be afforded an extension of 40 days from the date on which
such notice is given to file or amend a proof of claim, if
necessary, or be forever barred from so doing.

Any person or entity holding a claim required to file a proof of
claim by the Bar Date that fails to do so:

      -- shall be forever barred from:

         (a) participating in the Debtors' estates;

         (b) voting with respect to any Chapter 11 plan(s) of
             reorganization or liquidation filed;

      -- receiving any distribution under the Chapter 11 plan(s)
         of reorganization or liquidation; and

      -- shall be bound by the terms of any Chapter 11 plan(s)
         of reorganization or liquidation if confirmed by the
         Court.

Pursuant to Rule 2002(a)(7), RGH proposes to have the Claims
Agent serve the Notice of Bar Date, instructions and a proof of
claim form that conforms to Official Bankruptcy Form No. 10, by
first class regular mail on all known potential claimants.  To
flush-out unknown claims, the Debtors propose to publish the Bar
Date Notice in the national editions of The New York Times and
The Wall Street Journal. (Reliance Bankruptcy News, Issue No.
13; Bankruptcy Creditors' Service, Inc., 609/392-0900)     


SNV GROUP: Cuts 53% of Staff After Filing for CCAA Protection
-------------------------------------------------------------
SNV Group Ltd. (CDNX: SGL) announced that, following its filing
for protection under the Companies' Creditors Arrangement Act,
it laid off 53% of its employees.

These layoffs, which affect a total of 46 employees in the
Company's Vancouver and Montreal offices, will substantially
reduce its operating costs during the restructuring period.  The
Company is confident that its remaining employees, which include
all of its senior management team, will be able to continue to
provide service to its customers during this period.

SNV provides a professional link between Canadian tourism
products and an international business network of tour
wholesalers, travel agents, airlines and other tourism-related
partners.  SNV is headquartered in Vancouver, with a group and
incentive operations office in Montreal and sales service
offices in the United Kingdom and France.


SAFETY-KLEEN: Wants Approval of 2nd Consent Agreement with EPA
--------------------------------------------------------------
David S. Kurtz and J. Gregory St. Clair of the Chicago office of
Skadden, Arps, Slate, Meagher & Flom LLP (Illinois), acting as
lead counsel, and Mark A. Fink and Gregg M. Galardi of the
Wilmington office of that firm as local counsel, ask Judge Peter
Walsh, on behalf of Safety-Kleen Corp. and twenty-eight of its
direct and indirect subsidiaries and affiliates, to approve the
terms of the Second Amended Consent Agreement, by which the
Debtor-Respondents and the United States Environmental
Protection Agency agree to amend certain provisions of the
Consent Agreement by and between the Debtor-Respondents and EPA
dated as of September 5, 2000 and the First Amended Consent
Agreement and Final Order dated May 4, 2001.

The Debtor-Respondents remind Judge Walsh that on September 15,
2000, they filed a motion seeking approval of the Debtor-
Respondents' entry into the Consent Agreement. As the Debtor-
Respondents explained in that motion, the fact that the Debtor-
Respondents did not have Compliant Financial Assurance presented
the Debtors with a stark choice: either commence a nationwide,
zero-sum litigation strategy to avoid attempts by EPA or the
Participating States to close the Covered Facilities or
negotiate a consensual process by which the Debtor-Respondents
would obtain Compliant Financial Assurance in cooperation with
EPA and the Participating States.

The Debtor-Respondents chose to proceed along the consensual
pathway, the result of which was entry into the Consent
Agreement. Entry into the Consent Agreement, which ultimately
was not opposed by either the Creditors' Committee or the
secured lenders with certain conditions and a reservation of
rights, enabled the Debtor-Respondents to preserve the status
quo while the Debtor-Respondents went about re-establishing
Compliant Financial Assurance. On October 17, 2000, Judge Walsh
entered his Order approving the Consent Agreement and Final
Order.

Pursuant to paragraph 20(d) of the Consent Agreement, the
Debtor-Respondents were required to obtain Compliant Financial
Assurance by December 15, 2000. On December 15, 2000, EPA
conditionally extended the Compliant Financial Assurance
Deadline to February 28, 2001. On February 28, 2001, EPA further
extended the Compliant Financial Assurance Deadline to April 30,
2001, which was the last date to which the Compliant Financial
Assurance Deadline could be extended under the Consent Agreement
Order.

On May 4, 2001, the EPA and Debtors entered into the First
Amended Consent Agreement. On May 16, 2001, this Court approved
the First Amended Consent Agreement. Under the terms of the
First Amended Consent Agreement, the Compliant Financial
Assurance Deadline as extended until July 31, 2001 for those
Covered Facilities, and September 30, 2001 for certain Covered
Facilities other than certain specified facilities subject to a
different extension). The Financial Assurance Deadline for
those Covered Facilities (other than certain specified
exceptions) was subsequently extended by EPA from September 30,
2001 to October 18, 2001 and further extended to November 5,
2001.

On July 11, 2001, this Court approved the Insurance Program with
Indian Harbor, thereby enabling the Debtors to establish
Compliant Financial Assurance for those Covered Facilities. On
October 18, 2001, Debtors filed a motion with this Court seeking
to establish Compliant Financial Assurance for certain of the
Other Covered Facilities, which facilities are located in
Arizona, Colorado, Louisiana and Utah. The Other Covered
Facilities (Active) consist of one landfill located in Deer
Trail, Colorado; a RCRA/TSCA storage, treatment and disposal
facility located in Clive, Utah (aka the Grassy/Grayback
Mountain disposal facility); a service center in Phoenix,
Arizona; an incinerator in Aragonite, Utah; a wastewater
treatment facility in Baton Rouge, Louisiana; and a PCB and RCRA
storage facility in Clive, Utah.

The Financial Assurance Deadline for those Covered Facilities
was subsequently extended by EPA from September 30, 2001 to
October 18, 2001, and further extended to November 5, 2001.

Thus, the Debtors seek the Court's approval of the Debtors'
entry into the Second Amended Consent Agreement extending the
deadline to establish Compliant Financial Assurance for the
certain facilities located in Utah through January 31, 2002 and
extending such deadline for the Other Covered Facilities located
in Kansas, New Jersey, Georgia, Iowa, Kentucky, Wisconsin,
Louisiana, Ohio, Oklahoma, South Carolina and Pennsylvania
through March 31, 2002.

Under the Second Amended Consent Agreement, Safety-Kleen
Services, Inc. has agreed to pay an additional civil penalty in
the amount of $1,200,999.00 for not having Compliant Financial
Assurance during the period from October 18, 2001 through
January 31, 2002 and for not having Compliant Financial
Assurance for other Facilities during the period from October
18, 2001 through March 31, 2002. Safety-Kleen Services, Inc. has
agreed to pay $500,000 of the civil penalty as an Allowed
Administrative Expense within fifteen days of Judge Walsh's
Order approving the Second Amended Consent Agreement. The
remainder of the penalty will be treated as an allowed
administrative expense claim and paid consistent with the
treatment of other allowed administrative expense claims. These
changes do not alter any other terms of the CA/OF.

Under the Consent Agreement Order, the Debtor-Respondents were
authorized to enter into similar agreements with Parallel Action
States or states that were neither Participating States nor
Parallel Action States, respectively, without further Court
order, provided that the Debtor-Respondents had provided certain
notice of such Agreements to the Committee and the Lenders.  The
Debtor-Respondents have entered into several agreements with
Parallel Action States and Non-Participating States.

Accordingly, the Debtor-Respondents may attempt to negotiate
similar extension agreements with Parallel Action States and
Non-Participating States having facilities with noncompliant
financial assurance coverage. The Debtors are currently
negotiating such an agreement with the State of Colorado with
respect to an extension through January 31, 2002 for the only
remaining active facility not covered by the Second Amended
Consent Decree, a landfill located at Deer Trail, Colorado. In
order to streamline that process and to preserve estate assets,
the Debtor-Respondents seek authority to enter into extensions
with Parallel Action States and Non-Participating States without
further Court order, provided that Debtor-Respondents provide
counsel to the Committee and the Lenders with 10 business days
notice prior to the effectiveness of such extensions and they do
not object.

The Debtors/Respondents direct Judge Walsh's attention to
Bankruptcy Rule 9019, which empowers him to approve compromises
and settlements if they are in the best interests of the
estates. In determining whether to approve a settlement, a
bankruptcy court should consider "(1) the probability of success
in litigation; (2) the likely difficulties in collection; (3)
the complexity of the litigation involved, and the expense,
inconvenience and delay necessarily attending it; and (4) the
paramount interest of the creditors."

In approving the Consent Agreement and First Amended Consent
Agreement, Judge Walsh previously found that the above
requirements were met because in weighing the cost to these
estates in embarking upon a scorched earth litigation strategy
against embarking upon a negotiated, cooperative course towards
obtaining Compliant Financial Assurance, the Debtor-Respondents
and their creditors were best served by proceeding along the
consensual pathway.  The same arguments hold true for the
Debtor-Respondents' entry into the Second Amended Consent
Agreement. Rather than triggering a litigation war that would
consume many of the resources of these estates and injure the
Debtor-Respondents' customer relations, the Debtor-Respondents
have agreed to pay an additional $1,200,999.00 civil penalty. In
weighing those options, it is clear that the best interests of
the creditors of the Debtor-Respondents lie in entering the
Second Amended Consent Agreement.

         Terms of the Second Amended Consent Agreement

In addition to the requirements of the CA/FO discussed above,
Respondents shall comply with the provisions and terms contained
in the Compliance Schedule set forth in the Second Amended
Consent Agreement:

       a. Within two Working Days of the Effective Date of the
Second Amended consent Agreement, the Debtor/Respondents will
submit to Indian Harbor Insurance Company the necessary letters
of credit to establish the collateral needed to secure the
financial assurance for the facilities identified in this Second
Amended Consent Agreement. Respondents' lenders have represented
that they will not oppose the expenditure of funds to secure the
letters of credit, the submittal of same to the Indian Harbor
Insurance Company or the purchase of Compliant Financial
Assurance for the Covered Facilities identified in this Second
Amended Consent Agreement.

       b. On January 31, 2002, the Debtor/Respondents will put
in place financial assurance for the Covered Facilities
specifically identified in the Second Amended Consent Agreement,
or, if the financial assurance is not in place by January 31,
2002, then the Debtor/Respondents will immediately cease to take
waste and shall comply with the requirements for closure, post-
closure and/or corrective action for such Covered Facilities in
accordance with federal regulations and statutory law, and the
applicable hazardous waste permit or TSCA approval. The
Debtor/Respondents' lenders have represented that if the
Respondents have not obtained Compliant Financial Assurance
prior to January 31, 2002, Respondents' lenders shall not seek
from Judge Walsh (or otherwise) any waiver or extension of the
obligation to cease operations without the written consent of
the EPA and shall not contend that the final volume or quantity
of hazardous or PCB waste received at such Covered Facilities
occurred after January 31, 2002.

       c. On or before October 17, 2001, the Debtor/Respondents
shall file with the Bankruptcy Court a request for all approvals
necessary to obtain Compliant Financial Assurance for the
Covered Facilities in Arizona, Louisiana, and Utah identified
this Second Amended Consent Agreement. The Debtor/Respondents'
lenders have represented that they will not oppose such a
request.

       d. On or before October 19, 2001, Respondents shall have
sent to Arizona, Louisiana, and Utah the financial
responsibility mechanism for the Covered Facilities identified
in this Second Amended Consent Agreement for review and
approval.

       e. If, prior to January 31, 2002, the Debtor/Respondents
file a motion to request permission from the Bankruptcy Court to
sell any of the Covered Facilities listed on Attachment L to the
Second Amended Consent Agreement, the Debtor/Respondents at the
same time will file with the Bankruptcy Court a request seeking
approval for a financial responsibility mechanism pursuant to
which Compliant Financial Assurance for that Covered Facility
will be put in place. The Debtor/Respondents' lenders have
represented that they will not oppose such a request.

During the Interim Compliance Period, the Debtor/Respondents
will continue to use their best efforts to obtain Compliant
Financial Assurance. The Debtor/Respondents shall continue to
seek additional proposals or mechanisms for obtaining Compliant
Financial Assurance.

In addition to other reporting of the CA/FO, the
Debtor/Respondents shall include in their weekly report of the
status of their efforts to obtain Compliant Financial Assurance
information that describes in detail:

             (i) the status of the Debtor/Respondents' efforts
to obtain consents or approvals for financing from various of
the Debtor/Respondents' lenders for the posting of collateral
that would be required for Compliant Financial Assurance for the
Covered Facilities;

            (ii) the Debtor/Respondents' efforts to obtain
proposals or mechanisms for obtaining Compliant Financial
Assurance; and

           (iii) the Debtor/Respondents' efforts to obtain
proposals for the sale, merger, or divestiture of any Covered
Facilities or other facilities of the Debtor/Respondents.

       (f) The Debtor/Respondents shall participate in weekly
conference calls with EPA to discuss the status of the efforts
to obtain consents or approvals for financing from various of
the Debtor/Respondents' lenders for the posting of collateral
which would be required for Compliant Financial Assurance for
the Covered Facilities. Upon request, the Debtor/Respondents
shall exercise their best efforts to include interested lenders
in the discussions under this requirement.

       (g) The Debtor/Respondents shall provide EPA and
requesting Participating States a detailed report every other
week on the status of its reorganization and/or marketing plans.
If requested, Respondents shall provide such report in writing.

                  Penalties and Restrictions

Failure to perform any of the tasks specified the Second Amended
Consent Agreement shall result in stipulated penalties.  The
Debtor/Respondents shall not seek to withdraw the irrevocable
stand-by letter of credit in the amount of $28.5 million from
Toronto Dominion to Frontier Insurance Company so long as the
Debtor/Respondents have any surety bonds issued by Frontier. If
for any reason the $28.5 million irrevocable stand-by letter of
credit is released as collateral for the surety bonds issued by
Frontier for any of the Covered Facilities owned and operated by
the Debtor/Respondents, and the Debtor/Respondents still do not
have Complaint Financial Assurance, the extensions granted in
this Second Amended Consent Agreement with respect to the
Covered Facilities shall no longer apply.

If such events occur, the Debtor/Respondents shall provide EPA
and the Participating States with ample time to provide comments
regarding the timing and prioritization of operational shutdown
of the Covered Facilities in accordance with applicable law.

If EPA determines, in its sole discretion, that the situation
with Frontier has materially changed, EPA may provide the
Debtor/Respondents with notice that the Compliance Financial
Assurance Deadline is being changed to an earlier date not less
than 30 days from the date of the notice.

    Monetary Penalties in Second Amended Consent Agreement

Debtor/Respondent Safety-Kleen Services, Inc., agrees to pay an
additional civil penalty in the sum of $1,200,999 as an Allowed
Administrative Expense for not having Compliant Financial
Assurance during the period from October 18, 2001, through
January 31, 2002, for those facilities operated by it, and for
not having Complaint Financial Assurance during the period form
October 18, 2001, through March 31, 2002, for the remaining
facilities.  The general provisions of the Consent Agreement
regarding payment of this penalty shall apply to the additional
civil penalty, except that Services will pay $500,000 of this
amount within 15 days of Judge Walsh's approval of the Second
Amended Consent Agreement.

EPA reserves all rights to obtain stipulated penalties for any
violation of the CA/FO that has occurred or does occur.

Debtor/Respondent Services, Inc. shall be liable for stipulated
penalties to the EPA for failure to submit the additional civil
penalty specified in and in accordance with the penalties in the
Second Amended Consent Agreement. The Debtor/Respondent Services
shall pay stipulated penalties in the following amounts for each
day during which the payment is not received:

   Period of Failure                       Penalty Per Violation
     To Comply                                   Per Day
   -----------------                       ---------------------
   1st through 30th day                         $ 2,500.00
   31st through 60th day                        $ 4,000.00
   60th day and beyond                          $10,000.00

All of the Debtor/Respondents shall be liable for stipulated
penalties to the EPA for failure to perform the tasks specified
in this Second Amended Consent Agreement. The Debtor/Respondents
shall pay stipulated penalties in the following amounts for each
day during which the payment is not received:

   Period of Failure                       Penalty Per Violation
     To Comply                                   Per Day
   -----------------                       ---------------------
   1st through 30th day                         $ 1,000.00
   31st through 60th day                        $ 2,000.00
   60th day and beyond                          $ 4,000.00

             Effect of Second Amended Consent Agreement

This Second Amended Consent Agreement resolves only EPA's civil
claims for failure to have Compliant Financial Assurance for the
period from October 18, 2001 through January 31, 2002 for those
facilities listed on Attachment L and for not having Compliant
Financial Assurance during the period from October 18, 2001
through March 31, 2002 for those Facilities listed on Attachment
M to the Second Amended Consent Agreement. Nothing in the Second
Amended Consent Agreement shall be construed to limit the
authority of EPA, the United States and/or the Participating
States to undertake action against any person, including the
Debtor/Respondents, in response to any condition which EPA, the
United States or the Participating States determine may present
an imminent and substantial endangerment to the public health
and welfare or the environment, nor shall anything in this
Second Amended Consent Agreement be construed to resolve, and
the EPA, United States and Participating States reserve their
authority to pursue, criminal sanctions against the
Debtor/Respondents. (Safety-Kleen Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


SHOPKO STORES: Refinancing Risks Compel Fitch's Low-B Ratings
-------------------------------------------------------------
Fitch has lowered its ratings on Shopko Stores, Inc.'s bank
credit facility to `BB-' from `BB' and the senior notes to `B'
from `BB-'. The Rating Outlook remains Negative. Approximately
$803 million is affected.

The downgrades reflect a highly competitive retail environment,
which has negatively impacted the company's operating results,
difficulty in achieving the benefits from its Pamida acquisition
and refinancing risks associated with several debt maturities
over the next three years.

In addition, since a significant portion of cash flow is
generated during the fourth quarter, a poor retail environment
in the upcoming holiday season could further pressure results.
The Rating Outlook remains Negative given the company's weakened
financial profile and competitive challenges longer term.

While SKO has competed against the top three specialty
discounters (Wal-Mart, Target, and Kmart) for some time, the
level of their penetration in SKO's key markets continues to
increase. Moreover, weak same-store sales and a more cautious
consumer have hurt results as shoppers are more selective with
regard to purchases. During the first half of 2001, comparable-
store sales declined 2.1%.

SKO continues to develop its Pamida acquisition (completed in
1999); however, the integration has been costly for the company,
as SKO has failed to recognize returns from the acquisition. The
company's EBITDA margin of 5.7% is below its pre-acquisition
level of 6.8% (including ProVantage, a pharmacy-related division
sold in 2000).

In addition, a reduction in capital expenditures to $30 million
for 2001 from $196 million last year as the company focuses on
debt retirement will likely impair growth opportunities in the
near to intermediate term. EBITDAR-to-interest plus rents has
fallen to 2.9 times in 2001 from 4.2x in 2000. Nonetheless,
SKO's pharmacy and optical segment and smaller, more efficient
store layout continue to be key drivers to the company's ability
to compete.

Over the next three years, SKO has three separate senior notes
maturing totaling $242 million. SKO's current bank credit
agreement and cash from operations appear sufficient to
refinance its senior notes maturing in March 2002 and beyond.
However, operating results need to improve in order to shift the
focus from debt refinancing to a more competitive operator.


SPINNAKER: S&P Drops Ratings to D After Missing Interest Payment
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured debt ratings on Spinnaker Industries Inc. to 'D'.

The rating actions follow the company's announcement that it has
failed to make its October 15, 2001, semi-annual interest
payment on its 10.75% senior secured notes maturing in 2006.
Standard & Poor's does not expect that Spinnaker will make the
required payment within the 30-day grace period.

Spinnaker has retained a financial advisor to review the
company's financial position, and the company is in discussions
with bank lenders and note holders regarding debt-restructuring
alternatives.

Spinnaker is a U.S. producer of adhesive-backed, paper-label
stock for the packaging industry and the largest supplier of
stock for pressure-sensitive U.S. postage stamps. For the past
several years, intense pricing pressures and high-cost
operations have thwarted cost-reduction initiatives and caused
recurring losses.

                      Ratings Lowered

     Spinnaker Industries Inc.          TO   FROM

       Corporate credit rating          D    CCC+
       Senior secured debt rating       D    CCC


SUN HEALTHCARE: Wants to Pay Martin's $505K Mechanic's Lien
-----------------------------------------------------------
In connection with the completion of the construction of an
office building and parking structure at 101 Sun Avenue,
Albuquerque, New Mexico, Sun Healthcare Group, Inc. seek the
Court's authorization to remit payment of $505,374.00 to Gerald
Martin, Ltd., as compensation for post-petition services.

Pursuant to a Conditional Waiver of Lien, upon the receipt of
$505,374.00, GAM will agree to waive any mechanic's or
materialmen's lien against the Property and indemnify, defend
and hold the Debtors harmless for any liability resulting from
the failure or refusal of GAM to pay and discharge in full any
claims for labor or materials furnished and contracted for by
GAM.

The Contract Price for the construction of the Property was
$46,359,773.00 originally. After the petition date, the Parties
entered into five separate contractual modifications, each
reducing the Contract Price. The most recent Change Order
reduced the Contract Price to the aggregate sum of
$31,421,102.00. The Debtor advise the Court that they have
remitted payment of $30,915,728.00 to GAM for pre-petition and
post-petition services performed pursuant to the Contract. (Sun
Healthcare Bankruptcy News, Issue No. 23; Bankruptcy Creditors'  
Service, Inc., 609/392-0900)   


TELEX COMMS: 10-1/2% Note Exchange Offer Extended to Friday
-----------------------------------------------------------
Telex Communications, Inc. announced that it has further
extended the expiration date for its previously announced
Exchange Offer and Consent Solicitation in connection with its
proposed debt restructuring plan.

The Exchange Offer and Consent Solicitation relate to the Telex
10-1/2% Senior Subordinated Notes Due 2007 (CUSIP No. 879569AD3)
and Telex (formerly known as "EV International, Inc.") 11%
Senior Subordinated Notes Due 2007 (CUSIP No. 269263AC3).

The Exchange Offer and Consent Solicitation have been extended
to, and are now scheduled to expire at, 5:00 P.M., New York City
time on Friday, October 26, 2001.

Telex's restructuring plan is intended to significantly reduce
Telex's outstanding debt, increase its financial flexibility and
improve its cash flow. In anticipation of completing the debt
restructuring, and as previously announced by Telex, Telex will
not make the interest payment that was due on September 17, 2001
under its 11% Senior Subordinated Notes and will not make the
November 1, 2001 interest payment that is due on its 10-1/2%
Senior Subordinated Notes.

The Exchange Offer and Consent Solicitation are conditioned
upon, among other things, the consent of the lenders under
Telex's senior secured credit facility and senior secured notes
to the restructuring transactions, and waivers of defaults under
the senior secured credit facility and senior secured notes, and
obtaining additional senior secured financing. Telex is
currently in the process of seeking to obtain such consents and
waivers and to arrange such financing.

As of this date, tenders of approximately $27.5 million
principal amount of the 10-1/2% Senior Subordinated Notes, and
tenders of approximately $18.5 million principal amount of the
11% Senior Subordinated Notes, have been received pursuant to
the Exchange Offer.

Telex is a leader in the design, manufacture and marketing of
sophisticated audio, wireless and multimedia communications
equipment for commercial, professional and industrial customers.
Telex provides high value-added communications products designed
to meet the specific needs of customers in commercial,
professional and industrial markets, and, to a lesser extent, in
the retail consumer electronics market.


USG CORP: U.S. Trustee Asks Court to Appoint Fee Auditor
--------------------------------------------------------
The United States Trustee for Region III asks Judge Newsome to
appoint an independent auditor to analyze and comment upon all
interim and final fee applications filed by USG Corporation's
and Committees' professionals in these cases in order to
facilitate the Court's review of professional fees and expenses.

The UST reminds the Court that it has appointed three official
committees in this case: an Official Committee of Unsecured
Creditors, an Official Committee of Asbestos Personal Injury
Claimants, and an Official Committee of Asbestos Bodily Injury
Claimants.

The Debtors and the Committees have retained at least 15
professionals.

Based on the history of bankruptcy proceedings involving other
asbestos-related cases, it is very likely that many more
professionals will be retained by the Debtor and the Committees
as these case progresses.

The UST says that a Fee Auditor should be appointed because:

      -- Appointing a fee auditor to review and to comment on
interim and final fee applications under section 105 will
streamline the Court's oversight duties under sections 330 and
331. The Third Circuit Court of Appeals has acknowledged the
review process for fee applications is a necessary, but
significant, burden on bankruptcy judges. Accordingly, the court
has encouraged the judges to take necessary steps to enhance the
efficiency of fee application review. If the Court implements
section 105 to appoint a fee auditor in this situation to ease
the Court's fulfillment of section 330's mandatory, independent
review, that pressure would be lessened; and

      -- Appointing a fee auditor under Fed.R.Evid.706(a) will
also preserve the applicants procedural due process rights. By
streamlining the fee review process through the Court's fee
auditor appointment, the expert will provide the Court with a
disinterested means of identifying and reporting problem
applications. The fee auditor's reports will provide applicants
with Court concerns and the like prior to hearings so that those
issue may be addressed beforehand. The fee auditor will, in that
way, promote fairness and due process rights. (USG Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


WARNACO GROUP: Unsecured Panel Hires Jaspan as Special Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of The Warnaco
Group, Inc. seeks the Court's authority to employ Jaspan
Schlesinger Hoffman LLP to serve as special counsel, nunc pro
tunc to October 9, 2001.

Committee Chairman William C. Kulkens, International Credit
Manager for Milliken & Company, tells the Court the Committee
needs Jaspan's assistance with their continued investigation and
potential challenges to the Pre-Petition Secured Lenders'
security interests, liens and claims.

Mr. Kulkens explains they need a special counsel to complete the
analysis of potential claims, which the Committee can assert,
and to pursue those causes of action.  According to Mr. Kulkens,
the Committee's counsel - Otterbourg, Steindler, Houston & Rosen
- cannot pursue these claims because the firm may directly
affect the interests of current or former clients.

Mr. Kulkens asserts that the Jaspan firm can do this job well
because its attorneys have expertise and experience in many
facets of the legal disciplines that affect the Committee's
duties including investigation and challenges to the Pre-
Petition Secured Lenders' security interests, liens and claims.

The Committee will look to Jaspan to:

  (a) assist and advise the Committee in connection with the
      Committee's investigation of the security interests, liens
      and claims of the Debtors' Pre-Petition Secured Lenders,
      including Rule 2004 examinations;

  (b) commence, if necessary, and prosecute adversary
      proceedings against the Pre-Petition Secured Lenders and
      other necessary parties, which shall include all aspects
      of discovery;

  (c) to attend meetings and negotiate with the representatives
      of the Debtors and/or any party which is the subject of
      investigation by the Committee or against which the
      Committee may commence an adversary proceeding;

  (d) to take all necessary action to protect and preserve the
      interests of the Committee, including:

         (i) the prosecution of actions on their behalf, and

        (ii) negotiations concerning all litigation in which the
             Debtors are involved;

  (e) to prepare on behalf of the Committee all necessary
      adversary complaints and related motions, applications,
      answers, orders, reports and other papers in support of
      positions taken by the Committee in any adversary
      proceeding;

  (f) to appear, as appropriate, before this Court, the
      Appellate Courts, State Courts and the United States
      Trustee and to protect the interests of the Committee
      before said Courts and the United States Trustee; and

  (g) to perform all other necessary legal services in these
      Cases as is appropriate given the purpose and scope of
      Jaspan's retention, with those services primarily related
      to present or former clients of Otterbourg.

According to Mr. Kulkens, Jaspan will continue the investigation
commenced by Otterbourg, inter alia, which will include:

    (i) scheduling and conducting Rule 2004 examinations,

   (ii) requesting and reviewing additional documents in the
        possession of various of the Pre-Petition Secured
        Lenders,

  (iii) completing a thorough and comprehensive review of the
        pre-petition transactions, and

   (iv) prosecuting various claims and defenses, if requested.

Subject to the Court's approval, Mr. Kulkens says, Jaspan will
calculate its fees for professional services based on:

(A) Jaspan's customary hourly billing rates, which in the normal
    course of business are subject to revision.  Jaspan's
    current range of customary hourly rates is:

                     Partners: $315 to $395
                      Counsel: $235 to $375
                   Associates:  $95 to $225
             Legal Assistants:  $75 to $105

    Jaspan will also charge the Committee for all other
    disbursements incurred, such as: costs for telephone
    charges, photocopying (at a reduced rate of 10 cents per
    page), travel, business meals (but not overtime meals),
    computerize research, messengers, couriers, postage, witness
    fees and other fees related to trials and hearings.

(B) If a proceeding is filed to assert any Claims against the
    Pre-Petition Secured Lenders, Steven R. Schlesinger, a
    member of the firm of Jaspan Schlesinger Hoffman, LLP, says
    they intend to apply to the Court for compensation and
    reimbursement of actual and necessary expenses incurred in
    such proceeding, to be awarded strictly on a contingency fee
    basis.  Mr. Schlesinger explains that a contingency fee
    arrangement is required since the Final Financing Order
    provides that proceeds of Pre-Petition and Post-Petition
    collateral (representing virtually all of the Debtors'
    assets) may not be used to assert Claims against the Pre-
    Petition Secured Lenders.  Subject to the Court's approval,
    Mr. Schlesinger notes, Jaspan will charge a contingency fee
    calculated as:

    (1) the fees shall be contingent upon results as measured by
        the distribution to the Unsecured Creditors pursuant to
        a Plan of Reorganization, or as a result of a
        liquidation pursuant to Chapter 7 of the Bankruptcy
        Code,

    (2) either in cash or in kind arising from the settlement
        with Secured Creditors, the setting aside of lien claims
        of the Secured Creditors, the return to the Estate of
        preferences or any other tangible benefit inuring to the
        Unsecured Creditors,

    (3) such fees shall be equal to 10% of the first
        $10,000,000, 7% of the next $10,000,000 and 1 1/2% of
        amounts in excess of $20,000,000.

(C) In the event there is a benefit to the Estate as a result of
    Jaspan's efforts (but distribution to the Unsecured
    Creditors is limited relative to the benefit obtained by the
    Debtors' Estate), then, Mr. Schlesinger says, they will
    reserve their right to apply for fees bases upon the time
    expended by Jaspan and the benefit obtained by the Estate
    from those efforts.

The Committee contends that the proposed contingency fee
arrangement is reasonable and should be approved by the Court
subject to a determination of the amount to be paid to Jaspan
upon application for allowance.

If Jaspan's employment will be approved, Mr. Schlesinger says,
Jaspan intends to apply to the Court for allowance of
compensation and reimbursement of expenses in accordance with
the applicable provisions of the Bankruptcy Code, the applicable
Federal Rules of Bankruptcy Procedure and rules and Orders of
this Court.

To ensure that there will be no unnecessary duplication of
services performed or charged to the Debtors' estates, Mr.
Schlesinger assures the Court that Jaspan will work closely with
the Committee and its counsel.  Given the limited scope of
Jaspan's retention, the Committee believes that duplication, if
any, will be minimal.

Jaspan discloses that it currently represents or has represented
Fleet Bank N.A. on episodic transactional matters.  But Mr.
Schlesinger assures Judge Bohanon that Jaspan's representation
of Fleet Bank N.A. will not affect Jaspan's representation of
the Committee on the matters for which retention is sought.  Mr.
Schlesinger declares that Jaspan has not, does not, and will not
represent any parties-in-interest or any of their respective
affiliates/subsidiaries in matters directly related to the
Debtors or their Chapter 11 Cases.

Mr. Schlesinger declares that Jaspan does not hold or represent
any interest adverse to the Debtors or the estates with respect
to the matters on which Jaspan is to be retained.  Jaspan is
"disinterested" as such term is defined in section 101(14) of
the Bankruptcy Code, Mr. Schlesinger asserts.

                  Debt Coordinators Complain

The Bank of Nova Scotia and Citibank, N.A. in their capacity as
Debt Coordinators for the Pre-petition Banks object to Jaspan's
retention because the Committee's application and the
Schlesinger Affidavit are allegedly devoid of evidence
establishing cause for the relief that is being requested.

James L. Garrity, Jr., Esq., at Shearman & Sterling, New York,
New York, notes the Committee's Application fails to address why
Otterbourg cannot complete its investigation and bring suit, if
that is appropriate.

Moreover, Mr. Garrity says, the Application is impermissibly
vague regarding the scope of Jaspan's retention.  "It is simply
impossible," Mr. Garrity observes.

The Debt Coordinators also inform Judge Bohanon that the
Committee's counsel, Otterbourg, was aware of the potential
conflicts of interests at the time it was retained considering
that some of the Debtors' largest secured creditors were or
continued to be Otterbourg's clients.  At the same time, Mr.
Garrity tells the Court, Otterbourg was bargaining for the
opportunity to conduct an investigation of the Potential Claims
against its Clients.

"This suggests that Otterbourg believed that its representation
of the Committee would not be adversely affected by its
representation of the Otterbourg Clients," Mr. Garrity observes.
However, for reasons unknown to the Debt Coordinators,
Otterbourg suddenly determined in early October 2001 that it was
unable to complete its analysis of the Potential Claims "because
they may directly affect the interests of current or former
clients." This development came as a surprise to the Debt
Coordinators because during their meeting with Otterbourg last
October 3, 2001, Otterbourg never mentioned the fact that it
would be unable to complete its analysis of the Potential
Claims.

The Committee's revelation that Otterbourg cannot pursue the
claims because they may directly affect the interests of current
or former clients, gives rise to one of two possibilities,
either:

    (1) the filing of the Application was calculated to provide
        the Bankruptcy Court with an otherwise unfounded basis
        to extend the Committee's deadline to file a complaint,
        or

    (2) during the course of its investigation of potential
        avoidance claims over the past 4 months, Otterbourg was
        unable to conduct its investigation with the same vigor
        that it would have had it not represented its Clients
        because its investigation may have been hampered by "the
        interests of current or former clients."

Given that the Committee and its counsel knew, or should have
known,

    (i) of Otterbourg's inability to vigorously and fully pursue
        the Potential Claims against the Pre-petition Banks
        when the Committee retained Otterbourg,

   (ii) the potential importance of the investigation and
        prosecution of the Potential Claims,

the Debt Coordinators are bewildered by Otterbourg expending
approximately 4 months of effort and delaying, until eleven days
prior to the deadline (October 22, 2001), the retention of
special counsel.

Mr. Garrity asserts that the Committee and its counsel should at
least be obligated by the Court to fully disclose all of the
facts and circumstances surrounding Otterbourg's sudden ability
to conduct any analysis of the Potential Claims.

The Debt Coordinators are unclear as to the point at which
Jaspan will assume responsibility for asserting legal and/or
financial positions that are adverse to the Debt
Coordinators.

Furthermore, Mr. Garrity argues that if the Court authorizes the
Committee to retain Jaspan, Jaspan would necessarily have to
conduct an investigation that will, at least partially, be
duplicative of Otterbourg's efforts.  "And awarding compensation
to both Otterbourg and Jaspan for performing identical tasks
would be inappropriate," Mr. Garrity asserts.

Moreover, Mr. Garrity maintains that the proposed contingency
fee structure should not be granted.

The Debt Coordinators contend that the proposed contingency fee
structure is inappropriate because it is not based on the
benefit to be provided to the unsecured creditors that are not
Pre-petition Banks.  Instead, Mr. Garrity observes, the
Application calls for Jaspan to receive a fee based on a re-
characterization of distributions to the Pre-petition Banks as
unsecured creditors as opposed to secured creditors.  According
to Mr. Garrity, a proper calculation of the contingency fee
should be based on the actual benefit to Jaspan's clients;
namely, the unsecured creditors other than the Pre-petition
Banks.

Mr. Garrity reminds the Court that the Pre-petition Banks hold
95% in amount of all non-subordinated claims against the
Debtors. Thus, to the extent that there is any recovery to
the general unsecured creditors in these cases, Mr. Garrity
explains, a substantial part of such recovery will be
distributed to the Pre-petition Banks.

If the Court will approve any contingency fee structure, Mr.
Garrity suggests that it should recognize the economic benefits
of litigation and should measure the compensation based on the
benefit realized by the general unsecured creditors other than
the Pre-petition Banks.  According to Mr. Garrity, this will
insure that compensation is based on the benefit, if any, to be
enjoyed by Jaspan's clients.  Because even in the unlikely event
that Jaspan is successful in any litigation against the Pre-
petition Banks, Mr. Garrity notes, the vast majority of
distributions will go to the Pre-petition Banks in their
capacity as either secured or unsecured creditors.

Mr. Garrity also argues that the proposed hourly fee structure
should not be approved.  The Debt Coordinators are unclear as to
the exact meaning of this hourly fee proposal and the conditions
under which Jaspan would seek compensation based on hourly fees,
according to Mr. Garrity.  In any event, to the extent that it
contemplates the payment of any fees from any of the collateral
granted to the Pre-petition Banks, Mr. Garrity notes, such
payments are expressly prohibited under the terms of the Final
DIP Order.

Thus, the Debt Coordinators ask Judge Bohanon to deny the
Committee's application at this time. (Warnaco Bankruptcy News,
Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


WHEELING-PITTSBURGH: Applauds ITC Ruling On Steel Industry Probe
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation President and CEO James G.
Bradley applauded the U.S. International Trade Commission (ITC)
ruling announced that found the domestic steel industry has been
severely damaged by unfair foreign competition.

"This ruling reconfirms what we and the industry have contended
since the steel import crisis began more than three years ago,"
Bradley said.  "Unfairly traded steel imports have severely
injured the domestic steel industry costing thousands of
American steelworkers their jobs and sending 24 steel companies
into bankruptcy or liquidation.

"This action is an important step for the survival of the
domestic steel industry, which is as efficient as any in the
world," Bradley said.  "Without this determination by the ITC,
thousands more jobs would be lost and many more steel companies
would file for bankruptcy or go into liquidation.  As it is,
steel markets are depressed, with little pricing improvement
expected in the near future."

Within the next two months the ITC will make its recommendation
of a remedy to the President.  The President will then have two
months to act on the ITC's recommendation, modify those
recommendations, or set a different course of action.

"We deeply appreciate how quickly the ITC has conducted its
investigation and thank President Bush for initiating the
Section 201 investigation in June," Bradley said.  "The decision
[Mon]day and strong remedial actions by the President in the
coming months will help Wheeling-Pittsburgh Steel successful
reorganization and emerge from bankruptcy."

Bradley also thanked Sen. Robert Byrd, Sen. Jay Rockefeller,
Rep. Bob Ney, Sen. Mike DeWine and Rep. Alan Mollohan for their
efforts on behalf of Wheeling-Pittsburgh Steel and its
employees.  Bradley noted that these and other West Virginia,
Ohio and Pennsylvania officials have consistently supported the
company's efforts during the steel crisis.

                          *********

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For copies of court documents filed in the District of Delaware,  
please contact Vito at Parcels, Inc., at 302-658-9911. For  
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of Delaware, contact Ken Troubh at Nationwide Research &  
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                          *********

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

Troubled Company Reporter is a daily newsletter co-published by
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Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
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Copyright 2001.  All rights reserved.  ISSN: 1520-9474.

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