TCR_Public/011025.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

            Thursday, October 25, 2001, Vol. 5, No. 209


360NETWORKS: Fishel Company Seeks Stay Relief To Foreclose Liens
APARTMENT INVESTMENT: S&P Affirms BB+ Corporate Credit Rating
AT HOME: Stock Now Trades on the OTC Bulletin Board
AVECIA GROUP: S&P Puts Low-B Ratings on Credit Watch Negative
BETHLEHEM STEEL: Court Okays Use of Cash Management System

BIRMINGHAM STEEL: Restructuring Talks With Lenders Continue
CAPITOL DEVELOPMENT: Sells Residential Parcel for $1.76 Million
COMDISCO: Creditors' Committee Retains Lazard Freres as Banker
EDISON INTERNATIONAL: Posts $413 Million Loss For Third Quarter
EXODUS COMMUNICATIONS: Paying Prepetition Sales Tax Obligations

FANTOM TECHNOLOGIES: Director James Meekison Resigns
FEDERAL-MOGUL: Enters Into $675,000,000 DIP Financing Pact
HALO INDUSTRIES: Creditors Object to Employee Retention Plan
HMG WORLDWIDE: Nasdaq Halts Trading & Asks For More Information
HOLLYWOOD ENTERTAINMENT: Will Release Q3 Earnings on October 30

ICG COMMUNICATIONS: Wants To Assume Genuity Solutions IRU Pact
INTERNATIONAL POWER: S&P Rates $540 Million Bank Facility at BB
INTERNATIONAL TOTAL: Seeks Injunction Against Former Chairman
LOUISIANA-PACIFIC: S&P Places Ratings On Credit Watch Negative
MARINER: Moves To Extend Rule 9027 Removal Period To April 1

MOSLER INC: Diebold To Buy Security Assets for $28 Million
NAKORNTHAI: S&P Withdraws Ratings Due to Prolonged Restructuring
NETIA HOLDINGS: Fitch Cuts Senior Debt Rating to B- from B+
NETVOICE TECHNOLOGIES: Chapter 11 Case Summary
NEWPORT CREAMERY: Trustee Subpoenas Bank Records

OWENS CORNING: Moves to Transfer Assets To New Subsidiary
PACIFIC AEROSPACE: Amends Lock-Up Agreement with Noteholders
PACIFIC GAS: Assumes Amended PPA With Langerwerf Dairy, Inc.
PILGRIM AMERICA: Increasing Default Rate Prompts Fitch Downgrade
POLAROID CORP: Obtains Waiver Of Investment & Deposit Guidelines

QUALITY STORES: Involuntary Case Summary
RITE AID: Taps to Secure Transportation Contracts
SAFETY-KLEEN CORP.: Rejecting Oral JV Agreement With Creamer
STC BROADCASTING: S&P Drops Ratings To Low-B and Junk Levels
SUN HEALTHCARE: Unsecured Creditors' Committee Membership Change

TRANSCOM USA: Selling Perfection Equipment To Rush Enterprises
TRI-NATIONAL: Files Voluntary Chapter 11 Petition in San Diego
USINTERNETWORKING: Bain Capital To Invest $100 Million
VIASYSTEMS GROUP: Reports $27 Million Third-Quarter Loss
W.R. GRACE: Asbestos Panels Hire Cozen & McKool for Litigation

WAM!NET INC.: Secures $100 Mil Financing from Cerberus Capital
WASHINGTON GROUP: Will Not Make Quarterly Filing On Time
WINSTAR COMM: Agrees To Provide Qwest With Adequate Assurance


360NETWORKS: Fishel Company Seeks Stay Relief To Foreclose Liens
The Fishel Company, a secured creditor in 360networks inc.'s
chapter 11 cases, seeks partial relief from the automatic stay
to allow for filing foreclosure actions, and the service of the
summons and complaint regarding construction and mechanic's
liens on certain interests of 360 networks (USA) Inc.

George J. Wade, Esq., at Shearman & Sterling, in New York, New
York, relates Fishel entered into a contract with the Debtor a
year ago.  Under this contract, Mr. Wade says, Fishel agreed to
perform labor and to provide materials and equipment for the
installation of innerduct along the western route from
Sacramento, California to Portland, Oregon, on leasehold
property interests owned by the Debtor.  However, Mr. Wade
notes, the Debtors have breached the agreement by refusing to
pay Fishel all amounts due under the contract.

                      The Oregon Liens

According to Mr. Wade, Oregon Revised Statute 87.055 provides
that "no lien created under Oregon Revised Statute 87.010 shall
bind any improvement for a longer period than 120 days after the
claim of lien is filed unless suit is brought in a proper court
within that time to enforce the lien."

Mr. Wade relates Fishel filed and recorded these Construction
Lien Claims:

Date Recorded   Lien Claim Deadline   Property Securing Lien
-------------   -------------------   ----------------------
August 1, 2001  November 29, 2001     37545 Jasper-Lowell Rd
                                       Lane County, Oregon

August 3, 2001  December 1, 2001      30806 Saddle Butte Rd
                                       Linn County, Oregon

August 2, 2001  November 30, 2001     108936 Highway 97 N.
                                       Klamath County, Oregon

August 2, 2001  November 30, 2001     40920 Highway 97 N.
                                       Klamath County, Oregon

August 2, 2001  November 30, 2001     7450 Keller Road S.
                                       Klamath County, Oregon

Sept. 11, 2001  January 12, 2002      1244 Howell Prairie Rd. NE
                                       Marion County, Oregon

August 30, 2001 December 28, 2001     48513 US Hwy 58, Lot 2A
                                       Lane County, Oregon

                  The California Liens

Mr. Wade notes that California Civ. Code sections 3172 and 3144
provide that "no lien created under these statutes shall bind
any improvement for a longer period than 90 days after the claim
of lien is filed unless suit is brought in a proper court within
that time to enforce the lien".

According to Mr. Wade, Fishel filed and recorded these
Mechanic's Lien Claims:

Date Recorded   Claim Deadline    Property Securing Lien
-------------   --------------    ----------------------
August 1, 2001  October 30, 2001  17355B Highway 113, Robbins
                                   Sutter County, California

August 3, 2001  November 1, 2001  3951 Farris Road, Biggs
                                   Butte County, California

August 3, 2001  November 1, 2001  4746 Tokay Ranch Road, Chico
                                   Butte County, California

August 16, 2001 November 14, 2001 4185 County Road 97, Tulelake
                                   Modoc County, California

August 1, 2001  October 30, 2001  13830 Baker Road, Red Bluff
                                   Tehama County, California

August 1, 2001  October 30, 2001  13650 Oak Run Road, Oak Run
                                   Shasta County, California

August 1, 2001  October 30, 2001  40633 Red Mountain Road,
                                   Fall River Mills
                                   Shasta County, California

Thus, Mr. Wade explains Fishel needs relief from the automatic
stay because Fishel's lien rights may be forever lost if Fishel
cannot begin all steps necessary for initiation of the
foreclosure, including service of summons and complaint within
the time allowed by law in both Oregon and California.

Of the 14 liens filed and recorded by Fishel, Mr. Wade notes
that foreclosure must be started by October 30, 2001, for the
oldest California lien and by November 29, 2001 for the oldest
Oregon lien.

Mr. Wade further asserts that cause exists to grant Fishel
relief from the automatic stay because:

    (a) the substantive issues implicated are governed solely by
        Oregon and California law, respectively;

    (b) this Court lacks jurisdiction over necessary parties to
        the suits Fishel is required to file in Oregon and

    (c) Fishel has a strong probability of success on the
        merits; and

    (d) the detriment to Fishel of denying relief from the stay
        strongly outweigh any benefit to the Debtor if relief
        from the stay is not granted.

Fishel also requests the Court to waive the 10-day stay period
under Rule 4001(a)(3) of the Federal Rules of Bankruptcy
Procedure considering Fishel's urgent need to start the
foreclosure actions by October 30, 2001. (360 Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

APARTMENT INVESTMENT: S&P Affirms BB+ Corporate Credit Rating
Standard & Poor's affirmed its double-'B'-plus corporate credit
rating and single-'B'-plus preferred stock rating on Apartment
Investment and Management Co. (AIMCO). The outlook is stable.

The rating acknowledges AIMCO's seasoned and deep management
team and the solid geographic diversification of its portfolio.
These strengths are tempered by the inherent risks associated
with the company's transaction-oriented growth strategy and an
aggressive financial profile.

Denver-based AIMCO is one of the largest owners/managers of
apartment properties nationwide. At September 30, 2001, the
portfolio was comprised of a 50% or greater ownership position
in over 150,000 apartment units nationwide, an ownership stake
of less than 50% in another 100,000 units, long-term management
contracts with 21,000 units, and short-term third-party
management agreements for an additional 35,000 units. The income
generated from this portfolio shows favorable diversity
characteristics, both by product type and geographic location.
Additionally, nearly 90% of the total free cash flow is
generated from conventional apartment investments, with the
balance coming from service business (such as management
contracts) or other residential investments (such as affordable
housing). However, recent macroeconomic events, including
increasing corporate layoffs and declining household formations,
are expected to hamper rental rates and occupancy gains
industry-wide for the near term.

AIMCO's primary growth strategy has been to acquire controlling
interests in limited partnerships (generally by purchasing a
general partner position) that own/manage multifamily property
and to add value through selective renovations and redevelopment
of older properties. Since 1998, the company has nearly tripled
the size of its owned/controlled portfolio by acquiring, either
outright or gaining equity positions in, an additional 100,000
apartment units. Initially, these acquisitions are more
aggressively financed than AIMCO itself, and are much more
complex than typical apartment property acquisitions.

In addition to the potential pitfall of integrating the acquired
assets into AIMCO's large operating portfolio, the short-term
financing strategy limits financial flexibility by exposing the
company to unpredictable capital market fluctuations. To date,
due in part to the size and seasoned history of AIMCO's
operating structure and to the prior health of the real estate
markets, the company has not experienced any major missteps. It
is expected that future growth opportunities will be focused on
consolidating the existing universe of limited partnership
interests rather than acquiring additional general partnership

The company's growth strategy is supported by a decentralized
operating infrastructure administered through regional operating
centers. This regional strategy, in theory, should allow local
decisions to be processed more rapidly, while maintaining
portfolio-wide decisions at the corporate level. While a
portfolio of this size offers obvious economic efficiencies,
> it also provides management with a platform from which to
experiment with various technology initiatives. Investments made
to date have been modest, and related write-downs are not
anticipated. Investments include an on-line supply requisition
service, an internal-management software program, and a
centralized purchasing department. Standard & Poor's does not
view these initiatives as significant revenue contributors but
expects that the benefits could be manifested longer term in
improved operating efficiencies.

AIMCO pursues an aggressive financial strategy, which produces a
capital structure that is less transparent than other real
estate companies, due to the complicated ownership and revenue
structures. The partial, and, in some cases, nonconsolidation of
controlled entities makes it more challenging to analyze
profitability and efficiency measures; however, the continued
integration of limited partnership units will improve visibility
over time.

AIMCO continues to do a good job of match-funding long-term
investments with permanent capital; however, it has done so with
secured debt and greater-than-average use of perpetual preferred
securities. The result is a highly encumbered portfolio with
lower-than-average fixed-charge coverage measures. Book value
leverage was 59% at June 30, 2001. This figure, however,
increases to 75% when preferred securities are included;
preferred securities represent 38% of book value equity.
Furthermore, over 90% of portfolio-level net operating income is
generated from properties encumbered by secured debt. At June
30, 2001, fixed-charge coverage (which is burdened by fairly
hefty annual principal amortization of nearly $60 million) was
approximately 1.8 times, down from 2.3x in 1998 but relatively
flat for the past two years. It is expected that debt service
coverage measures may increase modestly from current levels, as
the benefits from refinancing relatively high-cost debt are
somewhat offset by the company's announced expectations for
moderately lower near-term earnings. Maturing debt is largely
made up of secured mortgages, which should be readily refinanced
even in a weakened capital markets environment due in part to
the heavy amortization schedule.

                    Outlook: Stable

Standard & Poor's continues to view AIMCO as a transaction-
oriented consolidator within the apartment sector and
acknowledges the large and diversified portfolio of apartment
properties that has been created. The rating outlook
incorporates expectations of a continuation of this strategy and
modest improvement to debt service coverage measures. Future
ratings improvement would be dependent on a migration of fixed-
charge coverage back above the 2.0x area and the successful
completion of several larger properties currently under

AT HOME: Stock Now Trades on the OTC Bulletin Board
Excite@Home (OTC Bulletin Board: ATHMQ) announced that the
company's Series A common stock is now eligible for over-the-
counter trading. The company's shares were de-listed from the
NASDAQ National Market. The company expects its shares to be
quoted on the OTC Bulletin Board under the ticker symbol ATHMQ.

The OTC Bulletin Board is a regulated quotation service that
displays real-time quotes, last-sale prices and volume
information in over-the-counter (OTC) equity securities. OTC
Bulletin Board securities are traded by a community of
registered market makers that enter quotes and trade reports.
Information regarding the OTC Bulletin Board can be found at

Excite@Home is the leading provider of broadband, offering
consumers residential broadband services and businesses high-
speed commercial services. Excite@Home has interests in one
joint venture outside of North America delivering high-speed
Internet services and three joint ventures outside of North
America operating localized versions of the Excite portal.

AVECIA GROUP: S&P Puts Low-B Ratings on Credit Watch Negative
Standard & Poor's placed its ratings on Avecia Group PLC on
CreditWatch with negative implications, reflecting its concern
that the U.K.-based specialty-chemicals producer will unlikely,
in the short to medium term, improve its financial profile to
levels compatible with the current ratings.

The group's 2001 trading performance has been adversely affected
by the economic slowdown throughout the year. Moreover, owing to
challenging general economic conditions, key end markets for
Avecia, including electronics, are not expected to recover in
the near term.

The CreditWatch placement is not related to Avecia's recent
announcement that it has opened discussions regarding the
potential sale of the Stahl business (leather finishes).
Standard & Poor's views this transaction as neutral from a
credit standpoint. From a business perspective, diversification
of the group's business portfolio would be slightly impaired
by the sale. From a financial perspective, while proceeds from
the disposal would be used for debt reduction, this would not
significantly strengthen the group's coverage ratios as the
positive impact would be offset by a decrease in operating cash
flow generation.

Ratings are supported by Avecia's strong positions in profitable
niche specialty-chemicals markets. Avecia develops,
manufactures, and markets value-added specialty products to
customers in a wide range of end markets, including
agrochemicals, pharmaceuticals, automotive, construction, and
electronics, as well as various other industrial segments. The
diversity of Avecia's product range and its leading global
market positions are important elements of cash flow protection.

The ratings continue to be constrained primarily by the group's
weak financial profile. Coverage ratios are very stretched for
the rating category, with a ratio of EBITDA to cash net interest
of about 1.8 times in first-half 2001.

Standard & Poor's will closely monitor Avecia's next quarterly
results. The ratings could be lowered if unfavorable business
conditions persist.

   Ratings Placed on CreditWatch with Negative Implications

     Avecia Group PLC
          Long-term corporate credit rating     BB-
          Senior unsecured debt                 B
          Preference stock                      B-

BETHLEHEM STEEL: Court Okays Use of Cash Management System
Prior to Petition Date, Bethlehem Steel Corporation used a
centralized cash management system similar to those utilized by
other major corporate enterprises in the ordinary course of

Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates the Debtors' cash management system is designed to
efficiently collect, transfer, and disburse funds generated
through the Debtors' operations and to accurately record such
collections, transfers, and disbursements as they are made.
However, Mr. Miller informs the Court, Bethlehem Steel
Corporation's wholly owned direct and indirect non-debtor
railroad subsidiaries maintain a distinct cash management

The principal components of the Cash Management System are:

    (i) Cash Collection and Concentration

        The Debtors maintain their main concentration account at
        The Chase Manhattan Bank in New York.

   (ii) Disbursements

        Bethlehem Steel Corporation maintains a primary
        disbursement account, which is used to fund all other
        disbursement accounts. The Primary Disbursement
        Account is a zero balance account that is funded daily
        from the Concentration Account. The Debtors also
        maintain a variety of other disbursement accounts

  (iii) Petty Cash and Other Miscellaneous Accounts

        In addition, the Debtors maintain several petty cash
        accounts. These accounts are used to fund de minimis
        cash needs and to cover the occasional need to issue a
        check locally or on an expedited basis. These accounts
        are funded periodically by wire transfer from the
        Primary Disbursement Account.

According to Mr. Miller, the Debtors maintain current and
accurate accounting records of daily cash transactions:

    (a) between and among the Debtors, and
    (b) between and among the Debtors and the Subsidiary

Thus, Mr. Miller notes, the entitlement to funds of each Debtor
and Subsidiary Railroad is known and recorded.

Mr. Miller asserts that the Debtors' cash management procedures
constitute ordinary course, essential business practices.  Mr.
Miller outlines the significant benefits provided by the Cash
Management System to the Debtors including, inter alia, the
ability to:

    (i) control corporate funds;

   (ii) ensure the maximum availability of funds when necessary;

  (iii) reduce borrowing costs and administrative expenses by
        facilitating the movement of funds and the development
        of more timely and accurate account balance information.

Furthermore, Mr. Miller reminds the Court that the use of a
centralized cash management system has historically reduced
interest expense by enabling the Debtors to utilize all funds
within the system.

Mr. Miller explains that the Debtors' business operations
require that the existing Cash Management System continue during
the pendency of these chapter 11 cases, as any disruption could
have a severe and adverse impact upon the reorganization efforts
of the Debtors.  Because of the Debtors' corporate and financial
structure, Mr. Miller adds, it would be extremely difficult and
expensive to establish and maintain a separate cash management
system for each Debtor.  Nevertheless, Mr. Miller says, the
Debtors will maintain records of all transfers within the cash
management system so that all transfers and transactions will be
documented in their books and records to the same extent such
information was maintained by the Debtors prior to the Petition

                        *     *     *

Convinced it is in the Debtors' best interests, Judge Lifland
authorizes the Debtors to continue to manage their cash pursuant
to their Cash Management System.  In addition, the Court allows
the Debtors to transfer funds by and among the Debtors and their
affiliates as and when needed and in the amounts necessary or
appropriate to maintain their operations.

Judge Lifland also directs the Debtors to maintain records of
all transfers within the Cash Management System so that all
transfers and transactions shall be adequately and promptly
documented in, and readily ascertainable from, their books and
records. (Bethlehem Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

BIRMINGHAM STEEL: Restructuring Talks With Lenders Continue
Birmingham Steel Corporation (NYSE:BIR) reported financial
results for the fiscal 2002 first quarter ended September 30,
2001. The Company's financial performance in the first quarter
improved from the immediately preceding quarter ended June 30,
2001, and was better than the results reported for the same
period of the prior fiscal year.

For the three months ended September 30, 2001, the Company
reported a net loss from continuing operations of $2.3 million,
compared with a loss of $6.8 million in the first quarter of the
prior fiscal year. In the immediately preceding fourth quarter
ended June 30, 2001, the Company reported a net loss of $3.5

Steel shipments in the first quarter of fiscal 2002 were 630,000
tons, compared with 653,000 tons in the same period last year.
The average selling price per ton was $272 down from $287 last
year, reflecting lower overall average selling pricing,
particularly for merchant products.

John D. Correnti, Chairman and Chief Executive Officer of
Birmingham Steel, commented, "We are pleased to report another
quarter of improved financial performance. With the exception of
the Cartersville facility, each of our core operations was
profitable for the first quarter." Correnti noted that, in the
first quarter, the Company continued to reduce selling, general
and administrative expenses, improved operating margins and
generated $21 million in EBITDA cash flow (earnings before
interest, taxes, depreciation and amortization).

Correnti continued, "Following the unfortunate terrorists'
attacks on the U.S. on September 11, 2001, the pace of our steel
shipments slowed. As a result, financial performance in the
month of September was significantly less than in July and
August. Although shipments in October are more in line with
expectations, there is considerable uncertainty about the near-
term outlook for the steel industry and the general economy. As
a result, following a partial restoration of selling values in
the fourth quarter of fiscal 2001, rebar prices are again under

Correnti stated, "We are encouraged by the actions of the U.S.
International Trade Commission and the recent decision by the
Bush Administration to support existing anti-dumping laws in the
steel industry. However, we expect steel prices will remain
under pressure for the remainder of 2001 and for the first half
of 2002."

Correnti said the Company is continuing discussions with its
lenders regarding the possible restructuring of debt or
extension of certain debt maturities, which are currently due
April 1, 2002. Correnti said the Company expects to remain in
compliance with all covenants pursuant to its debt agreements.

Correnti said, "We expect to maintain sufficient liquidity and
availability under our revolver to conduct operations as normal
until the maturity of the revolver on April 1, 2002. We
appreciate the past support of our lenders during very difficult
times in the industry, and we will continue to seek their
support in the days ahead."

Correnti also said the Company is progressing with due diligence
and documentation regarding the pending sale of the Company's
SBQ facilities in Cleveland, Ohio to Corporacion Sidenor, S.A.,
an SBQ steel producer headquartered in Bilbao, Spain. The
Company expects to have completed a definitive agreement with
Sidenor by November 9, 2001. Correnti said Sidenor is currently
paying the costs for approximately 60 former employees of the
SBQ operations in order to retain these workers for a restart of
operations upon closing of the transaction. Correnti noted that
the transaction with Sidenor would reduce debt and eliminate
further cash requirements of the Cleveland facility.

Correnti concluded, "Birmingham Steel has demonstrated progress
during challenging times for the steel industry. However, we
face continued challenges as we approach the seasonally slower
winter months against a background of pricing pressures and
general economic uncertainty. Although our task is difficult, we
will continue to pursue strategies and make decisions which
further our goals of returning to profitability and improving
the Company's long-term financial prospects."

Birmingham Steel operates in the mini-mill sector of the steel
industry and conducts operations at facilities located across
the United States. The common stock of Birmingham Steel is
traded on the New York Stock Exchange under the symbol "BIR".

CAPITOL DEVELOPMENT: Sells Residential Parcel for $1.76 Million
Capitol Communities Corporation (OTC Bulletin Board: CPCY)
announced its wholly owned subsidiary, Capitol Development of
Arkansas, Inc., has entered into an agreement to sell
approximately 88 acres of land it owns in Maumelle, Arkansas.

The land is zoned for single family residential development. The
buyer is Maumelle Valley, LLC, a Maumelle-based developer of
residential housing. The proposed sale is scheduled to close by
December 1, 2001. The Company disclosed the sale price to be
approximately $1,760,000 or $20,000 per acre. Terms of sale are
$1,584,000 cash at the closing and credit of $176,000 to be
applied towards improvements to Odom Boulevard, a major arterial
adjoining the sale property.

"The cash proceeds of this sale will be used to pay mortgage
debt owed to Nathaniel S. Shapo, Director of Insurance of the
State of Illinois, as Liquidator of Resure Inc., and operating
costs of the Company," said Michael G. Todd, President of
Capitol Communities.

Capitol Development of Arkansas has filed a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy
Code. The petition was filed in the United States Bankruptcy
Court for the Eastern District of Arkansas, Little Rock Division
on July 21, 2000. The sale is subject to approval by the U.S.
Bankruptcy Court.

Capitol Communities Corporation, through its subsidiary, owns
approximately 1,000 acres of residential property in the master
planned community of Maumelle, Arkansas. Maumelle is a planned
city with about 12,000 residents. It is located directly across
the Arkansas River from Little Rock. Maumelle contains a full
complement of industrial and commercial development, parks,
lakes, green belts, jogging trails, and other lifestyle

COMDISCO: Creditors' Committee Retains Lazard Freres as Banker
The Official Committee of Unsecured Creditors of Comdisco, Inc.
seeks the Court's authority to retain and employ Lazard Freres &
Co. LLC as its investment banker nunc pro tunc to July 27, 2001.

William J. Barrett, Esq., at Gardner, Carton & Douglas, in
Chicago, Illinois, assures the Court that Lazard will coordinate
its efforts with the Committee's financial advisor, Ernst &
Young LLP, to avoid duplication of the services to be provided
to the Committee.

According to Mr. Barrett, Lazard started work for the Committee
on several matters requiring immediate attention in connection
with the Debtors' chapter 11 cases, including reviewing bids for
certain assets of the Debtors and reviewing bid procedures to
encourage a competitive auction for those assets.

Mr. Barrett explains the Committee wants to retain Lazard as
their investment banker because, among other things:

    (i) Lazard and its senior professionals have an excellent
        reputation for providing high quality investment banking
        services in bankruptcy reorganizations and other debt

   (ii) Lazard has knowledge of the Debtors' financial and
        business operations, and

  (iii) Lazard has industry expertise in the financial
        institutions sector.

Mr. Barrett notes that Lazard provides a broad range of
corporate advisory services to its clients.  For in this case,
Mr. Barrett says, Lazard will be required to render these
services to the Committee:

    (a) To the extent it deems necessary, appropriate and
        feasible, review and analyze the business, operations,
        properties, financial condition and prospects of the

    (b) Evaluate the Company's debt capacity in light of its
        projected cash flows;

    (c) Assist in the determination of an appropriate capital
        structure for the Company;

    (d) Determine a range of values for the Company on a going
        concern basis and on a liquidation basis;

    (e) Advise and attend meetings of the Committee as well as
        due diligence meetings with the Company;

    (f) Review and provide an analysis of all proposed chapter
        11 plans proposed by any party;

    (g) Review, evaluate and assist, if necessary, the Company's
        sale efforts for various lines of business;

    (h) Review and provide an analysis of any new securities,
        other consideration or other inducements to be offered
        and/or issued under the Plan;

    (i) Assist the Committee and/or participate in negotiations
        with the Company;

    (j) Assist the Committee in preparing documentation within
        our area of expertise required in connection with
        supporting or opposing the Plan;

    (k) When and as requested by the Committee, render reports
        to the Committee as the Investment Banker deems
        appropriate under the circumstances; and

    (l) Participate, to the extent necessary, in hearings before
        the Bankruptcy Court with respect to the matters upon
        which the Investment Banker has provided advice,
        including as relevant, coordinating with the Committee's
        counsel with respect to testimony.

Mr. Barrett informs the Court that the Committee has decided to
compensate Lazard based upon the recoveries achieved by
unsecured creditors in these cases.  "The Committee believes
that tying professional compensation directly to the ultimate
return to creditors on a present value basis presents the most
efficient mechanism to obtain the services needed to maximize
the return to creditors," Mr. Barrett relates.

According to Mr. Barrett, Lazard will bill for its services at
$200,000 per month plus reimbursement for its actual and
necessary expenses.  Lazard will also be compensated with a
contingent Incentive Fee based on the value of the distributions
paid to unsecured creditors in these cases, Mr. Barrett adds.

"Distributions made in the form of cash present no valuation
issue; distributions in the form of securities would be valued
based on the average trading price of those securities for 20
trading days after the Debtors emerge from bankruptcy.
Distribution received from litigation recoveries or other
miscellaneous sources will be valued on receipt," Mr. Barrett
tells Judge Barliant.

Mr. Barrett explains that no Incentive Fee would be payable to
Lazard if creditor recoveries did not exceed 85%.  On the other
hand, Mr. Barrett notes, the maximum Incentive Fee achievable
would be $5,000,000.  According to Mr. Barrett, the maximum
Incentive Fee will be earned when creditor recoveries meet or
exceed 99% of their total claims.  But Lazard will no longer
receive an incremental payment for recoveries surpassing this
level, Mr. Barrett clarifies.  Between those extremes, Mr.
Barrett says, the Incentive Fee would be computed by
interpolating in between the amounts specified (on a pro rata

Recovery of             Incremental Lazard     Cumulative Lazard
Unsecured Creditors     Incentive Fee          Incentive Fee
-------------------     ------------------     -----------------
    86% -- 91%           $0 - $  725,000          $  725,000
    91% -- 94%                   870,000           1,595,000
    94% -- 96%                 1,160,000           2,755,000
    96% -- 98%                 1,450,000           4,205,000
    98% -- 99%                   795,000           5,000,000
  99% and above                        0           5,000,000

According to Mr. Barrett, all Monthly Advisory Fees in excess of
the first 6 payments of the Monthly Advisory Fee will be
credited against the Incentive Fee.  "In the event that the sum
of the Incentive Fee plus all Monthly Advisory Fees exceeds
$3,500,000, all Monthly Advisory Fees, including the first 6
payments of the Monthly Advisory Fee, will be credited against
the Incentive Fee, provided however, that crediting shall not
result in a total fee to Lazard of less than $3,500,000," Mr.
Barrett explains.  But, Mr. Barrett emphasizes, the total
Monthly Advisory Fees and Incentive Fee is capped at $5,000,000.

The Committee justifies its compensation to Lazard by citing
Lazard's restructuring expertise as well as its capital markets
knowledge, financing skills and mergers and acquisitions
capabilities.  According to Mr. Barrett says, the ultimate
benefit to the Committee of Lazard's services could not be
measured merely by reference to the number of hours to be
expended by Lazard's professionals.

The Incentive Fee is also necessary considering the substantial
commitment of professional time and effort that will be required
of Lazard and its professionals, the Committee asserts.  Mr.
Barrett notes that such commitment may foreclose other
opportunities for Lazard.  Moreover, Mr. Barrett adds, the
actual time and commitment required of Lazard and its
professionals to perform its services may vary substantially
from week to week or month to month, creating "peak load" issues
for the firm.

The Committee contends that the proposed fee arrangements are
reasonable under the standards set forth in section 330 of the
Bankruptcy Code.

According to Mr. Barrett, Lazard also intends to seek
reimbursement for reasonable out-of-pocket expenses incurred.
And as part of the compensation payable to Lazard, the Committee
has agreed to certain indemnification and contribution
obligations.  If the Court approves of its retention, Mr.
Barrett says, Lazard intends to file interim and final
applications for allowance of its fees and expenses in respect
of its services. The firm will provide time detail in a summary
format, Mr. Barrett adds.

Eric S. Hanson, managing director at Lazard Freres & Co., tells
Judge Barliant that the firm has researched its client files and
records to determine its connections with the Debtors,
creditors, any other party-in-interest, and their respective
attorneys and accountants.

"Based upon the review and to the best of my knowledge, Lazard
has not been retained to assist any entity or person other than
the Committee on matters relating to, or in connection with,
these chapter 11 cases.  If this Court approves the proposed
employment of Lazard by the Committee, Lazard will not accept
any engagement or perform any service for any entity or person
other than the Committee in these cases.  Lazard will, however,
continue to provide professional services to entities or persons
that may be creditors or shareholders of the Debtors, or
parties-in-interest in these Chapter 11 cases, provided,
however, that such services do not relate to, or have any direct
connection with these chapter 11 cases," according to Mr.

Mr. Hanson maintains that Lazard does not hold any interest
adverse to the Committee or the Debtors, in the matters for
which Lazard is to be employed.  "I believe that Lazard is a
'disinterested person' within the meaning of section 101(14) of
the Bankruptcy Code," Mr. Hanson asserts. (Comdisco Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,

EDISON INTERNATIONAL: Posts $413 Million Loss For Third Quarter
Edison International (NYSE: EIX) reported a loss of $413 million
for the third quarter of 2001. The results include a one-time
item reflecting a write-down at Edison Mission Energy (EME), the
company's independent power producer, of $1.15 billion, after-
tax, related to the decision to sell two coal stations in the
United Kingdom (U.K.).

On October 8, 2001, EME announced the sale of its two U.K.-based
coal stations, Fiddler's Ferry and Ferrybridge (FFF), to two
wholly owned subsidiaries of American Electric Power for an
aggregate price of 650 million pounds sterling. The sale is
expected to close before the end of the year. The plants were
acquired in 1999 for 1.3 billion pounds sterling. As a result of
the transaction, EME recorded a one-time, after-tax write-down
of $1.15 billion in the third quarter.

As previously reported, on October 2, 2001, Southern California
Edison (SCE) and the California Public Utilities Commission
(CPUC) entered into a settlement agreement of a lawsuit over
uncollected procurement-related obligations. On October 5, 2001,
a U.S. District Court judge approved the settlement. Under the
settlement agreement, SCE shall recover in rates procurement-
related obligations of $3.3 billion. SCE believes the settlement
provides a workable plan for the utility to become creditworthy
once again and pay its obligations, and to remove the State of
California from the power-purchasing business. A decision
regarding the accounting treatment of the settlement and the
related Procurement Related Obligations Account (PROACT) is
expected to be completed in the fourth quarter of 2001.

Excluding the one-time item related to the sale of the plants in
the U.K., Edison International reported operating earnings of
$741 million for the third quarter of 2001.

SCE's reported earnings in the third quarter decreased by $39
million, excluding the recovery of previously incurred
generation-related costs of $518 million, after tax. The
decrease was primarily attributable to higher interest expense
and lower kilowatt-hour sales.

Excluding the one-time item reflecting the asset write-down
associated with FFF, the $64 million decrease in operating
earnings at EME is primarily due to lower pool prices and
capacity payments in the U.K., and the non-recurring earnings
associated with the stock plan expense adjustment in 2000,
partially offset by higher energy prices for EME's U.S. projects
and increased earnings from oil and gas activities.

Edison Capital's decrease of $21 million in reported earnings
was due to lower revenues from leveraged leases and affordable
housing projects and the termination of FFF mezzanine financing.
The decrease was partially offset by a net gain on asset sales
and lower general and administrative expenses.

The decrease of $24 million at Mission Energy Holding Company
(parent only) reflects the issuance of new debt. The $11 million
improvement at the parent company and Edison Enterprises was
primarily the result of lower operating expenses at the parent

               Year-to-Date Earnings Summary

Edison International reported a year-to-date loss of $1.13
billion. These results include SCE's net unrecovered generation-
related costs for the period totaling $205 million. EME incurred
a one-time item of $1.15 billion reflecting the write-down of
FFF, and Edison Enterprises' incurred a one-time item of $117
million reflecting the decision to sell Edison Select and
substantially all of the assets of Edison Source. Excluding one-
time items, Edison International recorded year-to-date operating
earnings of $140 million compared with earnings of $607 million
for the same period last year.

SCE's reported earnings for the first nine months of 2001
decreased by $360 million from the same period in the prior
year. The decrease was primarily due to a loss of $205 million
for net unrecovered generation-related costs, an outage at San
Onofre Nuclear Generating Station (SONGS) Unit 3, higher
interest expense and lower kilowatt-hour sales, partially offset
by lower operating and maintenance costs.

Excluding the one-time write-down for FFF, EME's operating
earnings decreased by $24 million, and earnings from Edison
Capital decreased by $63 million. The explanations for the
variations in earnings are consistent with the descriptions
provided in the quarterly analysis.

The decrease of $24 million at Mission Energy Holding Company
(parent only) reflects the issuance of new debt. Excluding the
one-time item of $117 million, the parent company's and Edison
Enterprises' loss decreased by $4 million. The improvement is
primarily the result of lower operating expenses at Edison

            Twelve Months Ended Earnings Summary

For the twelve months ended September 30, 2001, Edison
International recorded an operating loss, excluding one-time
items, of $2.4 billion compared to operating earnings of $711
million in the same period last year.

On a reported basis, including one-time items, the company
recorded a loss of $3.7 billion for the 12-month period ending
September 30, 2001, compared to earnings of $703 million in the
same period of the prior year. These results include a write-off
at SCE of $2.5 billion of generation-related regulatory assets
in the fourth quarter of 2000 and the operating losses for SCE's
net unrecovered generation-related costs totaling $205 million
for the first nine months of 2001. Results on a reported basis
also include the one-time write-down of FFF, the one-time item
at Edison Enterprises related to the decision to sell Edison
Select and substantially all of the assets of Edison Source for
$117 million, and the one-time items in the prior period for a
tax benefit at SCE and the closing of five Edison Enterprises
businesses in 1999.

SCE incurred a loss of $2.4 billion for the twelve months ended
September 30, 2001, compared with operating earnings of $567
million for the same period ended September 30, 2000, excluding
the one-time tax benefit in December 1999. The decrease of $3.0
billion primarily reflects a write-off of $2.5 billion of
generation-related regulatory assets in the fourth quarter of
2000, net unrecovered generation-related costs of $205 million
in 2001, higher interest expense, lower kilowatt-hour sales, and
the outage at SONGS Unit 3, partially offset by lower operating
and maintenance costs.

Excluding the one-time write-down of FFF, EME reported operating
earnings of $101 million for the twelve-month period, compared
to $154 million in the same period last year. The decrease was
primarily due to lower power pool prices in the United Kingdom,
and certain tax benefits related to the sale of a portion of
EME's interest in Four Star Oil & Gas, partially offset by
higher energy prices from U.S. projects, and stock plan expense

Edison Capital contributed $72 million for the twelve-month
period compared to reported earnings of $134 million from the
same period last year. The decrease was mainly the result of
lower earnings from leveraged leases and affordable housing,
combined with the impact of the termination of the FFF
financing, partially offset by the net gain on asset sales.

The decrease of $24 million at Mission Energy Holding Company
(parent only) reflects the issuance of new debt. Excluding the
one-time items at Edison Enterprises for the decision to sell
Edison Select and Edison Source in 2001 and the closing of five
businesses in December 1999, the parent company and Edison
Enterprises recorded a $150 million loss on an operating basis
for the twelve months ended September 30, 2001, compared to a
$144 million loss in the same period last year. Increased
interest expense at the parent company was partially offset by
improved operating performance at Edison Enterprises.

Based in Rosemead, Calif., Edison International is the parent
company of Southern California Edison, Edison Mission Energy,
Edison Capital, Edison O&M Services, and Edison Enterprises.

EXODUS COMMUNICATIONS: Paying Prepetition Sales Tax Obligations
David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP,
in Wilmington, Delaware, relates that in the ordinary course of
their businesses, the Exodus Communications, Inc. incurs various
tax liabilities, including liability for Sales and Use Taxes,
Employment and Withholding Taxes. Prior to the Petition Date,
the Debtors generally paid their tax obligations as they became

Sales and Use Taxes accrue daily in the ordinary course of the
Debtors' business, Mr. Hurst says, and are calculated based upon
statutorily mandated percentages. In some cases, Sales and Use
Taxes are paid in arrears, once collected by the Debtors. Many
jurisdictions however, require remittance of estimated Sales and
Use Taxes on a periodic basis during the month or quarter in
which sales are made. Mr. Hurst contends that the Debtors
generally timely file a Sales and Use Tax return with the
relevant taxing authority reporting the actual Sales and Use Tax
due, paying any further amounts owed for a month or quarter and
consequently believes that no significant amounts of Sales and
Use Taxes are owed.

Mr. Hurst tells the Court that the Debtors have not conducted an
exhaustive survey of all states and localities in which the
Taxes are due to determine whether such taxes are deemed "trust
fund" taxes in each and every such jurisdiction because of the
costs involved. Nevertheless, the Debtors submit that most of
the Taxes likely constitute so-called "trust fund" taxes which
are required to be collected from third parties and held in
trust for payment to the taxing authorities. Mr. Hurst submits
that "trust fund" taxes collected by the Debtors for remittance
to Taxing Authorities, they are not property of the Debtors'
estates and have no equitable interest at all in such Taxes and
are obligated to remit to the appropriate Taxing Authority all
amounts collected.

Even if the Taxes were not considered "trust fund" taxes in a
particular jurisdiction, Mr. Hurst maintains that the payments
to the Taxing Authorities should be authorized. Authorizing the
payment of pre-petition tax obligations is necessary because:

A. Such payment is necessary to effectuate the paramount
    purpose of chapter 11 reorganization which is to prevent the
    debtor from going into liquidation and preserve the debtor's
    potential for rehabilitation, or

B. nonpayment would trigger a withholding of goods or services
    essential to the debtor's business reorganization plan.

Mr. Hurst submits that payment of the Taxes in full and on time
is both necessary and in the estates' best interests because
failure to timely pay, or a precautionary withholding by the
Debtors of payment of the Taxes likely would cause Taxing
Authorities to take precipitous action, including a flurry of
lien filings and a marked increase in audits. Mr. Hurst tells
the Court that prompt and regular payment of the Taxes would
avoid any such unwarranted governmental action.

Mr. Hurst contends that most of the Taxes would be entitled to
priority status and payment in full under any reorganization
plan. The Debtors' payment of the Taxes in the ordinary course
of business thus will affect only the timing of the payments to
the Taxing Authorities. Mr. Hurst asserts that the rights of
other unsecured creditors and parties-in-interest consequently
would not be prejudiced if the requested relief is granted, and
the Court's exercise of its equitable powers will not be in
derogation of any other provision of the Bankruptcy Code.

Mr. Hurst also informs the Court that the federal government and
many states in which the Debtors operate have laws providing
that, because the Taxes constitute "trust fund" taxes, the
Debtors' officers or directors or other responsible employees
could be held personally liable for the payment of such Taxes.
To the extent any accrued Taxes of the Debtors were unpaid as of
the Petition Date in these jurisdictions, Mr. Hurst claims that
the Debtors' officers and directors could be subject to lawsuits
during the pendency of these Chapter 11 cases. This would be
extremely distracting for the Debtors' directors and officers,
Mr. Hurst says, whose full-time focus must be to devise and
implement a successful reorganization strategy for the Debtors.

The Debtors thus submit that it is in their best interests and
the best interests of their creditors and consistent with the
reorganization policy of the Bankruptcy Code to eliminate the
possibility of such time-consuming and potentially damaging

Finding the relief requested necessary and in the best interest
of the Debtors and their estates, their creditors and other
parties-in-interest, Judge Robinson authorizes the Debtors to
pay the taxes collected from the Debtors' customers. (Exodus
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

FANTOM TECHNOLOGIES: Director James Meekison Resigns
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.

FEDERAL-MOGUL: Enters Into $675,000,000 DIP Financing Pact
New post-petition financing "is vital to the success of the
Debtors' reorganization efforts," Federal-Mogul Corporation
tells the Court. Todd R. Synder, Managing Director for
Rothschild, Inc., outlines the Debtors' cash requirements for
the next 45 days to pay:

    $50,000,000 to so-called Critical Vendors
     25,000,000 of anticipated Cash in Advance Payments
     15,000,000 in DIP Facility Commitment Fees
    190,000,000 of ordinary course Postpetition Vendor Payments
    110,000,000 to fund payroll obligations
     30,000,000 for Funding for Excluded Subsidiaries that are
                not parties to Stand-Alone Facilities
     265,000,000 to retire Securitization Lender Obligations
    $685,000,000 Total

These amounts, Mr. Snyder related, are in addition to
$150,000,000 the Debtors will seek to borrow on an interim basis
to replace, if necessary, stand-alone facilities for the
Debtors' non-U.S. and non-U.K. affiliates.  The Debtors estimate
that approximately $385,000,000 million of these cash
requirement can be funded through a combination of cash on hand
and collections of accounts receivable that have not been sold
to the F-M Funding Securitization Facility.  The $450,000,000
balance of this 45-day requirement must be funded by a DIP

"Absent this Court's approval of the . . . Postpetition
Financing Motions," Mr. Snyder concludes, "the Debtors face a
substantial risk of severe disruption to their business
operations and irreparable damage to their relationships with
their vendors and service providers."

The Debtors tell the Court that they obtained a commitment from
J.P. Morgan Chase for a $675,000,000 debtor-in-possession
financing facility, under which the Debtors can obtain the post-
bankruptcy financing they need.

Federal-Mogul steps the Court through the Company's complex pre-
petition debt structure, explaining that Debtors funded their
U.S. operations with four different types of debt (or debt-like)

      (A) The Debtors issued $2,300,000,000 of long-term Bond
Debt, consisting of (i) $2.125 billion in Notes and Senior Notes
issued between 1997 and 1999, with maturities ranging from 2004
through 2010, (ii) $84 million in medium-term notes due between
2001 and 2005, and (iii) miscellaneous other borrowings.  A
substantial portion of this debt is guaranteed by certain of
Federal-Mogul's U.S. subsidiaries, each of whom is a debtor and
debtor in possession herein.

      (B) The Debtors arranged for $2,000,000,000 of senior bank
term debt and revolving credit facilities under that certain
Fourth Amended and Restated Credit Agreement, dated as of
December 29, 2000 by and between itself and a syndicate of
lenders for which The Chase Manhattan Bank serves as
administrative agent.  As of the Petition Date, Federal-Mogul
had fully drawn this facility.

      (C) The Debtors arranged for various Sureties (Travelers
Casualty and Surety Company, Safeco Insurance Company, National
Fire Insurance Company and Continental Casualty Company) to
issue surety bonds.  As of the Petition Date, the Debtors'
contingent reimbursement obligations in respect of surety bonds
issued by the Sureties totaled approximately $225,000,000.

      (D) The Debtors created Federal-Mogul Funding Corporation,
a wholly-owned special purpose subsidiary, to put an accounts
receivable securitization facility in place.  FM Funding
provided working capital to the Debtors by purchasing, for cash
and on a daily basis, a significant portion of the accounts
receivable generated by the U.S. Debtors (and Federal-Mogul
Canada Limited, a non-debtor) in the ordinary course of
business.  F-M Funding funded its purchase of receivables by
borrowing money in the capital markets.  As of the Petition
Date, F-M Funding owned $550,000,000 of receivables and F-M
Funding, in turn, owed $265,000,000 to its lenders

The Bond Debt, the Senior Bank Debt, and the Surety
Reimbursement Obligations are ratably secured by a lien on the
stock of the Debtors' principal U.S. subsidiaries.  The Senior
Bank Debt and the Surety Reimbursement Obligations are secured
by a lien on substantially all of the U.S. assets of the U.S.
Debtors (excluding accounts receivable sold to F-M Funding) and
the stock of most of the principal foreign subsidiaries of the
U.S. Debtors.  A $350,000,000 tranche of new money loans which
was committed to by the Banks in December of 2000 (and
completely drawn by the Debtors thereafter) is entitled to first
priority. The remaining Senior Debt Claims share ratable second-
priority liens.  The DIP Facility liens will prime all liens in
the Senior Debt Collateral.

             Description Of Proposed DIP Facility

Larry J. Nyhan, Esq., at Sidley Austin Brown & Wood, tells the
Court that the DIP Facility is structured to address the
Debtors' highest priority: to ensure, to the best of the
Debtors' abilities, that the Debtors can maintain the integrity
of their internationally integrated businesses -- including the
critically important mandate of uninterrupted service to their
customers -- while at the same time coping with the novel and,
in many respects, challenging environment of multi-
jurisdictional reorganization proceedings.

The DIP Facility, Mr. Nyhan explains, will provide the Debtors
with $675 million in new funds.  Of the $675 million, $265
million can be used to retire loans extended by the
securitization lenders, thereby permitting the Debtors to
reacquire, through merger, approximately $550 million in
accounts receivable.  In addition, $150 million can be used to
fund loans to the Excluded Subsidiaries, thereby permitting the
Debtors, to the extent necessary or prudent, to replace in their
entirety the existing standalone facilities to the Excluded
Subsidiaries, with an additional $70 million to be used to fund
ordinary course working capital loans to the Excluded
Subsidiaries, and $25 million for loans to the English Debtors.  
The balance of the DIP Facility can be used for general working
capital and other general corporate purposes.

The DIP Facility (i) will be secured by liens upon the Senior
Debt Collateral that are senior in priority to the liens
securing the Senior Debt Claims, and (ii) will be entitled to a
superpriority claim status pursuant to 11 U.S.C. Sec. 364(c)(1).
The Debtors have also agreed to "roll" the Liquidity Facility
into a Tranche of the DIP Facility, so that the December 2000
Liquidity Facility will also be afforded the status of a
postpetition claim.

The salient terms of the New $675,000,000 Revolving Credit, Term
Loan and Guaranty Agreement dated October 1, 2001, include:

Borrowers:     Federal-Mogul Corporation
                J.W.J. Holdings, Inc.
                Federal-Mogul Tri-Way, Inc.
                Carter Automotive Company, Inc.
                Federal-Mogul Venture Corporation
                F-M Global Properties, Inc.
                Federal-Mogul World Wide, Inc.
                Felt Products Manufacturing, Inc.
                F-M International, LLC
                Federal-Mogul UK Holdings, Inc.
                Federal-Mogul Global, Inc.
                T&N Industries, Inc.
                Ferodo America, Inc.
                Gasket Holdings, Inc.
                Federal-Mogul Mystic, Inc.
                Federal-Mogul Powertrain, Inc.
                Federal-Mogul Piston Rings, Inc.
                McCord Sealing, Inc.
                Federal-Mogul Dutch Holdings, Inc.
                Federal-Mogul Ignition Company
                Federal-Mogul Products, Inc.
                Federal-Mogul FX, Inc.
                Federal-Mogul Puerto Rico, Inc.

Lender:       The Chase Manhattan Bank, and other lenders that
              may become party to the DIP Facility from time-to-

Agent:        The Chase Manhattan Bank

Arranger:     J.P. Morgan Securities, Inc.

Availability:  The DIP Facility consists of:

              (A) a $300,000,000 revolving credit facility on an
                  interim basis, and a $525,000,000 Revolver
                  on entry of the Final DIP Financing Order, in
                  each case, a $75,000,000 sublimit for letters
                  of credit; and

              (B) a $150,000,000 term loan

Maturity:      October 1, 2002

Base:        The Borrowing Base may include inventory and
              accounts receivable meeting certain eligibility
              standards initially determined by the
              Agent, and a Plant, Property & Equipment component
              defined in a manner satisfactory to the
              Administrative Agent.  The PP&E Component may not
              exceed the lesser of $125,000,000 or 20% of the
              Borrowing Base.

and Priority: Subject to the Carve-Out, the Debtors grant to the
              Agent (i) a perfected first priority lien on all
              unencumbered property and all cash maintained in a
              Letter of Credit Account, pursuant to 11 U.S.C.
              Sec. 364(c)(2); (ii) a perfected junior lien,
              pursuant to 11 U.S.C. Sec. 364(c)(3), on all
              property of the Borrowers that is subject to valid
              and perfected liens in existence as of the
              Petition Date or perfected subsequent thereto as
              permitted by 11 U.S.C. Sec. 546(b); and (iii)
              pursuant to 11 U.S.C. Sec. 364(d)(1), first
              priority, senior priming liens on all of the
              property of the Borrowers that is subject to
              existing liens pursuant to the Senior Credit
              Agreement or in connection with the Surety
              Bonds, or pursuant to other agreements where the
              obligations or indebtedness exceed $20,000,000.
              Further, all DIP Loans shall be granted
              superpriority administrative status under 11
              U.S.C. Sec. 364(c)(1), with priority over all
              administrative expenses of the kind specified in
              11 U.S.C. Sec. 503(b) or 11 U.S.C. Sec. 507(b).

Carve Out:   $5,000,000 for payment of fees of professionals
              retained by the Debtors and any statutory
              committee, U.S. Trustee fees and fees payable to
              the Bankruptcy Clerk

Rates:       Interest accrues on the Revolver and Term Loans at
              Chase's Alternate Base Rate plus 2.50% or, at the
              Borrowers' option, at LIBOR plus 3.50%.  Interest
              accrues on Tranche C Loans at the Alternate Base
              Rate plus 2.75% or, at the Borrowers' option, at
              LIBOR plus 3.75%.  In the event of a default, the
              interest Rate increases by 2%.

Fees:        The Debtors agree to pay:

                * a $1,687,500 Structuring Fee;
                * a $13,500,000 Syndication Fee;
                * a $1,000,000 Work Fee;
                * an annual $150,000 Administrative Agent Fee;
                * an annual $200,000 Collateral Agent Fee;
                * a Commitment Fee equal to 0.50% of any amount
                  not borrowed under the Revolver; and
                * all reasonable out-of-pocket costs of
                  the Agent the Arranger (including the fees and
                  expenses of the Agent's counsel and financial

L/C Fees:    The Debtors pay Letter of Credit Fees equal to
              3.50% per annum on the outstanding face amount of
              each Letter of Credit and 3.75% per annum on the
              outstanding face amount of each Existing Letter of
              Credit, plus certain customary fees for fronting,
              issuance, amendments and processing.

Covenant:    The Debtor may not make capital expenditures in
              excess of:

                   During the Fiscal
                    Quarter Ending        Maximum CapEx
                   -----------------      -------------
                      12/31/2001           $88,500,000
                      03/31/2002            93,750,000
                      06/30/2002            93,750,000
                      09/30/2002            93,750,000
                      12/31/2002            93,750,000
                      03/31/2003            90,250,000
                      06/30/2003            90,250,000
                      09/30/2003            90,250,000
                      12/31/2003            90,250,000

Covenant:    The Debtors may not permit earnings before
              interest, taxes, depreciation and amortization on
              a consolidated basis and for their Domestic
              Operations during any 12-month period then-ending
              to fall below:

                    For the         Minimum         Minimum
                    Period       Consolidated       Domestic
                    Ending          EBITDA           EBITDA
                    -------      ------------     ------------
                    10/2001      $430,000,000     $135,000,000
                    11/2001       440,000,000      130,000,000
                    12/2001       485,000,000      130,000,000
                    01/2002       470,000,000      120,000,000
                    02/2002       460,000,000      125,000,000
                    03/2002       460,000,000      120,000,000
                    04/2002       475,000,000      130,000,000
                    05/2002       460,000,000      120,000,000
                    06/2002       455,000,000      115,000,000
                    07/2002       465,000,000      120,000,000
                    08/2002       470,000,000      120,000,000
                    09/2002       475,000,000      120,000,000
                    10/2002       475,000,000      120,000,000
                    11/2002       475,000,000      120,000,000
                    12/2002       490,000,000      130,000,000
                    01/2003       510,000,000      135,000,000
                    02/2003       520,000,000      135,000,000
                    03/2003       530,000,000      145,000,000
                    04/2003       540,000,000      150,000,000
                    05/2003       550,000,000      155,000,000
                    06/2003       565,000,000      160,000,000
                    07/2003       565,000,000      160,000,000
                    08/2003       570,000,000      160,000,000
                    09/2003       580,000,000      165,000,000
                    10/2003       595,000,000      170,000,000

Mr. Snyder testified at the Interim DIP Financing Hearing that
the Debtors have relationships with five lenders who could pull-
off arranging a near-quarter-billion-dollar DIP facility.  The
Debtors solicited DIP Lending proposals from two institutions:
J.P. Morgan Chase and Citibank, N.A.  The Debtors tried to
negotiate for non-priming facilities.  That suggestion was
rejected by both lenders.  Ultimately, the Debtors favored Chase
because it in a better position to negotiate priming-related
issues with the Prepetition Lenders.

It is essential, Mr. Nyhan stressed to the Court, that the
Debtors immediately instill their employees, vendors, service
providers and customers with confidence in the Debtors' ability
to transition their business smoothly to the chapter 11 process,
operate normally in that environment, and ultimately to
reorganize in a successful and expedient manner.  The DIP
Facility is necessary to continue, among other things, the
orderly operation of the Debtors' business, the maintenance of
continued relationships with the Debtors' vendors and service
providers, and to satisfy necessary working requirements for the
Debtors' business.

The initial success of these chapter 11 cases and the
stabilization of the Debtors' operations at the outset, Mr.
Nyhan suggests, depend on the confidence of the Debtors'
employees, vendors, service providers and customers, which in
turn depends upon the Debtors' ability to minimize the
disruption to their business of the bankruptcy filing.  If DIP
Financing isn't put in place, Mr. Nyhan cautioned, the necessary
parties' confidence may be shattered, consequently damaging the
Debtors' ability to reorganize, perhaps beyond repair.  In
contrast, once the DIP Facility is approved and implemented, the
Debtors' ability to continue functioning normally will be
reasonably assured.

Concurring with the Debtors' assessment, and based on the
evidentiary record laid-out at the Interim DIP Financing
Hearing, the Bankruptcy Court authorized Federal-Mogul to enter
into the DIP Financing Agreement and borrow up to $450,000,000
($300,000,000 under the Revolver plus the full amount of the
Term Loan) pending a Final DIP Financing Hearing.  Those interim
loans shall be secured and accorded superpriority administrative
claim status pursuant to 11 U.S.C. Sec. 364.  To the extent
necessary, the Debtors are authorized to use the Prepetition
Lenders' collateral pursuant to 11 U.S.C. Sec. 363 and are
directed to provide those Prepetition Lenders with adequate
protection pursuant to 11 U.S.C. Secs. 363 and 364.  The Court
will convene a Final DIP Financing Hearing within 30 days.
(Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

HALO INDUSTRIES: Creditors Object to Employee Retention Plan
Four creditors who are seeking a chapter 11 trustee to oversee
HALO Industries Inc.'s bankruptcy case have filed an objection
to the company's proposed management and employee retention
programs, according to Dow Jones.

J.P. Morgan Partners LLC, Bloomfield Partners Family LP,
Coventry Partners Family LP and Carramore Ltd. filed the
objection on Wednesday.

The objection referred to the creditors' request to appoint a
trustee, claiming that Chief Executive Marc Simon should be
replaced for "conduct ranging from gross mismanagement to
disloyalty to fraud." The creditors said that since HALO filed
for bankruptcy on July 30, Simon has continued employment and
consulting agreements of company board members and friends "who
are providing little benefit to HALO's operations."

As part of its proposed plan, HALO would adopt Simon's
employment agreement, under which he would receive a minimum of
$750,000 for his first year. And if Simon leaves the company
"for good reason" or if he is let go "other than for cause," the
pact would entitle him to $1.2 million, paid over two years,
plus a performance bonus. The creditors' objection said that if
the court grants their request for a trustee, Simon might be
terminated. If the company is permitted to assume his employment
agreement, it would turn any potential claim Simon may have for
bonus or severance benefits into an administrative claim
superior to those of HALO's remaining creditors, the filing

The U.S. Bankruptcy Court in Wilmington, Delaware, will consider
approval of HALO's retention plan at a hearing on Thursday. The
Niles, Ill.-based promotional products provider listed assets of
about $100 million and liabilities of about $80 million in its
July 30 bankruptcy petition. The company's Lee Wayne Corp. and Inc. units also filed for chapter 11 bankruptcy
protection on July 30. (ABI World, October 22, 2001)

HMG WORLDWIDE: Nasdaq Halts Trading & Asks For More Information
The Nasdaq Stock Market(R) announced that the trading halt
status in HMG Worldwide Corporation, (Nasdaq: HMGC) was changed
to "additional information requested" from the company. Trading
in the company had been halted yesterday, October 23, at 9:04
a.m. Eastern Time for News Pending at a last sale price of .09.
Trading will remain halted until HMG Worldwide Corporation has
fully satisfied Nasdaq's request for additional information.

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

HOLLYWOOD ENTERTAINMENT: Will Release Q3 Earnings on October 30
Hollywood Entertainment Corporation (Nasdaq: HLYW), insolvent
owner of the Hollywood Video chain of video superstores,
announced that third quarter earnings for the year 2001 will be
released on Tuesday, October 30, 2001. Hollywood Entertainment
will hold a conference call with analysts and institutional
investors on Tuesday, October 30, 2001 at 7:00 a.m. Pacific Time
to discuss the results.

Hollywood Entertainment will provide an online Web simulcast and
rebroadcast of its 2001 third quarter earnings release
conference call.

The broadcast will be available online by going to
The online replay will be available immediately following the
scheduled call and continue through November 30, 2001.

ICG COMMUNICATIONS: Wants To Assume Genuity Solutions IRU Pact
ICG Communications, Inc., and certain of its subsidiaries and
affiliates, Debtors, ask Judge Walsh for his consideration and
for an order authorizing Debtor ICG Telecom Group, Inc. to
assume a contract, as amended, with Genuity Solutions, Inc.,
successor-in-interest to Genuity Networks Inc.

On or about August 18, 2000, the Debtors entered into the IRU
Agreement with Genuity. Pursuant to the IRU Agreement, the
Debtors provide Genuity with a diverse fiber route for their
Oakland, California Communications Point Of Presence.
Specifically, under the IRU Agreement, Genuity:

     (a) paid the Debtors a deposit of $600,000, and

     (b) was obligated to pay Telecom approximately $1.2 million
         once the Debtors completed construction of the diverse
         fiber route.

Completion of the Double Fiber Route would involve significant
capital expenditures for the Debtors. Accordingly, the Debtors
entered into negotiations with Genuity to amend the IRU
Agreement to allow for the construction of a more cost-effective
fiber route. As a result of these negotiations, the parties
agreed to amend the IRU Agreement to provide for the
construction of the Single Fiber Route. Because such amendment
will result in significant cost-savings for the Debtors, the
parties also agreed to reduce Genuity's future liability under
the IRU Agreement from $1.2 million to $900,000. Of the
$900,000, $600,000 has been paid in the form of a deposit.

                   The Debtors' Rationale

There is more than adequate business justification to assume the
IRU Agreement, as amended. By amending the IRU Agreement to
provide for the construction of the Single Fiber Route, rather
than the Double Route, the Debtors significantly reduce their
construction costs and expenses. In addition, because
construction of the Single Fiber Route will take less time than
construction of the Double Fiber Route, the proposed amendment
will provide the Debtors with an immediate infusion of revenue
from Genuity. Finally, Genuity would not agree to such amendment
absent the Debtors' immediate assumption of the IRU Agreement.
Notably, the Debtors will not be required to pay any "cure"
amounts under section 365 of the Bankruptcy Code in connection
with the assumption of the IRU Agreement. (ICG Communications
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  

INTERNATIONAL POWER: S&P Rates $540 Million Bank Facility at BB
Standard & Poor's assigned its long-term double-'B' rating to
U.K.-based global power developer International Power PLC
(IPower)'s $540 million senior unsecured bank loan, maturing in
2004. At the same time, Standard & Poor's affirmed its double-
'B' long-term corporate credit and senior unsecured bond ratings
on the company and its guaranteed subsidiary, International
Power (Cayman) Ltd. The outlook is stable.

The revolving credit and letter of credit facility has been
given the same long-term double-'B' rating as IPower's corporate
credit rating and unsecured bonds, reflecting the facility's
structure and payout priorities under a default scenario. The
facility is guaranteed jointly and severally by International
Power PLC and Deeside Power Development Company Ltd. (not

IPower was established following the demerger of National Power
PLC in October 2000. The company, which is active in 11
countries, owns 7,959 megawatts (MW; net) of generating
capacity. IPower also has interests in 3,200MW (net) of capacity
under construction, primarily in the U.S., and 2,784MW (net) of
heat capacity.

The ratings on IPower reflect the following risks:

IPower has substantial revenue income from investments in
merchant power that expose about 40% of future revenues to
commodity price risk. About one-half of IPower's assets operate
on a merchant base.  Many plants will use the Alstom GT24B
turbine, a relatively unproven technology with a limited
operational history. The turbine has had some early problems
that have affected its reliability. The manufacturer appears to
have solved some of the technical problems with the turbine, but
the fix has seen only limited operational hours. IPower has a
relatively high exposure to refinance risk at its subsidiary

Lenders will assume some portfolio concentration risk and
correlation of performance among projects. IPower has a limited
record on strategy and structure as a standalone entity.

At the double-'B' rating level, however, these risks are offset
by the following strengths:

   * Standard & Poor's forecasts of minimum interest coverage
levels of 2.9 times for consolidated interest coverage remain
adequate under severe downside scenarios, such as a 50% cut in
U.S. projected EBITDA and 30% higher interest costs at the
subsidiary level.

   * A large part of IPower's cash flow (75%) will come from
investment-grade countries. Future investments are also expected
to take place predominantly in investment-grade countries.
Parent-level recourse debt is forecast to remain relatively low
and Standard & Poor's expects leverage (on a consolidated basis)
to remain well below 60%. IPower has also established itself in
the capital and bank markets.

  * Given that subsidiaries of IPower will operate many of its
plants, there is low operational risk. IPower also benefits from
the experience of National Power, which operated installed
generating capacity of 34,100MW.

  * At fiscal year-end 2000 (nine months until December owing to
a change of year-end from March), IPower had total assets of 3.3
billion pounds ($4.9 billion) and total equity of about o1.7
billion. IPower's year-end EBIT was 221 million pounds (for 12
months in 2000). International Power (Cayman) Ltd. issued a $358
million convertible bond due 2005 (rated double-'B'), guaranteed
by IPower, and closed financing at ANP Funding I LLC (ANP
Funding; BBB-/Stable/--), which is a wholly owned subsidiary of
American National Power (ANP; not rated). In turn, ANP is an
indirect, wholly owned subsidiary of IPower.

ANP is engaged in the acquisition, development, operation, and
ownership of interests in independent power producers in the

IPower owns or invests in plants in the U.S., Turkey, Pakistan,
Spain, Portugal, the U.K., Thailand, Malaysia, Oman, Kazakhstan,
the Czech Republic, and Australia. In the near future, IPower is
to expand its operations in the U.S., Italy, and Abu Dhabi.

                       Outlook: Stable

The rating on IPower is supported by a financial profile that
will maintain adequate cash interest coverage levels and
consolidated leverage below 60%, and an overall projected cash
quality that should not deteriorate. If cash flow quality
improves and becomes less speculative, and a longer track record
is established, a rating upgrade could follow.

INTERNATIONAL TOTAL: Seeks Injunction Against Former Chairman
International Total Services Inc. (OTC:ITSW) relates that the
chief judge of the U.S. Bankruptcy Court overseeing the
company's Chapter 11 case has issued an order to show cause in
support of a motion by ITS to enjoin attempts by Robert A.
Weitzel to call a special meeting of shareholders. The order was
issued on October 16, 2001, and a hearing on the ITS motion is
scheduled for Thursday, October 25, 2001.

ITS filed the motion seeking an injunction in response to
Weitzel's October 2, 2001 demand for a special shareholder
meeting to replace the current board of directors. ITS believes
the demand is legally ineffective. ITS also believes the recent
"notice" of such a meeting mailed to shareholders by Weitzel is
equally ineffective.

ITS and its domestic subsidiaries filed voluntary petitions for
protection under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Eastern District of New
York on September 13, 2001. The company has continued business
operations without interruption under court protection with a
court-approved Debtor-in-Possession (DIP) credit facility
of up to $28.5 million.

International Total Services Inc. is a leading provider of
airport service personnel and staffing and training services and
commercial security services for a wide variety of industries.
ITS services include, among other things, airport passenger
checkpoint screening for airlines. The company has more than
12,000 employees at operation throughout the United States, and
in Guam and the United Kingdom.

LOUISIANA-PACIFIC: S&P Places Ratings On Credit Watch Negative
Standard & Poor's placed its ratings on Louisiana-Pacific Corp.
on CreditWatch with negative implications.

The CreditWatch placement stems from worsening economic and wood
product market conditions during the past month. As a result,
the company's already weak financial profile could deteriorate
further despite significant cost-cutting initiatives.

A planned senior secured credit facility is expected to close
shortly. However, credit quality would be negatively affected if
the closing were delayed or cancelled.

Ratings will be reviewed after Standard & Poor's has had the
opportunity to meet with management and evaluate the company's
performance prospects and its ability to withstand a prolonged
period of market weakness.

    Ratings Placed on CreditWatch with Negative Implications

     Louisiana-Pacific Corp.                   Ratings

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

MARINER: Moves To Extend Rule 9027 Removal Period To April 1
Mariner Post-Acute Network, Inc. and the Mariner Health Group
ask the Bankruptcy Court in Wilmington to authorize, pursuant to
Rule 9006(b) of the Bankruptcy Rules, a further extension of the
Debtors' time within which to file notices of removal of related
proceedings under Bankruptcy Rule 9027(a) to and including April
1, 2002 (or such later date 9027 may provide).

The Debtors remind the Court of the size and complexity of their
cases. In particular, the Debtors believe that they are parties
to approximately 230 currently pending judicial actions in the
courts of various state and federal districts (collectively, the
Prepetition Actions). As a result, much work remains to be done,
notwithstanding all the progress made both in the
reorganizations of the MPAN cases generally and in connection
with the Prepetition Actions, the Debtors represent.

Specifically, as a matter of efficient judicial administration,
the Debtors believe that the issue of the removal of large
numbers of Prepetition Actions should be addressed only after a
comprehensive effort to resolve such actions through the ADR
procedure, after which time the number of actions will likely be
significantly smaller. However, such effort will require several
more months to complete. The Debtors tell that Court that they
have made significant progress in the implementation of the ADR
procedures approved by a prior order of this Court. The ADR
Procedures have resulted in the settlement or resolution,
through mediation and arbitration, of some Prepetition Actions.
To the extent that the ADR procedures continue to be successful
in this regard, the question of whether such Prepetition Actions
will need to be removed will be rendered moot. However, until
the Debtors have been able to fully implement the ADR Procedures
and thereby dispose of many of the Prepetition Actions without
the need to decide whether or not removal is appropriate, they
do not wish to waive their right to review the appropriateness
of actions should they determine that removal is appropriate.

The Debtors are hopeful that extending the deadline to remove
Prepetition Actions to April 1, 2002 will provide them the
necessary time to fully implement the ADR procedures, after
which they will have far fewer Prepetition Actions to consider

For non-debtor parties, extension of the deadline will not
prejudice their rights, the Debtors represent. First, nothing in
the relief requested would prevent any party to a Prepetition
Action that is removed from seeking to have such action remanded
to the state court pursuant to 28 U.S.C. section 1452(b).
Second, removal of a Prepetition Action pursuant to 28 U.S.C.
section 1452(a) does not mean that the action automatically will
be referred to the Bankruptcy Court for the MPAN case or any
other Bankruptcy Court. All that section 1452(a) provides is
that an action may be removed "to the district court for the
district where such civil action is pending." Venue of the
removed action will not change to this District unless such a
change is "in the interest of justice or for the convenience of
the parties." Third, to the extent the Prepetition Action is a
personal injury tort or wrongful death action, 28 U.S.C. section
157(b)(5) provides that jurisdiction over a trial in such action
cannot be transferred to the Bankruptcy Court, although it may
be transferred to a Federal District Court. Finally, to the
extent that a Prepetition Claim is resolved through the ADR
procedures, the claimant, too, will benefit from not having to
deal with (and perhaps litigate) the issue of removal
prematurely at this time.

For all these reasons, the Debtors believe that the additional
time requested is reasonable, appropriate, and necessary.

Accordingly, by this Motion, the Debtors request the entry of an
order, pursuant to Bankruptcy Rule 9006(b), further extending
the period to remove actions and related proceedings to and
including the later of (1) April 1, 2002 or (2) such later date
as Rule 9027 may provide, without prejudice to the Debtors'
right to seek further extensions of such time period, and
granting such other relief as is just and proper. (Mariner
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  

MOSLER INC: Diebold To Buy Security Assets for $28 Million
In a strategic move designed to better serve its existing
customers and the security industry, Diebold, Incorporated
(NYSE: DBD) announced it has signed an agreement to purchase the
physical and electronic security assets, currency processing,
certain service and support activities, and related properties
of Mosler, Incorporated for approximately $28 million.

Mosler, which announced August 3 that it would cease operations
and file for Chapter 11 bankruptcy, was a leading integrator of
physical and electronic security systems, monitoring services,
support and maintenance.

"This purchase will effectively protect our mutual customer base
and complement our product and service offerings," said Walden
W. O'Dell, Diebold's chairman, president and chief executive
officer. "Mosler was in business for 134 years, has an excellent
name and brand recognition as well as a parallel history with
Diebold that makes it a perfect fit."

The agreement in principle includes the purchase of selected
assets and operations of Mosler, specifically all intellectual
property, GSA listings, the central monitoring station, access
control equipment, inventory and certain real estate with an
expected net book value approximating the purchase price.

In related developments, Diebold is obtaining the rights to
sell, install and service equipment formerly sold by Mosler,
such as Toshiba's currency sorting equipment and service, as
well as Pacom's product solutions to the financial and
commercial markets in the United States, Canada, Mexico, and
Central and South America.

When fully integrated these activities could add $100 million to
Diebold revenue. Diebold expects to close the acquisition by the
end of October.

Mosler, Incorporated offered a comprehensive line of electronic
and physical security systems that secure physical premises,
manage access, monitor events and process currency. Mosler
tailored its solutions to financial institutions, government
facilities and a wide range of commercial and industrial market

Diebold, Incorporated is a global leader in providing integrated
self-service delivery systems and services. Diebold employs more
than 12,000 associates with representation in more than 80
countries worldwide and headquarters in North Canton, Ohio, USA.
Diebold reported revenue of $1.7 billion in 2000 and is publicly
traded on the New York Stock Exchange under the symbol 'DBD.'
For more information, visit the company's Web site at

NAKORNTHAI: S&P Withdraws Ratings Due to Prolonged Restructuring
Standard & Poor's withdrew its long-term corporate credit rating  
on Nakornthai Strip Mill Public Co. Ltd. (NSM). At the same
time, the ratings on the senior mortgage notes and senior
subordinated mortgage notes issued by NSM Steel (Delaware) Inc.,
and guaranteed by NSM, were withdrawn. The rating withdrawals
are a result of the prolonged debt restructurings at the
company. All of the company's ratings have been 'D' (default)
since 1999.

NETIA HOLDINGS: Fitch Cuts Senior Debt Rating to B- from B+
Fitch, the international rating agency, has downgraded Netia
Holdings' senior unsecured corporate credit rating to 'B-' from
'B+'. The rating remains on Rating Watch Negative that was first
put in place on 6 August 2001.

This rating action reflects the continued uncertainty as to how
the company will fund the business until it turns free cash flow
positive. Fitch believes that the business is fully funded until
the end of the first quarter of 2002, possibly into the second
quarter. Telia AB (48% stake) and Warburg Pincus (9% stake) are
parties to the shareholders' agreement that effectively governs
the management of the business. As such, the agency understands
that they are in discussions with the executive team to agree a
new strategic plan.

Once a new strategic plan has been agreed to, the shareholders
can begin to look at ways of financing the business. A
combination of a funding gap, the knowledge that the company is
likely to run out of cash within the next six months and
continued uncertainty as to the nature and level of future
funding that might be available substantially weaken Netia's
credit risk profile.

Nevertheless, Fitch believes that these shareholders remain
supportively disposed towards the company, although Telia remain
reluctant to see any consolidation of Netia into the Telia
group. Revenues and EBITDA continue to grow more slowly than
expected and while management is reviewing its strategic options
and is looking to minimise capital expenditures this trend
contributes to a weakening of the Netia's financial outlook.

In view of Netia's deteriorating credit trend and the business'
capital structure Fitch draws investor's attention to the
provisions of Netia Holdings BV and Netia Holdings II BV's
senior notes. Fitch believes that the group's constrained
financial flexibility presents note holders with a risk of being
structurally disadvantaged as a result of any new debt funding
arrangements. This risk is not factored into Netia's senior
unsecured corporate credit rating.

Netia, which was established in 1991 and commenced operations in
1994, is Poland's leading alternative local and long-distance
fixed line telecommunications provider, holding 24 licenses to
provide local telecommunications services over an area
incorporating 40% of the country's population, as well as
holding a national long distance license. Netia is listed on the
Warsaw Stock Exchange and NASDAQ.

NETVOICE TECHNOLOGIES: Chapter 11 Case Summary
Debtor: NetVoice Technologies, Inc.
        3201 West Royal
        Suite 1600
        Irving, TX 75063

Chapter 11 Petition Date: October 17, 2001

Court: Eastern District of Louisiana (New Orleans)

Bankruptcy Case No.: 01-18342

Judge: Jerry A. Brown

Debtor's Counsel: Kenneth F. Tamplain, Jr., Esq.
                  4500 One Shell Square
                  New Orleans, LA 70139

NEWPORT CREAMERY: Trustee Subpoenas Bank Records
Andrew Richardson, the independent trustee running Newport
Creamery and investigating the bankrupt company's finances has
subpoenaed records from Citizens Bank of Rhode Island and sued
the owner's wife for another $60,000, according to the
Providence Journal.

Richardson asked Citizens Bank to turn over canceled checks,
wire-transfer instructions and other supporting documentation
for deposits and withdrawals made on three Newport Creamery bank
accounts between March and August, according to documents filed
on Friday. As part of the subpoena, the bank is being asked to
release all written materials relating to an estimated $1.5
million worth of transactions.

Richardson's lawyers presented the bank with a list of 54
specific withdrawals, transfers and deposits for which they are
seeking more information.

Richardson, in two separate lawsuits, has alleged that owner
Robert Swain and his wife, Linda, drained more than $1.5 million
from Newport Creamery to pay a mortgage on a house in Florida
plus other personal and household bills. Richardson has also
asked Citizens for banking information from the accounts of
three businesses related to Newport Creamery and controlled by
Swain. Richardson is planning to ask Newport Federal Savings
Bank and Bank Rhode Island for records from Newport Creamery and
other related businesses.

Last month, Richardson subpoenaed banking records from Newport
Federal Savings for accounts held by Robert and Linda Swain.
Right now, he does not plan to subpoena any more of the Swains'
personal financial records. But, Richardson did tack another
$60,000 onto his lawsuit against Linda Swain. Last month,
Richardson sued Linda Swain for $900,000, alleging that she
borrowed money from the Creamery for personal use, with no
intention of paying it back.

Newport Creamery filed for chapter 11 bankruptcy protection in
June and listed more than $10 million in debt. In September, the
case was converted to chapter 7. (ABI World, October 22, 2001)

OWENS CORNING: Moves to Transfer Assets To New Subsidiary
Owens Corning files a motion seeking authority to create a non-
debtor subsidiary, and to sublicense intellectual property, and
transfer tangible assets to such subsidiary.

As part of the Debtors' vision of continuing to be a world
leader in providing consumer and industrial customers with
building material systems and high performance glass composites
systems, it developed the ELAMINATOR System. The ELAMINATOR
utilizes proprietary and patented machines and processes to
insulate commercial metal building roof assemblies with a light
density fibrous glass blanket insulation product.

In order to facilitate the sale and distribution of ELAMINATOR
Insulation and promote the ELAMINATOR System, the Debtors
propose to create a new subsidiary, Owens Corning Commercial
Insulation Systems (OCCIS), a Delaware limited liability
company. OCCIS will develop and operate a franchise program and
will license franchises to use the ELAMINATOR System. As
required by federal and state law, OCCIS will issue a Uniform
Offering Circular (UFOC), the offering prospectus to be
delivered to prospective franchisees. The Debtors would transfer
the ELAMINATOR machines and equipment to OCCIS and sublicense to
OCCIS the right to use ELAMINATOR intellectual property,
including training and installation manuals.

Owens Corning Fiberglas Technology, Inc., (OCFT) a wholly owned
subsidiary of the Debtors, owns the ELAMINATOR Intellectual
Property and is the exclusive licensee of the intellectual
property and maintains the exclusive right to grant sublicenses
in and to such intellectual property. In exchange for these
licensing rights, the Debtors pays royalties to OCFT, determined
as a percentage of net sales of ELAMINATOR insulation products.
OCCIS' right to use the ELAMINATOR Intellectual Property would
be accomplished through a sublicense agreement. Thereafter,
OCCIS will be able to grant sublicenses to franchisees for the
use of the intellectual property while the Debtors will continue
to pay the same volume-based royalty to OCFT.

J. Kate Stickles, Esq., of Saul Ewing LLP, in Wilmington,
Delaware, contends that several sound business reasons exist for
the proposed creation of a separate, non-debtor subsidiary and
the transfer and/or sublicense of ELAMINATOR assets to such

Ms. Stickles explains, as a limited liability company, the new
subsidiary would act as a shield to protect the assets of the
Debtors and related entities. She says that this is essential in
a franchising situation where the offer and sale of franchises
is regulated at the state and federal levels and particularly in
the context of a new franchise that will evolve over time.

Federal and some state laws require that the UFOC must include a
disclosure of all other franchises offered by the franchisor.
Ms. Stickles relates that if the Debtors offer several different
franchises, a full discussion of each OC franchised business
would be required in the UFOC. But if a separate subsidiary is
created for the franchise, only a more narrow disclosure of
other OC franchises is required. Ms. Stickles asserts that
because the UFOC is a marketing tool as well as a disclosure
document, it is in the best interests of the estate to
streamline as much as possible the disclosure of competing
opportunities. The UFOC also requires a biographical disclosure
of each director, principal offer or any other management
executive responsible for the franchise program. Ms. Stickles
contends that it would be extremely burdensome for the Debtors
to meet such disclosure requirements were the ELAMINATOR
franchise program operated at the Debtors Corning level. Thus,
creating a separate subsidiary allows the Debtors to comply with
the disclosure requirements without being burdened.

Ms. Stickles tells the Court that in exchange for the transfer
and/or sublicense of ELAMINATOR assets, the Debtors will receive
a 100% equity interest in the newly formed entity. (Owens
Corning Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

PACIFIC AEROSPACE: Amends Lock-Up Agreement with Noteholders
Pacific Aerospace & Electronics, Inc. (OTC Bulletin Board: PCTH)
entered into an amended lock-up agreement with the holders of
approximately 98% of its 11-1/4% senior subordinated notes
regarding a plan to restructure the Company's debt and equity
outside of bankruptcy. The Amended Lock-up was entered into, in
cooperation with the Noteholders, as a result of the Company's
decision not to sell its U.K. subsidiary, Aeromet International

"We are pleased with the continued cooperation of the
Noteholders in the restructuring of our debt," said Don Wright,
President and Chief Executive Officer of the Company. "We
continue to work closely with them as we undertake the steps
necessary to accomplish the restructuring."

The Amended Lock-up is similar in many respects to the lock-up
agreement previously entered into by the Company and the
Noteholders. It provides that the Noteholders will waive the
Company's existing and future defaults under the Notes and
contemplates the exchange by the Noteholders of their
outstanding 111/4% senior subordinated notes, including accrued
interest, for a combination of common stock, convertible
preferred stock, and new notes. The Amended Lock-up provides
that, upon completion of the restructuring, the Noteholders
would own approximately 97.5% of the Company's common stock on a
fully diluted basis. The notes to be issued to the Noteholders
in the exchange would consist of $15 million of 10% pay-in-kind

The Amended Lock-up eliminates $15 million of the new notes that
originally would have been delivered to the Noteholders under
the Lock-up, and increases the percentage of the Company's
common stock to be held by the Noteholders as a result of the
restructuring from 95% to 97.5%. The Amended Lock-up, like the
original Lock-up, expires on December 31, 2001, or upon
consummation of the restructuring, if earlier.

The Company previously announced that it had entered into an
agreement with the holders of its senior secured debt, in which
the holders of the Senior Debt agreed to waive the Company's
payment defaults and certain other defaults until December 31,
2001. As part of the Amended Lock-up, the Company is currently
seeking asset-based financing from commercial lenders in the
U.S. and the U.K. to repay the Senior Debt and to provide
additional working capital. The Noteholders will be entitled to
terminate the Amended Lock-up if the Company has not obtained a
satisfactory financing commitment by November 30, 2001.

Pacific Aerospace & Electronics, Inc. is an international
engineering and manufacturing company specializing in
technically demanding component designs and assemblies for
global leaders in the aerospace, defense, electronics, medical,
telecommunications, energy and transportation industries. The
Company utilizes specialized manufacturing techniques, advanced
materials science, process engineering and proprietary
technologies and processes to its competitive advantage. Pacific
Aerospace & Electronics, Inc. has approximately 800 employees
worldwide and is organized into three operational groups -- U.S.
Aerospace, U.S. Electronics and European Aerospace. More
information may be obtained by contacting the Company directly
or by visiting its Web site at

PACIFIC GAS: Assumes Amended PPA With Langerwerf Dairy, Inc.
Pursuant to the Court's order providing for procedures to seek
proposed assumptions by Pacific Gas and Electric Company of
Power Purchase Agreements with Qualifying Facilities (QFs) by
Notice rather than Motion, the Debtor sought and obtained the
Court's approval for the assumption of the Power Purchase
Agreement between PG&E and Langerwerf Dairy, Inc., pursuant to
11 U.S.C. Section 365 and Rules 6006 and 9019 of the Federal
Rules of Bankruptcy Procedure.

The QF is a counter-party to a PPA, which provides for the
purchase of power by PG&E from the QF. Prior to the commencement
of the within bankruptcy case, PG&E failed to pay in full the
amounts due under the PPA, resulting in pre-petition claims for
payment to the QF, in the amount of $5,217.01 (the Pre-Petition
Payables). Pursuant to the Lynch Decision issued by the CPUC,
PG&E and the QF agreed to amend the PPA to replace the energy
price term with the CPUC price modification for 5 years (the PPA

The Agreement to assume the PPA (the Assumption Agreement), as
approved by the Court, provides for the following general terms:

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

     (b) July 31, 2001 shall be the effective date for PG&E's
assumption of the PPA, providing that all conditions as set
forth in Sections 2, 17 and 18 of the Assumption Agreement are

     (c) As the sum of the Pre-Petition Payables is less than
$10,000, PG&E will pay the amount of the Pre-Petition Payables
to QF, without interest, within 60 days of all conditions for
approval of the Assumption Agreement being met;

     (d) As more fully set out in Sections 4, 5, and 7 of the
Assumption Agreement, the QF waives certain potential
administrative and pre-petition claims, including any claim
to receive any difference between a "market rate" and the
contract price for energy and capacity delivered to PG&E from
and after April 6, 2001 through the effective date for PG&E's
assumption of the PPA. (Pacific Gas Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

PILGRIM AMERICA: Increasing Default Rate Prompts Fitch Downgrade
Fitch downgrades three tranches of the liabilities of Pilgrim
America CBO I. The transaction is backed by high yield bonds.
Pilgrim was managed by Pilgrim Investments, Inc. until July 8,
2001, when management was transferred to Prudential Investment
Management, Inc.

These rating actions are being taken after reviewing the
performance of the portfolio amidst increased levels of defaults
and deteriorating credit quality of the underlying assets. Given
the current quality of the portfolio, Fitch believes the credit
risk is no longer consistent with the liability ratings.

The CBO has been failing its total overcollateralization test of
107% since April 1999. It is also failing its class B O/C test
of 118% since June 2000 and its class A O/C test of 135% since
November 2000. In addition, the Weighted Average Fitch Rating
test and 'CCC-' buckets are also well above their triggers. To
date, the deal has had a total of $103,500,000 in defaults, with
$66,500,000 of defaults still outstanding. The portfolio also
contains an additional $24,718,255 of 'CCC-' and below rated

As a result of the findings, Fitch downgrades the following
classes of notes:

     * $172,123,895 class A notes from 'A' to 'BBB+';
     * $41,000,000 class B notes from 'B' to 'C';
     * $41,000,000 class C notes from 'CC' to 'C'.

Fitch has performed a full review of Prudential and is hopeful
that they may be able to stem the losses this portfolio absorbed
prior to their appointment. However, the high number of
defaults, the low value of unsold defaults, and high amount of
'CCC' rated or otherwise stressed assets may hamper their
ability to turn this portfolio around.

POLAROID CORP: Obtains Waiver Of Investment & Deposit Guidelines
Neal D. Goldman, EVP and Chief Administrative Officer of
Polaroid Corporation, tells Judge Walsh that the Debtors
maintain an investment account with Dreyfus Institutional
Services. According to Mr. Goldman, the Debtors use the
investment account as an overnight investment device for excess
cash in their main concentration accounts. Mr. Goldman advises
the Court that the investment portfolio includes repurchase
agreements, asset-backed securities, short-term bank securities,
commercial paper, U.S. Treasury Bills and U.S. Treasury Notes
and Bonds.

The Debtors are convinced that their investment and deposit
procedures substantially conform to the approved investment
practices identified in 11 U.S.C. Sec. 345. The Debtors likewise
believe that all deposits and investments into the investment
account and their other bank accounts are safe, prudent and
designed to yield the maximum reasonable net return on the funds
invested. Nonetheless, to the extent that these deposits and
investments do not conform to the approved investment practices
of the Bankruptcy Code, the Debtors seek to waive these

Specifically, the Debtors ask Judge Walsh for authority:

     (a) to invest and deposit funds in a safe and prudent
manner in accordance with their existing investment guidelines,

     (b) for the applicable institutions to accept and hold or
invest such funds in accordance with the Debtors' pre-
petition practices.

David S. Kurtz, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Chicago, tells the Court that the majority of the
Debtors' bank accounts are maintained as minimum or zero balance
accounts that are not invested. Therefore, Mr. Kurtz contends,
the investment and deposit restrictions of Section 345(b) can be
waived with respect to these accounts as not applicable.

As for the investment account, Mr. Kurtz insists that the
investment vehicle used by the Debtors to invest the idle funds
in this account is safe. Mr. Kurtz reminds Judge Walsh that
courts have routinely granted requests to approve the continued
use of investment and deposit guidelines that do not strictly
comply with Section 345 but that nevertheless are safe and

Convinced by the Debtors' arguments, Judge Walsh grants the
relief requested by the Debtors. If no objections are received
within 20 days, the interim order shall be deemed a final order
without further hearing. (Polaroid Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

QUALITY STORES: Involuntary Case Summary
Alleged Debtor: Quality Stores, Inc.
                dba Central Tractor Farm & County, Inc.
                455 East Ellis Rd
                Muskegon, MI 49441

Involuntary Petition Date: October 20, 2001

Case Number: 01-10662             Chapter: 11

Court: Western District of Michigan

Judge: James D. Gregg

Petitioners' Counsel: Robert S. Hertzberg, Esq.
                      Hertz Schram & Saretesky PC
                      1760 South Telegraph
                      Suite 300
                      Bloomfield Hills, MI 48302-0183

Petitioners: Century Funding Ltd
             c/o Greg Scketa
             Conseco Capital Management, Inc.
             11825 North Pennsylvania St
             Carmel, IN 46032

             Century Funding Corp
             c/o Greg Scketa
             Conseco Capital Management Inc
             11825 North Pennsylvania St
             Carmel, IN 46032

             Pacholder High Yield Fund, Inc.
             c/o James E Gibson
             8044 Montgomery Rd Ste 480
             Cincinnati, OH 45236

             Triton CBO III
             c/o Michael H Sollott
             565 5th Ave
             NewYork, NY 10017

             Triton CDO IV
             c/o Michael H. Sollott
             565 5th Ave
             New York, NY 10017

RITE AID: Taps to Secure Transportation Contracts
--------------------------------------------------------------- Inc., the leader in transportation procurement and
management technology building the industry's first standards-
based logistics network, says that Rite Aid Corp. (NYSE: RAD;
PCX), a $14.5 billion leading drugstore chain, has engaged to secure the majority of its annual ground
transportation contracts. With the addition of Rite Aid, services six of the top 20 retailers in the

Rite Aid's engagement with is one component of a
major supply chain transformation initiative utilizing the
consulting and business services of Accenture. Together, Rite
Aid and Accenture chose

Rite Aid will deploy's proven OptiBid Network(TM)
to optimize and automate transportation procurement. The large-
scale engagement spans truckload, less than truckload and
intermodal transportation and involves inbound shipments to Rite
Aid's distribution centers, warehouse-to-warehouse
transportation and the portion of its outbound transportation
that is not handled by private fleets.

OptiBid Network is a systematic approach to developing an
optimal transportation strategy, implementing that strategy by
securing annual transportation service contracts and managing
those contracts on an ongoing basis. Using leading-edge
optimization tools, OptiBid Network considers all critical
business factors, including freight variability, network flows
and carrier rates and service levels, and recommends an optimal
strategic transportation plan. After the optimal carrier-to-lane
assignment is determined, OptiBid Network generates a set of
routing databases for quick integration into a company's
execution-based load tendering and rating, freight audit and
payment systems.

"Rite Aid and numerous other Fortune 500 retailers recognize
that transportation is a complex and often untapped area for
driving bottom-line efficiency that keeps prices low and
improves customer satisfaction," said Todd Kolber, vice
president of retail for "'s
new engagement with Rite Aid further establishes us as the
transportation technology provider of choice in the retail

No other e-logistics provider is closing new customer deals at
the volume and frequency of, validating that is unequivocally outdistancing other players in
this space. Approximately 35 Fortune 500 shippers and third
party logistics providers have used OptiBid Network to enable
the procurement of over $6 billion of annual recurring freight
services, resulting in over $400 million in savings.

Based in Burlington, Mass., empowers shippers and
carriers to buy, sell, manage and optimize transportation
services over land, air and ocean. The company links all players
in the logistics and adjacent industries on a standard
communication and application integration platform, Logistics
Event Management Architecture (LEMA).'s three
offerings include OptiBid, a strategic procurement solution for
shippers; OptiManage, a comprehensive transportation management
solution for shippers; and OptiYield, a management, analysis and
procurement solution for carriers. The company has received
funding, strategic guidance and operational support from
Internet Capital Group (Nasdaq: ICGE). has
received numerous accolades and was recently named to the Forbes
Best of the Web: B2B for the second consecutive year. For
further information, visit the company Web site at

Rite Aid Corporation is one of the nation's leading drugstore
chains with annual revenues of more than $14 billion and
approximately 3,600 stores in 29 states and the District of
Columbia. Information about Rite Aid, including corporate
background and press releases, is available through the
company's Web site at

SAFETY-KLEEN CORP.: Rejecting Oral JV Agreement With Creamer
Safety-Kleen Corp. and its subsidiaries and affiliates, Debtors,
ask Judge Walsh to authorize the rejection of an oral
joint venture agreement between R. Steve Creamer and/or Creamer
Investments, Inc. and/or RACT, Inc., on the one hand,1 and one
or more of the Debtors, on the other hand, known as the Project
Phoenix Agreement. In an effort to reduce postpetition
administrative costs and in an exercise of the Debtors' business
judgment, the Debtors have determined that it is in the best
interests of their estates, their creditors, and all parties-in-
interest for the Debtors to reject the Project Phoenix

              The Project Phoenix Agreement

In or around August, 1997, the Debtors and Creamer entered into
the Project Phoenix Agreement, pursuant to which the parties
verbally agreed to form a joint venture called "Project
Phoenix". Under the laws of both Utah and South Carolina, the
two states whose law might be found to govern the Project
Phoenix Agreement, the various oral and written communications
between the Debtors and Creamer were more than sufficient to
form the basis of an executory oral contract.

The purpose of Project Phoenix, which originally was to be owned
50% by the Debtors and 50% by Creamer, was two-fold:

     (1) To obtain the regulatory permits necessary to allow the
deposit of low-level radioactive waste at the Debtors' Grassy
Mountain facility, located in Tooele County, Utah; and

     (2) To construct a facility at Grassy Mountain capable of
accepting the low-level radioactive waste.

By subsequent agreement between the Debtors and Creamer, the
relative ownership percentages were adjusted, so that the
Debtors now own 80% and Creamer now owns 20% of Project Phoenix.

In fact, four attempts to gain approval from Tooele County ended
unsuccessfully. Despite the parties' original intentions upon
entering into the Project Phoenix Agreement, as well as their
subsequent efforts to secure the required permits, Project
Phoenix never achieved its intended results. First, the
political climate in Utah changed, making it difficult, if not
impossible to obtain the requisite permits. Second, and more
important, the Debtors decided to exit the low-level radioactive
waste-business altogether.

On or about January 21, 1999, the Debtors offered to purchase,
among other things, Creamer's interest in Project Phoenix.
However, a subsequent purchase and sale agreement between the
Debtors and Creamer, dated as of March 19, 1999, specifically
excluded Creamer's interest in Project Phoenix from the assets
being purchased by the Debtors.

Subsequently, by letters dated July 10, 2000, and December 11,
2000, Creamer offered to assume the lead role on Project Phoenix
by completing the permitting process and modifying the Grassy
Mountain facility to comply with the conditions of any permits
obtained. By this time, however, the Debtors had determined that
Project Phoenix was no longer compatible with their long term
business plans and, accordingly, that continued efforts to
ensure the success of the project would not inure to the
Debtors' benefit.

The Debtors now seek to reject the Project Phoenix Agreement. By
rejecting the Project Phoenix Agreement, the Debtors will avoid
incurring any unnecessary administrative expense obligations
with no corresponding benefit to the estates. Rejection of the
Project Phoenix Agreement thus is in the best interests of the
Debtors, their estates, their creditors and all parties-in-

A debtor's determination to reject an executory contract is
governed by the "business judgment" standard. Here, the Debtors
have satisfied the "business judgment" standard for rejecting
the Project Phoenix Agreement. Because Project Phoenix is no
longer in accord with the Debtors' current or future business
plan, rejection of the Project Phoenix Agreement is an exercise
of the Debtors' sound business judgment and is in the best
interests of the Debtors, their estates and their creditors.
(Safety-Kleen Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 609/392-0900)    

STC BROADCASTING: S&P Drops Ratings To Low-B and Junk Levels
Standard & Poor's lowered its ratings on STC Broadcasting Inc.
The current outlook is negative.

The downgrade is based on concern that continuing television
advertising softness will weaken the company's key credit
measures to levels not supportive of a single-'B'-plus corporate
credit rating. This concern is magnified by the pending adverse
liquidity effect of the February 2002 onset of required cash
dividends on STC's debt-like preferred stock.

Advertising demand contraction during the past year has
accompanied the normal reduction in political ad spending in
even-numbered years. The recent terrorist attacks in the U.S.
and the U.S. military response have introduced additional
economic uncertainty that have further chilled the weak
advertising climate. Declining consumer confidence could
undermine local advertising, which has been more stable than the
national category and which represents an increasing percentage
of company revenue. Political and Olympic advertising should
boost revenue in 2002, although spending is unlikely to reach
the level attained in 2000.

The ratings reflect high financial risk from debt-financed
station acquisitions, modest company size, and mature growth
prospects for small market television. Somewhat tempering these
factors are network television affiliates' typically healthy
shares of local advertising, the less competitive nature of
smaller markets, good margin and free cash flow characteristics,
and station asset values.

STC owns and operates major network affiliated TV stations
reaching 2.4% of U.S. households through eight small-and medium-
size markets ranked between 49 and 196. STC's controlling
shareholder is Hicks, Muse, Tate & Furst Inc., which also owns
LIN Television Corp.

During the six months ended June 30, 2001, STC's pro forma
revenue declined 10.4% and EBITDA fell 22.7%. The EBITDA margin
in the 30% to 35% range is about average for this scale of
operations; however, profitability could slip below 30% given
continuing demand weakness. Interest coverage for the 12 months
ended June 30, 2001 was modest, in the upper 1 times area, while
coverage of interest plus noncash debt-like preferred dividends
was weak at almost 1x. By the end of 2001, interest coverage
will likely fall to about 1.5x and total interest and preferred
coverage could dip below 1x. Capital spending needs are modest
and the company generates discretionary cash flow, although this
liquidity source will shrink sharply and possibly swing to
losses once required cash dividend payments on the preferred
stock begin.

Debt maturities are moderate for the next four years.

Prolonged advertising softness, debt-financed acquisitions, or
the absence of liquidity could trigger another downgrade, given
the pending onset of required cash dividend payments on debt-
like preferred stock.

                     Ratings Lowered

     STC Broadcasting Inc.                 To      From

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

SUN HEALTHCARE: Unsecured Creditors' Committee Membership Change
Pursuant to 11 U.S.C. Sec. 1102(a)(1), the United States Trustee
for Region III appoints these creditors to serve on the Official
Committee of Unsecured Creditors in Sun Healthcare Group, Inc.'s
chapter 11 cases:

     (1)  HSBC BANK USA, as Indenture Trustee
           140 Broadway, New York, NY 10005-1180
                Attn: Robert A. Conrad, V.P.,
                   Tel: (212) 658-6029     Fax: (212) 658-6425

     (2)  U.S. BANK, NATIONAL ASSOCIATION, as Indenture Trustee
           1180 East Fifth Street, St. Paul, MN 55101
                Attn: Timothy Jon Sandell
                   Tel: (651) 244-0713     Fax: (651) 244-5847

          11 Madison Avenue, New York, NY 10022
                Attn: Alex Lagetko, Director
                   Tel: (212) 325-3810     Fax: (212) 352-8290

    (4)  BANK OF AMERICA, N.A.
          555 South Flower Street
          Mail Code: CA-706-10-10, Los Angeles, CA 90071
                Attn: M. Duncan McDuffle, Managing Director
                   Tel: (213) 228-2609     Fax: (213) 228-6003

          c/o Foothill Capital Corporation
          11111 Santa Monica Blvd., Suite 1500,
          Los Angeles, CA 90025
                Attn: Marshall E. Steams, Senior V.P.,
                   Tel: (310) 996-7158     Fax: (310) 472-0461

          300 Esplanade Drive, Suite 1860, Oxnard, CA 93030
                Attn: Neil B. Glassman, Attorney-in-fact,
                   Tel: (805) 981-8655     Fax: (805) 981-8663

          6653 Embareadero Drive, Suite Q, Stockton, CA 96219,
                Attn: Bryan Burr, CFO
                   Fax: (209) 481-9410

          1313 L. Street, N.W. Washington, DC 20005
                Attn: Andrew L. Stern, President
                   Tel: (202) 898-3200     Fax: (202) 898-3481

         "Rabobank Nederland" New York Branch
          245 Park Avenue, New York, NY 10157-0062
                Attn: John P. McMahon
                   Tel: (212) 916-7800       Fax: (212) 986-7621

          12 East 49th Street, Suite 3200, New York, NY 3200,
                Attn: Anna R. Kovner,
                   Tel: (212) 884-6206       Fax: (212) 884-6184

Don A. Beskrone, Esq. (215/597-4411) is the staff attorney for
the U.S. Trustee assigned to Sun's chapter 11 cases. (Sun
Healthcare Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

TRANSCOM USA: Selling Perfection Equipment To Rush Enterprises
Rush Enterprises Inc. (Nasdaq:RUSH), which operates the largest
network of Peterbilt heavy-duty truck dealerships in North
America, John Deere construction equipment dealerships in Texas
and Michigan, and three of the largest farm and ranch
superstores (D&D) in America, announced that it has signed a
definitive purchase agreement to purchase the assets of
Perfection Equipment Company Inc., an Oklahoma corporation, from
its parent company, TransCom USA Management Co. L.P.

On May 7, 2001 Transcom filed a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code. Rush was
recognized as the "stalking horse" bidder by the United States
Bankruptcy Court for the assets of Perfection. The pending
acquisition will provide Rush with Perfection's oil and gas up-
fitting business, medium-duty truck accessory and up-fitting
business, and will further compliment Rush's existing heavy-duty
truck parts business, all located in Oklahoma City, Oklahoma.

Rush has a high regard for the management and the employees of
Perfection and looks forward to working with the team. Rush
intends to integrate their operations into the Rush Truck Center
system upon completion of the transaction. Rush had revenues of
$897.4 million during 2000 while Perfection had revenues of
approximately $16.2 million for the same period.

Rush anticipates the purchase price for Perfection will be
approximately $4.2 million and will be paid for with cash.
Subject to an auction administered by the Bankruptcy Court on
November 8, 2001, Rush expects the acquisition to close on or
about November 12, 2001. Perfection recorded unaudited pretax
earnings of $1.1 million for the seven-month period ended
July 31, 2001.

In announcing the agreements, W. Marvin Rush, Chairman and Chief
Executive Officer of Rush Enterprises Inc. stated, "This
acquisition will complement our existing Oklahoma City
dealership and the services we provide to the oil and gas
industry." Mr. Rush added, "We look forward to joining forces
with this very well-run organization and offering our
consistently high-quality products and services to our customers
in Oklahoma."

Rush Enterprises operates the largest network of Peterbilt
heavy-duty truck dealerships in North America and John Deere
construction equipment dealerships in Texas and Michigan. Its
current operations include a network of dealerships located in
Texas, California, Oklahoma, Louisiana, Colorado, Arizona, New
Mexico and Michigan. These dealerships provide an integrated,
one-stop source for the retail sale of new and used heavy-duty
trucks and construction equipment; aftermarket parts, service
and body shop facilities; and a wide array of financial
services, including the financing of truck and equipment sales,
insurance products and leasing and rentals. The Company also
operates retail farm and ranch superstores that serve the
greater San Antonio, Houston and Dallas/Forth Worth, Texas

TRI-NATIONAL: Files Voluntary Chapter 11 Petition in San Diego
Tri-National Development Corp. (OTCBB:TNAV) filed a voluntary
Chapter 11 bankruptcy petition in the San Diego Bankruptcy

The petition was accompanied by all of the schedules of Tri-
National's assets and debts, its statement of affairs and a list
of its shareholders.

According to the schedules, the current market value of Tri-
National's assets is approximately $86 million, while its debts,
both secured and unsecured, total approximately $33 million. The
reason for the filing is apparent from a reading of the
schedules: Tri-National has valuable, unencumbered land, but no
cash with which to satisfy the claims of its creditors.

Tri-National is a Wyoming corporation. Its principal business is
the acquisition and development of real property. Currently, its
principal real property holdings are located in the State of
Baja California Norte, Mexico. These real properties are owned
by several subsidiary Mexican corporations.

Michael A. Sunstein, president and chief executive officer of
Tri-National, said, "It is my intention to reorganize Tri-
National in the voluntary Chapter 11 case in quick order by
marketing assets owned by Tri-National's Mexican subsidiary
corporations, up-streaming the sale proceeds and using the
proceeds to pay creditors. We intend to work closely with our
creditors, and we expect to have a reorganization plan confirmed
and begin distributions to creditors in six months or less.

"The reorganization will be facilitated primarily by our wholly
owned and debt-free subsidiary, Planificacion Desarollos S.A. de
C.V. As detailed in the schedules, Planificacion owns, free and
clear of liens, 600 acres of land known as 'Hills of Bajamar.'
The Hills of Bajamar is approximately 50 miles south of the
U.S./Mexico border, located east of the toll road across from
Bajamar, a well known residential and golf development in the
Municipality of Ensenada. Planificacion has options to purchase
an additional 1,750 acres of Hills of Bajamar for $2,800 per

"Three hundred acres of the Hills of Bajamar property was
appraised by Cushman Wakefield in April 2001 and valued at
$23,333 per acre, as is. Since the appraisal, Tri-National has
acquired the additional entitlements, including sub-division
approval and permits to begin selling lots, thereby enhancing
the value of the property. We plan to immediately being
marketing lots in the sub-division. We believe, based on
comparable properties and sales in the area, that sufficient
sales can be generated in a relatively short amount of time to
enable Tri-National to pay its creditors in full.

"Also included in the schedules is the company's Mexican
subsidiary, Tri-National Holdings S.A. de C.V., which is owned
approximately 60 percent by Tri-National. Holdings owns two
parcels of real property located in Rosarito Beach, Baja
California Norte, Mexico: 187,500 square feet of commercial
shopping center space, which is roughly 80 percent built out,
and 15 acres of undeveloped beachfront property. The shopping
center has been appraised by Cushman Wakefield and valued at
$12.5 million as is. The Beachfront has also been appraised by
Cushman Wakefield and valued at $13 million as is. Both
properties are unencumbered, and Holdings is substantially debt-
free. Thus, Tri-National's interest in Holdings is worth over
$15 million. We look forward to the opportunity to realize the
value of these parcels as well, now that we are afforded the
protection of the Chapter 11 filing and the ability to proceed."

Tri-National is represented in its Chapter 11 case by Colin W.
Wied, who said: "This case is a classic example of the utility
of Chapter 11 of the Bankruptcy Code. If left to creditors, Tri-
National and its subsidiaries would be dismembered by a few
creditors, to the great detriment of other creditors and the
company's shareholders. The Bankruptcy Code's automatic stay
stops creditors from any further attacks against Tri-National or
its property. That gives Tri-National time to market its Hills
of Bajamar and other properties, distribute the sale proceeds to
pay its creditors in full, and preserve and enhance the value of
its stock for the benefit of its shareholders."

Tri-National Development Corp. is an international real estate
development, sales and management company focused on providing
affordable housing in the Baja region of Mexico and the
Southwestern U.S

USINTERNETWORKING: Bain Capital To Invest $100 Million
USinternetworking, Inc. (USi, Nasdaq: USIX), the leading
Application Service Provider (ASP), has announced that Bain
Capital Partners, LLC (Bain), a private investment firm with $12
billion of assets under management, has executed a letter of
intent with USi providing for an equity investment of $100
million. The investment is contingent upon a number of
conditions including among others a balance sheet restructuring,
execution of definitive documentation, any necessary regulatory
approvals, and final legal and accounting due diligence.
Pursuant to the letter of intent, Bain and USi would work
together to restructure the balance sheet and implement a
recapitalization plan. The investment, upon completion, is
expected to fund the Company through cash flow positive, while
maintaining a strong balance

Under the terms of the letter of intent, affiliates of Bain
would initially invest $75 million in USi, with an additional
$25 million available upon achievement of certain business
milestones. The equity to be issued in conjunction with the
recapitalization is expected to comprise most of the Company's

"This vote of confidence in USi's business by one of the world's
most prestigious private investment firms acknowledges the
strength of the ASP value proposition and USi's leadership
position," said Andrew A. Stern, CEO, USi. "Bain's proposed
investment addresses financial viability concerns that have
limited our growth. USi can now focus its energies on growing
the business and delivering the best enterprise ASP services

"Bain Capital invests in growing companies with strong
management teams and competitive advantages in promising
industry sectors. Based upon our experience in the ASP industry,
we are excited about the prospects for USi," said Andrew Balson,
a Managing Director at Bain Capital. "At the same time, we
remain very pleased with our investment in Interpath, which was
our original investment in the ASP sector, and is fast-emerging
as a market leader."

USi's Board of Directors approved the letter of intent on
October 8, 2001.  USinternetworking, Inc. will hold its
quarterly conference call on Tuesday, October 30, 2001 at 5:30
p.m. ET, at which time the aforementioned topic will be further
addressed. The call will be accessible via Webcast at replay of the call will  
be available beginning at 9:00 p.m. ET on October 30, 2001 and
will remain available through 7:00 p.m. ET on November 6, 2001.
About USinternetworking, Inc.

USinternetworking Inc. (Nasdaq: USIX), the leading
Application Service Provider, delivers enterprise and e-commerce
software as a service. The company's iMAP portfolio of service
offerings delivers the functionality of leading software from
Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft,
Plumtree and Siebel as a continuously supported, flat-rate
monthly service via an advanced, secure global data center
network. Additionally, USi's AppHost managed application hosting
services provide the most advanced solutions for enterprises,
software companies, marketplaces, and system integrators that
are seeking a better way to deliver solutions over the Internet
to their customers and end users. For more information, visit

VIASYSTEMS GROUP: Reports $27 Million Third-Quarter Loss
Viasystems Group, Inc. (NYSE: VG) announced that the company's
earnings, adjusted for goodwill amortization (EBG), from ongoing
operations for the quarter ended September 30, 2001, were a loss
of $27.0 million. Revenue for the quarter was $268.1 million.
These financial results are consistent with the company's
previous guidance.

EBG from ongoing operations excludes the impact of $165.8
million of charges for restructuring and asset impairment, and
write-off of amounts due from affiliates. The cash impact of the
restructuring charge is $16.2 million, and $8.7 million in cash
was expended during the quarter on restructuring charges taken
during the current and prior periods. Including the effect of
the restructuring charge, impairment and write-off of amounts
due from affiliates, results for the quarter were a loss of $205

"Viasystems worked aggressively during the quarter to improve
liquidity while continuing our efforts to reduce costs," said
David M. Sindelar, chief executive officer. "During the third
quarter, the company generated $49.3 million in net incremental
liquidity through improved inventory turns and collections of
receivables while simultaneously reducing our average payables
by 13 days. At the end of September, Viasystems had systemwide
availability of $111.7 million to supplement funds generated
from operations.

"In addition to strengthening Viasystems' balance sheet,
management continues to focus on improving operational
efficiencies," Sindelar said. These efforts have included:

Facility consolidation: During the quarter, Viasystems
consolidated the operations of its Orange County, CA electronics
manufacturing services (EMS) facility with that of its sister
operation in Portland, OR. The company's two EMS operations in
San Jose, CA are also coordinating workloads to optimize
efficiency. In Europe, Viasystems closed its Bolden, England EMS
facility and transferred the workload to its sites in Coventry,
England and Rouen, France.

Asian expansion: Viasystems is continuing its aggressive
expansion plans in China. During the quarter, the company
largely completed the transfer of printed circuit board (PCB)
fabrication equipment from the company's Richmond, VA facility
to Guangzhou, China. The Richmond plant was closed in May 2001
in response to weak worldwide PCB demand and a global emphasis
on reduced pricing.

"We believe that Viasystems continues to hold one of the most
favorable cost positions of any global EMS provider," Sindelar
said. "Since the start of this unprecedented industry downturn
in January, Viasystems' management has worked to maintain this
competitive advantage. As customers continue to delay initiation
of recently awarded programs, Viasystems has reduced overhead
and fixed costs without sacrificing the ability to respond to
improved market conditions."

For the nine months ended September 30, 2001 Viasystems' EBG
from ongoing operations was a loss of $41.4 million. Revenue for
the period was $966.4 million. EBG from ongoing operations for
the 2001 period excludes the impact of a $283.3 million of
charges for restructuring and impairment, and write-off of
amounts due from affiliates and a $50.1 million charge,
included in cost of goods sold, to write down inventory to net
realizable value. The cash impact of these charges totals $58.7
million, of which $35.2 million was expended during the first
nine months of 2001. Including the effect of the charges,
results for the period were a loss of $408.3 million.

Consistent with financial analysts' models, the attached
financial statements reflect the pro forma results of Viasystems
as though the March 29, 2000 transfer of nine European
manufacturing facilities had occurred on January 1, 2000, which
more appropriately reflects the results of Viasystems as a
public company. The pro forma results of operations for the nine
month period ended September 30, 2000 also exclude the impact of
one-time non-cash charges totaling $104.4 million recorded in
the first quarter of 2000 as well as the elimination of the
extraordinary loss on early extinguishment of debt totaling
$31.2 million. For more detail on these transactions, refer to
the company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 23, 2001.

W.R. GRACE: Asbestos Panels Hire Cozen & McKool for Litigation
The Official Committee of Asbestos Property Damage Claimants and
the Official Committee of Asbestos Personal Injury Claimants ask
Judge Farnan for his approval of the employment of the law firms
of Cozen O'Connor and McKool Smith as co-special counsel to
prosecute the Sealed Air and National Medical fraudulent
transfer claims on behalf of the estate.

On June 14, 2001, the Asbestos Committees filed the Joint Motion
by the Official Committees of Asbestos Property Damage and
Asbestos Personal Injury Claimants for Authority to Prosecute
Fraudulent Transfer Claims. On July 11, 2001, W. R. Grace & Co.
and the Official Committee of Unsecured Creditors filed their
respective Opposition to the Fraudulent Transfer Motion. The
Debtors argue that the Asbestos Committees have a bias in
assessing the magnitude of the Debtors' asbestos liability
because "both committees were formed for the essential purpose
of representing people who are asserting asbestos claims." The
Official Committee of Unsecured Creditors argue that whether the
Fraudulent Transfer Claims should be prosecuted needs to be
investigated prior to bringing an action. Thus, they argue that
the Asbestos Committees are conflicted from performing the
necessary investigation because the Asbestos Committees have
already taken the position that the Fraudulent Transfer Claims
should be prosecuted.

Responses to the Fraudulent Transfer Motion were also filed on
July 11, 2001, by Sealed Air, Inc. and National Medical Care,
Inc., the principal targets of the Fraudulent Transfer Claims.
Sealed Air and National Medical Care both argue in their
respective Responses that the prosecution, if any, of the
Fraudulent Transfer Claims, should take place in this Court.

On August 2, 2001, this Court postponed the hearing on the
Fraudulent Transfer Motion until September 7, 2001. On September
7, 2001, this Court further postponed the hearing on the
Fraudulent Transfer Motion until further notice.

The Asbestos Committees have availed themselves of the
postponement to interview numerous law firms with pre-eminent
abilities to serve as special counsel to handle the prosecution
of the fraudulent transfer Claims. As the Debtors admit in their
Response to the Fraudulent Transfer Motion, "someone else [other
than the Debtors] should assess whether a fraudulent conveyance
claim was in the best interests of the estates."

The selection process employed by the Asbestos Committees
entailed: (a) in-depth discussions with all candidates to
determine the levels of their expertise and resources; and (b) a
thorough review by all candidates of their former and current
clients to ensure disinterestedness, and no representations of
interests adverse to the Debtors' estates or conflicts of
interest. Based upon this thorough and thoughtful selection
process, the Asbestos Committees jointly concluded that the
interests of the estates would be best advanced and protected by
the retention of both Cozen O'Connor and McKool Smith to serve
as special counsels in respect of the fraudulent transfer

Firstly, the Asbestos Committees have determined that the Law
Firms' respective litigation and insolvency groups have
extensive experience with investigating, analyzing, and
prosecuting fraudulent transfer actions. Indeed, McKool Smith
serves as plaintiff's counsel in Abner, et al. v. W.R. Grace &
Co., et al., currently pending in the United States Bankruptcy
Court for the District of Delaware (transfer order from the
United States Bankruptcy Court for the Northern District of
California-San Francisco Division, following removal from
California state court, which cogently frames the Fraudulent
Transfer Claims. Thus, that Law Firm is also intimately familiar
with the applicable operative facts and legal theories.
Likewise, Cozen O'Connor has considerable experience in
reorganization cases before this Court and others, in complex
litigation cases in this District and others, and is eminently
well-qualified to act as special counsel. Thus, the Asbestos
Committees believe that the Law Firms possess expertise in the
areas of law relevant to the fraudulent transfer claims.

Secondly, as set forth in the attached Affidavits, neither of
the Law Firms holds or represents any interest adverse to the
Debtors' estates or has a conflict of interest with existing or
former clients. Moreover, to the best of the knowledge of the
Asbestos Committees, the Law Firms are "disinterested" and have
no connection with the Debtors, their creditors or any other
party in interest, including their respective attorneys or
accountants, the United States Trustee, or any person employed
in the office of the United States Trustee, except as
specifically set forth in the attached Affidavits.

Finally, the Law Firms have agreed to accept this engagement on
a pure contingent fee arrangement. Such agreement is remarkable
for at least two reasons. First, a contingent fee arrangement
ought to assuage any concern that the prosecution of the
fraudulent transfer claims will drain the resources of the
Debtors' estates. Second, the willingness of the Law Firms to
accept the engagement on a contingent fee basis --- after each
of the Law Firms made an independent examination and analysis of
the underlying transactions and the resulting fraudulent
transfer claims --- is testimony to the merits of the claims.
Assuredly, the contemplated litigation of the fraudulent
transfer claims will be lively, enormously time consuming and
promises to engender a substantial investment of resources by
the Law Firms.

The professional services for which the Asbestos Committees
desire to employ Law Firms include, without limitation, the

       (i) analysis, investigation and prosecution (including
representation in any ensuing appeals) of the fraudulent
transfer claims; and

       (ii) performing such other legal services as may be
required and as are deemed to be in the best interests of the
Asbestos Committees and their constituencies which they

Subject to Judge Farnan's approval of this Court, the Law Firms
are willing to undertake this representation on a contingency
           Contingency Fee            Recovery Amount
           ---------------            ---------------
                 10%               The first $1,000,000,000
                 11%            $1,000,000,000 to $2,000,000,000
                 12%              In excess of $2,000,000,000

The term "Recovery Amount" refers to a sum of money equal in
amount to the full fair market value of all relief obtained or
received by the Debtors' estates as a proximate result of the
claims, including, but not limited to, money, guaranteed
payments, tangible or intangible property, business interests,
compensatory damages, exemplary damages, attorney's fees,
prejudgment interest, and/or post judgment interest (whether
through trial, judgment or settlement of the Claims). The term
"Recovery" includes the fair market value of any relief obtained
or received, including all amounts of money or property that are
to be received by the Debtors' Estates over any period of time.
In the event of a resolution acceptable to the Asbestos
Committees and the Debtors' Estates that includes multiple
issues in the bankruptcy proceeding, including issues unrelated
to the Claims, the amount of the Recovery shall be determined by
agreement of the Committees and the Firms, subject to approval
of this Court, or by this Court in the absence of agreement. The
Law Firms have agreed amongst themselves to the manner in which
they will share such fees.

The Asbestos Committees propose that the Law Firms file with
this Court applications for the allowance of reimbursement of
expenses in accordance with the Administrative Order Under 11
U.S.C. 105(a) and 331 Establishing Procedures for Interim
Compensation and Reimbursement of Expenses for Professionals and
Official Committee Members, dated May 3, 2001, and that their
applications for the allowance of compensation be made in
accordance with applicable bankruptcy laws, procedures and
rules, as well as any applicable provisions of further Orders of
this Court.

                   The Cozen Disclosures

Patrick J. O'Connor, a shareholder in the law firm of Cozen
O'Connor with offices located at 1900 Market Street,
Philadelphia, Pennsylvania agrees that he and his firm are
disinterested persons, neither holding nor representing any
interests adverse to the Committees or these estates in the
matters for which approval of employment is sought.  Mr.
O'Connor assures Judge Farnan that, to the extent that any
information disclosed in support of this application requires
amendment or modification upon Cozen O'Connor's completion of
further analysis or as additional information becomes available
to Cozen O'Connor, supplemental affidavits will be filed with
the Court.

Mr. O'Connor tells Judge Farnan that, in order to prepare this
Affidavit, he caused names and information concerning the
Debtors, their former subsidiaries and the subsidiaries'
affiliates, National Medical Care, Inc., Fresenius A.G.,
Fresenius U.S.A., Inc., Fresenius Medical Care, Inc., Fresenius
National Medical Care, Inc., Sealed Air Corporation, Sealed Air
Corporation (US), and Cryovac, Inc., together with the word
"Asbestos" to be compared with names and information contained
in Cozen's conflict check system in order to determine the
extent, if any, of Cozen's involvement with any of the Debtors,
or with asbestos matters generally. Because Cozen O'Connor's
proposed retention is as special litigation counsel regarding
fraudulent transfer claims arising from divestiture by the
Debtors of the Spin-Offs, and for no other purpose, Mr. O'Connor
warns he did not enter the names of the Debtors' creditors, its
shareholders, employees or any other parties-in-interest into
the Conflict Check System. He does not believe such additional
search is necessary because of Cozen O'Connor's limited role.
Once the fraudulent transfer litigation is completed, with or
without the Court finding that a fraudulent transfer or
transfers took place, Cozen O'Connor will have no further
involvement in these Chapter 11 cases and, in particular, will
have no role in determining what happens as a result of the
conclusion of the fraudulent transfer litigation.

No attorney at Cozen O'Connor previously or presently represents
a party-in-interest which creates a conflict for Cozen O'Connor
to pursue the fraudulent transfer litigation. However, Mr.
O'Connor avers that:

       (1) Cozen O'Connor serves as Casualty Defense counsel for
AIG Technical Services, Inc. (approximately 88 cases), Chubb
Insurance Company (one case) and American Manufacturers Mutual
Insurance Company (one case) in which W.R. Grace is a co-
defendant with the Insurance Companies' Insured.

       (2) Cozen O'Connor represents Nason & Cullen, Inc. in
defense of environmental liability claims arising from the
Pennsauken (New Jersey) landfill. W.R. Grace is also a named

       (3) Cozen O'Connor is local counsel in San Francisco,
California for Dorr Oliver Corporation, a boiler manufacturer,
which used asbestos in its boilers purchased from numerous
companies, including W.R. Grace. Dorr Oliver, having sold a
product which contained asbestos, is a defendant in asbestos
litigation. Cozen O'Connor is also counsel for Goodall Rubber
Company which, having manufactured and sold a product containing
asbestos, is a defendant in asbestos litigation. Cozen O'Connor
has put into place an ethical screen to assure the Asbestos
Committees, on the one hand, and Dorr Oliver Corporation and
Goodall Rubber Company on the other, that information regarding
these representations will be strictly controlled, including the
imposition of both physical and electronic access locks.

None of these representations entailed or entails fees during
the period(s) covered by such representations that would impair
Cozen's ability to discharge its professional responsibility to
the Debtors' estates, Mr. O'Connor tells Judge Farnan.

                      The McKool Disclosures

Lewis T. LeClair, a shareholder with the law firm of McKool
Smith, P.C., with offices located at 300 Crescent Court, Suite
1500, Dallas, Texas, repeats Mr. O'Connor's conclusions
regarding his firm's disinterestedness.  Mr. LeClair describes
the same limited conflicts search undertaken for the same
reasons as Mr. O'Connor states.  Mr. LeClair advises Judge
Farnan that, after the conclusion of that search, no attorney at
McKool previously or presently represents a party-in-interest
that would create a conflict for McKoo1 Smith to pursue the
fraudulent transfer litigation.

Based upon the conflict searches conducted by Mr. LeClair to
date, and to the best of his knowledge, neither Mr. LeClair, nor
McKool, nor any member, counsel, associate or paralegal of
McKool has any connections with the Debtors, their creditors or
any other party in interest, including their respective
attorneys or accountants, the United States Trustee, or any
person employed in the office of the United States Trustee,

Abner v. WR. Grace, removed to the United States Bankruptcy
Court for the Northern District of California, Cause No.Ol-3070,
pending transfer per order to United States District Court for
the District of Delaware. McKool Smith served as lead counsel on
behalf of certain creditors of W.R. Grace in asserting
fraudulent transfer claims against W.R. Grace and certain of its
former affiliates and subsidiaries and other parties with whom
it entered into business transactions or combinations. The
claims asserted in this action are the same claims that would be
the subject of McKool Smith's special counsel representation in
the W.R. Grace bankruptcy.

Mr. LeClair concludes that this representation neither entailed
or entails fees during the period(s) covered by such
representations that would impair his firm's ability to
discharge its professional responsibility to the Debtors'
estates. (W.R. Grace Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

WAM!NET INC.: Secures $100 Mil Financing from Cerberus Capital
WAM!NET Inc. -- a global provider of  
content hosting and distribution solutions, has announced it has
closed on a $100 million working capital facility from
affiliates of Cerberus Capital Management, L.P., a New York
City-based private investment firm.

Company officials stated that the financing is expected to be
the last round of funding required for the company to reach
profitability and become operating cash-flow positive in 2002.

WAM!NET Chairman and Chief Executive Officer, Ed Driscoll,
commented on the funding and the progress WAM!NET has made in
establishing a foundation for long-term profitable growth.
"Cerberus' financing of WAM!NET is indicative of their
confidence in not only our business model and proven services
portfolio, but also, our excellent market opportunities and
solid prospects for driving significant, ongoing revenue growth.
At the same time, with the assistance of TenX Capital Partners,
we have taken necessary, aggressive actions in the last
several months that have allowed us to align our cost structure,
sales and marketing efforts, and other operating strategies
company wide with WAM!NET's revenue and growth targets. We now
have in place the right cost structure, a team of world-class
employees, a large, established customer base, and a portfolio
of in-demand information technology services."

"WAM!NET has created a significant market position and the
technology and personnel to take advantage of that position,"
said Michael Green, managing partner, TenX Capital Partners -- an investment, operations management and  
executive services firm. TenX has supported WAM!NET in the
successful accomplishment of its strategy to establish a solid
financial base and drive business results.

                    About WAM!NET, Inc.

WAM!NET is a global provider of digital content hosting and
distribution solutions. The company's managed network, data
storage, application hosting and professional services enable
its commercial and government customers to access the
combination of IT services they need on an outsourced,
subscription basis. In doing so, customers are connected with
their partners and clients within WAM!NET's secure, online
digital environment, enabling them to share, collaborate, store
and manage content. With WAM!NET services, customers gain
considerable productivity, time-to-market, and cost-saving
benefits, and eliminate time-intensive and costly analog steps
in their workflows, as well as the significant capital
investments and systems management requirements often associated
with proprietary networks or FTP workflows.

Headquartered in Eagan, Minnesota, WAM!NET commenced operations
in 1994. The company has more than 17,000 corporate end users of
its e-services worldwide. WAM!NET services are available in
North America, Europe, Japan and Australia. For information on
the company, call 800-611-9006, or visit WAM!NET's Website at

WASHINGTON GROUP: Will Not Make Quarterly Filing On Time
Washington Group International, Inc. will not file its quarterly
report for the quarterly period ended August 31, 2001 by October
15, 2001, the prescribed due date for such filing, because it
needs additional time to prepare the consolidated financial
statements and related disclosures required to be included.

As previously reported, on May 14, 2001, Washington Group
International, Inc. and several of its direct and indirect
subsidiaries filed voluntary petitions to reorganize under
Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the District of Nevada in Reno.

WINSTAR COMM: Agrees To Provide Qwest With Adequate Assurance
Qwest Communications Corporation (QCC) and Qwest Corporation
(QC) provide certain telecommunications and related service to
the Winstar Communications, Inc. under certain agreements
between and among the parties. QC and QCC have undertaken to
estimate the cost of the services desired by Winstar and have
concluded that in the aggregate, regular recurring charges for
such services are expected to total approximately $1,128,411.42
per month for QC and $418,520.25 for QCC.

Both parties have met and agreed to execute a stipulation and
order to resolve the issues between them and set forth terms
under which QC and QCC will provide services to the Debtors
during the pendency of these cases.

Terms of the stipulation approved by Judge Farnan are:

A. Adequate Assurance Deposit/True-up Payment - To provide
       adequate assurance of payment to QC and QCC, the Debtors
       shall make these payments:

       1. Within five days of the approval of this
          Stipulation and Order, the Debtors shall pay to QC
          $1,000,000 for prepetition services, and $564,205.71
          for approximately 1-month usage as a security deposit.

       2. Commencing on the second Wednesday following the
          previous payment, and each second Wednesday thereafter
          until its post-petition obligations are brought
          current, the Debtors shall pay to QC $1,000,000.

       3. Within 5 days after the Effective date, the Debtors
          shall pay QCC $53,074.02 and all other amounts owed
          for post-petition services and $9,260.13, representing
          approximately 1 month usage as a security deposit.

       4. Commencing on the second Sunday following the previous
          payment, and on every second Wednesday thereafter,
          Winstar shall pay QC a total of $564,205.71 and QCC a
          total of $9,260.13 as advance payment for service
          rendered the succeeding 14 day period, minus any
          amount owed by Qwest to the Debtors.

B. Reconciliation/Adjustments - All parties agree that from time
     to time, but in any event not less than once every 4 weeks
     after the approval of this Stipulation, they shall confer
     in order to reconcile and adjust the amounts payable,
     including these points:

     1. Should the bi-weekly payments be insufficient or should
          there be a material increase in the post-petition
          charges due to QC and/or QCC, both parties may request
          an immediate increase in the amount of the bi-weekly
          payment and such amount shall be equal to the bi-
          weekly charges that accrued during the two-week period
          prior to the Adjustment Request.

     2. To the extent that in any given month the charges due to
          Qwest exceed any aggregate bi-weekly payments in such
          month, then upon written request, Winstar shall
          immediately pay QC and/or QCC sufficient funds to cure
          the deficiency request.

     3. To the extent Winstar disputes any Adjustment Request or
          Deficiency Request, Winstar shall within 5 business
          days of an adjustment Request or deficiency Request
          present a detailed written statement which identifies
          and the matter in dispute. All such statements shall
          be accompanied by supporting documentation.

     4. If in any given month the charges due to Qwest are less
          than any aggregate bi-weekly payments made in such
          month, QC and QCC shall be permitted to apply such
          finds to any outstanding post-petition balance due to
          QC and/or QCC. If there is no outstanding post-
          petition balance due, then such shall be credited
          against the subsequent bi-weekly payment which would
          be due. In each case, Qwest shall immediately notify
          the Debtors of such excess amount.

     5. If there is a material decrease in the post-petition
          charges due to QC/QCC, and should the Debtors request
          so, the Debtors shall be entitled to an immediate
          reduction in the amount of the bi-weekly payment and
          this amount shall be equal to the bi-weekly charges
          that accrued during the two-week period prior to any
          Adjustment Request, or as otherwise agreed by the

C. Defaults - If the Debtors fails to make any of the payments
     provided for in this Stipulation and Order, or comply with
     any term in therein or any agreements between parties, or
     comply with any tariffs filed by Qwest for post-petition
     obligations, then Qwest is authorized to suspend or
     terminate services to the Debtors. That is, unless if
     within 5 days after written notice, the Debtors cures such

D. Term - The term of this Stipulation and Order shall expire
     automatically on the earlier of:

      1. an Event of Default has occurred which is not cured by
          the expiration of the Cure Period,

     2. the entry of a Bankruptcy Court order converting any of
          the Debtors' cases to a chapter 7 liquidation and
          consensual arrangements for continued service are not
          made between QC and QCC and the Chapter 7 trustee,

     3. any of the Debtors' cases is dismissed, or

     4. an order is entered confirming the Debtors' chapter 11

     Upon expiration of this Stipulation and Order, Qwest shall
     be permitted to put Winstar on credit hold or terminate any
     underlying agreement without further court approval. If
     Qwest terminates services or agreements, they shall return
     to the Debtors within 5 days all sums held as security

E. Reservation of Rights, Assignment - Except as expressly
     provided, the parties reserve and preserve all rights under
     the Bankruptcy Code, including tariffs. This Stipulation
     and Order shall be binding upon the Debtors, QC, and QCC,
     and their respective successors and assigns, provided that
     the Debtors shall not be permitted to assign subcontract or
     transfer any part of the benefits they receive under any
     Qwest contract without any written request from QC, or QCC.

F. Modification of Automatic Stay - The automatic stay shall be
     modified to the extent necessary to authorize the relief
     sought through this Stipulation and Order. Nothing shall
     prevent the Debtors from seeking injunctive relief against
     Qwest in connection with any agreement between them.

G. Adequate Assurance - So long as the Debtors is performing
     under this Stipulation and Order, there is no event of
     Default, Qwest may not alter refuse or discontinue service
     to the Debtors.

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


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

A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Go to order any title today.

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


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

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

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 240/629-3300.

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