TCR_Public/011105.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

           Monday, November 5, 2001, Vol. 5, No. 216


AHL SERVICES: Four of Seven Directors Resign & Hires New CFO
AMF BOWLING: AWI Moves to Deem Utilities Adequately Assured
AMERICAN CLASSIC: Northrop Grumman Stops Work on Cruise Ships
AMES DEPARTMENT: Utilities Demand Weekly Payments or Deposits
ARMSTRONG HOLDINGS: German Unit Scraps Plan to Sell Desso Assets

BE INC: ISS Pushes For Approval of Sale of Assets & Dissolution
BETHLEHEM STEEL: Taps MWW Group as Communications Consultants
BORDEN CHEMICALS: Seeks Approval of 2nd DIP Financing Facility
BRIDGE: McGraw-Hill Moves to Compel Payment & Allow Recoupment
CHAPARRAL RESOURCES: Defaults on $3.3MM Loan with Shell Capital

CHATEAU COMMUNITIES: Completes Restructuring of $70M 7.54% Notes
CHIPPAC INC: Revenues Drop in Q3 Attributable to Demand Slowdown
COMDISCO: Court Okays Deferment of Employee Cash-to-Option Plan
CRESCENT OPERATING: Will Begin Rights Offer to Shed Debt Burden
CRESCENT OPERATING: Annual Stockholders' Meeting Set for Dec. 6

DTE BURNS: S&P Places BB Rating on CreditWatch Negative
DELTA AIR: Swings Into $295MM Net Loss in September Quarter
EASYLINK SERVICES: Gets Commitments to Complete Debt Workout
EXODUS COMMS: Signs-Up Gray Cary Ware as Corporate Counsel
FEATHERLIKE INC: Strategic Restructuring Evident in Q3 Results

FEDERAL-MOGUL: Intends to Assume Prepetition Employment Pacts
FINOVA GROUP: Household Finance to Continue Foreclosure Actions
FOCAL COMM: S&P Drops Senior Rating to D After Recapitalization
FRIENDLY ICE CREAM: Refinancing Plan Spurs S&P to Affirm Ratings
GENERAL DATACOMM: Files for Chapter 11 Relief in Delaware

GENERAL DATACOMM: Case Summary & 20 Largest Unsecured Creditors
GENESIS HEALTH: U.S. Trustee Demands Payment of Quarterly Fees
GENTIA SOFTWARE: Considers Seeking Protection from Creditors
INNOVATIVE CLINICAL: Research Units to Merge with NeuroScience
INPRIMIS: Datawave Will Put Hold on Plan of Arrangement Talks

INTEGRATED HEALTH: Seeks to Transfer Woodridge Facility in Texas
LERNOUT & HAUSPIE: Court Sets Nov. 26 Auction for Speech Assets
LERNOUT & HAUSPIE: Speechworks Offers $12.5M for Speech Assets
PERSONNEL GROUP: Seeking New Financing to Satisfy Maturing Debts
PHAR-MOR: Hires Atlas Partners as Agent to Dispose of 65 Stores

PHOTOCHANNEL INC: Parent Exits Online Photofinishing Business
PILLOWTEX CORP: Hires Duane Morris to Sue Westpoint Stevens
POLAROID CORP: Asks Court to Approve PIDS $1.3MM Break-Up Fee
PROTECTION ONE: S&P Knocks Ratings to Low-B and Junk Levels
RELIANCE GROUP: Pa. Insurance Commissioner Backs Down -- Sort of

RUSSELL-STANLEY: Noteholders Back Exchange Offer & Prepack Plan
SERVICE MERCHANDISE: Resolves Dispute with World Financial Bank
STONEBRDIGE TECHNOLOGIES: Staff-Led Investor Group Closes Buyout
SUN HEALTHCARE: Receives Approval of 3rd DIP Financing Amendment
UNITED AIRLINES: Posts $542M Q3 Loss Due to Air Travel Fall-Off

VIDEO UPDATE: Wants More Time to Solicit Acceptances for Plan
WEIRTON STEEL: Files Registration Statement to Restructure Notes
WEIRTON STEEL: Firms-Up New $200MM Facility & Vendor Financing
WHEELING-PITTSBURGH: Ties-Up with Weirton to Cut Healthcare Cost

* BOND PRICING: For the week of November 5 - 9, 2001


AHL SERVICES: Four of Seven Directors Resign & Hires New CFO
AHL Services (Nasdaq: AHLS), a leading provider of marketing
services in the United States and specialized staffing services
in Europe, announced a significant step in positioning its core
Marketing Support Services businesses, Gage Marketing Services
and Service Advantage, for profitable growth.  

AHL's previously announced focus on these core businesses has
resulted in its restructuring effort to ensure that its
leadership is in line with its financial and operational goals.

The board of directors and Chief Executive Officer Clay Perfall
announced the initiation of a search for independent directors
and a new chief financial officer, after accepting the
resignations of four directors: former Chief Executive Officer
Edwin R. Mellett, President and Chief Operating Officer of
Marketing Services Thomas J. Marano, Chief Financial Officer
Ronald J. Domanico and independent director Robert F.
McCullough.  The company will seek three independent, outside
directors to restore the board to a total of seven members.  

Furthermore, the company and Marano have agreed to allow his
contract with the company to expire on December 31st of this
year.  Domanico has committed to working with Perfall and the
board through the end of January 2002.  During this 90-day
transition, Domanico will assist in the search for his
replacement and continue his efforts to ensure the restructuring
provides a solid platform for restoring shareholder value.

Perfall stated, "I would like to personally thank Tom and Ron
for their hard work and for the significant contributions they
have made toward building AHL Services.  Given the current
economic environment and the strategic initiatives that AHL
intends to pursue, we all felt that significant changes to our
corporate management group were appropriate.  I would also like
to thank Ed and Bob for the contributions that they have made as
directors of AHL.  We will use the board vacancies created by
their resignations to create a board whose skills and
experiences are custom tailored to the strategic direction of
the company."

Perfall noted that the board is in discussions with several
candidates for the vacant board seats and expects to begin
filling those vacancies in the near term.

AHL Services, Inc., headquartered in Atlanta, GA, is a leading
provider of outsourced business services including marketing
services within the United States and skilled and semi-skilled
staffing services in Europe.  Marketing services includes the
integrated fulfillment of products, promotions and trade
materials, customer relationship management, information
management and merchandising services.  AHL's European staffing
services, which operates in Germany and the United Kingdom,
provides electricians, welders, plumbers and light industrial
workers.  AHL has previously indicated that it intends to
dispose of its European staffing operations.

                          *  *  *

On August 7, 2001, the Company amended its credit facility to
reduce the aggregate commitment from its lenders to $125.0
million (from $201.3 million) and to adjust certain financial
covenants and interest rate margins. Any unpaid balance of the
credit facility is due upon the expiration of the amended
agreement on April 15, 2002. As previously announced, the
Company expects to use the proceeds from the sale of the
European staffing business to repay the credit facility. If this
sale is not completed by April 15, 2002, the Company will either
extend the current credit facility or renegotiate a new
agreement with a syndicate of lenders.

AMF BOWLING: AWI Moves to Deem Utilities Adequately Assured
Prior to the petition date, AMF Worldwide, Inc. received water,
heat, natural gas, oil, electricity, trash removal, sewage,
telephone and other utility services at their various locations
in the United States and abroad from over 5,000 utility
companies. On July 5, 2001, this Court entered an order granting
the Debtors' Motion for Order Deeming Utility Companies
Adequately Assured of Future Performance; and Establishing
Procedures for Determining Requests for Additional Adequate
Assurance. The Utility Order allowed Utility Companies to seek a
security deposit in writing by July 25, 2001. Under the Utility
Order, if a deposit is not timely requested, then the Utility
Companies are deemed adequately assured of future payment for
the remainder of the bankruptcy cases. Pursuant to the Utility
Order, the Debtors have received security deposit demands
totaling over $3,000,000 from the Utility Companies. Many of the
Utility Companies seek a deposit equal to 2 times the monthly
usage or 2 times the largest monthly bill.

Thus, the Debtors seek an order from the Court which provides
that each Utility Company which has requested a deposit under
the Court's Utility Order shall be deemed to have adequate
assurance upon the Debtor's payment to the Utility Company of a
deposit equal to one-half of the average monthly bill for the
affected facility. To the extent the Debtors receive further
Deposit Demands not reflected on the Deposit Chart, the
requesting Utility Companies will be deemed adequately assured
of future payment for the remainder of these cases if the
Debtors post a deposit equal to one-half of the average monthly
bill. The Deposit Chart also reflects the amount of deposit
equal to one-half of the average monthly bill. If the Debtors
were unable to determine the existence of an account based on
the information provided by the Utility Companies and a review
of the Debtors' records, the amount of Proposed Deposit is
reflected as "no record."

Erin E. McDonald, Esq., at McGuire Woods LLP, in Richmond,
Virginia, relates that the Debtors object to the Deposit Demands
to the extent the Deposit Demands seek a deposit greater than
one-half of the average monthly bill for each of the Debtors'
facilities serviced by the Utility Companies. Ms. McDonald
contends that the Court may "order reasonable modification" to
the amount of deposit requested to provide adequate assurance of
payment. The Debtors represent that a deposit equal to one-half
of the average monthly bill for each of the Debtors' facilities
serviced by the particular Utility Company would satisfy the
standard governing demands for adequate assurance this Court has
previously set.

Based on the Debtors' post-petition liquidity and the Debtors'
anticipated expeditious emergence from chapter 11, the Debtors
submit that a deposit equal to one-half the average monthly bill
for each of the Debtors' facilities for which a Utility Company
has requested a deposit would satisfy the standard enunciated by
the Court and provide the Utility Companies with adequate
assurance. Ms. McDonald states that the Debtors have obtained
Court approval of a debtor in possession credit facility of
$75,000,000 and have entered into a cash-flow positive period in
their business cycle, which should continue through the
anticipated emergence date. (AMF Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    

AMERICAN CLASSIC: Northrop Grumman Stops Work on Cruise Ships
Northrop Grumman Corporation (NYSE: NOC) announced that it has
stopped work on Project America, a cruise ship program to build
two 1,900-passenger cruise ships at its Pascagoula, Miss.,
Ingalls Operations.

This decision follows negotiations with the U.S. Maritime
Administration, which has decided not to continue the guaranteed
funding necessary to complete the construction of the ships.  As
previously announced on Oct. 25, 2001, the company said it would
report a charge to operating margin of $60 million in the third
quarter 2001 if Project America could not secure guaranteed

Northrop Grumman said it took pretax charges totaling $60
million in the third quarter 2001, reducing operating margin for
the quarter from $285 million to $225 million.  The company
previously reported third quarter 2001 economic earnings of $161
million, now revised to economic earnings of $121 million.  
Under Generally Accepted Accounting Principles (GAAP), the
company previously reported third quarter net income of $117
million, now revised to $79 million.

Approximately 1,250 employees working on Project America were
affected by temporary layoffs last week.  The company said it
would make every effort to reassign affected employees.  
Immediately, about 500 employees will be reassigned to other
ongoing projects at the Ingalls Operations, while another 200
employees will be transferred to Northrop Grumman's Avondale
Operations facilities in Gulfport, Miss.  Most of the remaining
employees will be reassigned to Avondale Operations facilities
in New Orleans, La.

American Classic Voyages Company (Nasdaq: AMCVQ), the parent
company of Project America, filed for Chapter 11 bankruptcy
protection on Oct. 19, following the tragic events of Sept. 11
and their impact on the tourism industry.

Northrop Grumman Corporation is a $15 billion, global aerospace
and defense company with its worldwide headquarters in Los
Angeles.  Northrop Grumman provides technologically advanced,
innovative products, services and solutions in defense and
commercial electronics, systems integration, information
technology and non-nuclear shipbuilding and systems.  With
80,000 employees and operations in 44 states and 25 countries,
Northrop Grumman serves U.S. and international military,
government and commercial customers.

AMES DEPARTMENT: Utilities Demand Weekly Payments or Deposits
Niagara Mohawk Power Corporation, Dominion Virginia Power,
Dominion East Ohio Gas, Dominion Peoples Natural Gas, Dominion
Hope Gas, Baltimore Gas and Electric Company, American Electric
Power, Public Service Electric and Gas Company, Yankee Gas
Services Company, GPU Energy, Central Hudson Gas & Electric
Corporation, New York State Electric and Gas Corporation,
National Fuel Gas Distribution Corporation, and PECO Energy
Company, submit their Response To The Motion Of Ames Department
Stores, Inc. For Determination Deeming Utilities Adequately
Assured Of Future Performance.

Eileen P. McCarthy, Esq., at Gould & Wilkie LLP in New York, New
York, tells the Court that the Utilities provided the Debtors
with pre-petition utility service and continue to provide the
Debtors with post-petition utility service. The Utilities
estimated pre-petition claims against the Debtors are:

A. Dominion Virginia Power                         $  76,457.56
B. Dominion East Ohio Gas                              5,862.70
C. Dominion Peoples Natural Gas                          (17.61)
D. Dominion Hope Gas                                      78.79
E. Baltimore Gas and Electric Company                 64,749.18
F. American Electric Power                           360,538.71
G. Public Service Electric and Gas Company            50,216.00
H. Yankee Gas Services Company                         5,173.13
I. GPU Energy                                        425,110.34
J. Central Hudson Gas & Electric Corporation          47,473.08
K. New York State Electric and Gas Corporation       112,370.00
L. National Fuel Gas Distribution Corporation         98,280.00
M. Niagara Mohawk Power Corporation                  462,528.52
N. PECO Energy Company                                44,600.00

Based on the exposure presented by their state mandated billing
cycles, the Debtors' continued losses and the uncertainty
regarding the Debtors' future operations, Ms. McCarthy relates
that the post-petition security that the Utilities have
requested from the Debtors are:

A. Dominion Virginia Power $137,450 (2 month deposit)
B. Dominion East Ohio Gas $6,353 (1.3 month deposit)
C. Dominion Peoples Natural Gas $10,296 (2 month deposit)
D. Dominion Hope Gas $1,764 (2 month deposit)
E. Baltimore Gas and Electric Company $217,949 (2-mth. deposit)
F. American Electric Power $434,445 (2 month deposit)
G. Public Service Electric and Gas Company $76,080 (2-mth.
H. Yankee Gas Services Company $43,585 (3 month deposit)
I. GPU Energy $508,847 (2 month deposit)
J. Central Hudson Gas & Electric Corporation $136,300 (2 month
K. New York State Electric and Gas Corporation $626,314 (2 month
L. National Fuel Gas Distribution Corporation $122,235 (2 month
M. Niagara Mohawk Power Corporation $952,590 (2 month deposit)
N. PECO Energy Company $211,750 (2 month deposit)

In the alternative and in lieu of deposits, Ms. McCarthy states
that the Utilities would also be willing to accept an advance
payment arrangement under which the Debtors would tender weekly
payments to the Utilities in an amount equal to 1/8 of the
Utilities' two month deposit requests. The Utilities would
reconcile the foregoing weekly payments against the Debtors'
actual usage and either bill the Debtors for any amount used
that exceed the weekly payments or apply the applicable credit
to the next month's bill.

Ms. McCarthy contends that the weekly payment proposal not only
reduces the significant exposure the Utilities face from their
state mandated billing cycles but does not require the Debtors
to borrow to post the deposits they are reluctant to provide
even though they claim to purportedly have access to funding.

Regarding the Debtors' claim that their ability to pay for
future utility services and the grant of an administrative
expense priority for unpaid post-petition bills should
constitute adequate assurance of payment in this case, the
Utilities presents these objection:

A. The foregoing "protections" are inter-related because if the
   Debtors lose their ability to pay for future utility
   services the administrative expense priority will be
   worthless, particularly because the Debtors have provided
   their professionals with a $5,000,000 carve out to secure
   the payment of their fees.

C. The Debtors has not set forth any facts to demonstrate why
   this case is such an exceptional case that the Court should
   ignore the deposit or other security requirements of
   Section 366 of the Bankruptcy Code. Specifically, based on
   the $473,000,000 that the Debtors owed to their pre-
   petition lenders and the numerous other secured claims
   against the Debtors' estates, it is unlikely that the
   Debtors have complete access to the $755,000,000 facilities
   that they obtained. Moreover, since the Debtors' most
   important quarter is the fourth quarter, it is very likely
   that the Debtors have already made substantial post-
   petition borrowings under their DIP Facilities, one of
   which was to have been fully funded upon execution.

C. Based on the Debtors' history of continued losses, the
   Debtors' financial situation is not very promising. The
   Debtors' claim that the competitive retail environment and
   current economic conditions caused them to incur the losses
   that resulted in their bankruptcy filing. As there is no
   indication that the current economic situation is
   improving, the Utilities are concerned that the Debtors
   will continue to incur losses and possibly close and
   liquidate their stores as so many other retailers have

Therefore, Ms. McCarthy concludes that the Utilities should not
be required to be subject to these risks when the Court can
reduce these risks by requiring the Debtors to tender weekly
payments to the Utilities or require the Debtors to tender post-
petition deposits that the Debtors claim to have the finances to
pay. (AMES Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

ARMSTRONG HOLDINGS: German Unit Scraps Plan to Sell Desso Assets
Armstrong DLW AG, an indirect subsidiary of U.S.-based Armstrong
Holdings, Inc. (NYSE: ACK) confirms it has terminated plans to
sell the textile and sports flooring division operating under
the brand name Desso.

Armstrong Floor Products President and CEO Chan Galbato states,
"Based on a recent review of the economy, our industry and our
businesses, we now believe Desso will be a solid fit in the
global Armstrong flooring portfolio. We will now focus on
operating and growing the Desso businesses."  Galbato joined the
Armstrong team in June 2001.

Approximately 1,300 Desso employees produce commercial carpet
and artificial sports flooring in The Netherlands, Germany and
Belgium. Based in Oss, The Netherlands, the division had annual
sales of approximately 300 million Euros in 2000.

Desso's parent company, Armstrong DLW AG is an indirect
subsidiary of Armstrong Holdings, Inc., which is the parent
company of Armstrong World Industries, a global leader in the
design, innovation and manufacture of floors and ceilings.  
Based in Lancaster, PA, Armstrong has approximately 15,000
employees worldwide.  In 2000, Armstrong's net sales totaled
more than $3 billion. (Armstrong Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   

BE INC: ISS Pushes For Approval of Sale of Assets & Dissolution
Be Incorporated (Nasdaq:BEOS) announced that Institutional
Shareholder Services (ISS), the nation's leading institutional
shareholder advisory firm, has recommended that stockholders
vote FOR the proposals that will be considered at Be's special
meeting of stockholders on November 12, 2001 seeking approval of
(1) the sale of substantially all of Be's intellectual property
and other technology assets to ECA Subsidiary Acquisition
Corporation, a wholly owned subsidiary of Palm, Inc., and (2)
the subsequent dissolution of Be pursuant to a plan of

Institutional Shareholder Services, based in Bethesda, MD, is an
independent advisor to several hundred institutional investors
and provides voting recommendations for proxy contests,
corporate governance proposals and other shareholder-related

Jean-Louis Gassee, Chairman of the Board, President and Chief
Executive Officer of Be Incorporated, said, "We are very pleased
with the ISS recommendation. They have a strong reputation for
advocacy of shareholder interests. We strongly urge shareholders
to follow ISS's recommendation and to sign, date and return
their proxy cards by mail, by phone or over the internet, with a
vote FOR the proposals seeking approval of our asset sale
transaction with Palm and the subsequent dissolution of Be in
accordance with our plan of dissolution."

Be's board of directors has recommended that Be's stockholders
vote FOR each of the proposals. Both proposals must be approved
by a majority of the outstanding shares of common stock. The
failure of stockholders to return their proxy cards or to vote
via phone or the internet before November 12, 2001 will have the
same effect as voting AGAINST the asset sale and the
dissolution. If either the asset sale or the dissolution is not
approved, it is likely that Be will file for, or will be forced
to resort to, bankruptcy protection.

Be, its officers, directors, employees and agents will be
soliciting proxies from Be stockholders in connection with such
matters. Information concerning the participants in the
solicitation is set forth in the proxy statement/prospectus.

BETHLEHEM STEEL: Taps MWW Group as Communications Consultants
To maintain their current customers as well as to preserve their
reputation in the steel industry, Bethlehem Steel Corporation
and its debtor-affiliates seek to retain and employ The MWW
Group as their communications consultants in these chapter 11

Leonard M. Anthony, Senior Vice President, Chief Financial
Officer and Treasurer, tells the Court that The MWW Group and
its senior professionals have an "excellent reputation for
providing high quality communications programs supporting
specific business objectives as well as managing complex, high
profile and sensitive business challenges".  Furthermore, Mr.
Anthony adds, MWW and its senior professionals have extensive
experience as communication consultants to companies
reorganizing under the Bankruptcy Code.  Because of MWW's
impeccable record, the Debtors are convinced the Group is well
qualified to provide the required communications services in a
most efficient and timely manner.

Subject to the Court's approval, the Debtors will rely on MWW

  (a) Advise and assist the Debtors in managing the
      communications challenges presented by the Debtors'
      chapter 11 cases, including, but not limited to,
      maintaining the Debtors' relationships with their
      customers as well as preserving the Debtors' reputation in
      the industry;

  (b) Assist the Debtors in implementing specific communications
      programs to achieve their business objectives; and

  (c) Assist with such other communications services as may be
      necessary in connection with the Debtors' chapter 11

Months before the Petition Date, MWW already began extending
these services - which the Debtors want continued.  Mr. Anthony
informs the Court that MWW received an initial retainer payment
of $25,000 prior to the filing of these chapter 11 cases.  As of
the Petition Date, Mr. Anthony discloses that MWW has been paid
approximately $152,874 for services rendered pursuant to a
Letter Agreement dated June 14, 2001.

But Michael W. Kemper, on behalf of MWW, makes it clear that the
firm does not hold a retainer from the Debtors for services to
be performed during these chapter 11 cases.

According to Mr. Kemper, MWW intends to bill the Debtors based
on its standard hourly charges for professional time, which
currently range from $450 per hour for its principals to $75 per
hour for junior professionals, plus reasonable out-of-pocket
expenses.  MWW's hourly rates for these services (as such rates
are subject to normal adjustment each year for inflation and
other factors) are:

                     CEO/President $450 per hour
             Senior Vice President $300 per hour
         Senior Account Supervisor $235 per hour
                Account Supervisor $225 per hour
          Senior Account Executive $200 per hour
                 Account Executive $150 per hour
       Associate Account Executive $110 per hour
               Account Coordinator $ 75 per hour

If the retention of MWW is approved, Mr. Kemper says, MWW will
apply to the Court for allowance of compensation.

Mr. Kemper notes that the extent and scope of services to be
provided by MWW will be determined by the benefit derived by the
Debtors' estates.  According to Mr. Kemper, personnel with lower
billing rates will be used to the extent practicable.  In
addition, Mr. Kemper assures Judge Lifland that the services
provided by MWW are not duplicative in any manner with the
services to be provided by the Debtors' other chapter 11

Aside from the compensation for professional services rendered,
Mr. Kemper adds, MWW will seek reimbursement for reasonable and
necessary expenses incurred, including, but not limited to:
transportation, lodging, food, telephone, copying,
subscriptions, word processing, news services, messenger,
computer rental, etc.

Mr. Kemper further assures the Court that the firm does not hold
any interest adverse to the Debtors, their estates, their
creditors or any other party-in-interest herein or their
respective attorneys in the matters for which MWW is to be

However, Mr. Kemper notes that MWW regularly provides
communications services to a diverse client base, including
certain creditors in these cases.  "The services we may
currently provide or may have provided for creditors generally
include, among other things, the implementation of
communications programs and management of complex or sensitive
business challenges unique to those companies," Mr. Kemper

"To the best of my knowledge, information and belief, MWW has
not represented any creditors, customers or other parties in
interest in the Debtors' chapter 11 cases other than Raytheon
Engineers & Contractors in matters wholly unrelated to these
cases," Mr. Kemper discloses.  Furthermore, Mr. Kemper clarifies
that MWW has not performed services for Raytheon since October
1999.  In addition, Mr. Kemper says, no claims against the
Debtors by Raytheon are material to the financial condition of
such creditor.  "Therefore, in MWW's opinion, MWW's
representation of Raytheon in matters wholly unrelated to these
chapter 11 cases has no bearing on the services for which MWW is
to be retained in these cases," Mr. Kemper asserts.

Accordingly, Mr. Kemper contends that MWW is a "disinterested
person," as defined in section 101(14) and as required by
section 327(a) of the Bankruptcy Code.

For these reasons, the Debtors believe that the retention of MWW
is in the best interests of their estates, creditors and all

                       *     *     *

Judge Lifland grants the Debtors' application on an interim
basis.  The Court will convene a hearing on November 5, 2001 at
10:00 a.m. to consider any objection to the proposed retention.
Objections should be filed with the Court no later than October
30, 2001 at 5:00 p.m. and served on:

  (a) the Office of the United States Trustee, 33 Whitehall
      Street, 25th Floor in New York, New York 10004; Attention:
      Carolyn Schwartz, Esq.,

  (b) The MWW Group, One Meadowlands Plaza, Sixth Floor, East
      Rutherford, New Jersey 07073-2137, Attention: Careen
      Winters, and

  (c) Weil, Gotshal & Manges LLP, 767 Fifth Avenue in New York,
      New York, 10153, Attention: Jeffrey L. Tanenbaum, Esq. or
      George A. Davis, Esq.,

so as to be actually received by such filing deadline.  If there
are no objections, this order shall be deemed a final order
without further notice or hearing and MWW's retention shall be
effective nunc pro tunc to Petition Date. (Bethlehem Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-

BORDEN CHEMICALS: Seeks Approval of 2nd DIP Financing Facility
Borden Chemicals and Plastics Operating Limited Partnership
(BCP) (OTC:BCPUQ) announced that it filed a motion yesterday
with the U.S. Bankruptcy Court for the District of Delaware
seeking authorization to obtain additional, secondary
postpetition financing from its general partner, BCP Management,
Inc. (BCPM), of up to $15 million (plus an additional $10.5
million available only under specific limited circumstances).

The motion seeks immediate court approval of up to $10 million
in postpetition loans under the Secondary Debtor-in-Possession
credit facility (Secondary DIP Facility) and use of cash
collateral, pending a final hearing requested to be held no
later than November 30, 2001. A hearing on the interim order is
requested for November 8, 2001.

As lender under the Secondary DIP Facility, BCPM would hold
liens on substantially all of BCP's assets, subordinate only to
the liens held by the group of lenders led by Fleet Capital
under the debtor-in-possession credit facility approved by final
order of the court on July 11, 2001 (Primary DIP Facility). As
with the Primary DIP Facility, proceeds from the Secondary DIP
Facility would be used for working capital needs and general

As previously announced, on April 3, 2001, BCP and its
subsidiary, BCP Finance Corporation, filed voluntary petitions
for protection under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware. BCPM and Borden Chemicals and Plastics
Limited Partnership, BCP's sole limited partner, were not
included in the filings. (Two other separate and distinct
entities, Borden, Inc. and its subsidiary, Borden Chemical,
Inc., are not related to the filings.)

"Although BCP continues to face challenges, we have made
progress in stabilizing the business and moving forward on the
restructuring and asset sale process," said Mark Schneider,
president and chief executive officer of BCPM. "We have paid
down $18 million in debt under the Primary DIP Facility,
obtained final court approval of asset sale and bidding
procedures, and identified potential purchasers of assets. We
also communicated with Fleet today to announce an achievable
exit strategy that we believe will result in full payment of
BCP's debt under the Primary DIP Facility."

Schneider continued, "Right now we are engaged in serious
negotiations with potential purchasers. It is important that BCP
maintain liquidity during the sale process. But BCP has
experienced a recent tightening of liquidity under the Primary
DIP Facility. Under these circumstances and anticipating the
normal seasonal slowdown in PVC sales in November and December,
BCP sought additional financing from BCPM. We are pleased that
BCPM has agreed to provide this new financing."

"To facilitate the sale process and preserve the value of all of
BCP's assets, BCPM has agreed to step up and provide this loan,"
said William H. Carter, chairman of BCPM. "We believe this
action is in the best interest of all of BCP's creditors."

Commenting on operations, Schneider said BCP continues to
produce PVC resin at all three of its plants. "We appreciate the
support that customers, vendors, lenders and employees have
shown us over the past seven months as we have worked on the
reorganization and asset sale process. We are doing everything
we can to achieve a smooth reorganization. This additional
financing is intended to enable us to maintain production and
service without interruption."

He continued, "To sustain the business, we have reduced the
headcount by 30% compared with a year ago and made substantial
cost cuts elsewhere. Operations also have benefited from lower
raw materials costs, especially for natural gas. However, these
factors have not been sufficient to offset a very weak PVC
market. Market pricing dropped five cents per pound from the
second to the third quarter, and BCP has been operating at 70-
75% of capacity.

"Looking ahead," he said, "producers of PVC and PVC pipe have
announced price increases, which bodes well for the future. And
when demand does come back, the PVC industry's recovery should
be swift, since inventories are very low throughout the supply

BCP produces PVC resins at its facilities in Geismar, La., also
the site of its headquarters, and has additional PVC operations
in Addis, La., and Illiopolis, Ill.

BRIDGE: McGraw-Hill Moves to Compel Payment & Allow Recoupment
The McGraw-Hill Companies, Inc. and/or its divisions,
subsidiaries or affiliates are parties to 35 separate executory
contracts with Bridge Information Systems, Inc.   David A.
Sosne, Esq., at Summers, Compton, Wells & Hamburg, in St. Louis,
Missouri, tells the court that as of the Petition Date, those
contracts gave rise to a total of more than $700,000 in
administrative expense claims.

According to Mr. Sosne, notwithstanding the sale of some of the
Debtors' businesses and the assumption and assignment of
contracts to third parties, the Debtors remain liable to the
McGraw-Hill Entities for amounts that were incurred under the
assigned contracts through the applicable sale closing dates.

By its Motion, the McGraw-Hill Entities seek a Court order:

  (i) compelling the Debtors to:

      (A) make immediate payment of all administrative expense
          claims which are outstanding and overdue under their
          pre-petition agreements with the Debtors, and

      (b) make timely payments of additional administrative
          expense claims accruing thereunder as they become due,

(ii) authorizing Platts, a division of McGraw-Hill, to recoup
      the amounts owed to it by Telerate, one of the Debtors'
      operating units, from amounts owed to Telerate by Platts
      under its pre-petition contracts with Telerate.

These are the administrative expense claims due to some of the
McGraw-Hill Entities pursuant to certain agreements with
Telerate.  The McGraw-Hill Entities want Judge McDonald to
compel the Debtors to make these payments immediately:

Counterparty        Agreement               Amount     Due Date
------------        ---------               ------     --------
MMS International,  Optional Service      $1,079,251   08/31/01
Inc.                Delivery Agreement

Standard and        QISS/DDR Agreement        40,312   overdue
Poor's - Retail                               26,875   10/31/01

Standard and        CUSIP Electronic         138,541   overdue
Poor's - CUSIP      Distribution Agreement

Platts              Optional Service         130,000   10/30/01
                     Delivery Agreement

In addition, the McGraw-Hill Entities request Judge McDonald for
an order directing the prompt payment of all other sums due to
MMS, Platts and S&P under their respective pre-petition
agreements with the Debtors, as and when due:

        Counterparty             Amount          Due Date
        ------------             ------          --------
    (A) MMS                     $920,731        11/30/2001

    (B) CUSIP - product fees      66,000        11/30/2001
              - royalties        175,000        11/30/2001

    (C) S&P Retail                26,875        01/30/2002

    (D) MMS                      150,000        02/28/2002

Furthermore, Mr. Sosne relates, under Platts' Optional Service
Delivery Agreement with Telerate dated February 1996, Telerate
provides authorized customers of Platts access to Platts'
products and services containing news, price assessments,
analysis, research and commentary relating to energy, metal and
other commodities.  Mr. Sosne advises the Court that the
Platts/Telerate agreement is one of the contracts the Debtors
propose to assume and assign to Moneyline.

Under the agreement, Mr. Sosne says, Telerate bills Platts'
customers directly and collects the payments from those
customers on Platts' behalf.  Telerate is authorized to deduct a
10% royalty on all charges billed and collected, but is to remit
the remaining 90% monthly to Platts, Mr. Sosne adds.

Platts' records show that Telerate owes them $500,000
representing Platts' share of the amounts billed to customers
for the period through February 15, 2001.  On the other hand,
Mr. Sosne states, Platts owes Telerate $13,341 for its share of
the subscription revenues which Platts has billed and collected
for the period beginning with the first quarter of 1999 through
the projected sale closing date with Moneyline.

According to Mr. Sosne, the respective obligations of Platts and
Telerate are debts that arise out of a single integrated
transaction.  Thus, Mr. Sosne argues, Platts is entitled to
recoup the amounts it owes Telerate from the amounts Telerate
owes it.

For that reason, the McGraw-Hill Entities also ask Judge
McDonald to authorize Platts to exercise its right of recoupment
under the Agreement. (Bridge Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    

CHAPARRAL RESOURCES: Defaults on $3.3MM Loan with Shell Capital
Chaparral Resources, Inc. (OTC Bulletin Board: CHAR) announced
that it has received a notice of occurrence of certain events of
default from Shell Capital Services Limited as Facility Agent
under the Company's existing Loan Agreement with Shell Capital

The Notice states that the Company has failed to pay or
refinance the outstanding principal and accrued interest in the
amount of US$3,339,489.97 that was due on September 30, 2001
under the Company's Bridge Loan with Shell Capital.  As a
result, the shares of preferred stock in the Company's
subsidiary, Central Asian Petroleum (Guernsey) Limited that were
issued to Shell Capital to induce it to enter into the Bridge
Loan, have converted and Shell Capital is entitled to 40% of the
distributable profits of CAP(G).  There are no such
distributable profits at the present time.

The Notice also states that the following additional events of
default under the Loan Agreement have occurred: failure to make
an interest payment in the amount of US$189,280 that was due
September 28, 2001 under the Company's Loan Agreement with Shell
Capital; failure to achieve project completion by September 30,
2001; the previously granted waiver of the requirement that the
Company's common stock be listed on one of the three major stock
exchanges (Nasdaq, NYSE, or Amex) which had been granted on the
condition that there would be no further events of default under
the Loan Agreement has now terminated as a result of the
additional events of default specified in the Notice; certain
accounts payable of Closed Type JSC Karakudukmunay in which the
Company has a 50% interest, in the amount of US$3,050,245 are in
excess of 90 days past due; and KKM had entered into a short
term debt arrangement with certain financial institutions.  
Although such indebtedness has since been repaid, it was
prohibited under the terms of the Loan Agreement.

The Notice also states that the Company and Shell Capital are in
active negotiations to restructure the Loan Agreement and the
Facility Agent has been instructed not to pursue any remedies
available to it at the present time. The Company is attempting
to restructure its Loan Agreement with Shell Capital including,
waiving the existing events of default and allowing the Company
to re-acquire Shell Capital's interest in CAP-G.  However, there
can be no assurances that the Company will be able to re-
negotiate its credit agreements on acceptable terms, if at all.  
If the Company does not restructure the Loan Agreement and Shell
Capital does not waive the existing events of default, Shell
Capital could exercise its remedies under the Loan Agreement,
including calling the entire loan immediately due and payable.  
If so, the Company's investment in the Karakuduk Field may be

The Company also announced that KKM has suspended drilling
operations effective October 4, 2001.  This temporary suspension
will allow KKM's ongoing facilities development program to catch
up to current and future productive capacity as well as to allow
KKM to further analyze geological data from its recently
completed 3D seismic survey in order to ensure the efficient
development of the Karakuduk Field.  Subject to completing the
restructuring of its Loan Agreement, the Company expects that
KKM will resume drilling during 2002.

John G. McMillian, Co-Chairman and CEO, stated, "We are
continuing to work in good faith to restructure our indebtedness
with Shell Capital.  We appreciate their past support and look
forward to continuing to work with Shell Capital as we continue
to develop the Karakuduk Field."

Chaparral Resources, Inc. is an international oil and gas
exploration and production company.  The Company participates in
the development of the Karakuduk Field through KKM of which it
is the operator.  The Company owns a 50% beneficial ownership
interest in KKM with the other 50% ownership interest being held
by Kazakh companies, including KazakhOil, the government-owned
oil company.

CHATEAU COMMUNITIES: Completes Restructuring of $70M 7.54% Notes
Chateau Communities (NYSE:CPJ), the nation's largest
owner/operator of manufactured home communities, restructured
the bulk of its $70 million, 7.54% senior unsecured notes
scheduled to mature in November 2003.

Fifty million dollars of the loan now has an extended twenty-
year maturity date of October 2021, at 8.3 percent interest.

On October 30, 2001, CP Limited Partnership, the operating
partnership of Chateau, completed a private placement of $150
million aggregate principal amount of 7.125 percent senior
unsecured notes due 2011. The net proceeds from the sale of the
notes were used to repay a portion of the outstanding balance
under a short-term acquisition credit facility incurred in
connection with Chateau's acquisition of CWS Communities, Inc.
in August 2001.

CEO Gary McDaniel noted: "Completion of this financing is in
keeping with our commitment to a conservative debt structure. We
are pleased to have extended some of our debt to mature in
twenty years. Chateau is in an excellent position to accomplish
our strategic goals going forward."

Because the notes were sold on a private-placement basis, the
notes have not been and will not be registered under the
Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption
from the registration requirements.

Headquartered in Greenwood Village, Colo., Chateau Communities
is a fully integrated, self-administered real estate investment
trust (REIT). Its portfolio consists of 222 communities, with an
aggregate of approximately 70,900 residential homesites and
1,790 park model/RV sites. In addition, Chateau manages 40
manufactured home communities with approximately 8,700
residential homesites. The Company owns or has options on 9
greenfield development communities comprising approximately
3,500 sites for future development. Chateau operates in 37
states. Visit Chateau Communities at

CHIPPAC INC: Revenues Drop in Q3 Attributable to Demand Slowdown
ChipPAC, Inc. (Nasdaq: CHPC), one of the world's largest and
most diversified providers of semiconductor packaging, test and
distribution services, announced results for the third quarter
ended September 30, 2001.  

Revenues for the three months ended September 30, 2001 were
$74.7 million, with a net loss of $16.4 million, meeting First
Call consensus estimates.  The company reported revenues of
$155.8 million, with a pro forma net income of $11.1 million in
the same period a year ago excluding one-time charges.  These
results were in line with original guidance and reflect ongoing
economic weakness and a continued demand slowdown throughout the
semiconductor industry supply chain during the quarter.

Dennis McKenna, Chairman and Chief Executive Officer of ChipPAC,
Inc. said, "We saw a modest level of stability in the quarter,
which we believe will continue in the fourth quarter.  Our
design wins, based on the strength of our technology leadership,
are winning significant new and existing customer programs.  Our
SmartDESIGN design process continues to be a differentiator with
customer design personnel based on its accuracy and reliability.  
Our China facility achieved quarter-over-quarter revenue
improvements and set records for all-time high unit shipments.  
Importantly, new customer engagements were on plan and our power
segment remained steady."

Robert Krakauer, Chief Financial Officer of ChipPAC, commented,
"We remain successful in maintaining a stable balance sheet.  
Our reduced capital expenditures, and comprehensive cost
reduction programs have allowed us to continue to generate
positive gross margins every quarter throughout this year.  
Competitors within our peer group have not been able to achieve
this. Based on our estimates for operating cash flow we plan to
have adequate liquidity levels to service our debt and working
capital through 2002."

McKenna continued, "The on-going weak economy makes it necessary
for us to remain cautious in our outlook.  At this point, we
believe the expected industry recovery will now extend into 2002
with a slower ramp-up.  As a result, we are taking additional
steps in the fourth quarter to align our organization and assets
with this current growth projection.  Specifically, we will make
staffing cuts globally, resulting in a one-time charge of
approximately $4.5 million for restructuring.  Additionally, we
are rationalizing our global asset base and prioritizing higher
throughput, higher efficiency equipment, that is more cost
effective within our various geographies.  Our estimate is that
this will result in an asset write-down of approximately $25-$30
million.  These actions are designed to return the company to
profitability in the second half of 2002 based on improving
industry volume, and our lower cost structure.  Our approach is
designed to provide shareholders longer-term value as we
continue successfully implementing our strategic initiatives."

                    Fourth Quarter Outlook

The company believes revenues for the fourth quarter ending
December 31, 2001 will be flat to up 5% from the preceding third
quarter, excluding planned restructuring charges and an asset

ChipPAC is a full-portfolio provider of semiconductor package
design, assembly, test and distribution services.  The company
combines a history of innovation and service with more than a
decade of experience satisfying some of the largest -- and most
demanding -- customers in the industry.  With advanced process
technology capabilities and a global manufacturing presence
spanning Korea, China, Malaysia and the United States, ChipPAC
has a reputation for providing dependable, high quality
packaging solutions.  For more information, visit the company's
Web site,

As at September 30, 2001, the Company recorded cash and cash
equivalents amounting to $25.9 million, and net accounts
receivable totaling $34.2 million. Total current assets reached
$79 million, versus total current liabilities of $85 million.
Stockholders equity as at the same date amounted to $36.7

COMDISCO: Court Okays Deferment of Employee Cash-to-Option Plan
Comdisco's Cash to Options Programs are employee benefit
programs that allow certain employees to irrevocably elect, at
the beginning of a fiscal year, to receive stock options in
exchange for a reduction in compensation.  Felicia Gerber
Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in
Chicago, explains that there are 2 separate Cash to Options

  (a) The Broad-Based Program, with 122 participants, is
      available to non-management employees who were expected to
      have compensation in excess of $125,000 for the fiscal

  (b) The Senior Management Program, with 14 participants, is
      open to a limited number of senior management employees.

Other than the method of purchasing options, Ms. Perlman says,
the two programs are substantially the same.

The Debtors' ability to successfully maintain their business
operations and maximize the enterprise value of their businesses
for their estates and creditors is dependent upon the continued
employment, active participation, and dedication of their
employees, Ms. Perlman tells Judge Barliant.  According to Ms.
Perlman, requiring the participants in the Cash to Options
Programs to contribute at this time is harming employee morale
and has led to an increase in employee turnover among program

Thus, Ms. Perlman reports, the Debtors have decided to defer
collection of amounts that would otherwise have been deducted
pursuant to the Cash to Options Programs from employee
compensation to the fourth fiscal quarter of fiscal year 2002.
The Debtors intend to further address the Cash to Options
Programs in their plan of reorganization, Ms. Perlman adds.

The Debtors are convinced that the cost associated with such
deferral of contribution is more than justified by the benefits
that the Debtors expect to realize, including boosting morale
and discouraging resignations among key employees.

Accordingly, the Debtors request the Court to enter an order
authorizing them to defer contributions under the Cash to
Options Programs until the fourth fiscal quarter of fiscal year

Finding that sufficient cause exists to grant the Debtors'
motion, Judge Barliant authorized the Debtors to defer
collection of certain amounts owed by employees under the Cash
to Options programs, that otherwise would have been deducted
from employee compensation to the fourth fiscal quarter of
fiscal year 2002. To the extent Debtors have already collected
employee contributions under the Cash to Options programs for
the 2001 fiscal year, Judge Barliant ruled, such sums may be
refunded to the employees and the collections of such sums may
also be deferred until the fourth fiscal quarter of fiscal year
2002. (Comdisco Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)    

CRESCENT OPERATING: Will Begin Rights Offer to Shed Debt Burden
Crescent Operating, Inc. (OTCBB:COPI.OB) announced that it has
modified the anticipated pricing and timing of its plan,
announced on June 29 of this year, for a rights offering of
approximately $15 million of additional shares of common stock
to its common shareholders.

The rights offering is now expected to commence in early 2002
following the close of its restructuring transaction which is
anticipated to occur in December 2001.

The per share purchase price is expected to equal the lesser of
(a) the average of the reported closing prices for Crescent
Operating common stock for the twenty (20) trading days
immediately preceding the fifth day prior to the commencement
date of the rights offering, or (b) the average of the reported
closing prices for Crescent Operating common stock for the
twenty (20) trading days immediately following the commencement
date of the rights offering.

The principal purpose of the rights offering is to raise funds
to reduce Crescent Operating's debt burden. No record date has
yet been set for the offering, which is subject to the filing
and effectiveness of an appropriate registration statement with
the Securities and Exchange Commission.

Crescent Operating is a diversified management company which
through various subsidiaries and affiliates, owns, leases or
operates a portfolio of assets consisting primarily of three
business-class hotels, five luxury resorts and spas, an interest
in a temperature controlled logistics operating company, an
interest in three residential developments, and an equipment
sales and leasing business.

CRESCENT OPERATING: Annual Stockholders' Meeting Set for Dec. 6
Crescent Operating, Inc, (OTCBB:COPI.OB) announced the mailing
of its proxy statement for the annual meeting of shareholders to
be held on December 6, 2001 at the Fort Worth Club, located at
306 West 7th Street, Fort Worth, Texas.

At the meeting, shareholders will be asked to vote on a number
of items relating to the sale of assets and capital infusion
previously announced by the Company on June 29, 2001.
Shareholders of record at the close of business on October 3,
2001 will receive a proxy statement and are entitled to vote at
the annual meeting.

DTE BURNS: S&P Places BB Rating on CreditWatch Negative
Standard & Poor's double-'B' rating on DTE Burns Harbor LLC's
(DTE LLC) $163 million senior-secured notes remains on
CreditWatch with negative implications where it was placed on
May 4, 2001.

The proceeds from the notes were used by DTE LLC to purchase the
number one coke battery from Bethlehem Steel Corp. (D/---/---).
DTE LLC's rating is unchanged and remains on CreditWatch
following the filing of Chapter 11 bankruptcy protection by
Bethlehem Steel Corp.

The rating is still on CreditWatch as a result of DTE LLC's
reliance on sales of coke to Bethlehem Steel for a portion of
its cash flow. Cash flow from other revenue sources,
specifically Section 29 tax credits, is not sufficient to
completely cover debt service. The ability of the project,
however, to sell coke on the spot market if any of Bethlehem
Steel Corp.'s facilities do not require coke, combined with the
acceptance of DTE Energy Co. (triple-'B'-plus/Stable/'A-2') of
any changes in law, or later disallowances with respect to
Section 29 tax credits, provide support for the rating. However,
should the project be forced to operate on the spot market, or
should a substantial delay in payment threaten the project's
solvency, a substantial downgrade should be expected.

The project continues to operate well and benefits from a LOC
that provides a six-month debt service reserve. Bethlehem Steel
is up to date on all invoices with the exception of the
September invoice that was due on the date that Bethlehem filed
for bankruptcy.

Standard & Poor's will closely monitor the situation going
forward. As with most bankruptcies, information is not readily
available. Important considerations are whether Bethlehem Steel
will seek to vacate or renegotiate the coke sales agreement and
whether Bethlehem Steel will continue to operate the Burns
Harbor facility.

Standard & Poor's believes that these are not large risks
because the contract price of coke is competitive and Bethlehem
Steel will need coke to continue to operate.

Furthermore, Bethlehem has announced its intention to continue
operating and has secured $450 million of debtor-in-possession
financing that will allow it to do so. Should Bethlehem cease to
operate, the project can still survive, though at a
substantially reduced rating level, by selling coke on the spot
market. Standard & Poor's will also monitor the accounts
receivable situation. A substantial delay in receiving payment
from Bethlehem would erode the project's liquidity and could
also lead to a substantial downgrade. Standard & Poor's expects
these issues to be clarified within approximately 90 days and
expects to resolve the CreditWatch status in that time frame.

DELTA AIR: Swings Into $295MM Net Loss in September Quarter
Delta Air Lines (NYSE: DAL) reported a net loss of $295 million
for the September 2001 quarter versus net income of $273 million
in the September 2000 quarter, excluding the unusual items
described below.  Including unusual items, the September 2001
quarter net loss of $259 million versus net income of $133
million in the September 2000 quarter.

"The terrorist attacks against the United States on September
11, 2001 have had a severe impact on the airline industry," said
Leo F. Mullin, Delta's chairman and chief executive officer.  
"Due to the dramatic decrease in passenger demand, Delta has
taken several steps, including network changes and,
unfortunately, employee reductions, to respond to this difficult
operating environment."

Delta estimates that the tragic events of September 11
negatively impacted revenues in the September 2001 quarter by
approximately $400 million.  This is in addition to revenues
that were already projected to be down due to a weak economy and
lingering effects of the 89-day Comair strike.  In the September
2001 quarter, Delta's unit costs increased 4.5 percent from the
September 2000 quarter, while non-fuel unit costs increased 6.4
percent, excluding unusual items.  Total operating expenses
decreased 1.8 percent, excluding unusual items, while available
seat miles decreased 6.0 percent. Delta's fuel hedging program
saved Delta $69 million, pretax, in the quarter.  Delta is 67
percent hedged in the December 2001 quarter at approximately
$0.59 per gallon.

On September 26, Delta announced that it will reduce staffing by
up to 13,000 jobs across all major work groups over the next few
months.  "Delta's people are Delta Air Lines," said Mullin.
"This is the most difficult action I have had to take since
joining Delta."

Delta has offered its non-union employees in the United States
and Puerto Rico six voluntary job reduction programs. Over
11,000 Delta employees elected to take the voluntary programs.  
"This extraordinary acceptance rate affirms the attractiveness
of these programs," said Frederick Reid, president and chief
operating officer of Delta.  "Involuntary reductions are
expected to affect only 2,000 employees -- 1,700 pilots and 300
from the other work groups."

In addition to the workforce reductions, Delta has instituted a
broad-based recovery plan that includes eliminating
discretionary spending, cutting capital expenditures, and
reducing product and service offerings. In October 2001, Delta
announced the closing of 35 of 70 city ticket offices, 11 of 50
Crown Room clubs, and five of 23 reservations call centers.  
Delta expects to record charges in the December 2001 quarter
related to its early retirement program and impairment of fleet
and facilities.

                         Unusual Items

During the September 2001 quarter, Delta recorded several
unusual items, net of tax: a $33 million non-cash charge related
to equity rights, primarily in, to comply with
Statement of Financial Accounting Standard (SFAS) 133; a $42
million charge related to severance costs associated with the
employee reduction programs; a $104 million gain for
compensation received under the Air Transportation Safety and
System Stabilization Act; and a $7 million gain on the sale of
its investment in Equant, N.V.

In the September 2000 quarter, Delta recorded the following
unusual items, net of tax: a $141 million non-cash charge
related to SFAS 133; a $13 million charge related to the
decision to discontinue our Pacific gateway in Portland, Oregon;
and a one-time, non-cash gain of $10 million related to its
equity investment in Worldspan.

                      Financial Position

"An already challenging financial year for the airlines turned
even more difficult when terrorist attacks struck our nation,"
stated M. Michele Burns, Delta's executive vice president and
chief financial officer.  "Delta management's quick response to
reduce capacity and cut costs, combined with the assistance of
government funds helped mitigate the financial pressures on our
company.  Nevertheless, Delta and the industry continue to face
serious challenges ahead."

During the September 2001 quarter, Delta received $346 million
from the U.S. Government under the Air Transportation Safety and
System Stabilization Act to compensate Delta for a portion of
its direct and incremental losses resulting from the September
11 terrorist attacks.  Delta expects to receive a total of
approximately $690 million under this program.  For accounting
purposes, Delta recognized $171 million, pretax, of the
Stabilization Act compensation payment during the September 2001
quarter.  Additionally, on September 17, Delta received $1.25
billion from a public sale of Enhanced Equipment Trust
Certificates.  As of September 30, Delta's cash balance was $2.8

On October 12, 2001, Delta received $125 million in cash from
the sale of its stake in SkyWest Airlines.  "Delta is pleased
with its relationship with SkyWest," said Burns.  "This
transaction was part of our ongoing initiative to monetize non-
core assets and in no way signals a change in our operational

                     Operations Update

The terrorist attacks on September 11, 2001 have had a
significant impact on Delta's operations.  From September 11
through September 13, Delta canceled over 6,500 flights. By
September 16, Delta was operating approximately 80 percent of
its pre-September 11 schedule.  "The employees of Delta Air  
Lines worked extremely hard to get the operation up and running
in a safe, secure, and timely manner," said Reid.  "Our
employees went well above and beyond the call of duty to make
sure our passengers' needs were met."

Delta's load factor from September 11 through September 30, 2001
was 48.8 percent on Delta's reduced capacity.  For the month of
October 2001, Delta's preliminary results indicate that load
factor increased to 61 percent. "Although there are encouraging
signs as our operations improve and passengers begin to return,
business is still far from what it was before the attacks," said

Delta is working with the Federal Aviation Administration and
the Department of Transportation to enhance Delta's security
measures.  Delta has completed installation of new security
devices on all of the cockpit doors on its mainline aircraft.

                       Network Highlights

Effective November 1, 2001, Delta will reduce its capacity by
approximately 16 percent, as measured by available seat miles
from the level of service planned before September 11, 2001, due
to the decline in passenger demand stemming from the terrorist
attacks.  As part of these reductions, Delta will suspend
approximately 50 percent of its Delta Express capacity to
Florida and will suspend certain international flights from John
F. Kennedy Airport in New York including flights to Tokyo, Tel
Aviv, Munich, Dublin, Shannon, Cairo, Dubai, Zurich, Brussels
and Stockholm.

On October 5, Delta announced a realignment of some of its Delta
Connection carriers' regional jet operations to support Delta
Air Lines' network adjustments.  The adjustments will maintain
Delta network access for all domestic markets currently served
by Delta.

"In making these changes, Delta considered current and
anticipated passenger demand, route profitability, and the
ability to accommodate customers conveniently on other Delta
flights," said Reid.  "As demand returns, we will look to re-
instate mainline service to cities where it can be done

As a result of the capacity reduction, Delta is grounding 50
aircraft for the remainder of 2001.  Delta is currently in
negotiations with Boeing and Bombardier to defer certain new
aircraft deliveries and will continually review its fleet plan
based on demand and operational needs.

On October 19, the U.S. and France announced an open skies air
transport agreement.  Delta, along with its European SkyTeam
partners Air France, Alitalia and CSA Czech Airlines, filed an
application for antitrust immunity with the U.S. Department of
Transportation (DOT) earlier this year.  This new open skies
agreement will enable the U.S. Government to complete its review
and consideration of the application.  "We are hopeful that the
DOT will now move swiftly to approve the application so
passengers can begin to realize the benefits that will come from
open skies and closer coordination among SkyTeam partners," said

Delta's goal is to become the No. 1 airline in the eyes of its
customers, flying passengers and cargo from anywhere to
everywhere.  People choose to fly Delta more often than any
other airline in the world on 4,813 flights each day to 370
cities in 64 countries on Delta, Delta Express, Delta
Shuttle, Delta Connection carriers and Delta's Worldwide
Partners.  Delta is a founding member of SkyTeam, a global
airline alliance that gives customers extensive worldwide
destinations, flights and services.  In addition to safely and
securely making reservations and purchasing tickets at, Delta customers can select seats, upgrade, get up-to-
date flight information, make accommodations reservations, and
more.  U.S.-based travel agencies also can access Delta Web
fares for their customers via's Online Agency Service
Center.  For more information, go to http//

EASYLINK SERVICES: Gets Commitments to Complete Debt Workout
EasyLink Services Corporation (NASDAQ: EASY), a leading global
provider of outsourced messaging services to enterprises and
service providers, announced that it has received the necessary
financing commitments to complete its proposed debt

Closing of the debt restructuring is expected in November and is
subject to completion of definitive documentation and compliance
with applicable NASDAQ stock market rules.

"Completing the debt restructuring will be a major milestone for
EasyLink and will enable us to continue with the execution of
our business plan," said Thomas Murawski, Chief Executive
Officer of EasyLink. "Combined with our recent announcement that
we have achieved positive EBITDA during the third quarter of
2001, we believe we are creating long-term value for our

On September 25, 2001, the Company announced that it has entered
into agreements with its major creditors to restructure its debt
and lease obligations. Under the proposed restructuring, the
Company will eliminate approximately $44.2 million principal of
debt and decrease its annual cash debt service requirements from
approximately $36.0 million to approximately $5.0 million for
the next two years.

In conjunction with the restructuring and related financing, the
Company expects to issue an aggregate of $19.7 million of
restructure notes due in 2006, $4.0 million of other residual
payments due in 2004, approximately 50.0 million shares of Class
A Common Stock and warrants to purchase 18.0 million shares of
Class A Common Stock with an exercise price equal to the average
market price prior to closing.

Additionally, the Company separately announced last week that is
has generated positive EBITDA (earnings before interest, taxes,
depreciation and amortization) of approximately $500,000 during
the 2001 third quarter on a pro-forma basis, excluding, certain non-operating items and other non-cash
charges. This marks the Company's first quarter of positive
EBITDA results in its history and begins an expected trend of
increasingly positive EBITDA results for the coming quarters.
The Company will report actual 2001 third quarter results on
November 6th.

EasyLink Services Corporation (NASDAQ: EASY), based in Edison,
NJ, is a leading global provider of outsourced messaging
services to enterprises and service providers. The Company,
whose customers include over 300 of the Fortune 500, offers a
comprehensive portfolio of messaging services to provide the
essential communications infrastructure companies need to do
business in today's 24x365 environment. EasyLink's solution set
includes e-mail and groupware services including managed
Microsoft Exchange, Novell GroupWise and Internet e-mail
services; boundary services that offer virus protection, spam
control and content filtering for business e-mail systems;
message delivery services such as EDI, telex, desktop fax, and
broadcast and production messaging services; and professional
services including managed services support, on-site
applications management, help desk and staff augmentation
services. For more information, please visit

EXODUS COMMS: Signs-Up Gray Cary Ware as Corporate Counsel
Exodus Communications, Inc. applies to employ and retain Gray
Cary Ware & Freidenrich LLP as their general corporate counsel
to assist with general corporate issues and other related
services, nunc pro tunc to the Petition Date.

Adam W. Wegner, the Debtors' Adviser for Corporate and Legal
Affairs, states that representation of the Debtors by Gray is
critical to the success of the Debtors' reorganization cases.
The Debtors have no corporate counsel, and there is a general
need for corporations in reorganization to have general
corporate counsel. Mr. Wegner submits that Gray is familiar with
the corporate legal issues facing the Debtors, and is uniquely
well suited to handle such issues. The Debtors selected Gray as
their special corporate counsel because of their extensive
experience and expertise in corporate law, and its broad range
of legal resources. The Debtors desire to employ the Firm under
a general retainer because of the extensive legal services that
will be required from it in connection with these chapter 11

Specifically, Gray will:

A. Perform services as acting general counsel, generally
   including investigation, research and analysis of legal and
   factual issues, analysis of applicable law, negotiations
   with opposing counsel, drafting and preparation of
   documents, review and comment on documents prepared by
   others, and written and oral communications with other
   parties and with the Debtors.

B. Perform specific services, including serving as corporate
   secretary of the Debtors and director and corporate
   secretary of the Debtors' subsidiary corporations, managing
   the Debtors' internal legal department and managing outside

C. other possible services may include, but are not limited to,
   services related to real estate and real estate litigation,
   real estate leases, preparing and administering a
   comprehensive lease database with respect to the Debtors'
   real estate leases, intellectual property and licensing,
   employment issues, tax issues, and general commercial

James M. Koshland, Esq., a partner of the Firm, submits that the
partners, counsel and associates of the Firm do not have any
connection with or hold any interest adverse to the Debtors,
their affiliates, creditors or any other parties in interest, or
their respective attorneys and accountants, the United States
Trustee or any person employed in the Office of the United
States Trustee, except for:

A. With respect to the Debtors, the Firm has represented Salon
   Media Group, Inc. in a matter adverse to the Debtors that
   was settled and is now effectively completed; iBeam
   Broadcasting in a matter adverse to the Debtors that was
   settled and is now effectively completed; and M+W Zander in
   a matter adverse to the Debtors that is effectively

B. With respect to the Debtors' officers and directors, the Firm
   has formerly represented William L. Krause, Exodus' Chief
   Executive Officer, on matters unrelated to the Debtors and
   these cases.

C. With respect to the Debtors' major bond holders, the Firm
   formerly represented Brookside Capital, Inc., Goldman Sachs
   & Co., on matters unrelated to the Debtors and these cases;
   and currently represents Fidelity Investments, interests
   adverse to Goldman Sachs, Lehman Brothers Morgan Stanley &
   Co., interests adverse to Northwestern Investment
   Management Company, interests adverse to Oppenheimer & Co.,
   Inc., interests adverse to Smith Barney, interests adverse
   to T. Rowe Price Associates, Inc., interests adverse to TCW
   on matters unrelated to the Debtors and these cases.

D. With respect to the Debtors' bond trustees, the Firm
   currently represents Chase Manhattan Bank, interests adverse
   to HSBC on matters unrelated to the Debtors and these cases.

E. With respect to the Debtors' secured lenders, Firm formerly
   represented interests adverse to Bank of Tokyo Mitsubishi,
   Ltd., Barclays Bank PLC, interests adverse to Fuji Bank,
   Ltd., interests adverse to Lehman Brothers Bank FSB,
   interests adverse to Transamerica Lending, Inc., on matters
   unrelated to the Debtors and these cases; and currently
   represents interests adverse to Silicon Valley Bank,
   interests adverse to Venture Lending and Leasing, Inc.,
   Wells Fargo Bank on matters unrelated to the Debtors and
   these cases.

F. With respect to the Debtors' ordinary course professionals,
   the Firm formerly represented Baker & McKenzie, Deloitte &
   Touche, Fenwick & West, LLP, Minter Ellison, Orrick,
   Herrington & Sutcliffe, LLP, Seyfarth Shaw, interests
   adverse to Wachtell, Lipton, Rosen & Katz, on matters
   unrelated to the Debtors and these cases; and currently
   represents Farella Braun & Martel LLP, Fraser Milner
   Casgrain, KPMG LLP Littler Mendelson, interests adverse to
   PricewaterhouseCoopers, Wilson, Sonsini, Goodrich & Rosati,
   on matters unrelated to the Debtors and these cases.

H. With respect to the Debtors' major trade creditors, the Firm
   currently represents interests adverse to Akamai
   Technologies, Inc., AT&T, interests adverse to Devcon
   Construction, EMC 2, Equity office Properties, interests
   adverse to GE Access, interests adverse to Global Crossing,
   interests adverse to MGE UPS Systems, Oracle Corporation,
   interests adverse to Turner Construction, on matters
   unrelated to the Debtors and these cases; and formerly
   represented HRH Construction Company, on matters unrelated
   to the Debtors and these cases.

I. With respect to the Debtors' major lessors, the Firm
   currently represents interests adverse to Amdahl Corporation,
   interests adverse to Cabot Industrial Trust, interests
   adverse to Equity Office Properties, interests adverse to
   F5 Networks, Phoenix Leasing, Inc., on matters unrelated to
   the Debtors and these cases; and has formerly represented
   Cisco Systems, Mission West Properties, S3 Incorporated,
   Sun Microsystems on matters unrelated to the Debtors and
   these cases.

J. With respect to the Debtors' retained professionals, the Firm
   currently represents Lazard, Freres & Co., LLC, interests
   adverse to KPMG PeatMarwick, on matters unrelated to the
   Debtors and these cases, and has formerly represented
   Amdahl Corporation, on matters unrelated to the Debtors and
   these cases.

Mr. Wegner informs the Court that the Debtors have provided the
Firm with a retainer in the amount of $200,000 pursuant to the
terms of the engagement letter dated September 10, 2001 with the
Firm. Mr. Koshland relates that the Firm drew the amount of
$38,357.50 from the Retainer as payment for the Firm's pre-
petition services while the remaining balance of $161,642.50,
represents the amount of the retainer preceding the Petition

Mr. Koshland states that the Debtors have agreed to compensate
the Firm for all services rendered on an hourly basis pursuant
to the Firm's current normal hourly rates for professionals and
reimburse it for all expenses incurred during the course of the
chapter 11 cases. The Firm's current hourly rates are:

      Partners                       $240 to $650
      Associates                     $180 to $450
      Paralegals and Specialists      $70 to $290
(Exodus Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

FEATHERLIKE INC: Strategic Restructuring Evident in Q3 Results
Featherlite, Inc. (Nasdaq:FTHR), a leading manufacturer and
marketer of specialty aluminum trailers and luxury motorcoaches,
reported net sales for the third quarter ended September 30,
2001 of $51.6 million. This is up 0.4% from net sales of $51.3
million last year. Net profit for the third quarter was
$106,000, as compared to a net loss of $637,000 last year.

The Company's improvement of over $743,000 in net income is
substantially the result of reduced selling and administrative
expenses, including research and development costs, compared to
last year. The reductions are related to the closing of the
Featherlite plant in Pryor, Okla., at the end of the second
quarter in 2001, as well as the Company's across the board focus
on cost control and reduction of direct and indirect expenses.

"The positive effects of our strategic restructuring were
evident in Featherlite's third quarter results," Conrad Clement,
Featherlite chairman and chief executive officer, said. "Though
we are cautious on sales growth in the near term, particularly
since the events of Sept. 11, we believe that our aggressive
sales posture coupled with our successes in enhanced
efficiencies have well positioned the Company to capitalize on
an improving economy."

Featherlite's overall sales reflected a 22.2% increase in coach
sales over last year, while overall trailer sales declined 14.8
percent. "We believe Featherlite is gaining market share in the
bus conversion segment of the RV industry," Clement said. As a
percentage of sales, gross profit for the quarter declined
slightly to 12.5% compared to 13.0 % in 2000. Trailer margins
improved over 2000 due to reduced raw material costs and
improved labor and overhead utilization during the quarter.
Motorcoach gross profit margins declined due to reductions in
new inventory at lower than average selling prices.

Selling and administrative expenses declined in the third
quarter of 2001 by $1.2 million, an 18% reduction from the same
period in 2000. As a percentage of sales, these expenses
decreased to 10.5% in 2001 from 12.8% in 2000. Featherlite's
income before taxes increased by almost $1.2 million to $141,000
in the third quarter of 2001, compared to a loss before taxes of
$1.0 million in the same quarter last year.

For the nine months ended Sept. 30, 2001, net sales were $173.7
million, down 6.8% from sales of $186.4 million in last year's
comparable period. Net loss for the nine months was $4.0
million. This compares with net income of $1.2 million in 2000.

As at Sept. 30, the Company's cash and receivable totaled $6.5
million, while its current maturities of its long-term debt
amounted to $21 million.

FEDERAL-MOGUL: Intends to Assume Prepetition Employment Pacts
Prior to the Petition Date and in the ordinary course of
business, Federal-Mogul Corporation entered into a series of
Amended and Restated Employment Agreements with approximately 30
senior and mid-level management executives. The specific content
and details of the proposed Change of Control Agreements are
proprietary and confidential. Additional details of the Change
of Control Agreements will be provided to the U.S. Trustee, any
official committees appointed in these cases, and any other
parties in interest. However, such disclosure will be made only
upon the signing of a confidentiality agreement regarding the

Thus, the Debtors seek authority for the assumption of
their pre-petition employment agreements with approximately 30
executive personnel, providing for payment of certain benefits
to such employees in the event of a change of control of the

James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones,
P.C., in Wilmington, Delaware relates that the general terms of
the Change of Control Agreements provide that upon a Change of
Control as therein defined, the particular employee is assured
of continued employment for a 3-year period without reduction in
base salary, annual bonus or related employee benefits. If,
following a Change of Control, the executive is terminated
Without Cause or he or she terminates the Agreement for Good
Reason, the executive will receive the following payments in
lieu of the continuing employment benefits otherwise provided

A. lump-sum amount equal to:

    1. three times the employee's highest base salary and
       highest annual bonus, and

    2. the excess of the actuarial equivalent of the benefit he
       or she would have received under the Debtors' Personal
       Retirement Account and Supplemental Executive
       Retirement Program if his or her employment continued
       for three years after the date of termination over the
       actuarial equivalent of any amount paid or payable as
       of the date of termination; and

B. continuation of benefits under the employee benefit plans,
   programs, practices and policies of Federal-Mogul, for three

In addition, the Debtors are party to separate pre-petition
severance agreements with seven key personnel. Mr. O'Neill
states that the agreements provide, in each instance, that if
the particular employee is terminated for any reason other than
cause, the terminated employee will receive 2 years' annual base
salary, or 18 months' base salary, or 1 year's annual base
salary, plus targeted annual bonus, and basic medical, dental
and life insurance benefits for the designated time period.

The Debtors believe that the terms and conditions of the
severance agreements are well within industry standards, and
that assumption of such agreements during chapter 11 represents
an important ingredient in the Debtors' overall management and
employee retention policy. Mr. O'Neill contends that the Debtors
have reasonably exercised sound business judgment in determining
to assume each of the agreements, and accordingly the Debtors
request approval for Federal-Mogul to assume and perform its
obligations under each of such contracts.

Mr. O'Neill asserts that the Change of Control Agreements
provide assurance to the Debtors' senior and mid-level
management personnel regarding termination benefits in the event
of a change in control of the Debtors and termination of their
employment. The filing of a debtor's bankruptcy petition often
results in the company being "in play" and becoming the target
of friendly or hostile takeover attempts with ensuing
consolidation and cost-cutting measures. The commonly known and
widespread knowledge of this dynamic may well induce Debtors'
current senior or mid-management personnel to become receptive
to proposals of alternative employment from the Debtors'
competitors or companies outside the automotive parts and
components industry. Mr. O'Neill claims that the assumption of
the Change of Control Agreements will provide assurance and
protection to the Debtors' senior and mid-level management
executives and induce their continued employment on behalf of
the Debtors with resultant enhancement of the Debtors'
reorganization ability.

The Debtors believe that the success of their reorganization
effort is dependent upon retention of key personnel and
avoidance of distractions resulting from job insecurity or
susceptibility to proposals of alternative employment. The
Debtors submit that their decision to assume the aforementioned
executory contracts relating to the employment of existing
senior and middle management personnel, represents a reasonable
exercise of sound business judgment. Therefore, the Debtors
request that the Court approve the assumption of each of such
agreements by the applicable Debtor party, and authorize the
Debtors to perform their respective obligations. (Federal-Mogul
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

FINOVA GROUP: Household Finance to Continue Foreclosure Actions
Prior to Petition Date, Household Finance Corporation III
commenced a foreclosure action by filing an Amended Foreclosure
Complaint in the Circuit Court of the Ninth Judicial Circuit of
the State of Florida, in and for Orange County General Civil
Division.  In its foreclosure action, Household Finance seeks:

  (i) relief to foreclose a mortgage on certain real property in
      Orange County, Florida;

(ii) a determination of the rights of the defendants named in
      the Household Finance Foreclosure Action,

(iii) the sale of the Orange County Property, and

(iv) a deficiency judgment if the proceeds from the sale of
      the Orange County Property are insufficient to pay its

Finova Capital Corporation is one of the defendants named in the
Foreclosure Action.  In response, Finova Capital admits it
claims an interest in the Orange County property by virtue of
its judgment against Ariff A. Khimani and Sheila A. Khimani.  
Finova Capital also demands that any excess proceeds from the
foreclosure sale of the Orange County Property be distributed to
Finova Capital.

But when the Debtors filed these chapter 11 cases, the
foreclosure action was stayed pursuant to section 362 of the
Bankruptcy Code.  Thus, the Debtors and Household Finance
present the Court with a stipulation lifting the automatic stay
to allow Household Finance to proceed with its foreclosure
action.  Both parties agree that:

  (1) To the extent applicable, the automatic stay is lifted for
      the sole purpose of allowing Household Finance to:

      (a) prosecute the Household Finance Foreclosure Action to
          judgment in the Florida Civil Court; and

      (b) take all actions reasonably necessary to conduct a
          foreclosure sale of the Orange County Property and
          have a certificate of title issued to the highest
          bidder of such foreclosure sale.

  (2) The Debtors reserve all rights to pursue claims against
      any proceeds or other rights in connection with the
      proceeds or transaction, giving rise to the foreclosure
      sale of the Orange County property. (Finova Bankruptcy
      News, Issue No. 17; Bankruptcy Creditors' Service, Inc.,

FOCAL COMM: S&P Drops Senior Rating to D After Recapitalization
Standard & Poor's lowered its corporate credit rating on Focal
Communications Corp. to 'SD' from double-'C' and lowered its
senior unsecured debt rating to 'D' from single-'C'. These
ratings were removed from CreditWatch negative, where they had
been placed July 30, 2001.

Standard & Poor's triple-'C'-plus rating on Focal's senior
secured bank loan remains on CreditWatch with negative

The rating action follows the completion of the company's $430
million recapitalization plan. The recapitalization plan
includes debt-for-equity arrangements totaling about $280
million in principal amount of bonds for receipt of about 35% of
the fully diluted shares of Focal common stock. This results in
the bondholders receiving about 44 cents on the dollar relative
to the par value of the bonds exchanged. The recapitalization
plan also includes the infusion of $150 million of private
investment capital and an amendment of Focal's secured bank
credit facility to provide up to $225 million of borrowing

There has been no event of default as defined under the terms of
the indentures of the affected bonds. Standard & Poor's,
however, defines default to include debt exchanges where the
total value of the securities received is materially less than
the originally contracted amount.

Standard & Poor's will meet with management to discuss its
revised business plan, in light of the recapitalization, before
assigning new corporate credit and debt ratings. The rating on
the senior secured bank loan is expected to be equalized with
the new corporate credit rating, given the uncertain valuation
of competitive local exchange carrier assets.

FRIENDLY ICE CREAM: Refinancing Plan Spurs S&P to Affirm Ratings
Standard & Poor's revised its outlook on Friendly Ice Cream
Corp. to developing from negative.

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

The outlook revision is based on the company undertaking a
refinancing plan to replace its existing credit facility, which
would improve its financial flexibility. Friendly is facing
added liquidity pressures from the March 2001 amendment to its
credit facility that requires principal payments of about $75
million in 2002.

The ratings on Friendly reflect its participation in the
intensely competitive restaurant industry, weak operating
performance, liquidity pressures, and weak credit protection
measures. These factors are partially offset by the company's
strong brand name and regional market position.

Wilbraham, Massachusetts-based Friendly operates 394
restaurants, franchises 160 restaurants and six cafes, and
manufactures a line of packaged frozen desserts distributed
through more than 3,500 supermarkets and other retail locations.

The company's operating performance improved somewhat in the
first nine months of 2001. Same-store sales rose 1.5% in the
third quarter of 2001 following a 1.4% increase in the second
quarter and a 1.0% increase in the first quarter, after
declining 3.3% in all of 2000. The improved results have come
after the closing of 135 underperforming restaurants since March
2000. Credit protection measures are weak, with EBITDA coverage
of interest for the 12 months ended September 30, 2001, at 1.7
times, and leverage is high, with total debt to EBITDA at 5.6x
for the same period.

Friendly has used proceeds from asset sales and refranchised
units to meet its accelerated debt requirements under its
amended credit facility. To improve the company's financial
flexibility management has engaged Bank of America Securities
LLC as a financial adviser to help evaluate refinancing
alternatives that focus on real estate-based financing. The new
financing plan includes a revolving credit facility for $35
million, mortgage financing for $55 million, and a sale and
leaseback for $35 million. As of Oct. 24, 2001, Friendly had
obtained a commitment letter for the mortgage financing.

                     Outlook: Developing

Ratings could be upgraded if the company successfully completes
the refinancing. However, ratings could be lowered if the
company is unable to replace its existing credit facility
because it does not generate sufficient operating cash flow to
cover its 2002 scheduled principal payments.

GENERAL DATACOMM: Files for Chapter 11 Relief in Delaware
General DataComm Industries, Inc. (GDII) announced that it
received notice from its primary lenders that such lenders would
not commit to make further advances to the Company.

The Company does not have another source of capital available to
fund its operations. Accordingly, the Company and its domestic
subsidiaries have filed voluntary petitions for relief pursuant
to Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware.

GDC -- -- is a leader in the design,  
development, manufacture and service of network access
communications equipment supporting the convergence of voice,
video, and data over wideband and broadband connections for
major service providers, government, and enterprise networks.

GENERAL DATACOMM: Case Summary & 20 Largest Unsecured Creditors
Lead Debtor: General DataComm Industries, Inc.
             199 Park Road Extension  
             Middlebury, CT 06762  

Chapter 11 Petition Date: November 2, 2001

Court: District of Delaware

Bankruptcy Case No.: 01-11101-PJW

Judge: Peter J. Walsh

Debtor affiliates filing separate chapter 11 petitions:

      Entity                            Case No.
      ------                            --------
      General DataComm Inc.             01-11102
      DataComm Leasing Corporation      01-11103
      DataComm Rental Corporation       01-11104
      GDC Federal Systems, Inc.         01-11105
      GDC Naugatuck, Inc.               01-11106
      GDC Holding Company, LLC          01-11108
      General DataComm International
      Corporation                       01-11109
      General DataComm China, LTD       01-11110
      GDC Realty, Inc.                  01-11111
Type of Business: General DataComm Industries, Inc.(GDC) is a
                  worldwide provider of wide area networking and
                  telecommunications products and services. GDC
                  designs, assembles, markets, installs, and
                  maintains products that enable
                  telecommunications common carriers,
                  corporations, and government to build,
                  improve, and more cost effectively manage
                  their global telecommunication networks.

Debtors' Counsel: James L. Patton, Esq.
                  Joel A. Walte, Esq.
                  Michael R. Nestor, Esq.
                  The Brandywine Bldg.  
                  1000 West Street, 17th Floor  
                  PO Box 391  
                  Wilmington, DE 19899-0391  
                  302 571-6684

Total Assets: $64,000,000

Total Debts: $94,000,000

Debtors' 20 Largest Unsecured Creditors:

Entity                        Nature Of Claim     Claim Amount
------                        ---------------     ------------
US Assemblies, Georgia        Trade                 $9,583,215  
1075 Windward Ridge Parkway
Suite 100
Alpharetta, Georgia 30005
PO Box 90248
Raleigh, NC 27675
131 Laurel Hill Road
Verona, Virginia 24482
Fax: 607-729-8981

Continental Stock Transfer    Debentures            $2,179,000
2 Broadway
New York, New York 10004
Fax: 212-616-7619

Weisman, Cellar, Spett &      Trade                 $2,179,000
445 Park Avenue
New York, New York 10022
Fax: 212-371-5407

MTI Electronics               Trade                 $1,144,557
W133 N 5139
Campbell Drive
Menononee Falls
Wisconsin 53051-7031
Fax: 262-783-4959

State of California           Tax                     $651,422
Board of Equalization
205 East Street, Room 1100
New York, New York 10017
Fax: 212-697-5146

Primetech Electronics, Inc.   Trade                   $584,112
18107 Trans Canada Highway
Kirkland, Quebec
Canada H9J 3K1
Fax: 514-697-0059

Middlebury Tax Collector      Tax                     $583,403
PO Box 392
Connecticut 6762-0392
Fax: 203-758-8629

Arrow/Bell Components         Trade                   $561,554
800 North Main Street Ext.
Connecticut 06492-2419
Fax: 631-847-2101

Avnet Electronics Marketing   Trade                   $530,085
1157 Highland Ave.
Suite 207
Cheshire, Connecticut 06410
Fax: 978-532-9795
Avnet/Marshall Electronics
20 Sterling Drive
PO Box 0200
Connecticut 06492-0200
Fax: 978-532-9795

Jefferson Public Schools      Trade                  $396,483
Bo Lowery
PO Box: 34020
Louisville, Kentucky 40232
Fax: 502-485-3600

Sanmina, Inc.                 Trade                  $322,733
Interconnect Products
8 Presidential Ave.
Woburn, Washington 01801
Fax: 408-964-3658

MOP Limited Partnership       Tax                    $296,910
c/o The Randor Group
2200 Marcos Avenue
New Hycle Park
New York, New York 11042-2042
Fax: 516-775-8407

Todd Video Network            Trade                  $287,920
Management, Inc.
6545 Cecilia Circle
Minnesota 55439-2722
Fax: 612-941-0940

New Venture Technologies      Trade                  $271,471
Corp, (NTC)
176 South Road
Connecticut 06082-9854
Fax: 860-253-5315

Dynamic Detail, Inc.          Trade                  $254,861
Texas Operation
410 Forest Street
Massachusetts 01752
Fax: 508-624-4525

Timex Corporation             Trade                  $250,000
555 Christian Road
PO Box 310
Connecticut 06762
Fax: 203-346-5139

Naugatuck Tax Collector       Trade                  $218,371

PriceWaterhouseCoopers        Trade                  $181,936

Cherokee Electronica          Trade                  $173,925

Kanbay, Inc.                  Trade                  $130,007

Advanced MP Technology        Trade                  $129,324

Accutron, Inc.                Trade                  $125,909

NEC America, Inc.             Trade                  $125,302

GENESIS HEALTH: U.S. Trustee Demands Payment of Quarterly Fees
The United States Trustee Program (USTP), a component of the
United States Department of Justice, is implemented through a
number of United States trustees, each of which has
administrative oversight responsibilities in bankruptcy cases
within a certain geographic region.

The USTP is funded through a fee charged to bankruptcy estates
in Chapter 11 cases, based upon estate "disbursements" made
within each three-month period that the case is open. The USTP
does not receive funds from tax appropriations. 28 U.S.C.
section 1930(a)(6) originally provided that the quarterly fee
would be paid "until a plan is confirmed or the case is
converted or dismissed, whichever occurs first." In an effort to
increase the USTP's funding, Congress amended the statute in
January, 1996 by deleting the "until a plan is confirmed"
language. Thus, the amended statute required payment of
quarterly fees "until the case is converted or dismissed,
whichever occurs first."

In addition to the filing fee paid to the clerk, a quarterly fee
shall be paid to the United States trustee, for deposit in the
Treasury, in each case under chapter 11 of title 11 for each
quarter (including any fraction thereof) until the case is
converted or dismissed, whichever occurs first. The fee depends
on the amount of disbursements. For example, it shall be $250
for each quarter in which disbursements total less than $15,000;
$500 for each quarter in which disbursements total $15,000 or
more but less than $75,000; $750 for each quarter in which
disbursements total $75,000 or more but less than $150,000 ...
$8,000 for each quarter in which the disbursements total
$3,000,000 or more but less than $5,000,000; $10,000 for each
quarter in which disbursements total $5,000,000 or more.

The U.S. Trustee objected to confirmation of the Plan on the
basis that Genesis Health Ventures, Inc. & The Multicare
Companies, Inc. had failed to allocate expenses to the
individual Debtor entities and thus has not paid the full amount
of fees required by section 1930 of the Judicial Code. The U.S.
Trustee requested that the amount of fees payable under section
1930 be determined as part of the Confirmation Hearing in
accordance with section 1129(a)(12) of the Bankruptcy Code. The
U.S. Trustee demands payment of an estimated additional $3.7
million. The parties agreed to preserve the issue through the
establishment of an escrow account so that confirmation of the
Plan could proceed. Thus, the Plan was confirmed on September
20, 2001 and the effective date occurred on October 2, 2001.

At the confirmation hearing, Mr. Hager (Vice President and Chief
Financial Officer of Genesis) indicated that the corporate
expenses (which are "significantly greater" than the
expenditures to satisfy accounts payable and payroll) were not
included in the figures reported on the Supplemental Exhibits to
MOR 1 - (a), yet they are allocated to individual debtor-
entities for tax reporting purposes.

It strikes the UST that, if the Debtors had not allocated all of
their disbursements on the Supplemental Exhibits to MOR 1 - (a)
in monthly operating reports, the UST's quarterly fees assessed
on individual debtors have been understated because these are
based on the Debtors' self-reporting of its own expenditures in
satisfaction of accounts payable and payroll. The UST indicates
that it will charge according to the Debtors' yet-to-come
provision of an allocation of the corporate expenses to
individual debtors. In her Initial Brief in Support of Her
Position on the Debtors' Obligations to Pay Quarterly Fees, the
UST argues that amounts in addition to the $3.7 million are owed
based on an allocation of corporate overhead to the individual
Debtor entities.

The Debtors contest this. The economic effect of the differences
between the parties would be a potential increase in the fees
payable by the Debtors from $691,250 to over $4 million for the
last five quarters, with more to come. The increase in such fees
reduces the value of the common stock being issued to creditors
by an equal amount. On the other hand, it can increase the
United States Trustee System Fund which can be kept on deposit
or invested for keeping a balance over the long term. In the
Genesis/Multicare cases, it is a contest over millions of
dollars. For the UST, this also has significant ramifications
because nearly one-fourth of the nation's Chapter 11 cases are
filed in Delaware annually. A number of the "mega" cases filed
in Delaware (1) are jointly administered; (2) have centralized
cash management systems; and (3) may have accounting information
and/or reports which is consolidated. As such, quarterly fee
collection is a significant function of the USTP's Delaware

To win the contest, both sides argue vigorously over the
interpretation of "disbursements" for the purpose of determining
UST fees, which is the centerpiece of the whole issue.

Patricia A. Staiano, the UST for Region 3, asserts that the Term
"Disbursements" includes all of a Debtor's expenses. In the
instant case, the "disbursements" of any one of the Genesis or
Multicare debtors have two components. The first component is
expenditures in satisfaction of accounts payable and payroll, as
reflected on the Supplemental Exhibits to MOR - 1(a) in the
monthly operating reports. The second component of the
"disbursements" is the corporate expenses which (1) are shared
by two or more debtors and (2) are allocated to individual
debtors for tax reporting purposes.

In these cases, the Debtors have not allocated the corporate
expenses to each debtor-entity in their monthly operating
reports. Therefore, due to the Debtors' under-reporting of
disbursements, the UST has not used the corporate expenses in
calculating the quarterly fees owed by each of the Genesis and
Multicare debtors to date, the UST accuses.

The UST tells the Court that the Debtors should not be permitted
to cling to some argument, equitable or otherwise, that
quarterly fees should be calculated based upon some fraction of
a debtor's "disbursements" due to practical difficulties or
biased, subjective notions of what the size of the UST's
quarterly fee claim should be. The UST asserts that mere
existence of practical difficulties does not excuse the
obligation to pay quarterly fees, the UST asserts. The UST also
indicates that it has been willing to meet with Chapter 11
debtors and their professionals and work through practical
difficulties with respect to self-reporting and quarterly fee

"Further, the mere fact that these cases are jointly
administered does not affect creditors' rights," the UST
asserts, "This Court should reject any idea that centralized
cash management and/or accounting systems provide a vehicle for
jointly-administered debtors to evade quarterly fee liability."

The UST notes that, more generally, Chapter 11 case
administration will be affected. When a parent ("ABC") of a
subsidiary ("XYZ") carries an inter-company receivable on its
books for monies due and owing from XYZ, that accounting entry
is more than merely a placeholder. It is an estate asset of ABC
which the creditors of ABC (including the UST) may look to for
satisfaction of their claims, the UST asserts.

At bottom, the UST cautions, the Debtors' argument with respect
to quarterly fees - no check, no "disbursement" - threatens to
take the Court down the "slippery slope" to a point where two
worlds are created in jointly-administered cases with
centralized cash management systems: in one world, the UST will
receive information and get paid based upon voodoo accounting;
in the other world, creditors and potential purchasers will
receive information and/or get paid based upon GAAP. The UST
urges the Court to reject the Debtors' invitation to take their

The UST also argues that, for purposes of calculating
"disbursements," the question of whether a debtor or a third
party writes the check is irrelevant.

"Apparently, the Debtors want this Court to assess quarterly fee
liability to the 'owner' of each of the Debtors' disbursement
accounts and include only those payments made by individual
debtors through their respective imprest cash accounts," the UST
tells Judge Wizmur, "In other words, the Debtors contend that,
if a particular debtor does not write a check, no 'disbursement'
is made, and quarterly fees should be calculated accordingly."
The UST notes that the Debtors make this argument even though
(1) many (if not all) of the debtor-entities have active
operations that require the expenditure of funds to sustain, (2)
the Debtors break out expenses on Supplemental Exhibits to MOR 1
- (a) on an entity-by-entity basis and (3) the Debtors break out
revenue and expenses on an entity-by-entity basis for tax
reporting purposes, but a number of courts have considered the
Debtors' argument and rejected it, as in In re Central Copters,
Inc., 226 B.R. 447 (Bankr. D. Mont. 1998), In re Flatbush
Associates, 198 B.R. 75 (Bankr. S.D.N.Y. 1996), a case which the
Debtors have cited in their papers on the issue of escrowing
funds, as well as in the United States Trustee v. Hays Builders,
Inc. (In re Hays Builders, Inc.), 144 B.R. 778, 780 (W.D. Tenn.

The UST asserts that its interpretation of "disbursements" as
including all of a debtor's operating expenses is consistent
with the legislative history. Quarterly fees, the UST notes, are
a type of "user tax." Jamko, 240 F.3d at 1316.

In conclusion, the UST requests that the Court issue an order
awarding the UST the sum total reflected on UST Exhibits 4 and 5
pending a further hearing to determine the amount of quarterly
fees due with respect to the corporate expenses.
(Genesis/Multicare Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

GENTIA SOFTWARE: Considers Seeking Protection from Creditors
Gentia Software plc (OTCBB: GNTIY), a leading provider of
intelligent analytical applications for enterprise-wide
deployment, reported its results for the third quarter, ended
September 30, 2001.

Gentia's revenues for the third quarter of 2001 totaled $1.1
million, compared with revenues of $1.8 million in the second
quarter of 2001 and $2.6 million in the year-ago quarter.

Costs for the quarter totaled $2.3 million. This compares with
costs of $3.9 million in the second quarter, and $12.3 million
in the year-ago quarter. Gentia reported a net loss for the
quarter of $1.1 million.  This compares with a loss of $2.1
million for the second quarter of 2001 and $9.7 million for the
year-ago quarter.

"Given the disappointing results for the third quarter, the
company is facing a cash crisis and is urgently pursuing
discussions with potential purchasers of its business.  In the
meantime, it and its subsidiaries are instituting formal steps
to seek protection from creditors," said Steve Fluin, Chief
Executive Officer, Gentia Software.

Gentia Software (OTCBB: GNTIY) is a leading supplier of
intelligent analytical applications for enterprise performance
management and customer relationship management.  The Company's
product suite sustains and improves business performance by
improving the quality of customer interactions and driving
strategy and performance management.  Gentia incorporates unique
technology and the world-class consulting expertise of partners
including IBM, NCR, PWC and KPMG. Gentia offers best-in-class
solutions for Global 2000 companies including Volvo, Credit
Suisse First Boston and Motorola.  For more information, visit

INNOVATIVE CLINICAL: Research Units to Merge with NeuroScience
Innovative Clinical Solutions, Ltd. (ICSN) announced that it has
entered into a definitive agreement to merge Clinical Studies,
Ltd. (CSL), its Clinical Studies and Healthcare Research
subsidiary, with a subsidiary of Comprehensive NeuroScience,
Inc., a privately held clinical knowledge company focused on the
development, evaluation and appropriate use of drugs used to
treat neuropsychiatric illnesses.  

The merger will result in a new healthcare research organization
with significant expertise in the central nervous system (CNS)
area and combined projected revenue for 2001 of approximately
$50 million.  Innovative Clinical Solutions, Ltd. (ICSL) will
remain an independent, public company with substantial stock
ownership in Comprehensive NeuroScience, Inc., which will remain
a private company.

The combined business will provide multi-therapeutic, Phase I-IV
clinical research services as well as an array of medical
information technology services to the pharmaceutical and
biotechnology industries.  It will be the nation's largest CNS
(central nervous system) focused clinical trials company with 34
research sites and over 126 Physician Investigators in 11 states
nationwide.  The company's combined experience consists of over
2,600 clinical trials completed and over 36,000 patients
enrolled.  While the company's specialty will be CNS, it will
also conduct research in areas of general medicine including
Women's Health, Endocrinology, and Pain Management as well as
Phase I studies.

The combined business's Medical Information Technologies
Division will consist of four groups:  (1) the Expert Knowledge
Group which develops and disseminates treatment guidelines based
on the scientific survey of expert physician opinion, (2) the
Health Services Group which provides strategic consultation and
focused educational services to pharmaceutical companies, (3)
the Pharmacoeconomic Research Group which develops and manages
patient registries, and conducts Phase IV studies of outcomes
and cost-effectiveness, and (4) the Behavioral Pharmacy
Management Group which provides a new service for Health Plans
aimed at improving the quality and cost effectiveness of
prescribing practices.

"This merger will have a strong impact on the bio-pharmaceutical
industry," said Michael Heffernan, President and Chief Executive
Officer of ICSL.  "It allows the combined companies to achieve
the necessary 'critical mass' that has been lacking to date in
this segment of the industry.  The merged company will have
unparalleled central nervous system expertise and therapeutic
depth.  The linkage of Comprehensive NeuroScience's clinical
scientists and opinion leaders with ICSL Clinical Studies' site
management infrastructure will provide significant value to our

"We are very excited to contribute to the revolutionizing of the
clinical trials enterprise by providing a powerful presence in
CNS," states John Docherty, M.D., President and Chief Executive
Officer of Comprehensive NeuroScience, Inc.  "Our goal is to
accelerate the drug development process by offering expertise
and services for each facet of the treatment development and
knowledge process and to improve the care of patients.  ICSL
Clinical Studies' national geographic presence and multi-
therapeutic experience adds breadth and depth to our clinical
research presence while enhancing our post-clinical trial,
evaluative, and knowledge transfer services with ICSL Healthcare
Research's pharmacoeconomics expertise.  With such diversified
service offerings designed to gather and disseminate quality
research data, the new company will be a valuable partner to the
pharmaceutical industry."

John Docherty, M.D., will continue to serve as President and
Chief Executive Officer of Comprehensive NeuroScience.  Gary
Gillheeney, current Chief Financial Officer and Chief Operating
Officer of ICSL Clinical Studies and ICSL Healthcare Research,
will be the COO and CFO of Comprehensive NeuroScience.  Michael
Heffernan will serve on the Board of Directors for Comprehensive
NeuroScience.  The combined business will be headquartered in
White Plains, NY, with an operation center based in Providence,

The closing of the merger is subject to a number of conditions,
including accounting due diligence, a satisfactory restructuring
or replacement of CSL's debt facility, and shareholder approval.

Innovative Clinical Solutions, Ltd., headquartered in
Providence, Rhode Island, provides services that support the
needs of the pharmaceutical and managed care industries.  The
company's components include ICSL Clinical Studies, ICSL
Healthcare Research and ICSL Network Management.  ICSL Clinical
Studies' site management infrastructure has over ten years of
experience conducting clinical trials in multiple therapeutic
areas including Central Nervous System, Women's Health, Asthma
and Allergy, and General Medical indications.  The ICSL
Healthcare Research division provides pharmacoeconomics and
outcomes research solutions to the pharmaceutical and
biotechnology industries with over 100 peer-reviewed
publications and presentations.  ICSL Network Management offers
managed care functions for single-specialty physician networks
in the areas of Chiropractic, Podiatry, Dermatology, Pulmonology
and Urology.

Comprehensive NeuroScience, Inc. of White Plains, New York, is
dedicated to expediting the development and appropriate use of
new products and services to relieve neuropsychiatric illnesses.  
Comprised of three complementary divisions (Drug Discovery,
Clinical Trials, and Medical Information Technologies),
Comprehensive NeuroScience, Inc. supports the drug and treatment
development process from discovery through clinical trial
evaluation to the synthesis and dissemination of clinically
actionable medical information.  The company has 12 clinical
research sites that conduct Phase II-IV clinical trials in the
central nervous system area.  Their management team consists of
world-renowned CNS thought leaders who disseminate their
psychiatric/neurological expertise through publications,
practice guidelines, conferences, and advisory boards.

INPRIMIS: Datawave Will Put Hold on Plan of Arrangement Talks
Inprimis Inc. (OTCBB:INPM) announced that it received a notice
from Datawave Systems, Inc. (CDNX:DTV.V) (OTCBB:DWVSF) relating
to the proposed combination of the two companies. The notice
states that Datawave will require further assurances from
Inprimis that the company resulting from the proposed business
combination will meet the NASDAQ's SmallCap Market new listings
criteria. The notice was sent in reaction to the delisting of
Inprimis stock from the NASDAQ NMS.

In the notice, Datawave requests that Inprimis provide adequate
assurances on or prior to November 15, 2001 that a NASDAQ
listing will be achieved by the combination. The notice further
states that, pending receipt of such assurances, Datawave will
put on hold the negotiation of the Plan of Arrangement
contemplated by the non-binding Letter of Intent entered into by
Inprimis, Datawave and Cash Card Communications Corp. Ltd. ("C-
4") on October 12, 2001.

Inprimis is engaged in ongoing discussions with Datawave and C-4
regarding restructuring the proposed combination of Inprimis and
Datawave with a view towards ensuring that the resulting company
will meet the NASDAQ's SmallCap Market new listings criteria.

Inprimis Inc., through its wholly owned subsidiary, Inprimis
Technologies Inc., provides product design services and the
technology to help consumer electronics companies, cable
operators, Internet service providers and telecommunications
companies bring devices to market quickly and cost effectively.
Headquartered in Boca Raton, Fla., the company develops product
designs, customizes embedded system software and offers systems
engineering and manufacturing consultation services for
interactive-television, video-on-demand, Internet-access and
other convergent-technology appliances. Inprimis's television
set-top box designs are currently used by Philips Electronics
and LodgeNet Entertainment. The company maintains strategic
relationships with Liberate, National Semiconductor, Conexant,
Sigma Designs and others. For more information, call (561) 997-
6227 or visit the company's Web site at

INTEGRATED HEALTH: Seeks to Transfer Woodridge Facility in Texas
As previously reported, the Woodridge Convalescent Center d/b/a
Integrated Health Services at Woodridge, located at 1500 Autumn
Drive, Grapevine, Texas, is among the 11 Facilities covered in
Integrated Health Services, Inc.'s motion to reject leases. The
Facility failed to generate a positive cash flow (EBITDA less
capital expenditures) for the year 2000. (EBITDA refers to
"Earnings Before Interest, Taxes, Depreciation and
Amortization.") The Facility's year 2000 annualized pro forma
cash flow was negative $488,535. Therefore, the Facility is of
little or no value to the Debtors' estates.

The Rejection motion was not opposed by the landlord Baron
Investments, Ltd., successor in interest to Wedgwood Nursing
Home, Inc. which entered into the lease with Debtor Woodridge
Convalescent Center, Inc. (Transferor) in 1985 when the Facility
was known as the Grapevine Nursing Home.

Since the date the Rejection Motion was filed, the Debtors and
the New Operator successfully concluded the negotiation of the
terms of the Transfer Agreement by and between (i) Debtor
Woodridge Convalescent Center, Inc. (as Transferor), (ii)
Centers for Long Term Care of Woodridge, Inc. (as Transferee and
New Operator), and (iii) Baron Investments, Ltd. (Landlord),
which provides for the transfer to the New Operator, of the
Facility. Pursuant to the Transfer Agreement, the New Operator
will take over the operation of the Facility and the Lease will
be terminated. In addition, the Transfer Agreement governs: (i)
the transfer of Transferor's property located at the Facility to
the New Operator, including, but not limited to inventory,
furniture and equipment; (ii) the transfer of Resident Trust
Funds; (iii) the employment of Transferor's employees; (iv) the
disposition of unpaid accounts receivable; and (v) access to

With the provision of the Transfer Agreement that the Lease will
terminate as of the Effective Time, the Debtors have agreed to
withdraw their Rejection Motion as of the date that the parties
to the Transfer Agreement conclude a closing of the transfer of
the Facility. Accordingly, the Rejection Motion will be
adjourned to a date which falls after the hearing date for this
Motion to allow the parties time to conclude the transactions
which are contemplated in this motion.

Since the New Operator will not accept an assignment of the
Transferor's Medicare and Medicaid Provider Agreements, the
Transferor has not and will not move to assume them.

Counsel for the Department of Justice has requested that the
Debtors formally reject the Transferor's Medicare provider
reimbursement agreement. Accordingly, Debtors seek the Court's
approval and authorization to reject the Transferor's Medicare
Provider Agreement pursuant to section 365 of the Bankruptcy

The New Operator acknowledges and agrees that it is assuming all
risk arising out of New Operator's failure to obtain new
Medicare and/or Medicaid Provider Agreements with respect to the
Facility. The New Operator has also agreed that it will not
discharge, or take any action to cause the discharge of any
Medicare or Medicaid beneficiaries who are residents or patients
of the Facility immediately prior to the Effective Time by
reason of New Operator's inability to bill Medicare or Medicaid
with respect to such residents or patients, and to indemnify
Transferor and IHS from and against all damages, claims, losses,
penalties, liabilities, actions, fines, costs and expenses
(including attorney's fees and expenses), incurred by the
Transferor which arise out of the New Operator's failure to
accept assignment of the Medicare and/or Medicaid Provider
Agreements including the discharge from the Facility of any
Medicare or Medicaid beneficiary who was a resident or patient
of the Facility immediately prior to the time that Transferor
ceases to hold a Medicare Provider Agreement and/or Medicaid
Provider Agreement.

The Transfer Agreement further acknowledges that all rent which
was due and payable by the Transferor from the Petition Date
through September 30, 2001, has been paid, and that Transferor
is entitled to remain in possession and operate the Facility
without any obligation for the payment of rent until the
Effective Time has occurred, or until possession and operation
of the Facility have been transferred to the New Operator or
another qualified operator pursuant to an agreement reasonably
acceptable to Transferor.

Since the New Operator has declined to assume any vendor,
service or other agreements to which Transferor or IHS is a
party, Transferor does not seek authority to assume and assign
any such contracts.

The Debtors believe that it is sound decision to transfer the
Facility to the New Operator considering the results this would
entail: the divestiture of an unprofitable facility that the
Debtors have been unable to turn around, and the elimination of
significant ongoing administrative liabilities. The Debtors
submit that the transfers of property and the actions which are
described in the Transfer Agreement are prudent and appropriate,
and that entering into the Transfer Agreement represents an
exercise of sound business judgment which should be approved and
authorized by the Court.

Accordingly, the IHS Debtors move the Court for an order,
pursuant to sections 105(a), 363(b) and 365 of the Bankruptcy
Code, and Rules 6004 and 6006 of the Bankruptcy Rules, (a)
approving and authorizing the Lease Termination and Operations
Transfer Agreement, dated as of October 9, 2001 (the Transfer
Agreement), by and between (i) Debtor Woodridge Convalescent
Center, Inc. (as Transferor), (ii) Centers for Long Term Care of
Woodridge, Inc. (as Transferee and New Operator), and (iii)
Baron Investments, Ltd. (Landlord), which provides for the
transfer to the New Operator, of the Woodridge Convalescent
Center d/b/a Integrated Health Services at Woodridge (the
Facility) and (ii) authorizing the Debtors to reject the
Transferor's Medicare number and provider reimbursement
agreement. (Integrated Health Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   

LERNOUT & HAUSPIE: Court Sets Nov. 26 Auction for Speech Assets
Lernout & Hauspie Speech Products N.V. (EASDAQ: LHSP, OTC:
LHSPQ), L&H Holdings USA, Inc. and their affiliates, a world
leader in speech and language technology, products and services,
wishes to advise creditors and parties-in-interest that on
October 29, 2001, the United States Bankruptcy Court for the
District of Delaware approved bidding procedures and an auction
date with respect to the L&H Group's planned auction of the
assets of its Speech and Language Technologies Business (the SLT

The deadline for the submission of bids for the SLT Assets is
November 19, 2001 at 4:00 p.m. EST, and the auction for the SLT
Assets is scheduled to be held in New York City on November 26,
2001, commencing at 1:00 p.m. EST. The bidding procedures set
forth detailed information regarding how and when bids for the
SLT Assets must be made, as well as minimum requirements that
must be satisfied before potential bidders will be considered
for participation in the auction.

L&H is a global leader in advanced speech and language solutions
for vertical markets, computers, automobiles,
telecommunications, embedded products, consumer goods, and the
Internet. The company is making the speech user interface (SUI)
the keystone of simple, convenient interaction between humans
and technology. The company provides a wide range of offerings,
including: customized solutions for corporations; core speech
technologies marketed to OEMs; end user applications for
continuous speech products in vertical markets; and document
creation and linguistic tools. L&H's products and services
originate in the following basic areas: automatic speech
recognition (ASR), text-to-speech (TTS), search and retrieval
and audio mining. For more information, please visit L&H on the
World Wide Web at

L&H is a trademark of Lernout & Hauspie Speech Products N.V. in
the United States and/or other countries. All other product
names or trademarks referenced herein are trademarks of their
respective owners.

LERNOUT & HAUSPIE: Speechworks Offers $12.5M for Speech Assets
Lernout & Hauspie Speech Products N.V. and L&H Holdings USA,
Inc., Debtors and Sellers, ask Judge Wizmur to:

       (i) enter an order approving the bidding procedures the
payment of a break-up fee and expense reimbursement, and certain
exclusivity provisions; and

       (ii) enter of an order approving the Asset Purchase
Agreement by and among L&H NV, Holdings, certain non-debtor
affiliates of L&H NV and Holdings, and SpeechWorks
International, Inc., dated as of October 22, 2001, subject to
higher or otherwise better offers;

       (iii) authorizing the sale of substantially all of the
assets related to the Sellers' Speech and Language Technologies
Business to the highest or otherwise best bidder or bidders
determined in accordance with the Bidding Procedures; and

       (iv) authorizing the assumption and assignment of certain
executory contracts and unexpired leases of non-residential real

                        The Sale Assets

The SLT Assets include, without limitation, equipment,
inventory, intellectual property and other intangible property,
permits, receivables, license agreements and other executory
contracts, and goodwill that are associated with eight separate
asset groups that together comprise the SLT Assets. These eight
asset groups are:

     (i) the Text-to-Speech Asset Group;

    (ii) the L&H Speech Processing/Dialog (and Automotive) Asset    

   (iii) the Dragon Speech Processing/Dialog Asset Group (which
         includes the M-REC speech recognition engine);

    (iv) the ISI Speech Processing/Dialog Asset Group;

     (v) the Intelligent Content Management Asset Group;

    (vi) the Audiominig Asset Group;

   (vii) the Knexyx Asset Group; and

  (viii) the Machine Translation Asset Group.

The Debtors/Sellers tell Judge Wizmur that, subject to her
approval, they have entered into the Agreement, pursuant to
which the Sellers have agreed to sell two of the SLT Asset
Groups (the Text-to-Speech Asset Group and the L&H Speech
Processing/Dialog (and Automotive) Asset Group) to the
Purchaser, subject to higher or otherwise better offers. The SLT
Assets, excluding the Purchaser Assets, are referred to in this
Motion as the "Other Assets".

After extensive marketing by the Sellers, with the assistance of
their investment banker, Credit Suisse First Boston, L&H NV and
Holdings believe that, based on the current economic environment
and subject to an auction process, the aggregate purchase price
offered by the Purchaser for the Purchaser Assets is the highest
and best value achievable for the benefit of the estates. L&H NV
and Holdings have also extensively marketed the Other Assets,
and have received a number of indications of interest, both
written and verbal, with respect to the Other Assets. Certain of
these indications of interest contemplate offers for some or all
of the Other Assets together with some or all of the Purchaser
Assets. Therefore, L&H NV and Holdings believe that the proposed
sale of the Purchaser Assets to the Purchaser may stimulate
interest by other parties for the purchase of the largest
possible aggregation of SLT Assets at the highest price and best
terms available.

At the auction to be held in accordance with the terms of the
Bidding Procedures, the Sellers will auction all of the SLT
Asset Groups, including the Purchaser Assets, to the highest or
otherwise best bidder or bidders. Bidders will be able to bid on
any aggregation of SLT Asset Groups, but only on complete SLT
Asset Groups. L&H NV and Holdings hereby seek approval of the
Bidding Procedures that it believes will ensure that the maximum
value achievable is obtained for all of the SLT Assets. The
Sellers negotiated to allow the Agreement with the Purchaser,
subject to the payment of a break-up fee, to serve as a
"stalking horse" bid for the Purchaser Assets that other
potential bidders can use as a starting point for additional
offers for the Purchaser Assets and, potentially, for the Other
Assets as well.

                   The SLT Business

The SLT Business is comprised of the SLT Assets owned and
operated by L&H NV, Holdings, and the other Sellers. The SLT
Business constitutes a substantial part of the remaining core
assets of the L&H Group. The SLT Business is a leading
developer, licensor, and provider of conversational user
interface technologies, systems, and products to customers in
multiple markets. As of October, 2001, the SLT Business employed
approximately 600 full-time employees around the world,
including almost 400 research and product development engineers.

B. Products and Services. The SLT Business develops and sells a
wide variety of speech and language technologies, systems, and
products that incorporate automatic speech recognition, text-to-
speech, intelligent content management, and other capabilities.
These technologies enable telecommunication systems, computing
equipment, and mobile communications devices to effectively hear
what users say, speak to users, carry on conversations,
recognize users by their voice, and understand the information
in the computer or on the web in order to find what users need
and deliver it in the most natural and efficient way. The SLT
Business products and services are capable of operating across
multiple languages and in a variety of environments.

L&H NV and Holdings believe, in their business judgment, that
the Sellers will receive maximum value from the Purchaser Assets
if they are sold on the terms set forth in the Agreement,
subject to higher or otherwise better offers in accordance with
the Bidding Procedures, and if the Other Assets can also be sold
at the Auction to the highest and best bidder or bidders.

                     Necessity for Sale

Since the commencement of these chapter 11 cases, L&H NV's and
Holding's primary objectives have been to stabilize operations,
develop a strategic, long-term business plan built around core
businesses, and maximize the value of their assets for the
benefit of their estates. In their business judgment, L&H NV and
Holdings have concluded that it is in the best interests of
their estates to undertake the sale of the SLT Business.

The sale of the Purchaser Assets pursuant to the Agreement will
gross approximately $10 million in cash plus an equity interest
in the Purchaser that has an approximate value of $2.5 million,
for an aggregate of $12.5 million in value for the Purchaser
Assets. The proceeds of the sale of the Purchaser Assets, after
payment of certain costs and expenses, will be utilized by L&H
NV and Holdings to satisfy their post-petition obligations and
thereafter fund distributions to pre-petition creditors. L&H NV
and Holdings believe that the prompt sale of the Purchaser
Assets, on terms and conditions no less favorable than those set
forth in the Agreement, and the potential sale of the Other
Assets as a result of the Auction, is critical to ensure that
the value of the SLT Business is maximized for the benefit of
L&H NV's and Holdings' estates and their creditors.
(L&H/Dictaphone Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  

PERSONNEL GROUP: Seeking New Financing to Satisfy Maturing Debts
Personnel Group of America, Inc. (NYSE:PGA), a leading
information technology and professional staffing services
company, announced its results for the third quarter ended
September 30, 2001.

For the third quarter, total revenues were $173.6 million, down
from $194.4 million in the second quarter this year and $224.0
million in the third quarter last year. PGA's IT Services
practice contributed $103.9 million of revenues in the third
quarter, while the Company's Commercial Staffing unit added
$69.6 million.

Exclusive of restructuring and rationalization charges, the
Company lost $0.9 million during the quarter, down from net
income of $3.7 million last year. After the restructuring and
rationalization charges, the Company reported a net loss of $1.2
million for the quarter.

The Company recorded restructuring and rationalization charges
of $0.5 million ($0.3 million after tax, related primarily to
the structural harmonization of operations, company wide, and
further workforce reductions. Since the beginning of the year,
the Company has reduced its permanent workforce by more than

Commenting on the third quarter results, PGA's Chief Executive
Officer Larry L. Enterline said, "An already difficult economic
environment worsened in the face of the terrible events of
September 11, and our third quarter results reflected the
combination of these events and the ongoing economic slump
impacting our segment. Our operations have remained strong,
however, and we have continued to generate positive cash
earnings in spite of the soft economy. We are continuing to
focus on our infrastructure to align our cost base with our
revenue expectations. Additionally, our marketing and sales
initiatives have produced several exciting wins, the most
notable being the State of Georgia vendor management system
project - a first in the use of web technology to automate
hiring processes across multiple state agencies. We are also
working hard to explore financing alternatives for the Company
in anticipation of the June 2002 expiration of our current
revolving credit facility."

"I particularly want to recognize the professionalism and
remarkable composure demonstrated by our New York companies
under the severest of conditions. All of PGA's offices in the
area reopened within a day of the tragedy, and our local
operators have shown purposeful determination in returning to
their normal business routines. The resilience, calm and genuine
caring displayed by our people is something I am very proud of."

James C. Hunt, PGA Chief Financial Officer, added, "As we have
indicated throughout the year, we are continuing to make
progress on our balance sheet, and reduced our outstanding
revolving credit balance by $18.0 million during the third
quarter to $120.0 million. Our days sales outstanding (DSO) of
54 days at the end of the third quarter were essentially flat
with the end of the second quarter (and down from 56 days at the
end of the third quarter last year). The Company is improving
its aged account balances in a difficult environment and these
improvements directly benefited our debt repayment objectives.
Additionally, after a $1.5 million payment in October, the
Company has completed its earn out obligations from past

"Considering the weakened economic conditions, there today
exists, however, greater uncertainty of the Company's ability to
maintain strict compliance with certain financial covenants in
the existing credit facility. We are doing everything we can to
stay in compliance. Additionally, we are working hard to
favorably refinance the Company in anticipation of the June 2002
expiration of the current revolving credit facility, and have
had discussions with numerous parties, including our existing
lenders, to evaluate our financing alternatives. Moving ahead,
our focus on execution within our operations, on financial
fundamentals including debt reduction, close monitoring of all
spending, and on refinancing initiatives will continue

                Information Technology Services

IT Services revenues in the third quarter decreased 14% to
$103.9 million from $120.8 million in the second quarter of this
year, as declines in corporate IT spending continued to reduce
the demand for PGA's billable consultants. IT gross margins were
25.2% in the third quarter, down slightly from 25.6% in the
second quarter this year, as the result of general margin
pressures attributable to the challenging IT business
environment. Operating income margins were 6.6% before
restructuring and rationalization charges, down from 7.1% in the
second quarter. IT Services had approximately 2,800 billable
professionals on assignment at the end of the third quarter,
down from approximately 3,200 at the end of the second quarter.

                      Commercial Staffing

Revenues for PGA's Commercial Staffing unit in the third quarter
decreased 5% to $69.6 million from $73.5 million in the second
quarter of this year. Commercial Staffing permanent placement
revenues in the third quarter were 5.2% of total revenues, down
from 6.8% in the second quarter of this year. Primarily as the
result of the softer permanent placement business, gross margins
declined to 25.8% in the third quarter, down from 28.4% in the
second quarter. Operating income margins were 5.9% before
restructuring and rationalization charges, also down from 7.3%
in the second quarter this year.

Personnel Group of America, Inc. is a nationwide provider of
information technology consulting and custom-software
development services; high-end clerical, accounting and other
specialty professional staffing services; and technology systems
for human capital management. The Company operates through a
network of proprietary brand names in strategic markets
throughout the United States.

PHAR-MOR: Hires Atlas Partners as Agent to Dispose of 65 Stores
Phar-Mor, Inc. obtained approval from the United States
Bankruptcy Court, Northern district of Ohio, for the retention
of Atlas Partners, LLC as its Special Real Estate Agent to
handled the disposition of the 65 stores that it has announced
it is closing as part of its reorganization plan.  The Court
also authorized Atlas to retain CB Richard Ellis, Inc. as  
Special Marketing Agent to assist in the disposition process.

A special web site has been set up to provide immediate access
to the information that prospective purchasers of the leaseholds
will want at  This site has copies of  
all of the leases that are for sale, as well as numerous
subleases with other users that occupy some portion of some
leased locations.  Due to the very fast Going Out Of Business
sale that the liquidators are running, bids for the leases will
be due on Monday, November 26th, and an auction will be held in
Youngstown, OH and telephonically on Tuesday, November 27th.

Atlas Partners is a Chicago based real estate consulting firm
whose registered slogan is "The real estate department for
companies that do not want to be in the real estate business ...
but are."*  The firm represents businesses where real estate is
either part of the problem or part of the solution.

CB Richard Ellis is the largest vertically integrated commercial
real estate services firm in the world. Headquartered in Los
Angeles with over 10,000 employees -- and nearly 250 principal
offices in 44 countries -- it offers the most comprehensive
services portfolio in the industry.

Phar-Mor is a retail drug store chain operating 139 stores under
the names "Phar-Mor," "Pharmhouse" and "The Rx Place" in 24
states.  Phar-Mor's online store is accessible at
http://www.pharmorwebrx.comand through the company's Web site  

On September 24, 2001, Phar-Mor filed for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code.  On October 3,
2001, the Company announced that it would close 65 of its

PHOTOCHANNEL INC: Parent Exits Online Photofinishing Business
PhotoChannel Networks Inc. (CDNX: PNI; OTC-BB: PHCHF), a global
digital imaging network company, at the request of the Canadian
Venture Exchange, wishes to clarify the news release issued
November 1, 2001, announcing that it's U.S. subsidiary,
PhotoChannel, Inc, has filed for Bankruptcy, under Chapter 7
with the United States Bankruptcy Court, District of
Connecticut. The total liabilities of the subsidiary were in
excess of CDN$2.5 million with realizable assets of less than

Mr. Peter Scarth, CEO & Chairman of PhotoChannel Networks Inc.
states, "PhotoChannel Networks Inc is no longer interested in
pursuing a direct to consumer online photofinishing business.
The subsidiary was in this business. A considerable amount of
time and money was invested in this subsidiary. This business
failed. As such, the filing of Chapter 7 was the only realistic
business decision available to the parent company. PhotoChannel
Networks Inc will continue to trade on the CDNX under the symbol
PNI, and expects to resume trading on the OTC-BB soon."

- All Directors of the Company continue to act for the Company,
and no resignations from the Directors have been received.

- The Company continues to be in good standing with its transfer
agent, Computershare Investor Services.

- With this Chapter 7 filing the subsidiary, PhotoChannel, Inc.,
will cease to operate and no longer carry on business.

- The Company knows of no reasons why the U.S. subsidiary's
filing for Chapter 7 under the United States Bankruptcy Act
would adversely affect the parent company, PhotoChannel Networks

PhotoChannel is a technology producer and integrated provider of
services enabling retailers and other members of the
PhotoChannel Network to meet the needs of their film and digital
photography customers. The Company has created and manages the
PhotoChannel Network environment whose focus is delivering photo
e-processing orders from origination to fulfillment under the
control of the originating retailer. Additional information is
available at

PILLOWTEX CORP: Hires Duane Morris to Sue Westpoint Stevens
In connection with their dispute with WestPoint Stevens, Inc.,
Pillowtex Corporation desire to employ and retain Duane,
Morris & Heckscher LLP as special counsel.

John F. Sterling, Vice President and General Counsel of
Pillowtex Corporation, tells Judge Robinson that Duane Morris
has vast experience in the area of debtors', creditors' and
equity security holders' rights, business reorganizations and
bankruptcy law.  Thus, the Debtors are convinced that the
retention of Duane Morris will contribute greatly to the
efficient representations of the Debtors in this matter.

The Debtors will look to Duane Morris to render these
professional services in connection with the WestPoint Stevens

    (a) Investigation and pursuit of claims against WestPoint

    (b) Initiating, and representing the Debtors in connection
        with, a potential adversary complaint against WestPoint

Duane Morris has stated its desire and willingness to act as the
Debtors' special counsel in this matter, Mr. Sterling reports.
The firm will charge for its legal services on an hourly basis
and will seek reimbursement of its actual and necessary

Michael R. Lastowski, a partner in the Duane Morris firm, lists
the principal attorneys and paralegals designated to represent
the Debtors and their current standard hourly rates:

        Michael R. Lastowski      Partner         $375
        Richard W. Riley          Partner          290
        William K. Harrington     Associate        245
        Ralph N. Sianni           Associate        200
        John W. Weiss             Associate        175
        Carolyn B. Fox            Paralegal        110
        Shelley A. Hollinghead    Paralegal        110

Mr. Lastowski assures the Court that, as far as he has been able
to ascertain:

    (1) The partners, counsel, and associates of Duane Morris do
        not have any connection with the Debtors, the Debtors'
        material secured lenders, other parties in interest, and
        the Debtors' largest unsecured creditors as identified
        in pleadings filed with their chapter 11 petitions; and

    (2) Duane Morris does not represent any other entity having
        an adverse interest in connection with these cases.

Thus, Mr. Lastowski swears, Duane Morris is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
(Pillowtex Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., 609/392-0900)    

POLAROID CORP: Asks Court to Approve PIDS $1.3MM Break-Up Fee
PIDS Holdings has expended, and likely will continue to expend,
considerable time, money and energy pursuing Polaroid
Corporation's Asset Sale, David S. Kurtz, Esq., at Skadden,
Arps, Slate, Meagher & Flom, in Chicago, Illinois, tells the
Court.  Furthermore, Mr. Kurtz adds, PIDS Holdings has engaged
in extended arm's-length and good faith negotiations.  According
to Mr. Kurtz, the amount of due diligence conducted by PIDS
Holdings stretches back to the summer of 2001.

To compensate PIDS Holdings for its time, energy and resources
expended as well as for serving as a "stalking horse" bid, the
Debtors seek the Court's authority to pay PIDS Holdings up to
$1,300,000 in the event it is not the Successful Bidder.
Mr. Kurtz informs Judge Walsh that the Termination Fee will not
be paid until the earlier of:

    (y) consummation of any Acquisition Proposal or other sale
        of the Assets, or

    (z) 30 days after the acceptance by Polaroid of an
        Acquisition Proposal.

The Debtors explain that the Bidding Protections were a material
inducement for, and a condition of, PIDS Holdings' entry into
the Agreement.  Accordingly, the Debtors contend the Bidding
Protections are fair and reasonable in view of, among other

    (a) the intensive analysis, due diligence investigation, and
        negotiation undertaken by PIDS Holdings in connection
        with the Asset Sale, and

    (b) the fact that the efforts of PIDS Holdings have
        increased the chances that the Debtors will receive the
        highest and best offer for the Assets, to the benefit of
        the Debtors, their estates, their creditors, and all
        other parties-in-interest.

Unless the Court authorizes the payment of the termination fee,
Mr. Kurtz informs Judge Walsh that PIDS Holdings is not willing
to commit to hold open its offer to purchase the Assets under
the terms of the Agreement.  If that happens, Mr. Kurtz says,
the Debtors will lose the opportunity to obtain what they
believe to be the highest and best, and perhaps the only,
available offer for the Assets.

On the other hand, if the Court approves the payment of the
termination fee, the Debtors are ensured of the sale of the
Assets to a contractually committed bidder at a price they
believe to be fair while.  At the same time, Mr. Kurtz notes,
Bidding Protections also provide the Debtors with the potential
of even greater benefit to the estates.

Thus, the Debtors ask Judge Walsh to authorize the payment of
the Termination Fee pursuant to the terms and conditions of the
Agreement. (Polaroid Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

PROTECTION ONE: S&P Knocks Ratings to Low-B and Junk Levels
Standard & Poor's lowered its corporate credit and senior
unsecured debt ratings on Protection One Alarm Monitoring Inc.
to single-'B' from single-'B'-plus and its subordinated note
ratings to triple-'C'-plus from single-'B'-minus. The outlook
remains negative.

The downgrade is based on deteriorating operating performance
resulting in weaker credit protection measures. Topeka, Kansas-
based Protection One Alarm Monitoring is the second largest
security alarm company in the U.S., providing monitoring and
related security services to nearly 1.3 million customers in
North America.

The ratings on Protection One take into consideration a highly
leveraged financial profile and the management challenge of
improving subpar operating performance. These concerns are only
partially offset by the stability and predictability associated
with the security alarm monitoring business, which yields a
recurring revenue stream.

Operating performance deteriorated in 2001 as new management
struggled to stem high customer attrition rates and reduce
operating costs, while revamping its customer acquisition
strategy. Revenues have declined by nearly 15% over the past
year as the subscriber base declined, hampering profitability
and credit measures. The company's annualized customer attrition
rate for the first nine months of 2001 remained high at nearly
16%. Efforts to streamline operations through customer service
facility consolidation and staff rationalization have reduced
costs, but not fast enough to offset the decline in revenues

As sales decline, operating margins, which deteriorated to 30%
in the first nine months of 2001 from above 35% in 2000, are
likely to remain pressured, despite management's efforts to
improve service levels and stabilize sales. Consequently, EBITDA
interest coverage of about 1.7 times for the 12 months ended
September 2001 is susceptible to further deterioration over the
near term. Moreover, Standard & Poor's is concerned about the
company's reliance on its credit facility that expires in early
2002. The facility is provided by Westar Industries, which owns
87% of Protection One's stock. As of Sept. 30, 2001 the company
had $138 million outstanding on the credit facility.

                     Outlook: Negative

Uncertainty associated with refinancing the credit facility and
the challenge of stabilizing operating performance leave the
ratings susceptible to a further downgrade.

RELIANCE GROUP: Pa. Insurance Commissioner Backs Down -- Sort of
The Pennsylvania Insurance Commissioner, withdraws her objection
to Reliance Group Holdings, Inc.'s motion to set-up interim
compensation protocol. Ann B. Laupheimer, Esq., of Blank, Rome,
Comisky & McCauley, counsel for tells Judge Gonzalez that the
Commissioner was unaware RGH had any liquid assets not subject
to an ownership dispute.  Since those uncontested assets can be
used by RGH to fund its financial needs for the time being
without dipping in to the funds under dispute in the
Constructive Trust Action, RGH is free to spend them.

In view of the fact that the Debtors have recently represented
through pleadings and oral representations before this Court
that they possess or will possess other liquid assets separate
from the Disputed Funds with which to pay professionals and
administrative expenses, the Objections of the Rehabilitator to
the motion to set-up employment compensation protocol has been
rendered premature.  As such, the Rehabilitator requests
deferral of the Compensation Procedures Objection, so long as
the Debtors do not attempt to utilize the Disputed Funds to pay
professionals and expenses.  On the other hand, if the Debtors
seek to utilize the Disputed Funds before the final resolution
of the Constructive Trust Action, the Rehabilitator requests
immediate notice and an opportunity to be heard prior to the
approval of any payments made from the Disputed Funds.

Apology not accepted, say Lorna G. Schofield, Esq., of Debevoise
& Plimpton, counsel for Debtors, Jack Rose, Esq., of White &
Case, counsel for the Official Unsecured Bank Committee, and
Barbara Moses, Esq., of Orrick, Herrington & Sutcliffe, counsel
for the Official Unsecured Creditors Committee.

Since July, when the Commissioner filed her motion asking this
Court to dismiss or abstain from exercising jurisdiction over
these Chapter 11 cases on the ground that all of the Debtors'
assets "belong to and were up streamed from RIC," the
Rehabilitator has assiduously used that allegation to thwart the
ordinary progress of these cases, while at the same time
fighting just as hard to prevent this Court from evaluating the
merits of her underlying constructive trust claim.  As part of
this game plan, the Rehabilitator filed a motion and a series of
objections asking the Court to prevent the Debtors and
Committees from paying the professionals necessary to move
forward with these cases, on the ground that the funds to be
used for such purposes are subject to her constructive trust

Even now, with her Dismissal Motion withdrawn, the Rehabilitator
wants to have it both ways: to use the pendency of her
constructive trust allegations as leverage to handicap the
efforts of the Debtors and Committees to pay their
professionals. Her latest effort comes in the form of her
Supplemental Statement, in which, rather than withdrawing her
objection, she requests that it be "deferred," subject to
various spending caps and notice requirements that she
apparently seeks to have this Court impose on the Debtors and
the Committees in the form of some sort of preliminary

To prove their point, the three attorneys provide a truncated
timeline of recent events.  On July 11, 2001, the Rehabilitator
filed her Dismissal Motion asking Judge Gonzalez to dismiss or
abstain from exercising jurisdiction over these chapter 11 cases
on the ground that all of the "apparent" assets in the Debtors'
estates belonged to and were "upstreamed" from RIC. On July 12,
2001, the Rehabilitator filed a motion to remand her
constructive trust claim (as well as a similar claim, seeking to
prevent the Debtors and their officers and directors from
utilizing any of the proceeds of their own insurance policies)
from the United States Bankruptcy Court for the Eastern District
of Pennsylvania, where the Debtors had removed them, to the
Commonwealth Court. In August, 2001, after a series of hearings
and conferences in this Court and the Pennsylvania Bankruptcy
Court, and over the Rehabilitator's objections, the Dismissal
Motion was scheduled to be heard on September 12, 2001. The
schedule was specifically designed to allow this Court to hear
and rule on the Dismissal Motion prior to any further
proceedings on the Remand Motions. On August 24, 2001, the
Debtors and Committees served an extensive brief in opposition
to the Dismissal Motion. The Debtors and Committees also
expended significant additional expense gathering documentary
evidence and attempting to negotiate factual and evidentiary
stipulations with the Rehabilitator, all in preparation for the
hearing on the Dismissal Motion.

While the Debtors and Committees were briefing and preparing to
argue the Dismissal Motion, the Rehabilitator commenced her
campaign to prevent them from paying the professionals necessary
to administer these proceedings (including their counsel, whose
fees were largely necessitated by the Rehabilitator's litigation

The legal triad claims that Ms. Koken is using the Constructive
Trust Action, which is filed in another court, as a basis for
objection in this Court. The Rehabilitator not only requests
that her fee motion be "deferred," but also that, during the
period of deferral, the Debtors be restrained from using the so-
called Disputed Funds and be ordered to provide the
Rehabilitator with monthly compensation reports. By these
requests, the Rehabilitator seeks to restrain the Debtors from
taking any action that would thwart her ability to obtain all of
the relief she contends she will be entitled to if and when she
ultimately prevails on her constructive trust claim. Thus,
though she understandably avoids the label, the Rehabilitator
has made a motion (only three business days prior to the hearing
date) for a preliminary injunction.

In this Circuit, as elsewhere, preliminary injunctive relief may
be granted only after the applicant shows:

      * Irreparable harm and either:

      * A likelihood of success on the merits, or

      * The existence of sufficiently serious questions going to
        the merits to make them a fair ground for litigation and
        a balance of hardships tipping decidedly toward the
        party requesting the preliminary relief.

Maryland Casualty Co. v. Realty Advisory Ed. on Labor Relations,
107 F .3d 979,984 (2d Cir.1997); Hasbro Bradley, Inc. v. Sparkle
Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985).

The Rehabilitator has not satisfied any element of the test. To
the contrary, by withdrawing her Dismissal Motion in its
entirety, refusing to permit this Court to decide the Remand
Motions, and seeking to "defer" her fee motion, she has done her
level best to ensure that this Court has no way to evaluate
either the quantum of harm RIC could suffer absent preliminary
relief or the likelihood that she will ultimately succeed on the
merits of her constructive trust claim.

The Debtors and Committees respectfully request that this Court
grant in full the Debtors' motion establishing compensation and
reimbursement procedures for the ordinary course professionals.

Judge Gonzalez finds merit in the Debtors' and Committees'
arguments.  The Commissioner's Objection is overruled and the
Debtors' Motion is granted. (Reliance Bankruptcy News, Issue No.
14; Bankruptcy Creditors' Service, Inc., 609/392-0900)     

RUSSELL-STANLEY: Noteholders Back Exchange Offer & Prepack Plan
Russell-Stanley Holdings, Inc. announced that it extended the
expiration time of its exchange offer to holders of its 10-7/8%
Senior Subordinated Notes due 2009 and its solicitation of
releases and the voting deadline for votes on its prepackaged
plan of reorganization.

The expiration time of the exchange offer and the voting
deadline are now 5:00 p.m., New York City time, on November 2,
2001, unless further extended. The Company is offering to
exchange for each holder's pro rata share of $150 million
aggregate principal amount of Old Notes a pro rata share of $20
million aggregate principal amount of new 9% Senior Subordinated
Notes due 2008 and 3,000,000 shares of common stock. To date,
approximately 99.1% of the aggregate principal amount of the Old
Notes have been tendered in the exchange offer.

The 9% Senior Subordinated Notes due 2008 and common stock will
not be registered under the Securities Act or applicable state
securities laws, and may not be offered or sold in the United
States absent registration under the Securities Act and
applicable state securities laws or available exemptions from
such registration requirements.

Russell-Stanley Holdings, Inc. is a leading manufacturer and
marketer of plastic and steel containers and a leading provider
of related container services in the United States and Canada.

                         *   *   *   

At June 30, 2001, the Company's consolidated financial
statements showed (i) liabilities exceeding assets by $39
million, rendering the Company insolvent and (ii) $59 million of
current assets available to satisfy $278 million of debt coming
due within the next year, straining liquidity to unmanageable

SERVICE MERCHANDISE: Resolves Dispute with World Financial Bank
Service Merchandise Company, Inc. sought and obtained a Court
order approving their settlement of certain disputes with World
Financial Network National Bank and some of its affiliates as
well as the disposition of certain funds held by Service Credit

Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville,
Tennessee, informs Judge Paine that the World Financial Parties
have agreed to release any claims they may have to cash reserves
in excess of $8,000,000 held by Service Credit in connection
with the terminated private label credit card program that used
to exist between the parties.  In addition, Mr. Jennings says,
the World Financial Parties will withdraw, with prejudice, its
proof of claim amounting to $15,000,000.

According to Mr. Jennings, the Debtors and Service Credit
entered into a Private Label Credit Card Agreement with the
World Financial Parties last January 1997.  The program was
terminated in 1999 after a dispute arose between the parties,
Mr. Jennings notes.  The dispute even led to the Debtors' filing
of a complaint against the World Financial Parties, which the
World Financial Parties sought and obtained a dismissal.

Last year, Mr. Jennings reminds the Court that World Financial
Parties filed a proof of claim in these chapter 11 cases,
asserting claims in excess of $15,000,000 against the Debtors.
The World Financial Parties also asserted claims against Service
Credit including alleged rights to certain cash reserves held by
Service Credit in connection with the terminated program, Mr.
Jennings adds.  As of August 2001, Mr. Jennings discloses, that
the Service Credit Reserves exceed $8,800,000.

In the meantime, the parties have filed various claims and
counterclaims.  Since neither party refuse to admit fault and
liability, the Debtors realized that it would be more cost-
efficient to settle the dispute.

Mr. Jennings notes the Debtors have agreed to dismiss with
prejudice its complaints and actions.  Likewise, Mr. Jennings
says, the World Financial Parties have agreed to release any
claim to the Service Credit Reserves, to dismiss with prejudice
its counterclaims, and withdraw with prejudice its Proof of
Claim.  Mr. Jennings relates that Service Credit has also
entered into a separate and confidential agreement with the
World Financial Parties.  But since Service Credit is not a
debtor in these cases, Mr. Jennings explains, the terms could
not be disclosed in Court.

Judge Paine is convinced that the compromise reached is "fair
and reasonable under the circumstances since it will resolve
costly and uncertain litigation, including the reduction of
claims against the Debtors' estates by $15,000,000.  Also, the
Court agrees with the Debtors that the resolution of the World
Financial Parties' alleged claims to the Service Credit Reserves
will enhance the Debtors' liquidity position by over $8,000,000.
(Service Merchandise Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

STONEBRDIGE TECHNOLOGIES: Staff-Led Investor Group Closes Buyout
Stonebridge Technologies, a provider of technology consulting
and enterprise integration services, announced that an employee-
led investor group headed by company founder and CEO James Ivy
has successfully completed a buyout of the company's assets.  
Company officials did not disclose terms of the transaction.

Stonebridge, which is based in Dallas, specializes in
information technology integration projects involving business
intelligence/data warehousing, enterprise resource planning
(ERP), enterprise application integration and infrastructure
design, architecture and implementation.

"This is a great day -- a brand new day -- for our customers,
our strategic partners, and most of all, for our employees," Ivy
said.  "When we made the decision to buy back the company two
months ago, we made a commitment to continue delivering at a
high level for our customers and to maintain our strategic
relationships with our partners.  To the credit of Stonebridge
employees, we have been successful at maintaining the
fundamental value of the company.  Now we are focused solely on
our future, which is bright indeed."

The sale of the company's assets to the employee-led group was
approved last week by the U.S. Bankruptcy Court in Dallas.  The
company had operated under voluntary Chapter 11 protection since
September 6.  The employee-led buyout group headed by Ivy filed
an asset-purchase contract to acquire the company's assets on
September 10.

Ivy founded Stonebridge in 1995 and served as the company's CEO
until January 1999 when he retired as chief executive.  During
the subsequent dot- com heyday Stonebridge experienced
tremendous growth, acquiring four companies and establishing 13
offices in the Southeast and South Central United States.

Stonebridge's core business, like that of other technology
consulting companies, was impacted by the collapse of the dot-
com market in the spring of 2000 and a sustained market
slowdown.  In December of last year the company initiated the
first in a series of cost-cutting initiatives to gain control of
its operating expenses.  In May of this year, the company's
board asked Ivy to return as CEO.

"During my second tenure as CEO, we were able to validate our
business model and go-to-market strategy, but the debt burden we
inherited simply would not allow us to create an operating model
that worked.  While the situation has been a challenging one not
only for the management team and me but also for our employees,
we never lost our belief in the fundamental value of the
company," Ivy said.

"I am pleased to report that, as of [Thurs]day, Stonebridge is a
stronger and more viable company than ever, both financially and
operationally," he said. "We are positioned to succeed solely on
the unique business value of our services.  Our core solutions -
- high-value IT consulting and development services for 60-to-
90-day enterprise integration projects that provide an immediate
return on capital -- are still in demand despite a down economy.
And we will be very well positioned as the market recovers in Q1
and Q2 of next year."

Stonebridge Technologies collaborates with clients to architect,
develop and deploy enterprise integration solutions that
leverage rapid advances in Web-enabled technologies and devices
to transform and extend the life of existing business-critical
systems.  Stonebridge's core skills in enterprise integration,
business intelligence, Web integration and infrastructure
services help clients increase revenues, gain operational
efficiencies and create sustained competitive advantage.  More
information about Stonebridge is available at

SUN HEALTHCARE: Receives Approval of 3rd DIP Financing Amendment
At a hearing on October 25, 2001, Judge Walrath issued a Final
Order authorizing Debtors to enter into "Third Amendment to
Revolving Credit Agreement, and authorizing and directing the
Debtors to immediately pay to Lenders' Agent, for itself and as
agent for and on behalf of the Lenders that are parties to the
Financing Agreement, the fees as set forth in the Third

The Commitment Amounts under the Third Amendment are:

      The CIT Group/Business Credit, Inc.     $56,875,000
      Heller Healthcare Finance, Inc.         $45,000,000
      Citicorp USA, Inc.                      $26,250,000
      LaSalle Business Credit Inc.            $21,875,000
                  Total                     $ 150,000,000

Judge Walrath makes it clear that, having received the payment
of the amounts required by Section 2(f) of the Third Amendment,
GMAC Commercial Creidt LLC shall have no claims against, and its
acceptance of payment shall be deemed to be a release of the
Agents, the Lenders and the Borrowers in respect to GMAC's prior
status as a Lender under the Financing Agreement and other Loan
Documents.  (Sun Healthcare Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   

UNITED AIRLINES: Posts $542M Q3 Loss Due to Air Travel Fall-Off
UAL Corporation (NYSE: UAL), the holding company whose primary
subsidiary is United Airlines, reported its third-quarter
financial results.

The company incurred a third-quarter loss of $542 million before
special charges described in the notes to the financial
statements.  This performance compares to a third-quarter 2000
net loss of $64 million, excluding two special charges explained
in the notes and an extraordinary item due to the early
retirement of debt.

The special charges recorded in the third quarter total $617
million, net of tax, and include charges for aircraft
impairment, reduction in force and early termination fees offset
by the first grant payment from the U.S. government.

John W. Creighton, UAL chairman and chief executive officer,
said, "United, along with the rest of the airline industry, has
been struggling with a weak economy and was dealt a difficult
and painful blow by the September 11 terrorist attacks and their
impact on air travel.  Our results this quarter reflect the
sharp falloff in both business and leisure travel that has
occurred, and we anticipate continued weakness in both of these
sectors into next year.

"We have already taken a number of aggressive actions to respond
to these unprecedented conditions, including the largest
furlough and schedule overhaul in our company's history," he
adds.  "Going forward, we will work hand-in-hand with our
employees and unions to build on our existing strengths,
including valuable hubs in outstanding cities and the best
global route network in the industry.  Some tough compromises
will be required from all of us in the short-run, but I am
confident that I can rely on the support and cooperation of our
entire company as we continue to review every option available
to us to restore United's financial stability."

                       Operating Results

Passenger revenues for the quarter were down 20 percent year-
over-year and the company experienced a revenue shortfall of
$500 million for the period September 11-30.  United's cash flow
during the month of October was approximately negative $15
million per day.  Expenses were down 2 percent year-over-year
excluding special charges.  Given the current difficult revenue
environment, the company is focusing its near-term efforts on
eliminating the negative cash flow it has experienced and on
improving its liquidity position. As of September 30, 2001,
UAL's cash balance was $2.7 billion.  This includes $1.5 billion
received from the company's Aug. 10 Enhanced Equipment Trust
Certificate (EETC) debt offering, $391 million from the U.S.
government's Air Transportation Safety and System Stabilization
Act and $300 million from drawn credit facilities.  In addition,
the company has close to $4 billion in unencumbered aircraft.

                      Actions Taken

The company has undertaken the following cost-cutting
initiatives since September 11:

    * United reduced its capacity by 23 percent and converted
      six stations to United Express.

    * United on September 19 announced plans to reduce its  
      workforce by approximately 20,000 employees.

    * The company has retired its entire fleet of Boeing 727s
      and 737-200s.

    * United is currently in negotiations with aircraft
      manufacturers regarding the deferral of future aircraft

    * The carrier has made a number of changes to its onboard
      products, including in-flight entertainment, meal service
      and more.

    * The UAL board of directors has suspended its compensation
      through the end of the year and has suspended the
      quarterly common stock dividend.

The company has made every effort to minimize the number of
people affected by the furloughs and has put together severance
packages and other voluntary options for the various employee
groups affected by the workforce reduction.


The company expects that, based on the revenue trends since
September 11, it will record a fourth quarter net loss excluding
special charges that will be substantially greater than the
third quarter net loss excluding special charges.

For October, passenger unit revenue is down about 30 percent

VIDEO UPDATE: Wants More Time to Solicit Acceptances for Plan
Video Update, Inc. and certain of its direct and indirect
subsidiaries moved to extend exclusive period to the United
States Bankruptcy Court for the District of Delaware to solicit
acceptances for their plan of reorganization to November 30,

The Company made tremendous progress toward successful
reorganization. Having shed nearly 200 unprofitable or
underperforming retail store lease and implemented other major
cost cutting measures, the Debtors are now well positioned to
confirm their Plan and to emerge from these proceedings as a
revitalized competitor in the retail video industry.

The first twelve months of these chapter 11 cases have required
the Company and their professional advisors to address and
resolve a number of challenging issues and to overcome a variety
of difficult economic hurdles.  Now that the Plan has been filed
and the Disclosure Statement has been approved, the Debtors
believe that the Acceptance Period should be extended for sixty
days while they confirm and consummate their Plan.

Video Update, Inc. and certain of its direct and indirect
subsidiaries, filed for chapter 11 protection on September 18,
2000 in the Bankruptcy Court for the District of Delaware.

WEIRTON STEEL: Files Registration Statement to Restructure Notes
Weirton Steel Corp. (OTC Bulletin Board: WRTL) officials said
the company filed a registration statement with the U.S.
Securities and Exchange Commission in order to restructure its
long-term publicly held debt through an exchange offer as part
of the company's announced five point strategic restructuring

The company will offer $85.4 million in principal amount of new
10% Senior Secured Discount Notes due 2008 in exchange for all
of the company's outstanding unsecured 11-3/8% Senior Notes due
2004 and the 10-3/4% Senior Notes due 2005.  The Senior Secured
Discount Notes will be secured by a mortgage and first priority
security interest in the company's hot strip mill, which is an
integral part of the company's downstream processing operations.
As part of the exchange offer, the company is also seeking
consents to amend its current unsecured senior notes indentures.  
The exchange offer will commence as soon as practicable after
the registration statement becomes effective.

Under the terms of the exchange, for each $1,000 in principal
amount of outstanding unsecured senior notes, holders will be
offered up to $350 of principal amount of new Senior Secured
Discount Notes.  The exchange would extend debt maturities and
reduce debt service requirements, particularly over the next two

In addition to this exchange offer and consent solicitation, the
company requested the City of Weirton to offer to exchange all
of its outstanding 8-5/8% Pollution Control Revenue Refunding
Bonds (Weirton Steel Corporation Project) Series 1989 due 2014
for new 9% Pollution Control Revenue Refunding Bonds (Weirton
Steel Corporation Project) Series 2001 due 2014.  The Secured
Series 2001 Bonds will also be secured by a mortgage and first
security interest in the company's hot strip mill.

The dealer manager for the concurrent exchange offers and
consent solicitation is Lehman Brothers Inc.  (A copy of the
prospectus relating to the registered exchange offer for
outstanding senior notes can be obtained from Lehman Brothers
Inc., 101 Hudson Street, 31st Floor, Jersey City, New Jersey
07302, Attention: Hyonwoo Shin, (212) 681-2265 (call collect) or
(212) 455-3326, or can be obtained from D. F. King & Co., Inc.,
77 Water Street, 20th Floor, New York, New York 10005, banks and
brokers call: (212) 269-5550 (call collect) or (800) 431 9643.  
These securities are offered only by means of a written
prospectus and this is neither an offer to sell nor a
solicitation of an offer to buy.)

The registration statement relating to the company's 10% Senior
Secured Discount Notes has been filed with the Securities and
Exchange Commission, but has not yet become effective.  These
securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.  
This press release shall not constitute an offer to sell or the
solicitation to an offer to buy, nor shall there be any sale of
these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.

Weirton Steel is a major integrated producer of flat rolled
carbon steel with principal product lines consisting of tin mill
products and sheet products.  The company is the second largest
domestic producer of tin mill products with approximately 25% of
the domestic market share. Web site:

WEIRTON STEEL: Firms-Up New $200MM Facility & Vendor Financing
Weirton Steel Corp. (OTC Bulletin Board: WRTL) officials said
the company finalized a $200 million senior credit facility,
vendor financing programs generating at least $30 million in
one-time cash benefits, and an annualized $51 million operating
cost savings plan which includes a significant workforce

These actions constitute major milestones in the company's
announced strategic restructuring plan, which consists of five
integral parts:

  --  Reducing operating costs, including employment cost    
      savings with union and management employees;

   -- Improving near term liquidity through vendor financing

   -- Increasing borrowing availability under a new senior bank
      credit facility;

   -- Restructuring long-term debt; and

   -- Fundamentally repositioning the business to focus on the
      production and sale of tin mill and other higher margin
      value-added sheet products.

The company entered into a new $200 million senior credit
facility with Fleet Capital Corp., as agent for itself and other
lenders, Foothill Capital Corp., as syndication agent, and The
CIT Group/Business Credit, Inc. and GMAC Business Credit LLC,
which serve as co-documentation agents for the facility, and
Transamerica Business Capital Corporation as a lender.  Fleet
Securities, Inc. acted as arranger for the facility.  The
company is utilizing borrowings from the new senior credit
facility to refinance its existing inventory and accounts
receivable facilities.  Through this new asset-based facility,
the company's management believes that it will be able to more
effectively borrow against accounts receivable and inventory and
generate additional availability of approximately $35 million.

The new facility, which is secured by the company's inventory,
accounts receivable and No. 9 tandem mill, provides for
revolving loans, including a letter of credit subfacility, up to
a maximum of $200 million depending on the underlying asset
base.  The new facility extends through March 31, 2004.

With the closing of the new senior credit facility, the company
will continue with its plans to reduce operating costs, which
when fully implemented in 2002, will save approximately $51
million on an annual basis. The cost reduction will be achieved
through new collective bargaining agreements which were ratified
in September 2001, a workforce reduction of 550 employees,
reductions in employee benefit costs and other operating cost

The company has also obtained assistance from key vendors
through vendor financing programs to improve near term
liquidity.  Under the vendor financing programs, the company has
negotiated arrangements with over 60 vendors in the form of
purchase credits, improved pricing or other concessions to
achieve one-time cash benefits of at least $30 million in the

In addition to the liquidity generated from the new senior
credit facility the company expects to begin to realize benefits
in the fourth quarter of 2001 from operating cost reductions and
vendor financing programs which are part of its five point
restructuring plan.

"We thank the financial institutions and vendors who have been
instrumental in our restructuring efforts.  We also greatly
appreciate the leadership and cooperation of the Independent
Steelworkers Union, and the efforts of all the Weirton Steel
employees who have helped in achieving these milestones.  I am
confident that our five point restructuring plan, once
completed, will ensure our long-term viability and
competitiveness," commented John Walker, company President and

Mark Kaplan, company CFO, stated that, "The restructuring of the
company's long-term debt, including a reduction of current debt
obligations and extension of debt maturities through planned
exchange offers is the critical next step to improve the
company's liquidity and financial stability and to permit a
fundamental repositioning of the company's business."

Weirton Steel is a major integrated producer of flat rolled
carbon steel with principal product lines consisting of tin mill
products and sheet products.  The company is the second largest
domestic producer of tin mill products with approximately 25% of
the domestic market share.

WHEELING-PITTSBURGH: Ties-Up with Weirton to Cut Healthcare Cost
Weirton Steel Corp. and Wheeling-Pittsburgh Steel Corp.
announced they have joined forces to form a "steel coalition"
that will reduce both companies' health care benefit costs. The
effort is endorsed by the United Steelworkers of America. The
joint effort does not affect the level of employee or retiree
benefits, but will combine the group purchasing power of both
companies and reduce the amount of administrative fees paid to
insurance carriers. It also will establish new reimbursement
guidelines for Ohio Valley health care providers. It is similar
to cost reduction efforts related to volume purchasing that both
companies have initiated with vendors outside the health care

Combined, both companies provide health care benefits to more
than 45,000 employees, retirees and their dependents, primarily
in the Upper Ohio Valley, at a cost of over $80 million per

Weirton Steel and Wheeling-Pittsburgh Steel have signed an
agreement with both Highmark and Mountain State Blue Cross Blue
Shield to reduce claims processing costs and implement a
regional pricing system for health care providers. The new
program establishes provider payments that are more in line with
reimbursement levels in the Pittsburgh area. It will become
effective on Jan. 1, 2002.

"Wheeling-Pittsburgh and Weirton have been hit hard by
illegally-priced steel imports. All domestic steel producers are
actively involved in reducing costs. While we are friendly
competitors, this is an occasion when our companies can both
benefit by working together for a common goal," said John
Walker, Weirton Steel president and chief executive officer.

James G. Bradley, Wheeling-Pittsburgh Steel president and chief
executive officer, added, "By working together in the area of
health care, Wheeling-Pittsburgh and Weirton will continue to
provide the same outstanding benefits, but at a reduced cost.
This effort supports Wheeling-Pittsburgh Steel's reorganization
efforts and the company's desire to preserve jobs and health
care benefits."

In addition to lower reimbursement rates for hospital and
physician services and reduced administrative fees, the new
program will increase medical management services to improve
coordination of care and help manage costs.

A new case management specialist will be assigned to focus
exclusively on identifying and managing highest-intensity cases.
Blue Cross also will create a dedicated account manager/analyst
to oversee the steel accounts and address care management,
referrals and network management and a dedicated customer
service unit. An onsite review nurse also will be placed at
Wheeling Hospital, Ohio Valley Medical Center and East Ohio
Regional Hospital.  This new service will complement an existing
review nurse working at hospitals in the Weirton-Steubenville
area. In addition, Mountain State Blue Cross Blue Shield will
work with Weirton Medical Center on initiatives to coordinate
care and monitor services that are referred out of area.
(Wheeling-Pittsburgh Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  

* BOND PRICING: For the week of November 5 - 9, 2001
Following are indicated prices for selected issues:

Amresco 9 7/8 '05             25 - 27(f)
Asia Pulp & Paper 11 3/4 '05  25 - 27(f)
AMR 9 '12                     87 - 89
Bethelem Steel 10 3/8 '03      5 - 7(f)
Chiquita 9 5/8 '04            78 - 80(f)
Conseco 9 '06                 40 - 42
Enron 9 5/8 '03               76 - 80
Global Crossing 9 1/8 '04     15 - 17(f)
Level III 9 1/8 '04           46 - 48
McLeod 11 3/8 '09             28 - 30
Northwest Airlines 8.70 '07   73 - 75
Owens Corning 7 1/2 '05       34 - 35(f)
Revlon 8 5/8 '08              42 - 44
Royal Caribbean 7 1/4 '18     61 - 63
Trump AC 11 1/4 '06           60 - 62(f)
USG 9 1/4 '01                 72 - 74(f)
Westpoint 7 3/4 '05           32 - 34
Xerox 5 1/4 '03               80 - 82


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
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.  

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
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are $25 each.  For subscription information, contact Christopher
Beard at 240/629-3300.

                     *** End of Transmission ***