TCR_Public/011107.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

           Wednesday, November 7, 2001, Vol. 5, No. 218


360NETWORKS: Court Extends Schedule Filing Deadline to Feb. 10
AMF BOWLING: Disclosure Statement Hearing Set for Tomorrow
AIR CANADA: Preliminary Q3 Operating Loss Stands At $57 Million
AMERICAN CLASSIC: Wins Okay To Abandon Cruise Ship to Cut Costs
AMERICAN SKIING: Inks Deal to Sell Steamboat Springs Assets

AMES DEPARTMENT: Taps Donlin Recano as Claims & Noticing Agent
AMRESCO CAPITAL: Total Liquidating Distributions Reaches $106MM
APTIMUS INC: Lower Q3 Revenues Reflect Network Transition
ARMSTRONG HOLDINGS: Bar Date Dispute with Property Claimants
AT HOME: William R. Hearst III Resigns from Board

AVADO BRANDS: Chief Financial Officer Resigns
BRM HOLDINGS: Court Okays Rejection of Unexpired Lease in D.C.
BETHLEHEM STEEL: Gets Okay to Hire Ordinary Course Professionals
BIRMINGHAM STEEL: Seeking Financing Options to Shed Debt Burden
BLOUNT INTERNATIONAL: Defaults On $500MM Senior Credit Facility

CHATEAU COMMUNITIES: Higher Q3 Revenues Due to CWS Acquisition
COMDISCO: Equity Panel Gets Nod to Hire Water Tower as Advisor
DAY INT'L: S&P Concerned About Poor Results & Strained Liquidity
DYNEX CAPITAL: Continues to Focus on Repayment of Recourse Debts
EGAMES INC: Fleet Bank Agrees to Waive Defaults on $2MM Facility

EXODUS COMMUNICATIONS: Engages Fenwick & West As Special Counsel
FAIRPOINT COMMS: Tight Loan Covenants Spur S&P to Revise Outlook
FEDERAL-MOGUL: U.S. Trustee Appoints Asbestos Claimants' Panel
HORIZONS PHARMACIES: Fails to Meet AMEX Listing Guideline
KNOWLES ELECTRONICS: Q3 Restructuring Yields $1M Monthly Savings

LOEWS CINEPLEX: Gets Okay to Implement Retention/Severance Plan
MARINER POST-ACUTE: Seeks Okay to Assume NeighborCare Contracts
MCLEODUSA INC: Third Quarter Results Due for Release on Nov. 14
OMEGA HEALTHCARE: Posts Lower Q3 Net Loss Despite Lower Revenues
OMEGA HEALTHCARE: Files Rights Offering Registration Statement

OPTELECOM INC: Falls Short of Nasdaq Net Tangible Asset Test
OWENS CORNING: CSFB Backs Move to Transfer Assets to New Unit
PACIFIC GAS: Q3 Net Income From Operation Jumps to $256 Million
PLANVISTA CORP: Operating Loss Balloons to $33.1MM in Q3
POLAROID CORPORATION: Taps Skadden, Arps for Legal Services

POLYMER GROUP: Fine-Tunes Restructuring Plan to Save Up To $60MM
SAFETY-KLEEN CORP: Obtains Fourth Extension of Exclusive Periods
SUN HEALTHCARE: Seeks Approval to Divest Two THCI Facilities
SUSTAINABLE ENERGY: Financing Talks with Sabre Energy Crumble
U. S. AIRWAYS GROUP: Reduces Capacity By 23% in Third Quarter

UBIQUITEL: S&P Revises Outlook After Via Wireless Acquisition
VALENCE TECHNOLOGY: 2002 Second Quarter Revenues Drop 81.6%
VLASIC FOODS: Creditors' Committee Backs Plan Confirmation
WARNACO GROUP: Court Extends Objection Deadline to November 19
ZEROPLUS.COM: Begins Process to Surrender Assets to Loan Holder

* Meetings, Conferences and Seminars


360NETWORKS: Court Extends Schedule Filing Deadline to Feb. 10
Judge Gropper allows 360networks inc. to have 90 more days to
file their schedules of assets and liabilities, lists of equity
security holders, schedules of executory contracts and unexpired
leases and statement of financial affairs.  The new deadline
will expire on February 10, 2002. (360 Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AMF BOWLING: Disclosure Statement Hearing Set for Tomorrow
AMF Bowling Worldwide, Inc., sought and obtained an order
extending its exclusive plan filing period and the exclusive
plan solicitation period 120 days through and including February
27, 2002 and April 30, 2002, respectively.

Dion W. Hayes, Esq., at McGuire Woods LLP, in Richmond,
Virginia, reminds the Court that a Disclosure Statement hearing
is set on November 8, 2001, and the Debtors anticipate
confirmation of the Plan in January, 2002.  Mr. Hayes states
that in an abundance of caution and in an effort to retain
exclusivity for a sufficient period, the Debtors seek a
reasonable extension of their exclusive periods within which to
propose a plan and to solicit votes on a plan.

Mr. Hayes contends that the relief requested is warranted
because the Debtors' chapter 11 cases are large and complex
cases, plus the magnitude of these cases has required the
Debtors to dedicate a significant amount of time to resolving
complex issues including the negotiation of a plan of
reorganization and the reconciliation of thousands of creditor
claims. Further, the Debtors have been paying their post-
petition bills as they have come due.

Mr. Hayes tells the Court that the Debtors have made substantial
strides toward the confirmation of the Plan and the conclusion
of the administration of this case. The Debtors request this
extension in good faith and are not seeking this extension to
delay their reorganization or to pressure creditors to agree to
a plan unsatisfactory to them and in fact, the Debtors have made
every feasible effort to emerge expeditiously from these

AMF faces resistance from the official committee appointed to
represent the interests of unsecured creditors.  The Committee
dislikes the speed with which these cases are progressing and
suspects that the company is being undervalued.  Jonathan L.
Hauser, Esq., at Troutman Sanders LLP, leads the legal team
representing the committee.  (AMF Bankruptcy News, Issue Nos. 10
& 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AIR CANADA: Preliminary Q3 Operating Loss Stands At $57 Million
For the quarter ended September 30, 2001, Air Canada reported a
preliminary operating loss of $57 million and a pre-tax loss of
$160 million. This compared to operating income of $249 million,
after non-recurring labor expenses, and pre-tax income of $184
million in the third quarter of 2000. Non-recurring or
significant items were all recorded in non-operating
income/expense in the 2001 quarter and included aircraft write-
downs and government assistance related to the September 11
terrorist attacks and other gains.

Following the terrorist attacks on the United States, Air
Canada's operations were suspended on September 11, with a
partial return to service commencing September 13. From
September 11 to 30, over 9,300 planned flights were cancelled
and the Corporation experienced a significant downturn in
passengers carried and revenues. As a direct result of these
events, Air Canada estimates that approximately $163 million in
operating losses were incurred for the September 11 to 30
period. Removing these estimated losses, the Corporation would
have had an estimated operating income of $106 million in the
2001 quarter.

"Before September 11, Air Canada, like the rest of the airline
industry, was experiencing a very difficult financial year due
to the economic downturn -that's why it's important to view
these results in terms of what was accomplished prior to the
tragic events of the 11th. Having now seen the results of some
of the largest US carriers, it is clear that unlike Air Canada,
they were losing heavily throughout the summer. While I am
obviously not pleased with reporting a loss, it is gratifying to
have Air Canada produce the best operating results, pre-
government assistance, of any major international carrier in
North America," said Robert Milton, President and Chief
Executive Officer.

"Before September 11, we were on track to announce a break-even
third quarter in line with our earlier guidance. We had
implemented a comprehensive Action Plan of cost-cutting and
revenue-generating initiatives and initial results were
encouraging. Prior to September 11, Air Canada's July and August
unconsolidated operating income was $81 million and its pre-tax
income was $29 million with unit costs down 5 per cent from the
previous year."

But the September 11 events then knocked the legs out from under
an already weak airline industry worldwide and set back the
progress Air Canada had made to date in the quarter.

"After September 11, we swiftly took action to further cut costs
including the necessary but difficult decision to eliminate
9,000 jobs, including the 4,000 previously announced. Our
overall network capacity, including that of our regional
airlines, is being reduced by up to 20 per cent and we are
progressively removing 84 aircraft from the fleet, with 20 to be
transferred to the low fare carrier in due course and up to four
to our sports charter unit. We have introduced a strict cash
conservation policy, we are reviewing contracts with our
suppliers, we have restricted capital spending to mission
critical requirements and we have implemented initiatives
designed to stimulate traffic, such as Tango by Air Canada,
which was launched [Sun]day.

"We will take further action as necessary to cut costs and
address future liquidity needs, as the outlook for at least the
next two quarters is bleak. Traffic levels are down in the range
of 15 per cent from previous year levels, yields are down
considerably and the economy, by most accounts, is clearly in
recession. In fact, Merrill Lynch predicts that the US airline
industry will post losses of US$3.5 billion in the fourth
quarter 2001 alone.

"We continue to impress upon the Federal Government that one of
the key elements to a secure future for Canada's airline
industry lies in a government stabilization package - including
the assumption of security costs and financial support on parity
with that given to US carriers. Today, Air Canada is competing
with a US industry supported by its government to the tune of
US$15 billion, excluding funding of security enhancements. The
necessity for parity is particularly evident at Air Canada given
our extensive international and US transborder operations, which
account for over 55 percent of our revenues. Air Canada cannot
be left to compete with a selectively subsidized Canadian
industry and a massively subsidized US industry.

"In the face of this crisis, our fundamental strengths are more
important than ever before. The Air Canada brand is strong and
Aeroplan is one of North America's leading customer loyalty
programs. We fly a comprehensive route network in partnership
with some of the world's leading airlines. We can be justly
proud of our young, efficient fleet and reputation for
industry-leading and uncompromising safety standards. Most
important of all, our dedicated employees are determined to see
the airline through this crisis. All of us at Air Canada
recognize that our ultimate success rests upon delivering safe
and reliable top-flight service to our valued customers each and
every day," he concluded.

Q3, 2001 operating income (loss) results posted by the six
largest US carriers provide context for Air Canada's results
given its ranking as the 7th largest carrier in North America.
The US airline results are obtained from  published reports
removing government assistance and special charges/provisions or
write-downs from operating income.

AMERICAN CLASSIC: Wins Okay To Abandon Cruise Ship to Cut Costs
Bankrupt American Classic Voyages Co. won approval to abandon
one of its seven cruise ships in an effort to decrease expenses,
according to Dow Jones.

The U.S. Department of Transportation Maritime Administration
will take control of the vessel. American Classic owes the
administration more than $24 million, all of which is secured by
the ship, the S.S. Independence.

The vessel's scrap value is between $1 million and $3 million,
the company said in documents filed with the U.S. Bankruptcy
Court in Wilmington, Delaware The Chicago-based American
Classic, which filed for chapter 11 bankruptcy protection on
October 19, listed assets of $37.4 million and liabilities of
$452.8 million. Nineteen of the company's subsidiaries filed
for chapter 11 bankruptcy protection on October 22. (ABI World,
October 31, 2001)

AMERICAN SKIING: Inks Deal to Sell Steamboat Springs Assets
As part of the implementation of its restructuring plan
announced on May 30, 2001, American Skiing Company recently
entered into a non-binding letter of intent relating to the sale
of Steamboat Ski & Resort Corporation, which operates the ski
resort located in Steamboat Springs, Colorado.

The sale of the Steamboat resort is a critical element of the
Company's strategic plan. As a result, the Company is currently
negotiating critical terms of the proposed deal and with its
auditors are evaluating the effect on its financial statements
and related disclosures for the fiscal year ended July 29,
2001,and its credit agreements.

In addition, the Company is continuing negotiations with other
potential purchasers of the Steamboat resort.  The Company is
also continuing to work on the other aspects of its
restructuring plan, including the Heavenly Gondola lease and
other financing arrangements.

As a result of these factors, the Company is not able to
complete and file its financial statements with the Securities
and Exchange Commission by the date required.

AMES DEPARTMENT: Taps Donlin Recano as Claims & Noticing Agent
Subject to Court approval, Ames Department Stores, Inc. has
employed Donlin Recano & Company, Inc. to serve as the claims
and noticing agent in connection with the Debtors' chapter 11
cases pursuant to the terms and conditions of that certain
Claims Agent Agreement. Section 156(c) of title 28, United
States Code, which governs the staffing and expenses of the
Bankruptcy Court, authorizes the Court to use facilities other
than those of the Clerk's Office for the administration of
bankruptcy cases.

Any court may utilize facilities or services, either on or off
the court's premises, which pertain to the provision of notices,
dockets, calendars, and other administrative information to
parties in cases filed under the provisions of title 11, United
States Code, where the costs of such facilities or services are
paid for out of the assets of the estates and are not charged to
the United States.

By this Application, the Debtors request that the Court enter an
order authorizing the employment of Donlin Recano & Company Inc.
to perform such claims and noticing agent services. The Debtors
also request authorization to compensate and reimburse
Bankruptcy Services, L.L.C. for the claims and noticing agent
services it previously rendered in these chapter 11 cases.

The Debtors have estimated that there are in excess of 1,000
creditors in these chapter 11 cases, many of which are expected
to file proofs of claim and accordingly believes that the
retention of Donlin as the Court's outside agent is in the best
interests of their creditors and their estates. David H. Lissy,
Esq., the Debtors' Senior Vice President and General Counsel
informs the Court that Donlin is a nationally recognized
specialist in chapter 11 administration and has vast experience
in noticing and claims administration in chapter 11 cases.

Subject to the Court's approval, Donlin has agreed to provide
the following services in these cases:

A. maintain an official copy of the Debtors' schedules of assets
    and liabilities, schedules of executory contracts and
    unexpired leases, and statements of financial affairs,
    listing the Debtors' known creditors and the amounts owed

B. notify all potential creditors of the existence and amount of
    their respective claims as evidenced by the Debtors' books
    and records and set forth in the Schedules;

C. furnish a notice of the last date for the filing of proofs of
    claim and a form for the filing of a proof of claim, after
    such notice and form are approved by this Court;

D. file with the Clerk a copy of the notice, a list of persons
    to whom it was mailed, and the date the notice was mailed,
    within 10 days of service;

E. docket all claims received, maintain the official claims
    registers for each Debtor on behalf of the Clerk, and
    provide the Clerk with certified duplicate unofficial
    claims Registers on a monthly basis, unless otherwise

F. specify, in the applicable Claims Register, the following
    information for each claim docketed:

        1. the claim number assigned,
        2. the date received,
        3. the name and address of the claimant and agent, if
             applicable, who filed the claim, and
        4. the classification of the claim;

G. record all transfers of claims and provide any notices of
    such transfers required by Rule 3001 of the Federal Rules of
    Bankruptcy Procedure;

H. make changes in the Claims Registers pursuant to Court order;

I. upon completion of the docketing process for all claims
    received to date by the Clerk's office, turn over to the
    Clerk copies of the Claims Registers for the Clerk's

J. maintain the official mailing list for each Debtor of all
    entities that have filed a proof of claim, which list shall
    be available upon request by a party-in-interest or the

K. assist with, among other things, solicitation and calculation
    of votes and distribution as required in furtherance of
    confirmation of plan(s) of reorganization; and

L. at the close of the case, box and transport all original
    documents in proper format, as provided by the Clerk's
    office, to the Federal Records Center.

The Debtors request authority to compensate and reimburse Donlin
in accordance with these terms for all services rendered and
expenses incurred in connection with the Debtors' cases:

A. Noticing and Docketing Fees:

     1. System Usage Fees:

        a. Database Maintenance (based  on 17,000 creditors) of
           $200,000 plus $0.10 per creditor per month;

        b. Data Input Fee of $100/hour for Tape Conversation in
           format other than the Donlin format;

     2. Claims Docketing/Support Services:

        Client Claims Examination/Docketing $0.95/claim
        Pre-coded data entry $35/hour
        Uncoded data entry $60/hour
        Photocopying fee of $0.15/page
        Scanning fee to be determined
        Mailing services at cost

     3. Reports/Services:

        a. Laser printing notices $0.12/page

        b. Report Formatting/Set-Up:

           Laser printing $0.12/page
           Cheshire labels $0.05 each
           Peel & stick labels $0.06 each
           Ink Jet $0.09/each
        c. Special Report/Services:

           Programming $100/hour
           Special Consulting at Donlin's published rates

B. Plan Balloting charge of $1.50/ballot

C. Deposit of $60,000 to be applied to final bill.

The Debtors believe such compensation rates are reasonable and
appropriate for services of this nature and comparable to those
charged by other providers of similar services. In an effort to
reduce the administrative expenses related to Donlin's
retention, the Debtors seek authorization to pay Donlin's fees
and expenses, without the necessity of Donlin's filing formal
fee applications.

To the best of the Debtors' knowledge, neither Donlin nor any of
its members or employees hold or represent any interest adverse
to the Debtors' estates or creditors with respect to the
services described herein and in the Donlin Agreement.

Prior to the Debtors' reaching a final decision to employ
Donlin, Mr. Lissy states that the Debtors utilized the services
of BSI as claims and servicing agent in these chapter 11 cases
because the Debtors required certain claims and noticing agent
services soon after commencing their chapter 11 cases. Although
the Debtors subsequently determined to employ Donlin, Mr. Lissy
explains that BSI has performed certain services in these
chapter 11 cases, including, but not limited to, the mailing of
the Notice of Commencement of Cases Under Chapter 11 of the
Bankruptcy Code, Meeting of Creditors, and Other Matters and the
Notice of Electronic Filing Procedure to all parties in

The Debtors believe the services rendered by BSI were in the
best interests of the Debtors, their estates, their creditors,
and all parties in interest. Accordingly, the Debtors request
authorization to compensate BSI for services previously
rendered, and reimburse BSI for all necessary and reasonable
expenses previously incurred, through the date Donlin replaces
BSI as claims and noticing agent in these chapter 11 cases.
(AMES Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

AMRESCO CAPITAL: Total Liquidating Distributions Reaches $106MM
Amresco Capital Trust is a real estate investment trust ("REIT")
which was formed in early 1998 to take advantage of certain mid-
to high-yield lending and investment opportunities in real
estate related assets, including various types of commercial
mortgage loans (including, among others, participating loans,
mezzanine loans, acquisition loans, construction loans,
rehabilitation loans and bridge loans), commercial mortgage-
backed securities (CMBS), commercial real estate, equity
investments in joint ventures and/or partnerships, and certain
other real estate related assets.

Subject to the direction and oversight of the Board of Trust
Managers, the Company's day-to-day operations are managed by
Amreit Managers, L.P., an affiliate of Amresco, INC. On July 2,
2001, Amresco, Inc. filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code. The Manager was
not included in this bankruptcy filing.

On September 26, 2000, shareholders approved the liquidation and
dissolution of the Company under the terms and conditions of a
Plan of Liquidation and Dissolution which was approved by the
Company's Board of Trust Managers on March 29, 2000. As a
result, the Company adopted liquidation basis accounting on
September 26, 2000.

Under the liquidation basis of accounting, net assets in
liquidation decreased by $69,843,000 and $99,795,000 during the
three and nine months ended September 30, 2001, respectively.

The Company's sources of revenue for the three and nine months
ended September 30, 2001, totaling $721,000 and $5,580,000,
respectively, were as follows:

      * $376,000 and $4,647,000, respectively, from five mortgage
loan investments, four of which were liquidated. As of September
30, 2001, the Company held one mortgage loan investment.

      * $0 and $96,000, respectively, from investments in CMBS
(the Company's remaining CMBS holdings were sold on January 18,
2001 at their then current carrying value).

      * $345,000 and $837,000, respectively, of interest income
from short-term investments.

During the three and nine months ended September 30, 2001, the
Company's expenses were comprised of the following:

      * $130,000 and $790,000, respectively, of management fees
incurred pursuant to the terms of the amended Management
Agreement. During the three and nine months ended September 30,
2001, base management fees charged to the Company totaled
$76,000 and $528,000, respectively. During these same periods,
operating deficit reimbursements totaled $54,000 and $1,136,000,
respectively, of which $0 and $884,000 were attributable to
termination benefits which were paid to departing employees of
the Manager during the three and nine months ended September 30,
2001. Amounts approximating these termination benefits
($874,000), and those expected to be payable to the remaining
employees of the Manager, were included in amounts due to
manager at December 31, 2000.

      * $154,000 and $477,000, respectively, of general and
administrative costs, including $24,000 and $104,000 for
professional services, $59,000 and $176,000, respectively, for
directors and officers' insurance, $15,000 and $45,000,
respectively, of fees paid to the Company's Chairman of the
Board of Trust Managers and Chief Executive Officer for his
services to the Company, $30,000 and $95,000, respectively, of
fees paid to the Company's other trust managers for their
services to the Company, and $26,000 and $57,000, respectively,
of other miscellaneous expenses.

In June 2001, the Company realized a loss of $500,000 in
connection with the discounted payoff of its Wayland
(Massachusetts) office loan. No gain or loss was realized in
connection with three other loan dispositions (repayments) which
occurred during the nine months ended September 30, 2001.

On June 30, 2001, the Company reduced the carrying value of its
remaining mortgage loan investment (including the accrual rate
interest receivable related thereto) by $3,810,000 and it
increased the carrying value of its investment in Amreit II,
Inc. (its unconsolidated taxable subsidiary) by $100,000. During
the three and nine months ended September 30, 2001, liquidating
distributions paid to common shareholders totaled $70,280,000
and $99,898,000, respectively.

Shareholders approved the liquidation and dissolution of the
Company on September 26, 2000. As a result, the Company's
dividend policy was modified to provide for the distribution of
the Company's assets to its shareholders. During the nine months
ended September 30, 2001, the Company made three liquidating
distributions totaling $99,898,000.  Liquidating distributions
of $3,514,000, $26,104,000 and $70,280,000 were paid to the
Company's shareholders on January 17, 2001 (the "third
liquidating distribution"), March 30, 2001 (the "fourth
liquidating distribution") and August 9, 2001 (the "fifth
liquidating distribution"), respectively.

To date, the Company has made liquidating distributions totaling

The timing and amount of future liquidating distributions will
be at the discretion of the Board of Trust Managers and will be
dependent upon the Company's financial condition, tax basis
income, capital requirements, the timing of its loan
disposition, reserve requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue
Code of 1986, as amended, and such other factors as the Board of
Trust Managers deems relevant.

At a minimum, the Company intends to make distributions in a
manner which will allow it to continue to qualify as a REIT
under the Code throughout the liquidation period. The Company
believes that the liquidation process will be completed within
18 to 24 months from the date that shareholders approved the
liquidation, although there can be no assurances that this
timetable will be met or that the anticipated proceeds from the
liquidation will be achieved.

At the date of this report, the Company's investment portfolio
is comprised of one mortgage loan and a residual interest in its
unconsolidated taxable subsidiary.

The mortgage loan (a mezzanine investment) has a commitment
amount and an outstanding principal balance of $14,700,000. The
loan provides for interest at a pay rate of 10% per annum and an
accrual rate of 12% per annum. The incremental interest earned
at the accrual rate is due (from the borrower) at maturity. To
the extent that the underlying property generates excess cash
flow prior to maturity, such cash flow must be used by the
borrower to service the accrual rate interest.

The loan also provides the Company with the opportunity for
profit participation above the contractual accrual rate. The
loan is scheduled to mature on March 31, 2002; however, the
borrower has an option to extend the maturity date to March 31,
2003 provided that it is not in violation of any of the
conditions established in the loan agreement. The loan provides
for an extension fee of $147,000 (or 1% of the loan commitment
amount) to be paid to the Company at the time the extension
option is exercised by the borrower.

The repayment of the Company's second lien loan is subordinated
to a $26.2 million non-recourse first lien mortgage provided by
an unaffiliated third party. The first lien mortgage, which
matures on March 30, 2002, requires floating rate interest
payments throughout its term. From March 31, 2001 through March
30, 2002, the first lien mortgage also requires monthly
principal reductions of approximately $16,500.

The borrower has an option to extend the maturity date of the
first lien loan to March 30, 2003; in the event that this option
is exercised, the borrower will be required to make monthly
principal reductions under the first lien mortgage of
approximately $18,000 during the period from March 31, 2002
through March 30, 2003. The first lien loan and the Company's
second lien loan are secured by a 301,000 square foot office
building in Richardson, Texas. Inet Technologies, Inc. (Nasdaq:
INTI) and Macromedia, Inc. (Nasdaq: MACR) lease approximately
80% and 19%, respectively, of the building's net rentable area.

On June 30, 2001, the Company reduced the carrying value of its
remaining loan by $3,137,000, from $14,700,000 to $11,563,000;
additionally, the Company reduced the carrying value of the
related accrual rate interest receivable by $673,000, from
$673,000 to $0. At September 30, 2001, the carrying values of
the remaining loan and the associated accrual rate interest
receivable were $11,563,000 and $0, respectively.

At September 30, 2001, the estimated net realizable value of the
Company's remaining investment in its unconsolidated taxable
subsidiary totaled $150,000. In March 2001, a partnership
controlled by the subsidiary sold a mixed-use property to an
unaffiliated buyer; in connection with this sale, the
partnership received a $100,000 promissory note. The amount of
the note, which was collected (by the partnership) on July 24,
2001, is included in management's estimate of the value that is
expected to be derived from the subsidiary in connection with
the wrap-up of its activities (including the wind-up of the
partnership's affairs). Although there can be no assurances, the
residual interest in the subsidiary is expected to be fully
realized by the Company during the fourth quarter of 2001.

APTIMUS INC: Lower Q3 Revenues Reflect Network Transition
Aptimus, Inc. (Nasdaq: APTM), a single-source online direct
marketing network, announced preliminary financial results for
the third quarter ended September 30, 2001 and continued
progress in building out its Aptimus Network.

"Aptimus completed its transition from a site-based model to a
network-based model in the third-quarter," stated Tim Choate,
President and CEO of Aptimus.  "As a consequence, third quarter
revenues were almost exclusively generated from network-based
activity giving us a clean start for our growing new approach.
In contrast, the company's second quarter revenues were largely
the result of its discontinued site business."

As expected, total third quarter 2001 revenues reflect the
company's network transition, declining somewhat from the second
quarter to approximately $200,000.  Third quarter expenses
reflect the company's lower operating costs due to its
significant efforts during the first and second quarters to
reduce expenses related to its former web site business.  Thus,
the company expects its third quarter pro-forma loss to be
approximately $1.8 million, a 31% improvement over the second
quarter pro-forma loss of $2.6 million. Pro-forma loss excludes
amortization, equity based compensation and one-time
restructuring charges.

The company ended the third quarter 2001 with approximately $11
million in cash and short-term instruments. Following the close
of its pending issuer tender offer, the company intends to
leverage its highly scalable business model and robust
technology platform and work aggressively to achieve

"Aptimus set out earlier this year to build the leading online
direct response network," continued Choate. "Our third quarter
numbers represent a significant milestone in that process both
in terms of source of revenues and cost reduction.  With our
cost reductions completed and our network model growing, we are
making significant progress toward creating a viable and
profitable long-term business," continued Choate.  "Over the
coming months, we will continue focusing all our energies on
scaling our business by creating high volume performance-based
customer acquisition solutions for major consumer marketers."

Aptimus focuses its efforts around three primary offer
presentation formats:  co-registration, pop-ups, and emails. Co-
registration, Aptimus' core format, allows real-time targeting
of offers presented at the moment a consumer transacts by
registering for a web site or list, by purchasing, or by placing
other types of orders. Pop-ups are promotional windows presented
when users identify their interests through behavior such as
opening a particular web page. Finally, Aptimus presents
relevant offers to opt-in email lists owned and managed by
Aptimus as well as third-party lists.

Earlier this summer, the company launched a new technology
platform that offers greatly enhanced functionality and ease of
use.  More recently, it migrated hosting of that platform to
LoudCloud, Inc., a move that allows the company to economically
add server and bandwidth capacity as needed. Through this highly
scalable technology infrastructure, the company can now
dynamically and efficiently present offers to transacting
consumers across its growing list of network partner sites.

For its distribution partners, which include major web sites and
email list owners, Aptimus helps to "harvest" its partners'
audiences and generate additional revenues for those partners
with limited effort. In the process, Aptimus is able to achieve
the customer acquisition goals of its clients without spending
the significant resources that would be required to build its
own site audience.

Each of these elements contributes to form a simple, efficient
and highly scalable model. "Thanks to our early aggressive cost
cutting and adoption of an efficient and scalable business
model, we are one of the few public companies left focused on
the online direct marketing opportunity," stated Choate.  "That
opportunity is enormous despite the demise of many of the early
pure-play Internet direct marketers.  We look forward to
introducing our efficient and scalable solution to the growing
list of traditional direct marketers interested in reaching
millions of transacting online consumers," concluded Choate.

Aptimus is creating the leading online direct response network.
We provide high volume performance-based customer acquisition
solutions for major consumer marketers.  The Aptimus Network
presents consumers with relevant offers geared to their
immediate interests, allowing marketers to reach consumers with
the right offers when they are most likely to respond. Our offer
presentation serving technology platform enables us to promote
offers contextually via third party web sites across the
Internet. Built on a technology platform that is flexible and
scalable, the Aptimus Network can support millions of users and
hundreds of marketers and Web site partners. Aptimus is
headquartered in Seattle, and is publicly traded on Nasdaq under
the symbol APTM.

                           *  *  *

Aptimus' cash requirements depend on several factors, including
the level of expenditures on advertising and brand awareness,
the rate of market acceptance of its services and the extent to
which the Company uses cash for acquisitions and strategic
investments. Unanticipated expenses, poor financial results or
unanticipated opportunities requiring financial commitments
could give rise to earlier financing requirements. If the
Company raises additional funds through the issuance of equity
or convertible debt securities, the percentage ownership of its
shareholders would be reduced, and these securities might have
rights, preferences or privileges senior to those of our common
stock. Additional financing may not be available on terms
favorable to the Company, or at all. The notification of
possible delisting of the Company's securities from the NASDAQ
National Market and the going concern contingency contained in
our fiscal 2000 audit report may make raising additional
capital more difficult. If adequate funds are not available or
are not available on acceptable terms, the Company's ability to
fund its expansion, take advantage of business opportunities,
develop or enhance services or products or otherwise respond to
competitive pressures would be significantly limited, and the
Company might need to significantly restrict its operations.

ARMSTRONG HOLDINGS: Bar Date Dispute with Property Claimants
More than three and a half months after the deadline to object
to the Bar Date Motion, and more than three months after the
Court entered the Bar Date Order, Armstrong Holdings, Inc.
complains, the PD Committee now asks for an extension of the Bar
Date with respect to asbestos property damage claims and to
implement an unprecedented supplemental notice program. There's
no need for the Property Damage Committee, no need for
additional to purported property damage claimants, and no need
for Tierney Communications, the Debtors tell Judge Farnan.

Debra A. Dandeneau, Esq., at Weil Gotshal & Manges, reminds
Judge Farnan that, on or about March 30, 2001, the Debtors filed
a motion requesting, among other things, an order (i) fixing
August 31, 2001 as the bar date for filing certain proofs of
claim and (ii) approving the proof of claim form, the bar date
notice and the related publication notice and procedures. The
Bar Date Motion was granted by order dated April 18, 2001,
thereby establishing August 31, 2001 as the Bar Date and
approving the notice program and procedures outlined in the Bar
Date Motion, including widespread notice by publication.

                     The Debtors' Objections

The Debtors object to the PD Committee's application to employ
Tierney to serve as noticing consultant to the PD Committee on
the grounds that any consideration of a supplemental notice
program for asbestos property damage claims is, at best,
premature.  The Debtors have objected to the PD Committee's
Motion to Extend on two fundamental grounds: (i) that the Court
lacks authority to reconsider the Bar Date Order and (ii) that
given the Debtors' limited history with asbestos property damage
claims, the Debtors had no reason to develop and implement a
notice program specifically designed to reach residential
property owners other than the general notice published in the
national editions of three widely distributed daily newspapers
and various regional newspapers. Consideration of both these
issues does not require the analysis of a noticing consultant,
but instead, involves legal conclusions. Even if the Court
considers the Debtors' second ground for objection, such
objection deals with the necessity for providing notice, not the
sufficiency of notice. The PD Committee does not need Tierney
for this issue. Instead, an expert such as Tierney is only
required if the Court ultimately directs the Debtors to provide
some form of specialty designed notice of the Bar Date to
residential property owners.

If the Debtors' objection is sustained, and the Court does not
extend the Bar Date, it will never need to consider any
supplemental notice program. This is, however, precisely the
exercise that the PD Committee wants to retain Tierney to
conduct now. In view of the pending objection, the Debtors see
no reason why the Retention Application should not be deferred.
Moreover, the PD Committee itself appears to have acknowledged
that the issues relating to the PD Committee's Motion to Extend
should be bifurcated, thereby making the PD Committee's request
to retain Tierney at this time surprising. Specifically, in the
PD Committee's Motion to Extend, the PD Committee itself
bifurcated the issues into (i) whether the Bar Date should be
extended to allow for a supplemental notice program and (ii) if
so, what type of notice is warranted.

Because all parties appear to agree that the Court should
consider the issue of the content of a supplemental notice
program separate from (and logically subsequent to) a
determination as to whether such a program is even required, it
is premature for the PD Committee to retain a noticing
consultant at this time. Accordingly, instead of unnecessarily
wasting valuable estate assets by incurring additional
administrative expenses in these cases, the Debtors tell Judge
Farnan he should bifurcate the issues and defer consideration of
the Retention Application until the Court finally resolves the
threshold issue of whether the Court should extend the Bar Date
to allow the PD Committee to implement a supplemental notice
program as requested in the PD Committee's Motion to Extend.

In addition, the Debtors note that Tierney intends to bill the
Debtors' estates for its advice concerning a supplemental notice
program at the greater of its hourly rates and a fixed fifteen
percent commission based upon media costs. Any supplemental
media notice that may be required to be implemented will be the
responsibility of the Debtors' own notice consultants. To the
extent Tierney provides assistance with the development of any
such program, it can be adequately compensated at its hourly
rates upon application to the Court.

For these reasons, the Debtors tell Judge Farnan he should deny
the Retention Application without prejudice at this time, or
adjourn the hearing on the Retention Application until he rules
upon the PD Committee's Motion to Extend.

The Debtors also indicate that they object to the proposed
notice the PD Committee wants to circulate, arguing that the
form will have an adverse impact on the Debtors' flooring
business, to the detriment and prejudice of all parties in

Further, the Debtors tell Judge Farnan that they take issue with
the PD Committee's proposal to compensate Tierney based on a
percentage of the media costs for any supplemental notice
program. (Armstrong Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

AT HOME: William R. Hearst III Resigns from Board
Excite@Home announced that William R. Hearst III resigned from
the company's board of directors, effective October 31, 2001.
Hearst was a member of the board since August 1995. He is a
general partner of Kleiner Perkins Caufield & Byers.

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

AVADO BRANDS: Chief Financial Officer Resigns
Avado Brands, Inc. (OTC Bulletin Board: AVDO) announced that
Chief Financial Officer Erich J. Booth resigned from his CFO and
board member positions effective December 16 to pursue other

"We greatly appreciate the many contributions Erich made to the
Company and we wish him the very best in his new endeavors.  As
to the future, we expect to name a replacement to the Chief
Financial Officer position by the end of the year.  In the
meantime, finance and accounting activities will be handled by
myself, our capable staff as well as our accounting and finance
consultants," said Avado Brands Chairman and Chief Executive
Officer Tom E. DuPree, Jr.

Avado Brands owns and operates three proprietary brands,
comprised of 14 Canyon Cafe restaurants, 131 Don Pablo's Mexican
Kitchens and 74 Hops Restaurant * Bar * Breweries.

                         *   *   *

Standard & Poor's has junked the ratings of the Company based on
the company's limited near-term financial flexibility. Avado
used the majority of the proceeds from the sale of its McCormick
& Schmick's concept to repay borrowings of $95.8 million under
its credit facility that matured on Aug. 22, 2001.

As of July 1, 2001, pro forma for the debt repayment and asset
sale, Avado only had $760,000 of cash and cash equivalents on
its balance sheet.

BRM HOLDINGS: Court Okays Rejection of Unexpired Lease in D.C.
The United States Bankruptcy Court of the District of Delaware
approves the motion by BRM Holdings, Inc. f/k/a US Office
Products Company to reject unexpired lease of nonresidential
real property. The property is located at 2100 Pennsylvania
Avenue, NW, Washington, DC.

BRM Holdings, Inc., one of the world's leading suppliers of
office products and business services to corporate customers,
filed for chapter 11 protection on March 5, 2001 in the US
Bankruptcy Court for the District of Delaware. Brendan Linehan
Shannon, Esq., at Young Conaway Stargatt & Taylor, LLP
represents the Debtors in their restructuring effort.

BETHLEHEM STEEL: Gets Okay to Hire Ordinary Course Professionals
Bethlehem Steel Corporation seeks entry of an order authorizing
the Debtors to retain professionals utilized in the ordinary
course of business as of Petition Date and thereafter.

Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, New York, tells the Court that the Debtors desire to
continue to employ the Ordinary Course Professionals.  These
professionals have rendered various services including, among
others, legal services with regard to specialized matters or
areas of the law.

According to Mr. Miller, the Debtors reserve the right to retain
additional Ordinary Course Professionals from time to time
during these cases, as the need arises.  The Debtors promise to
file a list of such additional professionals with the Court.
They will also serve a copy of the list on:

     (a) the United States Trustee,
     (b) the attorneys for the pre-petition and proposed post-
         petition lenders, and
     (c) the attorneys for the statutory committee of unsecured
         creditors, once appointed.

If there are no objections to any such supplemental list filed
within 15 days after service, the Debtors assert that the should
be deemed approved by the Court without the need for a hearing.

Mr. Miller argues that it would be impractical and cost
inefficient for the Debtors to submit individual applications,
affidavits, and proposed retention orders for each Ordinary
Course Professional, considering the substantial number of these
professionals and the relatively small fees that they will
receive in return for their services.

Moreover, the Debtors propose that they be permitted to pay each
Ordinary Course Professional without a prior application to the
Court by such professional -- 100% of the fees and disbursements
incurred, upon the submission to, and approval by, the Debtors
of an appropriate invoice.  Mr. Miller emphasizes that the
invoice should set forth in reasonable detail the nature of the
services rendered and disbursements actually incurred.  But if
such professional's fees and disbursements exceed a total of
$30,000 per month, then the payments for such excess amounts
shall be subject to Court approval.

Mr. Miller makes it clear that these proposed ordinary course
retention and payment procedures do not apply to those
professionals for whom the Debtors have filed separate
applications for approval of employment.

                        *     *     *

Convinced that it is in the Debtors' best interest, Judge
Lifland grants the relief requested.  The Court permits the
Debtors to employ the Ordinary Course Professionals, effective
as of Petition Date.

Judge Lifland further requires each law firm retained as an
Ordinary Course Professional to file with the Court, within the
later of:

     (i) 30 days of entry of this Order, and
    (ii) the date of the law firm's engagement by the Debtors in
         these chapter 11 cases,

an affidavit pursuant to section 327(e) of the Bankruptcy Code
setting forth that such law firm does not represent or hold any
interest adverse to the Debtors or to their respective estates
in respect of the matters on which each law firm is retained.
(Bethlehem Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

BIRMINGHAM STEEL: Seeking Financing Options to Shed Debt Burden
In order to participate in the pending industry consolidation,
the primary obstacle Birmingham Steel Corporation must overcome
is its large debt level.  The Company's management is currently
investigating ways to address its debt in order to enable the
Company to proactively participate in consolidation activity.

In addition to improving financial performance and operating
cash flow, management is aggressively pursuing the sale of its
non-core assets as a means of obtaining proceeds to reduce debt.

The Company is also exploring debt financing/restructure
alternatives, which could include the sale of one or more of its
core facilities, in order to allow the Company to re-capitalize
its balance sheet and reduce debt.  Depending on the assets
sold, such transactions could result in material gains or losses
in future periods.

Alternatives for refinancing the Company's debt with new lenders
are limited because of softness in the current financial
markets.  Therefore, the Company is currently in  discussions
with its existing lender group regarding an overall debt
restructure or extension  of maturity dates under existing
financing arrangements.

As the Company's financial performance continues to improve and
the general financial  markets recover, the Company's management
believes additional opportunities to improve the debt structure
will become  available.  The Company does not anticipate any
defaults or breach of financial covenants  under its existing
financing arrangements; however, a major portion of the
Company's debt (approximately $295 million) is currently
scheduled to mature on April 1, 2002.

On September 17, 2001, the Company announced it had signed a
letter of intent to sell the Cleveland operation to Corporacion
Sidenor, S.A. The transaction is expected to close in December
2001. Management believes more favorable extension or
refinancing terms can be obtained once the Cleveland operation
is sold, provided the Company's core operations  continue the
recent positive trend in financial results.

Sales from continuing operations for the first quarter of fiscal
2002 were $172.8 million, down 10.4% compared to the first
quarter of fiscal 2001 sales of $192.9  million.  The decrease
was due to a 3.4% decrease in tons shipped and an average
decrease in selling price of $20 per ton in merchant products
offset by a $4 per ton increase for rebar products.

Shipments and selling prices have declined in the quarter ended
September 30, 2001 primarily  because of continuing pressure of
steel imports and uncertainty in United States economic
conditions.  While the Company announced various price increases
in the peak summer seasonal period in fiscal 2001, continued
industry pressure has kept prices relatively flat.  Economic
conditions have generally slowed in calendar 2001 and the tragic
events of September 11, 2001 could cause this trend to continue
until consumer confidence is restored.

In the three months ended September 30, 2001 the Company's net
loss from continuing operations was $2,307 as compared to the
same period of 2000 when net loss was $6,803 (stated in
thousands).  When losses from discontinued operations is
factored in the net loss in the 2001 quarter was $11,307, as
compared to the 2000 quarter when the net loss was $15,029.

BLOUNT INTERNATIONAL: Defaults On $500MM Senior Credit Facility
Blount International, Inc. (NYSE: BLT) reported results for the
third quarter ended September 30, 2001.  Sales were $194.5
million, an 11.3 percent decrease from the prior year's third
quarter sales of $219.2 million.  Earnings before interest,
taxes, depreciation, amortization and other income (EBITDA) for
the third quarter were $24.9 million.  This is a 32.7 percent
decrease from last year's third quarter EBITDA of $37.0 million.
Net loss for the third quarter was $6.2 million as compared to
last year's net income for the third quarter of $3.3 million.

                  First Nine Months Results

For the first nine months of 2001, Blount achieved sales of
$541.3 million, a decrease of 14.1 percent from last year's
sales of $629.8 million.  EBITDA for the first nine months
excluding first quarter restructuring costs of $16.2 million was
$72.9 million, a decrease of 31.2 percent over EBITDA for the
first nine months of 2000 of $106.0 million. These restructuring
actions, which included workforce reductions and a plant
closing, are expected to provide annualized savings of
approximately $6.0 million with approximately $5.0 million of
savings to be realized in calendar year 2001.

Net loss for the first nine months of 2001 was $14.5 million
($0.47 per share) before accounting for after tax restructuring
costs of $10.2 million as compared to net income of $9.0 million
for the first nine months of last year excluding a $2.6 million
after tax gain principally from the sale of the company

Commenting on the third quarter results, Harold E. Layman,
President and Chief Executive Officer, stated, "Third quarter
market conditions continued to be difficult as consumer
confidence weakened in light of the unprecedented tragic
terrorist attacks on our nation.  Uncertainty caused already
cautious dealers to delay stocking orders particularly in our
lawn care and sporting equipment operations.  Outdoor Products
chain and bar volume for the third quarter equaled that of the
second quarter but pricing continues to be impacted by the
dollar's strength as we respond to competitive situations to
maintain market share.  With continued economic softness, weak
consumer confidence and only a slightly weaker dollar we will
continue to focus on cost reduction actions.  Our Industrial and
Power Equipment group, reflecting the impact of earlier cost
reduction actions, positively contributed to results for a
second consecutive quarter even while their marketplace is at a
20 year low.

"We announced on October 25th that consistent with our long-term
strategy of reducing debt we had executed a letter of intent to
sell our Sporting Equipment Group to Alliant Techsystems.  There
can be no assurance, however, that the transaction will be

                        Segment Results

The Outdoor Products segment reported third quarter sales of
$82.0 million, 7.2 percent lower than last year's third quarter
sales of $88.4 million.  EBITDA for the quarter of $18.9 million
compares to last year's EBITDA of $22.5 million.  This year was
adversely impacted by the dollar's continued strength, not only
from translation but more importantly from a competitive
standpoint and the dealer delays in ordering Dixon lawnmowers as
a result of weak consumer confidence.  Backlog in this segment
remains reasonable at $39.0 million, which compares favorably to
historical levels, although 2000 at $55.3 million was higher
than normal reflecting the effect of a major windstorm in Europe
during that period.

For the third quarter, the Sporting Equipment segment reported
sales of $80.9 million down 10.6 percent from last year's third
quarter of $90.5 million.  EBITDA was $6.3 million compared to
last year's third quarter of $13.1 million.  Although there was
improved order activity near quarter end this was later than
normal and could not overcome earlier slowness, which still
reflected distributor inventory adjustment.  The Company expects
the events of September 11th to impact our business as law
enforcement forces increase ammunition purchases for homeland
security.  Competitive discounting, an unfavorable mix and lower
volume all contributed to lower margins.  Backlog in this
segment at $15.5 million compares to $17.0 million last year but
only marginally lower than normal levels seen in 1998.

The Industrial and Power Equipment segment reported third
quarter sales of $31.6 million, down 21.6 percent from sales of
$40.3 million in the year earlier third quarter.  EBITDA for
this quarter was $1.2 million versus $3.4 million in last year's
third quarter. The forestry equipment markets continue well
below historical levels.  Cost reduction actions have positioned
this segment to break even at these reduced levels as evidenced
by a second consecutive quarter of positive EBITDA.  While there
continues to be no indication of a significant near term upturn
in the market, third quarter sales were 14 percent higher than
second quarter sales and order activity continues at a
reasonable pace into the first part of the fourth quarter.
Backlog at $20.5 million is 11.4 percent above last year's $18.4
million but does represents the highest level in this segment
since December 1999.

On October 30, the company notified the administrative agent for
the company's $500 million senior credit facility that we failed
to meet certain financial covenants for the third quarter.
Failure to meet these covenants is considered an event of
default per the terms of the credit agreement.  The company is
actively negotiating a waiver to the credit agreement and does
not believe that its senior lenders have a present intention to
accelerate its outstanding indebtedness.  The waiver is
anticipated to provide time to complete the sale of the Sporting
Equipment Division, determine the impact to future financial
ratios and covenants and amend the senior credit agreement as

Headquartered in Montgomery, Alabama, Blount International, Inc.
is a diversified international company operating in three
principal business segments: Outdoor Products; Sporting
Equipment; and Industrial and Power Equipment.  Blount
International, Inc. sells its products in more than 100
countries around the world.  For more information about Blount
International, Inc., please visit our website at

As at Sept. 30, 2001, the Company had cash and cash equivalents
of $35 million, and accounts receivable amounting to $151.7
million. Also, stockholders' equity deficit reached $331.2

CHATEAU COMMUNITIES: Higher Q3 Revenues Due to CWS Acquisition
Chateau Communities, Inc. (NYSE:CPJ), a fully integrated, self-
administered real estate investment trust (REIT) specializing in
the ownership and management of manufactured home communities,
released results for the third quarter of 2001.

As previously announced, during August of 2001, Chateau
completed its acquisition, through merger, of CWS Communities
Trust. The transaction added 46 properties with approximately
16,600 homesites in 12 states to the Chateau portfolio, as well
as 1,518 expansion sites available for future development and
three RV communities with 481 RV sites.

Total revenues for the third quarter of 2001 were $64.6 million,
an increase of 25.9 percent from $51.3 million in the third
quarter of 2000. This increase reflects the addition of CWS
Communities properties. Funds from operations (FFO) for the
third quarter of 2001 increased 10.8 percent to $23.5 million,
from $21.2 million in 2000.

For the nine months ended September 30, 2001, total revenues
were $169.8 million, up 12.5 percent from $150.9 million in
2000. Year to date, funds from operations (FFO) were $67.1
million, a 6.1 percent increase from the $63.2 million reported
for the same period last year.

Same store net operating income for the third quarter was
relatively flat at $30.3 million. Same store rental income
increased 3 percent to $48.3 million from $46.9 million for the
third quarter of 2000. Same store property operating expenses
increased by 6.9 percent to $18.0 million from $16.8 million
last year.

Same store net operating income for the nine months ended
September 30 was $93.2 million, up 3.4 percent from $90.1
million for the same period last year. Rental income increased
4.1 percent, from $139.3 million to $145 million, and same store
property operating expenses increased 5.3 percent year to date,
from $49.2 million to $51.8 million.

For the full portfolio, third-quarter rental income increased
28.2 percent to $60.9 million from $47.5 million in the same
period of 2000. Operating expenses rose from $16.8 million to
$23.6 million, a 40.3 percent increase. Net operating income for
the full portfolio increased 21.5 percent, from $30.7 million to
$37.3 million in the third quarter.

For the nine months ended September 30, rental income was up
13.6 percent for the full portfolio, to $158.9 million from
$139.9 in 2000. Operating expenses increased 19.7 percent, from
$49.2 million to $58.9 million. Net operating income for the
first nine months of 2001 was $100.0 million for the full
portfolio, up 10.2 percent from $90.7 million in the same period
of 2000.

In October, the company successfully completed the issuance of
$150 million of 10-year unsecured senior notes. Proceeds were
used to repay approximately half of the company's bridge loan
for the CWS transaction. Immediately after this transaction, as
of October 30, 2001, Chateau has total debt of approximately $1
billion, mainly comprising $470 million of senior unsecured debt
at an average rate of 7.5 percent, $287 million of secured
mortgage debt at an average rate of 7.6 percent, approximately
$114 million under its lines of credit at an average rate of 4.0
percent, and a bridge facility of $156 million at an average
rate of 3.8 percent.

Approximately 74 percent of the Company's total debt is fixed-
rate debt with a weighted average interest rate of 7.5 percent
and a weighted average maturity of seven and a half years. The
Company plans to repay the remaining amount outstanding on the
bridge facility through the issuance of additional debt, equity
securities or the dispositions of properties.

In the third quarter, Chateau began implementing its previously
announced disposition plan and started identifying a number of
mature properties that no longer meet company portfolio
objectives. To date, the company has sold one property for $17
million, and anticipates completing more sales by year end. The
sold property was acquired as part of the CWS Communities
acquisition and was under contract at the time of acquisition.

Chateau expansion efforts resulted in the addition of 310 sites
so far this year. The Company expects to add 50 more new sites
to the expansion portfolio in the remainder of the year. Chateau
expects to have completed a total of 300 sites in its greenfield
projects by year end. In the first nine months of 2001,
approximately 290 sites were filled in greenfield or expansion

In recognition of the unique requirements of development
properties, Chateau recently initiated plans to segregate its
development portfolio into a specifically managed entity. Jeff
Kellogg will lead this group, while former Executive
VP/Acquisitions Rees Davis has assumed responsibility for the
majority of company operations as Chief Operating Officer. In
addition, CWS VP of Operations Wayne Loper was recently named
Atlanta Division President for Chateau, replacing Ginger
Hancock, who had previously announced her intention to retire.

Chateau subsidiary Community Sales, Inc. (CSI) sold 192 homes in
the third quarter, compared to 144 for the same period last
year. The company brokered 296 sales, compared to 288 in 2000.
The Company also arranged financing on approximately 245 loans
in the third quarter, as compared to 203 for the same period
last year, with a capture rate of 50 percent.

Chateau Chief Executive Officer Gary McDaniel commented: "Given
the uncertainty in the national economy, we are pleased with the
overall performance of the portfolio. We believe the structural
changes we have begun making to the portfolio, coupled with
changes in operations management, will help us continue to move
forward in the fourth quarter and the year ahead."

Headquartered in Greenwood Village, Colo., Chateau Communities
is the largest owner/manager of manufactured home communities in
the U.S. Its portfolio consists of 223 communities, with an
aggregate of approximately 71,300 residential homesites and
1,790 park model/RV sites. In addition, Chateau manages 39
manufactured home communities with approximately 8,300
residential homesites. The Company owns or has options on 8
greenfield development communities comprising approximately
3,400 sites for future development. Chateau operates in 37
states. Please visit Chateau Communities at

Meanwhile, Chateau Communities (NYSE:CPJ) has recently completed
the restructuring of 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.

COMDISCO: Equity Panel Gets Nod to Hire Water Tower as Advisor
After due deliberation, Judge Barliant authorizes the Equity
Committee of Comdisco, Inc. to employ and retain Water Tower as
its financial advisor under a general retainer nunc pro tunc to
September 7, 2001.  However, in the light of Water Tower's flat
fee arrangement, the Court rules that:

     (i) monthly invoices required pursuant to the interim
         compensation order entered in these cases need only
         consist of a brief narrative of the services provided
         during the previous month (redacted to protect
         confidential information but otherwise sufficient to
         describe the services provided) and the amount of any
         expenses for which reimbursement is sought; and

    (ii) in interim and final fee applications, a listing of time
         spent by day by individual Water Tower personnel and a
         description of the services provided by Water Tower
         during the application period (redacted to protect
         confidential information but otherwise sufficient to
         describe the services provided) may be substituted for
         detailed individual time entries.

Judge Barliant makes it clear that the United States Trustee and
any parties-in-interest retain all rights to object to Water
Tower's interim and final fee applications (including expense

The Court further rules that all requests of Water Tower for
payment of indemnity pursuant to the Consulting Agreement
arising during the pendency of these chapter 11 cases shall be
made by means of an application and shall be subject to review
by the Court.  Judge Barliant explains this is intended to
ensure that payment of such indemnity conforms to the terms of
the Consulting Agreement and is reasonable based upon the
circumstances of the litigation or settlement in respect of
which indemnity is sought.

The Court further modifies the Consulting Agreement to provide
that in no event shall Water Tower be indemnified if the
Debtors, the estates, the Official Committee of Unsecured
Creditors or the Equity Committee asserts a claim which is
determined by a final order of a court of competent jurisdiction
to have arisen out of Water Tower's own bad faith, self-dealing,
breach of fiduciary duty, gross negligence, reckless or willful
misconduct, malpractice or ordinary negligence arising from the

In the event that Water Tower seeks reimbursement for attorney's
fees from the Debtors pursuant to the indemnification provisions
of the Consulting Agreement, Judge Barliant emphasizes that the
invoices and supporting time records from such attorneys shall
be included in Water Tower's own applications.  Furthermore,
Judge Barliant states, such invoices and time records shall be
subject to the United States Trustee's guidelines for
compensation and reimbursement of expenses as well as the
approval of the Bankruptcy Court. (Comdisco Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900)

DAY INT'L: S&P Concerned About Poor Results & Strained Liquidity
Standard & Poor's placed its ratings on Day International Group
Inc. on CreditWatch with negative implications.

Total debt as of June 30, 2001, was about $270 million.

The CreditWatch placement reflects Day International's weaker-
than-expected operating performance, limited liquidity, and very
restrictive bank covenants resulting in heightened financial
risk. The continued slowing in the U.S. economy increases the
likelihood of Day International violating its bank covenant
requirements for the fiscal third quarter ended September 30,
2001. The company is currently working with its senior lenders
to obtain a waiver or modifications of such covenants for the
third quarter and for future periods.

The company's revenue fell 6.5% and EBIT dropped 35% in the
first six months ended June 30, 2001, compared with the same
period in 2000. The decline in sales and operating income was
primarily due to the weak U.S. economy, changes in product mix,
and lower fixed cost absorption as a result of lower volume. The
company's weak operating performance during a time of elevated
debt levels resulted in deterioration of credit protection
measures with EBITDA interest coverage at 1.8 times and total
debt to EBITDA at about 4.8x for the past 12 months as of June
30, 2001. In addition, Day International's liquidity position is
constrained, with less than $8 million available under its
credit facility.

The Dayton, Ohio-based company produces precision engineered
rubber products, specializing in the design and customization of
consumable image transfer products for the graphic arts
industry, fiber handling products for the textile industry, and
pressroom chemicals for the printing industry.

Standard & Poor's will meet with the company's management to
discuss the status of its senior secured credit agreement and
prospects for achieving operating improvements in 2002. If it
appears operating performance and credit protection measures
will remain below expected levels for an extended period, and
that liquidity will remain constrained, the ratings could be

               Ratings Placed On Creditwatch Negative

      Day International Group Inc.

        Corporate credit rating        B+
        Senior unsecured debt          B
        Subordinated debt              B-
        Preferred stock                CCC+

DYNEX CAPITAL: Continues to Focus on Repayment of Recourse Debts
Dynex Capital, Inc. (NYSE: DX) reported a net loss of $7.5
million for the third quarter 2001, versus a net loss of
$836,000 for the third quarter 2000, and net income of $2.8
million for the second quarter of 2001.

For the third quarter, the Company reported net interest margin
before provision for losses on its investment portfolio of $11.8
million compared to $13.0 million for the second quarter of
2001. Inclusive of provision for losses, the Company reported
that net interest margin for the third quarter was a negative
$2.4 million.

The decrease in net interest margin for the third quarter 2001
was primarily due to (i) prepayments on adjustable-rate mortgage
loans and securities, (ii) the reset of interest rates downward
on a portion of the Company's adjustable-rate mortgage loans and
securities, and (iii) the increase in provision for losses as a
result of the continued under-performance of manufactured
housing loans in the Company's investment portfolio.

The Company increased its provision for losses by $7.6 million
during the quarter to account for such losses in the
manufactured housing loan portfolio. Third quarter results were
also negatively impacted by further losses of $1.2 million
related to Eurodollar short positions which the Company entered
into in a prior quarter in order to effectively lock-in LIBOR
borrowing rates for approximately one-third of the Company's
floating-rate liabilities through 2001. These Eurodollar short
positions do not qualify for hedge treatment under FAS No. 133
and thus losses on the entire position must be recognized in the
quarter incurred.

The Company also reported that it incurred an extraordinary loss
of $1.0 million related to the write-off of unamortized bond
issue costs and discounts on the call of one series of
collateralized bonds. This series of collateralized bonds, which
is collateralized principally by adjustable-rate single-family
mortgage loans and securities, was called and resold by the
Company during the quarter.

The Company reported that as of September 30, 2001, its
remaining recourse debt consisted principally of $57.9 million
of July 2002 Senior Notes and $6.8 million relating to
repurchase agreements. In addition, shareholders' equity
increased to $181.3 million at September 30, 2001 from $175.7
million at June 30, 2001. This increase was due to the
improvement in the mark-to-market value of the assets
of the Company. The improvement in the market value of the
Company's investment portfolio resulted primarily from the lower
interest rate environment. The impact of losses relating to the
manufactured housing loan portfolio did not have a material
effect on the market value on the investment portfolio, as the
mark-to-market valuation has generally incorporated expectations
of such losses.

Regarding the outlook for the Company, Mr. Potts commented, "We
would expect net interest margin before provision for losses to
improve for the fourth quarter, as a result of the recent
reductions by the Federal Reserve in the short-term interest
rates which has the near-term effect of increasing our interest
spread. Regarding the provision for losses, our expectation is
that the provision for the quarter will likely be less during
the fourth quarter than the third, but still higher than the
$6.6 million recorded in the second quarter due to the
performance of the manufactured housing loan portfolio. All
other securitized loan portfolios are performing reasonably as

Mr. Potts further commented, "The Company continues to focus on
repayment of its recourse debt obligations, and enhancing the
overall value of its existing investments. Concurrently with
these efforts, as we have previously reported, management and
the Board continue to explore alternatives to improving
shareholder value and generating liquidity for shareholders. In
that regard, the Company initiated tender offers in September on
its Series A, Series B and Series C Preferred Stock, which will
result in the purchase of 486,517 shares of the Preferred Stock.
The Company plans to fund the purchase of the tendered shares on
November 2, 2001. On a proforma basis, assuming the tender
offers had been completed as of September 30, 2001, total
shareholders' equity would have declined from $181.3 million to
$172.3 million, and the aggregate liquidation preference for all
series of Preferred Stock would have declined from $134.9 to
$118.9 million, while book value per common share inclusive of
accrued and unpaid preferred dividends would have increased from
$4.06 to $4.66."

The Company also reported on the recent developments surrounding
certain litigation in which it is engaged. In regard to the
litigation with California Investment Fund (CIF) as a result of
the termination by the Company of the merger agreement dated
November 7, 2000 between the Company and CIF, in a case heard in
the Eastern District Court in Alexandria, Virginia, the jury
returned a verdict whereby (i) the escrow amount consisting of
$1 million and 572,178 shares of common stock is to be awarded
to the Company, and (ii) the Company is to pay CIF a termination
fee of $2 million. The judge has yet to enter the jury verdict
pending review of motions filed by the two parties.

Additionally, the action brought by ACA Financial Guaranty
Corporation (ACA) against the Company has been settled out of
court. The settlement, provides, among other things, that the
Company is permitted to fund the purchase of shares of its
Series A, Series B and Series C Preferred Stock tendered
pursuant to the Company's tender offers initiated in September,
while generally limiting the Company from making any other
distributions to its shareholders, including further tender
offers on the Preferred Stock, until such time as the Senior
Notes are fully repaid or defeased.

Dynex Capital, Inc. is a financial services company that elects
to be treated as a real estate investment trust (REIT) for
federal income tax purposes.

                          *  *  *

As of June 30, 2001, the Company has $58.4 million  outstanding
of its senior notes issued in July 1997 and due July 15, 2002.
On March 30, 2001, the Company  entered  into an  amendment  to
the related indenture governing the July 2002 Notes whereby the
Company pledged to the Trustee of the July 2002 Notes
substantially all of the Company's  unencumbered assets and the
stock of its subsidiaries. In consideration of this pledge,  the
indenture was further amended to provide for the release of the
Company from certain covenant restrictions in the indenture,
and specifically provided for the Company's ability to make
distributions on its capital stock in an amount not to exceed
the sum of (a) $26 million, (b) the cash proceeds of any
"permitted subordinated indebtedness", (c) the cash proceeds of
the issuance of any "qualified capital stock", and (d) any
distributions  required in order for the Company to maintain its
REIT status. I

n addition, the Company entered into a Purchase  Agreement with
holders of 50.1% of the July 2002 Notes which  require the
Company to purchase, and such holders to sell,  their respective
July 2002 Notes at various  discounts  based on a computation
of the Company's  available cash. The discounts provided for
under the Purchase Agreement are as follows: by
April 15, 2001,  10%; by July 15, 2001,  8%; by October 15,
2001, 6%; by January 15, 2002, 4%; by March 1, 2002, 2%;
thereafter until maturity,  0%. Through June 30, 2001, the
Company has retired $38,885 of July 2002 Notes for $35,185 in
cash under the Purchase Agreement.

EGAMES INC: Fleet Bank Agrees to Waive Defaults on $2MM Facility
eGames, Inc. (OTC Bulletin Board: EGAM), a publisher and
developer of Family Friendly, value-priced computer software
games, announced that the Company and its bank, Fleet Bank, have
entered into an agreement to pay off the outstanding balance
owed to Fleet Bank over a twenty-two month period.

The agreement also provides that, despite the Company's defaults
under the loan documents which had previously provided the
Company with a $2 million secured line of credit, the bank will
not enforce its rights and remedies under those loan documents
as long as the Company remains in compliance with the terms of
the agreement.

The terms of the agreement include, among other things, that the
remaining outstanding balance owed under the credit facility
will be repaid in monthly installments, with interest at prime
plus three percent.  The Company has also issued warrants to the
bank for the purchase of 750,000 shares of the Company's Common
Stock.  The warrants are exercisable until October 31, 2006 at
an exercise price of $.09 per share, and a separate registration
rights agreement provides that the bank will have demand
registration rights beginning on November 1, 2002.

Fleet Bank had notified the Company in late July 2001 that due
to the Company's default of the financial covenants under its
credit facility as of June 30, 2001, and material adverse
changes in the Company's financial condition, the bank would no
longer continue to fund the Company's $2 million credit

The Company worked with the bank and its advisors in the bank's
analysis of its collateral position, management's restructuring
and cost reduction plans, and the results of an independent
business assessment of the Company and its business plan.  These
actions provided the basis for a turnaround plan that was
presented to the bank culminating in the agreement providing for
an amortized term loan payout of the existing balance owed to
the bank.

eGames, Inc., headquartered in Langhorne, PA, develops,
publishes and markets a diversified line of personal computer
software primarily for consumer entertainment and personal
productivity.  The Company promotes the eGames, Game Master
Series, Multi-Pack and Galaxy of Home Office Help brand names in
order to generate customer loyalty, encourage repeat purchases
and differentiate the eGames Software products to retailers and
consumers.  eGames -- Where the "e" is for Everybody!

EXODUS COMMUNICATIONS: Engages Fenwick & West As Special Counsel
Exodus Communications, Inc. seeks to employ and retain Fenwick &
West LLP as special counsel to assist with continuing business
concerns, nunc pro tunc to the Petition Date.

Adam W. Wegner, the Debtors' Adviser for Corporate and Legal
Affairs, tells the Court that prior to the filing of these
chapter 11 cases, the Debtors were in need of counsel to advise
and represent them in connection with corporate, securities,
trademark, patent, labor, privacy, tax, litigation, licensing,
regulatory and other matters in connection with their businesses
and subsequently retained Fenwick & West to act as counsel and
advise the Debtors with regard to such matters.

Mr. Wegner submits that the Debtors now seek to retain Fenwick &
West to fill their needs regarding their continuing business
concerns as Fenwick & West is skilled in the areas of corporate,
securities, trademark, patent, labor, privacy, tax, litigation,
licensing and regulatory law and, as a result of its
representation of the Debtors prior to the Petition Date, has
special knowledge which will enable said counsel to perform
services of particular benefit to the Debtors.

The Debtors have agreed with Fenwick & West, subject to this
Court's approval, that the Firm will be employed on an hourly
basis and will be paid all additional attorneys' fees and
expenses incurred after the commencement of these cases.  The
current hourly rates of each attorney to be employed in this
representation is:

                 Gordon Davidson      $550
                 Horace Nash          $450
                 David Michaels       $450
                 Blake Stafford       $425
                 Robert Freedman      $400
                 Carlyn Clause        $400
                 Piyasena Perera      $375
                 Maddie Mann          $310
                 Karen Kitterman      $310
                 Daniel Kim           $260
                 Ilana Rubel          $240
                 David Liu            $240
                 John Shields         $220
                 Nicole Black         $220
(Exodus Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

FAIRPOINT COMMS: Tight Loan Covenants Spur S&P to Revise Outlook
Standard & Poor's revised its outlook on FairPoint
Communications Inc. to negative from stable.

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

The outlook revision is based on increased execution risks in
light of the deteriorating economy, tight bank loan covenants,
and the potential impact of lower access rates.

FairPoint is a facilities-based provider of local, long
distance, and broadband/Internet services mainly to residential
customers in rural markets across 18 states. The company
operates a rural local exchange carrier (RLEC) business that
faces limited competition, is allowed to price services on a
return-on-investment basis, and is supported by Universal
Service Fund settlements.

Despite the RLEC's relative stability, execution risks have
increased due to the deteriorating economy and the company's
continued appetite for acquisitions. Tight leverage and bank
loan interest coverage covenants, in particular, may further
constrain financial flexibility given increased execution risks.
Because management has some flexibility to deleverage through
asset divestitures and capital spending reduction, and improve
cash flow by trimming overhead, FairPoint should be in a
position to meet the covenants. Lower long-distance access rates
could have some longer-term impact on FairPoint's revenues,
about 40% of which are based on access charges. Although there
is an increased cap on subscriber line charges and a new
universal support mechanism available to rural telephone
companies, it is uncertain whether these measures will fully
offset the effects of the rate reduction over the long term.

The ratings on FairPoint exclude the financial impact of
FairPoint Solution, the company's significantly weaker, wholly
owned competitive local exchange carrier (CLEC), in light of
management's commitment to limit cash support for this unit. The
rating on the company's unsecured notes is two notches below the
corporate credit rating because the concentration of bank debt
and accrued liabilities relative to Standard & Poor's assessed
realizable value of assets exceeds 30% on a prospective basis.

                     Outlook: Negative

The weak economy and the company's continued emphasis on
acquisitions have increased execution risks. Moreover, financial
flexibility could be further constrained given tight bank loan
covenants. To maintain current ratings, which assume limited
cash support for the CLEC, FairPoint must keep cash flow and
leverage at levels that will allow it to comfortably meet bank

FEDERAL-MOGUL: U.S. Trustee Appoints Asbestos Claimants' Panel
Pursuant to section 1102(a)(1) of the Bankruptcy Code, the
United States Trustee appoints these asbestos-plaintiff lawyers
to serve on the Official Committee of Asbestos Claimants in
Federal-Mogul Corporation's chapter 11 cases:

A. Joseph Arnold c/o Michael V. Kelley, Esq., Kelly & Ferraro
    1300 East 9th St., Penton Media Bldg., Cleveland, Ohio
    44114 Phone: (216) 575-0777  Fax: (216) 575-0799

B. Clinton Dale Ferguson c/o Vargas & Morgan, PLLC
    P.O. Box 886, 119 Caldwell Drive, Hazelhurst, Missouri 39083
    Phone: (601) 894-4088  Fax: (601) 894-4688

C. Marie Del Mato c/o Weitz & Luxenburg
    180 Maiden lane, New York, New York 10038
    Phone: (212) 558-5500  Fax: (212) 344-5461

D. Dominick Bellissimo c/o Robert Pearce & Robert Daley, Esq.
    707 Grant St., Pittsburgh, Pennsylvania 15219

E. Richard Schupbach
    c/o Dean Hartley, Esq., of Hartley O'Brein Thompson & Hill
    2001 Main St., Suite 600, Wheeling, West Virginia 26003
    Phone: (304) 233-0777  Fax: (304) 233-0774

F. Don & Marlene Henderson
    c/o Steven Kazan Esq., of Kazan McClain Edises Simons &
    171 12th St., Suite 300, Oakland, California 94607
    Phone: (510) 465-7728  Fax: (510) 835-4913

G. Paul L. Overstreet, Jr.
    c/o Donald Patten, Esq., Patten Wornom Hatten & Diamondstein
    12350 Jefferson Ave., Suite 360, Newport News, Virginia 23602
    Phone: (757) 223-4500  Fax: (757) 249-3242

H. Marcella Montagna
    C/o Russell W. Budd, Esq., at Baron & Budd, P.C.
    3102 OakLawn Ave., Suite 1100, Dallas, Texas 75219-4281
    Phone: (216) 575-0777  Fax: (216) 575-0799
(Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

HORIZONS PHARMACIES: Fails to Meet AMEX Listing Guideline
HORIZON Pharmacies, Inc. (Amex: HZP) (Frankfurt: HPZ) announced
that it has received notice from the staff of the American Stock
Exchange indicating that the Company no longer complies with
AMEX's continued listing guidelines for several reasons,
including that (i) the Company's shareholders' equity has fallen
below $2 million, (ii) the Company has sustained losses from
continuing operations and net losses in two of its three most
recent years, (iii) the aggregate market value of the Company's
publicly held securities is less than $1 million, and (iv) the
Company has failed to file an annual proxy statement and its
quarterly report on Form 10-Q for the period ended June 30,

Consequently, the AMEX staff has determined that the Company's
securities are subject to being delisted from the Exchange.

The Company has appealed this determination and requested a
hearing before a committee of the Exchange.  There can be no
assurance that the Company's request for continued listing will
be granted.

AMEX halted trading of the Company's common stock, at a last
price of $.21 per share, on July 23, 2001, when the Company
filed a voluntary petition for Chapter 11 relief in the United
States Bankruptcy Court for the Northern District of Texas,
Dallas Division.

KNOWLES ELECTRONICS: Q3 Restructuring Yields $1M Monthly Savings
Knowles Electronics Holdings, Inc. announced its results for the
quarter ended September 30 and the first nine months of 2001.

The manufacturer of hearing aid components and other products
reported third quarter sales of $54.6 million, 3% less than the
$56.4 million reported for the third quarter of 2000. The
company's sales for the first nine months of 2001 totaled $166.6
million, 6% less than the $176.9 million reported for the first
nine months of 2000.

All three of the company's divisions reported flat or lower
sales for the third quarter. Sales at the company's Knowles
Electronics Division remained essentially flat at $34.1 million.
The company's Emkay Division reported sales of $7.7 million, 8%
less than the $8.4 million reported in the third quarter of
2000. The company's Automotive Components Group reported sales
of $12.9 million, a decline of 7% compared to the $13.9 million
reported for the third quarter of 2000.

"Although our sales continue to lag last year's results, they
have improved during the course of the year," said President and
CEO John Zei. The company's Knowles Electronics Division sales
for the first nine months of the year totaled $101.4 million, 4%
less than the $106.0 million reported for the first nine months
of 2000, with flat third quarter sales. The decline in
automotive sales also grew narrower. Automotive sales for the
first nine months were down 14%, to $40.2 million, but were down
only 7% in the third quarter. Only the company's Emkay Division
reported a quarter-to-quarter decline in sales growth, after
reporting strong sales in first half of the year due to large
new orders for the company's infrared products. The Emkay
Division's sales totaled $25.1 million, 4% more than the $24.0
million reported for the first nine months of 2000.

The company's EBITDA for the third quarter totaled $14.1 million
or 25.9% of sales. For the first nine months, the company's
EBITDA reached $42.4 million or 25.5% of sales. Operating income
for the third quarter totaled $10.8 million, compared to $12.4
million for the third quarter of 2000. Operating income for the
first nine months totaled $34.2 million, compared to $20.1
million for the first nine months of 2000. The net loss for the
third quarter was $850,000, compared to $1.3 million loss the
third quarter of 2000. Net income for the year to date was
$70,000, compared to a loss of $16.8 million for the first nine
months of 2000, after the company reported a $20 million
restructuring charge to consolidate its worldwide manufacturing

"In the third quarter, we clearly saw the results of our
restructuring program," Zei said, "as we are saving over $1
million per month of manufacturing costs." The company's gross
profit margin rose by more than four percentage points, to
47.7%, compared to 43.3% in the third quarter of 2000.

"We are addressing the challenges of a slower economy while we
continue to invest for the future," said James F. Brace,
Executive Vice President and CFO. "We have made progress in
reducing inventories, although more work remains to be done. We
also will work aggressively to reduce receivables in the coming
quarter, which grew while our operations in England and Austria
were focused on implementing our new Enterprise Resource
Planning system. We have now launched the system at all North
American and key European locations, and the costs associated
with implementing the new system, which accounted for three-
quarters of the increase in our general and administrative
expenses, will decline sharply going forward."

The company's launch of new products is proceeding on schedule.
New products developed by Emkay are proving attractive for
military/security applications, and the division plans to begin
selling new silicon microphone products by the end of the year.
The Automotive Group's SSPI Electroforce product line,
established earlier this year, received its first orders for new
heavy-duty solenoids.

"We are moving in the right direction," said Zei. "We have
continued to improve our operations--and more progress is on the
way. We are the leader in our core markets, and our new
technologies will help us extend our lead. We're making the most
of current conditions and looking forward to growth."

Knowles Electronics is the world's leading manufacturer of
transducers and related components used in hearing aids. The
company also manufactures acoustic components used in voice
recognition and telephony applications as well as automotive
sensors and solenoids. In 1999, the European fund management
company Doughty Hanson & Co Ltd acquired Knowles.

Knowles Electronics, as at Sept. 30, 2001, had total current
assets of $105.5 million, including cash and cash equivalents of
$10.2 million and net accounts receivables amounting to $45
million. However, stockholders' deficit jumped to about $462
million, as at the same date.

LOEWS CINEPLEX: Gets Okay to Implement Retention/Severance Plan
The United States Bankruptcy Court of the Southern District of
New York approved Loews Cineplex Entertainment Corporation'
motion to adopt and implement the Retention and Severance Plan.

                         The Retention Program

Under the retention component of the Retention and Severance
Plan, key employees of the Debtors are eligible to participate
and are divided into three levels:

     (i)  Level One, which consists of 9 senior officers,

     (ii) Level Two, which consists of 21 officers at the vice
          president level and above and

    (iii) Level Three, which consists of 48 other key

Level One employees would receive a lump sum bonus (the
Retention Bonus) equal to 66.7% of their annual base salary.
Retention Bonuses paid to Level Two employees would be capped at
33.3% of the employee's aggregate annual base salary. Level
Three employees' bonuses would be capped at 25% of Level Three
employee's aggregate annual base salary.

The Debtors estimate that the total bonus pool available to the
Key Employees would be approximately $4.4 million. In light of
the size of the Debtors' business, the Debtors believe that the
cost of the Retention and Severance Plan is reasonable.

Each Key Employee would receive his Retention Bonus within 30
days after the consummation of a plan of reorganization (the
Consummation Payment Date), provided that such Key Employee is
employed by the Debtors on the Consummation Payment Date, and
that LCE meets its projected level of "attributable EBITDA" for
fiscal year ending 2002 as set forth in LCE's budget for fiscal
year 2002. If LCE fails to meet the Threshold, then the Key
Employees will be paid only half of the Retention Bonus.

In addition, if a plan of reorganization is consummated prior to
February 28, 2002, each Key Employee will receive half of the
Retention Bonus on the Consummation Payment Date and, provided
that LCE meets the Threshold, half within 30 days after February
28, 2002

                      The Severance Program

The severance component of the Retention and Severance Plan
provides eligible employees with assurances that they will be
compensated if they remain with the Debtors and are ultimately
terminated within one year after the consummation of a plan of
reorganization. Provided that a general release is executed by
the eligible employee, upon termination of the employee without
cause, the employee would be entitled to the following severance
benefits payable in a lump sum within 30 days after such
employee's termination date.

Loews Cineplex Entertainment Corporation is a major motion
picture theatre exhibition company with operations in North
America and Europe. The Company filed for chapter 11 protection
on February 15, 2001 in the Southern District of New York. Brad
Eric Scheler, Esq., Janice MacAvoy, Esq. at Fried, Frank,
Harris, Shriver & Jacobson represents the Debtors in their
restructuring effort.

MARINER POST-ACUTE: Seeks Okay to Assume NeighborCare Contracts
As previously reported, NeighborCare Pharmacy Services, Inc., is
party to a 1997 Pharmaceutical Supply Agreement under which
NeighborCare supplies 140 Mariner Post-Acute Network, Inc.
facilities with some $60,000,000 of specially packaged
medication 24 hours per day, 7 days per week, and other

About one and a half year ago, NeighborCare filed a motion
asking the Court to compel MPAN to make a decision about whether
it wanted to assume the Pharmaceutical Supply Agreement -- and
cure the arrearages -- or reject the Agreement, and to allow
NeighborCare an administrative claim in the MPAN cases.
NeighborCare complained that MPAN told it to keep supplying
goods and services under the Agreement but kept coming up with
ways to avoid or delay payment. NeighborCare alleged that MPAN
owed it $20,324,000 on account of pre-petition arrearages and
$1,347,885 on account of post-petition arrearages.

Since then, response and hearing dates have been continued from
time to time upon the parties' agreement and stipulation because
they want to seek to reach an amicable resolution of the

Meanwhile, NeighborCare has continued to provide Pharmacy
Products and Services to MPAN at the prices and on the terms
established by the Contracts. MPAN tells the Court it has paid
NeighborCare for such shipments within standard business terms.
Nevertheless, there are alleged defaults, and NeighborCare has
filed numerous proofs of claims in the MPAN Bankruptcy Cases. In
connection with the performance by the NeighborCare Group and
the MPAN Group under the Contracts prior to the MPAN Petition
Date, the NeighborCare Group collectively asserts monetary
defaults against the MPAN Group in the aggregate amount of
approximately $22.5 million, which amount the MPAN Group
believes exceeds the amount owing under the Contracts.
NeighborCare additionally asserts administrative and pre-
petition claims against the MPAN Group for liquidated damages
under the Contracts arising from the activities of the MPAN
Group both prior and subsequent to the MPAN Petition Date
relating to the closure or divestiture of operating locations.
The MPAN Group has not paid any such liquidated damage claims to
the NeighborCare Group and disputes the allowability of such
claims as a cost of administration in the MPAN Bankruptcy Cases.

                    The Proposed Agreements

The parties have now reached a proposed Settlement Agreement
which resolves all outstanding issues among the parties. The
following are salient terms of the Settlement Agreement.

(A) The Contracts will be assumed, as modified, by entering into
     uniform and restated agreements (the Amended and Restated
     Contracts). The Amended and Restated Contracts will be for a
     term of 18 months, but will provide certain pricing relief
     to the MPAN Group.

(B) The NeighborCare Group shall waive any outstanding
     prepetition cure amounts due under the Contracts, save and
     except for a single claim in the amount of $6,000,000 which
     will be allowed as a general unsecured, non-priority claim
     in the MPAN Bankruptcy Cases in the name of NeighborCare,
     for and on behalf of the NeighborCare Group. This allowed
     claim can be allocated among the members of the MPAN Group
     in the discretion of NeighborCare; provided, however, that
     (i) the amount allowed against any member of the MPAN Group
     shall not exceed the amount of the proof of claim originally
     filed by the NeighborCare Group against such member of the
     MPAN Group, and (ii) the NeighborCare Group shall not oppose
     the substantive consolidation of the members of the MPAN
     Group or the collective treatment under a plan of
     reorganization of all claims allowed against the members of
     the MPAN Group;

(C) The NeighborCare Group will waive any claims in the MPAN
     Bankruptcy Cases for liquidated damages, administrative or
     otherwise, and limit administrative claims to amounts due
     for goods sold and services rendered in accordance with the
     terms of the Contracts from the Petition Date to the
     effective date of the pricing changes as provided in the
     Settlement Agreement;

(D) The MPAN Group will be given a right to terminate, over
     time, the Service Agreements to be entered into as part of
     the Amended and Restated Contracts;

(E) Provision is made for assignment or termination of the
     Amended and Restated Contracts with respect to facilities
     owned and operated by the MPAN Group whose operations cease
     or are transitioned to new operators, including provisions
     for liquidated damages if the number of facilities which are
     parties to the Amended and Restated Contracts or similar
     agreements falls below an agreed upon threshold number;

(F) The NeighborCare Motion will be withdrawn, with prejudice;

(G) Mutual releases will be exchanged between the parties.

The Debtors make it clear that the entry into the Settlement
Agreement by the Parties is not linked to, or in any way
dependent upon, the recent offer submitted by NeighborCare to
acquire American Pharmaceutical Services, Inc. (APS).
NeighborCare's offer to acquire APS will be exposed to an open
bidding procedure prior to selection of the ultimate buyer, the
Debtors remind the Court.

The Debtors tell the Court that, as a compromise, the Agreements
clearly fall within the range of reasonableness.

The Debtors draw the Court's attention to the following benefits
derived from the Agreements:

       -- The MPAN Group is relieved of its obligations under
section 365(b)(1)(A) and (B) to cure alleged prepetition
defaults in amounts alleged to be in excess of $22.5 million;

       -- The claims of the NeighborCare Group are resolved for
the allowance of a single prepetition general unsecured, non-
priority claim in the amount of $6,000,000 in the MPAN
Bankruptcy Cases;

       -- NeighborCare's asserted administrative claim for
postpetition liquidated damages is withdrawn;

       -- The patients of the facilities owned or operated by the
MPAN Group which are serviced by the NeighborCare Group, as well
as the operations of the MPAN Group, avoid the disruption that
could be caused by transition to a new pharmacy supplier if the
Contracts were, instead, to be rejected;

       -- The NeighborCare Motion, pending for over a year, is
resolved without litigation over such issues as the amount of
cure in the circumstance of assumption of the Contracts, or, in
the case of rejection of the Contracts, (a) the continuation of
services pending transition to a new supplier, (b) the allowed
amount of the asserted prepetition arrearage under the
Contracts, (c) the claim for breach of the Contracts resulting
from their rejection, (d) the NeighborCare Group's entitlement,
if any, to critical vendor status, and (e) the appropriate
amount of any administrative claim due the NeighborCare Group
for liquidated damages and Pharmacy Products and Services
delivered after the Petition Date.

The Debtors submit that the Agreements were negotiated in good
faith, and are the product of extensive arm's-length
negotiations which involved substantial time, apparently, and
energy by the parties and their counsel, and the Agreements
reflect give-and-take and compromises by both sides. Moreover,
the NeighborCare Group are not "affiliates" or "insiders" of the
MPAN Group under Bankruptcy Code section 101, the Debtors

In sum, the Debtors believe they have articulated a sound
business justification for the proposed Agreements.

Accordingly, the Debtors move the Court for an order pursuant to
11 U.S.C. section 105, 363 and 365 and Bankruptcy Rules 2002,
6006, 9014 and 9019 approving (a) the assumption of executory
contracts, as modified, among the MPAN Group on the one hand,
and the NeighborCare Group on the other hand, and (b) the
compromise of controversies in connection with this as set forth
in the "Settlement Agreement Re: Pharmacy Supply Contracts".
(Mariner Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

MCLEODUSA INC: Third Quarter Results Due for Release on Nov. 14
McLeodUSA Incorporated (Nasdaq:MCLD) announced that it will
issue results for Third Quarter 2001 on Wednesday, November 14,
2001 after market close. A conference call will be held to
discuss the Company's Third Quarter 2001 results and other
Company information the following morning, Thursday, November 15
at 11 a.m. Eastern, 10 a.m. Central. Conference Call and Webcast
details follow:

Live Conference Call
Thursday, November 15
11 a.m. Eastern
US:               1-877-381-6511
International:    706-634-6027
Live Audio Webcast:

Conference Call Replay (available through Monday, November 19)
US:               1-800-642-1687
International:    706-645-9291
Password:         2124992
Audio Webcast Replay:

McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The company also provides data and voice
services in all 50 states. McLeodUSA is a facilities-based
telecommunications provider with, as of June 30, 2001, 383 ATM
switches, 49 voice switches, 372 collocations, 512 DSLAMs,
nearly 31,000 route miles of fiber optic network and 10,600
employees. The company's fiber optic network is capable of
transmitting integrated next-generation data, Internet, video
and voice services, reaching 800 cities and approximately 90% of
the U.S. population. In the next 12 months, McLeodUSA plans to
distribute 35 million telephone directories in 26 states,
serving a population of 59 million. McLeodUSA is a Nasdaq-100
company traded under the symbol MCLD. Visit the company's web
site at

OMEGA HEALTHCARE: Posts Lower Q3 Net Loss Despite Lower Revenues
Omega Healthcare Investors, Inc. (NYSE:OHI) announced its
Results of Operations for the quarter ended September 30, 2001
and a senior management staffing addition.

The Company reported a net loss for the three months ended
September 30, 2001 of $6.9 million on revenues of $66.8 million
as compared to a net loss of $70.8 million on revenues of $68.0
million for the three months ended September 30, 2000. The loss
for the quarter included a one-time $4.3 million charge for
severance, moving and consulting costs associated with the
Company's planned relocation to Timonium, Maryland, and a $1.5
million accounting loss associated with asset sales, offset by a
gain on early extinguishment of debt of $0.2 million. The prior
year quarter included a provision for impairment of assets of
$49.8 million and a provision for uncollectable accounts of
$12.1 million.

Funds From Operations for the quarter was $0.5 million as
compared to a deficit of $15.2 million for the three months
ended September 30, 2000. Diluted FFO for the quarter was $3.1
million as compared to a deficit of $11.0 million for the same
period in 2000. The Company utilized cash flow generated during
the quarter, including proceeds from non-strategic asset sales,
to repurchase $3.9 million of its bonds maturing in June 2002.

The increase in FFO this quarter as compared to the prior year
results from a decrease in net operating losses from the
Company's owned and operated assets ($0.6 million loss for the
September 30, 2001 quarter versus $2.6 million loss for the same
period in 2000), as well as a decrease in the provision for
uncollectable accounts ($19,000 in the quarter ended September
30, 2001 versus $12.1 million in the same period in 2000).

The recognition of $10 million of expense associated with the
settlement of the lawsuit with Karrington Health, Inc. resulted
in certain violations of financial covenants in the loan
agreements relating to the Company's secured credit facilities
as of June 30, 2001.

The Company previously obtained a waiver from the lenders under
both credit facilities through September 14, 2001. The lenders
under the Company's $175 million secured credit facility have
extended this waiver through December 13, 2001. The waiver
granted by the lenders under the Company's $75 million secured
credit facility has expired and discussions with the lenders are
continuing. The Company has not received any notice of
acceleration of the outstanding balance under that facility.
These covenant violations prevent the Company from drawing upon
the otherwise remaining availability under both credit
facilities until a permanent resolution is attained.

The Company also announced the addition of a key executive to
its staff. Daniel J. Booth has been named the Company's Chief
Operating Officer. Mr. Booth had been a member of Integrated
Health Services, Inc. management team since 1993, most recently
serving as IHS' Senior Vice President, Finance. He has a very
broad financial, banking and long-term care industry background.
Prior to joining IHS, Mr. Booth was Vice President in the
Healthcare Lending Division of Maryland National Bank (now Bank
of America). F. Scott Kellman, the Company's former Chief
Operating Officer will continue to assist the Company during a
transition period. "Our hiring objective has been to increase
the Company's direct industry expertise. We are very pleased to
have Dan's financial and industry experience as we restructure
our portfolio and position the Company for future growth," said
C. Taylor Pickett, Omega's Chief Executive Officer.

Omega is a Real Estate Investment Trust investing in and
providing financing to the long-term care industry. At September
30, it owned or had mortgages on 246 skilled nursing and
assisted living facilities with approximately 25,400 beds
located in 29 states and operated by 32 independent healthcare
operating companies.

OMEGA HEALTHCARE: Files Rights Offering Registration Statement
Omega Healthcare Investors, Inc. (NYSE:OHI) announced the filing
of a registration statement with the Securities and Exchange
Commission on November 2, 2001 in connection with its previously
announced plan to raise $50 million in new equity capital from
its current stockholders.

Omega's plan consists of two components: a rights offering to
its common stockholders to allow them to purchase their pro rata
share of the $50 million of new equity to avoid any dilution in
their ownership interest, and a private placement of equity to
Explorer Holdings, L.P., Omega's largest stockholder.

The purpose of the offering is to facilitate the company's
reaching an agreement with its senior secured bank lenders
regarding the modification of their revolving credit facilities
and to enhance the company's ability to repay approximately $108
million in debt maturing in the first half of 2002.

The registration statement relates to the shares of common stock
to be issued to stockholders in connection with the rights
offering. Explorer has agreed to invest an additional amount in
the private placement equal to the subscription price of all
unexercised rights, if any, thereby assuring that Omega will
raise the entire $50 million if the rights offering is

As described in the registration statement, each holder of Omega
common stock (other than Explorer) as of November 8, 2001 or
such later date as the SEC declares the registration statement
effective, will receive a dividend of a number of rights
representing such stockholder's pro rata portion of the $50
million of new equity. The subscription price has not yet been
determined, but the Board of Directors has established a maximum
subscription price of $2.92 per share of Omega common stock, a
6% discount from the average closing price of Omega common stock
for the 20 trading day period ending on October 26, 2001. At the
maximum subscription price, Omega would issue one right for
every 2.15 shares of common stock owned as of the record date.

The closing of both the rights offering and Explorer's
investment will occur simultaneously no later than ten days
following the expiration of the subscription period for the
rights offering. The closings are subject to Omega obtaining
certain amendments to its senior secured bank facilities and
waivers of Omega's current non-compliance with certain covenants
in such facilities on terms acceptable to Omega and Explorer.

The Company will be conducting a conference call today, November
7, 2001, at 11 a.m. EST. To participate, log on to 30 minutes before the call to
download the necessary software. Replays of the conference call
will be available on the website for at least 15 days.

Omega is a Real Estate Investment Trust investing in and
providing financing to the long-term care industry. At September
30, it owned or had mortgages on 246 skilled nursing and
assisted living facilities with approximately 25,400 beds
located in 29 states and operated by 32 independent healthcare
operating companies.

A registration statement relating to the securities offered in
the rights offering 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 of 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.

The Company will send a copy of the prospectus when it is
available to holders of record of the Company's common stock as
of the record date. Stockholders can also request a copy of the
prospectus by contacting Robert Stephenson, the Company's Chief
Financial Officer, Omega Healthcare Investors, Inc., 900 Victors
Way, Suite 350, Ann Arbor, Michigan 48108.

The securities to be sold to Explorer in the private placement
have not been registered under the U.S. Securities Act of 1933,
as amended, and may not be offered or sold without registration
thereunder or pursuant to an available exemption therefrom.
Omega does not intend to register these securities.

OPTELECOM INC: Falls Short of Nasdaq Net Tangible Asset Test
Optelecom, Inc. (Nasdaq: OPTC) announced receipt of a Nasdaq
Staff Determination on October 29, 2001 indicating that the
Company failed to comply with the net tangible assets
requirement for continued listing set forth in Marketplace Rule
4310(c)(2)(B), and that its securities are, therefore, subject
to delisting from the Nasdaq SmallCap Market.

The Company has requested an oral hearing before a Nasdaq
Listing Qualifications Panel to contest the Staff Determination.
Should the Staff Determination be upheld, the Company believes
it will continue to have a market for its stock which would
trade on the OTC Bulletin Board.

"We are working to remedy this situation," commented Clyde
Heintzelman, Optelecom's Chairman and CEO.  "We believe we will
return to compliance by the end of this month.  However, there
can be no assurance the Panel will grant the Company's request
for continued listing."

OWENS CORNING: CSFB Backs Move to Transfer Assets to New Unit
Credit Suisse First Boston (CSFB) believes that Owens Corning
have presented a valid business justification for the creation
of a new subsidiary through which it intends to conduct a
franchise business. Subject to completion of documentation and
full reservation of its rights, CFSB recommends to the Court
that the Motion be granted.

Mark D. Collins, Esq., at Richards Layton & Finger, in
Wilmington, Delaware, tells the Court that CSFB discussed the
issues with the Debtors and concluded that it is possible to
resolve them in the course of drafting the proposed sublicense
and franchise agreements for the new subsidiary. However, Mr.
Collins relates, CFSB wished to reserve its rights regarding
issues pending completion of satisfactory documentation.
Specifically, CFSB requests assurance that the proposed
sublicense will be drafted to be coterminous with the License
Agreement. Thus, Mr. Collins tells the Court, if the License
agreement is rejected or terminated, the sublicense will
terminate as well.

CSFB also requests that the sublicense and franchise agreements
contain provisions to ensure that the various non-monetary
obligations of the Debtors under the License Agreement are
incorporated and enforceable against the sublicensee and
franchisees. The Debtors, Mr. Collins says, have indicated their
intention to incorporate these provisions and CFSB reserves its
rights in that respect.

According to Mr. Collins, the Debtors have also indicated that
the proposed subsidiary will have insufficient book value to
qualify as a significant subsidiary under the terms of the
Credit Agreement. CFSB reserves its rights to monitor the OCCIS
business and to require that it execute a Guarantor supplement
if it qualifies to be a significant Subsidiary.

CFSB believes that the proposed payment of OCCIS proceeds to the
Debtors under an agreement between both parties is the right
course of action as it will avoid accumulation of assets in a
non-debtor subsidiary. (Owens Corning Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PACIFIC GAS: Q3 Net Income From Operation Jumps to $256 Million
PG&E Corporation (NYSE: PCG) reported third-quarter net income
from operations of $256 million, compared with $248 million for
the same quarter last year.

"The Corporation's results for the third quarter continue to
reflect solid underlying performance across our operations,"
said PG&E Corporation Chairman, CEO and President Robert D.
Glynn, Jr.

Total reported net income for the quarter was $771 million,
compared with $225 million for the third quarter of 2000.

Income from operations at Pacific Gas and Electric Company, the
Corporation's utility business, was $192 million, or $0.53 per
diluted share, compared with $211 million, or $0.58 per diluted
share, last year.  The decrease in operating income from a year
ago primarily reflects the effects of a recent California Public
Utilities Commission (CPUC) action to retroactively reduce
revenues previously authorized in the utility's 1999 General
Rate Case. Specifically, for the years 1999 through 2001, the
commission retroactively reduced the revenues the utility was
entitled to collect for such areas as meter reading, customer
account services and emergency response services.  The 2001
effects of this decision are included in operating results, with
the 1999 and 2000 effects accounted for as items impacting
comparability and reflected in total net income.  The company
intends to challenge the ruling in the courts.

At the PG&E National Energy Group (PG&E NEG), income from
operations grew to $77 million, for the third quarter, compared
with $37 million, in the third quarter of 2000.

                     Total Net Income

PG&E Corporation reported total net income of $771 million,
compared with $225 million, for the same quarter of 2000.  This
increase reflects the difference between generation revenues and
generation costs at Pacific Gas and Electric Company in the
third quarter of 2001.

Previously, in keeping with CPUC requirements, these revenues
were used to amortize generation-related transition costs
associated with energy industry restructuring.  However, in the
fourth quarter of 2000, accounting rules forced the company to
write off the balance of these unrecovered transition costs.
Since the second quarter of 2001, the company's revenues have
enabled it to offset a portion of these previously written-off

As noted, total net income also includes the 1999 and 2000
impacts of the CPUC's recent retroactive General Rate Case
decision, as well as several other items related to the
California energy crisis.  Specifically, these items are $66
million, of costs associated with the termination of gas
transportation hedges at the utility; $62 million of additional
interest costs; $25 million of other costs associated with
Pacific Gas and Electric Company's Chapter 11 case; and a gain
of $0.02 per share related to the state income tax effect of the
generation-related revenues mentioned above.

          Third-Quarter Accomplishments at PG&E Company

In September, Pacific Gas and Electric Company and PG&E
Corporation announced a plan to reorganize and refinance the
utility's operations in order to resolve creditors' claims in
the utility's Chapter 11 case.  The Plan of Reorganization filed
in the Bankruptcy Court will enable the company to emerge from
Chapter 11 without asking the court to raise rates or seeking a
state bailout.  Instead, the company will restructure its
operations to create the capacity for new financing to pay
creditors' claims.  The company is on track to make a series of
necessary federal regulatory filings in late November seeking
approvals to transfer certain assets and operating licenses in
order to implement the plan by the end of 2002.

"Pacific Gas and Electric Company continued to successfully
manage the financial and operational challenges associated with
the state's energy crisis," said Glynn.  "In addition to filing
the Plan of Reorganization, our team again delivered on its
commitment to provide safe, reliable and responsive gas and
electric service to its customers, as it has throughout 2001."

In the third quarter alone, the company's service
representatives, meter readers, troublemen and credit
representatives completed over 600,000 field orders, and
maintained an on-time-appointment score of more than 97 percent,
compared with the company's target of 94 percent.  Year-to-date,
the company's call centers have handled 14.6 million customer
calls, up more than 35 percent over volume from the previous
year.  The company has also maintained solid customer
satisfaction survey results, with more than 90 percent of
customers surveyed rating services as good, very good or

On the energy conservation front, the utility's Smarter Energy
Line has answered 425,000 calls year to date, more than double
the number of calls from the previous year.  The utility also
continued its successful energy efficiency rebate programs,
receiving and paying more than 73,000 customer rebate
applications for energy efficient appliances in the third
quarter, and also paying more than $7.7 million in instant in-
store rebates for energy efficient lighting purchases.

   Third-Quarter Accomplishments at PG&E National Energy Group

Among the highlights for the quarter, the PG&E NEG completed a
successful effort to establish a $1.25 billion revolving credit
facility that will provide working capital and credit to finance
the unit's growth plans.

In July, the NEG completed the sale of its Otay Mesa Generating
Project in San Diego County to Calpine.  Under the terms of the
sale, Calpine will build, own and operate the facility and PG&E
National Energy Group will contract for a portion of the output.
Also, the Caledonia generating project in Mississippi, with
which the PG&E NEG has signed an 810-megawatt tolling agreement,
went into construction during the quarter.  (Tolling Agreements
are contracts that provide PG&E Corporation with the rights to
sell electricity generated by facilities owned and operated by
another party.  Under such arrangements, PG&E Corporation
supplies the fuel to the power plant, and then sells the plant's
output in the competitive market.)

In August, the PG&E NEG broke ground on the 1,170-megawatt
Covert generating project in southwest Michigan, and in
September it secured financing and began construction on the
111-megawatt Plains End peaking facility near Denver, Colorado.
The PG&E NEG took also ownership of the 66-megawatt Mountain
View wind-generating facility in Southern California, which will
sell its power to the California Department of Water Resources
under a 10-year contract.  In its natural gas transmission
operations, the PG&E NEG began construction on the expansion of
its Pacific Northwest natural gas pipeline.

"The team at the PG&E National Energy Group continued its solid
performance in the third quarter, as it has throughout all of
2001," said Glynn.

During the quarter, the PG&E NEG continued working to manage the
indirect impacts of the utility's Chapter 11 filing and to shape
its strategy in light of increasingly challenging market

Looking to 2002 and 2003, the PG&E NEG will continue to move
forward with all of the projects currently under construction or
with which it has tolling agreements.  These include the Liberty
Electric, Athens, Southhaven, La Paloma and Harquahala
generating projects.  As a result, the PG&E NEG expects
construction to be completed on more than 5,400 megawatts, plus
almost another 2,200 megawatts from a number of tolling

                    Guidance and Conclusion

The Corporation is reaffirming its previous estimates of total
net income from operations in 2001.  Specifically, the company
continues to expect that net income from operations for the year
will be in the range of $2.70 to $2.75 per share.  For 2002, the
company announced it expects total net income from operations to
grow between 8-10 percent.

"We look forward to running our business well, implementing our
Plan of Reorganization, and continuing to deliver strong and
growing shareholder value," said Glynn.

A conference call with the financial community will be held
today at 11:00 a.m. Pacific time to discuss the company's
results for the quarter.  The call will be open to the public on
a listen-only basis via webcast.  Please visit our website for more information and instructions for
accessing the webcast.  A replay of the conference call will be
available toll-free by calling 877-690-2090, and also will be
available on our website. International callers will be able to
access the replay by dialing 402-220-0651.

PLANVISTA CORP: Operating Loss Balloons to $33.1MM in Q3
PlanVista Corporation (NYSE: PVC) announced its financial
results for the quarter ended September 30, 2001.

                    Financial Results

The Company reported revenues from continuing operations of $7.8
million, compared to $7.1 million in the third quarter of 2000,
or a 10% increase. Third quarter pre-tax loss from continuing
operations totaled $1.1 million, including an $80,000 pre-tax
loss connected with certain restructure and severance
obligations.  By comparison, the Company's pre-tax loss from
continuing operations for the third quarter of 2000 was
$887,000.  Loss from continuing operations, net of applicable
income taxes, was $33.1 million for the third quarter of 2001
compared to $495,000 for the same period in 2000. During the
third quarter of 2001, the Company established a reserve against
its available net operating losses totaling $32.0 million in
accordance with generally accepted accounting principles.  Loss
per share from continuing operations for the third quarter was
$2.16.  Excluding the reserve, the loss per share from
continuing operations for the third quarter was $0.07.  Loss
from continuing operations during the third quarter of 2000 was

Operating income (defined as revenue less operating expenses
before the allocation of corporate overhead, interest,
depreciation and amortization, and taxes) for the third quarter
totaled $3.0 million, compared to $3.2 million in the third
quarter of 2000.  EBITDA (defined as operating income less
allocable corporate overhead) for the third quarter was $2.2
million, compared to $2.6 million for the third quarter of 2000.

                      Operational Activities

PlanVista established a new claim processing record of 272,000
claims in July, which exceeded the previous record by
approximately 13,000.  The third quarter claim volume of 739,000
represented the second highest quarter in the Company's history.
On a year-to-date basis, claim volume is up 33% over the same
time period in 2000.

The ClaimPassXL Internet repricing system, introduced in the
first quarter of 2001, continues to produce excellent results.
Third quarter claim volume was up 312% over the third quarter of
2000, and up 355% on a year-to-year comparison basis.  Revenues
from ClaimPassXL continue to exceed $6 million on an annualized

PlanVista signed new business in the third quarter that is
expected to generate over $6.5 million in new revenue in 2002
and $1.3 million during the fourth quarter of 2001.  Included in
this estimate is the Conseco Services business, the launch
customer for PayerServ, PlanVista's network management
outsourcing product developed to save medical insurance payers
operating costs, and increase claim processing efficiencies.
Excluded from signed new business is the Company's previously
announced global healthcare program, the revenue of which the
Corporation previously indicated may be delayed beyond the
fourth quarter of 2001.  Based upon recent events, expected
revenue from the global healthcare program is projected to
exceed $4 million in 2002.


As previously announced, PlanVista entered into a Forbearance
Agreement with its lending group effective September 1, 2001.
The Forbearance Agreement provides among other things for the
deferral of certain interest payments during the term of the
Forbearance Agreement and gives the Company until December 15,
2001 to restructure its existing credit facility or complete a
refinancing.  The Company is currently negotiating with its
lending group to restructure its credit facility.  The Company
believes it will complete the restructure in accordance with the
terms of the Forbearance Agreement.


The Company's continuing strategy is to expand its business
through internal growth, continued technology development, and a
further diversification of product offerings.  Based upon
expected fourth quarter revenue, Company management believes
year-end revenue and operating income performance will exceed
2001 by approximately 30%.

PlanVista Solutions is a leading health care technology and
product development company, providing medical cost containment
for health care payers and providers through one of the nation's
largest independently owned full- service preferred provider
organizations.  PlanVista Solutions provides network access,
electronic claims repricing, and claims and data management
services to health care payers and provider networks throughout
the United States.  Visit the company's website at

POLAROID CORPORATION: Taps Skadden, Arps for Legal Services
Polaroid Corporation wishes to retain the firm of Skadden, Arps,
Slate, Meagher & Flom (Illinois) as their bankruptcy counsel
under a general retainer to perform the legal services that will
be necessary during the Debtors' chapter 11 cases.

Neal D. Goldman, EVP and Chief Administrative Officer of
Polaroid Corporation, explains that the Debtors have selected
Skadden, Arps because of the firm's pre-petition experience
with, and knowledge of, the Debtors and their businesses, as
well as its experience and knowledge in the field of debtors'
and creditors' rights and business reorganizations under chapter
11 of the Bankruptcy Code.  Mr. Goldman adds that the Debtors
desire to employ Skadden, Arps under a general retainer because
of the extensive legal services that will be required in
connection with the Debtors' chapter 11 cases.

The Debtors will look to Skadden, Arps to:

   (a) advise the Debtors with respect to their powers and duties
       as debtors and debtors-in-possession in the continued
       management and operation of their businesses and

   (b) attend meetings and negotiate with representatives of
       creditors and other parties in interest and advise and
       consult on the conduct of the chapter 11 cases, including
       all of the legal and administrative requirements of
       operating in chapter 11;

   (c) take all necessary action to protect and preserve the
       Debtors' estates, including the prosecution of actions on
       their behalf, the defense of any actions commenced against
       those estates, negotiations concerning all litigation in
       which the Debtors may be involved and objections to claims
       filed against the estates;

   (d) prepare on behalf of the Debtors all motions,
       applications, answers, orders, reports and papers
       necessary to the administration of the estates;

   (e) negotiate and prepare on the Debtors' behalf plan(s) of
       reorganization, disclosure statement(s) and all related
       agreements and/or documents and take any necessary action
       on behalf of the Debtors to obtain confirmation of such

   (f) advise the debtors in connection with the sale of assets;

   (g) appear before this Court, any appellate courts, and the
       U.S. Trustee, and protect the interests of the Debtors'
       estates before such courts and the U.S. Trustee; and

   (h) perform all other necessary legal services and provide all
       other necessary legal advice to the Debtors in connection
       with these chapter 11 cases.

Mr. Goldman tells Judge Walsh that upon entry into the
Engagement Letter dated August 2001, Skadden, Arps was paid a
$250,000 initial retainer.  In addition, with respect to
invoices submitted by Skadden, Arps to the Debtors on a regular
basis, the Debtors paid $836,150 for legal services performed
and charges and disbursements incurred in contemplation of or in
connection with these cases.  All fees and expenses accrued
prior to the Petition Date shall be paid from the initial

During the course of these cases, Skadden, Arps will invoice the
Debtors monthly for services rendered and charges and
disbursements incurred.  Skadden, Arps' standard rate structure
will apply to these cases:

        Partners                             $450 - $675
        Special counsel and counsel          $390 - $440
        Associates                           $215 - $430
        Legal assistants and support staff   $ 75 - $150

Except for sharing arrangements among Skadden, Arps, Slate,
Meagher & Flom (Illinois), its affiliated law practice entities,
and their respective members, Skadden, Arps has no agreement
with any other entity to share any compensation received, nor
will any be made, Mr. Goldman reports.

David S. Kurtz, a member of the Skadden, Arps firm, claims that
they have assembled a highly qualified team of attorneys to
service the Debtors during their reorganization efforts.

According to Mr. Kurtz, Skadden, Arps currently represents, or
has represented certain parties in interest on matters unrelated
to the Debtors, including J P Morgan Chase & Co. (Inc), the
Debtors' post-petition secured lender, and State Street Bank and
Trust, the bond trustee with respect to notes issued by the
Debtors.  Otherwise, Mr. Kurtz assures the Court that, to the
best of his knowledge, the members and associates of Skadden,

     (a) do not have any connection with the Debtors or their
         affiliates, their creditors, or any other party in
         interest, or their respective attorneys and accountants,

     (b) are "disinterested persons," as defined in section
         101(14) of the Bankruptcy Code, and

     (c) do not hold or represent any interest adverse to the
         estates. (Polaroid Bankruptcy News, Issue No. 2;
         Bankruptcy Creditors' Service, Inc., 609/392-0900)

POLYMER GROUP: Fine-Tunes Restructuring Plan to Save Up To $60MM
Polymer Group, Inc. (NYSE: PGI) announced that it is in the
process of finalizing a restructuring plan aimed at producing
annual savings of $55 - $60 million and plans to take a fourth
quarter restructuring charge anticipated to be less than $150
million.  The exact amount of the charge will be determined when
all aspects of the restructuring plan are finalized.

Highlights of the restructuring plan include:

* Fourth quarter restructuring charge of less than $150 million.

* The cash component of the restructuring charge to be
   approximately $10 - $15 million, predominantly for severance

* Non-cash charges are expected to be less than $135 million,
   related primarily to a write-down of goodwill and intangible

* 14% reduction in PGI's worldwide workforce

* PGI anticipates annual savings of approximately $55 - $60
   million from reduced overhead expenses, improved manufacturing
   efficiencies, lower payroll costs and a material reduction in
   Apex qualification and trial costs.

Commenting on this announcement, Jerry Zucker, Polymer Group
Chairman, President and CEO stated, "This is an important step
in positioning Polymer Group to return to growth and
profitability in the coming quarters.  This decision will result
in a repositioning of assets throughout our system, reducing
much of the trial, qualification and commercialization costs of
our Apexr programs and a material reduction in our manufacturing
costs.  This restructuring will result in annual savings in the
range of $55 to $60 million once fully implemented.  The
restructuring program will commence in the fourth quarter and
will continue to ramp-up throughout 2002."

Polymer Group intends to provide employees impacted by the
workforce reduction with severance pay, benefits continuation
and priority hiring in other Polymer Group facilities.

Polymer Group, Inc., the world's third largest producer of
nonwovens, is a global, technology-driven developer, producer
and marketer of engineered materials.  With the broadest range
of process technologies in the nonwovens industry, PGI is a
global supplier to leading consumer and industrial product
manufacturers.  The Company employs more than 4,000 people and
operates 25 manufacturing facilities throughout the world.
Polymer Group, Inc. is the exclusive manufacturer of Miratecr
fabrics, produced using the Company's proprietary advanced APEXr
laser and fabric forming technologies.  The Company believes
that Miratecr has the potential to replace traditionally woven
and knit textiles in a wide range of applications. APEXr and
Miratecr are registered trademarks of Polymer Group, Inc.

                         *  *  *

On April 11, 2001, the Company entered into Amendment No. 6
dated as of April 11, 2001 to its Credit Facility. The amendment
modifies the existing financial covenants relating to senior
leverage ratio, fixed charge coverage ratio and minimum required
levels of EBITDA. The amendment also increases the interest rate
by 75 basis points on the outstanding amounts under the Credit
Facility, limits amounts outstanding under the revolving portion
of the Credit Facility (together with outstanding letters of
credit) to $260 million, limits capital expenditures to $35
million for fiscal year 2001, restricts the Company from making
new investments or acquisitions and prevents the Company from
paying dividends on its Common Stock or making other restricted
payments. The Company was required to pay a fee to the lenders
equal to 1/2 of 1% of the outstanding commitments of the

The Company also affirmed its intention in the amendment to
reduce the amount outstanding under the Credit Facility by not
less than $150 million through one or more asset dispositions,
including sale-leaseback transactions, synthetic leases or asset
securitizations on or before August 15, 2001. In the event that
the Company does not complete such asset dispositions and reduce
outstanding indebtedness under the Credit Facility by not less
than $150 million on or before August 15, 2001, the rate of
interest on the outstanding loans will increase by 50 basis
points and the Company will be required to pay a fee equal to
1/2 of 1% of the outstanding commitments of the lenders. The
Company is currently in active discussions to undertake such
asset dispositions to improve its financial condition.

In addition, the Company intends to take certain actions
designed to alter its capital structure which may include
raising additional equity and/or reducing outstanding
indebtedness. Currently the Company has not completed any of the
above transactions and anticipates certain transactions to be
finalized during the third and fourth quarters of 2001. As a
result, the Company anticipates paying on August 15, 2001 the
fee of 1/2 of 1% of the outstanding commitments of the lenders.
In addition, the Company anticipates the interest rate on its
outstanding senior debt to increase by 50 basis points. There
can be no assurance that the Company will complete any of the
potential transactions or that the transactions can be completed
on terms and conditions acceptable to the Company.

Amendment No. 6 also grants the Company a waiver with respect to
the default under the leverage covenant existing on March 31,
2001 through and including December 29, 2001, at which time the
waiver expires. Based upon current operating projections, the
Company would be in default under the Credit Facility upon the
expiration of the waiver, unless certain of the actions
described above were completed. A failure by the Company to
complete the actions described above in order to comply with the
financial covenants under the Credit Facility including the
leverage ratio and fixed charge coverage ratio covenants, would
result in an event of default under the Credit Facility, which
could have a material adverse effect on the Company.

SAFETY-KLEEN CORP: Obtains Fourth Extension of Exclusive Periods
Safety-Kleen Corp. sought and obtained from Judge Walsh a
further extension of their exclusive right to present a plan of
reorganization, through and including January 31, 2002.
Additionally, Judge Walsh extends Safety- Kleen's exclusive
period during which to solicit acceptances of a plan of
reorganization to and including April 1, 2002.

In support of this request, the Debtors tell Judge Walsh that
they need a further extension of these periods to determine the
most effective way to maximize the value of their estates for
the benefit of all creditors; to formulate, negotiate and file a
plan that achieves that goal; and to solicit acceptances of that
plan.  Ms. Widdoss reminds Judge Walsh that in determining
whether to grant an extension the Court may consider, among
other factors:

      (a) The size and complexity of the Debtors' cases;

      (b) The existence of an unresolved contingency, and
          the need to resolve claims that may have a substantial
          effect on a plan;

      (c) The Debtors' progress in resolving issues facing
          their estates; and

      (d) Whether an extension of time will harm the Debtors'

However, Ms. Widdoss says that the most important factor to be
considered is whether the Debtors have had a reasonable
opportunity to (a) negotiate an acceptable plan with their
creditor constituencies and other interested parties; and (b)
prepare adequate financial and non-financial information
concerning the ramifications of that plan for disclosure to

In this case, a further six-month extension is warranted

         (1) The size and complexity of the Debtors' Chapter 11
cases alone constitutes sufficient cause to further extend the
exclusivity periods. The Debtors' have described assets worth
more than $4.45 billion, and debts of more than $3.14 billion.
The 74 debtors whose jointly administered cases are pending
constitute the largest hazardous and industrial wastes company
in North America, collectively employing more than 10,000, and
serving 400,000 customers in 47 states through a network of
almost 300 operating facilities.  The Debtors' cases are also
complex. The Debtors' current business operations are the
product of numerous acquisitions and other business
consolidations, some of which were not fully assimilated prior
to the filing of these cases. The success of the Debtors'
business plan involves, among other things, completion of the
assimilation of these varied enterprises into a cohesive unit,
and/or divestiture of those operations that do not, and will
not, provide a strategic fit or advantage for the Debtors on a
going-forward basis.

         (2) The Debtors have made significant progress in
resolving issues facing their estates, Ms. Widdoss claims.  Ms.
Widdoss cites as a primary example of that progress the
presentation of numerous objections to claims and the Debtors'
continued satisfaction of postpetition obligations.

The requested extension will not prejudice any party in
interest.  The Debtors have timely met, and continue to timely
meet, their postpetition obligations.  Further the Debtors
continue to work closely with their various creditor
constituencies to develop a consensual plan.

The Debtors tell Judge Walsh these facts strongly militate in
favor of granting the requested extensions. (Safety-Kleen
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

SUN HEALTHCARE: Seeks Approval to Divest Two THCI Facilities
The Beverly Facility in Massachusetts and Cheshire Facility in
Connecticut together lost more than $4.6 million in 2000 before
interest, taxes, depreciation, and amortization. Based on
annualization of actual results for the first four months of
this year, Debtors estimate that these facilities may lose more
than $5 million in 2001. Sun Healthcare Group, Inc. have
determined that these facilities must be divested.

THCI Company LLC has recently become the landlord by acquisition
from the former landlord Meditrust and related entities.

THCI does not challenge the Debtors' exercise of their business
judgment in concluding that divestiture of these facilities is
in the best interest of the estate. However, THCI claims that
the portfolio of leases which the Debtors now lease from THCI
must be either assumed or rejected in their entirety. Debtor
entities currently lease from THCI thirty-five different
healthcare facilities located in six states. In addition,
Debtors own four additional facilities on which THCI or related
entities hold the mortgage.

Alleging hardship to the landlord, THCI asserts that the Motion
should be denied because it "would deprive THCI" of the "benefit
of the bargain" that its predecessor sought in entering into the
respective leases. The Debtors note that what THCI maintains is
that the Debtors cannot exercise their business judgment to
decide which leases should be rejected because they are a
significant drain on the estates' resources and which leases
should be assumed because they are beneficial to the Debtors and
their estates.

What THCI really objects to is the operation of section 365 of
the Bankruptcy Code itself because this section of the
Bankruptcy Code expressly deprives landlords of the benefit of
their bargain in order to facilitate the reorganization of
financially troubled debtors and maximize the return for all
creditors of the estate, Debtors argue in their Reply Memorandum
in support of their motion for divestiture of the Facilities.

The Beverly and Cheshire facilities, as well as every other
facility the Debtors lease from THCI, are subject to separate
leases, the Debtors contend. To argue for this, the Debtors
first draw the Court's attention to the following:

        --- Each of these leases establishes a separate and
distinct rent obligation for each facility. The monthly rent for
the Beverly facility is approximately $89,800. The monthly rent
for Cheshire facility is approximately $122,000.

        -- The tenants of the 35 different leases in the Sun/THCI
portfolio are various different Debtor entities. For example,
the tenant at Beverly is Debtor Mediplex of Massachusetts, Inc.,
while the tenant at Cheshire is Debtor Mediplex of Connecticut,

        -- Prior to THCI's acquisition of the properties, there
were different (though related) landlords for many of the
facilities, including Meditrust, Meditrust of Massachusetts,
Inc., sub-groupings.

        -- The only connections between the various leases in the
portfolio are: (1) the existence of general cross-default
provisions relating to all transactions between the parties; and
(2) provisions in some, but not all leases, requiring that, if
the Debtors elect to exercise extensions of the lease terms or
purchase options, they must do so for all facilities within
certain sub-groupings. These provisions were inserted into the
Beverly and Cheshire leases by amendment in 1994 at the request
of Meditrust and related entities, the former landlords, as a
condition to Meditrust's consent to the merger of Sun Healthcare
Group, Inc., and The Mediplex Group, Inc. Further, these
provisions are found in only 26 of the 35 leases between the

In refute of THCI's objection, the Debtors argue as follows:

    (A) The Motion Is Procedurally Sound

The Motion requests a ruling from the Court that the cross-
default provisions in the leases are unenforceable as a matter
of federal bankruptcy law.

THCI asserts two procedural objections to the Motion: (1) that
it is an improper request for an "advisory opinion" on the
enforceability of cross-default provisions; and (2) that it is
premature because the Debtors have not presented a "detailed
divestiture plan for approval by the Court." Both are spurious
attempts to further delay resolution of this Motion, which has
been pending before the Court for more than six months, the
Debtors tell the Court.

The Debtors point out that THCI's own objection makes perfectly
clear that there is a concrete dispute between Debtors and THCI
on this question of law. Indeed, THCI specifically claims that
the existence of the cross-default provisions would preclude
Debtors from assuming other leases with THCI if they reject the
leases for the Beverly and Cheshire facilities. Accordingly, the
issue plainly is a justiciable controversy, sharpened by the
adversarial positions of the parties, and not a request for an
"advisory opinion."

A motion is a proper form of proceeding for resolution of the
cross-default issue, the Debtors assert, on the following bases:

-- Numerous bankruptcy courts have adjudicated the
    enforceability of cross-default provisions in the context of
    contested matters pursuant to Rule 9014.

-- Section 105(a) of the Bankruptcy Code permits the Court to
    "issue any order, process, or judgment that is necessary or
    appropriate to carry out the provisions of this title" and in
    the present case, the cross-default provisions, if enforced,
    would substantially impair the Debtors' ability to reorganize
    and contravene the specific provisions of 365 of the
    Bankruptcy Code.

-- There is nothing in Bankruptcy Rule 7001 that requires
    Debtors to commence an adversary proceeding to adjudicate the
    enforceability of cross-default provisions; Divestitures
    governed by sections 363(b) and 365(a) are not listed within
    the eight specifically enumerated types of adversary
    proceedings covered by the rule.

There can be no assertion that Debtors' decision to proceed by
motion failed to give the landlord a reasonable opportunity to
address the cross-default issue, the Debtors argue. The Motion
has been pending for more than six months, and Debtors
repeatedly granted consensual extensions of both the objection
and hearing deadlines to accommodate the closing of THCI's
purchase of the Meditrust portfolio, the Debtors point out. In
addition, THCI has had an opportunity to conduct discovery on
the Motion, the Debtors remind the Court.

In response to THCI's contention that Debtors have not
formulated an appropriate transition plan for the two affected
facilities, the Debtors point out that their facility
divestiture efforts have been underway since prior to petition
for bankruptcy and since the petition date have been subject to
extensive oversight by the Court, which has enabled the
implementation of uniform facility transfer procedures that have
been utilized to transfer approximately 50 healthcare

Moreover, in the event of a closure of the facilities, the
Motion specifically contemplates that such closure will be
subject to applicable state law requirements and that rejection
of the leases will become effective only upon completion of the
closure process, the Debtors remind the Court.

    (B) The Applicable Legal Standard Permits Debtors to Reject
        Certain Leases with THCI and Assume Others

The crux of THCI's objection is that the 35 separate leases
between the various Debtors and THCI constitute a single,
integrated transaction. THC1 thus contends that Debtors cannot
reject the leases for the two facilities subject to the Motion
unless they also reject all the remaining leases as well.

The Debtors point out that this issue appropriately is analyzed
in a similar case involving another healthcare industry debtor,
In re Integrated Health Services., Inc., No. 00-389 (MFW), in
which the Court concluded that a series of leases for healthcare
properties and a related non-competition agreement, all of which
were executed at the same time and had the same commencement and
termination dates, were severable and that assumption of the
leases did not require assumption of the non-compete agreement.

In the subject case, each of the relevant leases provides that
it is to be governed by the law of the state where the leased
property is located. The Debtors assert that this in and of
itself is strong evidence the obligations under the multiple
leases are severable, because if all the leases were treated as
a single contract the various choice of law clauses would be
meaningless as to any issue on which there was a conflict of
laws. In particular, the Beverly facility is located in
Massachusetts and Cheshire is in Connecticut. With respect to
severability of contracts, Massachusetts and Connecticut law are
substantially the same. Each provides that a contract is
severable if it consists of several distinct items to be
furnished or performed by one party and the consideration may be
apportioned to each item according to its value as a separate

Applying this to the subject leases, the Debtors point out that
the performance under each lease is matched with separate and
independent consideration. Each lease covers a separate facility
and expressly requires a distinct rent payment for that
facility. Thus, even if the entire lease portfolio is viewed as
a related whole, the multiple leases still are severable under
Massachusetts and Connecticut law because each expressly
provides for distinct items of performance matched with
corresponding consideration (rent) clearly apportionable to each
facility, the Debtors argue.

    (C) The Consent Agreement Does Not Integrate the Leases

THCI urges that the Consent Agreement between Debtors and
Meditrust suggests an intent to treat all the leases as an
integrated transaction.

The Debtors contend that this is incorrect for a variety of

First, contrary to THCI's suggestion, granting the Motion does
not in any way require the Court to modify the Consent

Second, the Consent Agreement is not an integrated part of the
leases but nothing more than an agreement to agree on proposed
amendments to the separate leases in the portfolio and it was
fully performed in June of 1994 - five months after its
execution - when Debtors and the Meditrust entities amended the
applicable leases. The correct inquiry is not what the Consent
Agreement says, but rather whether the actual leases themselves,
as amended, create "independent legal obligations" the Debtors

On the point of intent, the Debtors note that nothing in the
Consent Agreement suggests any mutual agreement to place less
profitable facilities in groupings with more profitable ones, as
THCI now claims. With respect to the affidavit of Mr. Michael S.
Benjamin, the Debtors contend that parol evidence on the intent
of the parties is particularly inadmissible where the contract
in question contains an integration clause excluding such
evidence. In this regard, the Debtors point out that the Consent
Agreement contains a broad integration clause, providing that
the document is the "entire agreement of the parties as to the
subject matter hereof and supercedes all other understandings,
both oral and written."

As far as the Consent Agreement is concerned, the Debtors
further argue that the fact that Debtors and THCI's predecessor
amended the various leases in a single transaction does not
suggest that the leases must be treated as a single, indivisible
contract for purposes of section 365 of the Bankruptcy Code.

THCI asserts the existence of cross-default provisions in the
leases as evidence of the parties' intent to enter into a
single, integrated agreement. The Debtors contend that the
cross-default provisions are unenforceable as a matter of
federal bankruptcy law and thus themselves are severable from
the leases.

    (D) Cross-Default Provisions in Real Property Leases Are
        Generally Ineffective in Bankruptcy

Contrary to THCI's argument that cross-default provisions are
only invalidated in "the most limited circumstances," they are
generally viewed as "inherently suspect" within the context of a
bankruptcy case, the Debtors assert.

THCI urges that the "goal of the grouping arrangements and
cross-default provisions was to avoid precisely what the Debtors
are attempting to accomplish with the instant Motion...." Thus,
what THCI really contends is that the very intent relating to
amendment of the leases in 1994 was - at least from the
landlord's perspective - to prevent Debtors from some day
invoking section 365(a) of the Bankruptcy Code to reject some
leases and assume others. Even assuming that THCI's contentions
in this regard are entirely correct, it should be recognized
that contractual provisions purporting to negate the effects of
the bankruptcy laws are generally unenforceable:

        Bankruptcy law is not subject to artful drafting.
        Business lawyers are accustomed to working with statutes
        that can be superseded by agreement of the parties.

        Bankruptcy law is otherwise. Its chief purpose is to
        relieve debtors of their improvident agreements. At the
        same time, it permits a trustee or debtor in possession
        to take advantage of those agreements that are
        beneficial, for the benefit of creditors. A trustee or
        debtor in possession must be permitted to pick and
        choose, to make this determination authorized by section

        Where a debtor has purchased multiple business
        establishments from a seller in the same transaction,
        artful drafting of the sales documents cannot be
        permitted to circumvent section 365.

The Debtors argue that enforcement of the cross-default
provisions would conflict with several express requirements of
the Bankruptcy Code.

First, the universe of permissible restrictions on a
debtor/tenant's ability to assume or assign an unexpired lease
of real property is delineated in section 365(c) of the
Bankruptcy Code. Nowhere in section 365(c) is mention made of
cross-default provisions in a lease.

Second, the plain language in section 365(e)(1)(A) renders
ineffective any contractual provision conditioned upon the
financial condition of the debtor. Because the Debtors are
unable to perform under the two leases, which is indicative of
the Debtors' financial problems, the cross-default provisions
operate as impermissible financial condition clauses. See In re
Sambo's Rests., Inc., 24 BR. at 757.

Finally, cross-default provisions circumvent the limit set by
section 502(b)(6) as to damages a lessor may claim for a
terminated lease. The Debtors note that THCI attempts to create
a situation which would require the Debtors to cure all defaults
on all leases as a condition to assumption of any lease, with
the result that the Debtors' rejection of a lease would put THCI
in a position of recovering, in the guise of cure payments,
rejection damages in an amount far in excess of that allowed by
the Bankruptcy Code.

For the foregoing reasons, Debtors request the Court grant the
Motion and authorize divestiture of the Beverly and Cheshire
facilities and order that the cross-default provisions in the
other leases between the Debtors and THCI cannot be enforced to
preclude assumption and/or assignment of such other leases. (Sun
Healthcare Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

SUSTAINABLE ENERGY: Financing Talks with Sabre Energy Crumble
Sustainable Energy Technologies Ltd. announced that the
Independent Committee of Directors appointed to negotiate the
proposed financing by Sabre Energy Ltd. was unable to reach
agreement with Sabre on terms that could be accepted by the
Company. With the failure to reach agreement, two outside
directors George Simos, and Ted Smith have resigned as

Sabre owns approximately 30% of the issued and outstanding
shares of the capital stock of Sustainable Energy, and is
represented on the board of directors by its President, Neal
Pirie. To date, Sabre has advanced $314,000 to the Company.

As the Company has very little remaining funds, it is
immediately suspending research and development operations in
Richland, WA and will look for alternative solutions, which may
include a sale of the power electronics technologies or a sale
of the Company as a whole.

However, the Company has been in discussion for several months
with a large European power supply company to have that company
contribute to ongoing commercialization of Sustainable Energy's
power electronics products. These discussions are well advanced
and while there is no assurance that agreement can be reached on
a timely basis, the Company believes that it may be able to
resume work in Richland WA in the very near future.

The Company has developed three products for alternative energy
and distributed generation markets:

--  A 5 kW power "inverter" for off-grid and grid-connected
distributed power systems that uses a patented hybrid switching
technology and advanced microprocessor controls to convert
variable voltage direct current ('dc") inputs from alternative
energy power sources such as fuel cells, solar and wind power
into high quality alternating current ("ac") outputs with much
higher (7% - 15%) efficiencies than competitive products on the

--  A 5kW kW "back up power management module" that combines the
5kW inverter with a proprietary bi-directional dc/dc converter
to enable alternative energy power sources to operate in tandem
with an energy storage device, such as a battery, to provide
premium power through a full range of load changes in off-grid
applications and in grid-connected applications during power

--  A 60A dc buck converter with maximum power point tracking
that is designed to use solar energy as a power source for the
remote telecommunications market.

The products are distinguished by the extensive use of advanced
microprocessor control of the power flow and an emphasis on
total system integration to create a software control platform
that allows each of the products to be operated alone or in
combination and to be easily configured, with software changes,
to meet application specific requirements.

"Both the inverter and dc converters are at the prototype stage
and the capital required to bring the products to market is very
modest by any standard." said Michael Carten President and CEO
of the Company. "We have successfully tested the inverter at the
Sandia National Laboratories in Albuquerque and there is a great
deal of interest in the products from alternative energy
companies, electronics companies and utilities, especially for
the grid connected backup power market in the United States."

U. S. AIRWAYS GROUP: Reduces Capacity By 23% in Third Quarter
US Airways Group, Inc. reported it had an operating loss of $369
million and a net loss of $433 million for the third quarter of
2001 before accounting for unusual items.

Including unusual items, US Airways Group had an operating loss
for the period of $750 million, a net loss of $766 million and a
loss on a diluted per-share basis of $11.42.

For the third quarter reported earnings, US Airways did not
recognize any accounting benefit of a tax credit. US Airways
currently has a net deferred tax asset of $427 million. Going
forward, with the restructuring activities underway, the company
expects to earn pre-tax income of at least $1 billion to support
this asset. However, given the large unusual losses for the
third quarter, the company believed it prudent not to increase
this asset.

"US Airways and other airlines today face the most significant
challenge in the history of our companies. That challenge is
being met at US Airways through a series of major initiatives
that will position the company to deal with the current economic
environment.  At the same time, our core structure remains sound
and provides a solid foundation for the future. In terms of
cash, we began the quarter with $1.25 billion and we completed
the quarter with $1.04 billion. Through increased passenger
revenues and reduced operating costs, along with certain efforts
under way to raise additional funds, we expect to end the year
with $800 million to $900 million in cash," said US Airways
President and CEO Rakesh Gangwal.

"To deal with the dramatic decrease in passengers and revenues
as a result of the events of September 11, we have reduced our
capacity by 23 percent. In implementing our capacity reductions,
we are continuing service to the communities previously served
by the US Airways system," Gangwal said.

"At the same time, these circumstances forced us to reduce the
number of our employees by approximately 11,000. The reductions
were a difficult and painful decision to make because these
dedicated employees are part of our family and provide excellent
service to our customers. However, with the help of an enhanced
voluntary leave program, we have been able to reduce the number
of furloughs by more than 2,000."

Gangwal noted that "US Airways' employees have worked long and
hard under difficult conditions to operate a high-quality
airline. Our on-time performance since September 11, for
example, has been a stellar 87 percent. We very much appreciate
the understanding and loyalty of our customers and are pleased
to see them return to US Airways."

US Airways Chairman Stephen M. Wolf said, "In these trying times
for our country and our company, US Airways and its employees
remain focused on providing the highest quality of service to
our customers."

From September 14, when air service was allowed to resume,
through September 22, US Airways carried about 65,500 passengers
daily with a 45.9 percent load factor. From September 23 through
the end of the month, the average number of daily passengers
increased to about 95,000 and the load factor to 52.8 percent.
For the month of October, through this past week, daily
passengers have averaged about 115,500 and the load factor has
been 62.4 percent. The trend has been similar at the wholly-
owned US Airways Express carriers, with the average number of
daily passengers increasing from 14,700 during the period
September 14-22 to 23,800 during the period September 23-30 and
about 30,000 for the month of October, through this past week.
The load factor during the period September 14-22 was 26.9
percent. This increased to 42.8 percent during the period
September 23-30 and has averaged 50.1 percent for October.

Further, operations at Washington's Reagan National Airport are
rebuilding, with the US Airways Shuttle running again on an
hourly schedule and with service to hubs in Charlotte,
Philadelphia and Pittsburgh. "We look forward to continuing to
rebuild at Reagan National," Gangwal said.

Gangwal noted that US Airways had a number of cost-saving
initiatives under way prior to the events of September 11, and
that these measures, along with the significant restructuring
introduced in recent weeks, will make US Airways a much more
efficient airline, benefiting the company going forward. Major
steps taken since September 11 include:

      - The retirement of three fleet types - the F-100, the B-
737-200 and the MD-80 - which will leave US Airways with a fleet
of newer Airbus A320 family and A330 and B-737, 757 and 767
aircraft. This will result in material savings in the areas of
overhead, inventories, flight crew and ground employee training
and day-to-day operations.

      - With the earlier retirement of B-727s and DC-9s, the
retirement of these three fleet types means that within a period
of two years, US Airways will have gone from seven types of
narrow-body aircraft to two - the A320 family and the B-737-
300/400 family.

      - The realignment of heavy maintenance operations to focus
on B-737 aircraft at the Pittsburgh maintenance facility and on
B-757 and 767 and A330 aircraft at Charlotte. This will result
in greater efficiencies in maintenance scheduling and parts
inventories. The location for heavy maintenance of A320 family
aircraft is pending. With the retirement of the B-737-200 and
MD-80 fleets, US Airways will no longer operate in-house engine
maintenance facilities.

      - The realignment of reservations operations from seven
centers to three, with related savings on rents and other

In addition, US Airways also has rescheduled aircraft
deliveries. Of the 12 Airbus A321s previously scheduled for
delivery in 2002, three now are rescheduled for delivery in 2006
and beyond with the remaining nine still scheduled for 2002.
Additionally, there is flexibility to cancel four of the nine
A321s now scheduled for delivery in 2002, although subject to
very significant penalties. Unique and favorable financing
commitments are in place to cover almost the full purchase price
of these aircraft at investment grade borrowing costs. One A330
aircraft scheduled for delivery in 2004 now is scheduled for
2007. As a result of these changes, there are no new aircraft
deliveries scheduled for 2003 or 2004 and only three aircraft
are scheduled for delivery in 2005. Non-aircraft capital
spending is expected to be less than $20 million in 2002.

During this quarter, US Airways had unusual items both relating
to and separate from the events of September 11.

As announced on August 10, US Airways recognized a pre-tax
aircraft impairment charge of $403 million relating to a write
down in value of its fleet of F-100, B-737-200 and MD-80
aircraft. Also prior to September 11, US Airways recognized a
pre-tax gain of $50 million for the fee received relating to the
termination of the merger agreement with United Air Lines.

As a result of the events of September 11 and the company's
restructuring initiatives to deal with a dramatic decrease in
passengers and revenue, US Airways recognized an additional
charge of $309 million. Actions were implemented quickly to
reduce capacity, retire three older and inefficient aircraft
fleets by early 2002, reduce headcount and close a number of
facilities. The primary components of this restructuring charge

      - Further impairment of aircraft and related spare parts
        $214 million
      - Employee severance, including benefits $75 million
      - Other (write-off of capitalized leasehold improvements
        and accrual for future lease commitments) $20 million

In line with recent accounting guidance, US Airways Group also
recognized $331 million as a reduction to operating expense for
the full expected amount of the federal Airline Stabilization
Act grant.

For the third quarter of 2001, including unusual items, US
Airways Group's operating loss of $750 million compares to
operating income of $5 million for the third quarter of 2000.
Operating revenues for the quarter of $2.0 billion were 16.5
percent below comparable figures for 2000, including the impact
of the events of September 11, while operating expenses of $2.7
billion were 15.3 percent higher than the previous year. The net
loss for the quarter of $766 million compares to a net loss of
$30 million for the third quarter of 2000. The diluted loss per
common share of $11.42 compares to a diluted loss per common
share of $0.45 in 2000.

Revenue passenger miles for the quarter, including the impact of
the events of September 11, were down 5.4 percent as compared to
the third quarter of 2000 as available seat miles declined 2.9
percent. The passenger load factor for the period was 71.1
percent, down by 1.8 percentage points from the third quarter of
2000. Passenger revenue per available seat mile of 9.15 cents
was 17.8 percent below that of 2000 while cost per available
seat mile of 12.18 cents was lower by 0.8 percent. The cost of
aviation fuel per gallon was 84.40 cents, a decrease of 14.1
percent, while gallons consumed decreased 6.9 percent.

For the first nine months of 2001, excluding unusual items, the
operating loss, was $554 million, the net loss was $613 million
and the diluted loss per common share was $9.15.

For the first nine months of 2001, including unusual items, the
operating loss of $957 million compares to operating income of
$34 million in the first nine months of 2000. Operating revenues
of $6.7 billion were down by 2.7 percent while operating
expenses of $7.7 billion were higher by 11.7 percent, including
the impact of the events of September 11. The net loss for the
first nine months of $960 million compares to a net loss of $168
million for the comparable period of 2000. The diluted loss per
common share of $14.32 compares to a diluted loss per common
share of $2.52 for 2000.

Revenue passenger miles for the first nine months were up by 6.3
percent while available seat miles increased 6.8 percent. The
passenger load factor for the period of 70.4 percent was down
0.3 percentage points from 2000. Passenger revenue per available
seat mile for the first nine months of 2001 was 10.23 cents,
down 11.8 percent, while cost per available seat mile of 12.36
cents was lower by 3.1 percent. Cost of aviation fuel per gallon
was 88.80 cents, a 2.5 percent decrease from 2000, while gallons
of fuel consumed increased by 3.3 percent.

UBIQUITEL: S&P Revises Outlook After Via Wireless Acquisition
Standard & Poor's revised its outlook on Sprint PCS affiliate
UbiquiTel Inc. and unit UbiquiTel Operating Co. to positive from

At the same time, Standard & Poor's affirmed its single-'B'-
minus corporate credit ratings on UbiquiTel and UbiquiTel
Operating Co., and affirmed its single-'B'-minus senior secured
bank loan and triple-'C' subordinated debt ratings on UbiquiTel
Operating Co.

The outlook revision is based on the successful completion of
UbiquiTel's initial network buildout, improvement in operating
and financial metrics, and completion of the Via Wireless

UbiquiTel's operating performance has been strong since
inaugurating personal communications service (PCS) in 2000,
exceeding coverage and subscriber count expectations. In the
third quarter of 2001, the company completed its initial network
buildout, covering about 63% of its service area, which was well
ahead of Standard & Poor's expectations. Subscriber count also
posted strong growth in the period, ending the third quarter at
132,000, including 57,000 customers from Via Wireless. The
acquisition of Via Wireless was completed in August 2001, and
added 3.4 million population equivalents (pops) and 50,000
subscribers at close. The conversion of Via Wireless to a type
II from a type III affiliate was also successful, meaning
that its billing, customer services, and activations are now
provided by Sprint PCS. This conversion not only generates cost
savings but allows for more efficient network management.

Coverage improvement and a relatively low percentage of Account
Spending Limit subscribers in the customer base helped the
company maintain churn at about 2.9% in the second and third
quarters of 2001. Nonetheless, this metric is still relatively
high compared with its affiliate peers. Solid subscriber growth
leveraged UbiquiTel's own retail distribution channel, and
helped bring down cost per gross addition (CPGA) to $387 in the
third quarter of 2001 from $422 in the second quarter. Service
ARPU has also exceeded original estimates, reaching $61 in the
period, which is well above the industry's average.

Roaming revenue was very strong and represented about 39% of
total revenues in the third quarter. Although the reciprocal
roaming rate for Sprint PCS and its affiliates will decline to
10 cents by January 2002, a favorable balance of inbound to
outbound traffic of about three-to-one, the contiguity of
UbiquiTel's service territory to several of Sprint PCS's markets
in California and Oregon, and high tourist traffic in some of
UbiquiTel's markets are expected to provide sources of stability
to UbiquiTel's roaming revenue base. As a result of strong ARPU
and roaming revenues, cost controls, and savings related to the
migration of Via Wireless to Sprint PCS billing and customer
services platforms, EBITDA loss was flat in the third quarter
compared with the second quarter, despite robust subscriber

The ratings on UbiquiTel also take into account the competitive
challenges the company faces from well-established cellular and
PCS providers in its markets. In addition, financial measures
are expected to remain weak over the intermediate term as the
company grows its subscriber base. EBITDA is expected to break
even in early 2003 and fully cover interest expenses by 2004,
and free cash flow is expected by 2004. Financial flexibility is
derived from a completed network buildout and the company's
fully funded business plan.

                       Outlook: Positive

UbiquiTel successfully deployed its network and services in its
first year of operation, with coverage improvement, sustainable
subscriber growth, and healthy ARPU levels. If the company
continues to execute its business plan well and cash flow
measures improve, the ratings could be raised within the next
two years.

VALENCE TECHNOLOGY: 2002 Second Quarter Revenues Drop 81.6%
Valence Technology, Inc. (Nasdaq:VLNC), a leader in the
development and commercialization of Lithium-ion polymer
rechargeable batteries, reported financial results for second
quarter of fiscal year 2002 ended September 30, 2001.

Revenue for the second quarter of fiscal year 2002 was $527,000,
representing a decrease of 81.6% from $2.9 million in the first
quarter of 2002, and a decrease of 74.9% from $2.1 million in
the second quarter of fiscal year 2001. System sales represented
more than 90% of the total revenue for the second quarter 2002.

For the second quarter of 2002, the company reported a net loss
of $10.1 million, compared with a net loss of $9.1 million in
the first quarter of 2002 and a net loss of $9.3 million in the
second quarter of 2001.

Stephan B. Godevais, Valence's president and chief executive
officer, said, "The good news is that we met our expectations
for the quarter. In line with our previous guidance, we
experienced a decline in revenue. We are on target with our
business plan in almost every area. We continue to focus our
efforts on the systems and licensing pipelines and we are
pleased with our traction on these fronts."

                    Business Strategy Update

Valence provided the following updates on progress relative to
the company's business strategy outlined in August. To date, the

--  completed its management team with the addition of David St.
Angelo as vice president, licensing. St. Angelo comes to Valence
with more than 14 years of experience including Motorola and
Mobil Solar Energy Corporation.

--  remains on track with its phosphate development. Valence
began transitioning phosphate manufacturing from its R&D
facility to its manufacturing plant in Northern Ireland. The
company is on schedule with this transition to the mass
production of phosphate cells by the first quarter of fiscal
year 2003.

--  launched a communications effort to evangelize Valence's
technology. This included a two-week industry analyst, media and
investor tour to promote a solid understanding of Valence's
technology and future prospects.

--  received the new, high-speed assembly equipment at the
Mallusk facility. The new equipment will enable Valence to reach
manufacturing levels of one million cells per month by the
middle of 2002.

--  is making headway with potential customers in the systems
arena. The company announced a collaborative investigation of
its phosphate technology with Wistron Corporation today.

--  has established a new sales process for the licensing
business that indicates longer sales cycles than Valence had
originally anticipated. As a result, the schedule for signing
new licensees may take more time than originally planned.
However, the company emphasizes that this is a potential timing
issue, and not an issue with its technology.

--  has completed $20 million in financing with Berg & Berg
Enterprises, LLC.

Valence is a leader in the development and commercialization of
Lithium-ion polymer rechargeable batteries. Valence has more
than 790 issued and pending patents worldwide, including 284
issued in the U.S. Valence operates facilities in Austin, Texas,
Henderson, Nevada, and Mallusk, Northern Ireland. Valence is
traded on the Nasdaq National Market under the symbol VLNC.
Valence can be found on the Internet at

As at Sept. 30, 2001, the Company's total current liabilities
exceeded its current assets by over $17 million, while its cash
and cash equivalents and receivables totaled $2.7 million, as
opposed to current portion of long-term debt amounting to $16.5

VLASIC FOODS: Creditors' Committee Backs Plan Confirmation
The Official Committee of Unsecured Creditors of Vlasic Foods
International, Inc. wholeheartedly supports the confirmation of
the Plan.  Michael R. Lastowski, Esq., at Duane, Morris &
Heckscher, LLP, in Wilmington, Delaware, asserts that the Plan
satisfies the requirements of the Bankruptcy Code.

According to Mr. Lastowski, Campbell Soup Company and The
Money's Trust's objections to the confirmation of the Plan have
no merit and should be overruled.

Mr. Lastowski notes the objecting parties have offered
absolutely no evidence to support the idea that the Committee or
the LLC Manager have or will breach their fiduciary duties.  Mr.
Lastowski remarks that the objecting parties' allegation that
"the Committee's involvement in the selection of the LLC Manager
will create an entity that is intent on breaching its fiduciary
duty and is beholden to the interests of bondholders rather than
all creditors" -- is highly speculative.  Mr. Lastowski
emphasizes that both the Committee, now, and the Manager of VFI
LLC, post-confirmation, have fiduciary duties to their
respective constituents.  Mr. Lastowski reminds the Court that
the Plan and the LLC Members Agreement were modified, at
Campbell's request, to further clarify the obvious -- that the
LLC Manager's fiduciary duty runs to all members of the LLC.

"The mere fact that the Committee may contain more bondholders
than trade creditors does not diminish this fiduciary duty nor
does it limit the Committee's ability to act in the
representative best interests of all creditors," Mr. Lastowski
argues.  Accordingly, Mr. Lastowski notes, it must be assumed
that the Committee will appoint a LLC Manager without regard to
individual creditor self-interests and/or the effect that such
an appointment may have on any particular creditor or creditor

Furthermore, Mr. Lastowski remarks, it is unfair of the
Objecting Parties to presume that the LLC Manager so appointed
will disregard its own fiduciary duty.  "Such an unwarranted and
unsupported speculation runs contrary to common sense, Mr.
Lastowski criticizes.

"Contrary to the Objecting Parties' assertions, the Manager has
no conflicts of interest, as its only interest is to manage the
LLC in a way which will maximize any potential recovery to the
members of the LLC, since the greater the recovery, the greater
the return to LLC Members," Mr. Lastowski explains.  Thus, Mr.
Lastowski says, it must be assumed that the Manager will
diligently pursue the causes of action held by the LLC for the
benefits of the LLC Members.

"Put simply, the Objections are nothing more than unwarranted
and unrealistic predictions that both the Committee and the duly
appointed LLC Manager will eagerly and intentionally breach
these clear fiduciary duties based upon non-existent conflicts
of interest," Mr. Lastowski summarizes.

Thus, the Committee asks Judge Walrath to overrule the
objections. (Vlasic Foods Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

WARNACO GROUP: Court Extends Objection Deadline to November 19
The Committee of The Warnaco Group, Inc. and the Debt
Coordinators inform the Court that they are currently
negotiating a possible consensual resolution of issues relating
to potential claims the Committee may assert against the Pre-
Petition Lenders and a possible consensual extension of the
Objection Deadline.

In the meantime, Judge Bohanon notes that it appears that the
relief requested is in the best interest of the Debtors, their
estates and creditors.  Thus, the Court extends the objection
deadline through and including November 19, 2001.  The Committee
has until that date to object to the validity, perfection,
priority or enforceability of the pre-petition indebtedness; or
assert any avoidance power claims or causes of action against
any of the pre-petition lenders. (Warnaco Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)

ZEROPLUS.COM: Begins Process to Surrender Assets to Loan Holder
---------------------------------------------------------------, Inc. (OTC Bulletin Board: ZPLS) announced that the
Company's forbearance agreement with the $2 million bridge loan
provider has expired.  The Company is currently in the process
of surrendering assets to the holder of the bridge loan, who
holds a lien on all intellectual property and

The Company said it will, in the near future, be filing a
proceeding for dissolution in Delaware, pursuant to which the
company will sell any remaining assets and proceed with the
formal dissolution of the company pursuant to Delaware law.

Based on the anticipated value of the company's remaining assets
and the amounts owed to creditors of the company, the company
believes that it is highly unlikely that any distributions will
be made to its preferred or common stockholders.

* Meetings, Conferences and Seminars
November 8, 2001
    New York Institute of Credit
       23rd Annual Credit SMORGASBORD
          New York, NY
             Contact: 212-629-8686 or

November 15-17, 2001
       Commercial Real Estate Defaults, Workouts, and
          Regent Hotel, Las Vegas
             Contact: 1-800-CLE-NEWS or

November 26-27, 2001
       Seventh Annual Conference on Distressed Investing
          The Plaza Hotel, New York City
             Contact: 1-800-726-2524 or

November 28, 2001
    New York Society of Security Analysts
       Anatomy of a Corporate Crisis: Managing Distress
          Arno Restaurant, 141 West 38 St., NY, New York
             Contact: Jennifer Ian 800/248-0108

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

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

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

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

February 28-March 1, 2002
       Corporate Mergers and Acquisitions
          Renaissance Stanford Court, San Francisco, CA
             Contact: 1-800-CLE-NEWS or

March 3-6, 2002 (tentative)
       Norton Bankruptcy Litigation Institute I
          Park City Marriott Hotel, Park City, Utah
             Contact:  770-535-7722 or

March 7-8, 2002
       Third Annual Conference on Healthcare Transactions
          The Millennium Knickerbocker Hotel, Chicago
             Contact: 1-800-726-2524 or

March 8, 2002
    American Bankruptcy Institute
       Bankruptcy Battleground West
          Century Plaza Hotel, Los Angeles, California
             Contact: 1-703-739-0800 or

March 20-23, 2002
       Spring Meeting
          Sheraton El Conquistador Resort & Country Club
          Tucson, Arizona
             Contact: 312-822-9700 or

April 10-13, 2002 (tentative)
       Norton Bankruptcy Litigation Institute II
          Flamingo Hilton, Las Vegas, Nevada
             Contact:  770-535-7722 or

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

April 25-27, 2002
       Fundamentals of Bankruptcy Law
          Rittenhouse Hotel, Philadelphia
             Contact:  1-800-CLE-NEWS or

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

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

June 20-21, 2002
       Fifth Annual Conference on Corporate Reorganizations
          The Millennium Knickerbocker Hotel, Chicago
             Contact: 1-800-726-2524 or

June 27-30, 2002
       Western Mountains, Advanced Bankruptcy Law
          Jackson Lake Lodge, Jackson Hole, Wyoming
             Contact: 770-535-7722 or

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

August 7-10, 2002
    American Bankruptcy Institute
       Southeast Bankruptcy Conference
          Kiawah Island Resort, Kiawaha Island, SC
             Contact: 1-703-739-0800 or

October 9-11, 2002
    INSOL International
       Annual Regional Conference
          Beijing, China
             Contact: or

October 24-28, 2002
       Annual Conference
          The Broadmoor, Colorado Springs, Colorado
             Contact: 312-822-9700 or

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

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

December 3-7, 2003
    American Bankruptcy Institute
       Winter Leadership Conference
          La Quinta, La Quinta, California
             Contact: 1-703-739-0800 or

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

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

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


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

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

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-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 240/629-3300.

                      *** End of Transmission ***