TCR_Public/011228.MBX        T R O U B L E D   C O M P A N Y   R E P O R T E R

           Friday, December 28, 2001, Vol. 5, No. 253


360NETWORKS: Court Okays Cline Williams as Special Counsel
AMF BOWLING: Working Capital Deficit Stands at $590M at Sept. 30
ACME METALS: Reorganization Plan Expected to Surface Today
ADVANCED LIGHTING: S&P Ratchets Down Ratings After Sale of Units
AVIATION DISTRIBUTORS: Butenhoff Discloses 5.5% Equity Interest

AVIATION SALES: Record Date for Rights Offer Set for Today
BETHLEHEM STEEL: Agrees to Grant RZB Finance Adequate Protection
BRADLEES: Secures Confirmation of Liquidating Plan
BRIDGE INFO: Exclusive Acceptance Period Extended to January 9
BRILL MEDIA: S&P Drops Ratings to D Over Missed Interest Payment

BURLINGTON: Gets Approval to Hire Jay Alix for Financial Advice
ELCOTEL INC: Inks Deal to Sell Assets to an Undisclosed Buyer
ELEC COMMS: Fails to Comply with Nasdaq Listing Requirements
EMAGIN: Inks Secured Note Purchase Pact with an Investor Group
ENRON CORPORATION: Wants to Retain Cadwalader for Legal Services

FOAMEX: Banks Back Profit Enhancement Plan & Ease Loan Covenants
HAYES LEMMERZ: Jay Alix Continues to Serve as Crisis Managers
HYLSA S.A.: S&P Slashes Corporate Credit Rating to SD  
IKS CORP: Has Until January 21 to Decide on Unexpired Leases
IT GROUP: Mulling Seeking Protection Under Chapter 11 Bankruptcy

LERNOUT & HAUSPIE: Will Talk About Exclusivity on January 4
LODGIAN INC: Seeks Access to $25 Million in DIP Financing
LOUISIANA-PACIFIC: S&P Concerned About Weaker Cashflow Measures
MENTERGY: Tel Aviv Court Okays Refinancing Pact with Creditors
METALS USA: Court Grants Injunction Against Utilities Except TXU

NATIONSRENT: Court Approves Payment of Employee Wages & Benefits
NETIA HOLDINGS: Fitch Hatchets Ratings Down to Default Level
ORGANIC INC: Amends Share Purchase Pact with E-Services & Seneca
OXFORD AUTOMOTIVE: S&P Knocks Down Junk Ratings to Default Level
PACIFIC GAS: Summary of Amended Joint Plan of Reorganization

PACIFIC GAS: Gets Approval to Settle Amounts of Certain Claims
PAYLESS CASHWAYS: Unsecured Committee Sues Congress Financial
PEN HOLDINGS: S&P Further Slashes Ratings to Junk Level
PERSONNEL GROUP: Credit Suisse Discloses 11.31% Equity Holding
POLAROID CORP: Committee Taps Houlihan for Financial Advice

SHEFFIELD STEEL: Signs-Up Greenberg Taurig as Bankruptcy Counsel
SMART CHOICE: Will Delay SEC Filing of October Quarter Results
STONERIDGE: Weakened Cash Flow Pushes S&P to Revise Outlook
SUN HEALTHCARE: Pushing for Extension of Solicitation Period
TRISM INC: Wishes to Extend Filing of Schedules through Jan. 17

VENTURE HOLDINGS: S&P Takes Action Over Refinancing Requirement
WARNACO GROUP: Court Okays Amendment of DIP Financing Agreement
WINSTAR COMMS: Univance Wants $1.6MM+ for Adequate Assurance

* BOOK REVIEW: Getting It To the Bottom Line: Management by
               Incremental Gains


360NETWORKS: Court Okays Cline Williams as Special Counsel
360networks inc., and its debtor-affiliates obtained Court
approval to employ the firm of Cline, Williams, Wright,
Johnson & Oldfather LLP, as their special counsel under a
general retainer.

Cline Williams' retention is for the limited purpose of
representing the Debtors as special counsel, primarily with
respect to certain litigation matters.

In its role as special counsel, Cline Williams will continue to
provide services to the Debtors in connection with various
lawsuits, such as the CapRock Telecommunications litigation, and
other matters designated by the Debtors so long as such matters
do not constitute matter central to the Debtors' reorganization.  
Cline Williams will work closely with the general bankruptcy
counsel so that Cline Williams' experience respecting the
Debtors can be made available to the Debtors' counsel in these
cases. (360 Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

AMF BOWLING: Working Capital Deficit Stands at $590M at Sept. 30
In furtherance of its Plan of Reorganization on November 15,
2001, Bowling Worldwide executed a commitment letter with
Bankers Trust Company whereby Bankers Trust agreed to provide
the Exit Facility which satisfies the terms of the Plan along
with a letter agreement with Bankers Trust and Deutsche Banc
Alex.  Brown, Inc. outlining the various fees to be charged in
association with the Exit Facility. Pursuant to the Commitment
Letter, the Exit Facility will be a $300.0 million term
facility, which will be comprised of a Tranche A facility in the
amount of $100.0 million and a Tranche B facility in the amount
of $200.0 million, and a $50.0 million revolving credit
facility. According to the terms of the Commitment Letter, the
Term Facility will be made available at the Effective Date and
the proceeds will be used to make cash payments to satisfy
certain claims and expenses to be paid in cash under the Plan.
The Revolver will be available for the Company's working capital
needs post-reorganization and will not be available for draw at
the Effective Date, other than the rollover of certain letters
of credit outstanding on that date in an aggregate amount not to
exceed $7.5 million.

By order dated November 26, 2001, the Bankruptcy Court approved
the Commitment Letter and the Fee Agreement. The Commitment
Letter requires the Exit Facility to close by February 28, 2002,
however, there is no certainty that the Exit Facility will close
by that date. The official committee of unsecured creditors
appealed the Exit Facility Order to the United States District
Court for the Eastern District of Virginia. The Committee did
not file a motion for a stay pending appeal with the Bankruptcy
Court and, therefore, the Exit Facility Order remains in full
force and effect.

The Debtors are reviewing their bowling center operations in the
United States, especially those operated on leased premises, and
may elect to close a number of these bowling centers. Management
believes these closures will not have an adverse impact on the
Company's consolidated cash flow.

At this time, it is not possible to predict the outcome, or the
financial impact on the Company, of the Chapter 11 cases. Under
the Plan, unsecured claims will be satisfied at a fraction of
their face value and the equity interests in AMF Group Holdings
will have no value. The Company believes the DIP Loan and cash
from operations should provide the Company with adequate
liquidity to conduct its business during the Chapter 11
proceedings, although no assurance can be given in this regard.
In addition, if the Plan is not confirmed, the DIP Loan expires
on July 2, 2002 and at such time, absent the Debtors obtaining
another facility, the Debtors will not have adequate liquidity
to conduct their businesses. The Company continues to evaluate
its operations in light of the current and projected operating
environment and the liquidity provided by the DIP Loan, and
until a plan of reorganization is confirmed, the Company's long-
term liquidity, including the availability of an exit financing
facility, and the adequacy of its capital resources cannot be
assured. In addition, the Company's liquidity, capital
resources, results of operations and ability to continue as a
going concern are subject to known and unknown risks and

      Quarter Ended September 30, 2001 Compared to Quarter
                 Ended September 30, 2000

Bowling Centers operating revenue decreased $2.6 million, or
2.1%, compared with the prior year. A decrease of $1.2 million,
or 1.3%, was attributable to U.S. constant centers, primarily as
a result of lower lineage partially offset by price increases in
open play revenue and food and beverage and ancillary revenue
associated with open play traffic in the third quarter of 2001.
International constant centers operating revenue decreased $1.8
million, or 6.5%, in part due to unfavorable currency
translation of results and, in part, due to a decrease in
lineage. On a constant currency basis, international constant
centers operating revenue would have been $1.5 million higher
compared with the prior year. Total operating revenue increased
by $2.1 million attributable to four U.S. centers acquired or
constructed since January 1, 2000 and increased by $1.6 million
attributable to 12 joint venture centers (which were previously
50% owned) acquired in December 2000 and two newly constructed
centers in Australia. A decrease of $1.4 million in total
operating revenue was attributable to nine centers that were
closed since September 30, 2000.

           Nine Months Ended September 30, 2001 Compared
              to Nine Months Ended September 30, 2000

Bowling Centers operating revenue decreased $5.5 million, or
1.3%, compared with the prior year. An increase of $3.3 million,
or 1.0%, was attributable to U.S. constant centers and was
primarily a result of price increases in open play revenue, and
additional food and beverage and ancillary revenue associated
with open play traffic. The increased revenue offset the effect
of lower lineage. International constant centers operating
revenue decreased $8.4 million, or 9.6%, in part due to
unfavorable currency translation of results. On a constant
currency basis, international constant centers operating revenue
would have been $7.0 million higher than the actual results
reported for the nine months ended September 30, 2001. Total
operating revenue increased by $2.5 million attributable to four
newly acquired U.S. centers and increased by $4.4 million
attributable to 12 joint venture centers (which were previously
50% owned) acquired in December 2000 and two newly constructed
centers in Australia. A decrease of $7.3 million in total
operating revenue was attributable to nine centers that were
closed since September 30, 2000.

                          Net Losses
Net loss in the three and nine months ended September 30, 2001
totaled $82.8 million and  $181.2 million, respectively,
compared with a net loss of $52.2 million and $104.1 million in
the three and nine months ended September 30, 2000,
respectively. In addition to the impact of changes in EBITDA,
depreciation, interest and taxes, the Company recorded $0.1
million and $0.7 million in equity in loss of joint ventures in
the three and nine months, respectively, ended September 30,
2000. Additionally, the Company recorded other income of $ 2.0
million and other expense of $2.3 million in the three and nine
months ended September 30, 2001, respectively, primarily related
to foreign exchange losses compared with other expense of $1.3
million and $2.4 million in the three and nine months ended
September 30, 2000, respectively.


Working capital on September 30, 2001 was a deficit $590.0
million compared with a deficit $1,107.1 million on December 31,
2000, an increase in deficit of $517.1 million. Prior to the
Petition Date, Bowling Worldwide was in default under the Credit
Agreement, its 12 1/4% Senior Subordinated Discount Notes and
its 10 7/8% Series B Senior Subordinated Notes. As a result of
such defaults, the Company's debt was reclassified as current at
December 31, 2000. Decreases in working capital were
attributable to a decrease of $13.1 million in inventory, a
decrease of $5.9 million in accounts receivable and a decrease
of $28.7 million in cash. These decreases in working capital
were partially offset by an increase in working capital
attributable to a decrease of $522.1 million in current portion
of long-term debt resulting primarily from the reclassification
of certain prepetition long-term debt to liabilities subject to
compromise in accordance with SOP 90-7 and a decrease of $36.2
million in accounts payable and accrued expenses resulting
primarily from the reclassification of certain prepetition long-
term debt to liabilities subject to compromise in accordance
with SOP 90-7 and an increase of $6.7 million in other current
assets.   As of September 30, 2001, the Company had no available
borrowing capacity under the Credit Agreement with $249.5
million outstanding and $8.0 million of standby letters of
credit. As of September 30, 2001, the Company had $71.1 million
available under DIP Loan.

ACME METALS: Reorganization Plan Expected to Surface Today
The U.S. Bankruptcy Court for the District of Delaware approves
Acme Metals Inc.'s request to further extend their Exclusive
Periods. After due deliberation and detrermining that the relief
requested is in the best interest of the Debtors, the Court
grants the extension of the Debtors' Exclusive Plan Proposal
period through December 28, 2001 and the Debtors' Exclusive
Solicitation Period through February 28, 2002.

Acme Metals filed for chapter 11 bankruptcy protection on
September 28, 1998 in the U.S. Bankruptcy Court for the District
of Delaware. Brendan Linehan Shannon, Esq. and James L. Patton,
Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors
in their restructuring effort. When the company filed for
protection from its creditors, it listed assets of $813 million
and liabilities of $541 million.

ADVANCED LIGHTING: S&P Ratchets Down Ratings After Sale of Units
Standard & Poor's lowered its ratings on Advanced Lighting
Technologies Inc.  At the same time, all ratings were placed on
CreditWatch with negative implications.

Total debt was about $170 million as of September 30, 2001.

The rating actions reflect Advanced Lighting's more modest size
and reduced business diversity following the sale of its fixture
lighting subsidiaries, and the company's weaker-than-expected
operating performance, heavy debt burden and limited financial
flexibility. These combined elements have increased financial

Advanced Lighting completed the sale of its fixture lighting
business on December 13, 2001, which included its subsidiaries
Ruud Lighting, Ruud Lighting Europe, and Kramer Lighting. The
transaction will allow the company to reduce its debt levels by
about $38 million by calendar year-end.  Revenues related to the
assets sale were about $82 million in fiscal 2001, representing
about 37% of total sales. Although Advanced Lighting's operating
efficiencies and profitability should gradually improve
following the divestiture of its weaker operating fixture
businesses, the company's revenue base and business diversity
are materially reduced. Despite the asset sale, Advanced
Lighting will continue to have a heavy debt burden, weak credit
protection measures, and limited financial flexibility.

During its fiscal 2002 first quarter ended September 30, 2001,
the company had an operating loss of $12.5 million compared with
$3.0 million of operating income for the same period in the
previous year. However, Advanced Lighting's operating income
(pro forma for the asset sale and excluding special charges,
loan impairments and other non-recurring items) would have been
$1.2 million and net income would have been $1.1 million.
Although sales, excluding the fixture lighting business, were
relatively flat in the first quarter of fiscal 2002 and are
expected to remain relatively flat throughout the fiscal year,
operating performance will remain challenged due to the current
difficult economic environment. Sales declined in several of the
company's business units during the first quarter of fiscal 2002
compared with the same period in the previous year, including a
5% decline in its APL materials, a key indicator of industry
trends, a 7% decline in its lighting sales, and a 2% decline in
its metal halide systems components, lamps and power supplies.

The company's poor operating performance is primarily due to the
overall weak U.S. economy, higher operating costs as a
percentage of sales, competitive pricing, lower metal halide
material sales particularly in the U.S., and lower-than-expected
sales at its fixture operations. The company's overall weak
operating performance during a time of elevated debt levels has
resulted in very weak credit protection measures, which are
outside Standard & Poor's expectations for the ratings, with
total debt to EBITDA of about 7.5 times and EBITDA interest of
about 1.7x as of September 30, 2001, on a last 12-month basis.
Although credit measures, (pro forma for the asset sale), are
expected to improve over time with the debt reduction and
improved operating efficiencies following the sale of its
fixture businesses and the realization of cost saving
initiatives that the company took in the first quarter of fiscal
2002, credit measures will remain weak and liquidity will be

Financial flexibility was limited with about $25 million
outstanding under its $40 million revolving credit facility and
$3.4 million in cash as of September 30, 2001. Liquidity will
remain constrained due to the expected reduction in size of the
company's senior credit facility in light of the asset sale of
its fixture business.

Standard & Poor's will meet with management to review prospects
for achieving operating improvements, strengthening credit
protection measures and enhancing its liquidity position during
fiscal 2002. In addition, Standard & Poor's will review the
status of the company's bank credit agreement in light of the
sale of its lamp fixture subsidiaries. If it appears the
company's operating performance and credit protection measures
will remain below expected levels for an extended period, and
liquidity will remain constrained, the ratings could be lowered.

          Ratings Lowered, Placed on CreditWatch Negative

     Advanced Lighting Technologies Inc.     TO     FROM
       Corporate credit rating               B      B+
       Senior secured debt                   B+     BB-
       Senior unsecured debt                 B-     B

AVIATION DISTRIBUTORS: Butenhoff Discloses 5.5% Equity Interest
Kurt Butenhoff beneficially owns 186,244 shares of the common
stock of Aviation Distributors, Inc., which represents 5.5% of
the outstanding common stock shares of the Company.  Mr.
Butenhoff holds sole voting and dispositive powers over the
stock held.

Kurt Butenhoff is a Senior Managing Director of Bear Stearns &
Co. Inc., an investment banking firm.  Bear Stearns & Co.'s New
York address is 245 Park Avenue.

Set forth below are the number of shares, trading dates and
average price per share for all sales of common stock made by
Mr. Butenhoff within the last 60 days. All sales were open
market transactions and were effected on the OTC Bulletin Board.

           Number               Trading                Price
         Of Shares                Date               Per Share
           20,000               12/06/01               0.3000
            5,000               12/11/01               0.2700
            5,000               12/11/01               0.2700
           10,000               12/12/01               0.2500
           35,000               12/13/01               0.2590
           10,000               12/14/01               0.2500

ADI sells new and used airplane parts, primarily to commercial
passenger airlines. The company offers a variety of parts,
including those classified as rotable (extensively repaired and
reused), repairable (repaired a limited number of times), and
expendable (used only once). ADI handles parts made by Airbus,
Boeing, General Electric, Lockheed Martin, Pratt & Whitney, and
Rolls Royce. It sells parts from its own inventory, on
consignment, and through marketing agreements with airlines,
manufacturers, and distributors. About half of ADI is held by
founder Osamah Bakhit. As of June 30, 2001, the company reported
an upside-down balance sheet, with total stockholders' equity
deficit of over $8 million.

AVIATION SALES: Record Date for Rights Offer Set for Today
Aviation Sales Company (OTCBB:AVIO) announced that it has set a
record date for its proposed rights offering and noteholder
consent solicitation.

The rights offering and the noteholder consent solicitation are
part of the Company's previously announced restructuring.

The Company announced that holders of its common stock at the
close of business today, December 28, 2001 will be issued non-
transferable rights to purchase shares of the Company's common
stock in the Company's contemplated rights offering. Similarly,
holders of the Company's 8 1/8% senior subordinated notes due
2008 as of the close of business today, December 28, 2001 will
be asked to consent to certain modifications to the indenture
for the old notes. The Company expects to send a prospectus to
its stockholders, with respect to the rights offering, and to
the holders of its outstanding senior subordinated notes, with
respect to the consent solicitation, in the near future, as soon
as the registration statements of which these prospectuses form
a part become effective with the U.S. Securities and Exchange

The Company also announced that the record date for its special
stockholders meeting to be called to consider and vote upon the
Company's proposed restructuring will also be the close of
business today, December 28, 2001.

The Company has filed registration statements relating to the
rights offering and the note exchange offer and consent
solicitation. It has also filed Preliminary Proxy Materials
relating to the proposed special meeting of its stockholders.
These filings contain important information about the Company,
the rights offering, the note exchange and consent solicitation
and related matters. Noteholders, stockholders and other
interested parties are urged to read the Company's filings with
the SEC, including the registration statements, for information
regarding these matters. The prospectus and consent
solicitation, the related letter of transmittal and certain
other documents related to the rights offering and the exchange
offer will be made available to all stockholders and noteholders
as of the record date, at no expense to them. These documents
will also be available at no charge at the SEC's website at  The notes and shares of common stock to be  
offered in the note exchange offer and the shares of common
stock to be offered in the rights offering may not be sold prior
to the time that the Company's registration statements become
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 the notes or the shares of common stock to be
offered in the rights offering in any state where such offer,
solicitation or sale would be unlawful.

Aviation Sales Company is a leading independent provider of
fully integrated aviation maintenance, repair and overhaul
(MR&O) services for major commercial airlines and maintenance
and repair facilities. The Company currently operates four MR&O
businesses: TIMCO, which, with its three locations, is one of
the largest independent providers of heavy aircraft maintenance
services in North America; Aerocell Structures, which
specializes in the MR&O of airframe components, including flight
surfaces; Aircraft Interior Design, which specializes in the
refurbishment of aircraft interior components; and TIMCO Engine
Center, which refurbishes JT8D engines. The Company also
operates TIMCO Engineered Systems, which provides engineering
services to our MR&O operations and our customers.

                         *   *   *

DebtTraders reports that Aviation Sales Company's 8.125% bonds
due in 2008 (AVIAS1) are trading between 38 and 40. See  
real-time bond pricing.

BETHLEHEM STEEL: Agrees to Grant RZB Finance Adequate Protection
Bethlehem Steel Corporation, and its debtor-affiliates request
entry of an order providing adequate protection to RZB Finance,

RZB financed the Debtors' acquisition of, and obtained a
security interest in, specially identified equipment located in
the New Cold Sheet Mill Complex at the Debtors' Sparrows Point,
Maryland facility, Jeffrey L. Tanenbaum, Esq., at Weil, Gotshal
& Manges LLP, in New York, explains.  According to Mr.
Tanenbaum, as of the Petition Date, the Debtors were indebted to
RZB in the principal amount of $45,000,000, plus accrued and
unpaid interest thereon and costs and expenses, under these loan

  (a) Amended and Restated Credit Agreement dated September 2000
      as amended on June 29, 2001;

  (b) Substitute Promissory note dated September 2000 in the
      original principal amount of $50,000,000, and

  (c) related loan documents between RZB and the Debtors.

The Debtors granted to RZB a security interest in the equipment
and certain rights relating thereto to secure all obligations
under the RZB loan documents, Mr. Tanenbaum notes.  
Subsequently, Mr. Tanenbaum adds, the final DIP order provided
RZB with replacement liens, in an amount equal to the post-
petition diminution in the value of the RZB collateral, with an
aggregate value not to exceed $7,000,000.

Now, a stipulation between RZB and the Debtors provides that:

    (i) RZB shall retain the RZB replacement lien, and

   (ii) as adequate protection of RZB's interests in the
        collateral, the Debtors have agreed to provide to or for
        the benefit of RZB:

        (a) Payment on a monthly basis of:

            (1) interest on the existing RZB obligations
                calculated at the non-default rate and in the
                manner specified by the Credit Agreement, and

            (2) principal in the amount of $416,667.

        (b) Payment on a current basis of RZB's reasonable fees
            and expenses incurred in connection with matters
            relating to the RZB loan documents, the obligations
            thereunder, the monitoring of the Debtors' chapter
            11 case or the enforcement and protection of the
            rights and interests of RZB.

        (c) Maintenance of insurance as required by the Credit

        (d) Maintenance of the Equipment as required by the
            Credit Agreement.

        (e) To the extent that the Debtors shall ever obtain any
            proceeds of the RZB collateral or the RZB
            replacement collateral that constitutes cash
            collateral within the meaning of section 363(a) of
            the Bankruptcy Code, the Debtors  shall maintain
            such cash collateral in a segregated account,
            subject to further order of the Court.

        (f) To the extent of the diminution of the RZB
            collateral after the Petition Date, a superpriority
            claim ranking pari passu with the allowed
            superpriority claims of the existing lenders, but
            subject to the carve-out (as defined in the final
            DIP order).

The equipment is a vital component of the New Cold Sheet Mill
Complex, which is the Debtors' most state of the art facility,
Mr. Tanenbaum tells Judge Lifland.  According to Mr. Tanenbaum,
entry of the stipulation and order will allow the Debtors to
continue to use the equipment without having to litigate complex
issues regarding the value and future value of the equipment.
Considering the extensive costs of litigation and uncertain
result if the Debtors were to litigate RZB's entitlement to
adequate protection, Mr. Tanenbaum contends the adequate
protection provided by the stipulation is an appropriate

Thus, the Debtors ask Judge Lifland to give the stipulation the
Court's blessings. (Bethlehem Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

BRADLEES: Secures Confirmation of Liquidating Plan
As reported in F&D Reports (December 24, 2001 Edition), the US
Bankruptcy Court in Manhattan confirmed the Plan of Liquidation
in the Bradlees, DIP (Braintree, MA) Chapter 11 case, following
the withdrawal of the limited objections filed by Royal Ahold's
Stop & Shop Supermarket Company and Tomarc Co.

According to F&D, the proceeds of $84.0 million are estimated
under the Plan, which would then be distributed:

      (i) $9.0 million will be used to pay off administrative
          expense claims in full;

     (ii) holders of priority tax claims and other priority
          claims will recover the full amount of their claims,
          estimated at $3.2 - $4.8 million and $22.6 - $37.0
          million, respectively; and

    (iii) general unsecured creditors are expected to receive
          $33.2 - $49.3 million, or approximately 12% - 24%,
          based on current estimates for both proceeds and the
          unsecured claims pool.

Equity holders will not receive any distribution.

BRIDGE INFO: Exclusive Acceptance Period Extended to January 9
In a bridge order dated December 12, 2001, Judge McDonald
extends the Acceptance Period of the Joint Plan of Liquidation
of Bridge Information Systems, Inc., and its debtor-affiliates
to January 9, 2002. (Bridge Bankruptcy News, Issue No. 23;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   

BRILL MEDIA: S&P Drops Ratings to D Over Missed Interest Payment
Standard & Poor's lowered its ratings on Brill Media Co. LLC and
Brill Media Management Inc. to 'D'. The downgrades follow
Brill's failure to make the December 15, 2001, interest payment
on its 12% $105 million senior notes.

                         Ratings Lowered

     Brill Media Co. LLC             To                   From
        Corporate credit rating      D                     CC
        Senior unsecured debt        D                     CC

     Brill Media Management Inc.
        Corporate credit rating      D                     CC
        Senior unsecured debt        D                     CC

BURLINGTON: Gets Approval to Hire Jay Alix for Financial Advice
The Court authorizes Burlington Industries, Inc., and its
debtor-affiliates to retain and employ Jay Alix & Associates as
financial advisors in these chapter 11 cases, nunc pro tunc as
of the Petition Date.  "To the extent the Engagement Letter
provides that the Debtors will indemnify, hold harmless and
defend Jay Alix & Associates and its principals, employees and
agents under certain circumstances, Jay Alix & Associates agrees
to waive such provisions with respect to pre-petition and post-
petition services," Judge Walsh rules.

Furthermore, the Court states that "To the extent the Engagement
Letter provides that if a dispute arises between the parties -
including any dispute with respect to the Engagement Letter -
either party may require the matter to be settled by binding
arbitration using the rules and procedures of the American
Arbitration Association, Jay Alix & Associates agrees that the
arbitration provision in the Engagement Letter shall apply only
to the extent that the United States Bankruptcy Court, or the
United States District Court if the reference is withdrawn, does
not retain jurisdiction over a controversy or claim."
(Burlington Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

ELCOTEL INC: Inks Deal to Sell Assets to an Undisclosed Buyer
Elcotel, Inc. (OTC Pink Sheets: EWTLQ) announced that it entered
into an Asset Purchase Agreement on December 14, 2001 providing
for the sale of substantially all of its assets to an
unaffiliated party.

Pursuant to the terms of the Agreement, Elcotel agreed to sell
to the Purchaser all of its rights, title and interest in
substantially all of its assets, rights and claims, including,
without limitation, the following: account receivables,
furniture, fixtures, equipment, governmental permits, books and
records, prepaid expenses, rents and credits, and all
guaranties, warranties and indemnities with respect to the
foregoing assets. Additionally, Elcotel will assign and the
Purchaser will accept all of Elcotel's rights under and title
and interest in certain executory contracts and unexpired leases
and certain intellectual property rights.  Except as set forth
in the Agreement, the sale will be free and clear of all liens,
claims and interests of anyone who receives notice of the
Company's Plan of Reorganization filed with the United States
Bankruptcy Court.

The Purchaser will assume certain liabilities and obligations of
Elcotel including liabilities and obligations arising under
executory contracts and unexpired leases assumed by the
Purchaser, governmental permits, and any accrued liabilities
with respect to employees that accept employment with the

In consideration for the acquired assets, the Purchaser will pay
at closing cash in an amount of $1,400,000, subject to
adjustment as set forth in the Agreement.

The Agreement contains conditions precedent to closing which are
customary for transactions of this nature, including all
necessary governmental and Bankruptcy Court approvals including
a final confirmation order of the Bankruptcy Court.

The Agreement may be terminated upon certain events, including
but not limited to: (i) failure of the closing to occur on or
before January 14, 2002; (ii) failure of the Bankruptcy Court's
confirmation order to have been entered on or before January 14,
2002; and (iii) on or before December 27, 2001 as a result of
the Purchaser's dissatisfaction with schedules prepared pursuant
to the Agreement.

The Company's Reorganization Plan contemplates an orderly
liquidation of Elcotel and its subsidiaries pursuant to a
liquidation process agreed to by the Company and its senior
secured lender upon the sale of substantially all of the
Company's assets.  The orderly liquidation process contemplates
a winding up of the Company's operations in a manner and on
terms acceptable to the Company's senior secured lender.  
Pursuant to an orderly liquidation, the Company's existing
common stock would be cancelled, and the holders thereof would
receive no value therefore.

Elcotel, Inc., based in Sarasota, Florida, is a leader in
providing public access telecommunications networks and
management services for both domestic and international wireline
and wireless communication networks.  Visit Elcotel's corporate
website at

ELEC COMMS: Fails to Comply with Nasdaq Listing Requirements
eLEC Communications (NASDAQ:ELEC), an integrated communications
provider of voice, data and broadband services, announced that
it has received a Nasdaq Staff Determination on December 19,
2001, indicating that eLEC fails to comply with the minimum net
tangible assets or minimum stockholders' equity requirements for
continued listing, set forth in Marketplace Rule 4310c(2)(B) and
that its common stock is therefore subject to delisting from The
Nasdaq SmallCap Market.

Marketplace Rule 4310c(2)(B) states that "For continued
inclusion, the issuer shall maintain: (i) stockholders' equity
of $2.5 million; (ii) market capitalization of $35 million; or
(iii) net income of $500,000 in the most recently completed
fiscal year or two of the last three most recently completed
fiscal years."

The company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination and a
hearing date is scheduled for January 31, 2002. There can be no
assurance that the panel will grant the company's request for
continued listing. eLEC's stock will continue to be listed on
The Nasdaq SmallCap Market pending the panel's decision. If
eLEC's stock is delisted, it will be eligible for quotation on
the OTC Bulletin Board.

eLEC Communications Corp. is a publicly-traded integrated
communications provider that is taking advantage of the
convergence of the current and future competitive technological
and regulatory developments in the Internet and
telecommunications markets. eLEC provides an integrated suite of
communications services to small and medium-sized business
customers, including voice, data and broadband services.

EMAGIN: Inks Secured Note Purchase Pact with an Investor Group
On November 27, 2001, eMagin Corporation and an Investor Group
entered into a Secured Note Purchase Agreement whereby Investors
agreed to lend eMagin $875,000 in exchange for (i) $875,000
9.00% per annum Secured Convertible Promissory Note due on
August 30, 2002 and (ii) Warrants exercisable for a period of
three (3) years to purchase 359,589 shares of common  stock of
eMagin.  In order to induce the Investors to enter in to the
Secured Note and Warrants, The Travelers Insurance Company
agreed to cap the warrants issuable under the August 20, 2001
Note Purchase Agreement to 451,842 shares of common stock of
eMagin.  The Secured Note Agreement provides for eMagin to issue
up to $1,500,000 aggregate amount of Secured Notes.

Interest is payable on the Debentures at a rate of 9% per annum
and is payable at maturity or on the effective date of an early
termination.  The full amount of the Secured Note is secured by
a general interest in the assets of eMagin pursuant to a
Security Agreement dated November 20, 2001. The Secured Note is
convertible into common stock of eMagin at a price of 105% of
the closing price of the Secured Note upon the issuance of a
minimum of $10,000,000 of convertible debt or equity securities
prior to the maturity of the Secured Note, and registration
under The Securities Act of 1933 of the underlying common stock
to be issued  pursuant to such conversion.  The Investors may
convert the Secured Note and accrued interest into common stock
of eMagin at any time.  Upon a change in control of eMagin,
eMagin may call the Secured Note and purchase all of the
aggregate principal amount of the Secured Note at a price equal
to 250% of the principal amount plus accrued and unpaid
interest.  If eMagin does not call the Secured Note within
thirty (30) days of the event of a change in control, the  
Investors may put the Secured Note to eMagin at a price equal to
250% of the aggregate  principal amount for a period of thirty
days following the call period.

ENRON CORPORATION: Wants to Retain Cadwalader for Legal Services
The firm of Cadwalader, Wickersham & Taft has provided legal
services to Enron Corporation, and its debtor-affiliates for
almost 9 years.  During such period, Mark E. Haedicke, the
Debtors' representative, relates, Cadwalader has provided
counsel and advice on a broad variety of matters, including:

  (a) the development and structuring of new products, services,
      and trading systems,

  (b) the documentation of trading, supply, and risk management
      relationships between the Debtors and their
      counterparties, and

  (c) related regulatory compliance, insolvency, and tax advice.

More recently, Mr. Haedicke tells Judge Gonzalez, Cadwalader has
been retained to advise the Debtors pertaining to their trading
businesses, including issues pertaining to swap contracts,
forward contracts, futures contracts, options on the foregoing,
other derivative products and services, trading systems, netting
arrangements, and other similar products and transactions.  Mr.
Haedicke anticipates that a large number of disputes will arise
with counterparties on these transactions.  Thus, Mr. Haedicke
says Cadwalader' expertise will be invaluable both in reaching
negotiated resolutions and, if necessary, in related litigation.

Mr. Haedicke explains that the Debtors have selected Cadwalader
because of the firm's general knowledge of the Debtors' business
and financial affairs, its extensive familiarity with the
Debtors' trading businesses, and in particular, its recognized
expertise in the field of derivatives.  Cadwalader thus has the
necessary background to address effectively and efficiently many
of the potential legal issues and problems that may arise in the
context of the Debtors' chapter 11 cases, Mr. Haedicke points
out.  "Cadwalader is both well qualified and uniquely able to
represent the Debtors in these chapter 11 cases," Mr. Haedicke

As of the Petition Date, Mr. Haedicke confides, Cadwalader
maintains an advance retainer for services to be performed and
reimbursement of related expenses of approximately $250,000,
which will be applied to such allowances of compensation and
reimbursement of expenses for Cadwalader as may be granted by
the Court.  Additionally, Mr. Haedicke anticipates that a small
portion of this retainer will be applied to pre-petition fees
and expenses not yet captured by Cadwalader's accounting system.

According to Mr. Haedicke, Cadwalader's hourly rates range from:

                  $435 to $660    Members and Counsel
                  $195 to $400    Associates
                  $120 to $195    Paraprofessionals

Cadwalader also intends to charge for reimbursements of out-of-
pocket expenses, Mr. Haedicke adds.

Gregory M. Petrick, a member of the firm, declares, "The
members, counsel and associates of Cadwalader do not have any
connection with, or any interest adverse to, the Debtors, their
creditors or any other party in interest, or their respective
attorneys and accountants." (Enron Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

FOAMEX: Banks Back Profit Enhancement Plan & Ease Loan Covenants
Foamex International Inc. (Nasdaq:FMXI), the world's leading
manufacturer of flexible polyurethane and advanced polymer foam
products, announced it is implementing a comprehensive profit
enhancement program that will reduce costs, spur revenue growth,
and drive increased long-term profitability and shareholder

As the cornerstone of the program, Foamex will leverage its
innovative proprietary Variable Pressure Foaming (VPF)
technology to consolidate its manufacturing operations, and will
close 8 of its 67 facilities in 2002. The Company will also
streamline and reorganize its supply chain and shared services
functions, while increasing investment in new product
development and support efforts.

As a result of implementing this set of initiatives, called
"Project Transformation," the Company will reduce its total
workforce by approximately 10% by year-end 2002. Foamex expects
Project Transformation to achieve pre-tax cost savings of
approximately $20 million in 2002, increasing to approximately
$30 million in 2003.

"By leveraging our proprietary foaming technology, Project
Transformation will allow us to invest more in our most
promising new products, continue deleveraging our balance sheet,
and enhance our profitability across the organization," said
Peter W. Johnson, President and Chief Operating Officer. "Foamex
is the world's leading polyurethane foam producer, a technology
innovator and an industry leader in every segment of our
business. We are confident that we can successfully implement
our plans, and are already well underway with many of these

In connection with Project Transformation, Foamex will take a
$38 million pre-tax charge against earnings in the fourth
quarter of 2001 for plant closings and consolidation, severance
and related expenses. Of the $38 million charge, $21 million is
non-cash. The Company's bank lenders have agreed to ease year-
end 2001 loan covenants to accommodate the fourth quarter
charge, enabling Foamex to proceed with Project Transformation.
Loan covenants have also been loosened for 2002.

"We're very pleased to have the support of our banks, enabling
us to make these important operational changes," said Thomas
Chorman, Executive Vice President, Chief Financial Officer and
Chief Administrative Officer. "The improvements we are making
across Foamex will result in better products and service, more
efficient manufacturing and lower costs. As we implement this
operational transformation, we are also working to further
strengthen our balance sheet."

      Manufacturing Operations and Plant Rationalization:
                 Leveraging VPF Technology

Foamex's patent-protected VPF technology allows it to produce
no-fatigue foam products through an efficient, emissions-free
manufacturing process. Foamex currently operates four VPF plants
which have more than twice the capacity of its traditional
plants. Over the next several years, Foamex expects to convert
additional production capacity to VPF production, increasing VPF
to one third of its total production capacity. Foamex will
implement this conversion at a pace that protects cash flow and
enables continuing debt reduction.

The Company will maintain existing business from the eight
facilities to be consolidated in 2002. Employees affected by the
restructuring will be notified in early 2002 and will receive
severance and other benefits in accordance with Company
policies. Foamex currently employs over 6,000 people worldwide.

               Profit Enhancement: New Products,
            Sales Growth and Customer Segmentation

Foamex plans to double its investment in research and
development from $3 million in 2001 to $6 million in 2002 to
take advantage of market opportunities and maintain the
Company's strong pipeline of differentiated new products.
Foamex's new product development effort is focused on technology
and innovations with the greatest potential to increase the
profitability of existing Foamex products, gain share in
existing markets, or develop new markets through new uses of
flexible polyurethane and advanced polymer foam.

Foamex will increase investment in its sales and marketing
efforts to develop strong proprietary brands and support sales
of its high-margin products to new and existing customers.
Foamex will also focus on providing better service to high-value
customers, and will work with customers targeted for profit
enhancement in order to create mutual value.

      SG&A/Shared Services and Supply Chain Simplification

Foamex will cluster its purchasing, logistics and shared
services and implement streamlined sourcing methods and business
processes to leverage its national purchasing power, reduce
overhead costs and improve customer service. Many of these
initiatives are already underway.


Commenting on the Company's outlook, Johnson said, "Despite a
weak economy, our sales for the fourth quarter 2001 are strong
and we expect to meet our forecasts for the quarter and beyond.
We expect to continue to pay down our debt by an average of $50
million annually over the next three years."

Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. Revenues for 2000 were $1.3 billion. For more
information visit the Foamex web site at

HAYES LEMMERZ: Jay Alix Continues to Serve as Crisis Managers
Hayes Lemmerz International, Inc., and its debtor-affiliates
move for an order authorizing the continued employment of Jay
Alix & Associates Services, LLC as their crisis managers.

Grenville R. Day, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, relates that on November 20, 2001, the
Debtors entered into the Employment Agreement, effective as of
October 15, 2001, wherein Jay Alix Services agreed to provide
certain temporary employees to assist the Debtors in their
restructuring process. Pursuant to the Employment Agreement, Jay
Alix Services' staff assumed certain management positions of the
Debtors' businesses. If this Motion is granted, Kenneth A. Hiltz
will serve as Chief Financial Officer until such time as a
permanent Chief Financial Officer is recruited. At that time, it
is anticipated that Mr. Hiltz will continue as the Debtors'
Chief Restructuring Officer, with responsibility for assisting
the Debtors' in evaluating and implementing strategic and
tactical options through the restructuring process.

Specifically, Mr. Hiltz's role includes:

A. assist in assuring suitable productivity of the "working
   group" professionals who are assisting the Debtors in the
   reorganization process or who are working for the Debtors'
   various stakeholders;

B. provide leadership to the financial function, including
   assisting the Debtors in strengthening the core
   competencies in the finance organization, particularly cash
   management and general accounting and financial reporting;

C. assist in overseeing development of an operating business
   plan to be used in managing the Debtors for the current year
   as well as for future years;

D. assist in overseeing and driving financial performance in
   conformity with the Debtors' business plan;

E. assist with the preparation of the statement of affairs,
   schedules and other regular reports required by the Court
   or which are customarily issued by the Debtors' Chief
   Financial Officer as well as providing assistance in such
   areas as testimony before the Court on matters that are
   within Jay Alix Services' areas of expertise;

F. assist with financing issues either prior to or during any
   bankruptcy filing and in conjunction with a plan of
   reorganization, or which arise from the Debtors' financing
   sources outside of the United States;

G. assist in negotiations with stakeholders and their

H. assist in negotiations with potential acquirers of the
   Debtors' assets;

I. assist with such other matters as may be requested that fall
   within our expertise.

In addition, under the Employment Agreement Herbert S. Cohen
serves as the Debtors' Chief Accounting Officer, who bears
responsibility for working with the Corporate Controller,
outside accountants and legal counsel, as appropriate, to
identify and implement adjustments, disclosures and changes in
accounting procedures and policies. Also pursuant to the
Employment Agreement, Pilar Tarry assists the Debtors in
developing and implementing cash management strategies, tactics
and processes.  Ms. Tarry works with the Debtors' treasury
department and other professionals and coordinates the
activities of the representatives of other constituencies in the
cash management process.

Kenneth A. Hiltz, the Debtors' Chief Restructuring Officer,
states that the forgoing professionals may be assisted by other
Jay Alix Services' professionals at various levels, as required.
The Debtors will only enlist the services of other JAS
professionals as set forth in this paragraph after first
ensuring that such additional resources do not duplicate the
activities of other employees or professionals. Other Jay Alix
Services' professionals currently assisting the Debtors on a
full-time or substantially full-time basis include Mr. Ronald
Bienias, who is assisting in the cash management process, Mr.
Barry Folse, Mr. Clayton Gring, Mr. Meade Monger and Mr. Bryan
Porter, who are assisting with bankruptcy administration
matters, and Mr. Jeffery Vogelsang, who is assisting with
business planning.

Mr. Hiltz informs the Court that the Employment Agreement
provides that Jay Alix Services shall be compensated for its
services on an hourly basis plus reimbursement for all
reasonable out-of-pocket expenses incurred in connection with
their services. The at these hourly rates:

      Principals                      $500-620
      Senior Associates               $385-495
      Associates                      $285-375
      Accountants and Consultants     $200-280

In addition to the listed fees and expenses, Mr. Hiltz submits
that the Debtors also agreed to pay Jay Alix Services a
performance fee equal to the sum of 0.10% of the first
$1,000,000,000 of total enterprise value, and 0.20% of total
enterprise value over $1,000,000,000 upon the effective date of
a plan of reorganization proposed by the Debtors, or the closing
of a sale or sales of all or substantially all of the assets of
the Debtors, as proposed by the Debtors. The Debtors paid a
retainer of $300,000.00 to JAS on October 18, 2001 to secure
performance under the Employment Agreement.

Mr. Hiltz contends that Jay Alix Services has a wealth of
experience in providing crisis management services to
financially troubled organizations. For more than 20 years, Jay
Alix Services has provided interim management and advisory
services to companies experiencing financial and operating
difficulties and has recently provided interim management
services in a number of large and mid-size bankruptcy
restructurings, including Harnischfeger Indus., Inc., APS
Holding Corp., Maiden Form Worldwide, Inc., and Sunterra Corp.

Mr. Hiltz, has worked as a turnaround consultant and interim
manager for more than fifteen years and has been employed by Jay
Alix Services since 1991. During his years as a restructuring
professional, Mr. Hiltz has worked in several bankruptcy
reorganizations, including Harnischfeger Industries, Inc., where
he served as Senior Vice President and Chief Financial Officer.
(Hayes Lemmerz Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

HYLSA S.A.: S&P Slashes Corporate Credit Rating to SD  
Standard & Poor's lowered its corporate credit rating on Hylsa
S.A. de C.V. to 'SD' (selective default) from triple-'C'-plus.
At the same time, the rating on the company's $300 million
senior unsecured bonds due 2007 was lowered to double-'C' from

The downgrade is based on the Mexican steelmaker's non-payment
of scheduled interest and principal payments, announced as part
of the proposal for the restructuring of its total outstanding
bank debt. Payments on the outstanding debt will resume until
the refinancing transaction is closed, which is expected by the
end of February 2002.

It is Standard & Poor's understanding that the company currently
plans to continue servicing principal and interest on the
outstanding rated bonds and on debt due to the Mexican Export-
Import Bank, Bancomext. There is significant uncertainty,
however, as to whether Hylsa will require a broader financial
restructuring than is currently contemplated.

The downgrade also reflects further erosion of margins and
deterioration of credit measures due to the depressed steel
market prices and the contraction of domestic demand, heightened
by an increased refinancing risk under a difficult maturity

IKS CORP: Has Until January 21 to Decide on Unexpired Leases
The U.S. Bankruptcy Court grants IKS Corp.'s request to extend
the deadline within which the Debtors may assume or reject
unexpired leases of nonresidential real property.

In its motion, the Debtors ask the Court to extend their Lease
Decision Period through January 21, 2002, in addition to the 60-
day period set forth in the Bankruptcy Code. The Court, having
found that there exists sufficient cause for such extension,
approved the motion.

IKS Corporations which manufactures, markets, and services
industrial knives and saws filed for chapter 11 protection on
September 24, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Michael L. Vild, Esq. at The Bayard Firm represents
the Debtors in their restructuring effort. When the company
filed for protection from its creditors, it listed $43,993,000
in assets and $109,554,000 in debt.

IT GROUP: Mulling Seeking Protection Under Chapter 11 Bankruptcy
The IT Group, Inc. (NYSE: ITX) announced that, as previously
disclosed, discussions with its senior secured lenders have been
and are continuing in order to address the Company's severe
liquidity problems and expected year-end covenant defaults.  
However, based on recent discussions with the lenders, it now
appears unlikely that satisfactory arrangements can be
negotiated with the lenders for a longer term financial
restructuring.  The Company is working with its advisors to
explore all other alternatives available to the Company,
including the sale of all or a portion of the Company's assets
and seeking protection from its creditors under Chapter 11 of
the U.S. Bankruptcy Code.  

Discussions with the lenders and potential asset purchasers are

The IT Group addresses the infrastructure and environmental
needs of both private and public sector clients as a leading
provider of diversified services, including environmental,
engineering, facilities management, water, construction,
emergency response, remediation, liability transfer and
information management. Additional information about The IT
Group can be found on the Internet at .  The
IT Group's common stock and depositary shares are traded on the
New York Stock Exchange under the symbol ITX and ITXpr,

LERNOUT & HAUSPIE: Will Talk About Exclusivity on January 4
Lernout & Hauspie Speech Products N.V. and Dictaphone
Corporation will return to Court on January 4, 2002, asking
Judge Wizmur for additional time to solicit acceptances of their
chapter 11 plans and to get their chapter 11 cases back on

                The L&H Plan is Still on the Table

As previously reported, L&H Holdings, L&H N.V., and Dictaphone
filed a joint plan of reorganization and joint disclosure
statement with the Bankruptcy Court on August 28, 2001.  That
Plan contemplated that (a) Dictaphone would reorganize and
emerge from chapter 11 as a stand-alone entity and (b) the
estates of L&H NV and L&H Holdings would dispose of their
assets, by entering into a joint venture or similar arrangement
involving the contribution of their assets into that joint
venture.  When the Ieper Commercial Court declined to approve a
parallel plan proposed in the Belgian Concordat proceeding and
imposed unworkable restrictions on the L&H Debtors, the Debtors
abandoned the August 28 Plan as it relates to Dictaphone.

That August 28 Plan, as it relates to L&H N.V. and L&H Holdings,
is still a valid plan and the L&H Debtors intend to prosecute
that plan to confirmation.  To keep the plan process alive, the
L&H Debtors ask Judge Wizmur for an extension of their exclusive
solicitation period.

               The Dictaphone Plan is Moving Forward

The Debtors remind Judge Wizmur that she approved Dictaphone's
Second Amended Disclosure Statement on October 18, 2001.  
Dictaphone had hoped that the plan would be circulated to
creditors shortly thereafter for voting and that confirmation
would follow in short order. Unfortunately, on October 18, 2001,
the Concordat Proceeding fell apart at the hands of the Belgian
appellate court.  In light of that event in Belgium, Dictaphone
determined that it was best to temporarily delay soliciting
votes to accept or reject the Second Amended Dictaphone Plan
until a new Concordat Proceeding could be filed.  It was and,
after some procedural hiccups and wrangling, the Five Belgian
judge-commissaires (known as Curators) appointed in the L&H NV
Belgian Bankruptcy Case gave their consent to allow the Debtors
to (i) continue Dictaphone's chapter 11 case (including the plan
confirmation process) subject to certain conditions and (ii)
continue with the L&H Group's efforts to sell or otherwise
dispose of the assets of L&H NV and L&H Holdings, pursuant to a
plan or otherwise.

Negotiations with respect to the distribution of the Dictaphone
New Common Stock have continued since Oct. 18 among the core
parties-in-interest in these chapter 11 cases.  Those talks have
resulted in the parties agreeing to distribute 10% of the
Dictaphone New Common Stock to L&H NV while reducing the
distribution to L&H NV's pre-petition Belgian lenders from 65%
to 63%.  That change will be reflected in a Third Amended Plan
Of Reorganization for Dictaphone.

                         *   *   *

The Debtors remind Judge Wizmur that the Bankruptcy Code gives a
debtor the exclusive right to file a plan of reorganization for
an initial period of 120 days from the petition date. If the
debtor files a plan within this exclusive period, then the
debtor has the exclusive right for 180 days from the petition
date to solicit acceptances to its plan. During these exclusive
periods, no other party-in-interest may file a competing plan of
reorganization. The Court may extend the exclusive periods "for
cause" upon request of a party-in-interest and after notice and

Congress did not intend that the 120- and 180-day periods be
inflexible deadlines; rather, Congress intended that the
exclusive periods be of adequate length, given the
circumstances, for the debtor to formulate, negotiate and draft
a consensual plan without the dislocation and disruption to the
business that would occur with the filing of competing plans of

                      Ample Cause Exists For
                Extension Of Solicitation Periods

Since the Petition Date, the L&H Group, in addition to handling
administrative matters and business complications that accompany
any chapter 11 filing, has been working diligently and
resolutely to:

       (a) develop a plan to maximize value for creditors;

       (b) develop a proposal for the actual plan of
reorganization; and

       (c) file the L&H Joint Plan and Joint Disclosure
Statement and the Third Amended Dictaphone Plan and Third
Amended Dictaphone Disclosure Statement agreeable to various

The Debtors believe that the additional time requested hereunder
will allow for an appropriate amount of time for L&H NV and L&H
Holdings to finalize the distribution scheme to its respective
creditors, to amend the L&H Joint Plan and L&H Joint Disclosure
Statement accordingly, to seek approval of the L&H Joint
Disclosure Statement, and, following approval, solicit votes
accepting or rejecting the L&H Joint Plan.

                        Debtors Not Using
                Exclusivity To Pressure Creditors

The L&H Debtors' request for an extension of the Solicitation
Periods is not a negotiation tactic, but instead merely a
reflection of the fact that an extension is required to provide
sufficient time to complete the solicitation process in this
complex chapter 11 case. The Debtors say they recognize the need
to deal with all parties-in-interest in these cases. The Debtors
and their professionals have consistently conferred with these
constituencies throughout the plan development process. The
Debtors have no intention to discontinue this exchange if this
Motion is granted.

For these reasons, the Debtors submit that the requested
extensions are justified, appropriate and realistic under the
circumstances and, therefore, the Court should extend the
Dictaphone Solicitation Period through and including December
31, 2001, and the L&H Solicitation Period through and including
January 31, 2002, without prejudice to the right of the L&H
Group to seek further extensions.

                         AllVoice Objects

AllVoice Computing plc, a creditor and party-in-interest,
objects to the Motion for a further extension of the
solicitation periods, saying that the record provides no basis
for an extension where cause exists to convert the cases of
Lernout & Hauspie Speech Products N.V. and L&H Holdings USA,
Inc., to cases under Chapter 7 of the Bankruptcy Code.

                      Confirmation Less Likely

On or about November 9, 2001, the Debtors filed the Extension
Motion, in which they seek to extend the exclusive solicitation
period (but not the exclusive filing period) under Code 1121.
Notwithstanding any statement or implication to the contrary
contained in the Extension Motion, the Liquidating Debtors were
forced to withdraw the Joint Disclosure Statement and Proposed
Joint Plan from consideration, and the record is devoid of
evidence to suggest that they have made any progress whatsoever
towards the goal of proposing a confirmable plan. To the
contrary, the Liquidating Debtors are less likely to have the
ability to propose a confirmable plan today than they were in
August of this year.  AllVoice requests that the Court deny the
Extension Motion for reasons substantially set forth in the
Motion to Convert, but adds one additional ground of objection.

                        Plan Not Feasible

AllVoice tells Judge Wizmur she should not extend time to
solicit acceptances of a plan where there is no evidence to
suggest that the Liquidating Debtors can or will propose a
confirmable plan. In its Objection to their Joint Disclosure
Statement, for example, AllVoice identified numerous
deficiencies stemming, not merely from a failure to present
adequate information as required by Code  1125, but from an
inability to present a confirmable plan. Feasibility - to take
but one example - was even then an insurmountable obstacle: the
Debtors admitted that N.V. and Holdings liquidations could be
avoided only if the Debtors secured a $30,000,000 credit
facility or formed a joint venture, but provided no evidence to
suggest that these contingencies were a likely outcome. Having
withdrawn the Joint Disclosure Statement shortly after the
filing of AllVoice's Objection, they have not filed another; nor
has either of the Liquidating Debtors ever supplied the Court
with any estimate of valuation for either entity.

The Liquidating Debtors' feasibility problems have only
increased with time. The value of each of the Liquidating
Debtors' estates has fallen substantially. The Debtors have
essentially conceded as much in their "Motion of L&H Group for
Order Pursuant to Section 363(b) of Bankruptcy Code and
Bankruptcy Rule 9019(a) Denying Approval of Baker Settlement
Agreement" at 15, in which they admit that "it [appears]
virtually certain that the claims of all Holdings' creditors
would not be paid in full". It is now apparent that the
Liquidating Debtors' principal source of funds is the proceeds
of asset sales that may be diverted either to the Belgian
curators or to satisfy rapidly mounting administrative costs and
fees. Furthermore, insofar as they have continued to market
infringing products, the size of AllVoice's administrative claim
can only increase.

Finally, it is disingenuous for the Debtors to imply that a
disclosure statement and proposed plan are presently on file
with the Court, awaiting amendment, when the Joint Disclosure
Statement was withdrawn for good and sufficient reasons after
the filing of AllVoice's objection and the appointment of the
Curators in N.V.'s Belgian proceedings, and no other plan and
disclosure statement have ever been filed. As the record makes
abundantly clear, the Liquidating Debtors are presently engaged
in a flurry of activity, seeking to liquidate the last vestiges
of their estates. There is no basis whatever for a belief that
they are working to prepare a plan to rehabilitate their
businesses, and that additional time will permit them to
"finalize [a] distribution scheme", "amend" their moribund
disclosure statement and seek votes for a plan of reorganization
that can never be confirmed.

To the contrary, as AllVoice shows in the Motion to Convert, it
is likely that, within a matter of weeks, the Liquidating
Debtors will have rid themselves of the last of their tangible
assets in the last of a succession of "fire sales". At the same
time, other assets of the Liquidating Debtors - i.e., potential
preference claims against affiliates and others - have not been
exploited. In short, by the end of January, 2002 - the date
requested in the Extension Motion - it is unlikely that any
tangible assets will remain to be reorganized. (L&H/Dictaphone
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  

LODGIAN INC: Seeks Access to $25 Million in DIP Financing
In addition to using their Secured Lenders' Cash Collateral,
Lodgian, Inc., and its debtor-affiliates need additional
liquidity to meet their postpetition obligations.  Because of
seasonal variations in cash flow from their hotel properties,
the Debtors project that they will need financing in order to
meet their day to day working capital needs and to fund certain
capital expenditures.  In fact, the Debtors project that cash
demands will exceed resources over the next few weeks:

                             Lodgian, Inc.
               Schedule of Receipts and Disbursements
                         12/22/01 - 01/18/02

         Hotel revenues                            $16,057,000
         Taxes, partnership income & gratuities      3,451,000
            Total receipts                         $19,508,000

        Payroll                                    $10,135,000
        Taxes                                        3,495,000
        Vendors, leases & utilities                 10,858,000
        Construction projects                          750,000
        Utilities, licenses & contingency payments   2,541,000
        Interest                                     3,050,000
           Total Disbursements                     $30,829,000
              Net Outflow                          $11,321,000

Prior to the Petition Date, the Debtors sought additional
financing from both new and existing lenders. No potential
lender was willing to provide the Debtors (as debtors in
possession) with the necessary amount of financing on the basis
of securing such advances with junior liens on the Debtors'
property under 11 U.S.C. Sec. 364(c). The Debtors also entered
into discussions with Morgan Stanley Senior Funding, Inc.,
which, after a series of good faith, arms-length negotiations,
culminated in a debtor-in-possession financing agreement.  The
Debtors are convinced that the Morgan Stanley-backed DIP
Financing is essential to the Company's restructuring efforts
and, therefore, is in the best interests of the Debtors, their
creditors and their estates.

At this critical juncture, Adam C. Rogoff, Esq., at Cadwalader,
Wickersham & Taft, tells Judge Lifland, the Debtors urgently
need the DIP Financing to instill in their creditors, vendors,
employees and customers confidence in the Debtors' ability to
meet their postpetition obligations.  The DIP Financing is
designed to serve these purposes and is necessary for the
Debtors to reorganize their businesses.  Mr. Rogoff outlines the
salient terms of the new DIP Financing Facility:

Borrower:      Lodgian, Inc.

Guarantors:    Each of the Debtors (other than Lodgian).

Agent:         Morgan Stanley Senior Funding, Inc.

Agent:         Morgan Stanley Senior Funding, Inc.

Facility:      A revolving credit limit of up to $25,000,000

Lenders and
Commitments:   $12,500,000 Morgan Stanley Senior Funding, Inc.
               $12,500,000 Lehman Commercial Paper, Inc.

Purpose:       To fund the working capital requirements of the
               Debtors, so long as the Debtors' expenditures do
               not exceed, in both timing and amount, the dollar
               amounts set forth in calendar year 2002 Budget:

                    Business Segment           Net Cash Flow
                    ----------------           -------------
                    Lower Leverage Hotels        ($9,900,000)
                    Higher Leverage Hotels        (3,400,000)
                    Corporate                      2,800,000
                    Consolidated                ($10,500,000)

Availability:  $10,000,000 upon the entry of an Interim DIP
               Financing Order and the balance of $15,000,000
               after entry of a Final DIP Financing Order.

Interest:      Loans bear interest at LIBOR plus 3.50% or Base
               Rate plus 2.5%

Maturity Date: December 20, 2002

Fees:          The Debtors agree to pay a variety of Fees to the
               DIP Lenders:

              * a $500,000 Facility Fee;

              * a monthly Administrative Fee to the Agent agreed
                  to by the Debtors in a non-public Fee Letter;

              * 0.75% per annum on every dollar not borrowed;

              * customary 2.5% per annum fees on the face amount
                of each Standby Letter of Credit and Commercial
                Letter of Credit.

Priority and
Collateral:   The DIP Lenders shall have (i) a first priority
              Lien on all of the Primed Hotels (although at the
              Interim Hearing the Debtors will only be seeking a
              Priming Lien on the MSSF Hotels and related
              collateral), and (ii) a junior lien on the High
              Leverage Hotels and Low Leverage Hotels that are
              not subject to DIP Priming Liens, and in each
              case, the related collateral, subject to the Carve
              Out and (x) any Primed Lender AP Lien on such
              property, (y) any Specific AP Lien on such
              property and (z) only as to High Leverage Hotels,
              any General AP Lien on such property. In addition,
              the DIP Lenders will be entitled to superpriority,
              administrative expense claim status in the
              Debtors' cases, subject only to the Carve-Out.

Carve Out:    The Lenders agree to a carve-out of their Liens
              for payment of unpaid professional fees and
              disbursements incurred following any Event of
              Default by professionals retained by the Debtors
              and any statutory committees appointed in the
              chapter 11 cases and for payment of U.S. Trustee
              fees pursuant to 28 U.S.C. Sec. 1930 and to the
              Clerk of the Bankruptcy Court plus $1,500,000

Participation: The DIP Credit Agreement provides that any
              "primed" Prepetition Mortgage Lender (which is an
              "Eligible Assignee" as defined in the DIP Credit
              Agreement) may elect to participate as a DIP
              Lender by assuming a ratable share of the DIP
              Lenders' commitments, in accordance with
              procedures set forth in the DIP Credit Agreement.

Covenants:    The Debtors make three promises to the Lenders in
              the DIP Financing Facility:

              (A) The Debtors covenant that their cumulative
                  Adjusted EBITDA for any period beginning on
                  January 1, 2002 and ending on the date
                  indicated will not fall below:

                    For the Period from      Minimum Cumulative
                    Jan. 1, 2002 through     Adjusted EBITDA
                    --------------------     ------------------
                    March 31, 2002               $12,900,000
                    April 30, 2002               $19,300,000
                    May 31, 2002                 $26,700,000
                    June 30, 2002                $34,400,000
                    July 31, 2002                $41,700,000
                    August 31, 2002              $51,500,000
                    September 30, 2002           $57,600,000
                    October 31, 2002             $66,300,000
                    November 30, 2002            $70,800,000

              (B) The Debtors covenant that they will not permit
                  the aggregate revenue of the Low Leverage
                  Guarantors to be less than:

                  * $19,000,000 for the month of January 2002 or

                  * $20,800,000 for the month of February 2002

              (C) The Debtors covenant that corporate overhead
                  expense (exclusive of unusual items such as
                  Chapter 11 costs, severance expense, office
                  relocation expense and other items reasonably
                  acceptable to the Co-Arrangers) for any month
                  will not exceed:
                                              Maximum Corporate
                    Month Ending              Overhead Expense
                    ------------              -----------------
                    January 2002                 $2,300,000
                    February 2002                $2,300,000
                    March 2002                   $2,070,000
                    April 2002                   $1,955,000
                    May 2002                     $1,840,000
                    June 2002                    $1,840,000
                    July 2002                    $1,495,000
                    August 2002                  $1,495,000
                    September 2002               $1,495,000
                    October 2002                 $1,495,000
                    November 2002                $1,495,000
                    December 2002                $1,495,000

Finding that the Debtors have an immediate need to obtain post-
petition financing to continue operating their businesses,
alternative financing is not available to the Debtors, the terms
of the DIP Financing are fair and reasonable and reflect the
Debtors' exercise of prudent business judgment consistent with
their fiduciary duty and are supported by reasonably equivalent
value and fair consideration, and that the financing package has
been negotiated in good faith and at arm's-length between the
Debtors and the Agent, Judge Lifland authorizes the Debtors to
enter into the DIP Financing Facility and borrow up to $10
million from the DIP Lenders pending a Final DIP Financing
Hearing on January 23, 2002.

Robert J. Levine, Esq. and Michael S. Flynn, Esq., at Davis Polk
& Wardwell, represent Morgan Stanley in this matter. (Lodgian
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  

LOUISIANA-PACIFIC: S&P Concerned About Weaker Cashflow Measures
Standard & Poor's lowered its ratings on Louisiana-Pacific Corp.
by one notch and removed them from CreditWatch where they were
placed with negative implications October 17, 2001. The current
outlook is negative.

The downgrade reflects expectations that oversupply and seasonal
softness in Louisiana-Pacific's primary markets are likely to
keep cash flow protection measures very weak for the next year
or so. During the next several months, debt levels could rise
somewhat in order to fund seasonal operating needs. On the
positive side, the company has initiated considerable operating
cost reductions, lowered capital expenditures substantially, and
eliminated all dividend payments. In addition, Louisiana-Pacific
and others have taken significant production downtime to manage
inventories (although this does raise unit costs). The company
has also completed a debt refinancing that should provide the
necessary flexibility during this cyclical trough and pushed all
major debt maturities beyond 2003.

Portland, Oregon-based Louisiana-Pacific is a leading
manufacturer of structural panels and lumber. Earnings and cash
flow are subject to wide swings due to the company's narrow
product focus within cyclical, commodity markets. Operating
results, although improving, remain weak, as they continue to be
negatively affected by poor pricing. Pulp operations were also a
substantial cash drain this year, but they should become less
significant as a result of the steps Louisiana-Pacific has taken
to eventually exit this business. Operating margins and funds
from operations to debt (excluding the non-recourse portion of
timber notes payable) are currently below 10%, with EBITDA
interest coverage below 1 times. Debt (excluding non-recourse
timber notes and including contingency reserves) to capital is
currently at about 47%, well above management's target maximum
of 40%. Significant improvement in the financial profile is not
expected until markets turn around. Moreover, performance could
actually worsen somewhat if housing markets, which have held up
well, weaken in the near term. However, earnings and cash flow
measures are expected to be robust at the peak of the cycle,
permitting the strengthening of credit protection measures in
cyclically strong periods.

                       Outlook: Negative

The ratings incorporate expectations that weak market conditions
are likely to keep credit protection measures at very low levels
for the next year or so. Ratings could be lowered if markets
deteriorate further, or if financial flexibility proves to be

           Ratings Lowered And Removed From CreditWatch

Louisiana-Pacific Corp.               To                  From
   Corporate credit rating            BB                   BB+
   Senior secured bank loan rating    BB+                  BBB-
   Senior unsecured debt              BB-                  BB
   Subordinated debt                  B+                   BB-
   Preliminary senior unsecured shelf BB-                  BB
   Preliminary subordinated shelf     B+                   BB-

MENTERGY: Tel Aviv Court Okays Refinancing Pact with Creditors
Mentergy, Ltd. (Nasdaq: MNTE), the leading global provider of
blended e-Learning solutions, announced that it has received the
approval of the District Court of Tel Aviv-Jaffa for the
refinancing agreement with Mentergy's principal creditors.  The
court approval follows the approval of Mentergy's creditors and
shareholders at meetings held on December 13, 2001.

As previously reported, under the refinancing agreement current
creditors agreed to convert approximately $43.4 million of debt
into equity.  As part of the agreement, certain principal
shareholders will make additional equity investments of an
aggregate of $2.85 million in cash.

The agreement remains subject to additional governmental and
other approvals.  Mentergy expects to obtain the necessary
approvals and close the transactions contemplated by the
agreement as soon as possible after receipt of such approvals.

Mentergy, Ltd. (Nasdaq: MNTE), formerly Gilat Communications,
Ltd. (Nasdaq: GICOF), is a global e-Learning company, providing
e-Learning products, consulting, and courseware development
services for large enterprises.  With over 21 years of expertise
in the learning industry, Mentergy assists businesses worldwide
to make a cost-effective shift from traditional learning to a
blended e-Learning approach. Mentergy Ltd's North American
operations comprise of the Allen Communication Learning Services
division and the LearnLinc Live e-Learning division (Entergy,
Inc.), in addition to John Bryce Training in Israel and Europe
(Aris Education, KocBryce and Iqsoft JohnBryce Training Center),
and a global sales and marketing operation that includes
Mentergy Europe, Gilat Satcom and Israsat that supplies service
for VSAT Network, Point to Point satellite links, Internet
backbone connectivity over satellite, and satellite
infrastructure for the e- Learning industry.

Mentergy is a trademark and LearnLinc is a registered trademark
of Mentergy, Ltd.  All other brand names, product names, or
trademarks belong to their respective holders.

METALS USA: Court Grants Injunction Against Utilities Except TXU
Teri Stewart Mace, Esq., in Dallas, Texas, relates that TXU
Electric Company and TXU Gas Company objects to Metals USA,
Inc., and its debtor-affiliates Utility Motion. The TXU
utilities are requesting deposits from the Debtors amounting to
$24,261 for pre-petition debt and $39,670 as post-petition
deposit. The deposit requested by the TXU utilities approximate
the exposure under the procedures by which TXU utilities must
operate in the collection of unpaid accounts.

Ms. Mace states that the administrative expense priority offered
by Debtors for undisputed post-petition amounts due offers
little consolation. Any utility is entitled for post-petition
service under the Bankruptcy Code without the necessity of a
Court Order.  Ms. Mace believes that there needs to be assurance
that the delinquency be paid in full because administrative
claim is generally necessary in unsuccessful reorganization and
adds nothing to the rights granted to all utilities servicing
the Debtors.

Ms. Mace relates that the fact that the Debtors may have a good
payment history does not offer real protection to a utility
company as the Debtors' proposal is no assurance at all. The
deposits sought by the TXU utilities are the same required of
all their commercial customers whose credit worthiness is
considered questionable or unknown. Debtors have not
consistently paid on a timely basis their accounts with the TXU
Utilities, which is an indication of lack of credit worthiness.

                             * * *

Finding sufficient cause for the relief requested, Judge
Greendyke approves the relief requested, which shall apply to
all utilities except TXU Electric Company and TXU Gas Company,
without prejudice to the Debtors' right to re-urge the motion as
to TCU. (Metals USA Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

NATIONSRENT: Court Approves Payment of Employee Wages & Benefits
NationsRent Inc., and its debtor-affiliates sought and obtained
an order from the Court authorizing them, in accordance with
their stated policies and in their sole discretion, to pay:

A. certain pre-petition employee and independent contractor
   wages, salaries, overtime pay, incentive payments, referral
   bonuses, contractual compensation, sick pay, vacation pay,
   holiday pay and other accrued compensation,

B. pre-petition employee and independent contractor business
   expenses, including travel, lodging, moving, closing,
   relocation, training and education costs and other business
   expenses incurred in the ordinary course of business,

C. pre-petition contributions to and benefits tinder employee
   benefit plans,

D. pre-petition employee payroll deductions and withholdings and

E. all costs and expenses incident to the foregoing payments and

Joseph I. Izhakoff, the Debtors' Vice-President and General
Counsel, informs the Court that the Debtors' workforce includes
approximately 3,300 employees. The continued and uninterrupted
service of Employees is essential to the Debtors' continuing
operations and their ability to reorganize. Mr. Izhakoff submits
that any delay in the provision of pre-petition compensation,
employee benefits, reimbursement of employee business expenses
or payments for which employee payroll deductions were made will
substantially impair the Debtors' relationship with the
Employees and destroy Employee morale at the very time when the
dedication, confidence and cooperation of these Employees is
most critical.  At this critical early stage, the Debtors simply
cannot risk the substantial disruption of business operations
that would inevitably result from any decline in workforce
morale attributable to the failure to make Pre-petition
Employment Payments in the ordinary course of their businesses.

Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, P.A.
in Wilmington, Delaware, states that the Debtors maintain a
number of employee benefit programs, including health, dental,
life and disability insurance, a retirement program for their
hourly and salaried Employees, ordinary course severance
programs and other similar programs. The Debtors also maintain
severance programs for hourly Employees, salaried Employees up
to the manager level and salaried Employees at the director
level and above. In addition, certain of the Debtors are
obligated to pay, in accordance with certain collective
bargaining agreements, contributions to union health and welfare
plans, union dental plans, union 401(k) and annuity plans, union
pension funds, union apprenticeship programs and other union
programs on behalf of certain covered union Employees.

As of the Petition Date, Benefits were owed but remained unpaid
because certain obligations under the Benefit Programs accrued
either in whole or in part prior to the Petition Date, but will
not become payable in the ordinary course of the Debtors'
businesses until a later date.

The Benefits that the Court authorizes the Debtors to pay
include those owing under these type of Benefit Programs:

A. Self-Insured Programs - The Debtors maintain self-insured
   plans that provide general health, prescription drug and
   dental benefits. Under the Self-Insured Plans, the Debtors
   assume liability for, and initially pay, covered Benefits,
   rather than paying premiums for third-party insurance
   coverage. The Debtors anticipate that various claims that
   accrued under the Self-Insured Plans prior to the Petition
   Date will continue to be submitted post-petition. Based on
   historical levels of unfiled claims, the Debtors estimate
   that, as of the Petition Date, approximately $1,100,000 in
   pre-petition claims under the Self-Insured Plans will be
   submitted by Employees post-petition.

B. Third-Party Insured Programs - The Debtors also maintain
   insured benefit plans under which the Debtors, the
   Employees' or both contribute to the payment of premiums
   for insurance or other coverage provided by third parties.
   The Insured Plans include medical and dental plans;
   employee term life insurance; optional employee term life
   insurance; dependents term life insurance; employee
   accidental death and dismemberment insurance; short-term
   disability insurance; long-term disability insurance;
   critical illness insurance; cancer insurances; and accident
   insurance. The Debtors pre-funded their payroll obligations
   through and including December 16, 2001 and, based on the
   historical levels of premiums under the Insured Plans, the
   Debtors estimate that, as of the Petition Date, there are
   no accrued but unpaid premium contributions.

C. Company-Sponsored Benefit Programs - The Debtors also
   maintain certain other Benefit Programs under which the
   Debtors, the Employees or both contribute to Benefits
   provided to Employees. The Noninsured Programs include 401(k)
   investment plans; flexible spending accounts, which permit
   the payment of health care costs and dependent care costs
   on a pre-tax basis; Ordinary Course Severance Programs;
   union health and welfare plans; union dental plans; union
   401 (k) and annuity plans; union pension plans; union
   apprenticeship programs; union supplemental unemployment
   accounts; union legal funds; union political action
   committee funds; and defensive organization picket strike
   funds. Based on historical levels of participation in the
   Noninsured Programs, the Debtors estimate that their
   accrued but unpaid obligations under the Noninsured
   Programs was approximately $118,000 as of the Petition

The Debtors seek to pay the benefits because any delay or
disruption in the provision of employee benefits or payment of
compensation will irreparably harm the Debtors' relationships
with the Employees and Independent Contractors and significantly
impair workforce morale at the very time when the dedication,
confidence and cooperation of the Employees and Independent
Contractors is most critical. Mr. DeFranceschi tells the Court
that the Debtors face the risk that their operations may be
severely impaired if the Court does not grant immediate
authority for the Debtors to make the payments.

In addition, bolstering Employee morale and ensuring the
uninterrupted availability of the Independent Contractors'
services will assist the Debtors in maintaining a "business as
usual" atmosphere and, in turn, facilitate the Debtors' efforts
to emerge from chapter 11 without significant delay. Finally, to
remain in a position to maintain necessary oversight and quality
control and to enable many key Employees and Independent
Contractors to perform their jobs effectively, the Debtors must
continue their corporate policies of permitting certain
Employees and Independent Contractors to incur business-related
expenses and thereafter seek reimbursement by submitting
appropriate invoices or vouchers evidencing such out-of-pocket

Mr. DeFranceschi explains that absent the relief requested, the
Employees and Independent Contractors will suffer undue hardship
and, in many instances, serious financial difficulties because
the amounts represented by Pre-petition Compensation, Pre-
petition Business Expenses and Deductions are needed to enable
the Employees and Independent Contractors to meet their own
personal obligations. Moreover, the stability of the Debtors
would be undermined by the potential threat that otherwise loyal
employees at all levels, as well as independent contractors,
would seek other employment. The Debtors believe that, in
substantially all cases, the total pre-petition wages, salaries
and contractual compensation owing to or on account of any of
any particular employee or independent contractor will not
exceed the $4,650 that is allowed as a priority claim.

Mr. DeFranceschi states that the Withholdings Taxes are held in
trust for the benefit of the appropriate federal, state or local
taxing authority for Employees or Independent Contractors on
behalf of whom such payment is being made. As such, the
Withholdings are not property of the Debtors' estates and will
not otherwise be available to the Debtors' estates and therefore
the remittance of the Withholdings will also not adversely
affect the Debtors' estates. Mr. DeFranceschi relates that many
federal, state and local taxing authorities impose personal
liability on the officers and directors of entities responsible
for collecting taxes from employees to the extent any such taxes
are collected but not remitted. Accordingly, if these amounts
remained unpaid, there is a risk that the Debtors' officers and
directors may be subject to lawsuits or even criminal
prosecution on account of any such nonpayment during the
pendency of these chapter 11 cases. Such lawsuits or proceedings
obviously would constitute a significant distraction for
officers and directors at a time when they should be focused on
the Debtors' efforts to stabilize their post-petition business
operations and develop and implement a successful reorganization

Mr. DeFranceschi contends that payment of the Pre-petition
Processing Costs is justified because the failure to pay any
such amounts might disrupt the provision of services by third
parties with respect to Pre-petition Compensation, Deductions
and Benefits. By paying the Pre-petition Processing Costs, the
Debtors may avoid temporary disruptions of such services and
thereby ensure that the Employees obtain all compensation and
benefits without any interruption. The Debtors estimate that the
aggregate amount of Pre-petition Processing Costs accrued but
unpaid as of the Petition Date was approximately $20,000.

The Court also directs all applicable banks and other financial
institutions, when requested by the Debtors, to receive,
process, honor and pay any and all checks drawn on the Debtors'
accounts in respect of Pre-petition Compensation, Pre-petition
Business Expenses, Deductions, Withholdings, Benefits and Pre-
petition Processing Costs, whether such checks were presented
prior to or after the Petition Date, provided that sufficient
funds are available in the applicable accounts to make the
payments.   Mr. DeFranceschi represents that these checks are
drawn on identifiable payroll and disbursement accounts and can
be readily identified as relating directly to the authorized
payment of Pre-petition Compensation, Pre-petition Business
Expenses, Deductions, Withholdings, Benefits or Pre-petition
Processing Costs. Accordingly, the Debtors believe that checks
other than those relating to authorized payments will not be
honored inadvertently. (NationsRent Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

NETIA HOLDINGS: Fitch Hatchets Ratings Down to Default Level
Fitch, the international rating agency, has downgraded Netia
Holdings senior unsecured corporate credit rating to 'D' from
'C' following a default on cross-currency swap obligations on
December 17, 2001 and the prospect of default on overdue
interest payments on some of its bonds. The rating is taken off
Rating Watch Negative, where it was first put in place on August
6, 2001.

The single 'D' rating designation reflects the agency's
estimation that bondholder recoveries are likely to equate to
less than 50% and its expectation that Netia will undergo a
formal revision of its capital structure. The agency has taken
note of comments made by a representative of Telia AB that it
would be ready to participate in a new share issue in the event
that Netia's debt is restructured first.

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

ORGANIC INC: Amends Share Purchase Pact with E-Services & Seneca
E-Services Investments and Seneca have stated, in an Offer To
Purchase, that upon acquiring at least 90% of the outstanding
shares of Organic, Inc., E-Services would be able to, and
presently intends to, cause Organic to effect a merger in which
each outstanding share not purchased pursuant to the Offer
(excluding any shares beneficially owned by Seneca and shares,
if any, held by stockholders who perfect their appraisal rights
under Delaware Law) would be converted into the right to receive
in cash the same per share amount paid in the Offer.

On September 18, 2001, Seneca entered into the Share Purchase
Agreement to acquire a subsidiary of Organic Holdings LLC, which
held 51,954,975 Shares, or 58.7% of the total outstanding
shares. On December 3, 2001, the Share Purchase Agreement was
amended to (1) reduce the cash amount payable early in the earn-
out period described below from approximately $16 million to
$8.5 million, (2) provide that most of Organic Holdings'
representations and warranties relating to Organic would
terminate as of the closing of the purchase, and (3) limit
Organic Holdings' rights in respect of covenants regarding
acquisitions, divestitures and other transactions involving
Organic during the earn-out period. The Share Purchase Agreement
was approved by Organic Holdings' member directors, comprised of
Jonathan Nelson, a director of Organic and its chairman, Gary
Hromadko, a director of Organic, and Michael Hudes, Organic's
former president and a former director.

The closing of the purchase of these shares to Seneca was
consummated on December 4, 2001, after which Seneca became the
beneficial owner of an aggregate of 80.9% of the outstanding
shares. The amount payable to Organic Holdings for the shares
purchased under the Share Purchase Agreement is based on an
earn-out formula calculated by reference to, in general, 4.5 to
6.5 times Organic's average annual profit before taxes for the
three years ended December 31, 2006. An advance cash payment of
$8.5 million was paid at closing. Additional payments, if any,
would depend on Organic's results of operations through December
31, 2006, and are calculated as follows:

2003.........   If 2002 PBT is greater than $10.0 million, an
                aggregate payment of $2.5 million

2004.........   If 2003 PBT is greater than $15.0 million and
                the 2003 PBT Margin is greater than 10%, an
                aggregate payment of $5.0 million

2005.........   58.74% of (2002 PBT + 2003 PBT + 2004 PBT),
                minus prior payments

2006.........   58.74% of (2003 PBT + 2004 PBT + 2005 PBT),
                minus prior payments

2007.........   97.90% of CAPBT, minus prior payments

The percentages set forth above for the years 2005, 2006 and
2007 will be decreased to the extent that Organic issues
additional shares of common stock (excluding shares issued under
the management incentive plan) in the future. Such decrease will
be proportionate to the dilutive effect on Seneca's (or any
other stockholder's) share ownership immediately prior to the

Accordingly, Organic Holdings received $0.164 per share in cash
at the closing of the sale and will also receive, if applicable,
earn-out payments on the basis summarized above. The amount that
Organic Holdings will receive under the amended Share Purchase
Agreement will depend on Organic's future results of operations.
These amounts may be higher or lower than the $0.33 per share to
be paid in the Offer and the Merger.

Also in connection with the amended Share Purchase Agreement,
Seneca agreed to vote its shares in favor of adopting an equity
incentive plan providing for stock awards to certain members of
Organic's management for up to an aggregate of 15% of Organic's
equity. Shares or rights awarded under this plan would be
subject to vesting requirements (with 20% vested each year,
subject to acceleration upon a change in control of Organic) and
be subject to rights under which Organic and, subject to certain
limitations, the executive could repurchase the award or cause
it to be repurchased based on a multiple of PBT over a
measurement period prior to the repurchase. Both Seneca's
ownership percentage and Organic Holdings' earn-out percentage
would be diluted by shares or rights that may be issued to
management under this arrangement. It is anticipated that only a
small portion of the shares or rights that may be issued under
the arrangement would be issued to Organic executives who have
ownership interests in Organic Holdings and no such shares or
rights would be issued to Jonathan Nelson, the Chairman of
Organic and the majority shareholder of Organic Holdings. The
grant of stock awards under the proposed incentive plan will, in
each case, be subject to the terms and conditions set forth in
the incentive plan and any required stockholder approvals. It is
not expected that any action will be taken with respect to this
plan prior to the expiration or termination of this offer.

At the intersection of businesses and their customers stands the
Internet, and Organic wants to be the crossing guard. The
company specializes in putting businesses online so they can
communicate with their customers in cyberspace. Organic offers
services such as marketing, branding, Web site design, e-mail
promotion, media relations, and fulfillment. Its more than 300
clients have included DaimlerChrysler (25% of sales), Federated
Department Stores (15%), British Telecommunications, and Target.
Organic has offices across Asia, Europe, Latin America, and
North America. Chairman Jonathan Nelson owns 59% of Organic,
while Seneca Investments, an affiliate of ad giant Omnicom, owns
more than 22% (and has offered to buy Nelson's stake). At the
end of September quarter, Organic Holdings registered a working
capital deficiency of about $12 million.

OXFORD AUTOMOTIVE: S&P Knocks Down Junk Ratings to Default Level
Standard & Poor's lowered its corporate credit and subordinated
debt ratings on Oxford Automotive Inc. and took them off
CreditWatch. At the same time, the senior secured debt rating
remains on CreditWatch with negative implications, where it were
placed October 2, 2001.

The rating actions follow Oxford's failure to make the December
15, 2001, interest payment on its publicly rated subordinated
debt. Oxford has entered into a Forbearance Agreement with its
lenders, under which the lenders have agreed to forbear from
exercising remedies under the credit agreement due to certain
defaults through January 14, 2002.

Oxford is a Tier I supplier of engineered metal components,
assemblies, and modules for the original equipment automotive
industry. Core products include closure systems, suspension
systems, and complex structural subsystems. Oxford's operating
performance has deteriorated during the past year due to the
weakening in North American automotive demand and increased
costs associated with the launch of new business, and this has
led to liquidity pressures and covenant issues. Debt to EBITDA
is currently estimated to be about 10 times.

           Ratings Lowered, Off CreditWatch Negative

     Oxford Automotive Inc.               TO      FROM
       Corporate credit rating            SD      CC
       Subordinated debt                  D       C

           Rating Remain on CreditWatch Negative

     Oxford Automotive Inc.
       Senior secured debt rating         CC

PACIFIC GAS: Summary of Amended Joint Plan of Reorganization
By April 6, 2001 (the Petition Date), Pacific Gas and Electric
Company had incurred approximately $8.9 billion in procurement
costs, including $2.3 billion attributable to the Debtor's
generation, that the CPUC refused to allow it to collect from
its customers, and had billions of dollars in defaulted debt and
unpaid bills, as a result of increasing costs in purchasing
power on the wholesale market that the Debtor could not recover
in its retail rates because the CPUC would not allow it despite
repeated requests by the Debtor. All of the major credit rating
agencies downgraded the Debtor to uncreditworthy ratings, which
precluded the Debtor from purchasing power in the wholesale
markets under federally-approved tariffs.

As its financial situation deteriorated, the Debtor turned to
the Bankruptcy Court, seeking relief under Chapter 11 of the
Bankruptcy Code which authorizes a debtor to reorganize its
business for the benefit of itself, its creditors and its equity
interest holders. In addition to permitting the rehabilitation
of a debtor, another goal of chapter 11 is to promote equality
of treatment for similarly situated creditors and similarly
situated equity interest holders with respect to the
distribution of a debtor's assets.

The principal objective of a chapter 11 case is the confirmation
and consummation of a plan. A plan sets forth the means for
satisfying claims against and equity interests in a debtor.
Confirmation of a plan by the bankruptcy court binds, among
others, the debtor, any issuer of securities under the plan, any
entity acquiring property under the plan, and any creditor or
equity interest holder of the debtor. Subject to certain limited
exceptions, the order approving confirmation of a chapter 11
plan discharges a debtor from any debt that arose prior to the
date of confirmation of the plan and substitutes therefor the
obligations specified under the confirmed plan. Certain holders
of allowed claims against and equity interests in a debtor are
permitted to vote to accept or reject the plan. Prior to
soliciting acceptances of the proposed plan, however, section
1125 of the Bankruptcy Code requires approval by the bankruptcy
court of a disclosure statement containing adequate information
of a kind, and in sufficient detail, to enable a hypothetical
reasonable investor to make an informed judgment regarding the

The Debtor developed the Plan against the backdrop of the
trouble it faced, and designed it to reaffirm the Debtor's
financial viability and provide for the payment in full of all
Allowed Claims.

Under the proposed Plan, the Debtor has created three new
limited liability companies - ETrans LLC (ETrans), GTrans LLC
(GTrans) and Electric Generation LLC (Gen) - and will separate
its operations into four lines of business based on the Debtor's
historical functions: retail gas and electric distribution;
electric transmission; interstate gas transmission; and electric

The Reorganized Debtor has also created a corporation, Newco
Energy Corporation, to hold the membership interests of ETrans,
GTrans and Gen and will ultimately declare and pay a dividend of
all of the outstanding common stock of Newco to the Parent. In
addition, the Debtor may create direct or indirect subsidiaries
of Newco to hold other assets and may create additional entities
as deemed appropriate. For example, certain other assets of the
Debtor deemed not essential to operations will be sold to third
parties or transferred to one or more special purpose entities
wholly-owned by Newco under the Plan, such as Land Holdings LLC,
which will hold certain property transferred by the Debtor
pursuant to the Plan. The assets and liabilities not transferred
or sold as described above will be retained by the Reorganized
Debtor, which will continue to conduct the local electric and
gas distribution operations and associated customer services as
of and after the Effective Date.

The Parent will declare and, on or as soon after the Effective
Date as practicable, pay a dividend of all of the outstanding
common stock of the Reorganized Debtor held by the Parent to its
existing shareholders. As a result of such dividend, the
Reorganized Debtor will thereafter operate as a stand alone
local electric and gas distribution business. The Reorganized
Debtor will retain the name "Pacific Gas and Electric Company."
The Reorganized Debtor will continue to procure natural gas on
behalf of its core customers.

The Debtor will, however, seek a Bankruptcy Court ruling whereby
the Reorganized Debtor will be prohibited from assuming the net
open position of its electric customers not already provided
through the DWR's contracts until the following conditions are

(1) the Reorganized Debtor receives an investment grade credit
    rating from S&P and Moody's;

(2) the Reorganized Debtor receives assurances from S&P and
    Moody's that the Reorganized Debtor's credit rating will not
    be downgraded as a result of the reassumption of the net
    open position;

(3) there is an objective retail rate recovery mechanism in
    place pursuant to which the Reorganized Debtor is able to
    fully recover in a timely manner its wholesale costs of  
    purchasing electricity to satisfy the net open position;

(4) there are objective standards in place regarding pre-
    approval of procurement transactions; and

(5) subsequent to reassumption of the net open position, the
    conditions in clauses (3) and (4) remain in effect.

As a result of the restructuring, the electric transmission,
interstate gas transmission and electric generation businesses
will be under the exclusive ratemaking jurisdiction of the FERC
after the Effective Date. The gas and electric distribution
business will remain under the jurisdiction of the CPUC.

Pursuant to the Plan, the Debtor will satisfy Allowed Claims in
full (other than Allowed Claims representing the various PC
bond-related obligations, including the Mortgage Bonds securing
certain of such PC Bond obligations and Allowed Environmental
and Tort Claims) (i) in Cash, (ii) with a combination of Cash
and Long-Term Notes issued by ETrans, GTrans and Gen, or (iii)
in the case of Allowed QUIDS Claims, with QUIDS Notes issued by
Gen. The Long-Term Notes issued by ETrans, GTrans and Gen and
the QUIDS Notes issued by Gen will be issued initially to the
Debtor. The Reorganized Debtor will then transfer such Long-Term
Notes and the QUIDS Notes to creditors of the Debtor and such
notes will represent the portion of an Allowed Claim to be
satisfied by Long-Term Notes and QUIDS Notes.

Holders of Allowed Claims representing the various PC Bond-
related obligations will receive payment of their Allowed Claims
through a combination of Cash, the reinstatement of all or a
portion of the Debtor's obligations under the Reimbursement
Agreements, the MBIA Reimbursement Agreement, the Prior
Reimbursement Agreements and the other PC Bond Documents (all
subject to certain modifications), the assumption by ETrans,
GTrans and Gen of certain of the Debtor's obligations
thereunder, and, in the case of the Mortgage Bonds securing the
Mortgage Backed PC Bonds, by substitution of New Mortgage Bonds.
Allowed Environmental and Tort Claims will be satisfied in full
in the ordinary course of business.

The Long-Term Notes and QUIDS Notes issued by ETrans, GTrans and
Gen will be several and independent and will not be cross-
defaulted with the corresponding notes of any of the other
operating companies.

The Debtor will satisfy any Cash requirements through its
current cash reserves, proceeds of the sale of certain assets,
and proceeds raised through new debt financings consummated by
each of the Reorganized Debtor, ETrans, GTrans and Gen as of the
Effective Date.

The Proponents and the Committee believe that the Plan is
workable, fair and in the public interest. Specifically,

      -- The value created by the Plan will provide cash and
increased debt capacity to enable the Debtor to repay its
creditors in full.

      -- The Plan will also create businesses that will be
financially sound going forward, thus providing the necessary
assurance that the Reorganized Debtor, ETrans, GTrans and Gen
will be able to service the debt issued or reinstated under the

      -- The Plan positions the Debtor to regain financial
viability, resume procurement of power for its retail customers,
and participate actively in Western energy markets by the end of

      -- The Plan provides for the continued ownership of the
Debtor's assets by California companies that will continue to
operate the Debtor's businesses consistent with sound business
and environmental policies.

      -- Without raising retail electricity rates above current
levels, the Plan provides a safe, reliable and long-term
electricity supply to California's electric customers.

      -- The Plan enables the Debtor to maintain a qualified
workforce and keep the Debtor's generating assets intact and
integrated, rather than selling them piecemeal to satisfy its

      -- The Debtor's restructured gas and electric
distribution, gas and electric transmission and generating
assets will continue to be regulated to protect the public

      -- The Debtor's assets will continue to be subject to rate
regulation under the Plan. For the ETrans Assets, the FERC will
continue to have exclusive jurisdiction over rates and terms of
service. The GTrans Assets and Gen Assets will be subject to
long-term contracts with the Reorganized Debtor for continued
use in serving its retail electric and gas customers on a non-
discriminatory basis at rates regulated by FERC.

      -- The CPUC will continue to have jurisdiction over the
Debtor's retail electric and gas distribution assets, rates and
services, including the manner in which the Reorganized Debtor's
retail costs are allocated among various classes of the State's
energy customers.

      -- The Debtor's assets will continue to be subject to
public health and safety regulation by numerous other state,
local, and federal agencies.

      -- Holders of Allowed Claims and Equity Interests will
obtain a greater recovery from the estate of the Debtor than the
recovery they would receive if the assets of the Debtor were
liquidated under chapter 7 of the Bankruptcy Code,

      -- Holders of Allowed Claims and Equity Interests will be
paid in full for such Allowed Claims and Equity Interests.

The Proponents and the Committee believe that the Plan will
enable the Debtor to successfully reorganize its business and
accomplish the objectives of chapter 11 and that acceptance of
the Plan is in the best interests of the Debtor, its creditors
and all patties in interest.

                   Termination of Committee

The appointment of the Committee shall terminate on the
Effective Date.

modify the Restructuring Transactions set forth in this Article
Vii in such a manner as they may deem necessary and appropriate
in order to effect the Internal Restructuring set forth in the
Plan, including, but not limited to, (a) forming additional
special purpose affiliates or subsidiaries of ETrans, OTrans,
Gen and Newco and (b) transferring certain assets of the Debtor
to the entities formed pursuant to this Section 7.10.

              Conditions Precedent to Confirmation

The Plan shall not be confirmed by the Bankruptcy Court unless
and until the following conditions shall have been satisfied or
waived pursuant to Section 8.4 hereof:

(a) the Bankruptcy Court shall have entered an order or orders
    approving the Plan;

(b) the Bankruptcy Court shall have entered an order or orders
    determining that the Debtor, the Parent and their respective
    affiliate s are not liable or responsible for any DWR
    Contracts (except for the DWR Claims) or purchases of power
    by the DWR, and any liabilities associated therewith;

(c) the Bankruptcy Court shall have entered an order or orders
    prohibiting the Reorganized Debtor from accepting, directly
    or indirectly, an assignment of the DWR Contracts;

(d) the Bankruptcy Court shall have entered an order or orders
    prohibiting the reassumption of the NOP of its electric
    customers by the Reorganized Debtor unless the conditions
    set forth in Section 7.5(e) hereof are satisfied;

(e) the Bankruptcy Court shall have entered an order or orders
    approving the commitment of ETrans to join a FERC-approved
    RTO and authorizing ETrans to join such FERC-approved RTO at
    such time as it is operational;

(f) the Bankruptcy Court shall have entered an order or orders
    approving and authorizing the execution, and finding
    reasonable the terms and conditions, of the proposed (i)
    Reorganized Debtor Power Sales Agreement, (ii) the
    Transportation and Storage Services Agreement, (iii) the
    Master Separation Agreement, and (iv) the Tax Matters

(g) the Bankruptcy Court shall have entered an order or orders,
    having the effect of prohibiting officials of the CPUC and
    officials of the State of California from taking any action
    related to the allocation or other treatment of any "gain on
    sale" related to assets transferred or disposed of under the
    Plan that would adversely impact the Reorganized Debtor;

(h) the Bankruptcy Court shall have entered an order or orders,
    that the CPUC affiliate transaction rules are not applicable
    to the Restructuring Transactions or any transactions or
    agreements contemplated thereby;

(i) the Bankruptcy Court shall have entered an order or orders
    that the approval of any California Governmental Entity,
    including, but not limited to, the CPUC, shall not be
    required in connection with the Restructuring Transactions
    because Section 1123 of the Bankruptcy Code preempts such
    state and local laws;

(j) the Bankruptcy Court shall have entered an order or orders
    that the Proponents are not required to comply with Chapter
    5 and Section 1001 of the California Corporations Code
    because Section 1123 of the Bankruptcy Code preempts such
    state law; and

(k) the Confirmation Order shall be, in form and substance,
    acceptable to the Proponents.

             Conditions Precedent to Effectiveness

The Plan shall not become effective unless and until the
following conditions shall have been satisfied or waived
pursuant to Section 8.4 hereof:

(a) the Confirmation Order, in form and substance acceptable to
    the Proponents shall have been entered by the Bankruptcy
    Court on or before June 30, 2002, and shall have become a
    Final Order;

(b) the Effective Date shall have occurred on or before
    January 1, 2003;

(c) all actions, documents and agreements necessary to implement
    the Plan shall have been effected or executed;

(d) the Proponents shall have received all authorizations,
    consents, regulatory approvals, rulings, letters, no-action
    letters, opinions or documents that are determined by the
    Proponents to be necessary to implement the Plan;

(e) S&P and Moody's shall have issued credit ratings for the New
    Money Notes, the Long-Term Notes and the QUIDS Notes of not
    less than BBB- or Baa3, respectively;

(f) the Plan shall not have been modified in a material way,
    including any modification pursuant to Section 11.11 of the
    Plan, since the Confirmation Date; and

(g) the Reorganized Debtor, shall have consummated the sale of
    the Reorganized Debtor New Money Notes as contemplated by
    the Plan and the New Money Notes of each of ETrans, GTrans
    and Gen shall have been priced and the trade date with
    respect thereto shall have occurred.

In the event that one or more of the conditions specified have
not occurred or been waived on or before January 1, 2003, (a)
the Confirmation Order shall be vacated, (b) no distributions
under the Plan shall be made, (c) the Debtor and all holders of
Claims and Equity Interests shall be restored to the status as
of the day immediately preceding the Confirmation Date as though
the Confirmation Order had never been entered and (d) the
Debtor's obligations with respect to Claims and Equity Interests
shall remain unchanged and nothing contained in the Plan shall
constitute or be deemed a waiver or release of any Claims or
Equity Interests by or against the Debtor or any Person or
Governmental Entity or to prejudice in any manner the rights of
the Debtor or any Person or Governmental Entity in any further
proceedings involving the Debtor; provided, however, the amounts
paid pursuant to Section 4.2(a) of the Plan on account of Post-
Petition Interest may be recharacterized as a payment upon the
applicable Allowed Claims, in the sole discretion of the
Proponents, but the Debtor will not otherwise seek to recover
such amounts. Notwithstanding the foregoing, any property or
other assets transferred to Land Holdings and subsequently sold
or otherwise transferred by Land Holdings to a third party shall
be unaffected by this section of the Plan. (Pacific Gas
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   

PACIFIC GAS: Gets Approval to Settle Amounts of Certain Claims
Pacific Gas and Electric Company received approval from the U.S.
Bankruptcy Court to proceed with the investigation, negotiation
and settlement of certain pre-petition claims, including all of
those under $100,000.  The Court's order allows the utility to
settle the amounts at which the claims will be allowed, but does
not authorize payment of any such claim.  Settled claims would
be paid pursuant to the plan of reorganization.

Approximately 12,800 claims have been filed, with about 80
percent of them for less than $100,000 and the remaining 20
percent for amounts in excess of $100,000.  The utility received
authority to resolve the following categories of claims without
seeking review and approval for settlements reached from either
the Official Creditors' Committee or the Bankruptcy Court:

     -- Claims where the allowed amount settled on is $100,000
or less.

     -- Certain claims where the proposed allowed amount exceeds
$100,000, but is no more than $5 million, and is the lesser of
(a) 110 percent of the amount of such claim as scheduled by PG&E
in the Amended and Restated Schedules, and (b) $500,000 more
than the amount of such claim as set forth on the Schedules.
(For example, where the Scheduled Amount of a claim is $4
million, and the creditor has filed a proof of claim for $5
million, if the parties reach a settlement whereby the claim
would be allowed at $4.4 million, no Court, United States
Trustee or Committee review would be required.)

Where PG&E and the claimant cannot reach a mutually agreeable
settlement, the Court will resolve the claim.

The Court also approved the utility's request to object to
groups of claims on the basis that they are, for example,
duplicative, late-filed or have been paid, without waiving its
right to assert additional objections to the same claims, if

PAYLESS CASHWAYS: Unsecured Committee Sues Congress Financial
F&D Reports (Dec. 17 Edition) said that on December 19, 2001, a
trial began in the US Bankruptcy Court in Kansas City, MO, at
which the unsecured creditors committee for Payless Cashways,
DIP (Lee's Summit, MO) will sue DIP lender Congress Financial.  
The suit, the report said, challenges a termination fee in the
$160.0 million DIP loan agreement that provides a 2% prepayment
penalty, or $3.2 million, if the DIP is terminated prior to
November 18.

The termination fee is tied to a prepetition, $260.0 million
revolver that Payless and Congress entered into in 1999, and,
according to the suit, is "invalid and unenforceable" unless
Congress can show that the fee would reimburse it for an actual
loss incurred.  According to an attorney familiar with the case,
"It will be up to the lender, who will have to show that the
prepayment penalty bears some reasonable relationship to the
risk involved in the loan, or additional transaction costs, or
reduction in the profitability of the loan."

PEN HOLDINGS: S&P Further Slashes Ratings to Junk Level
Standard & Poor's lowered its ratings on Pen Holdings Inc.

At the same time, Standard & Poor's revised the CreditWatch
implications on Pen Holdings to developing from negative.
Developing implications means ratings could be raised, lowered,
or remain unchanged.

The downgrade follows the announcement that the company did not
make its $5 million interest payment on December 17, 2001, under
the 9 7/8% senior notes due 2008. Under the indenture, the
company has a 45-day grace period to make the payment. There is
a possibility that Pen Holdings could make the payment, as it is
negotiations to sell a one-third interest of its International
Marine Terminals (IMT) for approximately $9 million. However,
the timing and proceeds of this sale are uncertain. If Pen
Holdings is unable to make the payment within the grace period,
the ratings will be lowered to 'D'.

          Ratings Lowered with CreditWatch Implications
                    Revised to Developing

Pen Holdings Inc.                    To                   From
   Corporate credit rating           CC                    CCC
   Senior unsecured debt             CC                    CCC

PERSONNEL GROUP: Credit Suisse Discloses 11.31% Equity Holding
Credit Suisse First Boston, on behalf of the Credit Suisse First
Boston business unit, has filed a stock ownership record with
the SEC recognizing beneficial ownership of 3,398,568  shares of
the common stock of Personnel Group of America, Inc.  Credit
Suisse shares voting and dispositive power over the stock which
represents 11.31% of the outstanding common stock of Personnel
Group of America.

Early in the month Personnel Group of America, Inc. (NYSE:PGA
received term sheets from the agent bank under its revolving
credit facility proposing modifications and waivers of existing
covenants, as well as extensions of the revolving credit
facility up through January 2004.

Under these term sheets, the bank group would waive technical
covenant compliance under the existing credit facility for the
fourth quarter of 2001. Additionally, the term sheets provide
for an amendment to the revolving credit facility under which
the maturity of that facility is extended to January of 2003,
after which the Company, at its option and provided certain
conditions are met, can further extend the maturity of the
facility, in six-month increments, up through January 2004. The
amended facility would be limited to $145.0 million initially,
and would reduce over time pursuant to an amortization schedule
to be agreed to by the Company and the bank group. Interest
payable under the amended facility would be base rate plus 200
basis points through June 2002, with increases during each
extension period through January 2004. As before, the Company
would pledge substantially all of its assets as collateral for
the amended facility.

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

POLAROID CORP: Committee Taps Houlihan for Financial Advice
The Official Committee of Unsecured Creditors of Polaroid
Corporation requests the Court's authority to employ and retain
Houlihan Lokey Howard & Zukin Financial Advisors, Inc., as its
financial advisors in these chapter 11 cases.

Daniel J. Arbess of Triton CBO III, Ltd., Co-Chair of the
Committee, relates that the Committee needs to retain a
financial advisor to assist with analyzing and implementing
critical restructuring alternatives, and to help guide them
through their reorganization effort.  The Committee believes
that Houlihan is best suited to handle their needs because of
the firm's extensive experience with the Debtors' operations and
financial conditions.  Mr. Arbess tells the Court that Houlihan
has been the advisor to an informal committee of holders of the
Debtors Senior Notes. "Houlihan has also broad industry
experience and is a nationally recognized financial advisory
firm," Mr. Arbess adds.  According to Mr. Arbess, Houlihan's
Financial Restructuring Group will be providing investment
banking and financial advisory services to the Committee.

As the Committee's financial advisor, Houlihan will:

    (a) evaluate the Debtors assets and liabilities;

    (b) analyze and review the Debtors financial and operating

    (c) analyze the Debtors business plans and forecasts;

    (d) evaluate all aspects of any debtor-in-possession
        financing, cash collateral usage and adequate protection
        and any exit financing in connection with any plan of
        reorganization and any budgets relating to it;

    (e) assist with the claims resolution process and
        distributions related to it;

    (f) provide specific valuations and other financial analyses
        as required  in connection with the Debtors cases;

    (g) assess the financial issues and options concerning the
        sale of any assets of the Debtors, and plan of
        reorganization or any other plan of the Debtors;

    (h) prepare, analyze and explain the Plan to various
        constituencies; and,

    (i) provide testimony in court on behalf of the Committee as

Prior to the filing of these chapter 11 petitions, Mr. Arbess
relates that Houlihan received a total of $450,000 in payment of
its fees as financial advisors to the Informal Committee, and
$10,782 in reimbursement of its expenses. In exchange for the
services Houlihan will provide, Mr. Arbess informs Judge Walsh
that the firm will be entitled to receive as compensation:

    (a) a monthly fee of $150,000;

    (b) a transaction fee equal to 1% of the fair market value
        of all cash and/or other securities received by holders
        of unsecured claims; and

    (c) the reimbursement of actual and reasonable expenses.

Under the Engagement Letter, Mr. Arbess tells the Court, the
Debtors shall indemnify and hold the firm harmless against any
and all losses, claims, damages or liabilities in connection
with the engagement except if the injury arises as a result of
any gross negligence or willful misconduct on the part of
Houlihan in the performance of its services.

Bradley C. Geer, Senior Vice-President of Houlihan Lokey Howard
& Zukin Financial Advisors, affirms the Court that Houlihan is a
"disinterested person" as the term is defined in Section 101(14)
of the bankruptcy code in that Houlihan:

    (a) is not a creditor, equity security holder or insider of
        the Debtors;

    (b) is not and was not an investment banker for any
        outstanding security of the Debtors;

    (c) within three years before the date of filing of the
        Chapter 11 petition, has not been an investment banker
        for a security of the Debtors or an attorney to such an
        investment banker; and,

    (d) within two years before the date of filing of the
        Chapter 11 petition, is and was not a director, officer
        or employee of the Debtors or of any investment banker.

Mr. Geer further asserts that Houlihan does not represent any of
the Debtors creditors or other parties, or their respective
attorneys or accountants, in any matter, which is adverse to the
interest of any of the Debtors.  Likewise, Mr. Geer adds,
Houlihan does not hold any interest adverse to any of the
Debtors estates in the matters upon which they will be engaged

Thus, the Committee requests the Court for an order authorizing
them to retain Houlihan as their financial advisors. (Polaroid
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

PREMCOR REFINING: S&P Rates Proposed $10MM Bond Issue at BB-
Standard & Poor's assigned its double-'B'-minus rating to The
Premcor Refining Group Inc.'s (PRG) proposed $10 million issue
of Ohio Water Development Authority Environmental Facilities
Revenue Bonds due November 1, 2031.

The ratings on Port Arthur Finance Corp., PRG, and parent
company Premcor USA Inc. are on CreditWatch with developing
implications, where they were placed on April 13, 2001. The
CreditWatch listing reflects parent Premcor's announcement that
it has filed a registration statement with the U.S. SEC in
connection with a proposed IPO (which is expected to raise up to
$300 million). As such, ratings may be raised, affirmed, or
lowered, depending on future events.

The ratings on PRG and Premcor reflect the company's position as
a midsize, independent petroleum refiner operating in a very
competitive, erratically profitable industry, which is burdened
by excess capacity and high fixed-cost requirements for refinery
equipment and environmental regulation compliance. In addition,
the company has aggressive debt leverage, and until the year
2000, poor profitability.

Somewhat offsetting these factors is PRG's ability to process
heavy sour crude, which should lead to improved profitability
over the intermediate term, the company's ability to deliver
reformulated gasoline into Midwest markets, and high cash
balances that provide the company with liquidity during cyclical

St. Louis, Mo.-based Premcor owns and operates three refineries
of varying complexity, with total processing capacity of 490,000
barrels per day. The facilities are sited in Illinois, Ohio, and
Port Arthur, Texas. The Port Arthur refinery (51% of total
Premcor refining capacity) recently has completed an upgrade
that enables it to process greater amounts of low-cost, heavy
sour crude oil, thereby significantly improving economics at
that unit. Another strength of Premcor is its ability to deliver
reformulated gasoline into tightly balanced Midwest markets,
where periodic price spikes can occur, should refined product
supply become interrupted.

Premcor has chosen to focus on merchant refining and, in 1999,
the company shed its retail holdings. Barring an outright sale
of the company, Premcor should expand through selective
acquisitions of geographically complementing refineries. The
likelihood that Premcor will be able to make such acquisitions
is enhanced by the announcement that the proceeds of the
proposed IPO would be used for debt reduction, resulting in
increased financial flexibility.

PRG has high debt leverage, with total debt to total capital of
about 75%, down from about 80% at year-end 2000. Profitability
and cash flow protection measures can be weak and erratic, often
scarcely able to cover fixed charges and maintenance capital
spending requirements. (During the past year, improved industry
conditions enabled PRG to post strong results). However, a key
element of PRG's financial policy is to maintain large cash
balances of $150 million to $200 million. The resulting
liquidity gives PRG the ability to operate through periods of
scarce profits, when access to banks and capital markets may be
limited. Recent market improvement has allowed PRG to build an
even greater liquidity cushion (about $280 million), which could
be used for modest debt reduction.

The CreditWatch listing reflects the potential for Premcor to
improve its prospective credit profile by using the proceeds
from an IPO to initially pay down debt. Depending on the IPO's
success, the proceeds could provide an adequate cushion for PRG
to fund its capital spending requirements necessary to meet new
clean fuels regulations. In addition, a successful IPO would
assuage concerns regarding near-term refinancing risks, as PRG
intends to use part of the proceeds to redeem all of its
outstanding 9.5% senior notes, due 2004.

DebtTraders reports that the 9.500% bonds of Clark Oil &
Refining Corp. (under related issuer Premcor USA) due on
September 15, 2004 (PRCOR2) are trading between 82 and 85. See for  
real-time bond pricing.

SHEFFIELD STEEL: Signs-Up Greenberg Taurig as Bankruptcy Counsel
Sheffield Steel Corporation along with its debtor affiliates ask
the U.S. Bankruptcy Court for the Northern District of Oklahoma
to retain and employ Nancy A. Peterman, Nancy A. Mitchell,
Patrick M. Jones and the law firm of Greenberg Taurig, P.C. as
their counsel in their Chapter 11 cases.

The Debtors also request that Greenberg Taurig be compensated on
an hourly basis and be reimbursed of the actual and necessary
expenses incurred.

Current Hourly Rates of Principal Attorneys and Paralegals

    (a) Nancy A. Mitchell         $450 per hour
    (b) Nancy A. Peterman         $350 per hour
    (c) Patrick M. Jones          $230 per hour
    (d) Kerry Carlson             $155 per hour

Range of Greenberg Taurig's Hourly Rates

           Title                  Rate Per Hour
           -----                  -------------
           Attorneys              $160-$625
           Paralegals              $75-$155

The Debtor says that Greenberg Taurig is well-qualified and is
well-suited for the representation they required in these
chapter 11 cases. In its motion, the Debtors stated that
Greenberg Taurig will render the professional services,
including, but not limited to,

   (a) providing legal advice with respect to the Debtors'
       powers and duties as debtors in possession in the
       continued operation of their business and management of
       their properties;

   (b) pursuing confirmation of plan and approval of a
       disclosure statement;

   (c) preparing all necessary applications, motions, answers,
       orders, reports and other legal papers as required, and
       representing the Debtors in any hearings or proceedings
       related thereto;

   (d) appearing in Court and protecting the interests of the
       Debtors before the Court;

   (e) assisting with any disposition of the Debtors' assets, by
       sale or otherwise, if necessary; and

   (f) performing all other legal services, including securities
       and tax services

The firm's extensive general experience and knowledge in the
field of debtor's and creditors' rights and business
reorganizations under Chapter 11 encourage the Debtors to retain
Greenberg Taurig. The Debtors also added that Greenberg Taurig
is already familiar with the their steelmaking business, making
it easier for the firm to represent them.

Sheffield Steel Corporation, a leading regional mini-mill
producer of steel products and has been in the steel making
business for over 69 years, filed for chapter 11 protection on
December 7, 2001 in the U.S. Bankruptcy Court for the Northern
District of Oklahoma. Neal Tomlins, Esq. at Tomlins & Goins
represents the Debtors in their restructuring effort. When the
Company filed for protection from its creditors, it listed an
approximate assets of $117,000,000 and $186,000,000 approximate

SMART CHOICE: Will Delay SEC Filing of October Quarter Results
Smart Choice Automotive Group, Inc. has advised the SEC that its
financial information for the period ended October 31, 2001 will
be delayed in filing since inn November 2001, pursuant to an
agreement, the Company's lender foreclosed upon certain
collateral of the Company's Florida based subsidiaries, and the
company granted its lender an option to purchase its PAACO
Subsidiary. Therefore, the Company has stated that additional
time is needed to properly account for and disclose the recent

Smart Choice incurred a net loss of $33.1 million for the three
month period ended October 31, 2001 as compared to net income of
$0.8 million for the same period in the prior fiscal year. The
decrease is principally the result of a $30 million write down
of certain assets that were deemed impaired in connection with
the foreclosure by Smart Choice's lender of certain Florida
based assets and a decision to wind-down Smart Choice's Florida
based operations.

STONERIDGE: Weakened Cash Flow Pushes S&P to Revise Outlook
Standard & Poor's revised its outlook on Stoneridge Inc. to
negative from stable. At the same time, Standard & Poor's
affirmed its ratings on the company.

At September 30, 2001, Stoneridge had about $315 million in
total debt.

The outlook revision reflects lower-than-expected cash flow
generation, which has further weakened credit protection
measures and may result in potential bank covenant violations in
the near term.

The ratings on Stoneridge reflect an aggressive financial
profile and solid niche positions as a leading producer of
highly engineered electrical and electronic components; modules;
and systems to the automotive, medium- and heavy-duty truck,
agricultural, and off-highway vehicle markets.

Due to industry pressures and weak end markets, the company
reported a moderate decline in sales and a sharp decline in
operating income for the nine months ended September 30, 2001.
Sales declined about 15% to $444 million, compared with $520
million in 2000. Operating income for the first nine months of
2001 declined 44% to about $48 million, compared with about $88
million in the same period for 2000.

The fall in EBITDA was mainly caused by reduced demand in all of
the company's end markets (especially heavy-duty truck),
exacerbated by increased pricing pressures, product launch
delays, higher developmental costs, and product mix issues. For
the nine months ended Sept. 30, 2001, total debt to EBITDA was
about 4.6 times and EBITDA interest coverage was about 2.2x.
Standard & Poor's expects total debt to EBITDA of around
3.5x-4.0x and interest coverage of around 3.0x over the cycle.

Stoneridge is undertaking initiatives to improve operating
performance and cash generation, including implementing lean
manufacturing, reducing overhead, and aggressively managing
working capital. Management's initiatives are expected to
improve profitability in the intermediate term.  Financial
flexibility is limited because Stoneridge had about $39 million
in availability on the company's $100 million revolving credit
facility as of September 30, 2001.

                       Outlook: Negative

Should operating initiatives fail to offset soft market
conditions and poor profitability, resulting in further
deterioration of credit protection measures, the ratings could
be lowered in the intermediate term.

         Ratings Affirmed, Outlook Revised to Negative

     Stoneridge Inc.                    RATING
       Corporate credit rating          BB-
       Senior secured debt rating       BB-

SUN HEALTHCARE: Pushing for Extension of Solicitation Period
Sun Healthcare Group and its debtor-affiliates seek a 60-day
extension of their exclusive period to solicit acceptances of
the Plan.

Russell C. Silberglied, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, tells Judge Walrath that the
solicitation procedures, which the Debtors have submitted to the
Court for approval, provides for completed ballots on the Plan
to be received by January 21, 2002.  The solicitation period is
currently set to expire on January 7, 2002, Mr. Silberglied
reminds the Court.  In order to complete the solicitation of
votes on the Plan, the Debtors therefore seek to extend the
solicitation period past the voting deadline through and
including March 7, 2002.

The Debtors' cases are large and complex, Mr. Silberglied
explains, and there are a large number of issues that must be
addressed, such as the disposition of the Debtors' skilled
nursing facilities.  Nevertheless, the Debtors have made
significant progress in these cases, Mr. Silberglied reports.
The Debtors have gone far in their effort to review and analyze
the proofs of claim filed by their creditors, Mr. Silberglied
relates, and they have identified potential purchasers for
SunCare Respiratory Services as well as 2 large commercial
office buildings in Albuquerque, New Mexico.  Mr. Silberglied
assures the Court that the Debtors have sufficient resources to
fund operations and meet all required post-petition payment

In sum, Mr. Silberglied states, the Debtors continue to make
substantial progress in the administration of their estates and
submit.  The Debtors remain in the best position to coordinate
and facilitate the solicitation of acceptances to the Plan in
the most expeditious manner, Mr. Silberglied contends.  But
additional time is needed to complete that process, Mr.
Silberglied claims.  Accordingly, the Debtors ask Judge Walrath
to extend their exclusive solicitation period from January 7,
2002 through and including March 7, 2002. (Sun Healthcare
Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   

TRISM INC: Wishes to Extend Filing of Schedules through Jan. 17
Trism, Inc., wishes the U.S. Bankruptcy Court for the Western
District of Missouri to extend the deadline to file schedules of
assets and liabilities, schedules of current income and
expenditures, statements of financial affairs and statements of
executory contracts.

The Debtors are unable to complete their Schedules and
Statements due to their quick decision to file its Chapter 11
petitions, the complexity of their business and its significant
assets, liabilities, financial and transactional records,
executory contracts and unexpired leases,  The Debtors however,
expect to have all information necessary to complete the
preparation of their Schedules on or before January 17, 2002.

Trism, Inc., the nation's largest trucking company that
specializes in the transportation of heavy and over-dimensional
freight and equipment, as well as material such as munitions,
explosives and radioactive and hazardous waste, filed for
chapter 11 protection on December 18, 2001 in Western District
of Missouri. Laurence M. Frazen, Esq. at Bryan Cave LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed $155
million in assets and $149 million in debts.

VENTURE HOLDINGS: S&P Takes Action Over Refinancing Requirement
Standard & Poor's placed its ratings on Venture Holdings. Co.
LLC on CreditWatch with negative implications.

The CreditWatch placement reflects Standard & Poor's increasing
concerns over the company's liquidity and upcoming refinancing

Venture is a full-service manufacturer of molded and plastic
parts for original equipment automotive manufacturers. The
company produces both exterior components (such as bumper
fascias, body-side moldings, hatchback doors, fenders, grille
opening panels, and large body panels) and interior components
(such as instrument panel systems, airbag covers, side-wall
trim, and door panels).

Venture is highly leveraged due to an aggressive acquisition
history.  Venture's most significant acquisition in recent years
was the May 1999, $450 million acquisition of Peguform GmbH, a
German-based manufacturer of molded and plastic automotive
components. Debt to EBITDA (adjusted for operating leases and
accounts receivable sales) is currently estimated to be about
4.4 times.

Adding to near-term financial risk are tight covenants, limited
borrowing availability, and an upcoming debt-refinancing
requirement. Venture has a $125 million bank loan that must be
refinanced by March 31, 2002. Although Venture was in compliance
with bank covenants at the end of the third quarter, the company
has little room under the covenants for deterioration in
financial performance. In addition, at the end of the third
quarter, Venture had only $38 million in availability under its
bank credit facility.

Standard & Poor's will assess Venture's near-term operating
outlook and liquidity situation and monitor the company's
efforts to address the upcoming refinancing requirement. If it
appears that the company will be unable to improve its liquidity
and financial flexibility, or have difficulty meeting its
refinancing commitment, the ratings are likely to be

             Ratings Placed On CreditWatch Negative

     Venture Holdings Co. LLC
       Corporate credit rating     B+
       Senior secured bank loan    B+
       Senior unsecured debt       B
       Subordinated debt           B-

WARNACO GROUP: Court Okays Amendment of DIP Financing Agreement
The Warnaco Group, Inc. (OTC:WACGQ.OB) announced that it has
received approval from the U.S. Bankruptcy Court for the
Southern District of New York of a motion that amends the
Company's Debtor-in Possession (DIP) financing agreement.

The amendment modifies the required EBITDAR (earnings before
interest, taxes, depreciation, amortization, and certain
restructuring charges) levels under the original DIP agreement
to reflect the current operating environment and the Debtor's
revised business plans.

The Company also said that it has had stronger than planned
liquidity due to significant improvements in cash management. As
such, the Company agreed to amend the DIP financing agreement to
reduce the total DIP borrowing facility from $600 million to
$475 million.

Under the amended DIP financing agreement, the Company is
required by its bank lenders to file a plan of reorganization
with the Bankruptcy Court by July 31, 2002. The administrative
agent for the bank lenders may extend this date at its sole

"Our post-petition experience has indicated that the revised DIP
facility will be sufficient to help fund our operations and
finalize a plan of reorganization in mid to late 2002. We are
moving forward with the sale of specific, non-core assets, and
we expect that process to accelerate in the new year," said Tony
Alvarez, chief executive officer of Warnaco.

The Warnaco Group, Inc., headquartered in New York, is a leading
manufacturer of intimate apparel, menswear, jeanswear, swimwear,
men's and women's sportswear, better dresses, fragrances and
accessories sold under such brands as Warner's, Olga, Van
Raalte, Lejaby, Bodyslimmers, Izka, Chaps by Ralph Lauren,
Calvin Klein men's and women's underwear, men's accessories, and
men's, women's, junior women's and children's jeans,
Speedo/Authentic Fitness men's, women's and children's swimwear,
sportswear and swimwear accessories, Polo by Ralph Lauren
women's and girls' swimwear, Oscar de la Renta, Anne Cole
Collection, Cole of California and Catalina swimwear, A.B.S.
Women's sportswear and better dresses and Penhaligon's
fragrances and accessories.

WINSTAR COMMS: Univance Wants $1.6MM+ for Adequate Assurance
Univance Telecommunications, Inc. seeks an Order requiring
Winstar Communications, Inc., and its debtor-affiliates to
provide Univance with adequate assurance, which is appropriate
for several reasons:

A. Debtors never paid Univance the previously agreed upon
   adequate assurance sums;

B. An unknown buyer has purchased Debtors' assets and no
   information is available as to the buyer's ability to pay
   Univance the sums due under the Services Agreement; and

C. Debtors have represented to the Court that they will not have
   sufficient cash to operate beyond December 10, 2001.

William D. Sullivan, Esq., at Elzufon Austin Reardon Tarlov &
Mondell P.A. in Wilmington, Delaware, submits that under these
circumstances, two months of the Recurring Charges, for a total
of $1,672,272, is an appropriate amount of adequate assurance.
(Winstar Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  

* BOOK REVIEW: Getting It To the Bottom Line: Management by
               Incremental Gains
Author:      Richard S. Sloma
Publisher:   Beard Books
Soft cover:  96 pages
List Price:  $34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at:

In the author's words, "(t)his is a book about how to optimize
operating profit in an ongoing business consistent with and
supportive of the owners' (and/or creditors') demands."  As in
his book The Turnaround Manager's Handbook, also published by
Beard Books, Richard Sloma's guidance is all-inclusive,
straightforward, and wise. He is perhaps unique in his ability
to use quotes and maxims liberally without sounding the least
bit preachy or trite.

A quote from Francois Voltaire, "perfection is attained by small
degrees," explains the main premise of this book, management by
incremental gains. It is based on the simple notion that change,
for better or worse and accidentally or on purpose, only occurs
incrementally. Without a succession of small changes in the same
direction there can be no progress or growth.  Mr. Sloma defines
management as "getting work done through the efforts of others."
Thus, change in an organization depends on people. Mr. Sloma
takes a pragmatic (and perhaps somewhat dim!) view of the
ability of people to change, and maintains that the smaller a
change planned by management, the more likely it is to be
successfully implemented.

Mr. Sloma provides "real-world tested and proven methodology for
working with people in a professional manner to maximize their
individual commitment to goal achievement."  He offers
recommendations based on his more than 30 years of management
experience that "strike(s) the long-sought-after logical balance
of viewing and managing people as if they were competent,
conscientious, and ambitious individuals who genuinely seek
opportunities for professional growth and development."

Getting It To The Bottom Line is not only about people skills,
by any means. Mr. Sloma introduces financial and operational
performance numbers, and gives details on how income statements
and cash flow statements measure the magnitude and direction of
planned changes in financial and operational performance. His
operational framework is illustrated in the following eight

     * Quantify the do-nothing scenario
     * If it works, don't fix it
     * If it doesn't, quantify minimal acceptable performance
     * Quantify components of any financial performance gap
     * If necessary, cut your losses, liquidate, and reinvest      
     * Quantify management action plans to bridge the
       performance gap
     * Define and establish a reporting and control system
     * Define and implement an incentive compensation program

Mr. Sloma examines each step thoroughly, using recognized
financial analysis methods, as well as some of his own.
Throughout, he consistently emphasizes the importance of
achieving ambitious goals one small step at a time. He
admonishes managers to "spend no time or effort making `little'
plans. They have no magic to stir men's blood - or to make
owners as wealthy as they could be!"

This is a solid and substantive book that targets managers at
every level. Mr. Sloma presents his concepts in such a way that
anyone charged with leading an organization can learn to do it
better. On the last page, he even tells readers to "drop me a
line and let me know what you think and how it's going." Why not
read the book and take him up on it?

Richard S. Sloma is an attorney with more than 30 years of
senior management experience. He has served as Chief Executive
Officer, Chief Operating Officer, Chairman and Vice Chairman of
the Board of Directors and Board Member of six international
companies. He holds degrees in business from Northwestern
University and the University of Chicago, and a law degree from
De Paul University.


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

Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at

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

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


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

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

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

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

The TCR subscription rate is $575 for 6 months delivered via e-
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                     *** End of Transmission ***