TCR_Public/020107.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

             Monday, January 7, 2002, Vol. 6, No. 4

                            Headlines

ACT MANUFACTURING: Receives Access to $9.5 Million DIP Financing
ADVANCED ACCESSORY: S&P Affirms B Ratings With Negative Outlook
ADVANTICA RESTAURANT: Commences Exchange Offer for Senior Notes
AMERICAN COMMERCIAL: S&P Slashes Ratings After Payment Default
AMF BOWLING: Moves To Institute ADR Program To Settle Claims

ANACOMP INC: Emerges From Bankruptcy With New Board Of Directors
ANCHOR GAMING: S&P Raises Senior Sub. Note Rating to BB- from B-
ARCHIBALD CANDY: Ratings Fall To D After Missed Interest Payment
AVIATION SALES: Will Hold Special Stockholders' Meeting Soon
BMK INC: Deadline For Filing Schedules Extended To January 28

BURNHAM PACIFIC: Warren Buffett Reports 5.06% Equity Interest
CAPTAIN D'S: Junk Ratings Still on Watch After Loan Extension
CARMIKE CINEMAS: Will Emerge from Bankruptcy By Mid-January
CJF HOLDINGS: Wants Schedule Filing Deadline Moved to Jan. 27
CLARION COMMERCIAL: Completes Liquidation of Assets

CLARION TECHNOLOGIES: Appeals Nasdaq Delisting Determination
COMDISCO: Court Okays Chanin's Employment as Financial Advisor
CONSTELLATION 3D: Seeks Review Of Nasdaq's Delisting Move
EASYLINK SERVICES: George Abi Zeid Holds 17.91% Equity Stake
ENRON CORP: Proposes Trading Business Bidding Procedures

ENRON: Enters Into Pipeline Settlement Pact With Dynegy
EXODUS COMMS: Wants to Stretch Removal Deadline to May 24
FEDERAL-MOGUL: Asks For Extension of Exclusive Period to Aug. 1
FENWAY INT'L: Needs More Funds To Continue As A Going Concern
FINOVA GROUP: Seeks Order Enforcing Plan Discharge & Injunction

FLAG TELECOM: S&P Drops Ratings To Lower-B Levels
FLEXIINTERNATIONAL: Hill Barth Replaces Deloitte As Auditors
GRAND EAGLE: Glenn C. Pollack Appointed as Chapter 11 Trustee
HIGHPOINT TELECOM: Debt Default Likely Due To Failed Reorg Plan
HOMELIFE: Exclusive Plan Filing Period Extended Through March 13

ICG COMMS: Wants To Assume Amended Irvine Co. Building License
INTIRA CORP.: Asks To Extend Lease Decision Deadline To March 31
LAIDLAW INC: Employing Spencer Stuart As Search Consultants
LEADER INDUSTRIES: Files An Assignment Under BIA in Canada
LODGIAN INC: Has Until March 5 To File Schedules

LOEWEN GROUP: Eastwood, et al, Selling Businesses For $1.15+ Mil
LONGVIEW FIBRE: Weak Business Position Spurs S&P Low-B Ratings
METALS USA: Seeks Approval of $60,000,000 Junior DIP Loan
METATEC: Lenders Agree To Extend Standstill Agreement To Feb. 8
NATIONSRENT INC: Court Allows Insurance Programs To Continue

OPTI INC: Postpones Liquidation Plan To Evaluate Options
PILLOWTEX CORP: Wants To Retain Ernst & Young LLP As HR Advisors
POLYMER GROUP: S&P Cuts Corporate Credit Rating to D From CCC
SANMINA-SCI: S&P Rates Corporate Credit, Senior Bank Loan at BB+
SEPRACOR: S&P Rates Convertible Subordinated Notes at CCC+

SERVICE MERCHANDISE: Will Cease Continuing Business Operations
STAR TELECOM: Co-Exclusive Period Extended through January 31
VALLEY MEDIA: Falls Short of Nasdaq Listing Requirements
VIATEL INC: Asks for More Time to Decide on Real Property Leases
WASTE SYSTEMS: Use of Cash Collateral Extended Through June 30

* BOND PRICING: For the week of January 7-11, 2002

                            *********

ACT MANUFACTURING: Receives Access to $9.5 Million DIP Financing
----------------------------------------------------------------
ACT Manufacturing, Inc. (Nasdaq: ACTM) has received $9.5 million
in Debtor in Possession (DIP) financing pursuant to a hearing
held Wednesday in U.S. Bankruptcy Court in Worcester,
Massachusetts.  ACT filed for Chapter 11 in the same court on
December 21, 2001.  The Company's overseas operations are
unaffected by the filing.

The DIP financing involved is short-term financing and is stage
one of a two-part process with the Company's lenders.  Stage
two, for which negotiations are already in progress, involves
longer-term financing for a substantially greater amount.  Given
the varied availabilities of all the parties involved during the
holiday season, this two-step process seemed to be the most
appropriate to allow the Company to continue manufacturing
operations, maintain a strong work force, and continue to serve
its customers effectively.

The Company has been adversely impacted by the extremely
negative conditions in the telecommunications and high-end
computing sectors.  Numerous steps have been taken in attempts
to restore the Company to profitability, including work force
reductions.  The filing of the bankruptcy petition was necessary
because the Company's banks would only continue to fund
operations under the provisions of Chapter 11.

ACT Manufacturing, Inc., headquartered in Hudson, Massachusetts,
provides value-added electronics manufacturing services to
original equipment manufacturers in the networking and
telecommunications, computer and industrial and medical
equipment markets.  The Company provides OEMs with complex
printed circuit board assembly primarily utilizing advanced
surface mount technology, electro-mechanical subassembly, total
system assembly and integration, mechanical and molded cable and
harness assembly and other value- added services.  The Company
has operations in California, Georgia, Massachusetts,
Mississippi, France, England, Ireland, Mexico, Singapore, Taiwan
and Thailand.

ACT is represented by Richard Mikels and the commercial law
group from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
and a team from Zolofo Cooper.


ADVANCED ACCESSORY: S&P Affirms B Ratings With Negative Outlook
---------------------------------------------------------------
Standard & Poor's affirmed its single-'B' corporate credit and
senior secured debt ratings for Advanced Accessory Systems LLC.
Standard & Poor's also affirmed Advanced Accessory subsidiary
AAS Capital Corp.'s triple-'C'-plus subordinated debt rating.
All ratings are removed from CreditWatch, where they were placed
August 17, 2001. The outlook is now negative.

The rating actions follow Advanced Accessory's successful
negotiation of an amendment to its credit facility, which
provides for additional liquidity and relaxed covenants. Ratings
continue to reflect the company's high debt leverage,
significant near-term debt maturities, and exposure to cyclical
and competitive markets.

Advanced Accessory produces towing and rack systems for the
original equipment and aftermarket segments of the automotive
industry. About two-thirds of revenues are generated in the
original equipment segment. Advanced Accessory serves a diverse
group of customers, including most of the major North American
and European original equipment manufacturers, as well as key
aftermarket companies. DaimlerChrysler is the company's largest
customer.

Advanced Accessory's earnings and cash flow have come under
pressure over the past year due to increased pricing pressures
and slowing demand in the original equipment automotive
industry. This, combined with the company's highly leveraged
capital structure and significant debt service requirements, has
resulted in an increase in financial risk and increased
liquidity pressures. Debt to EBITDA is currently estimated to be
slightly over 4 times. In order to avoid an anticipated covenant
violation, Advanced Accessory recently amended its bank
agreement to reset covenants. In addition, it increased
borrowing capacity by $10 million.

Ratings incorporate expectations that new business coming on
stream and cost-containment efforts will enable the company to
remain in compliance with the reset covenants and meet interest
payments and debt maturities as they come due. Debt to EBITDA is
expected to remain at or below the current level over the near
to intermediate term.

                    Outlook: Negative

Should earnings pressures intensify and lead to covenant
violations or increased liquidity pressures, ratings are likely
to be lowered.


ADVANTICA RESTAURANT: Commences Exchange Offer for Senior Notes
---------------------------------------------------------------
Advantica Restaurant Group, Inc. (OTCBB: DINE) is offering to
exchange up to $204.1 million of registered 12.75% senior notes
due 2007 to be jointly issued by Denny's Holdings, Inc. and
Advantica (the "New Notes") for up to $265.0 million of
Advantica's 11.25% senior notes due 2008 (the "Old Notes"), of
which $529.6 million aggregate principal amount is currently
outstanding.

For each $1,000 principal amount of Old Notes exchanged,
Advantica is offering $770 principal amount of New Notes plus
accrued and unpaid interest in cash.

The offer is scheduled to expire at 5:00 p.m., New York City
time, on February 1, 2002. Consummation of the exchange offer is
conditioned on a minimum amount of $160.0 million of Old Notes
having been validly tendered up to a maximum tender amount of
$265.0 million of Old Notes. In the event that the Old Notes
tendered exceed the maximum amount, then Advantica will allocate
the New Notes on a pro rata basis.

UBS Warburg LLC is acting as the dealer manager in the exchange
offer. MacKenzie Partners, Inc. is acting as the information
agent, and U.S. Bank National Association is serving as the
exchange agent. Copies of the prospectus may be obtained from
the information agent at 105 Madison Avenue, New York, NY 10016
or by phone at 800-322-2885. For further information on the
exchange offer, please see the Registration Statement on Form S-
4 as filed with the SEC. The Registration Statement may be
obtained from the SEC's website at www.sec.gov or from
Advantica's website at http://www.advantica-dine.com

Advantica Restaurant Group, Inc. is one of the largest
restaurant companies in the United States, operating moderately
priced restaurants in the mid-scale dining segment. Advantica
owns and operates the Denny's, Coco's and Carrows restaurant
brands. FRD Acquisition Co., the parent company of Coco's and
Carrows and a wholly owned subsidiary of Advantica, is
classified as a discontinued operation for financial reporting
purposes and is currently under the protection of Chapter 11 of
the United States Bankruptcy Code effective as of February 14,
2001.

DebtTraders reports that Advantica Restaurant's 11.250% bonds
due 2008 (ADVRES1) are trading between 69.5 and 71.5.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADVRES1
for real-time bond pricing.


AMERICAN COMMERCIAL: S&P Slashes Ratings After Payment Default
--------------------------------------------------------------
Standard & Poor's lowered its rating on American Commercial
Lines LLC's (ACL) 10.25% senior unsecured notes due 2008 to 'D'
from single-'B'-minus and ACL's corporate credit rating to 'SD'
from single-'B'-plus and removed both from CreditWatch, where
they had been placed with negative implications on May 7, 2001.
The rating on ACL's $535 million secured bank facility was
lowered to single-'B'-plus from double-'B'-minus and remains on
CreditWatch with negative implications.

These ratings actions follow ACL's announcement that it did not
make the $15.1 million interest payment on its senior unsecured
notes which was due December 31, 2001, in order to continue
discussions with its bondholders and banks on a financial
restructuring of the company. Entities controlled by investor
Samuel Zell are reported to have acquired over half of the face
value amount of the senior unsecured notes. ACL has adequate
cash to make the interest payment at the end of the 30-day grace
period, as well as to continue day-to-day operations and make
scheduled payments on other obligations.

The secured bank facility creditors will likely fare well in the
financial restructuring, as the bank facility is secured by
essentially all of ACL's assets and the company plans to
continue to make scheduled payments. However, the ratings on the
secured bank facility remain on CreditWatch with negative
implications pending the final outcome of the restructuring.

ACL's operating performance improved in the second half of 2001,
but its significant debt load and limited financial flexibility
has restrained improvement in its credit profile. Financial
flexibility will be further limited in 2002 with a return to
stricter bank covenants after a waiver was granted in early 2001
in exchange for a $40 million prepayment in October 2001 funded
by asset sales.


AMF BOWLING: Moves To Institute ADR Program To Settle Claims
------------------------------------------------------------
Subject to Court approval, AMF Bowling Worldwide, Inc. proposes
to institute an alternative dispute resolution (ADR) program to
permit the holders of the thousands of pre-petition claims
against the Debtors which the Debtors may dispute to first
negotiate, and then mediate resolutions of such claims
expeditiously.

Dion W. Hayes, Esq., at McGuireWoods LLP in Wilmington,
Delaware, explains that the negotiation phase provides for a
cost effective method for resolving claims through the exchange
of written offers between the parties. Mediation is a
particularly advantageous informal form of alternative dispute
resolution that permits the parties to a dispute to use a
neutral third party to help achieve a voluntary, mutually
beneficial settlement. Mr. Hayes adds that mediation is also
attractive because of its no-risk feature because the mediator
cannot bind the parties to any particular resolution.
Conversely, if the parties do reach a documented settlement, the
written agreement will be binding, subject to the Court's
approval. Therefore, all parties will be urged, if they
previously have not done so, to seek assistance of counsel.

Mr. Hayes explains that a Disputed Claim will be classified as
an ADR claim, and therefore be subject to the ADR Procedures,
upon service by the Debtors on the Claimant or its counsel, if
known, of a copy of the ADR Order and an ADR Notice. The Debtors
recognize that a process for estimating and liquidating the
Disputed Claims is a necessary component of their
reorganization. Due to the sheer magnitude of the Disputed
Claims, as well as the subject matter of many of the Disputed
Claims, the Debtors believe that liquidating the Disputed Claims
in the Bankruptcy Court is neither cost effective, or in some
cases, jurisdictionally proper. Moreover, Mr. Hayes points out
that resolution of the Disputed Claims through litigation, in
courts scattered throughout the United States, would be a time-
consuming, inefficient process that would be a substantial drain
on the time and resources of the Debtors. In addition, personal
injury and wrongful death claims cannot be liquidated for
distribution purposes by the Bankruptcy Court under 502 or any
other applicable section of the Bankruptcy Code. Accordingly,
this Motion proposes the establishment of procedures that will
result in the resolution of the ADR Claims in a manner
consistent with the jurisdictional limitations imposed upon the
Court, since participation in the program, and the resulting
liquidation of the ADR Claims, is substantially based upon the
consent of each Claimant.

Mr. Hayes relates that the Debtors maintain general liability
insurance policies with AIG and certain other carriers which
provide for a self-insured retention per occurrence of $500,000
including defense costs. Historically, only a small percentage
of general liability claims against the Debtors have exceeded
the retention. The defense costs associated with litigating
hundreds of general liability Disputed Claims through trial
would be prohibitively expensive. Thus, the ADR procedures
proposed will greatly reduce litigation costs for both the
Debtors and those Claimants asserting general liability Disputed
Claims.

Mr. Hayes tells the Court that the Debtors have explored and
analyzed a variety of alternative procedures designed to protect
each Claimant's due process rights while permitting the Debtors
to move forward promptly, efficiently and cost-effectively to
liquidate the ADR Claims. The Debtors propose to adopt and
implement ADR Procedures whereby all holders of ADR Claims will
have the option to participate in the ADR Procedures in an
effort to resolve their claim based on a mutual agreement of the
parties or they may await a later liquidation of their claims
against the Debtors. The proposed ADR Procedures provide for the
liquidation of ADR Claims through settlement offers and
mediation, which provides the Claimants with a simple, less
expensive mechanism to value their ADR Claims.

Mr. Hayes submits that the ADR Procedures will provide a vehicle
for promptly and effectively resolving all of the ADR Claims,
while decreasing the time, effort and costs involved in managing
and defending the ADR Claims. The ADR Procedures accomplish this
goal by encouraging the efficient and expeditious resolution of
ADR Claims, hopefully without the need to proceed to litigation
in the majority - if not all - of the cases, thereby enabling
the Debtors to realize savings by avoiding any protracted
litigation which would otherwise deplete the Debtors' estates.
Furthermore, if settlement of an ADR Claim is not reached, Mr.
Hayes states that the ADR Procedures ultimately allow the
Claimant to litigate his or her ADR Claim in the Bankruptcy
Court, or the United States District Court for the Eastern
District of Virginia.

The underlying rationale for the ADR Procedures is that most
claims settle prior to trial. The ADR Procedures will provide a
mechanism for the early, cost-effective analysis, resolution and
liquidation of ADR Claims. To the extent insurance proceeds are
available, the Claimants will have more immediate access to such
funds because the goal of the ADR Procedures is to liquidate the
ADR Claims.

If the Motion is approved, the Debtors request authority to
implement the ADR Procedures by serving Claimants with a copy of
the ADR Notice Package in the same manner. Mr. Hayes contends
that authorizing the Debtors to serve the Notice of ADR Motion
and the ADR Notice Package by one of the methods specified will
provide each Claimant with adequate notice of the proposed ADR
Procedures and an ample opportunity to participate in the ADR
Procedures if they so desire. At the same time, authorizing
service of the Notice of ADR Motion and ADR Notice Package by
one of the methods specified will greatly reduce the cost and
expense of implementing the ADR Procedures on the Debtors'
bankruptcy estates.

To implement the ADR Procedures, Mr. Hayes claims that it is
necessary that the Claimants be enjoined from commencing or
continuing an action regarding a claim against the Debtors, and,
to the extent any of the Debtors' former or current employees,
any party potentially entitled to reimbursement or
indemnification from any of the Debtors or for which the
ultimate liability rests with the Debtors or the Debtors'
Insurers is a party to such action, be enjoined from commencing
or continuing such action against these non-Debtor entities as
well. It is also necessary that the automatic stay remain in
effect against commencement or continuation of all pre-petition
claims asserted against the Debtors except to the extent that
Claimants are required to comply with the ADR Procedures. If the
Claimants are not enjoined and relief from the automatic stay is
granted to Claimants on an ad hoc basis before such Claimant has
complied with the ADR Procedures, Mr. Hayes fears that the ADR
Procedures will have little or no benefit to the Debtors and
will force the Debtors to expend their limited resources and
time in defending the ADR Claims in other forums, without the
efficiencies contained in the ADR Procedures. In addition, to
litigate each of the ADR Claims in a piecemeal fashion will
necessarily involve the Debtors' management and employees in
litigation throughout the country and impede their efforts to
reorganize the Debtors' businesses.

Mr. Hayes asserts that an extension of the ADR Injunction to the
Debtors' current and former employees, non-debtor affiliates and
entities potentially entitled to indemnification or
reimbursement from a Debtor or for whose liability a Debtor
retains ultimate liability, to the extent such non-debtor entity
is a party to a pending or threatened action under an ADR Claim,
is necessary, because with respect to many of the ADR Claims,
employees and landlords of the Debtors are named as co-
defendants. Not extending the ADR Injunction would force the
Debtors to defend the ADR Claim on behalf of such co-defendants,
nearly all of whom the Debtors must indemnify and/or are named
on the Debtors' Insurance Policies. Consequently, Mr. Hayes
points out that this would defeat the benefits of the automatic
stay and force the Debtors to divert their efforts and limited
resources from the ADR Procedures. Moreover, without the ADR
Injunction, the ADR Procedures would be meaningless as to the
Claimants that assert claims against third parties, because such
Claimants would have no incentive to participate in good faith
in the ADR Procedures if they could proceed against the same
Insurance Policy outside the ADR Procedures by virtue of their
claim against a non-Debtor co-defendant. Similarly, in order to
avoid the diversion of the Debtors' efforts from the ADR
Procedures and to avoid disincentives to the participation of
Claimants in the ADR Procedures, Mr. Hayes believes that the ADR
Injunction should also apply to direct suits against the
Debtors' Insurers and other parties potentially entitled to
indemnification or reimbursement from the Debtors, to the extent
the Debtors' Insurers or any other party potentially entitled to
indemnification or reimbursement from the Debtors is a defendant
in a pending or threatened action under an ADR Claim.  (AMF
Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


ANACOMP INC: Emerges From Bankruptcy With New Board Of Directors
----------------------------------------------------------------
Anacomp, Inc. (OTC Bulletin Board: ANCO), a leading provider of
document-management and technical services, says it has emerged
from Chapter 11 debt restructuring and that the terms of the
Company's reduced credit facility with its existing senior
lending group are now in effect.

In addition, Anacomp announced the naming of a new Board of
Directors, with Edward P. (Phil) Smoot assuming the role of
chairman.  Mr. Smoot also retains his position as chief
executive officer of Anacomp.

The emergence from Chapter 11, the new credit terms and the new
Board were all effective December 31, 2001.

"Anacomp's outlook is bright," said Smoot.  "Our overall
operating results have improved significantly over the past
year, and we fully expect that trend to continue.  Because our
debt restructuring plan will result in significantly lower fixed
interest costs, our financial results should benefit even more
going forward."

In early December, Anacomp reported financial results for its
fourth quarter and fiscal year ended September 30, 2001.  The
Company had significantly narrowed its net loss; improved its
EBITDA (earnings before interest, taxes, depreciation and
amortization); and exceeded its fiscal year cash goals, ending
the year with $24.3 million in cash.

Mr. Smoot commended the new Board of Directors.  "Their
extensive experience and business skills will be invaluable as
we guide the new Anacomp into the future," he said.  "In the
years to come, our new Board will play a key role in building
upon our long-standing commitment to our customers, suppliers
and employees."

New Board members include Ralph B. Bunje, Jr., a financial and
real estate consultant; Lloyd Miller, a registered investment
advisor; David E. Orr, former chief executive officer and member
of the board, Pliant Systems; Steve Singer, chairman and chief
executive officer, American Banknote Corporation; and Charles M.
Taylor, manager, Cap Gemini Ernst & Young.  Linster W. (Lin)
Fox, Anacomp's senior vice president and chief financial
officer, and Mr. Smoot are continuing on the Board as of their
appointment on November 2, 2001.

As reorganized, the Company's 10 7/8% Senior Subordinated Notes
due 2004 and existing Anacomp Common Stock have been canceled.
Anacomp's former noteholders now own 99.9% of the Company's
equity, while former common stockholders own 0.1% (before giving
effect to issuances of common stock reserved for management
incentive plans and warrants issued to the Company's former
common stockholders).  The Company emerged from the process only
10 weeks after filing its Chapter 11 petition on October 19,
2001, in the U.S. Bankruptcy Court in the Southern District of
California in San Diego.

                       About Anacomp

Anacomp, Inc. is a leading provider of document-management and
technical services. With global operations backed by more than
30 years of outsourcing experience, Anacomp offers premium
services for virtually any business application.  Anacomp
comprises two business units:  Document Solutions (document-
management outsource services) and Technical Services (multi-
vendor maintenance services, systems and supplies sales).  For
more information, visit Anacomp's web site at
http://www.anacomp.com


ANCHOR GAMING: S&P Raises Senior Sub. Note Rating to BB- from B-
----------------------------------------------------------------
Standard & Poor's raised its rating on Anchor Gaming's 9.875%
senior subordinated notes due 2008 to double-'B'-minus from
single-'B'. The rating on these notes remains on CreditWatch
with positive implications. Concurrently, Standard & Poor's has
withdrawn its double-'B'-minus corporate credit and senior
unsecured bank loan ratings on Anchor Gaming.

The rating action follows completion of the merger into
International Game Technology (IGT) of Anchor Gaming on Dec. 30,
2001. The ratings for IGT remain on CreditWatch with positive
implications where they were placed on July 9, 2001.

In resolving the CreditWatch listing, Standard & Poor's expects
to meet with management in the near term to focus on financial
policy and near- and long-term growth strategies.

             Rating Raised and Still on CreditWatch Positive

      Anchor Gaming                 To          From
        Subordinated debt           BB-         B

                        Ratings Withdrawn

      Anchor Gaming
        Corporate credit            N.R.        BB-
        Senior unsecured bank loan  N.R.        BB-

               Ratings Still on CreditWatch Positive

      International Game Technology
        Corporate credit rating                 BB+
        Senior unsecured debt rating            BB+


ARCHIBALD CANDY: Ratings Fall To D After Missed Interest Payment
----------------------------------------------------------------
Standard & Poor's lowered its senior secured notes rating and
corporate credit rating on Archibald Candy Corp. to 'D' from
single-'B'-minus. All ratings are removed from CreditWatch,
where they were placed July 12, 2000.

This affects $170 million in rated debt.

The rating actions are a result of Archibald Candy not making
the Jan. 1, 2002, $8.7 million interest payment on its 10 1/4%
notes due on July 1, 2004.

Chicago, Illinois-based Archibald Candy Corp, an 81-year-old
chocolate manufacturer, operates 290 Fanny Farmer/Fannie May,
180 Laura Secord, and 201 Sweet Factory candy retail stores.


AVIATION SALES: Will Hold Special Stockholders' Meeting Soon
------------------------------------------------------------
Aviation Sales Company, under date of December 2001, is advising
its stockholders of a special meeting at which they will be
asked to approve the following matters:

   (1)  The issuance of shares of its post-reverse split common
        stock, warrants to purchase shares of post-reverse split
        common stock and its new 8% senior subordinated
        convertible PIK notes due 2006 in exchange for all of its
        currently outstanding 8 1/8% senior subordinated notes
        due 2008;

   (2)  The issuance of: (a) shares of its post-reverse split
        common stock equal to 80% of its reorganized company for
        $20 million in a rights offering to its existing
        stockholders, (b) shares of its post-reverse
        split common stock to Lacy Harber, a 29.4% beneficial
        owner of its common stock, in the rights offering, to the
        extent that Mr. Harber is called upon to purchase
        additional shares in accordance with his commitment to
        purchase unsold allotments in the rights offering, and
        (c) warrants to purchase additional shares of its post-
        reverse split common stock to its existing stockholders;

   (3)  An amendment to the certificate of incorporation to
        increase the number of authorized common shares from 30
        million shares to 500 million shares;

   (4)  An amendment to the certificate of incorporation to
        effect a reverse stock split of issued and outstanding
        common stock on a ten-share- for-one-share basis;

   (5)  Its 2001 Stock Option Plan, which will allow it to grant
        options to purchase up to 2,400,000 post-reverse split
        shares of its common stock to its current and future
        officers, directors and employees;

   (6)  An amendment to the certificate of incorporation to
        change the corporate name to "TIMCO Aviation Services,
        Inc," to reflect the fact that its TIMCO heavy airframe
        maintenance operations now constitute the primary
        operations of the reorganized company;

   (7)  To vote to adjourn the special meeting if there are not
        sufficient votes to approve one or more matters, in order
        to provide additional time to solicit proxies; and

   (8)  To transact such other business as may properly come
        before the meeting.

Proposals 1, 2, 3 and 4 will be considered together, and none of
these proposals will be enacted unless all of them are approved.
Approval of proposals 1 and 2 requires the affirmative vote of
the holders of a majority of the votes cast and approval of
proposals 3 and 4 requires the affirmative vote of the holders
of a majority of the outstanding common stock.

No date was initially given for the holding of the special
meeting.


BMK INC: Deadline For Filing Schedules Extended To January 28
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
approves BMK Inc.'s motion to extend the deadline to file their
respective schedules of assets and liabilities, statement of
financial affairs, and any other lists or statements required to
be filed by the Bankruptcy Code to January 28, 2002.

BMK Inc. filed for chapter 11 protection on December 3, 2001 in
the U.S. Bankruptcy Court for the Central District of
California, Los Angeles Division. Lawrence Peitzman, Esq. at
Peitzman, Glassman & Weg LLP represents the Debtors in their
restructuring effort.


BURNHAM PACIFIC: Warren Buffett Reports 5.06% Equity Interest
-------------------------------------------------------------
On December 24, 2001, Warren E. Buffett filed a statement with
the SEC showing his beneficial ownership of 1,663,200 shares of
the common stock of Burnham Pacific Properties, Inc. Mr. Buffett
holds 5.06% of the outstanding common stock of Burnham Pacific
Properties, with sole voting and dispositive powers.


CAPTAIN D'S: Junk Ratings Still on Watch After Loan Extension
-------------------------------------------------------------
Standard & Poor's triple-'C'-plus corporate credit and senior
secured debt ratings on Captain D's Seafood Restaurants remain
on CreditWatch with developing implications following the
company's announcement that it has received a 90-day extension
of its existing $135 million credit facility. The maturity date
on this facility has been extended to March 31, 2002, from
December 31, 2001. Developing implications indicates that the
ratings could be raised, lowered, or affirmed.

The CreditWatch listing reflects Standard & Poor's concern
regarding Captain D's ability to refinance its existing $135
million bank loan that now expires on March 31, 2002. The
corporate credit rating on Captain D's is based on the
creditworthiness of its parent, Shoney's Inc. (Shoney's). Poor
operating performance has affected Shoney's, which consists of
Shoney's Restaurants and Captain D's Inc., and further weakness
could make it more difficult for Captain D's to refinance its
pending debt maturities.

Comparable-store sales at Shoney's Restaurants declined 1.6% for
the 40 weeks ended August 5, 2001, following declines of 1.8% in
2000, 3.6% in 1999, and 4.7% in 1998. Comparable-store sales at
Captain D's declined 4.1% in the third quarter and 3.2% for the
40 weeks ended Aug. 5, 2001. Shoney's has experienced prolonged
operating difficulties during the past several years due to the
combination of intense industry competition, a lack of
operational focus, and management turnover.

Credit protection measures at Shoney's are very weak, with
EBITDA coverage of interest at about 1.5 times for the 40 weeks
ended Aug. 5, 2001, and the company is highly leveraged, with
total debt to EBITDA at about 6.5x for the same period.
Financial flexibility is limited to a $30 million revolving
credit facility, of which only $6.5 million was available as of
Aug. 5, 2001. Financial flexibility is further limited by
Shoney's contingent liabilities of $27.5 million. Moreover,
Shoney's faces the maturity of its $5.2 million subordinated
convertible debentures in July 2002 and its $30 million
revolving credit facility in September 2002.

The ratings could be raised if Captain D's is able to obtain
refinancing for its maturing bank loan or if other sources of
capital are secured to improve near-term liquidity. The ratings
could be lowered if there is no progress.


CARMIKE CINEMAS: Will Emerge from Bankruptcy By Mid-January
-----------------------------------------------------------
Carmike Cinemas, Inc. (OTCBB: CKECQ) relates that the United
States Bankruptcy Court for the District of Delaware confirmed
the Company's Amended Chapter 11 Plan of Reorganization.  The
Company commenced chapter 11 cases in August 2000.  The Plan
will become effective in mid-January 2002.

Under the Plan, essentially all allowed creditor claims will be
satisfied in full, with interest.  Also under the Plan, the
common equity value of the reorganized Company will be increased
by over $100 million through the conversion of $46 million of
senior subordinated notes due 2009 and $55 million of Series A
Preferred stock.  As a result, the principal amount of the
senior subordinated notes outstanding post-Effective Date will
be approximately $154 million, as compared to a principal amount
of $200 million of such notes as of the chapter 11 commencement
date.  The holders of old common stock will receive shares of
New Common stock of the reorganized Company equal to 22.2% of
the post-Effective Date shares of issued and outstanding stock
on a fully diluted basis.

"During the chapter 11 cases, the Company was able to terminate
leases and close more than 130 unprofitable theatres, as well as
reduce costs, streamline management responsibilities and
restructure rents on other theatres to improve the profitability
of such theatres.  As a result, the Company operates on a more
efficient, effective basis and constitutes a more attractive,
viable theatre circuit," stated Martin Durant, Chief Financial
Officer.  In August 2000, the Company operated 436 theatres with
a total of 2,802 screens.  After the Effective Date, the Company
will operate 323 theatres with a total of 2,328 screens.


CJF HOLDINGS: Wants Schedule Filing Deadline Moved to Jan. 27
-------------------------------------------------------------
CJF Holdings, Inc. asks the court to extend the time within
which the it must file lists of creditors and equity security
holders; schedules of assets and liabilities; and statements of
financial affairs, through January 27, 2002.

The Debtors point out the extensive process of gathering the
necessary information to prepare and file the Schedules and
Statements.  They believe they cannot complete the task before
the current deadline.

The Debtors are currently involved in a liquidation sale, which
requires the attention of their key employees. In addition to
that, most of the Debtors' management is no longer associated
with the company, leaving one management person and a few key
employees to perform all of the tasks required of a debtor in
possession, including preparation of the Schedules and
Statements.

CJF Holdings, Inc. filed for chapter 11 protection on November
28, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Donna L. Harris, Esq. at Morris, Nichols, Arsht &
Tunnell represents the Debtors in their restructuring effort.
When the company filed for protection from its creditors, it
listed an estimated assets and debts of $10 million to $50
million.


CLARION COMMERCIAL: Completes Liquidation of Assets
---------------------------------------------------
Clarion Commercial Holdings, Inc. (NYSE: CLR) has sold the last
of its assets.  The assets were sold pursuant to the plan of
liquidation and dissolution that was approved by shareholders on
May 31, 2001.

Clarion Commercial Holdings, Inc. is a specialty finance company
that focuses on investments in commercial real estate assets.


CLARION TECHNOLOGIES: Appeals Nasdaq Delisting Determination
------------------------------------------------------------
Clarion Technologies, Inc. (Nasdaq: CLAR) has requested a
hearing to appeal a Nasdaq staff determination that the
Company's common stock is subject to potential delisting from
the Nasdaq Small Cap Market. The Company received a letter from
Nasdaq, dated December 21, 2001, notifying the Company of
Nasdaq's intent to delist the Company January 3, 2002. The
delisting notification was based on Nasdaq's determination that
the Company has failed to comply with Nasdaq's continued listing
requirements under Marketplace Rule 4310c(2)(B) regarding
minimum tangible net assets and minimum shareholder's equity.

Clarion is appealing the Nasdaq determination and will be
presenting a plan to the Nasdaq for achieving the minimum
continued listing requirements. Under Nasdaq rules, the
delisting will be stayed until the outcome of the hearing.
Consequently, the Company's common stock will remain listed and
will continue to trade on the Nasdaq Small Cap Market. The
Company understands that a hearing will occur within 45 days of
today's hearing request filing.

The Company intends to vigorously pursue the appeal and present
a plan that it feels will satisfy meeting the listing
requirements. If the appeal is denied, the Company's common
stock would trade on the OTC Bulletin Board electronic quotation
system, or another quotation system or exchange in which the
shares of the Company's common stock may qualify. The Company's
shareholders will continue to be able to obtain current trading
information, including last trade bid and ask quotations, as
well as share volume.

William Beckman, President of Clarion Technologies, Inc.
commented, "Clarion has been impacted by many of the economic
and market factors impacting the industries we serve as well as
the markets in general. We intend to pursue this appeal with the
intent of presenting an acceptable plan to the Nasdaq to achieve
the continued listing requirements. However, while we would
regret any delisting, we do not believe that such an occurrence
would have any adverse impact on our suppliers, customers, or
employees. We also believe that the many advancements made in
information technology would allow the Company's stock to trade
in a viable, fair market."

Clarion Technologies, Inc. operates five manufacturing
facilities with a total of approximately 600,000 square feet
located in Michigan, Ohio and South Carolina. Clarion's
manufacturing operations include approximately 155 injection
molding machines ranging in size from 50 to 5000 tons of
clamping force. The Company's headquarters are located in Grand
Rapids, Michigan. Further information about Clarion Technologies
can be obtained on the web at www.clariontechnologies.com or by
contacting James Hostetler, Vice President of Investor
Relations, at 847-490-6063.


COMDISCO: Court Okays Chanin's Employment as Financial Advisor
--------------------------------------------------------------
Judge Barliant authorizes the Equity Committee of Comdisco, Inc.
to employ and retain Chanin as its new financial advisor under a
general retainer, nunc pro tunc to November 15, 2001.  The Court
states that the maximum Monthly Advisory Fee due Chanin for the
period from November 15, 2001 to December 7, 2001 shall not
exceed $150,000 on a pro-rated basis for such period of time.

According to Judge Barliant, all monthly fee compensation and
reimbursement of expenses (including expenses arising from
indemnity claims) shall be paid to Chanin as administrative
costs and expenses of the estates, subject to approval of the
Court. But it is provided, however, that in the light of
Chanin's flat fee arrangement:

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

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

The Court emphasizes that the formulas used to calculate the
Deferred Fee shall not be subject to challenge except under the
standard review set forth in section 328(a) of the Bankruptcy
Code.

Judge Barliant rules that the United States Trustee and any
parties in interest retain all rights to object to Chanin's
interim and final fee applications (including expense
reimbursement) on all grounds including but not limited to the
reasonableness standard provided for in section 330 of the
Bankruptcy Code.

"All requests of Chanin for payment of indemnity arising during
the pendency of these Chapter 11 cases shall be made by means of
an application (interim or final as the case may be) and shall
be subject to review by the Court to ensure that payment of such
indemnity conforms to the terms of the Letter Agreement and is
reasonable based upon the circumstances of the litigation or
settlement in respect of which indemnity is sought," the Court
mandates.

Judge Barliant makes it clear that in no event shall Chanin be
indemnified if the Debtors, the estates, the official committee
of unsecured creditors or the Equity Committee asserts a claims
which is determined by a final order of a court of competent
jurisdiction to have arisen out of Chanin's own bad faith, self-
dealing, breach of fiduciary duty, gross negligence, reckless of
willful misconduct, malpractice or ordinary negligence arising
from the same.

In the event that Chanin seeks reimbursement for attorneys' fees
from the Debtors pursuant to the indemnification provisions of
the Letter Agreement, the Court states that the invoices and
supporting time records from such attorneys shall be included in
Chanin's own applications and such invoices and time records
shall be subject to the United States Trustee's guidelines for
compensation and reimbursement of expenses and the approval of
the Bankruptcy Court. (Comdisco Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


CONSTELLATION 3D: Seeks Review Of Nasdaq's Delisting Move
---------------------------------------------------------
Constellation 3D, Inc. (Nasdaq: CDDD), developer of Fluorescent
Multilayer Disc (FMD) and Card (FMC) technologies, announced
that the Company received a Nasdaq Staff Determination on
December 26, 2001 indicating that the Company fails to comply
with the net tangible assets, shareholders' equity, market
capitalization, total assets, total revenue and shareholder
approval of officer and director grants requirements, as set
forth in Nasdaq Marketplace Rules 4450(a)(3), 4450(b)(1) and
4350(i)(1)(A), and that its securities are, therefore subject to
delisting from the Nasdaq National Market.

The Company has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the Company's request
for continued listing.

The Company anticipates submitting a listing application to the
Nasdaq SmallCap Market. There can be no assurance that the
Company's common stock will be accepted for quotation on the
Nasdaq SmallCap Market.

The Company is the worldwide leader in the development of high
capacity Fluorescent Multilayer Disc and Card (FMD/C)
technology. The Company holds or has made applications for 122
worldwide patents in the field of optical data storage, and is
supported by a team of world-class scientists. Headquartered in
New York City, the Company has additional offices and
laboratories in Texas, Israel and Russia. More information is
available at http://www.c-3d.net


EASYLINK SERVICES: George Abi Zeid Holds 17.91% Equity Stake
------------------------------------------------------------
George Abi Zeid beneficially owns 28,725,068 shares of the
common stock of EasyLink Services, Inc., representing 17.91% of
the outstanding common stock of the Company. Mr. Zeid holds sole
voting and dispositive powers.


ENRON CORP: Proposes Trading Business Bidding Procedures
--------------------------------------------------------
Enron Corporation asks Judge Gonzalez to establish uniform
bidding procedures for selling a 51% interest in its Wholesale
Trading Business to a third-party purchaser.  Martin J.
Bienenstock, Esq., at Weil, Gotshal & Manges, LLP, tells Jeff
St. Onge at Bloomberg that 14 potential bidders are considering
making offers.  Press reports identify UBS and Citicorp as hot
contenders for Enron's Trading Business.

The Debtors know their NETCO joint venture partner must bring
three things to the table: cash, credibility, and a strong
balance sheet to the table.  If a bidder can't bring those three
things to NETCO, securing counterparty confidence will be
impossible.  Accordingly, the Debtors ask Judge Gonzalez to
limit the universe of Qualified Bidders to those having an
equivalent financial rating of "Al" or higher from Moody's or
"A+" or higher from Standard & Poor's.

Qualified Bidders will be permitted to conduct reasonable due
diligence for purposes of making a competing bid, subject to
executing an appropriate confidentiality agreement.

Every Competing Offer must be submitted using a standardized set
of documents and must be delivered to:

       * Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP,
         counsel for the Debtors;

       * Donald S. Bernstein, Esq., at Davis, Polk & Wardwell,
         counsel for JP Morgan Chase Bank, wearing its DIP Lender
         Agent hat;

       * Fredric Sosnick, Esq., at Shearman & Sterling, counsel
         for Citicorp, as a DIP Lender Agent; and

       * Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy
         LLP, recently retained as counsel to the Creditors'
         Committee.

no later than January 7, 2002, at 4:00 p.m. (EST).

Competing Offers must be accompanied by a $25,000,000 good faith
deposit in the form of a certified or cashier's check made
payable to Enron Corp.

An Auction will be held at Weil Gotshal's offices at 10:00 a.m.
on January l0, 2002.  The Debtors will start the Auction by
announcing who submitted the highest or best offer as of the
January 7 bid deadline.

The Debtor Sellers submit these bidding procedures provide a
fair and reasonable means of ensuring that the Assets are sold
for the highest or best offer attainable.  Specifically, the
procedures provide that any party interested in submitting a
Competing Offer be afforded due diligence opportunities in an
effort to generate a Competing Offer.  Moreover, the procedures
provide flexibility so as to enable a party interested in
submitting a Competing Offer to modify the terms of the
Agreements to an alternative structure and submit a greater
purchase price as a result thereof.  Likewise, the procedures
contain a timeframe so as to permit a prospective purchaser to
review a Competing Offer and, if interested, formulate a revised
increased bid.  Furthermore, the timeframe allows the Debtor
Sellers to consider and evaluate any Competing Offer so as to
ensure that such Competing Offer satisfies the requirements for
auction participation.

The Debtors will ask the Court to ratify their selection of the
highest and best bid that emerges from the Auction and authorize
the Sale Transaction at a hearing on January 11, 2002.

The Debtors submit that these Bidding Procedures are in the best
interests of the estates and should be approved by the Court.
(Enron Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


ENRON: Enters Into Pipeline Settlement Pact With Dynegy
-------------------------------------------------------
Enron Corp. (NYSE: ENE) reports it had entered into a settlement
of a dispute that has been the subject of litigation in Texas
regarding Dynegy's exercise of its option to acquire Enron's
Northern Natural Gas pipeline business.  Under the settlement
agreement, Dynegy will exercise the option and assume control of
the pipeline. Also as part of the agreement, Dynegy will dismiss
its Texas lawsuit, extend Enron's right to repurchase the
pipeline until June 30, 2002, and pay Enron $23 million pursuant
to the original terms of the option agreement upon closing,
subject to adjustment.

Enron will 1) continue to pursue its separate lawsuit against
Dynegy seeking $10 billion in damages arising out of Dynegy's
termination of its merger agreement with Enron, and 2) amend
that complaint to add an additional damage claim alleging that
Dynegy's exercise of the Northern Natural Gas Pipeline option
was wrongful.

Enron will continue to perform services for Dynegy that are
critical to the safe and reliable operation of Northern Natural
pursuant to an operating agreement to be executed between the
two parties.

Enron Corp. markets electricity and natural gas, delivers energy
and other physical commodities, and provides financial and risk
management services to customers around the world.  Enron's
Internet address is http://www.enron.com


EXODUS COMMS: Wants to Stretch Removal Deadline to May 24
---------------------------------------------------------
Exodus Communications, Inc., and its debtor affiliates moves for
entry of an order extending the time within which they may file
notices of removal through and including May 24, 2002.

David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, tells the Court that the Debtors are
parties to numerous judicial and administrative proceedings
currently pending in various courts and administrative agencies
throughout the country. Because the Debtors have been focused
primarily on stabilizing and maximizing the value of their
businesses, the Debtors have not reviewed all the Actions to
determine whether any Actions should be removed. The Debtors
submit that the requested extension of time is in the best
interests of their estates and creditors because it will afford
the Debtors a sufficient opportunity to assess whether the
Actions can and should be removed, thereby protecting the
Debtors' valuable right to adjudicate lawsuits.

Mr. Hurst assures the Court that the Debtors' adversaries will
not be prejudiced by such an extension because such adversaries
may not prosecute the Actions absent relief from the automatic
stay. Furthermore, nothing will prejudice any party to a
proceeding the Debtors seek to remove from pursuing remand.

A hearing is scheduled for January 16, 2002. (Exodus Bankruptcy
News, Issue No. 11; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


FEDERAL-MOGUL: Asks For Extension of Exclusive Period to Aug. 1
---------------------------------------------------------------
Federal-Mogul Corporation, et al., seek an extension of their
Exclusive Periods during which to file a plan of reorganization
and solicit acceptances of that plan. The Debtors request that
their Exclusive Plan Filing Period be extended through and
including August 1, 2002 and that their Exclusive Solicitation
Period be extended through and including October 1, 2002.
Federal-Mogul makes it clear that this request is made without
prejudice to the Debtors' rights to seek additional extensions
of these exclusive periods.

James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones
P.C., in Wilmington, Delaware, argues that the governing statute
and case law make plain that, in large and complex chapter 11
cases such as these, the exclusivity period can and should be
extended where the debtor has made, and is continuing to make,
progress toward a successful reorganization. These chapter 11
cases are somewhat unusual in that they were filed in large
measure as a result of mounting asbestos-related litigation
liabilities. Mr. O'Neill states that defining these liabilities
is central to resolving these bankruptcy proceedings and will
involve significant negotiations arid/or litigation, which will
take considerable time. To allow the Debtors sufficient time to
resolve these issues, the Court should grant the requested
extensions of the Exclusive Periods.

Mr. O'Neill submits that the Debtors have made significant
progress during the 3-month pendency of these cases. Since the
Petition Date, the Debtors have worked hard to effectuate a
smooth transition into chapter 11 and minimize the disruption to
their business, employees, vendors and customers. They also
commenced these cases with minimal disruption to their normal
business operations. In cases of this size, and for debtors as
geographically diverse as the Debtors, tasks such as these can
be monumental. Mr. O'Neill tells the Court that accomplishing
such tasks has required an intense level of effort and
commitment from all of the Debtors' employees, especially senior
management, as well as the Debtors' financial and legal
professionals.

Mr. O'Neill notes that the Debtors' management and professionals
have made significant progress in the administration of these
chapter 11 cases, while working toward the ultimate goal of
developing and presenting an appropriate plan of reorganization.
The Debtors' management and professionals have also been
involved in a continuing effort to assess the Debtors'
businesses and determine the best steps to be taken for the
future of their business. The Debtors intend to stabilize their
business operations further and continue development of a
strategic business plan that will ultimately contribute to the
plan of reorganization in these cases. To further this effort,
Mr. O'Neill informs the Court that the Debtors have commenced
during the pendency of these cases a global sourcing evaluation
in order to reduce costs and to determine the optimal partners
for their supply needs. Accomplishing this evaluation will
require additional time beyond the period prescribed in the
Bankruptcy Code, particularly in light of the myriad business
and legal issues that have occupied the Debtors' attention
during the first few months of these cases.

Mr. O'Neill relates that these chapter 11 cases involve large
and complex companies, with thousands of executory contracts and
unexpired leases, as well as a wide variety of unresolved
litigation and other sophisticated national and international
business issues that must be addressed before the Debtors can
put forth a comprehensive plan of reorganization. Central to
preparing and confirming such a plan is the establishment of a
means to liquidate the hundreds of thousands of asbestos-related
asserted against the Debtors pre-petition. The Debtors have
acted in good faith during the course of this bankruptcy
proceeding to address the issues facing them in these
proceedings, and, while doing so, have continued to pay their
post-petition obligations. As a result, no significant harm will
flow from an extension of the Exclusive Periods.

Mr. O'Neill observes that there are also a number of
complexities in these cases that exceed those normally found in
even highly sophisticated reorganization proceedings. During the
pendency of these cases, the Debtors have been forced to address
significant issues related to the English administration
proceedings, as well as deal with the "ripple effects" that the
commencement of the cases has had on the Debtors' roughly 300
non-debtor affiliates, which are located around the globe. In
these chapter 11 proceedings, Mr. O'Neill tells the Court that
the Debtors have been required to address motions to transfer
venue of virtually all asbestos litigation pending against the
world's major automobile manufacturers, as well as other,
similar parties. The filing of such motions has occasioned the
transfer of these cases from their original judge to new judges,
necessitating the postponement of hearings as well as the
establishment of new case management procedures. All of these
issues demonstrate that these cases are among the most complex
presently pending in the bankruptcy system, and amply justify
the requested extension of the Exclusive Periods.

Mr. O'Neill assures the Court that the extension of the
Exclusive Periods requested herein will not harm the Debtors'
creditors or other parties in interest. The Debtors, as
fiduciaries, are charged with the responsibility of attempting
to harmonize the interests of all creditor constituencies in the
development and presentation of a plan of reorganization. The
Debtors intend to develop and pursue a consensual plan of
reorganization under which the interests of all constituencies
will be addressed in an equitable fashion. However, Mr. O'Neill
contends that there are a number of unresolved contingencies in
this case, most particularly the nature and extent of the
Debtors' liability with respect to asbestos-related claims and
the resources available to satisfy those liabilities. The
extension will afford the Debtors a meaningful and reasonable
opportunity to negotiate with their creditors and to then
propose and confirm a consensual plan or reorganization.
(Federal-Mogul Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


FENWAY INT'L: Needs More Funds To Continue As A Going Concern
-------------------------------------------------------------
Fenway International Inc. has a working capital deficit, has
incurred development losses of $2,058,199 from inception and
needs new financing to develop its cement operations. These
factors raise uncertainty as to the Company's ability to
continue as a going concern.

Fenway Management has received a commitment for bridge financing
for the initial development of the cement operations. The
ability of the Company to continue as a going concern is
dependent upon the receipt of the bridge financing and future
long range development financing.

Fenway International plans to develop and construct two large
commercial grade cement production facilities in the
Philippines. The Company's predecessor-in-interest, Fenway
Resources, Ltd., spent more than five years preparing the
information and submissions for the necessary licensing, permits
and environmental approvals necessary to support construction of
such facilities on the island of Palawan. The necessary permits
and environmental approvals for a proposed facility on the
island of Negros Oriental have already been received. The
Company is required to participate with local corporations in
the Philippines in order to commercially exploit Philippine
mineral claims and, therefore, it has incorporated two
Philippine corporations. However, Fenway International Inc. has
not yet realized any revenue from operations, as its cement
manufacturing facilities are presently in the development stage.

At September 30, 2001, the Company had cash and cash equivalents
of $10,540. At September 30, 2001, it had total current assets
of $11,358. Total current liabilities at September 30, 2001 were
$699,649; therefore total current liabilities exceeded total
current assets by $688,291 at September 30, 2001.

For the nine months ended September 30, 2001, the Company
expensed $367,851 of development costs compared to $509,483 in
development costs for the corresponding period in 2000. It has
expensed total development costs of $2,066,792 from inception on
May 7, 1984 to September 30, 2001. Net loss for the three months
ended September 30, 2001 was $96,490 compared to a net loss of
$120,132 for the corresponding period in 2000. The decrease in
the net loss during those corresponding periods was due to a
decrease in development costs. From inception on May 7, 1984 to
September 30, 2001, the Company had suffered a net loss of
$2,058,199. Cash and equivalents constitute its present internal
sources of liquidity.

Because it is not generating any revenues at this time from
operations, the Company's only external source of liquidity is
the sale of its capital stock. Fenway is attempting to acquire
funding for both the Palawan Project and the Negros Project from
German financial institutions with assistance from Krupp-
Polysius, a German machinery manufacturing, engineering, trading
and financial services company. Krupp-Polysius has agreed to
help arrange the export credits and the required loan guaranties
for the loans required for both projects.

Based on current discussions, the Company presently anticipates
that the necessary financing for the Palawan Project will be
secured during the first quarter of 2002, which will allow it to
begin preliminary engineering programs during the first quarter
and initiate construction in the second quarter of 2002.
Emphasis will be initially on completing the port site which is
necessary to enable supplies and materials to be delivered for
construction of the plant.  The Palawan Project will be the only
cement manufacturing facility on the island of Palawan.

Success is dependent upon the company's ability to secure the
necessary financing. Through the efforts of Krupp-Polysius and
Belfinger + Berger, it has received a letter of interests from
German banks to provide all of the export credit and loan
funding. The Company is currently conducting negotiations for
all of the equity requirements which it believes will be
completed in the first quarter of 2002. It may also obtain
financing from the individual contractors for the port, power
and quarry facilities which would reduce overall financing
needs.

If Fenway International Inc. does not obtain adequate financing,
it may need to delay the program or to enter into arrangements
with other companies interested in developing cement
plants in the Philippines. In the opinion of management,
available funds will satisfy working capital requirements
through June 2002.


FINOVA GROUP: Seeks Order Enforcing Plan Discharge & Injunction
---------------------------------------------------------------
The FINOVA Group, Inc. asks the Court for an order enforcing
the discharge and injunction provided under the Bankruptcy Code,
the Reorganization Plan, and the Confirmation Order to bar and
permanently enjoin the claims asserted by Kasada, Inc., John
Michaels, Inc., Gabbey Design Group, Inc., Garment Makers, Inc.,
Theodore Sadaka, Karen Sadaka, and Gladys Sadaka.

The Plaintiffs asserted these claims against the Debtors in a
civil action pending in the United States District Court for the
Southern District of New York, according to Mark D. Collins,
Esq., at Richards, Layton & Finger PA, in Wilmington, Delaware.

Prior to Petition Date, Finova Capital was involved in certain
factoring transactions with Kasada, Inc. and John Michaels, Inc.
However, Mr. Collins says, these Factoring Accounts to U.C.C.
Asset Management Corporation on November 13, 2000.  Since then,
Mr. Collins says, Finova Capital has had no dealings with
Kasada, Inc., or John Michaels, Inc.

The Antitrust Action began when the Plaintiffs filed a complaint
against Access Capital, Inc., Westgate Financial Corp., Finova
Capital, UCC Asset Management Corp., Star Funding, Inc., Omni
Commercial, LLC, Commercial Services, Inc., Rosenthal &
Rosenthal, Miles M. Stochin, and Richard L. Simon.

"The Plaintiffs complained that the Defendants collectively
dominate the credit market in the piece good garment industry,
and conspired to deny Plaintiffs credit by refusing to purchase
their accounts receivables," Mr. Collins tells the Court.  For
antitrust violations, breach of contract and various business
tort claims, the Plaintiffs seek $120,000,000 in compensatory
and punitive damages from the Defendants.

Mr. Collins observes that the Plaintiffs' assertion of their
claims against Finova Capital is in direct violation of the
discharge and injunction of the Bar Date Order, the Notice of
Effective Date, the Plan, the Confirmation Order and the
Bankruptcy Code.

Accordingly, Mr. Collins maintains that the Plaintiffs are
precluded from asserting or prosecuting any claims against the
Debtors in the Antitrust Action.  Mr. Collins explains that the
Plaintiffs are barred because:

     (a) Plaintiffs' claims are pre-confirmation claims,

     (b) None of the Plaintiffs filed a proof of claim or an
         administrative claim at any time, and

     (c) Plaintiffs' claims are subject to the discharge and
         injunction provisions of the Plan, the Confirmation
         Order and the Bankruptcy Code.

Moreover, Mr. Collins relates, all Plaintiffs are unknown
creditors of the Debtors, received constructive notice of the
Bar Date, the Confirmation Hearing, and the Administrative Bar
Date by publication.  Therefore, Mr. Collins contends, the
Plaintiffs cannot contest the extinguishment of their claims
against Finova Capital Corporation.  Furthermore, Mr. Collins
informs Judge Walsh that the Debtors even gave actual notice of
the Bar Date to certain Plaintiffs who appeared in a customer
database -- which wholly undermined the Plaintiffs' claims in
the Antitrust Action.

Thus, the Debtors ask Judge Walsh to find that the Plaintiffs'
prosecution or pursuit of their claims in the Antitrust Action
against Finova Capital is barred and permanently enjoined by the
discharge and injunction of the Bar Date Order, the Notice of
Effective Date, the Plan, the Confirmation Order and the
Bankruptcy Code. (Finova Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


FLAG TELECOM: S&P Drops Ratings To Lower-B Levels
-------------------------------------------------
Standard & Poor's lowered its ratings on Flag Telecom Holdings
Ltd. and its wholly owned subsidiary FLAG Ltd., and placed the
ratings on CreditWatch with negative implications.

The rating action is based on continued weak industry
fundamentals and ongoing uncertainty regarding demand and
pricing levels in 2002 and 2003. Flag performed well in 2001,
largely due to presale activity on its trans-Atlantic cable.
Also, relative to its peers, the company has operated with a
lean corporate structure, a narrow business focus, and has had
less bad debt exposure because of its high-quality customer
base. Still, Flag is leveraged, with about $1.2 billion of debt;
business conditions remain very challenging; and Flag Network
Services is cash flow negative. Cash flow generation in 2002 and
2003 is difficult to predict given sharply declining prices and
lower demand levels from the company's carrier customers.

Liquidity is currently adequate, as the company had about $668
million of cash at September 30, 2001, and has availability on
both its Flag Atlantic and Flag North Asia bank facilities.
Capital expenditures are expected to be between $300 million and
$350 million in 2002, the majority of which will be used to
complete construction of its third cable system in North Asia.
The company is free cash flow positive on its Flag-Europe Asia
system, and excess cash has been used to pay down bank debt at
the FLAG Ltd. entity.

Flag is expected to give more guidance regarding its outlook for
2002 in February, when it anticipates reporting its 2001 fourth
quarter results. Standard & Poor's will assess future business
conditions, as well as the company's liquidity levels and
prospects for cash flow generation, when resolving the
CreditWatch listing in the first quarter of 2002.

      Ratings Lowered and Placed on CreditWatch Negative

      Flag Telecom Holdings Ltd.         TO      FROM
        Corporate credit rating          B+      BB-
        Senior unsecured debt            B-      B
      FLAG Ltd.
        Corporate credit rating          B+      BB-
        Senior unsecured debt            B+      B+


FLEXIINTERNATIONAL: Hill Barth Replaces Deloitte As Auditors
------------------------------------------------------------
On December 21, 2001, with the approval of the Audit Committee
and the concurrence of the Board of Directors,
FlexiInternational Software, Inc. engaged Hill, Barth & King as
its independent auditors and dismissed its former independent
auditors, Deloitte & Touche LLP, effective as of that date.

Prior to the engagement of HBK, Deloitte & Touche had served as
the independent auditors of the Company since December 1999.
Deloitte & Touche's audit of the Company's financial statements
for the year ended December 31, 1999, and issued audit report
dated January 29, 2000, for fiscal year 1999, contained a
qualification regarding the existence of substantial doubt about
the Company's ability to continue as a going concern. The
foregoing qualification was not included in Deloitte & Touche's
audit report, dated February 27, 2001, for the following fiscal
year.


GRAND EAGLE: Glenn C. Pollack Appointed as Chapter 11 Trustee
-------------------------------------------------------------
In December 13, 2001, Glenn C. Pollack was formally appointed
Trustee for Grand Eagle, Inc. in its Chapter 11 bankruptcy case
pending in the United States Bankruptcy Court for the Northern
District of Ohio, Eastern Division, Akron, Ohio. As Trustee, Mr.
Pollack will oversee the operations of Grand Eagle's business
and management of the company's assets.

Grand Eagle, Inc. (a privately held company) is North America's
largest independent motor, switchgear, and transformer services
provider. Based in Richfield, Ohio, the company provides
engineered upgrades, repair, remanufacturing and maintenance
services for industrial, utility and commercial markets.
Employing approximately 1,000 people in three business units
dedicated to the service of major brands of electrical
equipment, Grand Eagle has approximately 40 locations in 22
states across the nation. As of October 26, 2001, Grand Eagle
reported approximately $131 million in total assets and $82
million in total liabilities, including approximately $52
million of senior indebtedness and $11 million of trade
indebtedness. Credit Agricole Indosuez leads Grand Eagle's
senior lending group.

"I'm optimistic that Grand Eagle's business operations can be
stabilized in order to permit a sale of the company," said Glenn
Pollack, Trustee for Grand Eagle. "I believe that the Chapter 11
proceedings will allow Grand Eagle to solicit bids and complete
a sale in an orderly fashion."

Mr. Pollack is a Managing Director of Candlewood Partners, LLC,
a specialized investment banking firm located in Cleveland,
Ohio. During Mr. Pollack's over 20 year career, he has advised
both public and privately held companies in workouts,
financings, management buy-outs, recapitalizations and other
restructuring transactions. Prior to founding Candlewood
Partners, Mr. Pollack was the head of the restructuring practice
for a middle market investment bank with offices in Chicago and
Cleveland. Before joining the investment bank, Mr. Pollack was
Chief Executive Officer of a $180 million food distribution
company. Mr. Pollack previously was a partner at Seideman &
Associates, a turnaround and workout firm that merged its
practice into Price Waterhouse, where he was responsible for a
number of out-of-court restructurings and successful Chapter 11
plans of reorganization and acted as court appointed receiver or
financial advisor to creditors in other situations.

In connection with Mr. Pollack's role as Trustee, he has
proposed to retain Candlewood Partners, LLC as financial
advisor, Benesch, Friedlander, Coplan & Aronoff LLP as
bankruptcy counsel and Brown Gibbons, Lang & Company Securities,
Inc. as sales agent.


HIGHPOINT TELECOM: Debt Default Likely Due To Failed Reorg Plan
---------------------------------------------------------------
Highpoint Telecommunications Inc. reports that it has not been
able to establish a reorganization plan thereby giving rise to a
potential event of default under its outstanding 10% convertible
debentures. Accordingly, it has requested a halt in trading of
its securities while it reviews its alternatives.


HOMELIFE: Exclusive Plan Filing Period Extended Through March 13
----------------------------------------------------------------
Without prejudice to the Debtors' right to seek additional
extensions of their Exclusive Periods, the U.S. Bankruptcy Court
for the District of Delaware extends Homelife Corporation's
Exclusive Periods to file a Chapter 11 Plan and to solicit votes
of the Plan through March 13, 2002 and May 13, 2002,
respectively.

Privately-held HomeLife shut down all of its 128 retail
locations before it filed for chapter 11 bankruptcy protection
on July 16, 2001 in the U.S. Bankruptcy Court for the District
of Delaware.  The Debtors listed both assets and liabilities of
more than $100 million each in its petition. Laura Davis Jones,
Esq. at Pachulski, Stang, Ziehl, et al represents the Debtors in
their restructuring efforts.


ICG COMMS: Wants To Assume Amended Irvine Co. Building License
--------------------------------------------------------------
ICG Communications, Inc. and certain of its subsidiaries and
affiliates ask Judge Walsh for his authorization and approval
for Debtor ICG Telecom Group, Inc., as successor in interest to
ICG Access Services, Inc., to assume a Master Telecommunications
License Agreement with The Irvine Company, dated March 21, 1996,
as amended.

Pursuant to the License Agreement, Mark A. Fink, Esq., at
Skadden, Arps, Slate, Meagher & Flom explains, Irvine provides
the Debtors right of entry and equipment space in certain
commercial office buildings located in Southern California.
Irvine also leases space in certain of such Buildings to the
Debtors.  The Debtors conduct critical components of their
telecommunications businesses at these Buildings. Absent
continued use of the telecommunications services provided under
the License Agreement, the Debtors will suffer significant
disruption to their business to the detriment of their estates.

By its terms, the License Agreement expired in November 2001. As
a result of negotiations during the past few months, Telecom and
Irvine have agreed to modify the License Agreement to extend its
term, and to make certain other changes. The Debtors have
determined in their business judgment that it is essential to
the Debtors' continued operations to maintain its
telecommunications operations at certain of the Buildings after
November 2001, and thus that the License Agreement, as amended,
should be assumed.

                 The Amended License Agreement

At several of the Buildings, the Debtors currently house
equipment that is critical to the Debtors' network. Moreover, it
would be difficult - if not impossible - for the Debtors to
maintain its Southern California telecommunications network
without utilizing the right of entry and equipment space
provided under the License Agreement. However, the Debtors no
longer utilize or require telecommunications services at several
of the Buildings.

Accordingly, the principal terms of the License Agreement are:

        (1)  Term.  A term of five years, with an option to
extend such term, and a monthly license fee of $500 per
Building.

        (2)  Buildings.  The parties agreed to amend the list of
Buildings covered by the License Agreement, removing those
Buildings that the Debtors no longer utilize and adding a
Building that the Debtors have determined requires the
establishment of telecommunications operations.

        (3)  Cure. The parties have agreed that the "cure" amount
under the Bankruptcy Code in connection with the Debtors'
assumption of the License Agreement is $11,833.10.

                   The Debtors' Arguments

The assumption or rejection of a lease by a debtor is subject to
review under the business judgment standard. If a debtor's
business judgment has been reasonably exercised, a court should
approve the assumption or rejection of the unexpired lease. The
business judgment rule shields a debtor's management from
judicial second-guessing. Once the Debtors articulate a valid
business justification, "[t]he business judgment rule 'is a
presumption that in making a business decision the directors of
a corporation acted on an informed basis, in good faith and in
the honest belief that the action was in the best interests of
the company.'"

The Debtors argue that there is more than adequate business
justification to assume the License Agreement. The License
Agreement covers services and properties that are critical to
the Debtors' ongoing telecommunications operations and form an
integral part of the Debtors' network backbone. Any movement of
the operations currently conducted at the Buildings would be
prohibitively expensive. Additionally, the amendment to the
License Agreement reduces the number of properties covered by
the License Agreement to only those sites which are necessary to
support the Debtors' continuing operations, which, in turn,
reduces the Debtors' monthly license fees under the License
Agreement by more than half. Moreover, Irvine would not have
agreed to extend the term of the License Agreement absent the
Debtors' assumption of such agreement. Accordingly, the Debtors
believe that assuming the License Agreement is in the best
interests of the Debtors' estates, creditors and other parties
in interest. (ICG Communications Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


INTIRA CORP.: Asks To Extend Lease Decision Deadline To March 31
----------------------------------------------------------------
Intira Corporation asks the Delaware Bankruptcy Court to give
them more time to decide whether to assume or reject unexpired
leases of nonresidential real property through March 31, 2002.

The Court recently approved the Sale of substantially all of the
Debtor's assets to divine. divine is in the process of
negotiating the Leases and continues to use the relevant
premises while the Debtor's remaining assets and operations are
being administered.

The Debtor submits that they require additional time to evaluate
and determine the disposition of the Leases. Otherwise, they
will be compelled to forfeit leases prematurely, depriving
divine and the estate of potentially valuable assets, not to
mention interfering with the efficient administration of the
remaining assets of the estate.

Intira Corporation, a pioneer and industry leader in
netsourcing, outsourcing of information technology and network
infrastructure used to support internet or private network-based
applications. The Company filed for chapter 11 protection on
July 30, 2001 in Delaware. Laura Davis Jones at Pachulski Stang
Ziehl Young & Jones P.C. represents the Debtors in their
restructuring effort.  When the company filed for protection
from its creditors, it listed $112,970,000 in assets and
$152,700,000 in debt.


LAIDLAW INC: Employing Spencer Stuart As Search Consultants
-----------------------------------------------------------
Laidlaw Inc. seeks the Court's authority to retain and employ
Spencer Stuart as consultants in the search for:

     (a) new members of Laidlaw Inc.'s board of directors, and

     (b) a new chief executive officer for Laidlaw Inc.

Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New
York, tells the Court that the Debtors require respected and
qualified search consultants to assist the Debtors in recruiting
new members for Laidlaw Inc.'s board of directors.  Mr. Graber
reminds the Court that the Debtors' plan of reorganization
provides for the selection of the board of directors for New
Laidlaw Inc., which is currently anticipated to include nine
members.  Mr. Graber informs Judge Kaplan that eight of these
directors will be outside directors while the other director
will be the chief executive officer of New Laidlaw Inc.
"Although certain of the outside directors currently sitting on
Laidlaw Inc.'s board may be selected to sit on the board of New
Laidlaw Inc., new candidates must also be considered to assure
the most effective corporate governance for New Laidlaw Inc.,"
Mr. Graber states.  According to Mr. Graber, the use of a firm
that specializes in identifying and recruiting director
candidates will increase greatly the Debtors' ability to find
and obtain qualified candidates for the board of New Laidlaw
Inc.

In addition, Mr. Graber continues, the Debtors also require
search consultants to assist in recruiting a new chief executive
officer for Laidlaw Inc.  As recently announced, Mr. Graber
notes, John Grainger - who has been serving as Laidlaw Inc.'s
chief executive officer since December 20, 1999 - has become
President and Chief Executive Officer of the Laidlaw Companies'
education services operating division.  "It is essential that
the Debtors find a permanent chief executive officer for Laidlaw
Inc. so that the Debtors may finish their restructuring efforts
and Mr. Grainger can focus his undivided attention on the
operations and affairs of the education services business
segment," Mr. Graber emphasizes.  In order to find the best
chief executive officer candidate for Laidlaw Inc., Mr. Graber
asserts, the Debtors need the assistance of a qualified
executive search firm.

According to Mr. Graber, Spencer Stuart is particularly well
suited and qualified to assist the Debtors in both searches.
Mr. Graber notes that Spencer Stuart is one of the leading
executive and director search firms in the world, with 50
offices located in the key business and commerce centers of 24
countries.  The firm has successfully assisted many large
corporations in the United States in their respective searches
for senior executives, including such well-known companies as
AT&T Corporation, Campbell Soup Company, Delta Air Lines Inc.,
Eastman Kodak Company, IBM Corporation, Lockheed Martin
Corporation, W.R. Grace & Company, etc.  Mr. Graber adds that
Spencer Stuart also has extensive experience in searching for
senior executives for corporations engaged in corporate
turnarounds or emerging from chapter 11 protection.  These
companies include Aurora Foods Inc., Bruno's Inc., Payless
Cashways Inc., The Penn Traffic Company, Walter Industries Inc.,
etc.  "These experiences make Spencer Stuart uniquely qualified
to conduct the search for a new chief executive officer of
Laidlaw Inc.," Mr. Graber contends.

Furthermore, Mr. Graber relates, Spencer Stuart is one of the
top executive search firm with a group of professionals that
specializes in recruiting corporate directors and providing
related consulting services.  "This specialized group of
professionals has unique expertise, knowledge and contacts that
will enable Spencer Stuart to identify qualified board
candidates for Laidlaw Inc.," Mr. Graber explains.

Mr. Graber tells the Court that Spencer Stuart began searching
for qualified director candidates for Laidlaw Inc. prior to
Petition Date.

Pursuant to the Director Search Agreement, and subject to the
Court's approval, Mr. Graber says, Spencer Stuart will be paid:

     (a) $50,000 for each new director it successfully recruits
         for Laidlaw Inc.'s board of directors, and

     (b) an additional fee of $50,000 for its evaluation of the
         existing directors in consideration of their continued
         service on the board.

Because the number of new candidates being recruited for the
board of directors cannot be known until the new board is named,
Mr. Graber informs Judge Kaplan that Laidlaw Inc. and Spencer
Stuart agreed to initial billings, to be invoiced over a three-
month period, based on an estimate that there would be an
evaluation of existing directors and that five new directors
would be recruited -- for total estimated fees of $300,000.
"Any necessary reconciliation to account for the actual number
of directors recruited will be accomplished by an alteration in
the last month's billings under the Director Search Agreement,"
Mr. Graber adds.

Pursuant to the Executive Search Agreement, and subject to the
Court's approval, Mr. Graber continues, Spencer Stuart shall
charge a retainer fee equal to one-third of the projected first
year total cash compensation, including bonus, of Laidlaw Inc.'s
new chief executive officer.  Based on an estimated base salary
of $450,000 and a 75% bonus of $337,500, Mr. Graber calculates
that Spencer Stuart's Retainer will be $260,000.  "This Retainer
will be billed in three monthly installments of $90,000, $85,000
and $85,000," Mr. Graber explains.  In the event that a new
chief executive officer is hired at a higher targeted first year
total cash compensation package than the original estimate, Mr.
Graber says, Spencer Stuart shall receive one-third of the
amount by which the projected first year total cash compensation
exceeds the initial estimate. In the event that the new chief
executive officer is offered a projected first year total cash
compensation package that is less than the original estimate,
Mr. Graber notes, Spencer Stuart will keep the full amount of
the Retainer.

Under both Search Agreements, Mr. Graber states that Spencer
Stuart's estimated fees and retainers are considered earned and
due when billed and are not contingent upon Laidlaw Inc.'s
hiring a candidate presented by Spencer Stuart.  According to
Mr. Graber, Laidlaw Inc. has the right to cancel either Search
Agreement at any time, with Spencer Stuart keeping only the fees
and expenses earned through the cancellation date.  Mr. Graber
adds that Spencer Stuart also invoices an amount equal to 10% of
the fees billed to cover overhead and related expenses.  In
addition, Mr. Graber notes that travel-related expenses for
candidates and Spencer Stuart's consultants are passed through
to Laidlaw Inc. at cost.

Within the year preceding the Petition Date, the Debtors paid
Spencer Stuart $112,200 on June 27, 2001 as the first monthly
installment under the Director Search Agreement.

According to Julie Hembrock Daum, managing director of U.S.
Board of Services for Spencer Stuart, Spencer Stuart intends to
apply to the Court for payment of compensation and reimbursement
of expenses from the Debtors in accordance with the applicable
provisions of the Bankruptcy Code, the Bankruptcy Rules and the
Local Bankruptcy Rules of the Court, the Procedures for Interim
Compensation and Reimbursement of Expenses of Professionals, and
other additional procedures that may be established by the
Court.

Ms. Daum assures the Court that the firm, nor any of its
professional staff member or employee has any connection with
the Debtors, their creditors, the U.S. Trustee or any other
party with an actual or potential interest in these chapter 11
cases or their respective attorneys or accountants, except:

     (a) Spencer Stuart does not represent, and has not
         represented, any entity other than the Debtors in
         matters related to these chapter 11 cases.

     (b) Prior to the Petition Date, Spencer Stuart performed
         certain director search services for the Debtors.  The
         Debtors do not owe Spencer Stuart any amount for
         services performed prior to the Petition Date.

     (c) From time to time, Spencer Stuart has provided services,
         and likely will continue to provide services, to certain
         creditors of the Debtors in matters unrelated to these
         chapter 11 cases.  However, Spencer Stuart has
         undertaken a detailed search to determine whether it is
         providing services, or has provided services within the
         last three years, to any significant creditors, equity
         security holders, insiders or other parties in interest
         to such unrelated matters.

     (d) Spencer Stuart has over 500 employees. It is possible
         that certain employees of Spencer Stuart hold interests
         in mutual funds or other investment vehicles that may
         own the Debtors' securities.

To check and clear potential conflicts of interest in these
cases, Ms. Daum relates that Spencer Stuart has researched its
client database for the past three years to determine whether it
has any relationships with any parties-in-interest in Laidlaw's
chapter 11 cases.  Because the Debtors are a multinational
enterprise with numerous creditors and other relationships, Ms.
Daum admits that Spencer Stuart is unable to state with
certainty that every client relationship or other connection has
been disclosed.  In this regard, Ms. Daum assures Judge Kaplan
that if Spencer Stuart discovers additional information that
requires disclosure, the firm will file supplemental disclosures
with the Court as promptly as possible.

"As far as I have been able to ascertain, neither I, nor Spencer
Stuart, nor any of its professional staff member or employee,
hold or represent any interest adverse to the Debtors or their
respective estates in the matters for which Spencer Stuart is
proposed to be retained," Ms. Daum testifies.  Accordingly, Ms.
Daum maintains that Spencer Stuart is a "disinterested person"
as defined in section 101(14) of the Bankruptcy Code. (Laidlaw
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


LEADER INDUSTRIES: Files An Assignment Under BIA in Canada
----------------------------------------------------------
Leader Industries Inc. (TSE: LED) filed on December 31, 2001 an
Assignment under the Bankruptcy and Insolvency Act. Raymond
Chabot Inc. has been appointed as Trustee to the estate of the
company. The meeting of creditors is scheduled for January 22,
2002.

Operating under the Companies' Creditors Arrangements Act since
May 2, 2001, the Company had been granted by the Superior Court
until December 31, 2001, to come to an arrangement with its
creditors. The Company was not able to propose a suitable
arrangement and the Company's banker which is also its principal
creditor has enforced its security on all assets of the Company
resulting in a loss to such creditor and no residual equity for
the Company's other creditors.

The Company does not expect to have any further activity and
expects to be delisted from the Toronto Stock Exchange.


LODGIAN INC: Has Until March 5 To File Schedules
------------------------------------------------
Lodgian, Inc. sought and obtained an order from the Court
granting an extension of their time to file comprehensive
schedules of assets and liabilities, schedules of current income
and expenditures, schedules of executory contracts and unexpired
leases, statements of financial affairs, lists of creditors and
equity security holders as required by 11 U.S.C. Sec. 521(1).
The new deadline is March 5, 2002, without prejudice to the
Debtors' right to seek a further extension for cause shown.

Adam C. Rogoff, Esq., at Cadwalader Wickersham & Taft in New
York, tells the Court that the Debtors' business has a complex
organizational structure. The Debtors own and/or operate
approximately 106 hotels in 32 different states and Canada, most
of which are owned by individual Debtors, making the number of
actual Debtors substantial. Mr. Rogoff explains that each of the
Debtors' hotels record revenue figures, expenditure figures, and
other such information in the ordinary course of business. In
order to prepare the Schedules, the Debtors must gather
information from the books, records, and documents of each and
every hotel. Mr. Rogoff submits that the Debtors are currently
in the process of coordinating a centralized information pool to
gather all the required information. As the Debtors' business is
geographically expansive, such a task will require an enormous
expenditure of time and effort on the part of the Debtors and
their employees.

While the Debtors are mobilizing their employees to work
diligently and expeditiously on the preparation of the
Schedules, Mr. Rogoff contends that resources are strained. In
view of the complexity of the Debtors' corporate structure, the
amount of work entailed in assembling the necessary
documentation to complete the Schedules, and the competing
demands upon the Debtors' employees to assist in efforts to
stabilize business operations during the initial post-petition
period, the Debtors will not be able to properly and accurately
complete the Schedules within the 15-day time period imposed
under the Bankruptcy Rules.

In light of the size of the Debtors' cases, the amount of
information that must be assembled and compiled, the location of
such information, and the significant amount of employee time
that must be devoted to the task of completing the Schedules,
the Debtors submit that ample cause exists for the requested
extension. (Lodgian Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


LOEWEN GROUP: Eastwood, et al, Selling Businesses For $1.15+ Mil
----------------------------------------------------------------
Eastwood Memorial Gardens, Inc. and thirteen other Selling
Debtors seek the Court's authority:

(1) to sell the funeral home and cemetery businesses, and
      related assets used in the operation of those businesses,
      at 25 Sale Locations, free and clear of all Liens, Claims
      and Encumbrances, to the entity that the Debtors, in their
      sole business judgment, determine has submitted the highest
      and best offer, pursuant to section 363 of the Bankruptcy
      Code.

(2) to enter into necessary or appropriate agreements and
      transactions related to the proposed sale;

(3) to assume and assign to the Purchaser 118 executory
      contracts and unexpired leases, pursuant to section 365 of
      the Bankruptcy Code.

The Selling Debtors and Denco Holdings, Inc. (Initial Bidder)
have entered into an Asset Purchase Agreement which says that
the Selling Debtors agree to sell 24 of the 25 Sale Locations,
including substantially all personal property located thereon or
used exclusively in connection with the businesses conducted at
those 24 locations, to the Initial Bidder for $1,150,000 (the
Purchase Price), subject to higher and better offers pursuant to
the Bidding Procedures and, if necessary, an auction to be
conducted on the last business day before the Hearing Date. In
addition, the Selling Debtors have granted an option to purchase
certain assets of the Sale Location that is designated as the
"Option Location" for an option exercise price of $150,000. The
Initial Bidder agrees to accept the Sale Locations on the terms
and conditions set forth in the Purchase Agreement.

At first, the Debtors marketed 14 of the Sale Locations pursuant
to the Disposition Program. Denco Holdings, Inc. was selected as
the Qualified Initial Bidder. The parties then negotiated on
terms for the transaction. Denco expressed interest in
purchasing the other 11 Sale Locations as well and these were
added to the Disposition Program in the Fall 2001. The Debtors
then offered those 11 Sale Locations to the Initial Bidder as
part of the proposed transaction. In addition, the Debtors (a)
sent a list of those properties to an established broker of
funeral home and cemetery locations and (b) contacted previous
purchasers and potential purchasers of the other properties sold
under the Disposition Program regarding their possible interest
in those locations.

The Selling Debtors and the Initial Bidder ultimately entered
into an Asset Purchase Agreement. The Initial Bidder paid to the
Selling Debtors a Deposit in the amount of $57,500 upon the
execution of the Purchase Agreement and agrees to pay the
remainder of the Purchase Price at the closing.

In addition to the purchase price and the option mentioned
above, the Purchase Agreement also provides for the following:

-- All accounts receivable, transferable permits and goodwill
     relating to the businesses conducted at the Sale Locations
     will be transferred to the Initial Bidder.

-- The Initial Bidder agrees to assume all of the Assigning
     Debtors' rights and obligations under the Assignment
     Agreements.

-- The Initial Bidder is entitled to Breakup Fees in the amount
     of $23,000 and Expenses in the amount of $23,000 if the
     Selling Debtors fail to consummate the transaction
     contemplated by the Purchase Agreement, but only if the
     failure to consummate the transaction is because: (i) the
     Selling Debtors accept a higher or better offer from another
     entity and actually close the sale with, and receive the
     Purchase Price from, such entity; or (ii) the Selling
     Debtors materially breach their obligations under
     the Purchase Agreement and the Initial Bidder does not
     materially breach its obligations under the Purchase
     Agreement.

Consistent with the Disposition Order, the Debtors have provided
notice of the proposed sale which sets forth, among
other things, a description of the Sale Locations, the basic
terms of the Purchase Agreement, the procedures for objecting to
this Motion and the applicable provisions of the Bidding
Procedures, including the procedures for participating in the
Auction for the Sale Locations.

At the Auction, the Debtors, after consultation with the
Creditors' Committee, will select the bid. The Selling Debtors
then will seek authority to enter into the Purchase Agreement
with, and consummate the sale of the Sale Locations to, the
bidder submitting the Successful Bid at the hearing on this
Motion.

In connection with the proposed sale of the Sale Locations,
Neweol would sell and the Initial Bidder would purchase certain
accounts receivable related to the Sale Locations pursuant to a
purchase agreement between Neweol and the Initial Bidder. Under
the Purchase Agreement, a portion of the Purchase Price is
allocated to Neweol on account of accounts receivable subject to
the Neweol Purchase Agreement. The amount of the Neweol
Allocation will be determined immediately prior to closing in
the manner set forth in the Neweol Purchase Agreement and will
be paid to Neweol. Thus, the Neweol Allocation will not be
utilized or deposited in the manner contemplated by the Net
Asset Sale Proceeds Procedures.

The Debtors will deposit any Net Asset Sale Proceeds into the
"Net Asset Sale Proceeds Account" maintained by LGII at First
Union National Bank for investment by LGII in a manner
consistent with both the investment guidelines previously
approved in these cases and the investment limitations set forth
in Section 7.18 of the Credit Agreement. Breakup fees, purchase
price adjustments and closing costs may be paid from the account
without further order of the Court.

The Selling Debtors have determined that the sale of the Sale
Locations to the Purchaser on the terms set forth in the
Purchase Agreement is in the best interests of their respective
estates and creditors.

The Selling Debtors are:

     * Eastwood Memorial Gardens, Inc., an Alabama corporation
     * Montgomery Memorial Cemetery, Inc., an Alabama corporation
     * North Alabama Memorial Gardens, Inc., an Alabama
       corporation
     * Walker Cemetery Corporation, an Alabama corporation
     * Loewen (Alabama), L.P., a Delaware limited partnership
     * Kraeer Holdings, Inc., a Florida corporation
     * Loewen (Georgia), Inc. a Georgia corporation
     * Mozley Memorial Gardens, Inc., a Georgia corporation
     * Gordon E. Utt Funeral Home, Inc., an Indiana corporation
     * McClure Funeral Service, Inc., an Indiana corporation
     * Barham Funeral Home, Inc., a Mississippi corporation
     * Roseland Park Cemetery, Inc., a Mississippi corporation
     * Hilcrest Cemetery Corporation, a Tennessee corporation
     * Wilson County Memorial Park, Inc., a Tennessee corporation

The Sale Locations are:

Funeral Homes:

(1)  Walker Cemetery Corporation, an Alabama corporation, doing
       business as Walker Chapel Funeral Home (3475)
       1200 Ellard Road, Fultondale, AL 35068

(2)  Kraeer Holdings, Inc., a Florida corporation, doing
       business as Helm Funeral Home (2906)
       1811 Idlewild Avenue, Green Cove Springs, FL 32043

(3)  Kraeer Holdings, Inc., a Florida corporation, doing
       business as Sasser-Morgan-McClellan Funeral Home (2889)
       20 South Duvall Street, Quincy, FL 32353

(4)  Gordon E. Utt Funeral Home, Inc., an Indiana corporation,
       doing business as Gordon E. Utt Funeral Homes, Inc. (3267)
       100 West Main, Oaktown, IN 47561

(5)  Gordon E. Utt Funeral Home, Inc., an Indiana corporation
       doing business as Gordon E. Utt Funeral Homes, Inc.
       (3267A)
       118 S. Alexander Street, Carlisle, IN 47838

(6)  Gordon E. Utt Funeral Home, Inc., an Indiana corporation
       doing business as Gordon E. Utt Funeral Homes, Inc.
       (3267B)
       Indiana Street and Hickory, Freelandville, IN 47535

(7)  McClure Funeral Service, Inc., an Indiana corporation,
       doing business as McClure Funeral Service (3174)
       109 East Sixth Street, Bicknell, IN 47512

(8)  McClure Funeral Service, Inc., an Indiana corporation,
       doing business as McClure Funeral Service (3174A)
       618 West Main, Bruceville, IN 47516

(9)  Kraeer Holdings, Inc., a Florida corporation, doing
       business as Gooding Funeral Home (2919) -- the "Option
       Location" 602 Cedar Street, Cross City, FL 32628

Cemeteries:

(1)  North Alabama Memorial Gardens, Inc., an Alabama
       corporation, doing business as Burningtree Memorial
       Gardens (5801)
       4919 Marsha Lane, Decatur, AL 35603

(2)  Eastwood Memorial Gardens, Inc., an Alabama corporation,
       doing business as Eastwood Memorial Gardens (5824)
       7500 Wares Ferry Road, Montgomery, AL 36117

(3)  Loewen (Alabama), L.P., a Delaware limited partnership,
       doing business as Limestone Memorial Gardens (2277)
       1987 Highway 31 South, Athens, AL 35611

(4)  Barham Funeral Home, Inc., a Mississippi corporation, doing
       business as Livingston Memorial Gardens (5759)
       US Highway 11 East, Livingston, AL 36925

(5)  Montgomery Memorial Cemetery, Inc., an Alabama corporation,
       doing business as Montgomery Memorial Cemetery (5683)
       3001 Simmons Drive, Montgomery, AL 36108

(6)  Barham Funeral Home, Inc., a Mississippi corporation, doing
       business as Sumter County Memorial Gardens (5758)
       US Highway 11 West, York, AL 36925

(7)  Walker Cemetery Corporation, an Alabama corporation, doing
       business as Walker Chapel Memorial Gardens (5668)
       2500 Walker Street, Fultondale, AL 35068

(8)  Loewen (Georgia), Inc. a Georgia corporation, doing
       business as Greenhills Memory Gardens (2252)
       Memory Garden Road, Summerville, GA 31634

(9)  Loewen (Georgia), Inc. a Georgia corporation, doing
       business as Lafayette Memory Gardens (2086)
       3658 North Highway 27, LaFayette, GA 30728

(10) Mozley Memorial Gardens, Inc., a Georgia corporation, doing
       business as Mozley Memorial Gardens (5817)
       3180 South Sweetwater Road, Lithia Springs, GA 30122

(11) Roseland Park Cemetery, Inc., a Mississippi corporation,
       doing business as Beverly Memorial Company (5743)
       1202 West 7th Street, Hattiesburg, MS 39401

(12) Roseland Park Cemetery, Inc., a Mississippi corporation,
       doing business as Hillcrest Cemetery (5740)
       630 Hillcrest Loop, Petal, MS 39465

(13) Roseland Park Cemetery, Inc., a Mississippi corporation,
       doing business as Roseland Park (5739)
       1202 West 7th Street, Hattiesburg, MS 39401

(14) Hilcrest Cemetery Corporation, a Tennessee corporation,
       doing business as Hilcrest Memorial Gardens (2206)
       1700 South Ocoee Street, Cleveland, TN 37311

(15) Loewen (Georgia), Inc. a Georgia corporation, doing
       business as Sunset Memorial Gardens (2085)
       7180 North Lee Highway, Cleveland, TN 37320

(16) Wilson County Memorial Park, Inc., a Tennessee corporation,
       doing business as Wilson County Memorial Park (2178)
       618 South Maple Street, Lebanon, TN 37087

(Loewen Bankruptcy News, Issue No. 55; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


LONGVIEW FIBRE: Weak Business Position Spurs S&P Low-B Ratings
--------------------------------------------------------------
Standard & Poor's assigned its double-'B' corporate credit
rating to Longview Fibre Co. At the same time, Standard & Poor's
assigned its double-'B' senior unsecured debt rating to Longview
Fibre's new $250 million 3-year revolving credit facility and
its single-'B'-plus subordinated debt rating to the company's
$185 million senior subordinated notes due 2009 to be issued
under Rule 144a with registration rights. Transaction proceeds
will be used primarily to refinance existing debt.

The outlook is stable.

The ratings reflect Longview Fibre's below-average business
position within cyclical forest products markets and an
aggressive financial profile, partly offset by ownership of
valuable timberlands.

Longview Fibre, based in Longview, Wash., is engaged in three
primary businesses: timberlands ownership and management, the
manufacture of kraft paper and paperboard, and the conversion of
paperboard and paper into corrugated containers and specialty
packaging.

The company owns 572,000 acres of timberlands in Oregon and
Washington. They consist of plantations containing primarily
premium softwood species used mainly in residential and
commercial construction. The timberlands are managed on a
sustained yield basis on an average rotation of 60 years. About
a third of logs harvested are exported to Japan at a significant
price premium over domestic sales. Although the timberlands are
concentrated in a single region and end markets are cyclical,
they should remain a reliable source of strong cash flows, and
their market value is believed to considerably exceed the
company's total debt.

In contrast, the manufacturing operations are less well
positioned and have turned in weak results over the past few
years. The company has the capacity to produce about a million
tons of kraft paper and paperboard on 12 machines located at a
single site in Longview, Wash. While the majority of production
volume is channeled to the company's own converting operations,
about 30% of segment sales have historically been directed to
export markets, primarily Asia. Export demand and prices have
been very weak over the past few years due to a dramatic decline
in Asian manufacturing and the strength of the U.S. dollar. This
segment has been consolidating, and the company faces
significant competition from larger, financially stronger
rivals. In addition, demand for kraft paper has been declining
for several years due to the substitution of paper with plastic
in applications such as bags. On the positive side, there has
been an increasing focus on higher-margin converted products
such as disposable bulk-liquid bins, point-of-purchase displays,
corrugated pallets, and rupture-resistant multi-wall bags.

The financial profile is aggressive. Debt levels are high due to
a confluence of poor market conditions and a period of heavy
capital spending. Debt to EBITDA is currently about 4 times debt
to capital in the upper 50% area, funds from operations to debt
in the mid- to upper-teens percentage area, and EBITDA interest
coverage about 3x. While market and economic factors are likely
to keep performance relatively weak during the next year,
operating cost reductions, lower capital spending, and debt
reduction should lead to a strengthening of the financial
profile thereafter. During the next few years, debt to EBITDA
should improve to the mid-2x area, debt to capital to around
50%, funds from operations to debt to the low to mid- 20% range,
and EBITDA interest coverage to 4x-4.5x.

The bank loan rating, which is based on preliminary terms and
conditions, is the same as the corporate credit rating,
reflecting the lenders' senior unsecured status. The credit
agreement contains a negative pledge on all assets, and pricing
is based on debt leverage.

Principal covenants include:

      * Minimum net worth of $365.2 million initially;
      * Maximum debt to capital of 62.5% initially;
      * Minimum fixed charge coverage ratio of 1.15 to 1.00.

The ratio requirements become more stringent over time. The
credit agreement also contains a provision whereby the borrower
is required to notify the agent of any change in its senior
unsecured debt rating.

                      Outlook: Stable

Cash flow from valuable timberlands helps to offset the downside
risk of weak manufacturing operations. Management's commitment
to debt reduction is important to maintaining the ratings and
should allow the company to strengthen the financial profile to
appropriate levels.


METALS USA: Seeks Approval of $60,000,000 Junior DIP Loan
---------------------------------------------------------
The Metals USA, Inc. Debtors request that the Court approve a
proposed $60,000,000 Junior DIP Loan Program in which trade
vendors will receive a junior second lien on the Bank Group's
inventory, receivables and equipment collateral.

The Debtors further request that if any trade vendor has any
unsecured deficiency claim on its junior DIP Loan Claim, that
claim will be accorded priority status claim at the highest
priority ever to be granted in this case, pari passu with any
such deficiency claim for the Senior DIP Loan and any allowed
claim for professional expenses.

The Junior DIP Loan Program will operate in this manner:

A. Only claims for goods ordered by Debtors after the date of
        initial order approving Junior DIP Loan Program to be
        delivered after that date shall be entitled to
        participate in the Junior DIP Loan Program.

B. To apply to participate in the Junior Lien Program, a Trade
        Vendor may send to the Debtors a written request offering
        a line of credit that shall be at least $1,000,000 and
        shall have a substantial percentage of the line of credit
        provided by the Trade Vendor pre-petition. It shall also
        provide for Debtors to make payment 30 days from the date
        of invoice dated at, or after, Debtors' receipt of goods.

C. Debtors may then decide to accept this request by sending a
        written confirmation back to the Trade Vendor that the
        proposed Line of Credit is part of the Junior DIP Loan
        Program.

D. A trade vendor that meets the above criteria will hold a
        claim entitled to the protections of the Junior DIP Loan
        Program as set forth herein for all goods it ships
        subsequent to Debtor's acceptance and within the approved
        Line of Credit.

E. Junior DIP Loan Claims shall share pari passu in a Junior
        Lien in the I,R & E Collateral and super administrative
        priority claim for any deficiency, pari passu with
        certain other claims.

F. After Debtors have accepted a total of$60,000,000 of trade
        credit under the Junior DIP Loan Program, additional
        claims of Trade Vendors shall not be included in the
        Junior DIP Loan Program.

G. If the Debtors fail to timely pay a Junior DIP Loan Claim
        within the thirty-day period, that Junior DIP Loan
        Creditor may apply to the Bankruptcy Code for immediate
        payment of its Junior DIP Loan Claim out of any cash
        collateral Debtors are then authorized to use.

H. If any of the Debtors' cases convert to cases under Chapter 7
        of the Bankruptcy Code, all Junior DIP Loan Claims shall
        be entitled to be paid pari passu out of the proceeds of
        the I, R & E Collateral, after any creditors holding a
        valid, senior lien on the I,R & E Collateral are paid in
        full.

I. In any Chapter 7, liquidation or Chapter 11 plan of
        reorganization, if Junior DIP Loans are not paid in full
        out of the I, R & E Collateral, their remaining unsecured
        deficiency claim shall have the highest priority ever be
        granted in this case, pari passu with unsecured
        deficiency claims under the Senior DIP Loan and allowed
        claims for professional fees.

J. Notwithstanding their priority status, Junior DIP Claims can
        be paid by Debtors in the ordinary course of Debtors'
        business under a Chapter 11, as long as such payment is
        shown as feasible and such claims need not be paid in
        cash in full on the effective date of the Plan.

Zack A. Clement, Esq., of Fulbright and Jaworski LLP, tells the
court that the Debtors need to obtain as soon as possible up to
$60,000,000 of trade credit from Trade Vendors on 30-day terms
to run their business in a way that will create most value for
all parties-in-interest. Through the summer and early fall of
2001, the Debtors had substantial trade credit but as fall of
2001 wore on, the Debtors were not able to obtain sufficient
borrowing to avoid causing their trade payable to become more
than 60 days past due. Mr. Clement submits that the Debtors have
trade debt in their Chapter 11 cases of approximately
$150,000,000 but have not been able to obtain post-petition
trade credit in amounts anywhere near what they had prior to
petition.

Debtors propose to obtain up to $60,000,000 of trade credit by
granting Trade Vendors a junior lien on the Bank Group's
inventory, receivables and equipment Collateral. Mr. Clement
contends that the Bank Group is already adequately protected by
its senior lien on the inventory, receivables and equipment
Collateral. The trade credit that will be given under this
Junior DIP Loan Program will permit Debtors to generate more
post- petition inventory and receivable. Since these have been
pledged to the Bank Group pursuant to the Replacement Lien as
adequate protection for use of the Bank Group's Cash Collateral,
Mr. Clement argues that the Junior DIP loan will actually
increase the value of the adequate protection that has been
granted to the Bank Group in these cases.


                   Bank of America Objects

R. Michael Farquhar, Esq., at Winstead Sechrest & Minick P.C. in
Dallas, Texas, tells the Court that Debtors offered no evidence
of having their sought to obtain trade credit on an
administrative expense basis, absent such the priorities and
incentives of section 364(c) are not justified.

Similarly, Mr. Farquhar points out that Debtors have offered no
evidence of the existence of any creditor willing to provide
credit on the terms outlined in the motion, nor is there any
evidence that the terms described will entice any creditors to
provide credit terms to the Debtors. On the same note, they have
made no showing that creditors would or would not be willing to
offer the Debtors credit terms if Debtors offered only one of
the incentives or protections available under section 364(c),
without which, the motion is a little more than a speculative
pipe dream and equally unjustified.

The Bank further objects to the paragraph 10(g) of the Motion,
as creditors whose claims go 30 days past due would have the
right to petition the Court directly for application of the
Bank's collateral. Mr. Farquhar explains that the Bank objects
because this effectively removes its control of cash and would
potentially violate the Court's Order regarding use of cash
collateral pursuant to an agreed upon budget. Bank further
objects because the scheme envisioned by the motion would
effectively prime the bank and give junior lien claimants a
claim with highest priority, which violates section 507(b).

Mr. Farquhar submits that there is another logistical problem to
deny the motion to grant junior liens as it would essentially
allow those creditors to holdup and/or hold for ransom any sale
of assets, no matter how strategic, by refusing to consent to a
sale which would not pay their claims in full. By placing this
power to disrupt the reorganization process in a diffuse
creditor body, the Debtors seriously hampers its ability to
proceed under its proposed budgets and jeopardizes its chances
of reorganization.

The Bank believes that the Motion should be continued for a
period of 2-3 weeks, to be heard at the same time as the Court
will hear an argument on Debtors' final use of cash collateral
and motion to prime the Bank on its real estate collateral. Mr.
Farquhar tells the Court that the Bank would consent to Debtors'
continued use of cash collateral during that period on the same
terms as the previous interim orders, though on a going-forward
the Bank would request the Debtors maintain a 10% variance per
line item of the budget per week rather than on an aggregated
basis. (Metals USA Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


METATEC: Lenders Agree To Extend Standstill Agreement To Feb. 8
---------------------------------------------------------------
Metatec International, Inc., (Nasdaq:META) relates it has
reached agreement with its lenders to extend a standstill
agreement until February 8, thereby clearing the way for Metatec
to negotiate longer-term financing as part of the company's
turn-around strategy.

"The standstill agreement extension permits us to continue
negotiations with lenders and is a significant step in our
overall strategy to return Metatec to profitability," said
Christopher A. Munro, Metatec president and chief executive
officer. "We have a very positive and supportive relationship
with our lenders. They have stood by Metatec during this
challenging turn-around year, and we appreciate the confidence
they've shown in the company's business plans for this year and
beyond."

The standstill agreement says that Metatec's lenders agree to
forbear commencing any legal proceedings against Metatec or
exercising their rights and remedies under the original loan
agreement through February 8, 2002.

The lenders declared Metatec in default of the original loan
agreement for failure to satisfy certain financial covenants
(conditions). A standstill agreement was then put in place to
allow Metatec and its lenders additional time to continue
discussions.

               About Metatec International

Metatec International enables companies in the computer
hardware, software, telecommunications and media/publishing
markets to streamline the process of delivering products and
information to market by providing technology driven supply
chain solutions that increase efficiencies and reduce costs.
Technologies include CD-ROM and DVD manufacturing services, a
full range of supply chain management services and secure
Internet-based software distribution services. Extensive real-
time customer-accessible online reporting and tracking systems
support all services. Metatec maintains operations in Ohio and
The Netherlands.

More information about Metatec is available by visiting the
company's web site at http://www.metatec.com,
http://www.metatec.nland http://www.irbyctc.com.


NATIONSRENT INC: Court Allows Insurance Programs To Continue
------------------------------------------------------------
NationsRent Inc. sought and obtained an entry of an order from
the Court authorizing them to maintain their insurance programs
and granting related relief.

Joseph I. Izhakoff, the Debtors' Vice-President and General
Counsel, informs the Court that in connection with the operation
of the Debtors' businesses and the management of the Debtors'
properties, Debtors obtained various liability and property
insurance policies for the benefit of all of the Debtors, which
are maintained through multiple insurance carriers. The
Insurance Policies provide the Debtors with insurance coverage
for claims relating to general liability, umbrella liability,
automobile liability, directors' and officers' liability,
storage tank liability and crime. Accordingly, the Insurance
Policies are essential to the ongoing operation of the Debtors'
businesses.

Certain of the Insurance Carriers have posted bonds on behalf of
the Debtors as required by various licensing and other
authorities in the states and localities in which the Debtors
operate their businesses. The Bonds allow the Debtors, among
other things, to operate their machinery and equipment on
highways in various states that require a party to maintain
certain bonding levels in order to do business in those states.

Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, P.A.
in Wilmington, Delaware, states that the Debtors pay premiums to
the Insurance Carriers based upon fixed rates established and
billed by each Insurance Carrier. The premiums for most of the
Insurance Programs are determined annually and are paid by the
Debtors either directly to the Insurance Carriers or indirectly
through an insurance broker at policy inception or in
installments throughout the policy term. The annual premiums for
coverage under the Insurance Programs, including those that are
financed, are approximately $5,000,000.

Mr. DeFranceschi submits that the premiums for the Insurance
Policies obtained from Travelers Property Casualty Company, are
estimated at the beginning of each policy year and paid in
installments during the policy term. After the policy term,
Travelers conducts an audit to determine the actual premium
amount for the particular Insurance Policies issued by
Travelers. To the extent the audit reveals that the Debtors
underestimated the actual premium amount, Travelers bills the
Debtors for the difference between the Deposit Premium and the
actual premium. Conversely, to the extent the audit reveals that
the Debtors overestimated the actual premium amount, Travelers
reimburses the Debtors for the difference between the Deposit
Premium and the actual premium. Mr. DeFranceschi relates the
Court that Travelers is currently in the process of performing
an audit for the First Policy Year and based on Debtors' vehicle
count, revenues and total payroll, the Debtors expect a bill for
approximately $100,000-$200,000, representing approximately 5-
10% of the Deposit Premium.

Mr. DeFranceschi tells the Court that certain Insurance Policies
provide for deductible payments by the Debtors with respect to
claims for which insurance coverage exists. In addition, certain
of these Insurance Policies set forth aggregate limits on the
deductible amount for each policy year. Specifically, under the
automobile, general liability and workers' compensation
policies, claim losses and expenses are paid directly to
claimants by Travelers, which then bills the Debtors monthly for
reimbursement of those losses and expenses that fall under the
deductible amount for the relevant Insurance Policy. The Debtors
pay approximately $275,000 per month on account of deductible
and expense reimbursement charges.

The Debtors believe that, as of the Petition Date, they are
substantially current on all pre-petition deductible and claim
expense reimbursement charges due with respect to the Insurance
Policies, as well as all Premium and Brokerage Fee.
Nevertheless, the Debtors believe that they may have pre-
petition obligations in respect of the foregoing in the amount
of up to $500,000.

In order to guarantee the payment of claims as they come due,
Mr. DeFranceschi informs the Court that Travelers requires that
the Debtors post a letter of credit for each policy year during
which Travelers is one of the Insurance Carriers and to renew
each Insurance Letter of Credit, or to obtain a substitute
Insurance Letter of Credit, for five years beyond the policy
year for which an Insurance Letter of Credit is posted. Further,
the amount that must be outstanding under each Insurance Letter
of Credit is subject to an annual adjustment.

For the first policy year, September 1, 2000 through September
1, 2001, Mr. DeFranceschi says that the Debtors posted an
Insurance Letter of Credit for the benefit of Travelers issued
by Fleet National Bank in the amount of $4,874,000. This
Insurance Letter of Credit automatically renewed in the same
face amount for a second year on September 1, 2001. The
scheduled Annual Adjustment to the Insurance Letter of Credit
for the First Policy Year was $894,238. The Debtors, however,
were unable to obtain an additional letter of credit in this
amount, and, on November 16, 2001, the Debtors accordingly
transferred $894,238 to Travelers in lieu of the additional
letter of credit in the same amount.

For the current policy year, which runs from September 1, 2001
until September 1, 2002, Mr. DeFranceschi states that the
Debtors have posted an Insurance Letter of Credit issued by
Fleet in the amount of $6,500,000. This Insurance Letter of
Credit is subject to adjustment whereby the Insurance Letter of
Credit, which currently has a face amount of $2,166,666.67, will
increase in face amount to $4,333,333.34 for the period from
January 1, 2002 through April 30, 2002 and to 56,500,000 for the
period from May 1, 2002 through August 31, 2002. After August
31, 2002, the Insurance Letter of Credit is subject to the
Annual Adjustment. Accordingly, as of the Petition Date, there
are two Insurance Letters of Credit outstanding: one for the
First Policy Year, plus the amount of the Annual Adjustment that
was paid in cash, and one for the Second Policy Year.

Prior to the Petition Date, Mr. DeFranceschi submits that the
Debtors entered into an insurance brokerage agreement with Aon
Risk Services, Inc. of Florida for the administration of the
majority of the Insurance Programs. Under the Brokerage
Agreement, the Debtors pay the Broker a fee for the
administration of the Insurance Programs. The Broker's
administrative services include the placement of new coverage,
issuance of certificates of insurance, bond placement, claims
review and analysis and loss control, including analysis,
research of federal and state regulations and review of health
and safety issues. The Brokerage Fee is $170,000, payable in
equal monthly installments.

The Debtors represent that they have sufficient cash reserves,
together with anticipated access to sufficient debtor in
possession financing, to make all payments necessary to continue
their Insurance Programs, to the extent described herein, as
such amounts become due in the ordinary course of their
businesses.

Mr. DeFranceschi maintains that the Debtors must continue, in
full force and effect, their Insurance Programs, which programs
provide a comprehensive range of coverage for the Debtors'
businesses and properties. If the Debtors allowed the Insurance
Programs to lapse, the Debtors would be exposed to substantial
liability for any damages resulting to persons and property of
the Debtors and others. Further, the maintenance and
continuation of the directors' and officers' liability policy is
necessary to the retention of the Debtors' senior management who
are critical to the success of the Debtors' business and
reorganization, and to enable the Debtors to financially
indemnify their officers and directors per the requirements set
forth in their corporate bylaws. From an administrative
standpoint, Mr. DeFranceschi adds that it will be extremely
difficult for the Debtors to secure replacement insurance
coverage in the post-petition period if the insurance Programs
are allowed to lapse. Finally, the guidelines of the Office of
the United States Trustee also require the Debtors to maintain
their Insurance Programs.

The Debtors do not believe that their obligations for pre-
petition premiums, Brokerage Fees, Insurance Carrier, third
party administrator or Broker reimbursements or retroactive
adjustments are likely to exceed $500,000. As a result, Mr.
DeFranceschi contends that any payments authorized as a result
of this Motion should be relatively minor, especially compared
to the size of the Debtors' operations and the potential
liability exposure absent insurance Coverage.

To the extent that any of the Insurance Programs, or any other
agreement, policy or contract, including the Brokerage
Agreement, is deemed an executory contract within the meaning of
section 365 of the Bankruptcy Code, the Debtors do not at this
time intend to assume such agreements. Mr. DeFranceschi asserts
that Court authorization of payments in respect of the Insurance
Programs and the Brokerage Agreement shall not be deemed to
constitute post-petition assumption or adoption of such
agreements as executory contracts. (NationsRent Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)


OPTI INC: Postpones Liquidation Plan To Evaluate Options
--------------------------------------------------------
OPTi Inc. (Nasdaq:OPTI) announced a postponement of its plan of
voluntary liquidation and dissolution. The Company will however
proceed with a distribution to its shareholders of cash and
shares of stock that the Company holds in Tripath Technology,
Inc. (Nasdaq:TRPH). In addition, the Company will also postpone
its annual meeting of shareholders until the second quarter of
2002.

OPTi's Board determined that it would be prudent to postpone the
liquidation plan to allow the Company more time to evaluate its
intellectual property position, including the means by which it
would pursue claims for the infringement of certain of its
patents. The Board decision was not due to any change in the
Company's business prospects.

The Board did however determine that OPTi would conduct a
distribution of cash and Tripath stock as soon as practicable.
The Company expects that the distribution will take place in the
first quarter of 2002. The Company will announce details
regarding the timing and the size of the distribution when the
Board sets the distribution record date and amount. At that
time, or shortly thereafter, the Company will also announce the
scheduling of its forthcoming annual meeting.

OPTi Inc. is an independent supplier of semiconductors and is
headquartered in Mountain View, Calif. OPTi's stock is traded on
the National Market System under NASDAQ symbol OPTi.


PILLOWTEX CORP: Wants To Retain Ernst & Young LLP As HR Advisors
----------------------------------------------------------------
Pillowtex Corporation moves to retain and employ Ernst & Young
LLP as their human resources advisors.

The Debtors remind the Court that they sought and obtained
authority to retain and employ E&Y Capital Advisors LLC as
Financial and Restructuring Advisors.  These responsibilities
were later assigned to Ernst & Young Corporate Finance LLC.

According to William H. Sudell, Esq., at Morris, Nichols, Arsht
& Tunnell, in Wilmington, Delaware, E&Y Capital Advisors and
Ernst & Young Corporate Finance are affiliates of Ernst & Young
LLP. "Ernst & Young LLP is an independent entity that provides
consulting services separate from those provided by E&Y Capital
Advisors and Ernst & Young Corporate Finance," Mr. Sudell
explains.

The Debtors propose to retain Ernst & Young to assist in the
development of a market competitive long-term incentive plan and
equity grant strategy to be implemented upon the Debtors'
emergence from bankruptcy.

Mr. Sudell notes that there is no doubt as to Ernst & Young's
suitability to provide such services since the firm is widely
recognized as one of the world's leading professional services
firms, providing accounting, advisory, tax and other services.
Prior to Petition Date, Mr. Sudell says, Ernst & Young had also
provided tax and cash management advisory services to the
Debtors.  In addition, Mr. Sudell continues, Ernst & Young often
works closely with its affiliates, including E&Y Capital
Advisors and Ernst & Young Corporate Finance, to provide their
mutual clients with comprehensive and efficient consulting
services.

Pursuant to the Engagement Letter dated November 7, 2001, Mr.
Sudell relates, Ernst & Young will provide the Debtors with
human resource advisory services relating to the development of
a equity-based long term incentive program for the Debtors to
implement upon emergence from bankruptcy to:

     (1) ensure that the Debtors can attract, motivate and retain
         key personnel,

     (2) link compensation opportunities directly to shareholder
         value, and

     (3) focus employees on long-term value creation.

In this respect, Mr. Sudell lists the services that Ernst &
Young will perform:

     (a) collect and review information on the Debtors'
         organizational structure, business plan, financial and
         operating data, capital structure and key employee
         compensation arrangements, including historical equity
         ownership arrangements;

     (b) conduct an initial conference with the Debtors'
         management in order to:

           (i) facilitate the understanding of the Debtors'
               restructuring plan, and

          (ii) discuss leading practices and trends in
               compensation among other companies in bankruptcy,
               emerging from bankruptcy and in the Debtors'
               broader industry segment;

     (c) conduct a workshop with certain of the Debtors' key
         employees to develop one or more appropriate equity
         compensation frameworks that are aligned with typical
         market practices and the Debtors' overall business
         strategy;

     (d) review and discuss with the Debtors' management
         available data on equity compensation programs and
         explore alternative sources to develop market
         competitive ownership and equity compensation levels for
         key employees;

     (e) utilize Ernst & Young's proprietary database of
         companies in chapter 11, as well as its database on
         equity structures upon emergence from chapter 11, in
         order to identify equity allocation practices among
         other companies in chapter 11;

     (f) develop a compensation peer group comprised of
         approximately 12-15 publicly traded companies with which
         the Debtor competes for executive talent;

     (g) review and analyze all necessary public filings for peer
         companies in order to quantify market practices with
         respect to equity compensation programs;

     (h) integrate the information obtained from the design
         workshop with the market data collected in order to
         develop a summary of one or more preliminary equity
         compensation frameworks for the Debtors, identifying
         pertinent design features such as participants,
         eligibility criteria, plan term, award opportunity
         levels, vesting provisions, award payment provisions and
         changes in employment status;

     (i) prepare individual and aggregate equity participant
         models that summarize the financial, accounting and tax
         implications of any equity compensation program;

     (j) conduct a follow up conference with the Debtors to
         review the preliminary equity compensation framework and
         identify potential refinements to the preliminary
         financial models developed;

     (k) finalize any individual and aggregate models that
         summarize the financial, accounting and tax implications
         of any new equity compensation plan, and finalize the
         global dilution model to ensure that the new equity
         compensation program is consistent with the Debtors'
         objectives; and

     (l) prepare an executive summary and a final report that
         summarizes Ernst & Young's approach, methodology and
         findings regarding any proposed compensation strategies
         for the Debtors.

Mr. Sudell assures the Court that Ernst & Young's services will
not be duplicative of the services of other professionals
retained by the Debtors in these cases.

In exchange for these services, Mr. Sudell states that Ernst &
Young intends to charge or its professional services based on
the normal hourly rates charged by its professionals.  As of
July 1, 2001, those hourly rates are:

           $450-$600 per hour for partners and principals;
           $470-$550 per hour for senior managers;
           $350-$450 per hour for managers;
           $225-$286 per hour for senior advisors; and
           $170-$215 per hour for staff.

Ernst & Young's hourly rates are revised annually, effective
July 1 of every year.

In addition, Mr. Sudell says, Ernst & Young will also seek
reimbursement for its actual out-of-pocket expenses related to
this engagement, as well as any professional fees, including
those of legal counsel, for any time that an Ernst & Young
professional may incur in considering or responding to discovery
requests or participating as a witness or otherwise in any
proceeding as a result of the performance of services under the
Engagement Letter.

James E. Gansman, a partner of Ernst & Young LLP, assures Judge
Robinson that the firm will maintain detailed records in support
of its hourly fees and expenses and will apply to the Court for
payment of compensation and reimbursement of expenses.

Due to the immediate need for the proposed human resource
advisory services, Mr. Sudell relates, Ernst & Young began
performing human resource advisory services on November 8, 2001.
Accordingly, the Debtors seek approval of Ernst & Young's
retention - nunc pro tunc as of November 8, 2001.

Mr. Gansman discloses that Ernst & Young has no connection with
the Debtors, their creditors, the U.S. Trustee or any other
party with an actual or potential interest in these chapter 11
cases or their respective attorneys or accountants, except:

     (1) Ernst & Young is not and has not been employed by any
         entity other than the Debtors in matters related to
         these chapter 11 cases.

     (2) Prior to the Petition Date, Ernst & Young performed
         professional services for the Debtors. The Debtors do
         not owe Ernst & Young any amount for services performed
         prior to the Petition Date.  Also, Ernst & Young
         (Argentina) has provided services to the Debtors. Ernst
         & Young (Argentina) is a member of Ernst & Young
         International, a Cayman Islands limited liability
         company that has no shareholders and no capital. Ernst &
         Young International is a network of correspondent
         accountant firms that have agreed to conduct their
         individual practices in accordance with Ernst & Young
         International's Articles of Association. Ernst & Young
         has no ownership interest in Ernst & Young (Argentina).

     (3) From time to time, Ernst & Young has provided services,
         and likely will continue to provide services, including,
         but not limited to, accounting, tax or restructuring
         advisory services to certain creditors of the Debtors
         and various other parties adverse to the Debtors in
         matters unrelated to these chapter 11 cases.  Ernst &
         Young has undertaken a detailed search to determine, and
         to disclose, whether it is or has been employed by any
         significant creditors, equity security holders, insiders
         or other parties in interest in such unrelated matters.

     (4) Jones, Day, Reavis & Pogue, counsel for the Debtors;
         Arthur Andersen LLP, business consultants for the
         Debtors; KPMG, independent auditors and tax, accounting
         and compensation advisors for the Debtors; E&Y Capital
         Advisors and Ernst & Young Corporate Finance, financial
         and restructuring advisors for the Debtors;
         PriceWaterhouseCoopers, financial advisors for the
         Debtors' post-petition bank lenders; BDO Seidman,
         restructuring advisors to the Creditors' Committee; and
         Richards, Layton & Finger, PA, co-counsel to the
         Debtors' post-petition lenders, have provided services
         to Ernst & Young in the past and continue to provide
         services to Ernst & Young.  In addition, Akin, Gump,
         Strauss, Hauer & Feld, LLP, counsel for the Creditors'
         Committee, and Morris, Nichols, Arsht & Tunnell, co-
         counsel for the Debtors, have each provided services to
         Ernst & Young in the recent past.

     (e) These secured lenders of the Debtors participate in
         Ernst & Young's revolving credit program: Fleet Bank,
         N.A., First Union Bank, Bank One, Chase Manhattan Bank
         and Bank of America.

     (f) Ernst & Young provides services in connection with
         numerous cases, proceedings and transactions unrelated
         to these chapter 11 cases. These unrelated matters
         involve numerous attorneys, financial advisors and
         creditors, some of which may be claimants or parties
         with actual or potential interests in these cases or may
         represent such parties.

     (g) Ernst & Young personnel may have business associations
         with certain creditors of the Debtors unrelated to these
         chapter 11 cases. In addition, in the ordinary course of
         its business, Ernst & Young may engage counsel or other
         professionals in unrelated matters who now represent, or
         who may in the future represent, creditors or other
         interested parties in these cases.

Despite these efforts to identify and disclose Ernst & Young's
connections with parties in interest in these cases, Mr. Gansman
admits that the firm is unable to state with certainty that
every client representation or other connection has been
disclosed. "The Debtors are a large enterprise with thousands of
creditors and other relationships," Mr. Gansman notes.  Thus,
Mr. Gansman promises Judge Robinson that Ernst & Young will file
supplemental disclosures with the Court as promptly as possible
- if the firm discovers additional information that requires
disclosure.

Mr. Gansman asserts that Ernst & Young neither holds nor
represents any interest adverse to the Debtors or their
respective estates in the matters for which it is to be
retained. "Ernst & Young is a "disinterested person," as defined
in section 101(14) of the Bankruptcy Code," Mr. Gansman
maintains. (Pillowtex Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


POLYMER GROUP: S&P Cuts Corporate Credit Rating to D From CCC
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on Polymer
Group Inc. to 'D' from triple-'C'. At the same time, Standard &
Poor's lowered its rating on the company's $400 million
subordinated notes due 2007 to 'D' from double-'C'. Both ratings
are removed from CreditWatch, where they were placed with
negative implications March 14, 2001.

In addition, the rating on Polymer's senior secured bank debt
has been lowered to double-'C' from triple-'C' and the rating on
the company's $200 million subordinated notes due 2008 has been
lowered to single-'C' from double-'C'. These ratings remain on
CreditWatch with negative implications and would be lowered to
'D' upon a payment default, bankruptcy filing, or completion of
other debt restructuring actions.

On December 29, 2001, the company announced that it had been
unable to negotiate an extension of the waiver of covenant
defaults under its senior credit facility. While the company
remains current on its payment obligations under the bank
facility, the senior bank lenders have exercised their right to
block the company's January 2, 2002, interest payment on its
$400 million notes due July 2007. The company will have a 30-day
period to cure this situation before it becomes an event of
default under the indenture.

The senior bank lenders have agreed to a forbearance period
through March 29, 2002, during which they will not exercise
additional remedies available as a result of the covenant
defaults.

Polymer's vulnerability stems from its inability to reduce its
high debt levels due to challenging credit markets and economic
conditions. During the past 12 months, profitability and cash
flow have deteriorated, contributions from higher-margin
products have declined, and contributions from new product
initiatives have been limited. These operating difficulties
followed a period of rapid, debt-financed expansion and resulted
in meaningful deterioration of key financial measures and
financial flexibility.

DebtTraders reports that Polymer Group's 9.000% bonds due in
2007 (PGI1) are trading in the low 30s. Go to
http://www.debttraders.com/price.cfm?dt_sec_ticker=PGI1for
real-time bond pricing.


SANMINA-SCI: S&P Rates Corporate Credit, Senior Bank Loan at BB+
----------------------------------------------------------------
Standard & Poor's assigned a double-'B'-plus corporate credit
and senior secured bank loan rating to the new company, Sanmina-
SCI Corp. Sanmina Corp. acquired SCI Systems Inc. in a stock
transaction that closed on December 6, 2001. At the same time,
the rating on the subordinated notes of the former Sanmina Corp.
were raised to double-'B'-minus from single-'B'-plus, the rating
on the subordinated note of the former SCI Systems was lowered
to double-B'-minus from triple-'B'-minus, and the corporate
credit and senior note ratings on SCI Systems were withdrawn.
Ratings on Sanmina and SCI Systems are removed from CreditWatch
positive and CreditWatch negative, respectively, where they were
placed on July 16, 2001.

               The outlook is stable.

The raising of the Sanmina rating is based on the improved
market position of the combined entity and more diversified
customer base compared to the company's prior profile. The
lowering of the ratings of SCI reflects somewhat weaker credit
measures for the prior rating and operational challenges
associated with the merger.

Ratings on Sanmina-SCI are based on risks associated with the
challenge of integrating the operations of SCI Systems with
Sanmina in the midst of a severe downturn in communications and
computing markets and weak operating performance. These concerns
are only partially offset by the merged entity's enhanced
industry position as the third largest electronic manufacturing
services (EMS) provider, more diversified business mix, well
established relationships with leading original equipment
manufacturers (OEMs) and moderate financial profile.

Standard & Poor's believes significant management attention and
effort will be needed to successfully integrate the operations
of the companies. This concern is exacerbated by difficult
industry conditions that could persist until at least mid-2002.
Operating performance of both companies deteriorated throughout
2001, as industry overcapacity and declining demand,
particularly by communications equipment customers, led to
weaker financial results.

Still, the business combination bolsters Sanmina-SCI's market
position, as the combined entity has sales of about $12.4
billion for the 12 months ended September 2001, making it the
third largest EMS provider. The business profile benefits from
Sanmina's market leadership in complex printed circuit board
(PCB) production, in which the company enjoys relatively high
operating margins for the EMS industry, as well as SCI's full-
service EMS offering and strong customer relationships with OEMs
in computing end markets. End-market and customer
diversification improves, as communications end markets are
expected to comprise less than 45% of sales and computing
end markets about one-quarter of sales. In addition, a more
comprehensive EMS offering better positions the company to
compete for larger outsourced manufacturing transactions. Also,
the customer base is solid with such industry-leading customers
as Cisco Systems Inc., Hewlett Packard Co., and Nortel Networks
Corp.

Weak sales and low capacity utilization will pressure
profitability measures over the near term. On a pro forma basis,
for the 12 months ended September 30, 2001, operating margins
for the combined entity were 8.5%. Over the near term operating
margins are likely to be in the 6%-8% range, as Sanmina's
operating profitability deteriorated with PCBs sales falling by
one-half from peak levels of early 2001, and SCI's profitability
remains weak.

However, staff rationalization and other operational
restructuring efforts are expected to result in annualized cost
savings exceeding $200 million, which should aid profitability
over the intermediate term. On a combined basis, debt to EBITDA
for the 12 months ended September 2001 is 2.6x. Cash flow
protection measures are solid, with EBITDA interest coverage
expected to remain above 10x. Because of slumping demand,
capital expenditures are expected to be less than $200 million
in 2002. Sanmina's operations have consistently generated free
cash flow over the past four years and that should continue for
Sanmina-SCI, as management focuses on working-capital management
under soft market conditions. Standard & Poor's expects debt to
capital to remain below 35%, and adequate financial flexibility
is provided by a more than $1 billion cash balance.

                       Outlook: Stable

The challenge of improving operating performance while merging
operations limits the rating over the foreseeable future for
Sanmina-SCI. Ample financial flexibility and good cash flow
generation are expected to provide a cushion for management to
execute its near-term plans and maintain adequate credit metrics
for the rating.


SEPRACOR: S&P Rates Convertible Subordinated Notes at CCC+
----------------------------------------------------------
Standard & Poor's assigned its triple-'C'-plus subordinated debt
rating to Sepracor Inc.'s $500 million convertible subordinated
notes due 2006 and $460 million convertibles subordinated notes
due 2007. At the same time, Standard & Poor's affirmed its
single-'B' corporate credit rating and triple-'C'-plus
subordinated debt rating for Sepracor. The outlook remains
stable.

The speculative-grade ratings on Sepracor are based on the
emerging specialty pharmaceutical company's promising and
diverse near-term drug pipeline and key relationships with
several major pharmaceutical companies, offset by the
significant uncertainties inherent in drug development.

Marlborough, Massachusetts-based Sepracor specializes in the
development of single-isomer versions of pharmaceuticals that
isolate the active metabolite, resulting in an improved side-
effect profile and/or increased potency. The company's first
self-marketed product, Xopenex (a single-isomer version of
generic albuterol), for asthma, continues to post strong sales
growth since its 1999 launch. Sales for the product, which is
copromoted with Abbott Laboratories, should reach $120 million
for 2001.

Sepracor has several treatments in its near-term product
pipeline. Most notable is Soltara, an allergic rhinitis
treatment currently awaiting FDA approval. Soltara will compete
in the over $5 billion U.S. oral antihistamine market, which
continues to grow. The company hopes to have Soltara on the
market in the second half of 2002. Meanwhile, the company's
sleep disorder treatment, Estorra, has completed clinical
trials. The sleep disorder treatment market is rapidly
approaching $1 billion and the company believes Estorra is more
effective than currently marketed treatments. Sepracor plans a
2003 launch for Estorra. Sepracor's (S)-oxybutinin, a
once-daily fomulation of for urinary incontinence, and (R,R)-
formoterol, for asthma, are both in Phase III clinical testing.
All told, Sepracor plans to introduce 10 self-marketed products
over the next four years.

Sepracor also stands to benefit from royalties collected on
sales of products the company licensed out to larger
pharmaceutical companies, such as Clarinex. Schering-Plough
recently received FDA approval to launch Clarinex, an active
metabolite version of its leading drug, Claritin. Sepracor
already collects royalties on Aventis' allergy treatment,
Allegra.

Notwithstanding its product opportunities, operating losses
related to its significant research efforts and their uncertain
outcome highlights the risky character of the credit.
Furthermore, the marketing costs associated with the expected
launch of Soltara may be steep, particularly considering the
advertising-intensive nature of the category.

                         Outlook: Stable

While Sepracor has close to $1 billion in cash and investments,
this hoard will be necessary to fund product development over
the next several years. With potential debt maturities of $1.26
billion in the 2005-2007 period, the successful development of
the company's products is essential to the rating.


SERVICE MERCHANDISE: Will Cease Continuing Business Operations
--------------------------------------------------------------
Service Merchandise Company, Inc. (OTC Bulletin Board: SVCDQ)
will cease continuing business operations, beginning with the
commencement of going-out-of-business sales at more than 200
stores in 32 states on January 19, 2002, subject to approval of
the United States Bankruptcy Court for the Middle District of
Tennessee.

The Company said that its business plan performance exceeded
expectations in the prior two years but disappointing 2001
financial results primarily attributable to the combined effects
of the events of September 11, the resulting loss of consumer
confidence and the soft economy generally weakened the Company's
financial and liquidity position and precluded the Company from
completing its planned business reorganization and emergence
from Chapter 11.

Service Merchandise said it intends to file a plan of
liquidation by September 30, 2002 to provide for the
distribution of the proceeds of its assets to creditors, and it
will seek an extension of its exclusive periods in which to file
and solicit acceptances for a plan to accommodate its decision
to wind down its operations.  The Company said that it plans an
initial distribution to its creditors by year-end 2002 and
expects that shareholders will not receive any distribution on
account of their common stock.

Chairman and Chief Executive Officer Sam Cusano stated, "Since
1998, when Service transitioned from being a catalog showroom to
a speciality retailer focusing on fine jewelry, gifts and home
decor products, our associates have performed extremely well
even under the most adverse conditions.  With the continuing
support of our lenders, statutory creditors' committee and
vendors throughout our Chapter 11 cases, we put into place all
of the marketing, merchandising, real estate and other elements
for successful emergence from our reorganization cases. However,
given the extraordinarily poor retail economy this past year,
especially for jewelry retailers, our Company's prospects for
successfully reorganizing were compromised to the point that we
and our creditors consensually concluded that winding down the
business and distributing the substantial value of our
inventory, real estate and other assets to our creditors was in
their best interest.  While we wish the final result could have
been otherwise, our foremost goal throughout the cases has been
to maximize value for our stakeholders and we are doing so
through this course of action."

In connection with this announcement, Service Merchandise has
taken several steps to preserve value for its creditors
including the cancellation of vendor orders and the
implementation immediately and during the remainder of January
of a 50 percent reduction in force, or approximately 500 of the
1,005 employees in the Company's corporate, distribution and
sales support functions.  Approximately 8,300 store employees
(including both full-time and part-time employees) will continue
through the completion of the GOB sales later this Spring and
the Company's remaining employees have staggered departure dates
through year-end.  The Company said that employee severance and
other benefit payments would be paid in accordance with prior
orders of the Bankruptcy Court.  The wind-down will also include
the disposition of the Company's real estate portfolio
consisting of approximately 70 fee-owned properties and 150
unexpired leaseholds.

For more than 40 years, Service Merchandise has offered a
dominant selection of quality jewelry and products for the home
at affordable prices. During the 1970s, the Company innovated
the retail industry by becoming the nation's top catalog-
showroom retailer.  At its peak, Service Merchandise achieved
more than $4 billion in annual sales.  In recent years, however,
the Company's financial performance deteriorated.  The Company
responded with a series of restructuring plans, starting in
1997.  While it was in the process of revitalizing its retail
format, a small group of creditors filed an involuntary petition
under Chapter 11 of the Bankruptcy Code on March 15, 1999
seeking court supervision of the Company's restructuring
activities.

The Company filed a voluntary Chapter 11 petition on March 27,
1999 and management immediately implemented the 1999
Stabilization Plan, whereby the Company successfully improved
vendor relations and otherwise stabilized its business. Between
1999 and today, the Company downsized both its stores and its
employee base, reducing from approximately 350 stores to 216 and
approximately 41,000 employees to approximately 9,300.  In
February 2000, Service Merchandise announced its 2000 Business
Plan, which refocused its core product lines and rationalized
its real estate to better accommodate its core jewelry and home
assortments.  The Company discontinued unprofitable product
lines such as electronics, toys and sporting goods and developed
a strategic subleasing program through which it subleased
approximately half the square footage of many of its ongoing
stores to unlock the inherent value in unused portions of those
retail locations.  In January 2001, the Company continued to
refine its business model in an effort to achieve a timely
emergence from Chapter 11 during the first quarter of 2002.

The combined effects of the events of September 11, 2001, the
resulting loss of consumer confidence and the resulting soft
retail economy, however, prevented the Company from completing
its planned business reorganization and emergence from Chapter
11.  Fleet Retail Finance President Ward K. Mooney noted, "The
Company's management had made significant strides in
reorganizing its business and Fleet was prepared to support
Service Merchandise's reorganization and emergence from Chapter
11.  While the softness in 2001 financial performance has
resulted in the Company ceasing continuing operations and
working toward distributing the value of its assets to its
creditors, Fleet continues to look forward to working with the
Company in completing the wind-down of the estate consistent
with the agreements between the Company and its lenders."
Separately, the Company said that Fleet and Service Merchandise
were negotiating waivers and amendments to the Company's DIP
financing agreements to facilitate funding of the Company's
wind-down operations during 2002.

Glenn Rice of Otterbourg, Steindler, Houston and Rosen, lead
counsel for the Official Committee of Unsecured Creditors,
advised that the Committee supports the Company's decision to
wind down its business operations. "Service Merchandise has
worked closely with its creditors throughout its reorganization
cases including during recent weeks, and the Committee concurs
that under present circumstances it is in the best interests of
all creditors that the Company cease continuing operations in
light of the current difficult and unstable, weakened post-
attack retail economy.  The Committee has supported management
throughout its reorganization efforts and believes that the
Company will continue to take the appropriate steps to maximize
the value of its considerable assets and promptly distribute
them to creditors by year-end," Mr. Rice said.

The Company said that existing common shareholders will not
receive any distribution under the anticipated plan of
liquidation.

The Bankruptcy Court has scheduled a hearing for January 18,
2002, at which the Company intends to ask the Bankruptcy Court
to approve various forms of relief related to the wind-down of
the business, including:

     (a) the proposed conduct of the going-out-of-business sales
         and the Company's selection of a consultant to assist
         with such sales;

     (b) the retention of an inventory consultant for the
         Company;

     (c) a retention program for the Company's remaining
         employees;

     (d) the rejection of certain executory contracts that are no
         longer necessary to the Company, including procedures
         for the rejection of such contracts in the future;

     (e) procedures for the disposition of certain de minimis
         assets;

     (f) the extension of the deadline for the Company to assume
         or reject certain unexpired leases;

     (g) the extension of the Company's exclusive periods within
         which to file and solicit acceptances of a plan and

     (h) the termination of the stay of certain avoidance actions
         previously asserted by the Company.

Service Merchandise, a specialty retailer focusing on fine
jewelry, gifts and home decor products, has recently operated
218 stores in 32 states and employed approximately 9,300.


STAR TELECOM: Co-Exclusive Period Extended through January 31
-------------------------------------------------------------
By order of the U.S Bankruptcy Court for the District of
Delaware, the co-exclusive periods of Star Telecommunications
and the Official Committee of Unsecured Creditors are extended.
The Co-Exclusive Periods to file a chapter 11 plan and to
solicit votes on the Plan are moved through January 31, 2002 and
April 1, 2002, respectively.

Star Telecommunications, Inc., a leading provider of global
telecommunications services to consumers, long distance
carriers, multinational corporations and Internet service
providers worldwide, filed for chapter 11 protection on March
13, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young & Jones represent the Debtor in their restructuring
effort. When the company filed for protection from its
creditors, it listed $630,065,000 in assets and $284,634,000 in
debts.


VALLEY MEDIA: Falls Short of Nasdaq Listing Requirements
--------------------------------------------------------
Valley Media, Inc. (Nasdaq:VMIX) announced that the continued
listing of the Company's securities on the Nasdaq Stock Market
is no longer warranted due to the Company's inability to sustain
compliance with all requirements.

In a letter dated December 18, 2001, Nasdaq stated that it would
delist the Company's securities from the Nasdaq Stock Market at
the opening of business on December 27, 2001.


VIATEL INC: Asks for More Time to Decide on Real Property Leases
----------------------------------------------------------------
Viatel, Inc. asks the U.S. Bankruptcy Court to grant them
additional time through March 28, 2002, within which the Debtors
may assume or reject their unexpired leases of nonresidential
real property.

As of the date of this Motion, the Debtors said that there are
only a few remaining unexpired leases of nonresidential real
property which include equipment facilities, telecommunications
switch sites and offices at which the Debtors operate their
businesses.

Due to a number of pre-petition and postpetition reductions in
their workforce, the Debtors have only a few staff left
available to assess business alternatives and decide which
Unexpired Leases should be assumed or rejected. Almost all of
the Debtors' unexpired real property leases have been rejected.
However, in light of the drastic reductions in their workforce,
the Debtors need additional time to carefully consider the few
remaining Unexpired Leases.

Viatel, through its domestic and foreign subsidiaries, is the
builder, owner and operator of a state-of-the-art, pan-European,
trans-Atlantic and metropolitan fiber-optic network and a
provider of advanced telecommunications products and services to
corporations, carriers, internet service providers, and
applications service providers in Europe and North America. The
Company filed for chapter 11 protection on May 2, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Gregg M.
Galardi, Esq. and D. J. Baker, Esq. at Skadden, Arps, Slate,
Meagher & Flom LLP represent the Debtors in their restructuring
effort. When the Company filed for protection from its
creditors, it listed $2,124,000,000 in assets and $
2,683,000,000 in debts.


WASTE SYSTEMS: Use of Cash Collateral Extended Through June 30
--------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Waste Systems International, Inc. is authorized to
continue to use cash collateral subject to the security interest
of Howard Bank with an additional stipulation that the Debtors
shall be required to make monthly interest payments at the rate
of prime plus 2.5% per annum instead of the default rate of
prime plus 5% per annum.

The Debtors' continued use of cash collateral through June 30,
2002 is also subject to the right of Howard Bank to terminate
such use of cash collateral as set forth in the Cash Collateral
Stipulation on the First Extension.

Waste Systems International, Inc., an integrated non-hazardous
solid waste management company that provides solid waste
collection, recycling, transfer and disposal services to
commercial, industrial and municipal customers in the Northeast
and Mid-Atlantic Unites States, filed for chapter 11 protection
on January 11, 2001 in the U.S. Bankruptcy Court District of
Delaware. Victoria Watson Counihan, Esq., at Greenberg Traurig
LLP represents the Debtors in their restructuring efforts. When
the Company filed for protection from its creditors, it listed
$202,415,070 in assets and $167,004,357 in liabilities.


* BOND PRICING: For the week of January 7-11, 2002
--------------------------------------------------
Following are indicated prices for selected issues:

Amresco 9 7/8 '05               26 - 28(f)
Asia Pulp & Paper 11 3/4 '05    26 - 28(f)
AMR 9 '12                       92 - 94
Bethlehem Steel 10 3/8 '03      10 - 12(f)
Chiquita 9 5/8 '04              85 - 87(f)
Conseco 9 '06                   45 - 48
Enron 9 5/8 '03                 18 - 19(f)
Global Crossing 9 1/8 '04       12 - 13
Level III 9 1/8 '04             49 - 51
Kmart 9 3/8 '06                 68 - 70
McLeod 11 3/8 '09               23 - 25(f)
NWA 8.70 '07                    80 - 82
Owens Corning 7 1/2 '05         33 - 35(f)
Revlon 8 5/8 '08                43 - 45
Royal Caribbean 7 1/4 '06       74 - 76
Trump AC 11 1/4 '06             64 - 66
USG 9 1/4 '01                   74 - 76(f)
Westpoint 7 3/4 '05             33 - 35
Xerox 5 1/4 '03                 93 - 95

                            *********

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
conferences@bankrupt.com.

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 http://www.debttraders.com/

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 Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.

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

                           *********

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

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

Copyright 2002.  All rights reserved.  ISSN: 1520-9474.

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

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


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