TCR_Public/020204.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, February 4, 2002, Vol. 6, No. 24


AMF BOWLING: Chapter 11 Plan Confirmed on Consensual Basis
AMF BOWLING: Wins Nod to Grant Exit Lenders Leasehold Mortgages
ANC RENTAL: Committee Gets Okay to Hire Wilmer Cutler as Counsel
ALGOMA STEEL: Implements Plan of Arrangement and Reorganization
AMES DEPT: Wants March 25 Bar Date for Filing Proofs of Claim

APPLICAST: Files for Chapter 11 Relief to Restructure Finances
ARCHIBALD CANDY: Projects $20MM EBITDA for Fiscal 2001
ARMSTRONG HOLDINGS: Brings-In Gibbons Del Deo as N.J. Counsel
AURELIA ENERGY: S&P Rates Bluewater Finance's $200MM Notes at B+
BETHLEHEM STEEL: Gets Approval to Hire KPMG LLP as Accountants

BROADBAND WIRELESS: Forms Debtor-in-Possession Funding Committee
BROADWING INC: Mixed 2001 Results & Analyst Says Default Likely
CASUAL MALE: Seeks Further Open-Ended Removal Period Extension
CONTINENTAL AIRLINES: Fitch Rates Convertible Notes Issue at B-
COVANTA ENERGY: S&P Will Continue to Monitor Situation

ELIZABETH ARDEN: Seeking Waiver of Covenants Under Credit Pact
eMAGIN CORP: Mortimer D. Sackler Discloses 6.4% Equity Stake
ENRON CORP: Enron Oil & Gas India Sale Hearing Set for Feb. 13
ENRON: Gottesdiener Wants Stay Lifted to File 401(k) Lawsuits
FEDERAL-MOGUL: Court Okays Coblence & Warner as Asbestos Counsel

FOCAL COMMS: Salomon Smith Barney Discloses 12% Equity Stake
FRUIT OF THE LOOM: Seeking Disclosure Statement Approval Today
GENEVA STEEL: Signs-Up Kaye Scholer as Lead Bankruptcy Counsel
GRAND EAGLE: Glenn Pollack Appointed as Chapter 11 Trustee
HAYES LEMMERZ: Committee Hires Klett Rooney as Local Counsel

HOULIHAN'S RESTAURANTS: Taps Huntley Mullaney as RE Consultants
IT GROUP: Intends to Pay Prepetition Insurance Premiums
INTEGRATED HEALTH: Premiere Committee Brings-In BTCM as Counsel
INTERACTIVE TELESIS: Feels Sting from Global Crossing Bankruptcy
JDN REALTY: S&P Affirms BB- Rating After Class Action Settlement

JACOBSON STORES: Secures Interim $100MM DIP Financing Approval
KMART CORPORATION: Honoring Prepetition Customer Obligations
LEINER HEALTH: Seeking Support of Prepack Reorganization Plan
LODGIAN INC: Taps PricewaterhouseCoopers as Accountants
MAXCOM TELECOM: Reaches Debt Restructuring Deal with Bondholders

MUTUAL RISK: Gets Waivers & Amendments Re December 31 Default
NATIONSRENT: Court Okays Logan & Co. as Debtors' Claims Agents
PACIFIC GAS: Seeking Regulatory Approval of Plan's Elements
POLAROID CORP: Seeks Extension of Exclusive Period to April 29
POLYMER GROUP: Negotiating with Investor for Financial Workout

PRANDIUM: Foothill Won't Make Further Advances Under Facility
RHYTHMS NETCONNECTIONS: Gets Open-Ended Solicitation Extension
STROUDS, INC.: Plan Confirmation Hearing for March 4, 2002
SERVICE MERCHANDISE: Seeks Approval of Claim Settlement Protocol
SUNTERRA: Files Reorganization Plan & Settles FINOVA Obligations

TATA ENGINEERING: S&P Concerned About Weak Ops. Profitability
TELESYSTEM INT'L: Amended Purchase Offer for ESD to Expire Today
TERAYON COMMUNICATIONS: S&P Junks Subordinated Debt Ratings
TRANSPORTADORA DE GAS: S&P Drops Local Currency Rating to SD
TREESOURCE INDUSTRIES: Exits Voluntary Chapter 11 Proceeding

UBRANDIT.COM: Files for Chapter 11 Reorganization in Utah
UCAR INTERNATIONAL: S&P Rates Finance Unit's New Sr. Notes at B-
UNITEDGLOBALCOM: Completes Merger Transaction with Liberty Media
W.R. GRACE: Wants Lease Decision Period Extended to October 1
WARNACO GROUP: Intends to Auction Surplus Cut & Sew Equipment

WEBLINK WIRELESS: Files Plan of Reorganization in Texas
WINSTAR COMMS: Lucent Seeks Dismissal of $10 Billion Lawsuit

* BOND PRICING: For the week of February 4 - February 8, 2002


AMF BOWLING: Chapter 11 Plan Confirmed on Consensual Basis
AMF Bowling Worldwide, Inc. announced that its proposed plan of
reorganization was approved Friday by the U.S. Bankruptcy Court
for the Eastern District of Virginia.  Last week, the plan was
revised and received the consensual support of all the major
creditor groups, including the senior secured lenders and the
Unsecured Creditors Committee.  Within the next four to six
weeks, AMF expects to conclude necessary administrative work and
close on its new financing, after which the plan will become
effective and the company will formally exit the Chapter 11
process.  AMF and its U.S. subsidiaries filed voluntary
petitions for reorganization under Chapter 11 on July 2, 2001.

AMF has received a commitment for $350 million in new financing
from Deutsche Banc Alex Brown Inc. and its affiliate Bankers
Trust Co.  At the time of the loan's closing, $300 million is
expected to be outstanding.  In addition, $50 million will be
available under a revolving credit facility to meet AMF's
ongoing working capital needs.

"We are extremely pleased with the results of [Fri]day's hearing
and the willingness of our creditors to resolve issues and
arrive at a consensual plan," said Roland Smith, AMF's President
and Chief Executive Officer.  "We filed for Chapter 11
protection last July, and the process has proceeded quickly and
smoothly.  We are now ready to finalize our financial
restructuring, and when we emerge, we will have a much more
appropriate debt level and an improved capital structure, both
of which will help us achieve our financial goals.  I thank our
customers and vendors for their support during this difficult
period.  And I especially thank our employees who have worked
hard and remained committed to the company despite all the
challenges and distractions we have experienced during the
restructuring process."

The plan of reorganization will provide AMF's senior secured
lenders with recovery of their approximately $620 million in
claims through a combination of equity (equal to 92-1/2% of the
common stock of the reorganized company), $150 million in
subordinated notes, and cash.  In addition, unsecured creditors
will share proportionately in 7-1/2% of the common stock, as
well as warrants for the right to purchase additional shares.
The terms of the plan are such that AMF's parent, AMF Bowling,
Inc., which is the subject of a separate Chapter 11 case, will
have no assets to distribute to its common stockholders, and
little, if any, assets to distribute to its creditors.

Over the past two years, AMF held extensive discussions with its
lenders, bondholders and other creditors about ways to
restructure its debt and develop a more appropriate capital
structure.  At the same time, the Company focused on serving
customers, improving operations and reducing costs.

In its bowling centers, AMF continues to implement a revised
operating model that focuses on three key areas: 1) improved
training for center managers and staff; 2) improved compensation
and benefits for center managers and staff -- particularly
incentive compensation; and 3) improved national programs, such
as in marketing and purchasing, that take advantage of economies
of scale.

In its bowling products business, AMF is concentrating on three
areas: 1) improved product quality and order fulfillment; 2)
improving its global distribution network; and 3) improved
customer focus by establishing five operating divisions oriented
to provide an unprecedented level of customer support.

As the largest bowling company in the world, AMF owns and
operates over 500 bowling centers worldwide and is also a leader
in the manufacturing and marketing of bowling products.  In
addition, the company manufactures and sells the PlayMaster,
Highland and Renaissance brands of billiards tables. Additional
information about AMF is available on the Internet at

AMF BOWLING: Wins Nod to Grant Exit Lenders Leasehold Mortgages
AMF Bowling Worldwide, Inc., and its debtor-affiliates sought
and obtained entry of an order granting various forms of relief
to facilitate and expedite the securing of the Debtors' Exit
Facility by, inter alia, first priority liens on the Debtors'
domestic real property interests, including leasehold interests.

According to Dion W. Hayes, Esq., at McGuireWoods LLP in
Richmond, Virginia, the Plan authorizes the Debtors to
distribute cash, notes, warrants and common equity to holders of
secured and unsecured claims against the Debtors. In order to
fulfill these obligations, the Plan authorizes the Debtors to
enter into an Exit Facility in the form of either:

A. a term loan in the amount of $300,000,000 with an additional
      revolving loan of up to $90,000,000 to be provided by the
      Debtors' pre-petition lenders, or

B. a term loan in the amount of $300,000,000 with an additional
      revolving loan of $50,000,000 to be provided by an
      unidentified third party lender.

On December 18, 2001, Debtors filed its notice of election for
the Third Party Facility, without which, the Debtors cannot
consummate the Plan and cannot make the distributions required
under the Plan. On November 15, 2001, Mr. Hayes submits that the
Debtors executed a commitment letter with Bankers Trust Company
whereby Bankers Trust agreed to provide exit financing to the
Debtors in accordance with the Debtors' Plan. Approved by the
Court on November 26, 2001, the Commitment Letter provides for a
$350,000,000 facility to be secured by all real and personal
property assets everywhere, including domestic leasehold
interests. Mr. Hayes explains that the Commitment Letter
specifies that Bankers Trust must have a perfected first lien on
all properties as a condition to closing the Exit Facility, an
event scheduled to occur no later than February 28, 2002.
Because closing the Exit Facility is a precondition of
consummating the Plan, the Debtors must be able to provide
perfected first priority liens to Bankers Trust by February 28,
2002 in order to consummate the Plan.

As of the Petition Date, Mr. Hayes informs the Court that the
Debtors were party to more than 179 unexpired leases for
locations throughout the United States and abroad, some of which
may require landlord consent for leasehold mortgages. To require
the Debtors to obtain consent from each such landlord would be
prohibitively expensive and produce significant delay that might
impede the Debtors' ability to close the Exit Facility by
February 28, 2002. Thus, it is critical for the Debtors'
reorganization efforts to receive this Court's authorization to
grant leasehold mortgages.

In order to property perfect leasehold mortgages in favor of
Bankers Trust, Mr. Hayes believes that it is necessary for the
Debtors to file those leasehold mortgages with the appropriate
real estate recording offices. Further, in order for a leasehold
mortgage to be properly filed, there must also be a memorandum
of the underlying lease filed in the appropriate real estate
records. In certain cases, the Debtors have not filed memoranda
of lease with respect to their leases. Obtaining the signatures
of the Debtors' landlords on these lease memoranda would be
costly and time consuming and could also impede the Debtors
ability to close the Exit Facility by February 28, 2002.
Accordingly, the Court authorizes the Debtors and Bankers Trust
to file lease memoranda without landlord consent or joinder and
to direct the appropriate filing and recording offices to accept
such filings.

The Court also confirms that Section 1146(c) exempts from such
taxes the making, delivery, filing or recording of leases and/or
the various instruments and documents of transfer as specified
in or contemplated by the Plan and/or the Third Party Facility.
This relief will facilitate the securing of the Third Party
Facility and ensure the Debtors do not incur unnecessary filing
and recording costs. (AMF Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

ANC RENTAL: Committee Gets Okay to Hire Wilmer Cutler as Counsel
The Statutory Committee of Unsecured Creditors in ANC Rental
Corporation's chapter 11 case obtained Court approval to employ
Wilmer, Cutler & Pickering LLP as counsel, nunc pro tunc to
November 27, 2001.

The Committee will turn to Wilmer Cutler:

A. To consult with the Committee, the Debtors, and the U.S.
        Trustee concerning the administration of these Chapter 11

B. To review, analyze and respond to pleadings filed with this
        Court by the Debtors and to participate in hearings on
        such pleadings;

C. To investigate the acts, conduct, assets, liabilities and
        financial condition of the Debtors, the operation of the
        Debtors' businesses, and any matters relevant to these
        Chapter 11 cases in the event, and to the extent,
        required by the Committee;

D. To take all necessary action to protect the rights and
        interests of the Committee, including but not limited to
        negotiations and preparation of documents relating to any
        plan of reorganization and disclosure statement;

E. to represent the Committee in connection with the exercise of
        its powers and duties under the Bankruptcy Code and in
        connection with these Chapter 11 cases. (ANC Rental
        Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
        Service, Inc., 609/392-0900)

ALGOMA STEEL: Implements Plan of Arrangement and Reorganization
Algoma Steel Inc. (TSE: ALG) announced that its Plan of
Arrangement and Reorganization was implemented on Tuesday,
January 29, 2002. All of the conditions to the implementation of
the Plan were satisfied and the Articles of Reorganization were

New Notes and new Common Share certificates will be distributed
to those who are entitled to receive them in the near future.

Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is
Canada's third largest integrated steel producer. Revenues are
derived primarily from the manufacture and sale of rolled steel
products, including hot and cold rolled sheet and plate.

DebtTraders reports that Algoma Steel Inc.'s 12.375% bonds due
2005 (ALGOMA) are trading between 22 and 24. See
real-time bond pricing.

AMES DEPT: Wants March 25 Bar Date for Filing Proofs of Claim
Ames Department Stores, Inc., and its debtor-affiliates request
that the Court establish March 25, 2002, as the deadline by
which proofs of claim based on prepetition debts or liabilities
against any of the Debtors must be filed; approve a proposed
proof of claim form; approve a proposed bar date notice; and
approve proposed notice and publication procedures.

According to Martin J. Bienenstock, Esq., at Weil Gotshal &
Manges LLP, fixing a Bar Date will enable the Debtors to conduct
their analysis of prepetition claims in a timely and efficient

Pursuant to the proposed order, each person or entity that
asserts a "claim" against any of the Debtors that arose prior to
August 20, 2001 must file an original, written proof of such
claim which substantially conforms to the Official Form No. 10
so as to be received on or before the Bar Date by Donlin, Recano
& Co., Inc., either by mailing the original proof of claim to
United States Bankruptcy Court, Southern District of New York,
Ames Claims Docketing Center, Bowling Green Station, P.O. Box
103, New York, New York; or to the United States Bankruptcy
Court, Southern District of New York, Ames Claims Docketing
Center, One Bowling Green, Room 534, New York. The Debtors
request the Bar Date Order provide that the Ames Claims
Docketing Center will not accept proofs of claim sent by
facsimile or telecopy, and proofs of claim are deemed timely
filed only if such claims are actually received by the Ames
Claims Docketing Center on or before the Bar Date.

Pursuant to the proposed Bar Date Order, the following persons
or entities are not required to file a proof of claim on or
before the Bar Date:

A. any person or entity that has already properly filed with the
      Clerk of the United States Bankruptcy Court for any of the
      Southern District of New York a proof of claim against the
      applicable Debtor or Debtors utilizing a claim form which
      substantially conforms to Official Form No. 10;

B. any person or entity whose claim is listed on the Debtors'
      Statement of Financial Affairs, Schedules of Assets and
      Liabilities, and Schedules of Executory Contracts; whose
      claim is not described as "disputed," "contingent," or
      "unliquidated"; whose claim is asserted against a specific
      Debtor; who does not dispute the specific Debtor identified
      on the Proof of Claim against which such person's or
      entity's claim is asserted; and who does not dispute the
      amount or nature of the claim for such person or entity as
      set forth in the Schedules;

C. any person having an administrative expense claim of any of
      the Debtors' chapter 11 cases;

D. any person or entity whose claim has been paid in full by any
      of the Debtors;

E. any current director or officer or current employee of any of
      the Debtors that has or may have claims against any of the
      Debtors for indemnification, contribution, subrogation, or

F. any Debtor having a claim against another Debtor;

G. any person or entity that holds a claim arising out of or
      based solely upon an equity interest in any of the Debtors;

H. any person or entity that holds a claim that has been allowed
      by an order of this Court entered on or before the Bar
      Date; and

I. any person or entity whose claim is limited exclusively to
      the repayment of principal, interest, and/or other
      applicable fees and charges on or under any bond or note
      issued by the Debtors pursuant to an indenture; provided,
      however, that

      a. the foregoing exclusion in this subparagraph shall not
           apply to the Indenture Trustee under the applicable

      b. each Indenture Trustee shall be required to file one
           proof of claim, on or before the Bar Date, on account
           of all of the Debt Claims on or under the applicable
           Debt Instruments on or before the Bar Date, and

      c. any holder of a Debt Claim wishing to assert a claim,
           other than a Debt Claim, arising out of or relating to
           a Debt Instrument shall be required to file a proof of
           claim on or before the Bar Date, unless another
           exception in this paragraph applies.

The proposed Bar Date Order further provides any person or
entity that holds a claim arising from the rejection of an
executory contract or unexpired lease as to which the order
authorizing such rejection is dated on or before the date the
court enters the Bar Date Order must file a proof of claim based
on such rejection on or before the Bar Date. Any person or
entity that holds a claim arising from the rejection of an
executory contract or unexpired lease as to which the order
authorizing such rejection is dated after the date the Court
enters the Bar Date Order must file a proof of claim on or
before such date as the Court may fix in the applicable order
authorizing the rejection of such contract or lease.

For each creditor whose claim has been listed in the Schedules,
the Debtors propose to include in the upper right hand corner of
the Proof of Claim form sent to such creditor a description of
the amount of such creditor's claim against a specific Debtor,
as reflected in the Schedules; the type of claim held by such
creditor, and whether such claim is disputed, contingent, or
unliquidated.  Mr. Bienenstock submits that this will permit the
creditor to readily ascertain how its claim is scheduled against
a specific Debtor without having to examine the Schedules. If
the Proof of Claim does not identify a specific Debtor or the
creditor disagrees with the Debtor identified on the Proof of
Claim, the creditor is required to file a Proof of Claim
identifying the Debtor against which the creditor is asserting a

Other modifications to the Official Form proposed by the Debtors

a. allowing the creditor to correct any incorrect information
      contained in the name and address portion;

b. adding additional categories to the Basis of Claim section;

c. including certain instructions.

In addition, the proposed Bar Date Order provides that each
Proof of Claim filed must be written in English, be denominated
in lawful currency of the United States, conform substantially
with the Proof of Claim provided or Official Form No. 10,
indicate the Debtor against which the creditor is asserting a
claim, and be signed by the claimant or, if the claimant is not
an individual, by an authorized agent of the claimant.

The Debtors propose any holder of a claim against one or more of
the Debtors who is required, but fails, to file a proof of such
claim in accordance with the Bar Date Order on or before the Bar
Date shall be forever barred, estopped, and enjoined from
asserting such claim against such Debtor, and such Debtor and
its property shall be forever discharged from any and all
indebtedness or liability with respect to such claim, and such
holder shall not be permitted to vote to accept or reject any
chapter 11 plan or participate in any distribution in the
Debtors' chapter 11 cases on account of such claim or to receive
further notices regarding such claim.

The Debtors propose to mail, in addition to a Proof of Claim
form, a notice of the Bar Date Order to:

A. the Office of the United States Trustee for the Southern
      District of New York;

B. each member of the statutory creditors' committee appointed
      in these chapter 11 cases, and the attorneys for the

c. all known holders of claims listed on the Schedules at the
      addresses stated therein;

d. all counterparties to the Debtors' executory contracts and
      unexpired leases listed on the Schedules at the addresses
      stated therein;

e. the District Director of Internal Revenue for the Southern
      District of New York;

f. the Securities and Exchange Commission;

g. attorneys for the Debtors' prepetition senior lenders and
      postpetition lenders;

h. certain other entities with whom, prior to the Commencement
      Date, the Debtors had done business or who may have
      asserted a claim against the Debtors in the recent past;

i. the U.S. Attorney for the Southern District of New York;

j. the entities set forth in the Debtors' Master Service List
      established pursuant to an Order Establishing Notice
      Procedures, dated August 20, 2001.

Mr. Bienestock explains that the proposed Bar Date Notice
informs the parties of the Bar Date and contains detailed
information regarding who must file a proof of claim, the
procedure for filing a proof of claim, and the consequences of
failure to file timely a proof of claim.

As to the Debtors' current employees aggregating in excess of
25,000, in addition to providing notice to such employees via
the Bar Date Notice procedures described above, the Debtors
propose to use the procedures set forth below to notify such
employees of the Bar Date. Mr. Bienenstock relates that the
Debtors intend to notify their employees of the Bar Date so that
employees who believe they have claims for unpaid prepetition
wages and benefits or other claims against the Debtors can
obtain information regarding when and how to file a Proof of
Claim, and the consequences of failing to timely file a Proof of
Claim. In addition, the Debtors will conspicuously post such
notice in all the Debtors' stores within 10 business days after
the Court's entry of an order approving this Application if

The Debtors recognize it is highly unlikely the holders of any
of the Debtors' publicly-held equity securities will receive a
distribution under a chapter 11 plan on account of such equity
interest and thus, fixing a bar date for the filing of proofs of
interest is not warranted under the circumstances. In the event
circumstances change and a distribution on account of equity
interests becomes a possibility, Mr. Bienenstock assures the
Court that the Debtors will move the Court to establish a bar
date for filing proofs of interest.

The Debtors further propose, out of an abundance of caution, to
send the Bar Date Notice to persons or entities not listed on
the Schedules, but with whom the Debtors had done business prior
to the Commencement Date. Mr. Bienenstock explains that
providing such notice will enable any creditor inadvertently not
included in the Schedules to receive notice of the Bar Date and
to file a proof of claim, if necessary.

The Debtors have determined it would also be in the best
interest of their estates to give notice by publication to
potential creditors including:

A. those creditors to whom no other notice was sent and who are
      unknown or not reasonably ascertainable by the Debtors;

B. known creditors whose addresses are unknown by the Debtors;

C. potential creditors with claims unknown to the Debtors.

The Debtors request authority to publish the Bar Date Notice,
modified for publication as indicated therein. The Debtors
propose to publish the Publication Notice, once, in The Wall
Street Journal, The New York Times, Women's Wear Daily, at least
30 days prior to the Bar Date. Mr. Beinestock adds that the
Publication Notice includes a telephone number that potential
creditors may call to obtain a Proof of Claim form and
information on procedures for filing a proof of claim.

Mr. Beinenstock tells the Court that Donlin & Recano will be
responsible for mailing the Bar Date Notices and the Proof of
Claim forms. Thus, each creditor whose claim is listed on the
Schedules will receive in the mail a "customized" Proof of Claim
form printed with the appropriate Debtor's name, the creditor's
name and address, and information regarding the nature, amount,
and status of its claim, together with instructions for filing a
Proof of Claim.

The Debtors have been advised by Donlin & Recano that based upon
the number of entities to whom the Debtors propose to provide
notice, the Firm will be able to complete the mailing of the
Proof of Claim forms and Bar Date Notices within 8-10 business
days after the Court enters the proposed Bar Date Order. By
establishing March 25, 2002 as the Bar Date, Mr. Bienenstock
contends that all creditors of the Debtors will have between 35-
40 days' notice of the Bar Date for filing proofs of claim,
which is clearly an adequate period of time within which to file
proofs of claim. (AMES Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

APPLICAST: Files for Chapter 11 Relief to Restructure Finances
Applicast, a provider of SAP and Siebel Systems services,
announced it elected to file for Chapter 11 relief in order to
implement a financial restructuring of the Company. The petition
was filed in the United States Bankruptcy Court for the Northern
District of California.

The Company said this decision was prudent, given the demise of
many of its new-economy customers regionalized in the Bay Area,
as well as the current financial climate. Relief under Chapter
11 will afford Applicast, a subsidiary of Agilera, the
opportunity to restructure its balance sheet in an orderly

ARCHIBALD CANDY: Projects $20MM EBITDA for Fiscal 2001
In connection with restructuring discussions with certain
holders of Archibald Candy Corporation's 10-1/4% senior secured
notes, Archibald's management has prepared for such holders and
Archibald's directors and their affiliates forecasts which
indicate that if Archibald is able to effect a restructuring of
its senior notes and increase its capital expenditures from
approximately $4.4 million spent in fiscal 2001 to an average of
approximately $12.0 million in each of the next five fiscal
years, Archibald's EBITDA (excluding EBITDA attributable to
Archibald's Sweet Factory subsidiaries) would increase from
approximately $20.1 million for fiscal 2001 to approximately
$40.0 million for fiscal 2006. These forecasts are updates of
the forecasts included in the Current Report on Form 8-K filed
by Archibald on January 3, 2002.

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.

ARMSTRONG HOLDINGS: Brings-In Gibbons Del Deo as N.J. Counsel
Armstrong World Industries, Inc., Nitram Liquidators, Inc., and
Desseaux Corporation of North America ask Judge Newsome to
authorize and approve their employment of Gibbons, Del Deo,
Dolan, Griffinger & Vecchione PC as local New Jersey counsel to
the Debtors, nunc pro tunc to December 20, 2001.

The Debtors note that on November 27, 2001, Judge Edward R.
Becker, Chief Judge of the Third Judicial Circuit, entered an
order transferring, consolidating and assigning these chapter 11
cases, along with other asbestos-related bankruptcy cases, which
include many claims for personal injuries, to Judge Alfred M.
Wolin of the United States District Court for the District of
New Jersey.  The reassignment of these cases to Judge Wolin,
along with certain pending litigation matters, has created the
need for the Debtors to retain New Jersey counsel.

At the Debtors' request, Gibbons Del Deo attended the initial
meeting ordered by Judge Wolin on December 20, 2001, even though
the firm was not at that point able to present a retention
application because of the extensive conflicts check that it was
required to undertake. Gibbons Del Deo continued to perform
services at the Debtors' request while it obtained information
as to the identities of creditors and parties in interest needed
to perform a thorough conflict check.  In that regard, the
Debtors requested that Gibbons Del Deo, among other things,
immediately perform services in connection with the Maertin
litigation, which involves two actions pending in the New Jersey
court. In that litigation, the Debtors were facing critical
deadlines, including the requirement of filing an answer or
other responsive pleading by January 2, 2002, and a hearing
scheduled for January 4, 2002.  The conflict-checking process
was not complete until mid-January, and Gibbons Del Deo
presented the retention application as promptly as possible

Subject to further Order, Gibbons Del Deo will be:

        (a) taking necessary actions to preserve and protect the
Debtors' estates, including the prosecution of ations on the
Debtors' behalves, the defense of any actions commenced against
the Debtors, the negotiation of disputes in which the Debtors
are involved, and the preparation of objections to claims filed
against the Debtors' estates, as may be requested by the

        (b) preparing on behalf of the Debtors as debtors-in-
possession the necessary motions, applications, answers, orders,
reports and papers in connection with the administration of the
Debtors' estates, as may be requested by the Debtors in
consultation with its other counsel in these cases; and

        (c) performing such other necessary legal services in
connection with the Debtors' chapter 11 cases as may be
requested by the Debtors in consultation with its other counsel
in these cases.

The attorneys and their hourly rates with primary responsibility
to the Debtors in these cases are:

           Michael R. Griffinger              $525
           Paul R. DeFilippo                  $450
           James N. Lawlor                    $300
           Adam G. Brief                      $150

In addition, other professionals and paraprofessionals may
perform services for the Debtors at their standard hourly rates.

Mr. DeFilippo, a director of Gibbons Del Deo, avers that the
directors and associates of Gibbons Del Deo do not have any
connection with or any interest adverse to the Debtors, their
creditors, or any other party in interest, or their respective
attorneys, in these cases, and is a "disinterested" party.
However, he warns that Gibbons Del Deo may have in the past,
currently, or may in the future represent creditors of the
Debtors such as Wachovia Bank, Deutsche Bank, Barclays Bank,
Wells Fargo Bank NA, and Exxon Mobil Research & Engineering Com.
In addition, the firm identifies Chase Manhattan Bank, PNC Bank
NA, Mellon Bank, Citibank NA, and the Bank of America, as well
as trade creditors Roure Bertrand Dupont, Inc. and Occidental
Chemical Corporation, as well as Trizechechan Office Properties,
Inc., Lucent Technologies, and Sherwin-Williams Company as
members of the PD Committee.  Moreover, the firm represents the
accounting firms of Arthur Andersen and KPMG in unrelated
matters.  However, the firm has not represented these creditors
in connection with their claims, if any, against the Debtors,
and Gibbons Del Deo will not perform services on behalf of any
entity in these cases other than the Debtors, or take any action
on behalf of the Debtors adverse to the potential creditors
identified in his declaration. (Armstrong Bankruptcy News, Issue
No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)

AURELIA ENERGY: S&P Rates Bluewater Finance's $200MM Notes at B+
Standard & Poor's assigned its double-'B' corporate credit
rating to Aurelia Energy N.V. and single-'B'-plus subordinated
debt rating to Bluewater Finance Ltd.'s proposed issuance of
$200 million senior notes due 2012. Aurelia Energy and its
subsidiaries (collectively referred to as Bluewater), will
guarantee Bluewater Finance's proposed notes issue on a
subordinated basis.

The outlook is stable.

Standard & Poor's ratings on Bluewater reflect the company's
participation in the floating production, storage, and
offloading (FPSO) vessel industry, meaningful recontracting risk
between 2004 and 2005, and a somewhat aggressive debt burden.

Established in 1978, Bluewater is a specialized service provider
to, and operator in, the offshore oil industry. Bluewater
designs, develops, owns, and operates under long-term lease
contract FPSOs that are used to produce oil fields largely
located in deepwater and remote locations. Unlike conventional
fixed oil production platforms, FPSOs can be efficiently
redeployed, thus enabling the field owner to potentially spread
the cost of the unit (typically $200 million to $400 million)
over multiple fields in multiple geographic regions.

Bluewater owns and operates three FPSOs: the Bleo Holm, Uisge
Gorm, and Glas Dowr. In addition, Bluewater owns the Aoka Mizu,
a tanker hull that can be constructed into an FPSO. Upon the
funding of an arranged credit facility, which Bluewater has
stated will occur before the end of January 2002, Bluewater will
acquire from a sister company two additional FPSOs (Haewene
Brim and Munin), bringing to five its total of owned and
operated FPSOs. From 1998 through 2001, the FPSO business
generated between 79% and 100% of Bluewater's EBITDA. The
remaining EBITDA is provided by a division that designs and
supplies for sale single point mooring systems, which enables
the company to participate in the total growth of the FPSO
market without actually having to invest in new vessels.

Bluewater benefits from capable management and a good contract
position through 2004. The principal risks confronting
Bluewater's business are the successful construction or
refurbishment of FPSOs to customer specifications and budgets;
safe operation of FPSOs that are in service; the successful
marketing of vessels to customers, including the capture of
long-term contracts that enable the achievement of adequate
returns on investment; and competent project selection as
revenues can be linked to field production performance. On all
of these points, Bluewater has a fairly good record. Although it
currently has no vessels under construction (and it would only
build a new vessel if it were accompanied by a long-term
contract that ensured repayment of a high percentage of
construction costs), Bluewater has no history of material cost
overruns when it did build vessels. In addition, Bluewater's
experienced personnel and good vessel designs have resulted in
high in-service rates for its operational FPSOs. Finally,
Bluewater has a portfolio of term contracts that combine a
mixture of fixed rate and tariff-linked contracts that should
ensure ample cash in excess of fixed charges that can be applied
to debt reduction and/or growth initiatives through early 2004.

However, in 2004, Bluewater confronts the uncertainty caused by
the expiration of the minimum guaranteed periods--during which
Bluewater is assured of its lease rentals irrespective of
production volumes or oil price--of three of its five contracts.
(The minimum guaranteed period on the Uisge Gorm expires in
August 2002, while the minimum guaranteed period on the Glas
Dowr expires in late 2005.) Based on the production profiles of
the fields they operate in, it is likely that the Uisge Gorm,
the Bleo Holm, and the Haewene Brim will continue on-field
beyond the expiration of their minimum guaranteed periods. The
Glas Dowr will need to rely on tie-backs to adjacent fields to
continue under its existing contract beyond 2005. The Munin will
almost certainly seek re-employment on alternative fields when
its guaranteed period expires in 2004.

While Bluewater's FPSOs are likely to find work when they do
eventually come off their existing fields, because of their good
technological sophistication, strong operating history, long
lead times for building new vessels, and an ongoing need for
FPSOs in growing deepwater markets, the precise rate that
Bluewater will be paid under future contracts is uncertain. In
addition, new contracts for the current FPSO fleet may require
downtime for vessel marketing or modification, which could cause
periods of depressed revenue and cash flow for Bluewater.
Fortunately, Bluewater only requires that two of its vessels
work at current rates to comfortably meet debt service and other
cash requirements.

Bluewater's capital structure is somewhat aggressive. Pro forma
for the acquisition of two vessels, Bluewater's total debt at
Sept. 30, 2001, will total $572 million and account for about
56% of total capital. (A subordinated loan to Bluewater's
shareholder is largely considered as equity capital.) If
Bluewater does not undertake to build or refurbish additional
FPSOs, Standard & Poor's believes that Bluewater should be
capable of generating about $150 million of EBITDA in 2002 and
$200 million of EBITDA in 2003 (driven by the initiation of a
new contract that has been entered into for the Glas Dowr, which
is currently idle), which should cover projected interest
expense by 3.6 times and 5x, respectively. Similarly, during the
next two years, total debt to EBITDA could decrease to 2.9x from
3.9x as a result of rising EBITDA (assuming total debt stays
constant at $565 million). Credit metrics may be significantly
better if the company applies its free cash flow to debt
reduction or may be worse if it elects to build or acquire
additional FPSOs. Financial flexibility is provided by a
$600 million bank credit facility, of which $365 million is
expected to be drawn upon completion of the high-yield offering,
leaving initial incremental borrowing capacity of $235 million.
However, borrowing capacity under the bank credit facility is
linked to the company's future contracted revenue and the
residual value of its vessels and could be changed depending
on the terms of new contracts and a pre-established amortization

                        Outlook: Stable

The outlook on Bluewater is stable, reflecting the risks
surrounding the extension of the company's current contract
portfolio and that the company incurs additional debt to fund
new construction or additional FPSO purchases. The ratings and
outlook could be favorably changed as the company extends the
duration of its contract portfolio. Similarly, negative changes
could occur if the company embarks on new growth initiatives
that are funded with debt and lack offsetting contracted cash

BETHLEHEM STEEL: Gets Approval to Hire KPMG LLP as Accountants
In two separate orders, Judge Lifland approves the application
of the Official Committee of Unsecured Creditors of Bethlehem
Steel Corporation and its debtor-affiliates and authorizes the
Committee to retain both KPMG LLP-US and KPMG LLP-Canada as its
accountants and financial advisors, nunc pro tunc to October 27,

The Committee expects KPMG to render:

     (i) Review of reports or filings that are prepared pursuant
         to the Bankruptcy Code, the Bankruptcy Rules or the
         Local Rules, in accordance with orders of the Bankruptcy
         Court or at the request or direction of the Office of
         the United States Trustee, including, but not limited
         to, schedules of assets and liabilities, statements of
         financial affairs and monthly operating reports;

    (ii) Review and analysis of the Debtors' financial
         information, including, but not limited to, cash
         receipts and disbursements, financial statement items
         and proposed or potential transactions for which
         Bankruptcy Court approval is or may be sought;

   (iii) Analysis and monitoring of financial results and

    (iv) Review, evaluation and critique of the Debtors'
         financial projections and assumptions;

     (v) Upon request of the Committee, developing and providing
         financial and operational models to the Committee and/or
         the Debtors regarding the Debtors' businesses;

    (vi) Review and analysis of cash collateral and debtor-in-
         possession financing arrangements and budgets, including
         reports prepared in connection therewith;

   (vii) Evaluation of compensation and benefit issues, including
         pension and other post-retirement employee benefit
         obligations, labor agreements and potential employee
         retention and severance plans;

  (viii) Assistance with identifying, evaluating and reviewing
         potential cost containment and liquidity enhancement

    (ix) Assistance with identifying, evaluating and reviewing
         operational improvement and asset redeployment

     (x) Analysis of assumption and rejection issues regarding
         executory contracts and leases;

    (xi) Review and analysis of the Debtors' proposed business
         plans and strategy and the business, operations,
         financial condition and prospects of the Debtors

   (xii) Analysis of enterprise, liquidation and reorganization

  (xiii) Assistance in reviewing, developing and evaluating
         reorganization strategies and alternatives available to
         the creditors and the Debtors;

   (xiv) Assistance in formulating, negotiating and documenting a
         plan of reorganization, analyzing feasibility and
         preparing, developing and analyzing information
         appropriate for confirmation;

    (xv) Advice and assistance to the Committee in, and, where
         appropriate, participation in or attendance at,
         negotiations and meetings with the Debtors, lenders and
         other parties in interest;

   (xvi) Advice and assistance in evaluating the tax consequences
         of proposed plans of reorganization or other

  (xvii) Assistance with analysis of claims, including analyses
         of creditors' claims by type and entity;

(xviii) Administration of the collaborative workspace for the
         use of the Committee and the advisors;

   (xix) Investigation and forensic analysis of the Debtors' pre-
         petition transactions or other transfers of cash or
         other assets;

    (xx) Litigation consulting services and expert witness
         testimony regarding confirmation issues, avoidance
         actions or other matters; and

   (xxi) Other such functions as requested by the Committee or
         its counsel to assist the Committee in these chapter 11

"Subject to the United States Trustee's opportunity to request
otherwise, KPMG LLP-Canada and KPMG LLP-US shall jointly file
one fee application, given that they will effectively be
functioning as one entity in these cases," Judge Lifland rules.
(Bethlehem Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

BROADBAND WIRELESS: Forms Debtor-in-Possession Funding Committee
Broadband Wireless International Corporation (OTC Bulletin
Board: BBAN) said the company has formed a Debtor-in-Possession
Funding Committee.  The Company has entered into an agreement
with Entertainment Direct.TV, Inc., to provide interim funding
for daily operations.  A requirement of the Debtor-In-
Possession agreement is that a Debtor-in-Possession Committee be
formed to administer those funds.  The Committee consists of
executives and board members of Entertainment Direct.TV, Inc.
whose responsibilities are to assist the Board of Directors of
Broadband Wireless International Corporation in administering
and applying the operational funding provided.  A definitive
agreement for the acquisition of Entertainment Direct.TV, Inc.
was previously announced on October 29th, 2001.

By this agreement, Entertainment Direct.TV, Inc., becomes
directly involved with management of daily operations of
Broadband Wireless International Corporation while the company
continues the Chapter 11 proceeding.  Executives and Directors
from both companies continue to work cooperatively toward
finalizing the reorganization of Broadband and the acquisition
of Entertainment Direct.TV.  Dr. Ron Tripp -- Broadband Wireless
President, will continue to play a significant role in
facilitating the Chapter 11 process with the law firm of Kline,
Kline, Elliott, Castleberry & Bryant, P.C.

BROADWING INC: Mixed 2001 Results & Analyst Says Default Likely
Broadwing Inc., (NYSE:BRW) announced that for the full year
2001, revenues increased 15 percent to $2.35 billion, while
earnings before interest, taxes, depreciation and amortization
(EBITDA) grew 26 percent to $626 million.

For the fourth quarter, revenues increased 1 percent to $566
million.  EBITDA declined 2 percent to $143 million.

"This has proven to be a challenging time for our economy and
particularly for the communications industry," said Rick
Ellenberger, Chairman-elect and CEO, Broadwing Inc. "The actions
we have taken to focus our company against the realities of the
marketplace, the momentum we have established with enterprise
accounts, and the operating efficiencies we have realized place
our company in the best position to weather the storm and
achieve our free cash flow positive objective."

                     Cincinnati-Based Operations

Broadwing's Cincinnati-based businesses grew revenues 12 percent
for the year to $1.22 billion. EBITDA increased 24 percent over
the previous year to $516 million.

For the quarter, Cincinnati operations recorded revenue growth
of 8 percent to $305 million and EBITDA growth of 18 percent
year over year to $133 million. A primary contributor to growth
during the year was the company's continued success in selling
bundled services. Bundles that combine local, long distance,
wireless, internet access, DSL, and value added services on one
bill drove increased market share across product lines while
keeping churn well below industry averages.

                  Local Communications Services

Broadwing's local-exchange company, Cincinnati Bell Telephone,
produced revenues of $833 million for the year, a 5 percent
improvement over the previous year. EBITDA improved 8 percent
year over year to $423 million.

In the fourth quarter, CBT delivered revenue growth of 3 percent
to $212 million and EBITDA of $107 million, a 3 percent
increase. A major source of the company's growth resulted from
offering services nationally, through the Broadwing network, to
companies headquartered in Cincinnati who previously could
purchase only locally based services from Cincinnati Bell.

Cincinnati Bell's ADSL offering continued its steady growth,
increasing by 54 percent over the prior year to almost 61,000
total subscribers.

Cincinnati Bell set the standard for customer service and
satisfaction in 2001 by becoming the first provider to
simultaneously hold the JD Power and Associates award for
customer satisfaction in both the Local Residential Service and
Residential Long Distance Service categories. This customer-
centric focus is a major driver of the company's industry-
leading 98 percent residential wireline share retention.

                      Wireless Services

Cincinnati Bell Wireless increased revenues 38 percent in 2001
over the prior year to $248 million. EBITDA grew 258 percent
over full year 2000 to $66 million. In the fourth quarter,
revenues increased 23 percent to $64 million and EBITDA improved
to $17 million, up 359 percent from the same quarter in 2000.

Cincinnati Bell Wireless continues to be the market leader with
over 462,000 subscribers or 29 percent of the Cincinnati market.
Average revenue per user and churn continue to compare favorably
to industry averages.

                     Broadband Services

Broadwing Communications, the company's national broadband
services business, experienced growth for the first three
quarters of 2001, but the effects of the economic slowdown
became pronounced in the fourth quarter. For the year, revenues
increased 19 percent to $1.2 billion and EBITDA grew 35 percent
to $110 million compared to results for full year 2000.

The fourth quarter witnessed a revenue decline of 5 percent over
the same quarter in 2000 to $271 million, and EBITDA was $8
million. The revenue softness was primarily due to a contraction
in broadband demand in the carrier market.

The year also witnessed several significant accomplishments, as
the company completed the industry's first all-optical switched
network and established good momentum with Fortune 1000
enterprise accounts.

Broadwing leveraged the flexibility, capacity, and survivability
of its all-optical switched network to create new optical
services, such as MultiConnect, a scalable, distance-
insensitive, recoverable service for connecting multiple
locations through a single, secure hub. This unique offering is
gaining solid traction, especially with media and financial

                Other Communications Services

Cincinnati Bell Any Distance, the company's award-winning long
distance offering, added market share in every quarter and ended
the year with 67 percent of the residential market and 38
percent of the business market.

For the full year, Other Communications Services businesses
increased revenue 17 percent over the previous year to $166
million, and generated EBITDA of $27 million. For the fourth
quarter, this segment recorded revenues of $43 million and
EBITDA of $9 million, increases of 10 percent and 87 percent
respectively over the same quarter in 2000.

"During 2001, each of Broadwing's businesses made operational
improvements to heighten customer focus and manage costs," said
Kevin Mooney, COO, Broadwing Inc. "In the year ahead, we will
continue to leverage our network leadership, optical product
advantage, and customer operations focus to deliver unparalleled
quality and value across our diverse customer set."

The company reported a net loss of $1.36 per share for the year.
Excluding non-recurring items in both 2000 and 2001, the
company's loss of $0.71 per share represents a $0.11 per share
improvement over the prior year.

For the quarter, the company reported a net loss of $0.91 per
share. The mid-year completion of the all-optical switched
network increased depreciation and contributed to the company's
loss. Excluding non-recurring items, this loss was $0.29 per
share, which compares to a $0.18 per share loss in the fourth
quarter of 2000.

As announced in November, the company restructured to
consolidate operations, streamline functions, and exit non-
strategic activities. Non-recurring losses, including the
restructuring charges of $0.69 per share and $0.72 per share for
the quarter and the year, respectively, were partially offset by
non-recurring investment gains of $0.07 per share in both

For 2001, capital expenditures were $649 million, a 23 percent
reduction from full year 2000. In 2001, the company completed
several one-time network and systems projects that will not
recur in 2002. The completion of these projects consumed almost
$300 million in 2001 and will be a major driver in the reduction
of the company's capital program.

"We remain focused on managing our capital to invest in success-
based opportunities to bring new customers on our network," said
Mary McCann, senior vice president, corporate finance.

                          2002 Guidance

As previously announced, Broadwing will exit the network
construction business. As a result, the company will account for
the construction business as a discontinued operation in 2002.
Adjusted to reflect discontinued operations, revenue for full
year 2001 was $2.26 billion and EBITDA was $601 million.

For 2002, in light of current market and economic conditions,
revenues are expected to decline by approximately 1 percent to
$2.23 billion. EBITDA is expected to grow by 8 percent to $650
million. A portion of the EBITDA growth can be attributed to the
effects of the restructuring activities Broadwing implemented in
the fourth quarter of 2001. Capital expenditures for 2002 are
expected to be $300 million.

As a result of these actions, Broadwing expects to reach free
cash flow positive mid-year 2002.

Broadwing Inc. (NYSE:BRW) is an integrated communications
company. Broadwing leads the industry as the world's first
intelligent, all-optical, switched network provider and offers
businesses nationwide a competitive advantage by providing data,
voice and Internet solutions that are flexible, reliable and
innovative on its 18,500-mile optical network and its award-
winning IP backbone. Local service subsidiary Cincinnati Bell is
one of the nation's most respected and best performing local
exchange and wireless providers with a legacy of unparalleled
customer service excellence and financial strength. Cincinnati
Bell was recently ranked number one in customer satisfaction by
J.D. Power and Associates for both local residential telephone
service and residential long distance among mainstream users.
Cincinnati Bell provides a wide range of telecommunications
products and services to residential and business customers in
Ohio, Kentucky and Indiana.  Broadwing Inc., is headquartered in
Cincinnati, Ohio. For more information, visit

                              *   *   *

While Broadwing, Inc., projected to reach free cash flow
positive towards the next half, Fidelity Market Capital analyst
James Lee is seeing a not-so sunny picture on the horizon. In
the January 29, 2002, edition of Communications Today, Mr. Lee
is quoted as saying that in his opinion "[a] thorough look at
[Broadwing's] capital structure revealed that the company will
likely break the covenants on its existing bank facility in
2002. . . ."  Mr. Lee based his analysis on the telecom services
provider's high debt levels and reduced spending on network/data
by carriers.

Broadwing funds its working capital needs by drawing on a $2.3
billion bank facility.

"We doubt that bankers will pull the plug and force [Broadwing]
into bankruptcy since the company maintains a healthy EBITDA
coverage ratio.  However, we think [Broadwing] may (1) pay
higher rates on its existing balance of $1.9 billion and (2)
lose the ability to borrow the remainder of this credit line
($425 million) if new terms are negotiated," Mr. Lee says.

CASUAL MALE: Seeks Further Open-Ended Removal Period Extension
Casual Male Corp., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to
further extend their time period to remove prepetition civil
actions. The Debtors wish to move the Prepetition Removal Period
until the later to occur of:

     (a) 450 days after the Commencement Date,

     (b) 30 days after entry of an order terminating the
         automatic stay with respect to the particular action
         sought to be removed, or

     (c) 30 days after the qualification of a trustee in a
         Debtor's chapter 11 case but not later than 450 days
         after the order for relief.

The Debtors tell the Court that since the Petition Date, they
have been focused on managing numerous issues that arose in
their reorganization efforts. In this case, they have not had
the opportunity to complete a comprehensive analysis of the
pending State Court Actions.

The Debtors believe that at this stage of their chapter 11
cases, they should not be compelled to make a determination with
respect to the pending actions. This could be detrimental to the
Debtors' estate.

Casual Male Corp. is a national specialty retailer that, through
its subsidiaries, operates 662 stores in forty-seven stores. The
Company filed for chapter 11 protection on May 18, 2001. Adam C.
Rogoff, Esq. at Weil, Gotshal & Manges, LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $299,341,332 in
total assets and $244,127,198 in total debts.

CONTINENTAL AIRLINES: Fitch Rates Convertible Notes Issue at B-
Fitch Ratings has assigned a rating of 'B-' to the $175 million
in convertible notes offered by Continental Airlines, Inc.
(Continental). The notes carry a coupon rate of 4.50% and mature
in January 2007. The debt is convertible at a share price of $40
for Continental common stock, and will rank equally in the
capital structure with existing Continental unsecured debt. All
ratings for Continental remain on Rating Watch Negative.

The Fitch rating of 'B-' reflects the high level of financial
risk that Continental continues to face in the post-September 11
air travel demand environment. Although Continental's financial
results for the fourth quarter of 2001 suggest that a rebound in
revenue per available seat mile (RASM) is underway, business
travel demand remains weak and passenger yields have still not
recovered to the point where the company can generate positive
operating cash flow. Moreover, Continental's high debt levels
($4.6 billion as of December 31, 2001) and significant off-
balance sheet aircraft lease commitments will keep fixed
financing obligations (interest and rental expenses) high for
the foreseeable future.

Recognizing the presence of continuing risks as the company
seeks to stabilize its operations in the aftermath of September
11, it is important to note that Continental has been quite
successful in squeezing out costs in connection with its recent
schedule reductions. Benefiting from a sharp decline in fuel
prices, the company was able to keep cost per available seat
mile (CASM) essentially flat in the fourth quarter of 2001. This
was achieved in a period when Continental reduced capacity by
about 15% and faced significant non-recurring costs related to
job reductions, insurance and heightened security measures.
These cost control trends bode well for the company in its
effort to restore profitability in the second quarter of 2002.
Even with these encouraging signs, however, the risk of rising
labor costs looms in 2003 and beyond as the company opens
contract negotiations this year with its mechanics (contract
currently amendable) and pilots (negotiations scheduled to begin
this summer). Continental's labor costs are still well below
industry-leading levels.

In terms of capital spending commitments, the company has
apparently been successful in reaching an agreement with Boeing
to stretch out previously scheduled 2002 aircraft deliveries.
Deliveries of 20 Boeing aircraft are still slated for the first
half of this year, but no additional Boeing aircraft will be
delivered until the second half of 2003. Financing for all
2002 Boeing deliveries, as well as all Embraer regional jets for
Continental Express, is in place, but will place additional
financial obligations on the company during a period of high
balance sheet stress. Thirteen of the 20 Boeing aircraft
scheduled for delivery this year have been pre-funded through
enhanced equipment trust certificates (EETCs). The remaining 7
aircraft are covered by manufacturer financing commitments.
Capital spending for Continental in 2002 is expected to total
approximately $2 billion.

Continental's push to maintain an adequate liquidity position in
the months since September has also been largely successful.
Including the $175 million raised in the convertible note issue,
$172 million in net proceeds from a common stock offering
completed in November, and $264 million (after tax) in proceeds
from the government assistance program, management expects the
cash balance at the end of this quarter to lie somewhere in the
range of $925 million to $975 million. Given the company's
expectation that operating cash flow generation will resume in
the second and third quarters as a result of a more robust
traffic environment, the liquidity picture appears brighter.

DebtTraders reports that Continental Airlines' 8.000% bonds due
2005 (CAL2) currently trade between 88 and 90. See
real-time bond pricing.

COVANTA ENERGY: S&P Will Continue to Monitor Situation
Standard & Poor's views the announcement by Covanta Energy Corp.
(B/Watch Neg/--) that it is reasonably confident it will obtain
approval for an amendment in its bank facility that would grant
Covanta an extension of covenant waivers is a positive for

However, there will be no change in the rating or CreditWatch
status at this time. While final approval of the amendment would
be an encouraging first step in restoring Covanta's
creditworthiness and signifies some degree of confidence in
Covanta's underlying business, Covanta still needs to formulate
and execute a credible recapitalization plan, pay down $149
million in convertible subordinated debentures coming due during
the next 12 months, and provide liquidity for near-term
operations. Standard & Poor's will continue to monitor the

ELIZABETH ARDEN: Seeking Waiver of Covenants Under Credit Pact
Elizabeth Arden, Inc. (NASDAQ: RDEN), a leading manufacturer and
marketer of prestige beauty products, provided earnings guidance
for the fourth quarter of the fiscal year ended January 31,
2002, and for fiscal 2003.

During the fourth quarter, net sales to the Company's U.S.
department store customers have been weak, reflecting the
difficult economic environment and the absence of any major new
product introductions during the quarter. The sell-through of
Christmas gift sets in U.S. department stores was lower than
anticipated, and U.S. department store retailers have taken a
very conservative approach to post-holiday inventories,
depressing basic stock replenishment orders. As a result, the
Company's sales to its U.S. department store customers were
below its expectations, and the Company has increased its
reserves for returns of gift sets which did not sell-through.
Sales to U.S. mass retailers generally met expectations,
although the sell-through of Christmas gift sets in chain drug
stores was lower than planned, and sales to smaller independent
retailers were weak. International operations have generally
performed as planned, with the exception of the travel retail
market and certain distributors which continue to perform below
historical levels.

Consequently, for the fourth quarter of fiscal 2002, the Company
expects net sales of $160 million to $170 million, a gross
margin of 48% to 50%, and an EBITDA loss of between $1 million
and $4 million, excluding the costs of restructuring discussed
below. The expected gross margin was negatively impacted by
reduced sales to U.S. department stores and to the travel retail
market and international distributors, which have relatively
high gross margins, and by additional reserves for returns from
U.S. department stores. The expected gross margin and EBITDA
also reflect lower gross profits of approximately $3.5 million
realized on sales of Elizabeth Arden product purchased prior to
the Elizabeth Arden acquisition. Excluding the effect of the
sales of this inventory, the gross margin percentage would be
50% to 52%.

During January of 2002, the Company commenced a restructuring of
its U.S. operations. Approximately 100 positions, representing
10% of total headcount in the United States, will be eliminated,
resulting in savings of approximately $7 million, excluding
restructuring costs, in fiscal 2003. The cost of the
restructuring is approximately $2 million.

E. Scott Beattie, Chairman, President and Chief Executive
Officer of Elizabeth Arden, Inc., commented, "Our performance in
fiscal 2002 was disappointing and is not indicative of the
potential of this business. While we expected fiscal 2002 to be
a transition year for us as we integrated the worldwide
Elizabeth Arden business, the deteriorating economic
environment, particularly after September 11, had a significant
negative impact on our operations. We have responded quickly by
restructuring our operations to improve profitability. In
certain of our U.S. business units, we are reducing headcount
and cutting other costs and we are also in the process of
reviewing the profitability of retail store doors. We have
realigned our operations group, reducing costs and closing one
of three distribution locations in the United States."

Mr. Beattie continued, "Despite the difficult economic and
retail environment, we accomplished a great deal in fiscal 2002.
We managed a relatively smooth integration of the Arden
business, completing our management team and successfully
executing an array of complex transition tasks in areas
including information technology, operations, finance and tax.
We have increased our market share with most of our large
customers in our mass and mid-tier distribution channels, and
our White Diamonds brand maintained its top-ten rankings in all
channels of distribution in the U.S. Our "open-sell" program
with U.S. mass retailers has been very successful, and we expect
to expand this program during fiscal 2003. We also migrated our
businesses in France, Germany and Japan to a new, profitable
third-party distributor model. During the year, we sold through
most of the inventory of Elizabeth Arden product purchased prior
to the acquisition, positioning the business for higher margins
in fiscal 2003.

"From a financial perspective, we have carefully managed our
balance sheet to minimize working capital needs, and we
anticipate that our year-end inventory position will be nearly
10% lower than last year despite weaker-than-expected sales. Our
liquidity position remains strong, as we anticipate outstanding
borrowings of approximately $10 million under our credit
facility at year-end as compared with borrowings of $134 million
at the end of the third quarter. We also expect to have cash of
approximately $11 million at year-end with availability of
approximately $90 million under our credit facility. Borrowings
under our credit facility are secured by our U.S. receivables
and inventory. As a result of our expected operating performance
in the fourth quarter, we anticipate that we will not be in
compliance with certain maintenance covenants contained in our
asset based credit facility. We have already commenced the
process to obtain a waiver of covenant non-compliance for the
fourth quarter and the amendment of certain covenant levels in
our credit facility for fiscal 2003 to better reflect the
changed economic circumstances in which we are operating. Based
on indications from our lead banks, we expect that we will be
able to obtain such waiver and amendment."

For fiscal 2003, the Company has developed a number of
initiatives to drive sales growth and margin expansion while
reducing overhead costs. Several new product launches, postponed
due to the fiscal 2002 integration activities, are now scheduled
for fiscal 2003, and the Company's advertising and marketing
budget has been increased. During fiscal 2003, the Company plans
to launch a new Elizabeth Arden fragrance and expand the
Ceramides skin-care line globally. A new Elizabeth Arden color
line will be introduced in international markets. The Company
also plans to bolster its successful Elizabeth Taylor brands
with a new fragrance introduction in the fall. The Company is
confident that these initiatives, coupled with the Company's
strong market share, particularly with mass and mid-tier retail
customers, should position Elizabeth Arden for growth and
profitability in fiscal 2003 and beyond.

For planning purposes, the Company has assumed for fiscal 2003
that the current difficult economic environment will continue
for the first half of the year with a modest recovery in the
travel retail market in the second half of the year. Net sales
for fiscal 2003 are currently estimated to total $800 million to
$840 million. Gross margins are expected to be 50% to 52%, with
EBITDA of $95 million to $105 million. The Company is expected
to generate cash flow from operating activities of approximately
$30 million to $40 million, partially offset by capital
expenditures of approximately $18 million. With respect to the
seasonally slow first quarter, the Company estimates sales of
$150 million to $160 million and EBITDA ranging from a loss of
approximately $5 million to breakeven for fiscal 2003, as
compared with sales of $142 million and an EBITDA loss of $10
million for the first quarter of fiscal 2002. For the seasonally
slow second quarter, the Company estimates sales of $130 million
to $140 million with EBITDA ranging from a loss of approximately
$5 million to breakeven for fiscal 2003, as compared with sales
of $127 million and an EBITDA loss of $10 million (excluding the
non-cash inventory charge) for the second quarter of fiscal
2002. Note that this guidance does not reflect the impact of the
new accounting pronouncement affecting the classification of
certain sales incentives and promotional activities which the
Company will adopt in the first quarter of fiscal 2003. This
pronouncement will not affect reported EBITDA, but will result
in a reduction of reported revenue and margin with an offsetting
decrease in selling, general and administrative expenses.

Elizabeth Arden, is a leading global marketer and manufacturer
of prestige beauty products. The Company's portfolio of leading
brands includes the fragrance brands Red Door, Elizabeth Arden
green tea, 5th Avenue, White Shoulders, Elizabeth Taylor's White
Diamonds and Passion, Geoffrey Beene's Grey Flannel, Halston,
Halston Z-14, PS Fine Cologne for Men, Design and Wings by
Giorgio Beverly Hills; the Elizabeth Arden skin care brands
Visible Difference, Ceramides and Millenium; and the Elizabeth
Arden cosmetics line.

eMAGIN CORP: Mortimer D. Sackler Discloses 6.4% Equity Stake
Mortimer D. Sackler, M.D. beneficially owns 911,854 shares of
the common stock of eMagin Corporation, representing 6.4% of the
outstanding common stock of that Company.  Dr. Sackler holds
sole voting and dispositive powers on the stock held.

Mortimer D.A. Sackler beneficially owns 3,647,416 shares of the
common stock of eMagin with sole voting and dispositive powers,
and 238,322 shares with shared voting and dispositive powers.
The aggregate amount held by Mr. Sackler is 3,885,738 shares
which represents 13.5% of the outstanding common stock of eMagin

A leading developer of virtual imaging technology, eMagin
combines integrated circuits, microdisplays, and optics to
create a virtual image similar to the real image of a computer
monitor or large screen TV. These miniature, high-performance,
modules provide access to information-rich text, data, and video
which can facilitate the opening of new mass markets for
wearable personal computers, wireless Internet appliances,
portable DVD-viewers, digital cameras, and other emerging
applications. While the company continues to seek additional
funding to continue operations, its Board of Directors is
considering all of the company's options, including filing for
bankruptcy protection.

ENRON CORP: Enron Oil & Gas India Sale Hearing Set for Feb. 13
Enron Oil & Gas India Ltd., a non-debtor, is a Cayman Islands
corporation with its registered office in Grand Cayman and
operational offices in India.  Enron Oil & Gas is a wholly owned
subsidiary of Enron Asset Holdings, LLC, an indirect non-debtor
subsidiary of Enron Corporation.  Enron Oil & Gas receives
services in respect of its operations from Enron Global
Exploration and Production, Inc. and EGEP Services, Inc., other
non-debtor subsidiaries of Enron.

According to Martin J. Bienenstock, Esq., at Weil, Gotshal &
Manges LLP, in New York, Enron Oil & Gas conducts certain
upstream oil and gas activities in India and owns, among other
assets, certain rights, title and interests in three production
sharing contracts for the exploration for, and mining and
production of, naturally occurring oil and gas.  Mr. Bienenstock
tells the Court that the Government of India, together with
other entities, is one of the counterparties to these Production
Sharing Contracts.  "Two of the Production Sharing Contracts
concern the production and sale of oil and gas for consumption
in the Indian markets while the third Production Sharing
Contract governs proposed drilling activities of three
exploration wells scheduled in the year 2002 and onwards," Mr.
Bienenstock relates.

Enron Oil & Gas has approximately 205 employees located in

Mr. Bienenstock explains that the proposed sale of Enron Oil &
Gas to entities affiliated with BG Group Plc is the culmination
of a comprehensive 18-month process that began in June 2000.
That was the time Enron decided to divest itself of non-core
operations.  To facilitate the divestiture of Enron Oil & Gas,
Mr. Bienenstock says, Enron retained Credit Suisse First Boston
in November 2000 to solicit interest in the sale of Enron Oil &
Gas and, if successful, conduct a sale process.

And so, Mr. Bienenstock recounts, Credit Suisse and Enron Global
Exploration representatives solicited over 70 entities located
around the world.  Of the interested parties, Mr. Bienenstock
says, Enron was able to execute and deliver a Purchase and Sale
Agreement with the BG Group in May 2001.  But this initial
agreement expired.  A new Purchase Agreement dated January 22,
2002 was entered into by and among Enron, Enron Asset Holdings
LLC, BG Energy Holdings Limited -- the Acquiror, and BG
Exploration and Production India Limited -- the Buyer.

Mr. Bienenstock explains that the Sale Transaction contemplates
the delivery of all of the outstanding shares of Enron Oil & Gas
(held or to be held by Enron Asset Holdings), free and clear of
all liens, in exchange for approximately $350,000,000, in cash,
minus adjustments for, among other things:

   (a) approximately $66,000,000, representing net amounts
       attributable to Enron Oil & Gas' operations for the period
       from January 1, 2001 through and including November 21,
       2001 and for which the Purchaser shall pay full value,

   (b) certain fees for services in the approximate amount of
       $10,000,000 to be paid to Enron Global Exploration, and

   (c) the balance of intercompany debt and other amounts
       outstanding at closing (which amount should be de minimis
       if any).

In addition, Mr. Bienenstock continues, Enron Asset Holdings
shall retain the right to receive a tax refund in the amount of
$12,000,000 from the Government of India with respect to
disputed disallowances of foreign-exchange losses taken by Enron
Oil & Gas.

Specifically, Mr. Bienenstock outlines the principal terms of
the Sale Transaction:

(1) Securities: Enron Asset Holdings shall convey all of the
     shares of Enron Oil & Gas, par value $1.00 per share,
     outstanding immediately prior to the closing.

(2) Consideration: The purchase price of the Securities shall be
     an amount equal to:

        (i) $350,000,000, minus,

       (ii) $65,924,181 (representing the amount of the EDF Note
            (including principal and accrued but unpaid interest)
            attributable to Enron Oil & Gas's operations from
            January 1, 2001 through and including November 21,
            2001), minus

      (iii) any amount actually paid or payable by Enron Oil &
            Gas in relation to the period prior to the Closing
            pursuant to the Service Agreement, minus

       (iv) all Intercompany Debt and other amounts, if any,
            which BG Energy Holdings is required to procure that
            Enron Oil & Gas repays to any member of the Parent
            Group (specifically excluding Interim Loans), plus

        (v) an amount equal to the $65,924,181, payable by the
            assignment by BG Exploration to Enron Asset Holdings,
            without recourse, of an undivided interest in the EDF
            Note in such amount (such interest being the same
            interest acquired by the Buyer from Enron Oil & Gas
            pursuant to the EDF Note Procedure).

     The Purchase Price shall be paid at the Closing by BG
     Exploration. The Escrow Amount shall be placed by BG
     Exploration into the Escrow Account at the Closing.

(3) Structure: The Sale Transaction contemplates a step-by-step
     transaction for the handling of the EDF Note and its
     ultimate delivery to Enron Asset Holdings, plus the delivery
     to the Purchaser of the shares of Enron Oil & Gas.

(4) Restrictions on Solicitations: Enron and its affiliates have
     agreed that they will not solicit or approach any person to
     dispose of the Securities other than responding to inquiries
     or offers to purchase or dispose of Enron Oil & Gas if the
     Court or the Creditors' Committee requires any further
     marketing activity.

(5) Approval of the Bankruptcy Court: The Purchase Agreement
     requires that this Court enter into an order approving the
     sale of the Securities, free and clear of all Liens that can
     be asserted by any person in connection with the Debtors'
     chapter 11 cases, and providing BG Energy Holdings and BG
     Exploration protections pursuant to section 363(m) of the
     Bankruptcy Code, and otherwise in form and substance
     reasonably acceptable to each of the parties.

(6) Closing Date: If the Closing has not occurred by February
     15, 2002, the Purchase Agreement will terminate

(7) Indemnification and Escrow: At the closing, the Escrow
     Amount (defined as an amount equal to five percent (5%) of
     $350,000,000, plus the aggregate amount of the EDF
     Repayments) is to be deposited into an Escrow Account. The
     BG Exploration shall be entitled to compensation on a
     dollar-for-dollar basis (without duplication), by means of a
     release of monies from the Escrow Account, to the extent
     resulting from:

        (i) certain overpayments of the Purchase Price; or

       (ii) any Losses suffered as a result of the principal
            amount of the Interim Loans exceeding $22,000,000 in
            the aggregate; or

      (iii) any breach or untruth as of the Closing of any of the
            Leakage Representations; or any breach or untruth as
            of the Closing of the representations or warranties;

       (iv) for:

            (a) any liability of Enron Oil & Gas to pay monies to
                the EDF Bankruptcy Estate to the extent such
                liability arises because any EDF Repayments are
                determined by a Court of competent jurisdiction
                to be voidable or a preference or a fraudulent
                preference and recoverable under applicable
                insolvency or bankruptcy laws, and

            (b) any liability of Enron Oil & Gas to the EDF
                Bankruptcy Estate for legal costs in respect of
                any Proceeding brought by the EDF Bankruptcy
                Estate against Enron Oil & Gas for repayment of
                any EDF Repayments, which costs are incurred
                pursuant to an Order, and

            (c) all reasonable legal fees and other expenses
                incurred by BG Exploration or the Company in
                connection with any such liability.  NO DEBTOR
                THE ESCROW ACCOUNT.

(8) Tax Refund: Enron Asset Holdings has retained the right,
     post-closing, to receive a tax refund, estimated to be in
     the aggregate amount of $12,000,000, for taxes paid to the
     Government of India with respect to disputed disallowances
     of foreign-exchanges losses by Enron Oil & Gas.

(9) IT Agreement: Enron Global Exploration shall assign BG
     Overseas Holding Limited all of its right, title and
     interest in and to certain computer equipment on an "as-is,
     where-is" basis.

(10) Transition Support Agreement: For a period of 60 days from
     the date of signing of the Transition Agreement, Enron or
     its affiliates shall provide a team of approximately 11
     India-based employees and 18 Houston, Texas-based employees
     to provide all reasonable assistance to the BG Group and its
     affiliates in connection with or to be used in the day-to-
     day business operations of Enron Oil & Gas of prospecting
     for, extracting and producing oil and gas (and related
     activities), including, without limitation, providing
     training to individuals nominated by the BG Group or its
     affiliates or Enron Oil & Gas and complying with the
     reasonable directions in relation to the Enron Oil & Gas
     business operations. Enron shall invoice the BG Group on a
     monthly basis for payment.

(11) General Releases of Claims: Pursuant to the Purchase
     Agreement, Enron and BG Energy Holdings Ltd. shall execute
     mutual general releases of claims at the Closing.

(12) Termination Agreements: Certain operating and service
     agreements between Enron Oil & Gas and subsidiaries and
     affiliates of the Debtors shall be terminated.

One of the adjustments to the purchase price pertains to a Note
issued by Enron Development Funding Limited.

Mr. Bienenstock informs Judge Gonzalez that until November 2001,
Enron Development Funding (a non-debtor affiliate) provided
financial services to Enron Oil & Gas wherein Enron Oil & Gas
deposited its excess cash with Enron Development Funding and
obtained funds from Enron Development Funding when needed for
working capital purposes.  Mr. Bienenstock states that Enron
Development Funding issued an interest-bearing demand note to
Enron Oil & Gas, the balance of which increased or decreased
upon deposits made or draws taken by Enron Oil & Gas.  "The
Escrow Account is designed to, among other things, provide
comfort to the Purchaser regarding transactions conducted
between Enron Oil & Gas and Enron Development Funding during the
preceding twelve-month period," Mr. Bienenstock clarifies.

The Debtors contend that the Court must approve this Purchase
and Sale Agreement with the BG Group immediately.  Mr.
Bienenstock points out that by entering into the Agreement, the
Debtors will avoid future economic risk in Enron Oil & Gas and
receive fair market value in cash for its securities.  "Without
the Court's approval, Enron may be deprived of significant cash
consideration and possibly burdened with the continuing costs of
maintaining Enron Oil & Gas," Mr. Bienenstock warns.  The
Debtors maintain that the offer submitted by the BG Group
represents the highest and best offer that Enron currently has
for Enron Oil & Gas.

If there are any objections, they must be filed and served by
5:00 p.m. on February 11, 2002 on:

   (a) Weil, Gotshal & Manges LLP
       767 Fifth Avenue, New York, New York 10153
       Attention: Brian S. Rosen, Esq.
       Facsimile: 212-310-8007
       Attorneys for the Debtors;

   (b) Davis, Polk & Wardwell
       450 Lexington Avenue, New York, New York 10017
       Attention: Donald S. Bernstein, Esq.
       Facsimile: 212-450-3800
       Attorneys for JP Morgan Chase Bank, as Agent;

   (c) Shearman & Sterling
       599 Lexington Avenue, New York, New York 10022
       Attention: Fredric Sosnick, Esq.
       Facsimile: 212-848-7179
       Attorneys for Citicorp, as Agent

   (d) Milbank, Tweed, Hadley & McCloy LLP
       One Chase Manhattan Plaza, New York, New York 10005
       Attention: Luc A. Despins, Esq.
       Facsimile: 212-530-5219
       Proposed Attorneys for the Creditors' Committee;

   (e) Allen & Overy
       10 East 50th Street, New York, New York 10022
       Attention: Kenneth Coleman, Esq., and Hugh McDonald, Esq.
       Facsimile: 212-754-7903
       Attorneys for the Purchaser, and

   (f) The Office of the United States Trustee
       33 Whitehall Street, 21st Floor, New York, New York 10004
       Attn: Mary Elizabeth Tom, Esq.

Judge Gonzalez will convene a hearing on February 13, 2002 at
2:00 p.m. to consider the relief requested.  (Enron Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,

ENRON: Gottesdiener Wants Stay Lifted to File 401(k) Lawsuits
The Gottesdiener Law Firm said that it moved against Enron
Corporation in the U.S. Bankruptcy Court for the Southern
District of New York, asking the Court to lift the "automatic
stay" that has protected the company from suit since it filed
for bankruptcy on December 2, 2001.

The legal maneuver would allow workers to proceed in their
efforts to establish that the company violated federal pension
laws in its handling of its 401(k) Plan, and share in whatever
proceeds may be available after secured creditors' claims are
satisfied in the bankruptcy.

According to Eli Gottesdiener, the head of the Washington, D.C.
401(k) and pension class action law firm, which sued Enron,
Arthur Andersen and others in November 2001, the Enron 401(k)
Plan, including a $1 billion claim against the Company, "is
perhaps Enron's largest single creditor, and its participants
are the principal victims of the company's devastating

"No interest in the bankruptcy should be superior to that of
Enron's workers, and giving them the ability to promptly
litigate their claims against the company should be a top
priority for our justice system - if not that of Enron itself,"
Gottesdiener said.

Gottesdiener called on the company to "let its employees and ex-
employees have their day in court" and establish that, as his
suit on behalf of workers alleges, the company breached its
federal fiduciary duties in loading employees up with
artificially inflated Enron stock. Gottesdiener said he had
"every intention of making sure Enron workers sit at the head of
the unsecured creditors' table in the bankruptcy."

Separately, the firm also moved today to block Enron from
tapping into an $85 million fiduciary liability insurance policy
earmarked to compensate workers. This move follows statements by
the company suggesting an intent to use the policy proceeds to
fund the legal defense of key company executives caught up in
the various Congressional and Executive Branch probes of its

Gottesdiener called the company's action "disappointing" and
another example of "Enron overreaching."

The papers the firm filed with the bankruptcy court are
available at on the Website dedicated to the 401(k) litigation,

Based in Washington, D.C., the Gottesdiener Law Firm -- -- and its principal attorney,
Eli Gottesdiener, specialize in complex civil and criminal
litigation on behalf of plaintiffs and defendants in federal and
state courts.

Mr. Gottesdiener has prosecuted some of the leading pension and
401(k) plaintiffs' class action cases in the country, including
Mehling v. New York Life Ins. Co., a pending pension and 401(k)
class action case against New York Life Insurance Company;
Gottlieb v. SBC Communications, Inc., a 401(k) class action
against SBC; and Franklin (I and II) v. First Union Corp., two
401(k) class actions against First Union Corporation that were
recently successfully settled for $26 million.

FEDERAL-MOGUL: Court Okays Coblence & Warner as Asbestos Counsel
Federal-Mogul Corporation and its debtor-affiliates obtained
Court approval to employ Coblence and Warner P.C., as its
special asbestos litigation counsel during the course of these
chapter 11 cases. Coblence will provide legal and litigation
support required by the Debtors in connection with their
asbestos litigation matters, including:

A. providing analysis and advice to the Debtors in formulating
    and implementing a litigation strategy for resolving
    asbestos-related claims;

B. providing strategic advice to and representing the Debtors in
    connection with any and all matters in these bankruptcy
    proceedings arising from asbestos-related personal injury
    and property damage claims including:

     1. counseling and representing the Debtors in connection
        with all aspect of asbestos claims related litigation,
        including commencing, conducting and defending such
        litigation wherever located;

     2. counseling and representing the Debtors and assisting
        the Debtors' general bankruptcy counsel in connection
        with the formulation, negotiation and promulgation of a
        plan of reorganization and related documents related to
        asbestos claims; and

     3. counseling and representing the Debtors and assisting the
        Debtors' general bankruptcy counsel in connection with
        reviewing, estimating & resolving the asbestos claims.

C. Analyzing, litigating and advising the Debtors concerning the
    asbestos claims, including issues related to:

       1. removal, transfer, venue, abstention, injunctions,
          automatic stay and related matters, to the extent
          related to alleged asbestos liability;

       2. assisting the Debtors' general bankruptcy counsel with
          respect to asbestos claims bar date, asbestos-related
          proof of claim forms and related notice and asbestos
          claim processing issues, asbestos claim objections and
          litigation relating to claim allowance or disallowance,
          to the extent related to alleged asbestos liability.

Mr. Zmoyski advises that Coblence will charge the Debtors on an
hourly basis plus reimbursement of all expenses incurred in
connection with these cases. Coblence's current rates are:

      Attorneys               $175-475/hour
      Para-professionals       $90-150/hour

Mr. Zamoyski relates that Coblence received a $300,000 retainer
prior to the Petition Date.

Paul J. Hanly, Jr., a partner of the firm Coblence & Warner,
states that the Firm conducted a series of searches of its
records to identify relationships with creditors and other
parties.  Mr. Hanly discloses two asbestos-related defense
representations involving Porter Hayden Corp. and Pneumo Abex
Corp. (Federal-Mogul Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

FOCAL COMMS: Salomon Smith Barney Discloses 12% Equity Stake
Salomon Smith Barney Inc., and Salomon Brothers Holding Company
Inc., beneficially own 20,578,288 shares of the common stock of
Focal Communications Corporation, while Salomon Smith Barney
Holdings Inc. and Citigroup Inc. beneficially own 20,601,362
shares of that Company's common stock.

Each entity thereby holds 12.0% of the outstanding common stock
of Focal Communications Corporation, and there is shared voting
and dispositive powers held between the four companies.

Salomon Brothers Holding Company is the sole stockholder of
Salomon Smith Barney. Salomon Smith Barney Holdings Inc. is the
sole stockholder of Salomon Brothers Holding Company. Citigroup
is the sole stockholder of Salomon Smith Barney Holdings.

Focal Communications gets right to the point: The competitive
local-exchange carrier (CLEC) provides local and long-distance
voice services over more than 500,000 access lines in more than
20 US metropolitan markets. Targeting large corporations, it
also offers such data services as Internet access and remote
access to LANs, ISPs, and value-added resellers. Focal owns and
operates switches and leases transport capacity; it typically
provides its services over T1 lines. Nearly 70% of Focal's lines
are used for data traffic, and the company has rolled out
broadband digital subscriber line (DSL) service. Focal also
offers equipment colocation for ISPs. Investment firm Madison
Dearborn owns 35% of the company. At June 30, 2001, the company
reported an upside-down balance sheet, showing a total
stockholders' equity deficit of over $23 million.

FRUIT OF THE LOOM: Seeking Disclosure Statement Approval Today
Section 1125(b) of the Bankruptcy Code prohibits postpetition
solicitation of a reorganization plan unless the plan (or
summary thereof) and "a written disclosure statement approved,
after notice and a hearing, by the court as containing adequate
information" are transmitted to those persons whose votes are
being solicited. Fruit of the Loom, Ltd., and its debtor-
affiliates want to solicit votes on the First Amended Plan and,
Accordingly, request that Judge Walsh approve the Disclosure
Statement as providing adequate information within the meaning
of section 1125(a)(1) of the Bankruptcy Code.

The Amended Disclosure Statement, Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy, argues is extensive and
comprehensive; it contains descriptions and summaries of, among
other things, (a) the Plan, (b) certain events preceding the
commencement of the chapter 11 case, (c) significant events
during the chapter 11 cases, (d) the nature of known claims
against the Debtors' estates, (e) securities to be issued under
the Plan, (f) risk factors affecting the Plan, (g) a liquidation
analysis setting forth the estimated recoveries that creditors
would receive in chapter 7, (h) financial information and
valuations that would be relevant to creditors' determinations
of whether to accept or reject the Plan, and (i) securities law
and federal tax law consequences of the Plan.  Accordingly, the
Debtors submit that the Disclosure Statement contains adequate
information within the meaning of section 1125 of the Bankruptcy
Code and should be approved.

                       State Street Complains

"We do not agree," says Jeanne P. Darcey, Esq., and Eddirland D.
Christel, Esq., of Palmer & Dodge, in Boston, counsel for State
Street Bank and Trust. They tell the Court that the Disclosure
Statement: (i) fails to provide adequate information as required
by the Bankruptcy Code in a number of respects; (ii) improperly
classifies certain claims; and (iii) fails to provide sufficient
information in connection with the rights of the Trustee with
respect to its claims for reimbursement of fees and expenses.
For example the State Street attorneys argue that Fruit of the
Loom has improperly classified two classes of claims, namely
those in Class 4A and Class 2.  In addition, the Plan does not
expressly provide for preservation of the Trustee's charging
lien, which is a contractual right entered into between the
Trustee and the Holders and cannot, and should not, be
compromised by the Debtors.

                      Dissident Bondholders Balk

"The disclosure statement is wholly inadequate," says Bruce
Bennett, Esq., at Hennigan, Bennett & Dorman, on behalf of DDJ
Capital Management, Lehman Brothers and Mariner Investments.
The Dissident Bondholders say that the Disclosure Statement
fails to provide adequate explanation of the apparent decline in
the value of Fruit of the Loom's assets during the course of
these proceedings.  They say that in January of 2000, Debtors
stated that their assets should be valued at $1,525,000,000, but
now have an agreement in place with Berkshire to sell those
assets for approximately $1,000,000,000.  Interestingly, this is
at odds with Fruit of thee Loom's frequent assertions that it
has improved operations since the Petition Date.

In addition, the Dissident Bondholders say they are given
insufficient time to evaluate the Disclosure Statement.  Much of
the critical information needed by creditors to decide upon the
reorganization plan is not to be provided until the filing of a
Plan Supplement only five days before the Voting Deadline, an
unreasonable burden.

                         Hearing Today
Judge Walsh will convene a hearing to consider the adequacy of
the Debtors' Disclosure Statement and creditors' gripes about
the sufficiency of the information in that document at a hearing
today in Wilmington.  (Fruit of the Loom Bankruptcy News, Issue
No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900)

GENEVA STEEL: Signs-Up Kaye Scholer as Lead Bankruptcy Counsel
Geneva Steel LLC desires to retain and employ Kaye Scholer LLP
as its lead counsel in its chapter 11 case.  The Debtor relates
to the U.S. Bankruptcy Court for the District of Utah that prior
to the petition date, the Debtor has already sought the firm's
advice regarding its restructuring effort and preparation for
the prosecution of this case.

The professional services that Kaye Scholer will render in
behalf of the Debtor are:

     a) advice the Debtor on its powers and duties as a Debtor in
possession in the continued conduct of business;

     b) negotiate a reorganization plan with creditors and other
parties in interest, and taking necessary steps to obtain
confirmation, implement the plan, and if necessary, requisite

     c) prepare on the Debtor's behalf, any necessary
applications, motions, complaints, answers, orders, reports and
other pleading documents;

     d) appear before the Court and the U.S. Trustee to protect
the Debtor's interest; and

     e) provide any legal services that the Debtor may request.

The professionals presently designated to represent the Debtor
and their standard hourly rates are:

                Andrew A. Kress            $605 per hour
                Stephen E. Garcia          $550 per hour
                Keith R. Murphy            $395 per hour
                Robert H. Yu               $335 per hour
                Gurnel Jean-Louis          $135 per hour

The Debtor believes that Kaye Scholer is well-qualified to
represent them in this case because of the firm's familiarity
with the Debtor's business and legal affairs, and its expertise
and experiences in the field of debtor reorganization.

By separate application, the Debtor also seeks to employ and
retain the law firm of LeBoeuf, Lamb, Greene & MacRae, LLP as
its local counsel. LeBoeuf will assist the Debtor on matters
relating to local custom and practice. Kaye Scholer and LeBoeuf
have discussed an appropriate division of responsibilities and
will avoid any unnecessary duplication of effort, the Debtor
assures the Court.

Geneva Steel owns and operates an integrated steel mill located
near Provo, Utah. The Company filed for chapter 11 protection on
January 25, 2002. Andrew A. Kress, Esq., Keith R. Murphy, Esq.
and Stephen E. Garcia, Esq. at Kaye Scholer LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $264,440,000 in total
assets and $192,875,000 in total debts.

GRAND EAGLE: Glenn Pollack Appointed as Chapter 11 Trustee
Candlewood Partners, LLC, a specialized investment banking firm
located in Cleveland, Ohio, announced the formal appointment of
Glenn C. Pollack, a firm managing director, as Trustee for Grand
Eagle, Inc., in its Chapter 11 bankruptcy case.

The case is pending in the United States Bankruptcy Court for
the Northern District of Ohio, Eastern Division, Akron, Ohio. As
Trustee, Pollack will oversee the operations of Grand Eagle's
business and management of the company's assets.

"I'm optimistic that Grand Eagle's business operations can be
stabilized in order to permit a sale of the company," said
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."

Based in Richfield, Ohio, Grand Eagle, (a privately held
company) is North America's largest independent motor,
switchgear and transformer services provider. The company
provides engineered upgrades, repair, remanufacturing and
maintenance services for industrial, utility and commercial
markets. Employing approximately 1,000 people, 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.

Pollack is a founder and managing director of Candlewood
Partners, LLC, a specialized investment banking firm located in
Cleveland, Ohio. During Pollack's more than 20 year career, he
has advised public and privately held companies in workouts,
financings, management buy-outs, recapitalizations and other
restructuring transactions. Previously, Pollack headed the
restructuring practice for a middle market investment bank with
offices in Chicago and Cleveland.

Before joining the investment bank, Pollack was chief executive
officer of a $180 million food distribution company. Pollack
previously was a partner at Seideman & Associates, a turnaround
and workout firm that merged its practice into Price Waterhouse.
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.

HAYES LEMMERZ: Committee Hires Klett Rooney as Local Counsel
The Official Committee of Unsecured Creditors of Hayes Lemmerz
International, Inc., and its debtor-affiliates, asks the Court
for authority to employ and retain Klett Rooney Lieber &
Schorling as co-counsel in these Chapter 11 cases, nunc pro tunc
to December 17, 2001.

According to Committee Co-Chair Leonard Rettinger, Jr., Klett
Rooney participated with Akin Gump in representing an informal
committee of the Debtors' Noteholders prior to the Petition Date
and lodged several objections to certain first day motions on
the Petition Date in behalf of this informal committee and the
unsecured creditors in general.

As co-counsel, Mr. Rettinger says, Klett Rooney will:

A. Render legal advice with respect to the powers and duties of
      the Committee and the other participants in these cases;

B. Assist the Committee in its investigation of the acts,
      conduct, assets, liabilities and financial condition of the
      Debtors, the operation of the Debtors' businesses and any
      other matter relevant to the Debtors' cases, as and to the
      extent such matters may affect the Debtors' creditors;

C. Participate in negotiations with parties-in-interest on any
      disposition of the Debtors' assets, reorganization plans
      and disclosure statement on such plan and protect and
      promote the interests of the Debtors' creditors;

D. Prepare all necessary applications, motions, answers, orders,
      reports and papers in behalf of the Committee and appear in
      behalf of the Committee at court hearings and perform all
      other necessary legal services in connection with these
      Chapter 11 cases;

E. Render legal advice and perform general legal services in
      connection with the foregoing; and

F. Perform all other legal services in connection with these

Mr. Rettinger submits that the retention of Klett Rooney is
necessary and essential for the Committee to perform faithfully
its duties in this particular bankruptcy case.

Teresa K.D. Currier, Esq., a Klett Rooney shareholder, indicates
that the Firm will charge for legal services at its customary
hourly rates:

       Teresa K.D. Currier      $395
       Kathleen P. Makowski     $195
       Jeffrey Waxman           $160

       Shareholders             $300 to $470
       Associates               $140 to $270
       Paralegals               $120

Ms. Currier states that the firm conducted a conflict check with
Klett Rooney's Conflict Identification System and discovered
these professional relationships with several parties-in-
interests in matters unrelated to these Chapter 11 cases:

A. Secured Creditors: Bank of America, Citibank, Deutsche Bank,
      First Union National Bank, Fleet National Bank, Goldman
      Sachs, IDM Inc., KBC Bank, Mellon Bank, Merrill Lynch,
      National City Bank, Sterling Equities and Wachovia Bank.

B. Bondholders: Bankers Trust Co., Chase Bondholder, Citibank
      Bondholder Affiliates and Deutsche Bank Bondholder
      Affiliates, First Union National Bank, Goldman Sachs, Legg
      Mason Wood Walker Inc., Lehman Brothers, Mercantile-Safe
      Deposit & Trust Co., Merrill Lynch Pierce Fenner & Smith,
      Morgan Stanley & Co. Inc., PNC Bank, Salomon Brothers, US
      Bank, Wachovia Bank and Wells Fargo Bank.

C. Other Creditors: American Express Co., Alcoa, National Steel,
      PPG Industries Inc., CIT Group, Continental Casualty, GE
      Capital, Great American Insurance Co., Hartford Insurance
      Co., Heller Financial, Honda of America Mfg. Inc., Royal
      Indemnity Co., St. Paul Fire & Marine Contract Insurance
      Co., Transamerica, Bank of New York, U.S. Bank Trust
      National Association and KPMG Professional.

Ms. Currier assures the Court that Klett Rooney, nor any of its
shareholder, counsel or associate, holds nor represents any
interest adverse to the Debtors and their estates in matters for
which the firm is to be retained and is a disinterested person
in these Chapter 11 cases.  (Hayes Lemmerz Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)

HOULIHAN'S RESTAURANTS: Taps Huntley Mullaney as RE Consultants
The U.S Bankruptcy Court for the Western District of Missouri
grants the request of Houlihan's Restaurants, Inc., and its
debtor-affiliates to employ and retain Huntley, Mullaney &
Spargo, LLC as their Real Estate Consultants.

Huntley will provide services relating to the evaluation and
renegotiations of the Debtors' various leaseholds. Huntley will
also market certain properties of the Debtors. The Debtors
requested the retention of Huntley with a view towards achieving
rent reductions, term modifications, and other modifications or
assignments with respect to their lease portfolio.

As proposed, Huntley will receive a Monthly Fee of $10,000 for
the first 6 months and $8,000 per month thereafter; an Incentive
Fee for lease modifications for leases not being rejected or
assigned; an Incentive Fee for marketing, selling and leasing of
Debtor's properties; and an Incentive Fee for the sale of
"Darryl's Concept," and reimbursement for any reasonably
incurred expenses.

Houlihan's Restaurants, Inc. filed for chapter 11 protection
together with affiliates on January 23, 2002.  A number of
restaurant locations have already been shuttered.  Cynthia
Dillard Parres, Esq., and Laurence M. Frazen, Esq., at Bryan,
Cave LLP represent the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed an estimated debts and assets of more than $100 million.

IT GROUP: Intends to Pay Prepetition Insurance Premiums
The IT Group, Inc., and its debtor-affiliates request entry of
an order authorizing them to make payments to finance companies
on account of prepetition insurance and surety bond premiums
financed by such companies.

According to Harry J. Soose, the Debtors' Senior Vice President,
Chief Financial Officer and Principal Financial Officer, as part
of Debtors' integrated cash management system, the Debtors
finance the payment of premiums on certain insurance policies.
Typically, the Debtors pay an initial down payment and monthly
installments thereafter to a finance company, in exchange for
such company's agreement to pay the full annual insurance
premium, in advance, to the Debtors' insurers. The Debtors'
obligation to pay the finance company is secured by the unearned
or return premium reserve for such policies. The financed
insurance policies include:

A. property liability insurance;

B. pollution liability insurance for the Northern California
    sites; and

C. pollution liability insurance for the Capital Hill project.

Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, tells the Court that the Debtors have
financed property liability insurance premiums through
Cananwill, Inc. in the aggregate amount of $1,157,739, the total
monthly premium installment payment for which is approximately
$105,249.01 and the unpaid balance is $736,743.07. The Debtors
have also financed pollution liability insurance premiums for
the Northern California sites through AFCO Credit Corporation in
the aggregate amount of $8,240,987.04, the total quarterly
premium installment payment for which is approximately
$749,180.64 and the unpaid balance is $1,498,361.28. The Debtors
have also financed pollution liability insurance premiums for
the Capital Hill project through AFCO in the aggregate amount of
$194,346.56, the total monthly premium installment payment for
which is approximately $24,293.32 and the unpaid balance is

Mr. Galardi adds that the Debtors financed a surety bond premium
for a surety bond for the South Florida Water Management
District Project. The surety bond premium is financed through
AFCO in the aggregate amount of $99,879.54. The Debtors paid an
initial down payment to AFCO and thereafter pay monthly
installments in the amount of approximately $16,646.59, in
exchange for AFCO's agreement to pay, in advance, the full
annual surety bond premium, secured by the unearned or return
premium reserve for the surety bond. The unpaid balance is

The Debtors believe that maintaining the subject insurance
coverage and the surety bond, and paying the payments due on
account of the premium finance agreements, is necessary. If
installments are not paid, over time, Mr. Galardi points out
that the amount of the unearned premium reserve will decline,
eventually leaving the finance company unsecured. Thus, absent
authority to make these payments, the finance company may seek
modification of the automatic stay to cancel the policies. Such
automatic stay litigation would be expensive and potentially
disastrous because the Debtors are obligated to maintain
insurance coverage. Moreover, Mr. Galardi notes that the amount
at issue is de minimis compared to the overall size of the
Debtors' estates. Furthermore, even if the finance company were
unsuccessful in obtaining stay relief, the Debtors' future
ability to obtain insurance or bonding on favorable terms would
be undermined. Finally, even assuming the Debtors could avoid
entirely making current payments, the finance company would
likely be entitled to adequate protection of its collateral, the
unearned premium reserve. (IT Group Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)

INTEGRATED HEALTH: Premiere Committee Brings-In BTCM as Counsel
The Official Committee of Unsecured Creditors of Premiere
Associates, Inc., and its 34 debtor-subsidiaries, appointed in
Integrated Health Services, Inc.'s Chapter 11 cases, seeks the
Court's approval, pursuant to Sections 328(a) and 1103 of the
Bankruptcy Code and Rules 2014(a) and 2016(b) of the Federal
Rules of Bankruptcy Procedure, for the retention and employment
of Blanco Tackabery Combs & Matamoros, P.A. as counsel to the
Premiere Committee, nunc pro tunc as of 5:00 p.m., January 4,

The services BTCM has rendered and may be required to render to
the Premiere Committee include, without limitation:

(a) providing legal advice with respect to its powers and duties
     as an official committee appointed under Bankruptcy Code
     Section 1102;

(b) assisting in the investigation of the acts, conduct, assets,
     liabilities and financial condition of the Premiere Group
     Debtors, the operation of the Premiere Group Debtors'
     businesses, and any other matter relevant to the case or to
     the formulation of a plan of reorganization or liquidation;

(c) preparing on behalf of the Premiere Committee necessary
     applications, motions, answers, orders, reports and other
     legal papers;

(d) reviewing, analyzing and responding to all pleadings filed
     by the Debtors and appearing in court to present necessary
     motions, applications and pleadings and to otherwise protect
     the interests of the Premiere Committee; and

(e) performing all other legal services for the Premiere
     Committee in connection with these Chapter 11 cases.

The Premiere Committee has selected BTCM because of its
attorneys' experience and knowledge, because of BTCM's existing
knowledge of Debtors' cases, which will significantly reduce
professional fees, and because of the absence of any conflict of

Mr. Gene B. Tarr, Esq. has advised that prior to and during the
IHS chapter 11 cases, BTCM represented Don G. Angell, D. Gray
Angell, Jr. and Don R. House, in their capacities as Co-Trustees
of the Don G. Angell Irrevocable Trust under instrument dated
July 24, 1992 and Bermuda Village Retirement Center Limited
Partnership (the Angell Creditors). BTCM has ceased its
representation of the Angell Creditors in the IHS case. Mr. Tarr
assures that, for so long as BTCM represents the Premiere
Committee, BTCM will not represent any entity other than the
Premiere Committee in connection with the IHS cases. Mr. Tarr
submits that BTCM is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.

The primary attorneys and paralegals expected to represent the
Premiere Committee, and their respective hourly rates are:

         Gene B. Tarr                     $200 per hour
         George E. Hollodick              $200 per hour
         Reginald F. Combs                $250 per hour
         Ashley S. Rusher                 $150 per hour
         Carolyn W. Scogin                $125 per hour
         Nathan B. Atkinson               $125 per hour
         Brenda S. Bowden (paralegal)      $60 per hour
         Lisa G. Cornatzer (paralegal)     $60 per hour
         Angela F. Perrey (paralegal)      $60 per hour
         Cynthia M. Mallon                 $60 per hour

BTCM has not received any retainer from the Premiere Group
Debtors, the Premiere Committee, or any other entity in this

The Premiere Committee is also seeking by separate application
approval to employ The Bayard Finn to serve as local counsel in
this case. The Premiere Committee believes that if the
employment of BTCM and Bayard is approved by this Court, these
firms will allocate their delivery of services to the Premiere
Committee so as to avoid any unnecessary duplication of
services. (Integrated Health Bankruptcy News, Issue No. 28;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

INTERACTIVE TELESIS: Feels Sting from Global Crossing Bankruptcy
Interactive Telesis Inc. (OTCBB:TSIS), a provider of customized
interactive voice response (IVR) and speech-enabled products and
services, announced cost cutting measures and changes to its
board of directors.

In order to align costs with revenues, the company has elected
to put a portion of its staff on a temporary part time status.
This decision came after the company's largest client, Global
Crossing, representing more than 60 percent of its annual
revenue, filed for Chapter 11 bankruptcy. The move from full
time to part time status will allow the company to evaluate the
quality of the ongoing revenue stream and determine what other
actions are required from an ongoing business perspective.

"After reviewing the various alternatives available and the
underlying business climate, we concluded that putting a portion
of our staff on a temporary part time status provides the most
effective means to restructure the company in a process that
will enable us to continue uninterrupted daily operations," said
Al Staerkel, president and CEO of Interactive Telesis.

The company also announced that Cindy Mersky has resigned from
the board of directors, effective immediately. Mersky cited
responsibilities for other clients as the reason for her
resignation The board plans to appoint an ad hoc nominating
committee to identify and recruit qualified candidates to fill
the vacancy resulting from Mersky's departure.

                     Recent Investor Activity

BH Capital and Reichmann International have made demands to
convert their share position into a debt position pursuant to
their right to do so under specified conditions set forth in
their original investment agreement of June 2000. The company
has declined their request at this time because it does not meet
the specified conditions.

Interactive Telesis specializes in custom interactive voice
response (IVR) services and deployment of automated speech
recognition (ASR) technologies. Interactive Telesis presents a
very compelling offering for companies wishing to leverage the
benefits of IVR and speech recognition without the high cost of
ownership, capital outlay and internal IT staff requirements.
Clients include industry leaders such as 3D Systems, Global
Crossing, Lucent, MCI, Nike, Sprint, Wells Fargo, Worldcom and
Verizon, among others. Interactive Telesis is headquartered in
San Diego. For additional information, call 858/523-4000 or

JDN REALTY: S&P Affirms BB- Rating After Class Action Settlement
Standard & Poor's affirmed its double-'B'-minus corporate credit
rating on JDN Realty Corp., as well as the ratings on $235
million of senior notes and $75 million of preferred stock. In
addition, Standard & Poor's revised its outlook on JDN Realty
Corp., to stable from negative.

The outlook revision acknowledges the settlement of a class
action lawsuit, a strengthened management team, and the quality
and continued stability of the company's core portfolio. The
company's primary credit weaknesses remain weaker coverage
measures, limited financial flexibility, and higher levels of
short-term debt.

Shortly after the February 2000 announcement regarding
previously undisclosed compensation arrangements, JDN was faced
with turnover of the senior management team, a technical default
on the company's unsecured line of credit, and an uncertain
contingent liability related to shareholder lawsuits. Since that
time, the appointments of an interim CEO and CFO were made
permanent. Additionally, a seasoned shopping center developer
was named CEO and President of JDN Development Co. This new team
set out to improve relationships with existing tenants and
bankers, while proving the viability of its revised growth

Standard & Poor's recognizes that some progress has been made
toward these goals. The most visible of which was the $46
million settlement of a class action lawsuit that had
represented a potentially large contingent liability. The
settlement, which was made in the form of cash and common stock,
was expensed in the second quarter of 2001. It could take a
while longer, though, for the company's modified business model
to prove viable. The new management team has shifted its
development focus from predominantly Wal-Mart and Lowe's
anchored centers to grocery-anchored shopping centers. If
successful, this new model would further diversify JDN's tenant
base and enhance the company's cash flow stability.

Atlanta, Georgia-based JDN is a fully integrated REIT that
develops and manages shopping centers anchored by value-oriented
retailers. Today, the company owns 102 centers totaling 11.1
million square feet. The properties are relatively new and well
occupied by generally high-quality anchor tenants on long-term
leases. Five of the six largest tenants, led by Lowes Cos. Inc.
(single-'A') and Wal-Mart Stores Inc. (double-'A'), are
investment-grade tenants that contribute 31% of JDN's base
rental income. Kmart Corp. ('D') contributes less than 3% of
rental income. All five Kmart locations are currently operating
and paying rent. In addition to the relatively strong credit
quality of most of these retailers, lease expirations are very
stable, with an average of only about 4% of base rents expiring
annually over the next ten years.

JDN's financial profile continues to be impacted by a higher
cost of capital as well as additional costs consisting primarily
of legal expenses related to the shareholder lawsuit. While
leverage remains moderate at 55% on a book value basis, coverage
measures are weak at 2.1 times debt service and 1.8x fixed
charges (as of Sept. 30, 2001). These measures are low,
particularly given JDN's development and refinancing needs over
the next two years, and the variable rate nature of 42% of JDN's
debt. JDN does have sufficient capacity to fund the remaining
portion of its existing development commitments, primarily
through construction loans and expected asset sales proceeds.
However, financial flexibility and the company's ability to
implement its revised business plan, remains limited, since a
significant portion of JDN's portfolio is pledged to secured
lenders. As a result, Standard & Poor's views the unsecured
noteholder as being in a subordinate position, which warrants a
distinction between the corporate credit rating and the ratings
on the unsecured notes.

                        Outlook: Stable

The stable outlook acknowledges the progress the new management
team has made toward improving tenant and lender relationships
and eliminating much uncertainty surrounding shareholder
lawsuits. As JDN's developments come on-line and begin to
contribute to earnings, debt protection measures should
gradually improve. Standard & Poor's will consider improvement
to the rating and/or outlook upon the company's demonstration of
its ability to appropriately fund and execute its stated
business plan.

JACOBSON STORES: Secures Interim $100MM DIP Financing Approval
Jacobson Stores Inc., (Nasdaq: JCBS) has received interim
authority from the bankruptcy court overseeing its Chapter 11
reorganization for a one-year secured debtor-in-possession
revolving credit facility of up to $100 million.

The facility, to be administered by Boston-based Fleet Retail
Finance Inc., will be used by Jacobson's in part to purchase
merchandise and maintain essential business operations pursuant
to its business plan.  A final hearing on the facility is
scheduled for February 26, 2002.

As previously reported, Jacobson's, a regional specialty store
chain, filed a Chapter 11 petition for reorganization on January
15, 2002, with the United States Bankruptcy Court for the
Eastern District of Michigan, Southern Division, in Detroit.

The court also approved Jacobson's previously announced plan to
close five under-performing stores located in Columbus and
Toledo, Ohio; and Clearwater, Osprey and Tampa, Florida.  As
part of this action, The Ozer Group of Needham, Massachusetts,
will conduct the closing sales for these five stores.  These
sales, which began today, are expected to continue for several

Jacobson's currently operates 23 specialty stores in Michigan,
Ohio, Indiana, Kentucky, Kansas and Florida.  The Company's web
site is located at

KMART CORPORATION: Honoring Prepetition Customer Obligations
To maintain a business-as-usual atmosphere from a Kmart
Shopper's perspective, Kmart Corporation and its debtor-
affiliates sought and obtained authority to:

(a) honor approximately $42,300,000 of Gift Certificate
     Obligations (including gift or similar certificates,
     pre-paid gift cards, and cash cards for use in the Debtors'
     stores, plus "virtual cards" for use on the Debtors'
     Web sites.  As of the Petition Date, certain customers had
     not-yet redeemed certain of these prepetition Gift
     Certificates for goods or services. At the time that the
     customers in question purchased these Gift Certificates,
     they had every expectation that they would be redeemable.

(b) honor all Warranty obligations.  Prior to the Petition Date,
     the Debtors sold various extended merchandise warranties on
     certain merchandise under the umbrella name "Smart Plan" on
     behalf of a third-party warranty provider.  The Warranties
     provide for replacement of defective merchandise with
     identical new merchandise or the reimbursement of the
     customer's purchase price.  The Debtors have no liability
     with respect to Smart Plan warranty claims.  The liability
     for these claims belongs entirely to National Electric
     Warranty Company, the company sponsoring Smart Plan,
     providing customers with an additional year of coverage
     after the expiration of the manufacturer's warranty.  Under
     the Replacement Plan, coverage begins on the date of the
     customer's purchase and lasts one year. Under the Service
     Plan, if an item cannot be repaired after three attempts,
     such item will be replaced.  Additional Service Plan
     coverage is available for certain electronic merchandise.
     The ability to continue to provide the Warranties is vital
     to the Debtor's ongoing relationship with their customers.
     Although it is difficult to estimate the amount of
     prepetition warranty fees that the Debtors may owe to the
     third-party warranty providers, during the year prior to the
     commencement of these chapter 11 cases, the Debtors had
     collected revenues from Warranty sales of approximately
     $19,000,000, 50% of which are payable to the third-party
     warranty provider.

(c) honor all layaway agreements entered into prior to the
     Petition Date.  At the time that the customers in question
     made the Deposits, they had every expectation that the
     Debtors would apply the Layaway Deposits toward the purchase
     price of the Layaway Merchandise.  The Debtors estimate
     that, as of the Petition Date, they hold approximately
     $12,300,000 in Layaway Deposits.

(d) honor Returns, Refunds and Exchanges to customers in the
     ordinary course of business in the same manner as the
     Debtors did prior to the Petition Date, including Refunds of
     purchases paid for with charge/credit cards.  Because
     customers rely on the existence of such Refunds when they
     shop, the Debtors typically issue Refunds in the ordinary
     course of their business. It is difficult to ascertain with
     precision an estimate of the aggregate amount of requests
     for Refunds for merchandise purchased prior to the Petition
     Date. However, the Debtors estimate that for the fiscal year
     ending January 31, 2001, they will process approximately
     $2,300,000,000 in Returns.

(e) honor prepetition "rain checks" issued by the Debtors.  When
     out-of-stock merchandise is requested by a customer, the
     Debtors offer their customers the option of either
     purchasing at a later date the same merchandise at the
     currently advertised price or substituting comparable
     merchandise for the same price as the out-of-stock
     merchandise.  Certain of the Debtors' customers held rain
     checks as of the commencement of these cases. The Debtors
     believe that their ability to honor those rain checks is a
     key component to maintaining their relationships with their

(f) pay an estimated $14,600,000 of prepetition obligations owed
     to certain non-employee Customer Service Provider.  The
     Debtors use the services of certain individuals or entities
     who: (a) provide services to the Debtors' customers on
     behalf of the Debtors under licenses or other agreements
     (including, without limitation, internet service providers),
     (b) have direct contact with the Debtors' customers or take
     possession of customers' goods or property, (c) are
     perceived by customers to be employees of the Debtors, or
     (d) are compensated by the Debtors, who, in turn, receive
     customer payments for those services.  The Debtors utilize
     the services of several Customer Service Providers at their
     retail stores and for the operation of their retail website.
     Footstar, Inc., for example, owns a series of entities in
     which Kmart owns a minority interest.  These entities
     operate the footwear departments in each of Kmart's stores.
     When customers purchase footwear, Kmart collects the payment
     on behalf of itself and Footstar.  Kmart periodically-remits
     to Footstar a portion-of the payments pursuant to the
     parties' agreements.  Other examples of Customer Service
     Providers with whom the Debtors have similar arrangements
     include auto service and repair providers, greeting card
     companies, film developers, photography studios, food
     service providers, ticket service providers, and cash
     transfer service providers.

(g) honor such other similar policies, programs and practices of
     the Debtors in the ordinary course of business, including
     obligations under any Customer Satisfaction Programs and any
     other obligations to Customers for (a) deposits,
     overpayments (for example, with respect to check writing
     fees), partial payments, or pre-payments related to sales of
     goods and services (including services related to warranty
     protections and goods under "layaway" programs) that the
     Debtors have not yet delivered, provided (in full or in
     part), or obtained from third parties and (b) payments for
     gift or similar certificates (including, gift cards, cash
     cards, or "virtual cards") and coupons or certificates that
     customers have not yet redeemed for goods or services.

Most -- if not all -- of these Customer Obligations are entitled
to priority under 11 U.S.C. Sec. 507(a)(6), subject to a $2,100
cap per claim and will likely be entitled to receive payment in
full before payment of claims of general unsecured creditors,
John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom

Kmart CEO Charles C. Conaway tells the Court that the success
and viability of the Debtors' business, and ultimately the
Debtors' ability to successfully reorganize, are totally
dependent upon customer patronage and loyalty.  The Customer
Satisfaction Programs are critical and any delay in honoring the
Debtors' obligations will severely and irreparably impair
customer relations.  Additionally, any failure to honor
prepetition Customer Service Provider obligations, for even a
brief time, might well drive away valuable customers, thereby
irreparably harming the Debtors' efforts to reorganize from the
outset. (Kmart Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

LEINER HEALTH: Seeking Support of Prepack Reorganization Plan
Leiner Health Products Inc., announced that it has begun
formally soliciting Senior Bank Lender and bondholder votes in
support of its previously announced consensual prepackaged plan
of reorganization. The Company said that it had commenced
mailing ballots and a disclosure statement on January 30, 2002
to its Senior Bank Lenders and holders of its Senior
Subordinated Notes.

The Company said that holders of approximately 80 percent of its
outstanding Senior Subordinated Notes have already entered into
Forbearance and Lock-Up Agreements that secure the support of
these holders for the proposed restructuring plan. Additionally,
the Company said that holders of approximately 93 percent of
Leiner's outstanding bank debt have also entered into a Lock-up
Agreement regarding support of the plan.

As previously announced, the Company intends to implement its
financial restructuring through a consensual prepackaged plan of
reorganization under Chapter 11 of the US Bankruptcy Code.
Leiner said that under the proposed restructuring plan,
suppliers will be unimpaired and normal business operations will
continue. Also, Leiner's Canadian business would continue as
usual and Vita Health's creditors will not be impaired.

The Company entered into definitive documentation on January 30,
2002 with its primary investors on the terms of a new equity
investment, and has, as previously announced, reached agreements
in principle with its bank lenders and principal subordinated
debtholders on the terms of a comprehensive financial
restructuring. Under the definitive documents, a group of
Leiner's existing equity investors, led by North Castle
Partners, will invest $20 million in the Company. Under the
terms of the agreement in principle with bondholders
representing approximately 80 percent of the face value of
Leiner's 9.625 percent Senior Subordinated Notes due June 30,
2007, bondholders will receive a combination of cash and newly
created preferred stock in exchange for the current Notes, an
exchange that will reduce Leiner's indebtedness by $85 million.
Under the agreement in principle with its bank lenders, Leiner's
existing senior indebtedness will be restructured and remain
outstanding. In addition, Leiner's bank lenders will extend the
Company a new revolving credit facility of up to $20 million.

Assuming a successful solicitation of votes, Leiner would expect
to file its plan of reorganization with the US Bankruptcy Court
by the end of February 2002 and consummate the plan and exit
Chapter 11 within a few months thereafter.

Robert Kaminski, Chief Executive Officer, said, "The
commencement of the solicitation process is a significant move
in finalizing our restructuring process. We are gratified by the
support of our bondholders and bank lenders for the plan, and
are confident that we will obtain the level of support necessary
for implementation. We are especially pleased that our
restructuring plan will not impair our suppliers nor will it
impact our customers; both groups have been extremely supportive
of Leiner during the entire restructuring process."

Leiner Health Products Inc., headquartered in Carson,
California, is one of America's leading vitamin, mineral,
nutritional supplement and OTC pharmaceutical manufacturers. The
company markets products under several brand names, including
Natures Origin, YourLife and Pharmacist Formula. For more
information about Leiner Health Products, visit

LODGIAN INC: Taps PricewaterhouseCoopers as Accountants
Lodgian, Inc., and its debtor-affiliates ask the Court for
authority to employ and retain PricewaterhouseCoopers LLP as
their accountants and tax advisors, nunc pro tunc to December
20, 2001.

Michael J. Edelman, Esq., at Cadwalader Wickersham & Taft in New
York, tells the Court that PricewaterhouseCoopers will work
closely with the Debtors and their counsel as tax compliance
providers and tax consulting advisors in connection with these
Chapter 11 cases. The services of PricewaterhouseCoopers as tax
advisors are necessary in order to enable Lodgian to execute its
duties as Debtors and debtors-in-possession. Thus, the
employment of the said firm is necessary, essential and in the
best interest of the administration of these Chapter 11 cases.

Mr. Edelman submits that no amounts are owed by the Debtors to
PricewaterhouseCoopers as of the Petition Date. The Debtors
expect PricewaterhouseCoopers negotiate fixed fee or reduced
hourly billing rate arrangements with Lodgian for certain tax
services unrelated to these Chapter 11 cases. Such rates will be
no greater than the hourly rates charged to the firm's non-
bankruptcy clients.

In an affidavit, PricewaterhouseCoopers Partner Keith Ruth
states that on September 11, 2001, the Debtors and the firm
executed an engagement letter for the latter to provide tax
compliance outsourcing services to the Debtor. On December 10,
2001, another engagement letter was executed for the firm to
provide tax consulting services.

Given these relationships, Mr. Ruth contends that
PricewaterhouseCoopers is familiar with the Debtors' business
and that he and other professionals at the firm are well
qualified to act as tax advisors to the Debtors. In addition ,
PricewaterhouseCoopers professionals have significant experience
in representing companies in the hotel industry including that
of Six Continents.

The services expected of PricewaterhouseCoopers include:

A. Completing state and local income tax and franchise tax
        returns; preparing annual federal and state income tax
        returns for the Debtors beginning with the return for the
        year ending December 31, 2001.

B. Consulting on tax matters and other related matters as the
        Debtors or their counsel may request; and

C. Performing all other necessary accounting services in
        furtherance of its role as tax advisor for the Debtors

Mr. Ruth states reveals that PricewaterhouseCoopers have
rendered financial or tax compliance or consulting services,
unrelated to these proceedings, to the sixteen of the Debtors'
twenty largest creditors: Oracle Corp., Chase Bank of Texas,
Alliant Food Service, Marriott, GMAC Commercial Mortgage Corp.,
Lodgenet Entertainment, Choice Hotels, Niagara Mohawk, Ernst &
Young LLC, Zurich American Insurance Group, Waste Management,
ITA, Office Depot, Pepsi and Guest Supply.

Mr. Ruth submits that PricewaterhouseCoopers will be compensated
for services rendered according to the terms in its engagement
letter with the Debtors. In addition, the firm will also seek
reimbursement of its out-of-the-pocket expenses incurred in
connection with the Debtors' cases. (Lodgian Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)

MAXCOM TELECOM: Reaches Debt Restructuring Deal with Bondholders
Maxcom Telecomunicaciones, S.A. de C.V., a facilities-based
telecommunications provider (CLEC) using a "smart build"
approach to focus on small- and medium-sized businesses and
residential customers in the Mexican territory, said that it has
reached an agreement in principle with an informal committee of
bondholders, who hold the majority of its outstanding debt.  The
restructuring plan would reduce Maxcom's debt by 36% to $175
million, impacting positively on its annual debt service by $38
million over each of the next four years.

Bondholders representing over 56% of the outstanding Senior
Notes have agreed to the terms of the restructuring plan and
will tender their notes as part of the agreement.  Additionally,
a group of investors led by some of the existing shareholders
will invest up to $70 million in additional equity capital to
fund ongoing capital expenditure and customer acquisition costs.

The Company anticipates that the exchange offer and consent
solicitation will take effect as soon as feasible.  Among the
terms of the restructuring plan the following are included:

   *  Maxcom's outstanding $275 million principal amount
      Senior Notes will be exchanged for $175 million principal
      amount of New Senior Notes maturing on March 1, 2007, along
      with an additional consideration mentioned below.

   *  The $175 million New Senior Notes will bear 0% (zero)
      interest through March 1, 2006 and 10% payable semiannually
      in the final year.

   *  The Company will issue New Series A Convertible Preferred
      Stock to bondholders upon completion of the exchange offer,
      representing approximately 15% of Maxcom's outstanding
      capital stock prior to dilution of existing options and

   *  As part of the exchange offer, the Company will solicit
      consents to amend the terms of the indenture governing the
      Senior Notes to eliminate substantially all of the
      restrictive covenants and certain events related to

   *  If the exchange offer is completed before April 1, 2002,
      which is the next interest payment date on the Senior
      Notes, bondholders will also have the option to receive
      either cash in an amount equal to what they would have
      received as interest payment, or additional New Series A
      Convertible Preferred Stock.

   *  The Company will cancel its $25 million proprietary
      position on the Senior Notes repurchased during year 2001.

Stakeholders will invest up to $70 million in exchange for New
Series B Convertible Preferred Stock.  The New Series B
Convertible Preferred Stock issued in connection with the
restructuring will represent 77.5% of Maxcom's outstanding
capital stock.  The $70 million investment, which is conditioned
to the completion of the exchange offer, will be disbursed in
two tranches: $50 million upon the completion of the exchange
offer, and $20 million during the following year at the
Company's choice.

"I am extremely pleased that Maxcom's key stakeholders could
reach an agreement that recapitalizes the Company and provides
for its continued growth and success," stated Fulvio Del Valle,
Maxcom's President and Chief Executive Officer. Mr. Del Valle
added, "despite current market conditions, we completed the
negotiations in a record time as the stakeholders did not want
to waste time once they've validated Maxcom's potential."

"This restructuring will enable Maxcom to fund its business plan
and aggressively attack its target markets," said Jacques
Gliksberg from Banc of America Equity Partners and Chairman of
the Finance Committee of Maxcom's Board of Directors. Mr.
Gliksberg added, "this agreement with the bondholders committee
during difficult times in the telecommunications industry,
particularly in emerging markets, is an indication of the
confidence that the shareholders and bondholders have in
Maxcom's management and existing business opportunities."

"Maxcom's bondholders committee is very supportive of the
Company's ongoing results and its management; it believes that
the restructuring plan positions the Company as a significant
player in the Mexican telecommunications industry," stated
Michael Stamer of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
counsel to the informal bondholders committee.

The completion of the restructuring plan and additional $70
million investment is subject to certain conditions, including
the exchange of at least 95% of the outstanding Senior Notes and
certain Mexican regulatory approvals.

Maxcom Telecomunicaciones, S.A. de C.V, headquartered in Mexico
City, Mexico, is a facilities-based telecommunications provider
using a "smart-build" approach to deliver last-mile connectivity
to small- and medium-sized businesses and residential customers
in the Mexican territory. Maxcom launched commercial operations
in May 1999 and is currently offering local, long distance and
data services. In March 2000 the Company issued US $300 million
in 13.75% notes due 2007. Information about Maxcom's bonds can
be located on Bloomberg under the symbol "MAXTEL".

MUTUAL RISK: Gets Waivers & Amendments Re December 31 Default
Effective January 15, 2002, Mutual Risk Management, Ltd. entered

      (A) a Waiver and Amendment of its Convertible Exchangeable
Debenture Due 2006 with Mutual Group, Ltd., MGL Investments
Ltd., Legion Financial Corporation, Mutual Risk Management Ltd.,
MRM Securities Ltd., Mutual Finance Ltd., and XL Insurance Ltd.,
which governs all of the holders of the Company's Debentures;

      (B) a Waiver and Amendment to Credit Agreement with Mutual
Group, Ltd., MGL Investments Ltd., Legion Financial Corporation,
Mutual Risk Management Ltd., MRM Securities Ltd., Mutual Finance
Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados)
Ltd., the Lenders under the Company's $180 million bank facility
and Bank of America, N.A., as the Administrative Agent for the
Lenders; and

      (C) a Waiver with Mutual Finance Ltd., Mutual Indemnity
Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda)
Ltd., Mutual Indemnity (Dublin) Ltd., Mutual Indemnity
(Barbados) Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services
(Barbados) Ltd., the Lenders under the Company's Letter of
Credit and Reimbursement Agreement and Bank of America, N.A., as
the Administrative Agent for the Lenders,

each with regard to the Company's default as of December 31,
2001 of a covenant regarding required minimum statutory combined
ratio, among other matters. In conjunction with the waivers, two
of the waivers also amended their respective underlying,
governing agreements, including an amendment to increase the
required minimum shareholders' equity and an amendment to
increase the minimum required risk based capital ratio, both
effective April 30, 2002.

On January 15, 2002, the Company also announced that it has
appointed Mr. James C. Kelly as interim Chief Financial Officer
of the Company. As previously announced, the Company's former
CFO, Mr. Andrew Cook, has accepted a position as CFO of AXIS
Specialty Limited, a recently formed Bermuda insurer.
Mr. Kelly served as Mutual Risk Management's CFO for ten years
until the end of 2000. The Company is in the process of
recruiting a permanent Chief Financial Officer. Mr. Angus H.
Ayliffe, the Company's Controller, was designated as the
Company's Principal Accounting Officer.

NATIONSRENT: Court Okays Logan & Co. as Debtors' Claims Agents
NationsRent Inc., and its debtor-affiliates sought and obtained
permission to employ Logan & Company, Inc. to perform certain
claims, noticing and balloting functions; and approving the form
and manner of notice of the initial meeting of the Debtors'

Daniel J. DeFranceschi, Esq., at Richards Layton & Finger P.A.
in Wilmington, Delaware, believes that the large number of
creditors and other parties in interest involved in the Debtors'
chapter 11 cases may impose heavy administrative and other
burdens upon the Court and the Office of the Clerk of the Court.
To relieve the Court and the Clerk's Office of these burdens,
the Debtors propose to appoint Logan as a claims processing,
noticing and balloting agent in these chapter 11 cases.

Mr. DeFranceschi tells the Court that Logan is a data processing
firm that specializes in claims processing, noticing and other
administrative tasks in chapter 11 cases. The Debtors seek to
engage Logan to transmit certain designated notices, to maintain
claims files and claims registers and to assist the Debtors with
administrative functions related to any disclosure statement and
plan of reorganization. It is anticipated that Logan will
perform, at the request of the Debtors or the Clerk's Office
these services as the Claims, Noticing and Balloting Agent:

A. prepare and serve required notices in these chapter 11 cases,

      a. notice of the commencement of these chapter 11 cases and
           the initial meeting of creditors;

      b. notice of the claims bar date;

      c. notice of objections to claims;

      d. notice of hearings on any disclosure statement and
           confirmation of a plan of reorganization; and

      e. such other miscellaneous notices as the Debtors or the
           Court may deem necessary or appropriate for an orderly
           administration of these chapter 11 cases;

B. within five days after the mailing of a particular notice,
      file with the Clerk's Office a certificate or affidavit of
      service that includes a copy of the notice served, an
      alphabetical list of persons upon whom the notice was
      served and the date and manner of service;

C. maintain copies of all proofs of claim and proofs of interest
      filed in these cases;

D. maintain official claims registers in these cases by
      docketing all proofs of claim and proofs of interest in a
      claims database that includes the following information for
      each claim or interest asserted:

      a. the name and address of the claimant or interest holder
           and any agent thereof, if the proof of claim or proof
           of interest was filed by an agent;

      b. the date the proof of claim or proof of interest was
           received by Logan and, if applicable, the Court;

      c. the claim number assigned to the proof of claim or proof
           of interest;

      d. the asserted amount and classification of the claim; and

      e. the applicable Debtor against which the claim or
           interest is asserted;

E. implement necessary security measures to ensure the
      completeness and integrity of the claims registers;

F. transmit to the Clerk's Office a copy of the claims registers
      on a weekly basis, unless requested by the Clerk's Office
      on a more or less frequent basis;

G. maintain an up-to-date mailing list for all entities that
      have filed proofs of claim or proofs of interest in these
      cases and make the list available upon requests to the
      Clerk's Office or at the expense of any party in interest;

H. provide access to the public for examination of copies of the
      proofs of claim or proofs of interest filed in these cases
      without charge during regular business hours;

I. record all transfers of claims and provide notice of such
      transfers to the extent required;

J. provide temporary employees to process claims, as necessary;

K. promptly comply with such further conditions and requirements
      as the Clerk's Office or the Court may at any time
      prescribe; and

L. provide such other claims processing, noticing and related
      administrative services as may be requested from time to
      time by the Debtors.

In addition to the foregoing, Logan will assist the Debtors in:

A. the preparation of their schedules of assets and liabilities,
      statements of financial affairs and master creditor lists
      and any amendments thereto;

B. the reconciliation and resolution of claims;

C. the preparation, marking and tabulation of ballots and other
      related services for the purpose of voting to accept or
      reject a plan or plans of reorganization; and

D. technical support in connection with the foregoing.
(NationsRent Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

PACIFIC GAS: Seeking Regulatory Approval of Plan's Elements
As promised in its Bankruptcy Court filings, PG&E Corporation
(NYSE: PCG), and Pacific Gas and Electric Company jointly
submitted an application to the Securities and Exchange
Commission (SEC) seeking approval of elements of the utility's
proposed Plan of Reorganization (POR) pursuant to the federal
Public Utility Holding Company Act of 1935 (PUHCA).

The POR and accompanying disclosure statement identify several
important regulatory approvals that must be obtained in order
for the Plan to be implemented and the utility to emerge from
bankruptcy no later than December 31, 2002.  PG&E has already
filed applications with the Nuclear Regulatory Commission (NRC)
and the Federal Energy Regulatory Commission (FERC) seeking
necessary regulatory approvals.  Among other conditions, the POR
must be confirmed by the U.S. Bankruptcy Court.

The PUHCA filing made Thursday is necessary because, under the
POR, the electric transmission (ETrans), electric generation
(Gen), and gas transmission (GTrans) assets would be transferred
to subsidiaries of PG&E Corporation, where they would issue debt
in order to provide funds to pay off PG&E's creditors, without
asking the Bankruptcy Court for a rate increase or state
bailout.  The ETrans and Gen subsidiaries would be "public
utilities" as defined in PUHCA.  Under PUHCA, a company must
obtain SEC approval for a transaction that results in that
company owning more than one PUHCA-defined public utility.

For purposes of the SEC review of the application, the filing
presents values for the assets of the four companies that
Pacific Gas and Electric Company will be divided into under its
bankruptcy Plan of Reorganization: Pacific Gas and Electric
Company -- $9.5 billion, ETrans -- $1.6 billion, GTrans -- $1.4
billion, and Gen -- $5.3 billion.  Under the plan, ETrans,
GTrans and Gen will assume significant amounts of Pacific Gas
and Electric Company's debt:  ETrans -- $1.1 billion, GTrans --
$900 million, and Gen -- $2.4 billion.

The value for Gen represents PG&E's estimate of the value of
Gen's nuclear and hydroelectric assets and power contracts if
the company's POR is approved as proposed.  Under California
law, PG&E's ratepayers were entitled to receive the market value
of non-nuclear generation assets owned by PG&E as a credit
against their obligation to pay certain of PG&E's investment
costs.  The application and actual amount of any credit for
California ratemaking purposes will depend upon the way the
California Public Utilities Commission or the courts implement
applicable law.

The filing seeks the expeditious approval by the SEC of the
proposed transaction, emphasizing that it meets the applicable
standards of PUHCA:

      -- The POR would have no anti-competitive effect,
representing as it does only a regrouping of assets and
businesses under existing ownership;

      -- Fees and commissions would be within accepted ranges;

      -- The resulting entities would be creditworthy, reflecting
capital structures supportive of investment grade credit

      -- The businesses and assets allocated to discrete entities
would be interconnected utility assets in a single region
capable of effective management and in each case subject to
effective regulation;

      -- The POR would benefit the utility and its investors,
ratepayers and creditors by permitting its emergence from
bankruptcy with payment of all valid claims; implementation of
the POR does not require a retail rate increase.

Pacific Gas and Electric Company has requested an expedited
review and approval process of this application.  While not
required to act on an application within any set period of time,
the SEC generally issues its approval some time after all other
regulatory approvals have been obtained. It is anticipated that
approval will be obtained in time to allow the plan of
reorganization to be implemented by December 31, 2002.

POLAROID CORP: Seeks Extension of Exclusive Period to April 29
Polaroid Corporation, and its debtor-affiliates ask Judge Walsh
to extend their exclusive period during which to file a plan of
reorganization through April 29, 2002 and allow the Company the
exclusive right to solicit acceptances of that plan through June
24, 2002.

Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom
in Wilmington, Delaware, asserts that the extension is needed to
provide the Debtors a "full and fair opportunity to negotiate
and propose one or more reorganization plans without
deterioration and disruption."

To date, Mr. Galardi points out that the Debtors have devoted
their efforts to:

   * stabilizing the businesses;

   * exploring and pursuing certain strategic opportunities; and

   * facilitating negotiations with primary creditor

The extension will give the Debtors more time to continue these
activities and, hopefully, come up with a consensual plan of
reorganization, Mr. Galardi concludes. (Polaroid Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,

POLYMER GROUP: Negotiating with Investor for Financial Workout
Polymer Group, Inc. (NYSE: PGI) said that it is in active
negotiations with a third party that could lead to a
comprehensive financial restructuring.  The terms of any
restructuring are still under discussion, but are expected to
include a reduction in outstanding indebtedness in return for
the issuance of a substantial amount of new equity.

The potential transaction is subject to significant conditions,
including completion of confirmatory due diligence by the third
party as well as negotiation and execution of definitive
documentation.  The Company expects that existing equity
ownership would be substantially diluted as a result of the
potential restructuring.  Polymer Group has been in contact with
several holders of its outstanding Senior Subordinated Notes,
and is assisting in the formation of an informal bondholder
committee to represent such holders in this process.

The Company also announced that it continues to have substantial
liquidity, with approximately $50 million in cash and short-term
investments available to fund its operations.

As previously disclosed, the Company entered into a Forbearance
Agreement with its senior lending group.  Under the terms of the
Forbearance Agreement, the Company was required to deliver to
the senior lenders, among other things, a complete and
comprehensive recapitalization proposal by January 31, 2002. The
Company has not fully satisfied this condition, but is currently
in active negotiations intended to satisfy such requirement.
Consequently, the senior lenders will have the right to rescind
the Forbearance Agreement at any time following January 31,
2002.  The Company does not expect that the lenders will rescind
the Forbearance Agreement as long as the Company is continuing
to negotiate the possible restructuring proposal described

In the event the senior lenders were to rescind the Forbearance
Agreement and exercise their remedies under the senior credit
facility for any reason available to them, which would include
any action being taken by the Company's holders of Senior
Subordinated Notes, the Company would seek to reorganize under
Chapter 11.

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

DebtTraders reports that Polymer Group Inc.'s 9% bonds due 2007
(PGI1) are trading in the high 30s. For real-time bond pricing,

PRANDIUM: Foothill Won't Make Further Advances Under Facility
On January 10, 2002, Prandium, Inc., FRI-MRD Corporation, Chi-
Chi's, Inc., and certain other subsidiaries of the Company
entered into a letter agreement with Foothill Capital
Corporation whereby the Company Entities acknowledged that
certain specified events of default had occurred under the
Amended and Restated Loan and Security Agreement among Foothill
and the Company Entities and acknowledged that as a result of
such events of default, Foothill has no further obligation to
make advances or otherwise extend credit under the Foothill
Credit Facility.

However, Foothill did agree to extend for one year all letters
of credit under the Foothill Credit Facility which expire during
the period of forbearance described below. Foothill also agreed
that, subject to certain conditions including the reaffirmation
and consent by the Company Entities of their obligations under
the Foothill Credit Facility, it would forbear from exercising
its remedies relative to the events of default specified in the
letter agreement until the earliest to occur of: (i) March 31,
2002 (or such later date as Foothill may designate in writing in
its sole discretion); and (ii) the occurrence of any Event of
Default under the Foothill Credit Facility (other than those
defaults set forth in, and certain future defaults contemplated
by, the letter agreement).

The Company Entities also (A) released Foothill from any claims
they may have arising under the Foothill Credit Facility, (B)
agreed not to seek authority from any bankruptcy court to obtain
the use of any cash Foothill holds as cash collateral and
additional security for letters of credit outstanding under the
Foothill Credit Facility, and (C) covenanted that the Company
and FRI-MRD Corporation would each commence a pre-negotiated or
prepackaged proceeding under chapter 11 of the United States
Bankruptcy Code on or before March 1, 2002. The Foothill Credit
Facility was amended to extend its maturity date from January
10, 2002 to March 31, 2002, and to increase the amount of a
substitute letter of credit, which the Company Entities must
deliver to Foothill upon the Foothill Credit Facility's
termination, from 105% to 107% of the outstanding letters of
credit if Foothill is not released from all such letters of
credit. Foothill currently holds approximately $10.2 million as
cash collateral for the outstanding letters of credit.

Prandium is currently negotiating with its creditors to reach
agreement on an acceptable capital restructuring of the Company
and its subsidiaries. These negotiations contemplate that an
acceptable capital restructuring will include the filing of a
voluntary prearranged or prepackaged chapter 11 reorganization
plan under the United States Bankruptcy Code. There can be no
assurances that the Company will be able to successfully reach
an agreement with its creditors with respect to an acceptable
capital restructuring or file any voluntary prearranged or
prepackaged chapter 11 reorganization plan. Under such
circumstances, there is substantial doubt about the Company's
ability to continue as a going concern.

RHYTHMS NETCONNECTIONS: Gets Open-Ended Solicitation Extension
The U.S. Bankruptcy Court for the Southern District of New York
enlarges the Exclusive Solicitation Period of Rhythms
NetConnections Inc.  The period wherein only the Debtor has the
right to solicit acceptances of the plan is extended through the
Effective Date of the Plan.

Rhythms NetConnections provides Internet access and remote
network connections using high-speed digital subscriber line
(DSL) technology.  It filed for Chapter 11 protection on
August 1, 2001.  Paul M. Basta, Esq., at Weil Gotshal & Manges,
represents the company in its restructuring efforts.  When
Rhythms NetConnections filed for protection from its creditors,
it listed $698,527,000 in assets and $847,207,000 in debt.

STROUDS, INC.: Plan Confirmation Hearing for March 4, 2002
                     FOR THE DISTRICT OF DELAWARE

            In re                  )       Chapter 11
            STR, INC.              )       Case No. 00-3352 (EIK)
                   Debtor.         )


To Parties in interest in the Above-Captioned Cases:

      STR, Inc., formerly known as Strouds, Inc., is the debtor
and debtor in possession (the "Debtor").

      The Debtor in the above-captioned cases has filed the
"Debtor's Amended Plan of Liquidation" (the "Plan"), along with
a proposed Disclosure Statement with respect to the Plan (the
"Disclosure Statement").

      Following a hearing held on January 24, 2002, the United
States Bankruptcy Court for the District of Delaware, the
Honorable Erwin I. Katz, United States Bankruptcy court Judge
for the District fo Delaware, presiding (the "Bankruptcy
Court"), entered its "Order Approving (A) Adequacy of
Information in Disclosure Statement with Respect to the Debtors'
Join Plan of Reorganization; (b) Form, Scope, and Nature of
Solicitation, Balloting, Tabulation and Noticed with Respect
Thereto; and (C) Related Confirmation Procedures, Deadlines, and
Notices (the "Order"), by which the Bankruptcy court, among
other things, approved the Disclosure Statement as containing
adequate information to enable creditors to make an informed
judgment in determining whether to vote to accept or reject the

The Bankruptcy Court having entered the Order, NOTICE HEREBY IS

      1.  You may obtain copied of the disclosure Statement, the
Plan, a ballot with respect to the Plan (in the event that you
hold a claim that is impaired under the Plan), and the Order by
contacting Ikon Office Solutions,901 North Market Street, Suite
718, Wilmington, Delaware 19801, Telephone:  (302) 777-4500.

      2.  Holders of equity interest in the Debtor will receive
nothing under the Plan, are not entitled to vote on the Plan,
and are deemed to reject the Plan.  Creditors with claims
arising before September 7,2000, who desire to vote on the Plan
must return ballots to accept or reject the Plan so that they
are actually received by the Ballot Tabulator by no later than
February 25, 2002, at 4:00 p.m., prevailing Pacific time.  Any
ballots received after that deadline will not be counted.
Claimants must return their ballots to the Ballot Tabulator at
the address set forth above and in accordance with the
instructions that accompany such ballots.

      3.  the Bankruptcy court will hold a hearing to consider
confirmation of the Plan (the "Confirmation Hearing") on March
4, 2002 10:00 a.m., in Judge Katz' courtroom, 844 King Street,
Sixth floor, Wilmington, Delaware 19801.  The Confirmation
Hearing may be continued by announcement in open court without
further notice to parties in interest.

      4.  Any objection to confirmation of the Plan must be filed
with the Bankruptcy court and served upon the partied specifie4d
in the Order so as to be actually received by no later than
February 22, at 4:00 p.m. prevailing Eastern Time.  Any such
objection must be in writing, accompanied by a memorandum of
points and authorities, and set forth in detail the name and
address of the party filing the objection, the grounds for the
objection, any evidentiary support therefore in the nature of
declarations submitted under penalty of perjury, and the amount
of the objector's claims or such other grounds that give the
objector standing to assert the objection.  The failure to
timely and properly file and serve an objection by that deadline
shall be deemed by the Bankruptcy Court to be consent to
confirmation of the Plan.

                          HENNIGAN, BENNETT & DORMAN
                          Bennett J. Murphy
                          Joshua M. Mester
                          602 South Figueroa Street, Suite 3300
                          Los Angeles, California 90017
                          Telecopy: (213) 694-1234
                          Counsel for the Debtors

SERVICE MERCHANDISE: Seeks Approval of Claim Settlement Protocol
Service Merchandise Company, Inc., and its debtor-affiliates ask
Judge Paine to grant them discretionary authority to compromise
and allow certain claims pursuant to certain procedures.

Beth A. Dunning, Esq., at Bass, Berry & Sims, in Nashville,
Tennessee, states that such discretionary authority will
maximize efficiency and value in the allowance of claims.  Thus,
Ms. Dunning says, it will enable the Debtors to efficiently
administer their estates.  Ms. Dunning explains that more than
4,000 claims have been filed against the Debtors and the costs
associated with an individualized approval process would be an
unnecessary expense to the Debtors' estates.  The Debtors
propose to implement these procedures:

   (i) for administrative, priority or secured claims where the
       allowed amount is $50,000 or less, the Debtors request
       authority to allow such claims in amounts that the Debtors
       determine in their business judgment to be in the best
       interests of their estates without further notice;

  (ii) for administrative, priority or secured claims where the
       allowed amount is between $50,000 and $100,000, the
       Debtors request authority to allow such claims in amounts
       that the Debtors determine in their business judgment to
       be in the best interests of their estates, provided that
       prior  to making such a compromise, the Debtors will
       review such compromise in advance with the Committee, and
       if the Committee disagree with the Debtors as to such
       compromise the Debtors will file a motion to approve the
       proposed compromise;

(iii) for unsecured claims where the allowed amount is under
       $300,000, the Debtors request authority to allow such
       claims in amounts that the Debtors determine in their
       business judgment to be in the best interests of their
       estates, without further notice;

  (iv) for unsecured claims where the allowed amount is between
       $300,000 and $1,000,000, the Debtors request authority to
       allow such claims in amounts that the Debtors determine in
       their business judgment to be in the best interests of
       their estates, provided that prior to making such a
       compromise, the Debtors will review such compromise in
       advance with the Committee, and if the Committee disagree
       with the Debtors as to such compromise, the Debtors will
       file a motion to approve the proposed compromise; and,

   (v) for any claims where the discrepancy between the allowed
       amount and the Debtors' books and records does not exceed
       10%, the Debtors request authority to allow such claims in
       amounts that the Debtors determine in their business
       judgment to be in the best interests of their estates,
       provided, however, that were such 10% or less discrepancy
       exceeds $50,000, prior to making such a compromise, the
       Debtors will review such compromise in advance with the
       Committee, and if the Committee disagrees with the Debtors
       to such compromise, the Debtors will file a motion to
       approve the proposed compromise.

Furthermore, Ms. Dunning reports that for allowance of
administrative, priority or secured claims where the proposed
allowed amount is more than $100,000, the Debtors will file a
motion to approve the proposed compromise.  Accordingly, Ms.
Dunning continues, if the proposed allowed amount of any
unsecured claim is more than $1,000,000, the Debtors will file a
motion to approve such compromise.  For claims that the Debtors
will allow without further Court order, Ms. Dunning says, the
Debtors will periodically file with the Clerk of the Court a
notice identifying the claims and serve such notice to the
Debtors' claims agent and the applicable claimants. (Service
Merchandise Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

SUNTERRA: Files Reorganization Plan & Settles FINOVA Obligations
Sunterra Corporation says that it's filed a Plan of
Reorganization setting the stage for an exit from its Chapter 11
process in the coming months.  "We have worked very closely with
our creditors to develop a plan of reorganization that should be
accepted and executed this spring," said Gregory F. Rayburn,
Chief Restructuring Officer of Sunterra.  The plan contemplates
satisfaction of secured and debtor-in-possession claims, and the
emerging company will issue stock and warrants to satisfy
unsecured claims.

According to Rayburn, "this milestone is one of the final steps
for what has been a dramatic improvement in the company's
ability to emerge as a dominant competitor in the industry."
Nick Benson, CEO of Sunterra, added: "We will be very well
positioned to execute this plan when it is confirmed and we
emerge from the constraints of Chapter 11.  We are looking
forward to re-establishing ourselves as market leaders upon
conclusion of this process."

Sunterra also announced that it had settled its outstanding
financing obligations with Finova Capital Corporation, paying
off loans and other obligations for approximately $105 million,
representing a discount from par of approximately $25 million.
As part of the settlement, Sunterra and Finova released each
other from obligations relating to such financings and certain
other matters.  Sunterra obtained a portion of the funds to pay
Finova from term loans under its debtor-in-possession financing
agreement with Greenwich Capital Markets, Inc.

At the same time, Sunterra and Greenwich amended the debtor-in-
possession financing facility.  The amendment increases, subject
to certain conditions, the amounts that may be borrowed
thereunder, changes the maturity date of the loans under the
facility from June 30 to April 30, 2002 (subject to the ability
of Sunterra to extend such date to June 30, 2002 upon meeting
certain requirements), provides for the payment of certain
additional fees to Greenwich (including fees payable in
connection with the payment of the Finova loans referred to
above) and makes certain other changes.

In announcing these transactions, Mr. Rayburn stated:  "The
settlement with Finova represents a substantial benefit to our
reorganization process. It resolves various disputes between
Sunterra and Finova, and the payment to Finova reflects a
significant discount from the amount of Finova's fully secured
claims.  The transaction frees up additional cash flow for our
operations and allows us to access additional financing under
our debtor-in-possession financing agreement," Mr. Rayburn

Mr. Rayburn also said that in connection with the pending audit
of its consolidated financial statements for the year ended
December 31, 2000, Sunterra and its independent auditor,  had
identified certain matters that, upon further review, may result
in adjustments to Sunterra's consolidated financial statements
for 1999 and prior periods. Sunterra and its independent auditor
are continuing their review of these matters,  Mr. Rayburn said.
Sunterra will announce the results of the review and any impact
on such financial statements when the review has been completed,
and pending completion of the review such financial statements
should not be used or relied upon.

Sunterra Corporation is one of the world's largest vacation
ownership companies, with owner families and resorts in North
America, Europe, the Pacific, the Caribbean and Japan.

TATA ENGINEERING: S&P Concerned About Weak Ops. Profitability
Standard & Poor's lowered the corporate credit rating on Tata
Engineering & Locomotive Co. Ltd. (Telco) to double-'B'-minus
and removed it from CreditWatch where it was placed on March 2,
2001. The rating outlook is negative.

"Telco's rating reflects the extremely weak operational
profitability arising from the persistent weak demand in the
Indian commercial vehicle market, suboptimal asset utilization
in the company's small car business, and strong competition from
domestic manufacturers," said Craig Parker, director, Corporate
& Infrastructure Ratings. Offsetting the company's aggressive
capital structure is its dominant market position in the Indian
commercial vehicle (CV) market and the recent completion of the
company's Indian rupee (RE) 465 crore (cr) (RE10 million) equity

Telco has a vertically integrated manufacturing operation, with
technical expertise sourced from collaborative agreements with
offshore automotive manufacturers. Located at four sites in
India, the company manufactures a wide range of products
comprising heavy, medium, and light commercial vehicles (HCVs,
MCVs, and LCVs), multiutility vehicles (MUVs), and small
passenger cars (Indica). It dominates the Indian CV market, with
a market share of 68% in the MCV & HCV segment and 53% in the
LCV segment. In the MUV market, it has a reasonably strong
market presence, with a market share of about 19%. The company's
indigenously designed Indica, which was launched in the Indian
car market in early 1999, has consistently been the third-
largest selling car in the premium small car segment and has
achieved a 22% market share in the hatchback segment. Although
consumer perception was initially adverse, with respect to
product quality compared with other competitors, the launch of
an improved variant of the Indica (the "V2") in early 2001 has
addressed consumer concerns and helped build sales volumes in
the nine months to Dec. 31, 2001, of 42,377 vehicles, averaging
4,700 units per month.

"Telco's financial performance in fiscal 2001 was adversely
affected by reduced sales in its most profitable CV vehicle
segments. The company underutilized its substantial capacities
of 360,000 units per year, selling about 170,000 units in fiscal
2001, a decline of 15% in the previous period," added Mr.
Parker. Telco's unit sales were negatively impacted by the
demand dampening effects of an industrial slowdown, and higher
costs of emission control compliance coupled with the weak
profitability of commercial road freight operations due to
higher fuel costs. Consequently, the company reported a large
net loss of RE500 cr, which eroded Telco's equity base and
raised gearing levels to 48%. The nine month financial results
for fiscal 2002 indicate that Telco has improved operating
margins to 7.7% from 5.6% in the corresponding period. This
improved result is due to cost reduction initiatives, stringent
working capital management, and rationalization of the labor
force. However, these financial performance indicators remain
subpar, and the slower-than-anticipated increase in total unit
sales to December 2001 indicate the continued financial stress
experienced by the company. As a result of the under
subscription for the recent equity issue, the Tata group has
partially met the shortfall and have increased their
shareholding in Telco to about 32% from about 26%. Given the
weakness in overall market conditions and onerous debt burden,
the prospects of any material improvement in Telco's aggressive
financial profile is dependant on successful implementation of
the company's planned financial restructure measures.

The rating outlook is negative. "Standard & Poor's expects that
Telco will maintain its dominant market position in the CV
business and that market acceptance for the Indica will
continue." The rating also factors in the restoration to
profitability of Telco's business operations through its
ongoing cost reduction efforts, separation of manufacturing
operations, and continued financial flexibility provided by the
Tata group and the Indian banking system. "Standard & Poor's
will look to evidence of a significant improvement in the fiscal
2003 results to resolve the outlook," said Mr. Parker.

TELESYSTEM INT'L: Amended Purchase Offer for ESD to Expire Today
Telesystem International Wireless Inc., reminds holders of its
outstanding 7.00% Equity Subordinated Debentures (ESD) due
February 15, 2002 and holders of its outstanding Units that
TIW's amended purchase offer and consent request for all of its
outstanding ESDs and TIW's offer to purchase all of its
outstanding Units will both expire at 12:00 noon, Montreal time,
today, February 4, 2002, unless extended or withdrawn.

However, some investment brokers are asking their clients to
provide instructions on a prior date.  ESD holders and Unit
holders should contact their investment broker in sufficient
time to allow for their instructions to be validly executed.

The terms and conditions of the offers are contained in the
Offering Circulars and amending documents available from
Computershare Trust Company of Canada or in the finance section
of the TIW Web site at

TIW is a global mobile communications operator with 4.9 million
subscribers worldwide.  The Company's shares are listed on the
Toronto Stock Exchange ("TIW") and NASDAQ ("TIWI").

TERAYON COMMUNICATIONS: S&P Junks Subordinated Debt Ratings
Standard & Poor's revised its outlook on Terayon Communications
Systems Inc. to stable from negative. At the same time, Standard
& Poor's affirmed its single-'B'-minus corporate credit and
triple-'C' subordinated debt ratings.

The outlook revision reflects sustained improvement in the
company's liquidity position, following a yearlong program where
Terayon repurchased $326 million of its convertible debt issue
at a substantial discount to par. As of December 2001, Terayon's
cash balances of $334 million exceeded debt of $174 million.

The ratings on the company reflect significant industry
competition, the company's concentrated customer base, and long-
term uncertainties regarding technology evolution and customer
adoption in the broadband communications equipment market.

Santa Clara, California-based Terayon provides voice and data
communications equipment for cable television facilities.
Terayon is the second-largest supplier of cable modems after the
industry leader Motorola Inc. (BBB+/Negative/A-2). The company
competes against Cisco Systems Inc., Nortel Networks Corp. (BBB-
/Negative/A-3), and others to supply cable telephony products.
Terayon also offers additional broadband communications
products, part of a strategy to offer the full range of high-
speed voice, data, and video communications products over cable,
wireless, and digital subscriber line media.

The company's customer base of cable operators is concentrated,
with three customers accounting for 62% of revenues as of
September 2001. Although acquisitions in 1999 and 2000 played a
key role in filling out Terayon's product line, integrating
these businesses has proven challenging. In 2001, Terayon wrote
down $572 million in assets associated with suspended product
lines and development projects, and related intangible
acquisition costs. Terayon's market is expected to experience
rapid technological change during the next few years, as
participants compete to develop products that are compatible
with, and achieve market acceptance from customers based upon,
new rules that standardize cable internet access equipment.

Slim gross margins, high product development expenses, lengthy
sales cycles, and substantial customer support costs have
precluded operating profitability since the company's inception.
Terayon gained market share in 2001 despite declines in overall
cable modem industry revenues. Additionally, Terayon has been
able to reduce quarterly operating losses during 2001 through a
combination of revenue gains and cost reductions, and the
company expects to achieve operating profitability some time in
the second half of 2002. However, continued declines in average
selling prices, expected revenue shortfalls due to single-source
components shortages, and higher selling expenses might limit
the extent of operating improvements over the intermediate term.
Although Terayon is not expected to achieve positive cash flow
over the near term, capital-spending needs are moderate and
liquidity is adequate to fund both operating losses and

                       Outlook: Stable

Cash balances provide downside protection for the ratings,
whereas very competitive conditions and the early stage of the
market limit upside ratings potential.

TRANSPORTADORA DE GAS: S&P Drops Local Currency Rating to SD
Standard & Poor's lowered its local currency corporate credit
rating on Argentina-based Transportadora de Gas del Norte S.A.
(TGN) to (selective default) 'SD' from triple-'C'-minus.
Standard & Poor's 'SD' foreign currency and double-'C' senior
unsecured ratings on the company remain unchanged.

The rating action follows the company's announcement that it
missed debt service payments on certain financial obligations.
The company did not make the debt service payments on the TGN
IFC Trust I and II B loan and interest payments on the
convertibility risk insured bond transactions. However,
investors received the payments in a timely manner from the
outstanding reserve funds of these deals. For more information,
please refer to Standard & Poor's press release related to the
rating actions on TGN's structured transactions issued Tuesday.

The missed payments reflect the negative impact the unsettled
devaluation, which followed the end of convertibility, has had
on the company's cash flow. As part of these changes, the
government 'pesofied' the company's tariffs without allowing for
any compensating adjustments, which, combined with the lack of
liquidity in the financial system, worsened the company's
operating cash flow.

TGN has a 35-year exclusive license to operate Argentina's
natural gas north pipeline transmission system, which includes
the center-west pipeline and the north pipeline. The company's
pipeline network has approximately 3,329 miles of pipelines,
with a transportation capacity of about 1,864 million cubic feet
per day.

TREESOURCE INDUSTRIES: Exits Voluntary Chapter 11 Proceeding
TreeSource Industries, Inc., (OTC Bulletin Board: TRES) has
emerged from its voluntary Chapter 11 proceeding.  TreeSource's
plan of reorganization was confirmed by the U.S. Bankruptcy
Court for the Western District of Washington on January 11,

TreeSource filed a voluntary petition for reorganization under
Chapter 11 of the Bankruptcy Code on September 27, 1999. Under
the terms of the plan of reorganization, the Company's former
senior secured lenders now own 100 percent of reorganized
TreeSource's common stock. All equity securities that were
outstanding prior to effectiveness of the plan of reorganization
have been cancelled for no value effective today.

TreeSource Industries, Inc. operates facilities in Oregon and
Washington, producing softwood and hardwood lumber products.

TreeSource Industries, Inc. can be found at its web site at For more information, contact
TreeSource investor relations at 503-246-3440.

UBRANDIT.COM: Files for Chapter 11 Reorganization in Utah
Thursday, (AMEX: UBI) announced that the company
has filed Chapter 7 Bankruptcy proceedings in the United States
Bankruptcy Court for the District of Utah, which includes
certain of the company's wholly owned subsidiaries.

The bankruptcy filings arise from current economic and market
difficulties in attracting venture and investment capital in the
competitive area of technologies research and development.
Despite the company's stringent cost-control measures,
continuous and extensive efforts to attract investment and to
support technologies development, the board of directors
authorized the filing.

The bankruptcy filings follow the Amex decision to suspend
trading in the company's stock and the decision of the Amex to
seek authorization from the Securities and Exchange Commission
to delist the company.

The company has retained LeBoeuf, Lamb, Greene & McRae, LLP, 136
South Main Street No. 1000, Salt Lake City, UT 84101, as
bankruptcy counsel for the company and its subsidiaries.

The company also announced the resignations of Roger Royce,
chairman and chief executive officer, and Mark La Count, a
director and chief technology officer effective as of the close
of business on Jan. 25, 2002.

The company also announced the resignation of Rod Ylst, a
director and president, effective Jan. 31, 2002, and the pending
resignation of M. Karlynn Hinman, a director, assistant
secretary and general counsel, effective after certain
bankruptcy filings have been completed.

UCAR INTERNATIONAL: S&P Rates Finance Unit's New Sr. Notes at B-
Standard & Poor's affirmed its single-'B'-plus corporate credit
rating on UCAR International Inc. (UCAR) and revised its outlook
to stable from negative.

In addition, Standard & Poor's assigned its single-'B'-minus
rating to UCAR Finance Inc.'s $250 million senior unsecured
notes due 2012 to be offered under Rule 144A.

The outlook revision reflects:

     * UCAR's recent announcement of cost savings of an
       additional $80 million by 2004 and proceeds from asset
       sales totaling an estimated $60 million to $65 million
       after tax;

     * Improved financial flexibility resulting from the
       successful negotiation of a more flexible covenant package
       and less onerous amortization schedule from its bank
       creditors and;

     * Payment deferral of antitrust litigation fines.

The new senior notes will be guaranteed by UCAR, UCAR Global
Enterprises Inc., UCAR Carbon Co. Inc., and all U.S.
subsidiaries excluding Graftech Inc.   In addition, the notes
will receive a pledge from UCAR Finance of guaranteed unsecured
intercompany notes from most of UCAR's material foreign
subsidiaries, equivalent to the amount of the offering and by
the shares of Graftech Inc.  Given the bank lender's priority
lien on substantially all assets, Standard & Poor's ultimate
recovery analysis deems that recovery prospects for the
unsecured noteholders are materially disadvantaged by the
existence of the secured bank lenders.

The ratings reflect UCAR International Inc.'s position as the
lowest-cost producer of graphite and carbon electrodes in the
world and its leading market share, offset by an aggressive
financial profile and significant exposure to the cyclical steel
markets. With 72% of revenues generated from non-U.S. markets,
UCAR benefits from its position as the world's largest producer
of graphite electrodes, which are consumed by minimills in the
steelmaking process. Approximately two-thirds of the minimills
in the world market (excluding China, the former Soviet Union,
and Eastern Europe) purchase graphite electrodes from UCAR.

Following extensive industry consolidation, participants in the
graphite electrode industry have demonstrated capacity restraint
and are somewhat insulated from new production, given the high
barriers to entry. Still, UCAR's financial performance is
susceptible to the cyclical worldwide steel industry, which
translates into volatile operating performance. The U.S. steel
industry has been experiencing extremely difficult market
conditions for the past few years with the use of steel minimill
capacity down significantly. In addition, operating conditions
will remain challenging in Europe and Asia, given the overall
economic outlook and UCAR's meaningful exposure to these

In response, UCAR has achieved $126 million in cost reductions
over the past three years and recently announced it is targeting
an additional $80 million of cost savings. The bulk of these
savings has come from the closure of UCAR's higher cost
facilities and the re-allocation of production to its larger,
lower-cost sites. Although the remaining cost-cutting measures
are aggressive, Standard & Poor's believes they are attainable.

UCAR's good business position is offset by its aggressive
financial profile. The company's negative equity position is the
result of a 1995 leveraged equity recapitalization and charges
totaling $550 million over the past several years relating to
antitrust liabilities, and the cost-reduction initiatives.
Reflecting its good business position, UCAR's operating profit
margin (before depreciation, depletion, and amortization) has
averaged a healthy 26% over the three fiscal years prior to
fiscal 2001, although on a declining trend as the U.S. steel
industry has been besieged by imports.

Given its debt leverage position and the poor operating
conditions, EBITDA to interest was a weak 2.1 times for the nine
months ended Sept. 30, 2001, with an annualized, nine-month
funds from operations to total debt a very weak 7%. Standard &
Poor's expects near-term financial performance to approximate
these weak measures given the economic outlook for the U.S. and
European markets and the company's announcement of lower prices
in 2002. Despite difficult industry conditions, UCAR has been
successful in reducing its debt from $735 million at Dec. 31,
2000, to $638 million currently. This was accomplished through a
combination of effective working capital management and a
secondary stock offering that raised $91 million, with $55
million used for debt reduction.

                          Outlook: Stable

Recent initiatives provide some stability to the ratings. These
initiatives could, however, be challenged by a prolonged period
of weak economic conditions or deviation from Standard & Poor's
expectations of demand and prices for UCAR's products.

UNITEDGLOBALCOM: Completes Merger Transaction with Liberty Media
UnitedGlobalCom, Inc. (Nasdaq: UCOMA), following its special
stockholder meeting Thursday morning, completed its previously
announced transaction involving Liberty Media Corporation (NYSE:
L, LMC.B). In connection with this transaction, the Company
merged with a subsidiary of a newly-formed holding company.  As
a result of the merger, all of the former stockholders of the
Company became stockholders of the new holding company, which
changed its name to UnitedGlobalCom, Inc.

United's Class A common stock now trades on the Nasdaq National
Market under the symbol "UCOMA."

Immediately following the merger, Liberty contributed the
following assets to United:

      --  $200 million in cash;

      --  approximately $891.7 million in current principal
          amount of convertible notes issued by United's
          subsidiaries, Belmarken Holding B.V. and United Pan-
          Europe Communications N.V. (as co-obligor); and,

      --  approximately $1,435.3 million and Euro 263.1 million
          aggregate principal amount at maturity of UPC's
          publicly traded bonds.

As a result of the contributions, Liberty has been issued
approximately 281.3 million Class C common shares of United.
Such shares, when combined with Liberty's prior holdings of the
Company's common stock, give Liberty an approximate 72% economic
ownership in United.

United continues to be the majority shareholder and is now the
largest debt holder of UPC.  As a result, United is well
positioned to participate in any restructuring of UPC's balance

Also, as of the close of business Thursday, the tender offer by
IDT United, Inc., for the $1,375,000,000 10-3/4% Senior Secured
Discount Notes due 2008 issued by United's subsidiary has
resulted in over 85% of the Notes having been tendered to IDT
United.  All of the Notes remain outstanding.  United holds
approximately 55% of the Notes directly, and the balance of the
Notes are held by IDT United.  United acquired all of Liberty's
interests in IDT United today.  United paid for the acquisition
of the Notes and interest in IDT United by the assumption of
approximately $305 million of debt owed by Liberty to a
subsidiary of United, payment of $129 million in cash and the
delivery of a $17 million promissory note to Liberty.

As a result, United's third party debt obligations have been
reduced by approximately $1.2 billion, at a total cost of
approximately $462 million.

United is the largest international broadband communications
provider of video, voice and data services with operations in 26
countries.  At September 30, 2001, United's networks, in
aggregate, reached over 18.8 million homes and served over 10.6
million video customers, 671,500 telephony subscribers and
672,900 high speed internet access subscribers.  In addition,
the company's programming businesses reached approximately 48
million subscribers.

United's significant operating subsidiaries include United Pan-
Europe Communications N.V. (UPC) (53% owned), a leading pan-
European broadband communications company; Austar United
Communications Ltd. (56% owned) a leading satellite, cable
television and telecommunications provider in Australia and New
Zealand; and VTR GlobalCom S.A. (100% owned), the largest
broadband communications provider in Chile.

Liberty Media Corporation holds interests in a broad range of
domestic and international video programming, communications,
technology and Internet businesses.

W.R. GRACE: Wants Lease Decision Period Extended to October 1
W. R. Grace & Co., and its debtor-affiliates bring a second
Motion asking Judge Fitzgerald to further extend, to and
including October 1, 2002, the time period during which they may
decide to assume, assume and assign, or reject unexpired leases.
This extension is without prejudice to (a) the rights of the
Debtors to request a further extension of time to assume, assume
and assign, or reject the unexpired leases and executory
contracts, and (b) the rights of any lessor to request that the
extension be shorted as to a particular lease.

The Debtors tell Judge Fitzgerald they are parties to several
hundred unexpired leases that fall into two major categories:

       (A) real property leases for offices and plants throughout
           the United States and Puerto Rico; and

       (B) leases where the Debtors are lessees under leases of
           commercial real estate, often retail stores,
           restaurants, and other similar facilities most of
           which have been sub-leased to other tenants.

These leases are important assets of the estate, such that the
decision to assume or reject is central to any plan of
reorganization.  Further, these cases are large and complex, and
involve large numbers of leases.  Since the first extension
order was entered, the Debtors' management and professionals
"have been consumed with the operation of the Debtors'
businesses and the resolution of a number of complex business
decisions."  Furthermore,, during this period the Debtors have
focused on defining the mounting asbestos-related litigation
liabilities that the Debtors say precipitated these chapter 11
cases. Resolution of these issues will involve significant
litigation that will take time.  The Debtors have not yet had
time to intelligently appraise each lease's value to its plan,
and until the asbestos issues are resolved, little progress can
be made toward developing a viable plan of reorganization.

The Debtors assure Judge Fitzgerald that they are current in all
of their postpetition rent payments and other contractual
obligations with respect to the unexpired leases.  The Debtors
intend to continue to timely pay all rent obligations on leases
until they are either rejected or assumed, and will continue to
timely perform their contractual obligations with respect to the
assumed leases.  As a result, the continued occupation of the
relevant real property by the Debtors (whether directly or as
sublessees) will not prejudice the lessors of the real property
or cause the lessors to incur damages that cannot be recompensed
under the Bankruptcy Code. (W.R. Grace Bankruptcy News, Issue
No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)

WARNACO GROUP: Intends to Auction Surplus Cut & Sew Equipment
The Warnaco Group, Inc., and its debtor-affiliates remind the
Court that they have already closed or are in the process of
closing three of their clothing manufacturing facilities:

     (1) Warmana Facility in the Dominican Republic that
         manufactured intimate apparel until its closure in June

     (2) Murfreesboro Facility in Tennessee that manufactured
         intimate apparel until its closure in May 2000; and

     (3) Vista de Puebla Facility in Huejotzingo, Mexico, which
         is scheduled to close imminently.

Because Warnaco doesn't need the cut and sew clothing
manufacturing and related equipment in the Close Facilities, the
Debtors have decided to sell these surplus assets.  The Debtors
also want to include the additional surplus equipment not used
in their operating facilities in Costa Rica, Honduras and

Kelley A. Cornish, Esq., at Sidley, Austin, Brown & Wood, in New
York, tells the Court that there is potential for dozens of
purchasers of the Surplus Assets given that approximately 5,000
to 7,000 individual lots are being sold.

The Debtors propose liquidating the Surplus Assets at two
auctions -- one to be conducted at the Murfreesboro Facility in
Tennessee and the another at a third party location in or near
El Paso, Texas.  The Debtors believe that this is the way to
realize the greatest value from the Closed Facility Surplus
Equipment and the Operating Facility Surplus Equipment.  "The
Auctions will be conducted around March and April 2002,"
according to Ms. Cornish.  The Debtors estimate that the
Auctions will generate between $1,500,000 and $2,500,000 in
aggregate gross proceeds from the liquidation of the Surplus

Ms. Cornish asserts it would be impractical to seek approval of
the individual Sales after the conclusion of each Auction --
because the individual lots will probably range in value from
only $10 to the low thousands, and a several-week delay in
connection with obtaining Court approval of a sale after the
completion of an auction tends to dissuade potential purchasers
from bidding.  For this reason, the Debtors ask Judge Bohanon to
approve the Sales before the Auction actually occur.

Michael Fox International Inc. will conduct the auctions.

The Debtors intend to sell 5,000 to 7,000 commercial sewing
machines manufactured by Juki, Pegasus, Singer, Union Special,
Yamato, Rimoldi, and Wilcox.  Other cut and sew clothing
manufacturing equipment and miscellaneous equipment related to
the physical facilities will also be included in the Auctions.
"The Debtors estimate that the Auctions will yield aggregate
gross proceeds between $1,500,000 to $2,500,000," Ms. Cornish

The procedures for the Auctions are:

-- All of the Surplus Assets to be sold at each Auction will
    first be offered for sale to bidders in a single lot with the
    goal of maximizing the Surplus Assets' value by preserving
    their synergies.  Then, the Debtors have the option of

     (1) accepting the highest bid during the Single Lot Segment,

     (2) offering the Surplus Assets to bidders on a piece-by-
         piece basis while reserving the right to accept instead
         the high bid in a Single Lot Segment.

    If the Debtors choose to conduct the Multiple Lot Segment, at
    the conclusion of the auction process, the Sales will be
    consummated with either the highest bidder in the Single Lot
    Segment, or the highest bidders in the Multiple Lot Segment,
    depending on which method produces a greater return to the
    Debtors' estates.

-- To ensure that the Single Lot Bidders are induced to make
    their highest bids during the Single Lot Segment, the Single
    Lot Bidders will not be permitted to increase their bids
    during the Multiple Lot Segment, but may bid on individual
    lots during the Multiple Lot Segment.

-- Any party wishing to bid on the Surplus Assets will be
    required to deposit with the Auctioneer an amount equal to
    25% of its successful bid upon the close of bidding for each
    lot. This deposit can be made in cash, certified funds or
    check with a letter from the successful bidder's bank
    guaranteeing the amount of the check.  Immediately upon the
    conclusion of the Auction, each successful bidder will be
    required to pay in full for the lot upon which it
    successfully bid, subject to the Debtors' decision to
    consummate the Sale pursuant to either the Single Lot Segment
    or Multiple Lot Segment.

Ms. Cornish states that the Sales will be free and clear of all
claims, liens, encumbrances and security interests.
Furthermore, Ms. Cornish relates, the Debtors will sell the
Surplus Assets "as is, where is" and make no representations or
warranties whatsoever as to the Surplus Assets or their
condition.  The Purchasers will have to remove the Surplus
Assets at their sole expense, liability and risk, Ms. Cornish

Ms. Cornish explains that selling these Surplus Assets is more
beneficial than keeping them in storage.  The Debtors would
incur significant costs in storing these Surplus Assets.  "If
the Surplus Assets were brought out of storage eventually, the
equipment would be outdated and would likely require additional
costly maintenance to return to operation," Ms. Cornish asserts.

Thus, the Debtors contend, the best way to realize the value of
the Surplus Assets would be to sell them now at the Auctions.

                        GE Capital Objects

General Electric Capital Corporation and the Debtors are parties
to a certain Master Lease Agreement and Schedules, wherein the
Debtors leased certain equipment from GE Capital.  GE Capital
asserts that some of the Assets to be sold are part of the
Leased Equipment.  Thus, GE Capital maintains that the Debtors
should not be allowed to sell such equipment.  Neither should
the Debtors be allowed to move any of the Equipment constituting
Foreign Assets, GE Capital contends.

Furthermore, GE Capital requests documentation of all auction
expenses in advance of the auction and reserves all rights to
contest the same as well as any proration of GE Capital's share
of expenses.  GE Capital also objects to the segregation of any
proceeds of the sale of any of the Equipment.  According to GE
Capital, the Debtors have made no showing that GE Capital is not
entitled to immediate payment of the proceeds.

Thus, GE Capital asks the Court to deny the Debtors' motion.
(Warnaco Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

WEBLINK WIRELESS: Files Plan of Reorganization in Texas
WebLink Wireless, Inc., (OTC Bulletin Board: WLNKA) signed a
letter of intent for a transaction that will permit the Company
to emerge from its restructuring process with a new financial
partner, Sun Capital Acquisition Corp., an affiliate of Sun
Capital Partners, Inc., a Boca Raton, Florida-based private
investment firm.  WebLink Wireless also filed a plan of
reorganization incorporating the terms of the Sun Capital letter
of intent with the United States Bankruptcy Court, in connection
with its Chapter 11 petition filed on May 23, 2001.  Lenders
holding a majority of the Company's secured debt have also
indicated their support of the letter of intent with Sun

"WebLink has already completed an operational restructuring to
focus on its core telecommunications and business customers and
as a result has been cash flow positive for the last six months.
With Sun Capital's involvement we now plan to address the
restructuring of our balance sheet," said N. Ross Buckenham,
WebLink Wireless' president and chief executive officer.  "We
believe the resulting strong balance sheet combined with our
operational excellence, our advanced narrowband technology
network and the largest nationwide footprint will strengthen our
position as the 'wireless data network of choice' for our many
telecommunications partners and business customers."

"We are very enthusiastic regarding our potential investment in
WebLink Wireless and look forward to working with Mr. Buckenham
and his management team," said M. Steven Liff, vice president at
Sun Capital.  "Our goal now is to complete our due diligence and
finalize the deal."

WebLink expects to implement the restructuring through a sale of
its business and assets pursuant to Section 363 of the
Bankruptcy Code, and the proceeds from the sale are expected to
be distributed to the Company's creditors pursuant to the Plan.
The Company does not expect any proceeds of the sale or other
property to be available for distribution to the stockholders of
the Company.  The Bankruptcy court has not yet approved the
adequacy of any disclosure statement describing the Plan.

Consummation of the transaction is subject to successful
completion of due diligence by Sun Capital, negotiation of a
definitive purchase agreement, approval of the transaction by
the bankruptcy court and the Federal Communications Commission
and other conditions.  The Company does not expect consummation
of the sale or confirmation of a plan of reorganization before
late April 2002.

Sun Capital Partners, Inc. is a leading private investment firm
focused on leveraged buyouts of market leading companies that
can benefit from its in- house operating personnel and
experience.  The firm has successfully invested in approximately
30 companies during the past several years with combined
revenues in excess of $2 billion.  Web site:

WebLink Wireless, Inc., a leader in the wireless data industry,
operates the largest ReFLEX network in the United States.  The
Dallas-based company provides 2way wireless messaging, wireless
email, mobile Internet information, customized wireless business
solutions, telemetry, and paging to more than 1.5 million
business and retail customers.  WebLink Wireless is the
preferred wireless data network provider for many of the largest
telecommunication companies in the U.S. who resell services
under their own brand names. WebLink's reliable multicast
network covers approximately 90 percent of the U. S. population
and, through roaming agreements, extends throughout most of
North America.  For more information on WebLink Wireless please
visit us on the Internet at

WINSTAR COMMS: Lucent Seeks Dismissal of $10 Billion Lawsuit
Lucent Technologies Inc. moves the Court to dismiss certain
claims in first amended complaint OF Winstar Communications,
Inc., and its debtor-affiliates filed on April 18, 2001.

Paul N. Heath, Esq., at Richards Layton & Finger P.A. in
Wilmington, Delaware, relates that the Debtors' first amended
complaint does purport to seek specific performance of any
financing obligation of Lucent and the Debtors have abandoned
their claim for fraud.  Nevertheless, the first amended
complaint alleges various breaches of the same agreements as
pleaded in the original complaint and asserts a new claim for
breach of the implied covenant duty if good faith and fair
dealing. Among the relief sought, the first amended complaint
asks for consequential damages in excess of $10,000,000,000 and
specific performance of certain provisions of the agreements for
which specific performance was previously requested in their

Mr. Heath contends that the relief sought by the Debtors is
unavailable as a matter of law because:

A. Debtors' claims for damages in excess of $10,000,000,000 are
      claims for consequential damages that are expressly barred
      by the terms of the contracts.

B. As a matter of law, plaintiffs are not entitled to the
      specific performance of the supply agreements. Debtors may
      not obtain specific performance of any provision of a
      contract, like the supply agreement, that is legally
      unassumable as a whole.

C. Debtors' good faith and fair dealing claim is based on
      allegations that are either redundant of Debtors' other
      breach of contract claims or seek to impose obligations
      beyond those properly imposed by the implied covenant duty
      of good faith and fair dealing.

Accordingly, Mr. Heath submits that the Court should dismiss
Debtors' claim for breach of the covenant of good faith and fair
dealing in its entirety and enter an order barring Debtors from
recovering consequential damages on their remaining claims or
obtaining specific performance. Dismissing those claims now will
reduce the amounts at issue to a fraction of Debtors' current
claim and avoid unnecessary and extensive discovery into issues
that are not properly part of this action.

                          Debtors Object

According to Karen C. Bifferato, Esq., at Connolly Bove Lodge &
Hutz LLP in Wilmington, Delaware, in this lawsuit, Winstar seeks
to hold Lucent accountable for its intentional wrongdoing and
bad faith, and the billions of dollars of lost value incurred as
a result of Lucent's actions. Winstar also seeks to compel
Lucent to perform or complete certain undertakings and
obligations under the Supply Agreement (such as warranty and
maintenance work on Lucent equipment) that Lucent is in a unique
position to fulfill. Winstar seeks relief on two fundamental
causes of action: breach of contract (Counts One through Nine)
and breach of the implied covenant of good faith and fair
dealing (Count Ten).

In its Motion to Dismiss and accompanying Memorandum, Lucent
argues that three parts of Winstar's First Amended Complaint
should be dismissed under Fed. R. Civ. P. 12(b)(6) for "failure
to state a claim" because:

A. Lucent contends that Winstar's claim for $10,000,000,000 in
      compensatory damages on Counts Two, Three, Five, Six,
      Seven, and Ten, includes consequential damages, and that
      this claim should be dismissed in light of exculpatory
      clauses in the Network Agreements barring the recovery of
      consequential damages.

B. Lucent contends that Winstar's claim for specific performance
      of certain provisions of the Supply Agreement in Counts Two
      and Four should be dismissed because the Agreement is an
      indivisible contract to lend money which Winstar may not
      assume under section 365(c) of the Bankruptcy Code, and
      with respect to which Winstar may not obtain the benefit of
      continued performance.

C. Lucent contends that the allegations in Count Ten do not
      support a claim of breach of the implied covenant of good
      faith and fair dealing, so Count Ten should be dismissed in
      its entirety.

Winstar says Lucent's Motion to Dismiss is without merit

A. The issue of whether or to what extent the damages Winstar is
      claiming are consequential damages is an issue of fact
      under governing New York law, and it cannot be resolved
      until trial. Therefore, Lucent's motion is premature. But
      even if all the damages Winstar is claiming are
      consequential damages, the Court cannot dismiss Winstar's
      claim for these damages, because Winstar alleges in the
      Counts cited by Lucent that Lucent engaged in intentional
      misconduct and bad faith. Under New York Law, exculpatory
      clauses designed to shield a defendant from consequential
      damages are unenforceable if the defendant engaged in
      intentional misconduct or bad faith. Treating Winstar's
      allegations as true, as the Court must on Lucent's motion
      to dismiss, it cannot dismiss Winstar's damage claim even
      if those damages are consequential.

B. Section 365 of the Bankruptcy Code is not relevant to
      Winstar's claim for specific performance. Section 365
      addresses whether a trustee or debtor in possession may
      "assume" the performance of executory contracts. Winstar is
      not making in this case an application to assume the Supply
      Agreement. Rather, pending its decision to assume or reject
      the Supply Agreement, Winstar is seeking to compel Lucent
      to perform its pre-petition obligations under that
      Agreement. The Court may grant such specific performance
      pending Winstar's decision. In any event, contrary to
      Lucent's contention, the Supply Agreement is divisible into
      its funding and non-funding components, and, consistent
      with section 365, Winstar may assume the non-funding
      component as to which it seeks specific enforcement.
      Therefore, section 365 is no bar to the specific
      performance Winstar seeks.

C. Winstar has pled sufficient facts to state a claim for relief
      on the ground of breach of the implied covenant of good
      faith and fair dealing. By arguing that nothing it did, no
      matter how egregious, breached the covenant, Lucent asks
      this Court to write the covenant out of the parties'
      contracts. That is not permitted under New York law.
      (Winstar Bankruptcy News, Issue No. 21; Bankruptcy
      Creditors' Service, Inc., 609/392-0900)

* BOND PRICING: For the week of February 4 - February 8, 2002
Following are indicated prices for selected issues:

Amresco 9 7/8 '05           25 - 27(f)
AMR 9 '12                   92 - 94
Bethlehem Steel 10 3/8 '03  12 - 14(f)
Chiquita 9 5/8 '04          87 - 89(f)
Conseco 9 '06               54 - 57
Enron 9 5/8 '03             15 - 17(f)
Global Crossing 9 1/8 '04    4 - 6(f)
Level III 9 1/8 '04         42 - 45
Kmart 9 3/8 '06             45 - 47(f)
McLeod 11 3/8 '09           22 - 24(f)
NWA 8.70 '07                84 - 86
Owens Corning 7 1/2 '05     37 - 39(f)
Revlon 8 5/8 '08            44 - 46
Royal Caribbean 7 1/4 '06   84 - 86
Trump AC 11 1/4 '06         65 - 67(f)
USG 9 1/4 '01               82 - 84(f)
Westpoint 7 3/4 '05         28 - 31
Xerox 5 1/4 '03             92 - 94


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-
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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
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Real-time pricing available at

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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
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Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
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Copyright 2002.  All rights reserved.  ISSN: 1520-9474.

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