TCR_Public/020211.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 11, 2002, Vol. 6, No. 29

                           Headlines

AGRICORE UNITED: S&P Assigns BB+ Corp. Credit & Sr. Sec. Ratings
ALGOMA STEEL: Elects Robert J. Milbourne as New Board Chairman
BURLINGTON: Gets Partial Approval of Key Employee Retention Plan
CKE RESTAURANTS: Sets Special Shareholders' Meeting for Feb. 28
CABLE DESIGN: Likely Shortfall Spurs S&P to Keep Ratings Watch

CHIQUITA BRANDS: Promotes Carla A. Byron to VP, Treasure
CLARION COMM'L: Falls Below NYSE Continued Listing Standards
CLASSIC COMMS: Court Okays Young Conaway as Debtors' Counsel
COMDISCO INC: Panel Gets Okay to Hire Lazard Freres as Bankers
DOSKOCIL MFG.: Names Gary Baughman as Chairman, President & CEO

ETOYS INC: Wants Exclusive Plan Filing Time Extended to Mar. 18
ENRON CORP: Enron Re Liquidators Commence Wind-Up Process
ENRON CORP: Cayman Island Gov't Offers Assistance in U.S. Probes
EXODUS: Court Okays Wachtell Lipton as Committee's Lead Counsel
FACTORY CARD: Obtains Court Nod Extending Lease Decision Period

FEDERAL-MOGUL: US Trustee Amends Asbestos Claimants' Committee
FRUIT OF THE LOOM: Seeks OK of 2nd Amended Disclosure Statement
GC COMPANIES: 2001 Net Losses Narrow by 73% to $35.9 Million
GC COMPANIES: Court Extends Joint Exclusive Plan Filing Period
GENERAL BINDING: Cuts Net Debt by over 10% to $359MM in FY 2001

GENERAL DATACOMM: Wants More Time to Remove Prepetition Actions
GLOBAL CROSSING: Secures Okay to Use Prepetition Bank Accounts
GLOBAL CROSSING: SEC Probing Issues Raised by Ex-Employee
GLOBIX CORP: S&P Drops Ratings to D Following Missed Payment
GOODYEAR TIRE: Fitch Hatchets Debt Ratings Down to BB+ from BBB

HAMILTON BANCORP: Requests Delisting from Nasdaq National Market
HARDINGE: Seeking Waiver of Credit Pact's Financial Covenants
HAYES LEMMERZ: US Trustee Wants Disclosure of McKinsey's Fees
HOLLYWOOD ENTERTAINMENT: Junk Ratings On Watch for Upgrade
IT GROUP: Shaw Bidding Procedures Hearing Scheduled for Tomorrow

INNOVATIVE CLINICAL: Will Shut-Down Network Management Business
INTEGRATED HEALTH: Wants Approval of Cananwill Premium Financing
INVENTEK: Chapter 11 Case Summary
KMART CORP: Brings-In Rockwood Gemini as Real Estate Advisors
KMART CORP: Lease Rejections May Affect CMBS Deals, Says S&P

KMART CORP: Sterling Factors Agree to Provide Order Factoring
LTV CORP: Retirees Retain Walter & Haverfield for Legal Advice
LERNOUT & HAUSPIE: Dictaphone's Disclosure Statement is Approved
MBC HOLDING: Seeking $2MM Loan Guarantee from Local Government
MARINER POST-ACUTE: Intercompany Claims Bar Date Extended

MCLEODUSA INC: Court Approves Use of Existing Business Forms
METALS USA: Secures Okay to Sell Lafayette Property for $1 Mill.
NETWORK COMMERCE: Auditors Doubt Ability to Continue Operations
NEW VISUAL: Auditors Issue Going Concern Opinion in Jan. Report
NEW WORLD RESTAURANT: S&P Assigns B- Rating to $155MM Debt Issue

PACIFIC GAS: Attorney-General's Suit Moved to Bankruptcy Court
PACIFIC GAS: Says Preemption Ruling Paves Way for Reorganization
PARK PLACE: Fitch Cuts Low-B Ratings Owing to Reduced EBITDA
SAFETY-KLEEN: Seeks Open-Ended Lease Decision Period Extension
STRATUS SERVICES: Falls Short of Nasdaq Listing Requirements

SUN HEALTHCARE: Secures Approval of Crestwood Lease Settlement
TECSTAR: Case Summary & 20 Largest Unsecured Creditors
TESORO PETROLEUM: Acquisition Plan Prompts S&P's Ratings Watch
TRILLIUM HOSPITAL: Union Files Suit to Protect Employees
US INDUSTRIES: Fitch Downgrades Senior Secured Notes To B-

WARNACO GROUP: Lease Decision Period Further Extended to July 31
WESTPOINT STEVENS: Dec. 31 Balance Sheet Upside-Down by $778MM
WHEELING-PITTSBURGH: Court Okays Wage Deferral & Ohio Financing
ZILOG INC: Intends to File Prepackaged Chapter 11 by Month-End

* BOND PRICING: For the week of February 11 - 15, 2002

                           *********

AGRICORE UNITED: S&P Assigns BB+ Corp. Credit & Sr. Sec. Ratings
----------------------------------------------------------------
Standard & Poor's assigned its double-'B'-plus long-term
corporate credit and senior secured debt ratings to Agricore
United. The outlook is stable.

The ratings reflect the company's leading business position in
the Canadian agricultural economy, resulting in a company with
C$5 billion in pro forma revenues. The ratings also reflect
Agricore United's high market shares in both grain handling and
crop-production services, its modern infrastructure, and
relatively high barriers to entry.

These factors are offset by high leverage resulting from the
merger, and the low-growth nature of grain handling and crop
production.

Agricore United is the result of the November 2001 merger
between United Grain Growers Ltd. and Agricore Cooperative Ltd.,
both based in Winnipeg, Man. Agricore United is the largest
Canadian agri-business, with a leading 39% national market share
of grain shipments. The company also is the number-one retailer
of farm supplies in Western Canada, with more than 200
locations, and has a strong presence in both seed and fertilizer
with a majority interest in Western Co-operative Fertilizers
Ltd., a fertilizer distributor. Other divisions include
livestock services, farm publishing, and UGG Financial. Archer
Daniels Midland Co. is Agricore United's largest shareholder,
with an approximate 20% interest. Archer Daniels assumed a 42%
ownership interest in United Grain Growers in 1998.

Several factors have contributed to the recent consolidation in
Canadian agri-business, including:

     * An evolving regulatory environment. Reforms proposed by
the federal government will create a more efficient,
accountable, and competitive grain handling system through a
revised tendering process, resulting in reduced costs for
producers and grain handling companies. Transportation
efficiencies are rewarded through multirail car incentives, and
grain handlers that have invested heavily in their own high-
throughput elevators will benefit through a reduced cost
structure. In the past 15 years alone, the number of country
elevators has fallen from just under 2000 to about 650 today,
with the ultimate number to stabilize at around 250 in several
years. This reduction illustrates how important cost reduction
through logistics management has become in a slow-growth
industry.

     * The depressed state of world agri-business. Agri-business
is facing historically low grain prices, and farmers in Canada
are facing unprecedented low incomes due to declining subsidies.

     * Technology and productivity gains. Research and
development and genetics are distinguishing factors that are
driving consolidation. With the merger, Agricore United's
increased 39% market share in grain handling, as well as an
enhanced presence in crop-production services, will provide
numerous benefits, including synergies of about C$25 million
this fiscal year and C$50 million in both fiscal 2003 and 2004.
These cost savings will result from elevator closures,
administrative savings, crop-input product overlap, and payroll
reductions.

Barriers to entry remain high given the transportation
infrastructure already in place; very high port taxes in Canada
relative to other countries, particularly the U.S.; and high
regulatory compliance costs in Canada.

Postmerger, Agricore United's capital structure has been
strained, despite the company's C$57 million initial public
equity offering in November 2001. Current debt outstanding is
about C$650 million. Pro forma debt to EBITDA of more than 4.0
times and debt to capitalization of 58% are weak for the current
rating category, as are EBITDA interest coverage of 3.2x and
EBIT interest coverage of 1.4x. Debt reduction will be
facilitated given that planned annual capital expenditures are
expected to be modest at about C$50 million and will be devoted
to maintenance-type projects.

                        Outlook: Stable

The low-growth nature of the grain handling and crop-input
retailing industries will force Agricore United to continue to
implement systemwide cost reductions. Integration of merged
assets will remain a risk, at least in the near term. In
addition, Standard & Poor's expects the company to focus on debt
reduction in the near term.


ALGOMA STEEL: Elects Robert J. Milbourne as New Board Chairman
--------------------------------------------------------------
Algoma Steel Inc. (TSE: ALG) announced that, at the Board of
Directors meeting held on February 5, 2002 in Sault Ste. Marie,
Robert J. Milbourne was elected as Chairman of the Board and
David Baird was elected as Vice Chairman.

Mr. Milbourne is the Principal at Milbourne & Company, based in
Vancouver, and was formerly the Chief Operating Officer and a
Director of Stelco Inc.

Mr. Baird is a Senior Counsel at the Toronto office of Torys
LLP, with leading expertise in the restructuring of public
companies.

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
http://www.debttraders.com/price.cfm?dt_sec_ticker=ALGOMAfor
real-time bond pricing.


BURLINGTON: Gets Partial Approval of Key Employee Retention Plan
----------------------------------------------------------------
Judge Newsome finds that there is a sound business purpose for
Burlington Industries, Inc., and its debtor-affiliates to
implement the retention program with respect to employees in
tiers IV to VI.

Each Participating Employee under the proposed Retention
Incentive Plan is eligible to payment equal to an annualized
percentage of their base salary as such:

Tier       Participating Employee      Retention Incentive Plan
----       ----------------------      ------------------------
   I        Chief Executive Officer (1)             120%
  II        Senior Vice Presidents (2)              110%
III        Division Presidents (3)                  85%
  IV        Vice Presidents (3)                      75%
   V        Other Management (32)                    45%
  VI        Other Management (30)                    30%

Under the Emergence Bonus, each Emergence Bonus Participant has
a target Emergence Bonus equal to a percentage of their
annualized base salary as:

Tier                        Target Emergence Bonus
----                        ----------------------
   I                                 200%
  II                                 150%
III                                 100%

The Severance Pay will be based on base salary plus target
annual bonus for tiers I to IV and base salary only for tiers V
and VI. The duration of Severance Benefits shows:

                     Severance Plan           Severance Plan
Tiers          w/o change of control     w/ change of control
-----          ---------------------     --------------------
I                   24 months                 36 months
II                  18 months                 36 months
III, IV             12 months                 24 months
V, VI         greater of 6 months        greater of 6 months
               or duration entitled       or duration entitled
               to under pre-petition      to under pre-petition
               salaried severance plan    salaried severance plan

Judge Newsome further authorizes the Debtors to:

     (i) implement the retention program as to:

         (a) the Retention Incentive Plan; and,

         (b) the Severance Plan.

    (ii) make any and all payments required; and,

   (iii) enter into such transactions and documents as
         necessary or appropriate to implement the provisions of
         the Retention Program.

The Court authorizes the Debtors to establish a reserve of
$1,000,000 for their discretionary use.  This is to provide for
Retention Incentive payments on a case-to-case basis within the
Debtors discretion to new hires, promoted employees not
replacing participating employees and as needed in cases of
unforeseen circumstances.  However, Judge Newsome emphasizes
that:

   (i) no portion of the reserve will be used to make payments to
       any of the Debtors' directors or additional payments to
       any participating employees;

  (ii) the reserve will be used only for purposes consistent with
       the retention program; and,

(iii) any payments made from the reserve to eligible employees
       will be consistent with the amounts awarded to similarly-
       situated Participating Employees under the retention
       program.

The Court will continue the hearing on the relief requested with
respect to Participating Employees in tiers I to III and the
assumption of the McGregor Agreement, to February 27, 2002.
(Burlington Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


CKE RESTAURANTS: Sets Special Shareholders' Meeting for Feb. 28
---------------------------------------------------------------
CKE Restaurants, Inc., and Santa Barbara Restaurant Group, Inc.
have agreed to a merger in which CKE will acquire SBRG. If the
merger is completed, SBRG will become a wholly-owned subsidiary
of CKE. In the merger, holders of SBRG common stock will
receive:

       (1) if the average price of CKE common stock is $10 or
           less per share, one-half of one share of CKE common
           stock for each whole share of SBRG common stock; or

       (2) if the average price of CKE common stock is greater
           than $10 per share, a fraction of a share of CKE
           common stock equal to the quotient (rounded to the
           nearest thousandth) of $5 divided by the average CKE
           share price for each whole share of SBRG common stock.

CKE shares are traded on the New York Stock Exchange under the
symbol "CKR." If the average price of the CKE common stock is
less than $6.25 per share at closing, SBRG may terminate the
merger agreement. The closing price of CKE common shares on
January 22, 2002 was $9.97, and the closing price of CKE common
shares has not been lower than $6.25 during the three month
period preceding such date.

SBRG has not determined at this time what it intends to do if
the average closing price of the CKE common stock is less than
$6.25. If the stockholders of both companies approve the merger
and the average closing price of CKE common shares is lower than
$6.25 at closing, the SBRG Board of Directors will determine
whether to abandon the merger without seeking further approval
of SBRG stockholders.

After careful consideration, the Boards of Directors of CKE and
SBRG have approved the merger agreement and have determined that
the merger is in the best interests of their stockholders. Each
Board of Directors recommends that stockholders vote "FOR"
approval of the merger agreement.

The merger cannot be completed unless the necessary government
and lender approvals are obtained and unless the stockholders of
both of the companies approve it. Each company has scheduled
special meetings of its stockholders to consider and vote on the
merger.

                 CKE's Special Stockholders' Meeting

The special meeting of stockholders of CKE Restaurants, Inc.
will be held on Thursday, February 28, 2002, at 10:00, a.m.,
local time, at Fess Parker's Doubletree Resort Santa Barbara,
located at 633
East Cabrillo Boulevard, Santa Barbara, California 93103, to
consider and vote upon the proposal to approve and adopt the
Agreement and Plan of Merger, dated December 20, 2001 and
amended January 24, 2002, between CKE Restaurants, Inc. and
Santa Barbara Restaurant Group, Inc. and the issuance of
shares of CKE common stock in the merger, and to transact such
other business as may properly come before the special meeting.

Only stockholders of record at the close of business on January
18, 2002 are entitled to notice of, and to vote at, the special
meeting and any adjournments or postponements thereof.

         Santa Barbara Restaurant Group's Special Meeting

The special meeting of stockholders of Santa Barbara Restaurant
Group, Inc., will be held on Thursday, February 28, 2002, at
1:00 p.m., local time, at Fess Parker's Doubletree Resort Santa
Barbara, located at 633 East Cabrillo Boulevard, Santa Barbara,
California 93103, to vote on a proposal to approve and adopt the
Agreement and Plan of Merger, dated December 20, 2001 and
amended  January 24, 2002, between CKE Restaurants, Inc. and
Santa Barbara Restaurant Group, Inc., and to transact such other
business as may properly come before the special meeting.

Only stockholders of record at the close of business on January
18, 2002 are entitled to notice of, and to vote at, the special
meeting and any adjournments or postponements thereof.


CABLE DESIGN: Likely Shortfall Spurs S&P to Keep Ratings Watch
--------------------------------------------------------------
Standard & Poor's put its Cable Design Technologies (CDT)
double-'B'-plus corporate credit rating on CreditWatch with
negative implications. At the same time, Standard & Poor's
placed the preliminary ratings on the company's shelf
registration on CreditWatch, also with negative implications.

The CreditWatch action follows CDT's preliminary announcement of
a revenue and earnings shortfall for the fiscal second quarter,
ended January 31, 2002, and of expected restructuring charges of
$9 million. Further deterioration in operating outlook, along
with the need to implement additional cost reductions, are
likely to pressure credit measures in the near term.

CDT announced on January 31, 2002, that weaker-than-expected
business conditions in December and January would result in
revenues for the quarter to fall to $124 million, a 13%
sequential decline. The revenue shortfall would result in a
range from breakeven to a net loss $1.8 million before
restructuring and other charges of approximately $9 million. A
new three-year, $200 million credit facility provides moderate
financial flexibility during the industry downturn. The
unexpected erosion in operating performance increases financial
risk and detracts from CDT's credit quality in the near term.
Standard & Poor's will meet with management to assess the
outlook for demand and for cost reductions and their likely
impact on CDT's operating expectations prior to resolving the
CreditWatch.


CHIQUITA BRANDS: Promotes Carla A. Byron to VP, Treasure
--------------------------------------------------------
Chiquita Brands International, Inc. (NYSE: CQB) said that Carla
A. Byron has been promoted to the new position of Vice
President, Treasurer and Corporate Planning, effective
immediately.  Ms. Byron has been the Vice President of Corporate
Planning since 1996.  She reports to James B. Riley, Senior Vice
President and Chief Financial Officer of Chiquita.

Ms. Byron's responsibilities will include investor relations,
cash management, financing and hedging programs, and risk
management, in addition to mergers, acquisitions, divestitures
and strategic planning.

"Carla's appointment recognizes her record of accomplishment in
strategic decision-making as a key member of our debt
restructuring team and in the execution of important
acquisitions and divestitures of Chiquita," said Mr. Riley.
"Carla's integrity and financial expertise have earned her the
trust and respect of our bankers and other advisors."

Ms. Byron joined Chiquita as Financial Analyst in 1988, and was
promoted to Corporate Planner in 1989 and to Director of
Corporate Planning in 1993. During her tenure, she has led ten
acquisitions of companies with revenues of $25-$300 million and
the divestiture of several business units.  Prior to Chiquita,
Ms. Byron's experience was with Arthur Young & Co.

A native of Kentucky, Ms. Byron earned a B.S. degree in
accounting from the University of Kentucky.  She has been a
certified public accountant in Ohio since 1982.  Ms. Byron is
member of American Institute of CPAs and the Ohio Society of
CPAs.

Chiquita is a leading international marketer, producer and
distributor of quality fresh fruits and vegetables and processed
foods.

DebtTraders reports that Chiquita Brands' 10.250% bonds due 2006
(CQB4) are trading between 87.75 and 88.75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CQB4for
real-time bond pricing.


CLARION COMM'L: Falls Below NYSE Continued Listing Standards
------------------------------------------------------------
Clarion Commercial Holdings, Inc. (NYSE: CLR) said that its
third liquidating distribution pursuant to the company's plan of
liquidation and dissolution will be $3.11 per share.  Following
the distribution, the remaining assets of the Company will be
held as a reserve for contingencies.  The distribution will be
payable on March 8, 2002 to shareholders of record on March 1,
2002.

The Company also announced that the market capitalization of the
Company has fallen below the continued listing standards for the
New York Stock Exchange (NYSE).  Following the payment of the
liquidating distribution on March 8, 2002, the securities of the
Company will cease to be listed on the NYSE.


CLASSIC COMMS: Court Okays Young Conaway as Debtors' Counsel
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the retention and employment of Young Conaway Stargatt & Taylor,
LLP as attorneys for Classic Communications, Inc. and its
Debtor-Affiliates.

The Debtors will pay Young Conaway on an hourly basis plus
reimbursement of actual, necessary expenses and other charges
incurred by the firm. The principal attorney and paralegals
presently designated to represent the Debtors and their current
standard hourly rates are:

            Robert S. Brady             $390 per hour
            Brendan Linehan Shannon     $370 per hour
            Sean M. Beach               $210 per hour
            Mathew B. Lunn              $180 per hour
            Debbie Laskin (paralegal)   $130 per hour

Specifically, Young Conaway will:

    a) provide legal advise as debtors in possession in the
continued operation of their business and management of their
properties;

     b) prepare and pursue confirmation of a plan of
reorganization and approval of disclosure statement;

     c) prepare necessary applications, motions, answers, orders,
reports and other legal papers;

     d) appear in court and protect the interests of the Debtors
before the Court; and

     e) perform all other proper and necessary legal services.

Young Conaway received $162,450 in connection with planning and
preparation of initial documents for filing these chapter 11
cases.

Classic Communications, Inc., a cable operator focused on non-
metropolitan markets in the United States, filed for Chapter 11
petition on November 13, 2001 along with its subsidiaries. When
the Company filed for protection from its creditors, it listed
$711,346,000 in total assets and $641,869,000 in total debts.


COMDISCO INC: Panel Gets Okay to Hire Lazard Freres as Bankers
--------------------------------------------------------------
The Court finds the retention of Lazard Freres as Investment
Banker to the Official Committee of Unsecured Creditors of
Comdisco, Inc., and its debtor-affiliates as necessary.
Therefore, Judge Barliant permits the Committee to employ and
retain Lazard nunc pro tunc July 29, 2001.

Judge Barliant emphasizes that all requests of Lazard for
payment of indemnity shall be made by means of an application
and shall be subject to review by the Court to ensure that
payment of such indemnity conforms to the terms of the Agreement
and this Order.  "In no event shall Lazard be indemnified if a
court determines by final order that such claim arose out of
Lazard's own bad faith, intentional breach of fiduciary duty,
gross negligence or willful misconduct," Judge Barliant
clarifies. (Comdisco Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


DOSKOCIL MFG.: Names Gary Baughman as Chairman, President & CEO
---------------------------------------------------------------
Gary S. Baughman has been named Chairman, President and Chief
Executive Officer of Doskocil(R) Manufacturing Company, Inc.,
according to John Clark, Managing Partner of Westar Capital,
Doskocil's majority stockholder.

Baughman comes to Doskocil with a broad background in managing
consumer product businesses. Most recently, he was President &
CEO of Fisher-Price, Inc. He replaces former Doskocil President,
Larry E. Rembold, who is retiring. Rembold will continue serving
on the company's board of directors.

"Gary has a thorough understanding of family-oriented consumer
products and an impressive record as a turnaround expert," Clark
said. "His proven skill for improving sales and increasing
earnings will help position Doskocil for future growth."

As President/CEO of Fisher-Price, Inc., Baughman led the company
through a dramatic turnaround and return to profitability. The
manufacturer of preschool toys and children's products is a
subsidiary of Mattel, Inc., the largest toy company in the
world.

Prior to joining Fisher-Price, Baughman was President of Little
Tikes Co., a division of Rubbermaid, Inc. At Little Tikes, he
drove the company into a leading market share position in the
preschool toy market, second only to Fisher-Price.

At Doskocil, Baughman will focus on developing the company's
core categories and producing products with global appeal, Clark
said. He will also work on increasing awareness of the company's
major product lines.

"Doskocil has tremendous strengths in product development,
manufacturing and distribution that Gary can use as a platform
to take the company to the next level," Clark added. "We welcome
his strong leadership and are confident in his ability to grow
the business by maintaining a strong customer orientation and
exploring synergies between Doskocil and other Westar holdings."

Doskocil recently reached a financial restructuring agreement
with its bondholders that significantly reduced the amount of
its outstanding debt. The company's improved financial condition
combined with a strong management team under Baughman's
direction will allow Doskocil to maintain its leadership
position in the industry while growing sales and earnings, said
Clark.

Doskocil(R) Manufacturing, marketer of Petmate(R) products,
encourages responsible pet ownership through the marketing of
quality pet products with a focus on safety, training and
transport. Call 1-800-433-5185 or visit http://www.petmate.com
for more information.


ETOYS INC: Wants Exclusive Plan Filing Time Extended to Mar. 18
---------------------------------------------------------------
EBC I, Inc., formerly known as eToys, Inc. along with its
Debtor-Affiliates asks the U.S. Bankruptcy Court for the
District of Delaware to extend the time period within which they
have the exclusive right to file a plan of reorganization and
solicit acceptances to any proposed plan or plans.  The Debtors
want their exclusive plan filing period to run through March 18,
2002 and their exclusive solicitation period extended through
May 16, 2002.

The Debtors assert that their cases are large and complex
involving more than 6,400 claims against their estates.
Moreover, the Debtors operated their businesses from multiple
locations and had extensive relationships with numerous vendors,
lessors and other third-party service providers situated
throughout the country.

The Debtors tell the Court that even though they have been
working diligently to formulate a plan, they still need more
time to assess the amount and validity of administrative claims
asserted against their estates.

eToys, Inc. was a web-based toy retailer based in Los Angeles,
California. The Company filed for Chapter 11 Petition on March
7, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Robert J. Dehney, at Morris, Nichols, Arsht & Tunnell
and Howard Steinberg at Irell & Manella represents the Debtors
in their restructuring efforts. When the company filed for
protection from its creditors, it listed $416,932,000 in assets
and $285,018,000 in debt.


ENRON CORP: Enron Re Liquidators Commence Wind-Up Process
---------------------------------------------------------
Malcolm Butterfield and Anthony McMahon, as Joint Provisional
Liquidators of Enron Re Ltd., want to accomplish an orderly
wind-up and liquidation of the Company's operations and an
orderly resolution of the claims against it.

In order to achieve this, Scott D. Talmadge, Esq., at Clifford,
Chance, Rogers & Wells LLP, in New York, asserts, the Joint
Provisional Liquidators must have access to and control of all
of the Company's assets, wherever situated, in order to:

   (a) maximize the amount to be distributed, on the basis of
       equity, to the Company's creditors worldwide, and

   (b) ensure that all claims arising prior to the filing of the
       wind-up proceedings are presented in Bermuda for
       adjudication in the Foreign Proceeding.

If the Company's assets were dissipated during the course of the
Foreign Proceeding, or if creditors were permitted to proceed
with actions against the Company or its assets in the United
States, Mr. Talmadge says, the goal of the Joint Provisional
Liquidators would be seriously undermined.

Mr. Talmadge states that section 304 of the Bankruptcy Code was
specifically designed to assist foreign representatives in the
performance of their duties.  Section 304 allows the bankruptcy
court to:

-- order the turnover of the foreign debtor's property to a
    foreign representative,

-- enjoin the commencement or continuation of any action against
    a debtor in a foreign proceeding or its property, or

-- grant other relief to the foreign representative.

By this motion, the Joint Provisional Liquidators ask Judge
Gonzalez to enter an order:

   (a) requiring Merrill Lynch, Citibank N.A. and all other
       persons and entities having possession, custody or control
       of property of the company in the United States, or the
       proceeds, to turn over and account for such property or
       its proceeds to the Joint Provisional Liquidators;

   (b) enjoining the commencement or continuation of any action
       or proceeding against the Company;

   (c) enjoining the commencement or continuation of any action
       or proceeding or the taking of any act against the
       property of the Company involved in the Foreign
       Proceeding, including any action, proceeding or act:

          (i) to seize or otherwise obtain possession of or
              exercise control over such property, or

         (ii) to create, perfect or enforce any lien, setoff,
              judgment, attachment, restraint, assessment or
              order, or collect, assess or recover any claim
              against such property;

   (d) enjoining all persons from relinquishing or disposing of
       any property of the Company involved in the Foreign
       Proceeding, or the proceeds of such property, except to
       the Joint Provisional Liquidators;

   (e) requiring every person and entity that has a claim of any
       nature or source against the Company and that is a party
       to any action or other legal proceeding in which the
       Company is or was named as a party, or as a result of
       which a liability of the Company may be established, to
       place the Joint Provisional Liquidators' United States
       counsel on the master service list of any such action or
       other legal proceeding and to take such other steps as may
       be necessary to ensure that such counsel receives:

          (i) copies of any and all documents served by the
              parties to such action or other legal proceeding or
              issued by the court, arbitrator, administrator,
              regulator or similar official having jurisdiction
              over such action or legal proceeding, and

         (ii) any and all correspondence or other documents
              circulated to parties named in the master service
              list;

   (f) providing, with respect to any claim against the Company
       that may come known to the Joint Provisional Liquidators;

          (i) when informed of a Subsequent Claim, Counsel for
              the Joint Provisional Liquidators shall serve upon
              the holder of such claim a copy of the Summons,
              Petition, and the most recent injunction order
              entered by this Court;

         (ii) the holder of a Subsequent Claim, shall have 20
              days from service of the Summons in which to file
              an answer or motion with respect to the Joint
              Provisional Liquidators; and

        (iii) on not less than two days' notice to counsel for
              the Joint Provisional Liquidators, the holder of a
              Subsequent Claim may file a motion seeking an order
              of the Court vacating or modifying with respect to
              such Subsequent Claim the injunction entered in
              this proceeding.

       Such request shall be the subject matter of a hearing as
       scheduled by this court. Otherwise, the holder of a
       Subsequent Claim may file objections and be heard by this
       Court in accordance with the terms of any order of the
       Court providing for a hearing in the future on the relief
       sought by the Joint Provisional Liquidators in this
       proceeding.

The Joint Provisional Liquidators contend that these measures
will best assure an economical and expeditious administration of
Enron Re Ltd's estate. (Enron Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


ENRON CORP: Cayman Island Gov't Offers Assistance in U.S. Probes
----------------------------------------------------------------
The Government of the Cayman Islands confirms its ability to
respond to requests for assistance from the United States
government in its ongoing Enron investigation.  Through
established regulatory, law enforcement and treaty channels,
information exchange occurs frequently between the U.S. and the
Cayman Islands governments on a range of issues.  To date, no
formal request has been made by U.S. authorities for information
on the Enron matter.

Since 1990, the Cayman Islands government has provided
information on criminal matters to the U.S. Department of
Justice over 200 times.  That exchange has taken place through
the Mutual Legal Assistance Treaty.  The Cayman Islands was the
second jurisdiction in the world to sign such a treaty with the
U.S.

The Cayman Islands Monetary Authority (CIMA) has a well-
established working relationship with the Office of
International Affairs of the U.S. Securities and Exchange
Commission, which has facilitated mutual assistance. Any request
in the Enron matter would be treated in accordance with Sections
30 and 43 of the Monetary Authority Law (2001 Revision), which
provides for full cooperation with overseas regulators.  One of
the principal functions of the Authority is to provide
assistance to overseas regulatory authorities and it is always
ready to carry out that responsibility.

The Cayman Islands Financial Reporting Unit (FRU) has an ongoing
relationship with the U.S. Treasury's Financial Crimes
Enforcement Network (FinCEN). The FRU receives suspicious
activity reports and provides international law enforcement
cooperation on money laundering matters.  On 13 June 2001, the
Unit was admitted to the Egmont Group, an international
organization that includes over 50 similar agencies, and is the
worldwide standard-setting body among financial reporting units.

As a major financial center, the Cayman Islands takes its
international obligations seriously.  It has kept pace with
international standards in terms of anti-money laundering
regulations and has been recognized for that by the Financial
Action Task Force, and the U.S. Treasury in particular last
year. In a speech last November, U.S. Treasury Secretary
remarked, "The Cayman Islands has a long-standing relationship
with the United States, including partnering with the United
States in a mutual legal assistance treaty effective since 1990
under which we've already been cooperating in the hunt for
terrorist assets."  Secretary O'Neill added, "We commend the
Cayman Islands for emphatically demonstrating that those who
seek to engage in tax evasion or other financial crimes are not
welcome within its jurisdiction."

As in the U.S. and the United Kingdom, the Cayman Islands
respects the rights of law-abiding citizens to financial
privacy.  However, the Mutual Legal Assistance Treaty, the
Confidential Relationships (Preservation) Law, the Proceeds of
Criminal Conduct Law and other legislative provisions are
designed to ensure that the Cayman Islands are able to provide
assistance to U.S. and international authorities during a
criminal investigation.  This track record of international
cooperation is well-established with those authorities.

The Cayman Islands Monetary Authority is responsible for
regulating those engaged in the business of company management
and the provision of corporate services.  The Cayman Islands has
required company managers to be licensed since 1984.  It is only
one of a few jurisdictions in the world to regulate these
services.

Under the laws of the Cayman Islands, any person conducting
"relevant financial business" -- including bankers, lawyers,
accountants, securities brokers, company managers and corporate
service providers -- is subject to the Money Laundering
Regulations.  Therefore, company management and corporate
service providers are required to conduct know-your-customer and
due diligence procedures for each corporate entity they provide
services for.

In matters of trans-border insolvency supervision, the
Government of the Cayman Islands makes appropriate appointment
of provisional or official liquidators.  This is to ensure that
Cayman corporate entities affiliated to foreign companies in
bankruptcy or liquidation proceedings are properly supervised or
liquidated in the interest of their creditors, employees and
shareholders.  Two Enron Cayman subsidiaries are already in
process of provisional liquidation.


EXODUS: Court Okays Wachtell Lipton as Committee's Lead Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Exodus
Communications, Inc., and its debtor-affiliates, obtained Court
approval to employ and retain the law firm of Wachtell Lipton
Rosen & Katz as its counsel.

The members of the Committee based their selection of Wachtell
Lipton as Committee counsel on the firm's extensive experience
and knowledge in the field of bankruptcy and creditors' rights,
and in the other fields of law that are expected to be involved
in these cases as well as on the firm's familiarity with the
case due to its representation, as of September 2001, of an
unofficial committee of holders of the Debtors' senior notes.
The Committee believes that Wachtell Lipton is well qualified to
represent it in connection with these cases. In order to more
efficiently serve the Committee, Wachtell Lipton will represent
the Committee in coordination with the Delaware law firm of
Pachulski Stang Ziehl Young & Jones P.C.

Wachtell's compensation will be payable to Wachtell, Lipton on
an hourly basis, plus reimbursement of actual, necessary
expenses incurred by the law firm. Prior to the commencement of
these cases and in connection with its representation of the
Unofficial Committee, Wachtell Lipton received from the Debtors
a retainer in the amount of $150,000, a portion of which was
applied to Wachtell Lipton's fees and expenses incurred in
representing the Unofficial Committee. Wachtell Lipton will
apply its outstanding balance for fees and expenses incurred up
to the commencement of these cases to the retainer; the
remainder of the retainer, if any, will be applied to Wachtell
Lipton's fees and expenses in representing the Committee.

At the present time, attorneys and paralegals responsible for
the representation of the Committee and their current hourly
rates are:

        Richard D. Feintuch           $675 per hour
        Seth Gardner                  $395 per hour
        Stacey Comolli (paralegal)    $ 90 per hour

In addition, the Firm's other professionals may be engaged in
connection with these cases, whose hourly rates for work of this
nature currently range from:

        Paralegals          $ 90-$125
        Associates          $130-$395
        Members             $400-$875

Included among the professional services which Wachtell Lipton
will render to the Committee are:

A. advising the Committee and representing it with respect to
    proposals and pleadings submitted by the Debtors or others
    to the Court or the Committee;

B. representing the Committee with respect to any plans of
    reorganization or disposition of assets proposed in this
    case;

C. attending hearings, drafting pleadings and generally
    advocating positions which further the interests of the
    creditors represented by the Committee;

D. assisting in the examination of the Debtors' affairs and
    review of the Debtors' operations;

E. advising the Committee as to the progress of the chapter 11
    proceedings; and

F. performing such other professional services as are in the
    interests of those represented by the Committee.

To the best of the Committee's knowledge, Wachtell, Lipton has
had no other prior connection with the Debtors, their creditors
or any other party in interest and upon information and belief;
the firm of Wachtell Lipton does not hold or represent any
interest adverse to the Debtors' estates or the Committee or the
creditors the Committee represents in the matters upon which it
has been and is to be engaged.

Immediately upon its retention on October 11, 2001, Mr. Feintuch
informs the Court that Wachtell Lipton commenced work on several
matters requiring immediate attention in connection with the
Debtors' cases, including reviewing the first day orders and
commenting on the Debtors' proposed debtor-in-possession
financing facility and proposed employee retention program.
Accordingly, the Committee requests that this Court authorize
the retention of Wachtell, Lipton as of October 11, 2001.
(Exodus Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


FACTORY CARD: Obtains Court Nod Extending Lease Decision Period
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
an extension of the time period within which Factory Card Outlet
Corp. and it Debtor-Affiliates must assume, assume and assign,
or reject unexpired leases of nonresidential real property
leases through April 30, 2002 or on Confirmation of the Chapter
11 Plan, whichever comes earlier.

Factory Card Outlet Corporation, one of the largest chains of
company-operated superstores in the card, party supply and
special occasion industry in the United States, filed for
chapter 11 protection on March 23, 1999. Daniel J. DeFrancheschi
of Richards Layton & Finger, P.A., represents the Debtor in
their restructuring effort. As of August 4, 2001, the company
listed $77,551,000 in assets and $92,141,000 in debt.


FEDERAL-MOGUL: US Trustee Amends Asbestos Claimants' Committee
--------------------------------------------------------------
Pursuant to section 1102(a)(1) of the Bankruptcy Code, the
United States Trustee amends membership of the Official
Committee of Asbestos Claimants in the chapter 11 cases of
Federal-Mogul Corporation, and its debtor-affiliates by adding
Colette Margaret Platt to the Committee.  The Official Committee
of Asbestos Claimants is now composed of:

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

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

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

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

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

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

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

H. Marcella Montagna
    C/o Russell W. Budd, Esq., at Baron & Budd, P.C.
    3102 OakLawn Ave., Suite 1100, Dallas, Texas 75219-4281
    Phone: (216) 575-0777  Fax: (216) 575-0799

I. Colette Margaret Platt, Executrix of Eric Edwin Davies
    c/o Ness Motley Loadholt Richardson & Poole, P.A.
    28 Bridgeside Blvd., P.O. Box 1792, Mt. Pleasant, SC 29464
    Tel: 843-216-9586  Fax: 843-216-9450 (Federal-Mogul
    Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
    Inc., 609/392-0900)


FRUIT OF THE LOOM: Seeks OK of 2nd Amended Disclosure Statement
---------------------------------------------------------------
Luc A. Despins, Esq., of Milbank, Tweed, Hadley & McCloy LLP,
made his way to Judge Walsh's courtroom to argue for approval of
Fruit of the Loom's Second Amended Disclosure Statement.  Mr.
Despins explained to Judge Walsh that the Second Amended
Disclosure Statement addresses and resolves many of the
disclosure-related objections the Debtors received from
creditors and other parties-in-interest.

Mr. Despins told the Court that Fruit of the Loom "made a number
of non-substantive changes and clarifications to the Disclosure
Statement and the Plan."

            State Street's Objections are Accommodated

Mr. Despins refuted State Street Bank and Trust's objection.
Mr. Despins pointed Judge Walsh's attention to several sections
of the original Disclosure Statement that, he said, already
address State Street's concerns.

Regarding State Street's assertion that some Class 4A claims
were improperly classified, Mr. Despins observes that State
Street "admits this is a confirmation issue; Fruit of the Loom
believes that the classification for voting purposes is
correct."

The Second Amended Disclosure Statement will tell creditors that
State Street, as Indenture Trustee for the 7% Debentures,
asserts that the principal amount outstanding was $102,913,643,
plus accrued and unpaid interest of $2,527,222.78, for a total
of $105,441,420.78.  If State Street wants that language, that's
fine with the Debtors.

To provide additional information about adequate protection
payments made to Secured Creditors during the course of the
Chapter 11 Proceedings, the Debtors agree to add a paragraph in
the Second Amended Disclosure Statement saying:

     Under the Plan, the Adequate Protection Payments will be
     applied against the principal amount of the Prepetition
     Secured Creditors' Claims solely for determining the amounts
     of any deficiency claims for the purposes of voting and
     classification. Therefore, for that purpose only, such
     payments are not treated as payments on account of
     diminution in the value of the Prepetition Secured
     Creditors' collateral, but rather as prepayments of the
     Prepetition Secured Creditors' Allowed Claims under the
     Plan. Such treatment for such purposes does not constitute
     an agreement or assertion by any party in interest that, for
     distribution or any other purposes, the Adequate Protection
     Payments are or are not payments on account of diminution in
     the value of the collateral securing the claims of the
     Prepetition Secured Creditors.

The Debtors believe the Disclosure Statement provides sufficient
information about Class 2 Prepetition Secured Creditors' Claims.
Nonetheless, Fruit of the Loom will amend the Disclosure
Statement to provide a detailed explanation about the
methodology the parties used to calculate the Deficiency Claim.
Specifically, the Second Amended Disclosure Statement will
include this explanation:

    5. Calculation of Prepetition Secured Creditors' Class 4
       Deficiency Claim

       Pursuant to the Plan, the Allowed Class 4 deficiency claim
       of the Prepetition Secured Creditors will be calculated
       using the following methodology, which Fruit of the Loom
       believes is the most favorable to holders of all other
       Class 4 Claims since it is calculated as if all Adequate
       Protection Payments are applied to the principal amount of
       the Prepetition Secured Creditor Claims:

       Starting with the amount of the Prepetition Secured
       Creditors' aggregate claims, $1,207,207,035, as set forth
       in the proofs of claim, (i) the following amounts will be
       subtracted: (a) the Adequate Protection Payments, (b) all
       payments made by Fruit of the Loom under the Adequate
       Protection Order on account of professional fees and
       expenses incurred by the Prepetition Secured Creditors,
       and (c) the estimated Distribution to holders of Class
       2 Claims; and (ii) the total amount of all reasonable
       professional fees and expenses incurred by the Prepetition
       Secured Creditors (subtracted in (b) above) will be added
       back to their Allowed Class 4 Claim. Fruit of the Loom
       estimates that the total of the Prepetition Secured
       Creditors' Class 4 Claim, as Allowed pursuant to this
       formula, will not exceed approximately $[100] million.
       Although the Prepetition Secured Creditors have agreed to
       this calculation formula for purposes of the Plan only,
       they expressly reserve and do not waive their position
       that, for all other purposes, the Adequate Protection
       Payments should not reduce the principal amount of their
       Allowed Claims.

Mr. Despins advised Judge Walsh that the Debtors will also
include language in the Second Amended Disclosure Statement to
satisfy State Street concerns about discussion of its charging
lien:

       Notwithstanding the cancellation of securities pursuant to
       Section 7.20 of the Plan, provisions of the Indentures and
       the 8-7/8% Notes indenture governing the relationships of
       the respective Indenture Trustees and the 8-7/8% Notes
       Trustee and their respective noteholders, including those
       provisions relating to distributions, the rights of the
       Indenture Trustees and the 8-7/8% Notes Trustee to certain
       payments and (to the extent applicable) indemnity from the
       applicable noteholders, and liens on property to be
       distributed to any noteholders to secure the payment of
       the fees and expenses of the Indenture Trustees and the
       8-7/8% Notes Trustee shall not be affected by confirmation
       of the Plan; provided, however, that nothing in the Plan
       shall create, or shall be construed as creating, (a) any
       lien in favor of Indenture Trustees or the 8-7/8% Notes
       Trustee on any property to be vested or revested in or
       transferred to Newco, the Purchaser, or Reorganized Fruit
       of the Loom under the Plan, or (b) any claim in favor of
       Indenture Trustees or the 8-7/8% Notes Trustee against
       Newco, the Purchaser, or Reorganized Fruit of the Loom.

                The Farley Lenders are Satisfied

The Farley Lenders want the Disclosure Statement to say that as
of the Petition Date, the Farley Lenders assert that the
aggregate amount of their Claim is $60,047,356.72, including
outstanding and undrawn letters of credit in the aggregate
amount of $2.2 million and accrued and unpaid interest of
$715,126.14.  That language is included in the Second Amended
Disclosure Statement.

           The Dissident Bondholders are "Disingenuous"

Calling the Dissident Bondholders' request for more information
and more time "disingenuous," Mr. Despins told Judge Walsh that
this group is really seeking -- one more time -- to delay the
proceedings.

"The Bondholders themselves make it absolutely clear that they
are not seeking additional information so that they can make an
informed decision as to whether or not to vote for the Plan.
They have already decided to reject it," Mr. Despins told Judge
Walsh.

Mr. Despins reminds Judge Walsh that the disclosure requirements
of Section 1125 of the Bankruptcy Code are designed to take into
account the sophistication of the objecting party and its access
to information other than what is in a disclosure statement:
"[I]n ascertaining the adequacy of information in a disclosure
statement, the bankruptcy court must consider each creditor's
access to outside sources of information." In re Copy Crafters
Quick Print, Inc., 92 B.R. 973, 979 (Bankr. N.D.N.Y. 1988).

Calling the Dissident Bondholders "extremely sophisticated
investors . . . as mangers of investment portfolios holding
billions of dollars of distressed debt," Mr. Despins reiterates
his belief that their request for more information and time is a
delay tactic.  They have already received over 70,000 pages of
documents from Fruit of the Loom.  Under these circumstances, it
is clear they do not need additional information or time.

Next, Mr. Despins responds to the Dissident Bondholders'
objection that the Disclosure Statement does not explain the
decline in value of Fruit of the Loom's assets.

"The Disclosure Statement already contains an extensive
description of the reduction in the overall business of Fruit of
the Loom and the disposition of nearly $100 million of assets of
discontinued operations.," Mr. Despins told Judge Walsh.
Nonetheless the Debtors have amended to Disclosure Statement to
add further descriptions of (i) the shutdown and disposition of
non-core business, (ii) the effect of these events on Fruit of
the Loom's balance sheet, and (iii) the purposes of the January
2000 estimate of value.  The Disclosure Statement will now tell
creditors:

       As a part of the re-focusing on the core basic apparel
       business, Fruit of the Loom has undergone a number of
       changes and discontinued a number of lines of business,
       most notably the Pro Player Sports & Licensing Division,
       which had revenues in 1999 of approximately $150 million.
       As described more fully in below, notwithstanding those
       revenues, Pro Player lost approximately $31 million in
       1999. Following the Petition Date, attempts were made
       to sell Pro Player as a going concern, but ultimately no
       purchaser could be located. Therefore, in February 2000
       the orderly liquidation of Pro Player, was authorized. The
       net cash proceeds of that liquidation, which was
       substantially completed in 2000, of approximately $25
       million, were applied to reduce the DIP Facility.
       Similarly, Gitano, which has sales in 1999 of $48.2
       million, but an operating loss of $28.8 million for the
       same period, was liquidated in 2000 for a net cash
       proceeds of $19.4 million. Again, the proceeds were
       applied to repay and reduce the DIP Facility. In addition,
       there were a number of other asset sales whereby Fruit of
       the Loom disposed of assets no longer used in its business
       operations. The total proceeds of all of these asset sales
       (including Pro Player and Gitano) was approximately
       $91.6 million; in each instance the proceeds were applied
       to the DIP Facility.

and:

       Since the Petition Date through the end of 2001, the total
       amount of inventory and accounts receivable shown on Fruit
       of the Loom's balance sheet has been reduced by a
       forecasted aggregate amount of approximately $328 million.
       This reduction is a result of the elimination of
       unprofitable business lines, combined with increased
       efficiencies in manufacturing, so that inventory is no
       longer held for extended periods of time and accounts are
       collected more efficiently. However, looked at as merely
       the book value of assets (which was the valuation basis
       upon which the Adequate Protection Order was entered),
       this reduction which is a reflection of the improved
       manufacturing capabilities and the elimination of
       unprofitable lines of business, did reduce the
       absolute amount of book value assets of Fruit of the Loom.

With these amendments, the Debtors ask Judge Walsh to put his
stamp of approval on their Second Amended Disclosure Statement,
allow the document to be transmitted to creditors to solicit
acceptances of their Plan, and move these cases to confirmation
without further delay. (Fruit of the Loom Bankruptcy News, Issue
No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900)


GC COMPANIES: 2001 Net Losses Narrow by 73% to $35.9 Million
------------------------------------------------------------
GC Companies reported that net losses decreased $99.7 million to
$35.9 million in 2001 from $135.6 million in 2000. Net losses in
2001 included reorganization items related to the Bankruptcy
Proceedings of $21.7 million and impairment charges on the
investment portfolio of $4.4 million. Net losses in 2000
included an impairment and restructuring charge of $37.6 million
relating to the nonrecoverability of assets of the Company's
domestic theatre businesses and ventures, a reorganization
charge of $28.9 million related to the Bankruptcy Proceedings as
well as impairment charges on the investment portfolio of $19.1
million. Theatre operations showed a loss of $8.9 million in
2001 compared to a loss of $73.8 million in 2000. Operating
losses after corporate expenses for 2001 were $17.7 million, a
decrease of $75.0 million from operating losses after corporate
expenses of $92.7 million in 2000.  Earnings before interest,
taxes, depreciation, gain on disposition of theatre assets,
impairment, restructuring and reorganization ("Operating
EBITDA") was $16.9 million for 2001, an improvement of $26.5
million over the Operating EBITDA loss of $9.6 million in 2000.

                         Theatre Revenues

Total revenues decreased 16.6% to $298.4 million for the year
ended October 31, 2001 from $358.0 million for the same period
in 2000, primarily attributable to a 20.1% decrease in patronage
partially offset by a 7.4% increase in average ticket price and
a 2.0% increase in concession sales per patron. The decrease in
patronage was mainly due to the Company operating fewer theatres
during the year. In 2000, the Company closed 64 theatres with
417 screens, of which 55 theatres with 375 screens were closed
in the fourth quarter. Seven theatres with 28 screens were
closed in fiscal year 2001. The Company operated domestically
677 screens at 73 locations at October 31, 2001 compared to 685
screens at 78 locations at October 31, 2000. The increase in
average ticket prices was due to the theatres closed in the
fourth quarter of 2000, which had lower average ticket prices,
and moderate price increases during the summer of 2001. A growth
in concessions sales per patron was principally attributable to
the theatres closed in the fourth quarter of 2000, which had
lower concession sales per person.

                   Costs of Theatre Operations

Cost of theatre operations (film rentals, concessions, theatre
operations and administrative expenses and depreciation) for the
year ended October 31, 2001 decreased $88.2 million to $292.8
million in 2001 from $381.0 million last year. As a percentage
of total revenues, cost of theatre operations was 98.1% for the
year ended October 31, 2001 compared to 106.4% for the year
ended October 31, 2000. This decreased percentage of the cost of
theatre operations to total revenues for the year compared to
the same period in 2000 was primarily due to lower rent and rent
related expenses, a decrease in theatre payroll costs, lower
administrative costs and a decrease in advertising expenses.
These decreases were partially offset by lower film margins.

GC Companies, Inc., through its subsidiaries, operates a motion
picture exhibition circuit in the United States under the name
"General Cinema Theatres," through a joint venture, operates
motion picture theatres in South America and also manages the
Company's investments. Through its investment
operations, the Company invested in businesses which are
unrelated to the Company's theatre business and the broader
entertainment industry.

The Company is presently operating its domestic theatre business
and managing its investment assets as debtors-in-possession
subject to the jurisdiction of the United States Bankruptcy
Court in the State of Delaware. The Company's subsidiary which
holds the Company's interest in its South American theatre joint
venture did not file a petition for reorganization because there
were no significant outstanding liabilities on the books of the
subsidiary other than an intercompany payable to the Company. As
a result, the Company's subsidiary which holds the Company's
interest in the South American theatre joint venture is not
subject to the jurisdiction of the Bankruptcy Court.


GC COMPANIES: Court Extends Joint Exclusive Plan Filing Period
--------------------------------------------------------------
GC Companies, Inc. with its Debtor-Affiliates and the Official
Committee of Unsecured Creditors sought and obtained from the
U.S. Bankruptcy Court for the District of Delaware an extension
of their joint exclusive period for filing a co-proposed plan of
reorganization.  The Court gives them until March 15, 2002 to
file that consensual plan.

GC Companies, which operates about 80 movie theaters in 19
states and the District of Columbia, filed for chapter 11
protection on October 11, 2000 in the U.S. Bankruptcy Court for
the District of Delaware. The firm is represented by Aaron A.
Garber, Esq., at Pepper Hamilton LLP. The company's 10Q Report
filed with the SEC lists assets of $232,595,000 and liabilities
of $249,179,000 as of July 31, 2001.


GENERAL BINDING: Cuts Net Debt by over 10% to $359MM in FY 2001
---------------------------------------------------------------
General Binding Corporation (Nasdaq: GBND) reported results for
2001 reflecting slower sales resulting from the weak economy.
Despite the weak sales environment, the Company's focus on
working capital has resulted in further reductions in the
Company's debt levels. In addition, GBC reported that its new
Operational Excellence Program is expected to significantly
increase the Company's cash flows when completed in 2003.

                       Annual Results

For the full year 2001, the Company reported the following
summary results:

      -- Sales totaled $784.3 million, down $126.5 million from
the prior year. Approximately $26 million of the decrease was
due to the Company's planned exit from the sale of retail
shredders and certain writing board products. The remainder was
due to lower capital spending by customers on writing boards and
binding and laminating equipment, and on continued weakness in
the publishing industry.

      -- The Company's gross profit margin, before special
charges, was relatively unchanged from the prior year as a
result of the Company's ongoing supply chain management
programs.

      -- Selling, service and administrative expenses were down
approximately $35 million in 2001, due primarily to lower
variable sales expenses.

      -- Interest expense was lower in 2001 by $8.4 million as a
result of lower average debt levels and interest rates.

      -- The results for the year included special charges of
$25.0 million, which are reflected in sales, cost of sales,
restructuring expenses and other operating expenses. The prior
year's results included special charges of $4.5 million.

      -- A net loss of $1.24 per share was recorded in 2001,
compared to net income of $0.15 per share in 2000. Excluding
special charges, net income was $0.03 per share in 2001,
compared to $0.25 per share in the prior year.

      -- Cash flow, as measured by adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization and certain
special items), was $76.2 million (9.7% of sales), compared to
adjusted EBITDA of $95.3 million (10.5% of sales) for the prior
year.

      -- Total net debt at the end of the year, adjusted for cash
and equivalents, was $359 million, reflecting a reduction of $39
million from the prior year-end.

                     Fourth Quarter Results

Financial results for the fourth quarter of 2001 included the
following highlights:

      -- Sales in the quarter totaled $178.2 million, down $40
million from the fourth quarter of 2000, due primarily to
continued weakness in the sale of certain writing board
products, binding and laminating equipment, and commercial
laminating films. In addition, all of the Company's business
units reported weaker-than-expected demand in the month of
December, particularly in the last two weeks of the month.
Through January, the Company had not seen a continuation of the
weak sales trend which occurred at the end of December.

      -- The Company's gross profit margin for the quarter,
before special charges, declined slightly from the fourth
quarter of the prior year.

      -- Selling, service and administrative expenses were lower
in the quarter from the prior period by $7.4 million reflecting
lower variable selling expenses.

      -- Interest expense was lower in the quarter by $2.6
million as a result of lower average debt levels and interest
rates.

      -- Special charges included in the quarter totaled $16.7
million, which are reflected in sales, cost of sales,
restructuring expenses and other operating expenses. The prior
year's results included special charges of $0.8 million.

      -- A net loss of $0.88 per share was reported in the
quarter, compared to net income of $0.10 per share last year.
Excluding special charges, the net loss for the quarter was
$0.05 per share, compared to net income of $0.12 per share
reported in the fourth quarter of 2000.

      -- Cash flow, as measured by adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization and certain
special items), was $16.3 million (9.1% of sales), compared to
adjusted EBITDA of $25.7 million (11.8% of sales) for the prior
period.

      -- Total net debt at the end of the quarter, adjusted for
cash and equivalents, was $359 million, reflecting a reduction
of $11 million from the net balance at the beginning of the
quarter.

           Building on Solid Foundation for Future Growth

"Throughout the year, we have effectively managed the
controllable areas of our businesses, while continuing to
maintain all of our leading market positions and solid customer
relationships," said Dennis Martin, Chairman of the Board,
President and CEO. "These strong market positions and our focus
on working capital improvements have helped us to substantially
maintain our gross margins and EBITDA margins during the year,
as well as lower our net debt position. In addition, our
recurring supplies businesses were only modestly affected by the
weak economy. Two areas, however, were adversely affected
throughout the year, and these include capital-related products,
such as visual communication products and binding and lamination
equipment, as well as commercial lamination films, which have
been affected by a weak publishing industry."

"Although we had a difficult sales year due to the economy, we
continued to make progress during the year with our goal of
building long-term shareholder value for GBC," he added. "In
2001, we continued to strengthen GBC's management team and its
Board of Directors. We completed a comprehensive operational
review of all of our businesses to both simplify business
processes and eliminate the remaining excess facilities and
unprofitable SKUs related to the Company's late-1990s
acquisitions and to identify new revenue enhancement projects.
We began to roll out several of the initiatives of this new
Operational Excellence Program in the fourth quarter, and we are
now aggressively implementing the remaining initiatives. In
addition, we finalized the extension of our primary credit
facility for an additional two-year period to provide us with
the time to realize the cash flow benefits of these initiatives
and the flexibility to execute a refinancing under more
favorable market conditions."

                New Operational Excellence Program

The Company's new Operational Excellence Program uses the "80/20
principles" of simplification, segmentation, and intense focus,
and includes a combination of revenue and operational
improvement initiatives spread across all of the Company's
business units. The Program is expected to generate operating
income improvements in 2002 of about $7-$9 million before taxes.
When the Program is fully implemented by late-2003, operating
income is expected to increase by approximately $20-$25 million
on an annual pretax basis thereafter.

Of the $25.0 million of restructuring and special charges
incurred in the year 2001, $16.7 million related to the fourth
quarter implementation of the new Program. Further, the Company
estimates that it will incur up to $23 million of additional
charges related to the Program, and most of these charges are
expected to occur in 2002. These charges primarily consist of
severance costs, inventory rationalizations and other expenses
related to facility closures. The total cash portion of these
charges is estimated to aggregate up to $13 million, of which
about $3 million was recognized in 2001.

The Company said that its Operational Excellence Program is
focused both on improving operational effectiveness and on new
revenue initiatives primarily in the following areas:

      -- A workforce rationalization which affects approximately
400 positions, or about 9% of GBC's worldwide workforce. The
rationalization effort is principally related to the Company's
previously-announced closure of a manufacturing facility in
Ashland, Mississippi from which production will be transferred
to Company facilities in Booneville, Mississippi and Nuevo
Laredo, Mexico;

      -- The closing and rationalization of at least ten
manufacturing, distribution and other facilities around the
world;

      -- A continuation of the Company's successful SKU
rationalization and supply chain management programs which are
expected to result in a further reduction in existing SKUs by
approximately one-third and in decreases in the costs of raw
materials and sourced products;

      -- New sales, marketing and branding strategies focusing on
key products, markets and customers, including a reallocated
direct sales force and an expanded dealer network with new
branded products;

      -- New product introductions and selective price increases;
and

      -- Increasing research and development opportunities and
capitalizing on strategic alliances with other manufacturers for
new products.

                     Adoption of SFAS No. 142

Effective January 1, 2002, GBC will adopt SFAS No. 142,
"Goodwill and Other Intangible Assets. This new accounting
standard changes the manner in which goodwill is measured for
impairment, and it eliminates the amortization of goodwill. Upon
adoption of this standard, GBC expects to record a one-time,
non-cash, pretax charge currently estimated in the range of $80-
$110 million related to impairment of goodwill. This charge does
not affect the Company's operations, and it has no impact on
cash flows. Additionally, as goodwill will no longer be
amortized from the year 2002 and forward, the Company's pretax
income, excluding any impairment charges, will increase by
approximately $9.7 million on an annual basis. Under the new
standard, goodwill will be subject to an annual assessment for
impairment using a prescribed fair-value-based test.

                         Outlook for 2002

"In 2002," Mr. Martin continued, "we do not yet see any
significant improvement in the economy, and our revenue growth
is likely to be modest and will result from several pricing
initiatives and new product introductions. EBITDA, after
adjusting for special items, is expected to grow by about 10-
12%, primarily due to the positive effects of the new
Operational Excellence Program. Net debt is expected to decline
moderately as a result of our continued emphasis on working
capital and the generation of free cash flows, but interest
expense should increase due to the higher interest rate on our
recently-amended primary credit facility. Should the economy
improve faster than expected, we would expect greater growth in
sales and profitability due to the significant leverage we have
in our infrastructure."

"In summary, we will undoubtedly face a challenging economic
environment as we move forward. However, we are intensely
focused on continuing to ensure that best practices are
implemented in aligning our organization and product portfolio
to grow revenues, increase operating efficiencies, strengthen
our brands and, ultimately, drive shareholder value. We remain
optimistic that these efforts, coupled with our leading
worldwide market positions and strong customer relationships,
will allow us to quickly rebound and exploit opportunities when
the economy improves."

GBC is an innovative global technology leader in document
finishing, film lamination, visual communications and paper
shredder products. GBC's products are marketed in over 115
countries under the GBC, Quartet, Ibico, and Pro-Tech brands,
and are used in the commercial, business, educational, home
office and governmental markets. At September 30, 2001, the
company had a working capital deficit of $65 million.


GENERAL DATACOMM: Wants More Time to Remove Prepetition Actions
---------------------------------------------------------------
General Datacomm Industries and its Debtor-Affiliates asks the
U.S. Bankruptcy Court for the District of Delaware to give them
more time within to file notices of removal of civil actions
pending on the Petition Date.  The Debtors want their removal
period to run through May 31, 2002, or 30 days after an entry of
an order terminating the automatic stay with respect to the
particular action sought to be removed, whichever comes last.

The Debtors tell the Court that they have not had sufficient
time to fully complete an evaluation of their involvement in the
State Court Actions because they have been increasingly
pressured to produce documents and information while trying to
stabilize their business. In addition to this, the Debtors
relate to the Court that they have also been concentrating on
reviewing their unexpired leases of nonresidential real
property.

General DataComm Industries, Inc. is a worldwide provider of
wide area networking and telecommunications products and
services. The Company filed for Chapter 11 protection on
November 2, 2001. James L. Patton, Esq., Joel A. Walte, Esq. and
Michael R. Nestor, Esq. represent the Debtors in their
restructuring effort. When the Company filed for protection from
its creditors, it listed $64,000,000 in assets and $94,000,000
in debts.


GLOBAL CROSSING: Secures Okay to Use Prepetition Bank Accounts
--------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates request that the
Court grant it a waiver of the United States Trustee's
"Operating Guidelines and Financial Reporting Requirements
Required in All Cases Under Chapter 11," which requires a
chapter 11 debtor to close all prepetition bank accounts, and
then open new bank accounts and print new checks with a "Debtor-
in-Possession" designation on them.

To minimize expenses, the Debtors further request they be
authorized to continue to use their correspondence and business
forms, including purchase orders, multi-copy checks, letterhead,
envelopes, promotional materials and other business forms,
substantially in the forms existing immediately prior to the
Commencement Date, without reference to their status as debtors
in possession. The Debtors propose in the event they need to
purchase new Business Forms during the pendency of the chapter
11 cases, such forms will include a legend referring to the
Debtors' status as debtors in possession.

The Debtors believe that their transition to chapter 11 will be
smoother and more orderly, with a minimum of harm to operations,
if all bank accounts maintained by the Debtors prior to the
Commencement Date are continued with the same account numbers
following the commencement of these cases; provided, however,
that checks issued or dated prior to the Commencement Date will
not be honored, absent a prior order of the Court. By preserving
business continuity and avoiding the disruption and delay to the
Debtors' payroll activities and businesses that would
necessarily result from closing the Bank Accounts and opening
new accounts, Paul M. Basta, Esq., at Weil Gotshal & Manges LLP
in New York, believes that all parties in interest, including
employees, vendors and customers, will be best served. The
benefit to the Debtors, their business operations and all
parties in interest will be considerable, in view of the fact
that the Debtors maintain over 125 Bank Accounts. The confusion
that would otherwise result, absent the relief requested herein,
would ill-serve the Debtors' rehabilitative efforts.

If the Debtors are not permitted to maintain and utilize their
Bank Accounts and continue using their existing Business Forms,
the Debtors fear:

A. disruption in the ordinary financial affairs and business
      operations of the Debtors,

B. delay in the administration of the Debtors' estates, and

C. cost to the estates to set up new systems and open new
      accounts, print new business forms and immediately print
      new checks.

                           * * *

Judge Gerber entered an interim order granting the Debtors'
request, with objections due by March 21, 2002 and a hearing on
March 26, 2002. If no objections are filed, Judge Gerber orders
that this interim order shall be deemed a final order. (Global
Crossing Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


GLOBAL CROSSING: SEC Probing Issues Raised by Ex-Employee
---------------------------------------------------------
Global Crossing said it has received notification that the
company is the subject of an investigation by the U.S.
Securities and Exchange Commission (SEC).

As previously announced on February 4, 2002, Global Crossing
received an inquiry from the SEC for the voluntary production of
certain information in connection with issues raised in a letter
from a former employee.  This investigation is related to the
SEC's previous inquiry.

The company continues to cooperate fully with the SEC in
providing the requested information.

Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services.  Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing (NYSE: AX).

On January 28, 2002, Global Crossing and certain of its
affiliates (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated
proceedings in the Supreme Court of Bermuda.

Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.

DebtTraders reports that Global Crossing Holdings Ltd's 9.625%
bonds due 2008 (GBLX3) are trading between 3.5 and 4. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for
real-time bond pricing.


GLOBIX CORP: S&P Drops Ratings to D Following Missed Payment
------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured note ratings on Globix Corp., to 'D' from double-'C',
following the company's failure to make its interest payment due
February 1, 2002. The company plans to restructure its debt
through a voluntary prepackaged bankruptcy proceeding under
Chapter 11 of the U.S. Bankruptcy Code, which is expected to be
filed later this month.

New York, New York-based Globix Corp.'s operating performance
deteriorated throughout 2001 due to lagging demand for its Web-
hosting services. Globix has nearly $600 million of senior debt
and had just over $104 million in sales for the fiscal year
ended September 30, 2001, and never achieved profitability.


GOODYEAR TIRE: Fitch Hatchets Debt Ratings Down to BB+ from BBB
---------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured debt ratings
of The Goodyear Tire & Rubber Company (GT) to 'BB+' from 'BBB'.
The rating action is based on GT's continued weak profitability,
which is expected to persist over the near future, and limited
progress on meaningful debt reduction. Over the intermediate to
longer term, however, developing positive industry fundamentals
should benefit operating results. With the rating change, the
Rating Outlook is changed to Stable from Negative.

Volume shortfalls (production had been down for at least 10
straight months towards year-end 2001), combined with price/mix
shortfalls in markets outside of North America contributed to
weak operating performance through the first nine months of 2001
with no anticipated improvement for the balance of 2001 and
going into 2002. While the improving pricing environment in the
North American tire market, where GT derives about 50% of its
revenues, was an offset, the 1.7% decline in overall tire unit
sales for the nine months at September 30, 2001, contributed to
a 37% falloff in EBIT versus the comparable period in 2000.

Profitability had been depressed for at least a few years at GT
with EBIT margins sliding from the historical norm in the high
single digits to a more depressed 4% range through 1999 and 2000
and sliding into the low single digits during 2001. Various
industry factors as well as GT specific factors have contributed
to the profit declines. Credit statistics have also exhibited a
steady decline over this time frame with the continued under-
performance to the historical norm. GT will report its fourth
quarter and full year 2001 results on Friday Feb. 8, 2002.

Operating shortfall through September 30, 2001, and for full
year 2001 as Fitch anticipates had placed credit statistics out
of range appropriate for its categories. For the 12 months ended
September 30, 2001, GT had generated EBITDA of $1.0 billion,
before charges, with balance sheet debt of $4.2 billion, leading
to balance sheet Debt-to-EBITDA of 4.2 times. The company also
had $1.0 billion of off-balance sheet financing outstanding
through A/R securitization at September 30, 2001. EBITDA-to-
interest coverage for the same period amounted to 2.8x.

These credit statistics are not expected to show much
improvement with the year-end 2001 results nor through the near
term as risks associated with volume softness in 2002 globally
mostly outweigh developing positive industry fundamentals
associated with improved pricing discipline by the major
players, enriched mix of products in North American tire market
associated with a 'flight to quality' trend, lower oil & input
costs, and restructuring initiatives undertaken by GT. Fitch
will monitor closely these industry developments and GT's
ability to capitalize on these positive fundamentals during
2002.

GT's liquidity at September 30, 2001, was afforded through $785
million of cash on hand and $1.525 billion of undrawn bank
lines. Seasonal influx of working capital and GT's concerted
effort to reduce inventory levels and manage working capital
more efficiently are expected to have generated positive cash
flow in the fourth quarter and for the year. However, a return
to higher profitability is needed for meaningful debt reduction,
apart from gains achieved through working capital alone. No
material piece of debt comes due through 2003.

Goodyear is one of the world's three-largest tire manufacturers,
along with Bridgestone and Michelin. Its share of the worldwide
market for automotive, truck and farm tires had been gaining
over the past several years, in terms of unit volumes, with 23%
in 2000, 20% in 1999, and 19% in 1998. Additionally, with
Goodyear acquiring control of the Dunlop brand operations in
North America and Europe in the 1999 broadening of its alliance
with Sumitomo Rubber, Goodyear continues to have the leading
tire unit share (30%) in North and Latin America, while the
addition of Dunlop propels Goodyear into second place share
(22%-24%) in Europe behind leader Michelin. Along with tire
manufacturing and retailing (85% of GT's total sales),
engineered products such as hoses and belts for automotive and
industrial uses are 8% and outside sales of rubber and chemicals
are 7%.


HAMILTON BANCORP: Requests Delisting from Nasdaq National Market
----------------------------------------------------------------
Hamilton Bancorp Inc.'s subsidiary, Hamilton Bank, N.A., was
placed into receivership on Friday, January 11, 2002 by the
Office of Comptroller of the Currency. The Federal Deposit
Insurance Corporation has been designated as the receiver.
Hamilton Bank, N.A. was the Company's sole operating asset. As a
result of the seizure of the Bank, the Company has limited
tangible assets. As the owner of 99.8% of the Bank, the Company
will be entitled to any net recoveries following liquidation
of the Bank by the FDIC. At this time, the Company is unable to
provide any assurance that any recovery will be realized or the
timing of any such recovery.

As a result of the seizure of the Bank, the Company does not
fully satisfy the requirements for continued listing on the
Nasdaq National Market. As a result, the Company requested
delisting of its common stock from the Nasdaq National Market.
Also, as a result of these actions, the trust preferred shares
issued by Hamilton Capital Trust I (Nasdaq:HABKP) are also being
delisted.


HARDINGE: Seeking Waiver of Credit Pact's Financial Covenants
-------------------------------------------------------------
Hardinge Inc. (Nasdaq: HDNG), a leading producer of advanced
material-cutting solutions, reported pro forma earnings of $0.7
million for the three months ended December 31, 2001.  This
compares to pro forma earnings of $2.1 million in the fourth
quarter of 2000.  For the full year of 2001, Hardinge reported
pro forma earnings of $5.4 million as compared to $7.7 million
for the year of 2000.

These pro forma results differ from net income by the
amortization of purchased goodwill, which was $0.2 million and
$0.8 million, respectively, for the three and twelve months
ended December 31, 2001, and $0.04 million and $0.1 million,
respectively, for the three and twelve months ended December 31,
2000.  The full year 2001 pro forma earnings also exclude a
September, 2001 nonrecurring realignment charge of $26.5 million
net of tax benefits ($38.0 million, of which less than $1.0
million is cash, before tax benefits).

Net income was $0.6 million for the fourth quarter of 2001.
This compares to net income of $2.0 million in the fourth
quarter of 2000.  For the full year of 2001, Hardinge reported
net income, excluding the realignment charge, of $4.6 million as
compared to $7.5 million for the year of 2000. Including the
realignment charge, the 2001 net loss was $21.9 million.

The Company's backlog at December 31, 2001 was $51.2 million, a
decrease of 14.7 percent from the $60.0 million backlog on
September 30, 2001.  The backlog decreased 21.0 percent since
December 31, 2000, when it was $64.8 million, which included the
HTT backlog.

As previously reported, the September 2001 realignment charge
has better positioned the Company to focus its U.S.
manufacturing operations on those product lines which will
provide the strongest sustained shareholder returns, leveraging
the Company's competitive advantage in providing technologically
advanced, cost-effective, high end products.  The realignment
will also result in a financially stronger company, as under-
performing inventory and other assets are converted into cash
through sales at discounted prices and tax benefits, enabling
Hardinge to reduce its debt level and free up resources for
better uses.

The fourth quarter 2001 gross margin was 30.1 percent of sales,
compared to 30.9 percent in the fourth quarter of 2000.
Excluding the nonrecurring realignment charge in September, full
year gross margin was 30.6 percent of sales, compared to 32.2
percent of sales in 2000.  Competitive discounting of machine
prices has increased substantially.  Gross margins were also
negatively impacted by lower recovery of fixed manufacturing
overhead, because of decreased U.S. production. These factors
were only partly offset by numerous cost reduction initiatives
taken throughout 2001, including North American workforce
reductions in June, August and December which total 40 percent
of the Company's total North American workforce.

Interest expense for the fourth quarter and the year are
significantly higher than the comparable numbers from 2000 due
to the borrowing incurred in acquiring HTT, which totaled
approximately $31.5 million.  The Company has also experienced
higher average interest rates in the fourth quarter as recent
lower profitability has driven pricing under debt agreements to
higher levels.

The Company is in negotiations with several banks to replace the
current unsecured financing with secured financing, using its
working capital as collateral.  Based on its negotiations, as
well as the Company's large unsecured asset base and relatively
low debt to total capitalization ratio, management is confident
that such financing will be available at reasonable rates. If
the current earnings trend continues, it is probable that the
Debt to EBITDA covenant in the Company's current debt agreements
will be violated during 2002.  Based on discussions with the
banks, management believes that it will be able to obtain a
waiver of those covenants should it be needed to allow time to
put other financing in place.  Because those negotiations are
not complete at this time, the total amount of the Company's
debt is classified as currently payable as of December 31, 2001.

Income tax expense was $0.1 million for the quarter ended
December 31, 2001 and a benefit of $10.2 million for the full
year of 2001.  The full year benefit included $11.5 million of
tax benefits from the realignment charges. Tax expense was also
reduced because the mix of taxable income, which included more
profits generated in foreign countries with comparatively lower
tax rates.

J. Patrick Ervin, President and Chief Executive Officer,
commented, "Although our geographic diversification enabled us
to achieve a consolidated profit for this very difficult
quarter, current order levels do not indicate that the over-due
cyclical turnaround has begun.  Also, our European order levels
have decreased toward the end of the year as the economy there
has shown signs of a slowdown. If this pattern doesn't reverse,
we could see reduced sales levels in Europe by the third quarter
of this year.

"Manufacturing activity in North America, which remains the
largest market for our U.S. made machines and our non-machine
revenues, continues at very depressed levels.  During the fourth
quarter of 2001, the U.S. market for metal-cutting tools is down
over 60 percent from its highs three years ago, as companies of
all sizes defer necessary investments in productivity-building
technology.  Furthermore, continued announcements of layoffs and
even bankruptcies among manufacturing companies in the U.S.
reduce the number of potential orders from those companies.
This environment has created a situation where industry-wide
orders have decreased quarter by quarter throughout 2001.
Congress had an opportunity to provide targeted tax incentives
for capital investment within an economic stimulus package, both
of which are clearly needed, but their delays and subsequent
failure to do so have actually made matters worse.

"We first saw evidence of this downturn in late 1998.  We
announced our first workforce reductions in January of 1999, and
our cost reduction initiatives have never let up.  We continue
to monitor market conditions, as we must, and we will continue
to respond as needed.  The year 2002 is starting out to be a
continuation of the difficult conditions we saw in 2001.
However, we will continue to focus on cash management and cost
controls, while ensuring that we will be ready with the people
and the products to allow us to take full advantage of the
inevitable upturn.

"Because of our strong financial position, Hardinge has been
able to continue our essential new product development efforts.
We will be announcing new products in all of our major machine
lines during 2002 to further leverage our strengths in providing
advanced material-cutting productivity for the world's
manufacturers.  Nothing has changed the fundamental worldwide
need for machine tools, and Hardinge is positioned to provide
the marketplace with the best machines available, when
manufacturing gets back on its feet," Mr. Ervin concluded.

Hardinge Inc., founded more than 100 years ago, is an
international leader in providing the latest industrial
technology to companies requiring material- cutting solutions.
The Company designs and manufactures computer-numerically
controlled metal-cutting lathes, machining centers, grinding
machines and other industrial products.  The Company's common
stock trades on NASDAQ under the symbol "HDNG."  For more
information, please visit the Company's website at
http://www.hardinge.com


HAYES LEMMERZ: US Trustee Wants Disclosure of McKinsey's Fees
-------------------------------------------------------------
Frank J. Perch, III, Esq., tells the Court that U.S. Trustee
objects to Hayes Lemmerz International, Inc., and its debtor-
affiliates' employment of McKinsey because:

A. According to the Application, McKinsey will be paid "its
      standard fees for services of this type not to exceed
      $1,500,000 per month plus expenses." However, the
      Application does not explain what McKinsey's "standard
      fees" are, or how the actual fees in this matter will be
      determined. As a result, the Application fails to make
      adequate disclosure of the compensation sought to be
      approved.

B. Because the Application is vague and ambiguous regarding the
      fees to be charged and the method on which they will be
      calculated, the UST objects to the proposed finding that
      the terms of McKinsey's retention and compensation are
      reasonable under section 328(a) of the Code. It is not
      possible for the Court to make such a finding based on the
      Application because the Application does not adequately and
      clearly disclose what those terms are.

C. The UST objects to the payment of all of McKinsey's counsel
      fees relating to the retention including, apparently,
      counsel fees relating to the prosecution of the retention
      application itself.

D. The UST objects to the provisions of the engagement letter
      that provide for a retainer to be held against the last
      month of services. Rather, as with all other professionals,
      the retainer should be applied to McKinsey's first
      post-petition billings until exhausted.

E. The UST objects to the indemnification and liability cap
      provisions of the engagement letter as being contrary to
      appropriate principles of bankruptcy professionalism and as
      unreasonably foregoing any ability to obtain redress
      against McKinsey in the event its negligence causes harm to
      creditors or the estate. (Hayes Lemmerz Bankruptcy News,
      Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
      0900)


HOLLYWOOD ENTERTAINMENT: Junk Ratings On Watch for Upgrade
----------------------------------------------------------
Standard & Poor's ratings on Hollywood Entertainment Corp.
remain on CreditWatch with positive implications.

The ratings were placed on CreditWatch on December 10, 2001,
following the company's announcement that it had received a
fully underwritten commitment for a new bank credit facility.
The commitment is subject to various conditions, including the
company's sale of common stock and the application of the
proceeds, together with the initial borrowings under the new
bank credit facility, to the repayment of all borrowings under
the company's existing bank credit facility, which matures on
December 23, 2003.

On December 7, 2001, Hollywood Entertainment filed a
registration statement with the SEC to issue up to $126.5
million of common stock and $300 million of debt securities. If
the company is able to secure funding of at least $85 million
through a secondary common stock offering and uses the proceeds
to repay a portion of its existing credit facility, Standard &
Poor's would raise its corporate credit rating on Hollywood
Entertainment to single-'B'-plus, with a stable outlook, and
would raise its subordinated debt rating to single-'B'-minus.
Standard & Poor's would also assign a double-'B'-minus rating to
the proposed $175 million senior secured credit facility, which
matures in 2006.

However, if the existing $250 million subordinated notes are not
refinanced in full on or before February 28, 2004, the maturity
date of the new bank facility will be March 31, 2004. Proceeds
from the debt issuance are to be used to repay the company's
existing credit facility. The company had $240 million
outstanding on its existing credit facility as of September 30,
2001. The upgrade would be based on the company's new capital
structure, which lengthens the maturity of the bank facility and
better matches debt-reduction requirements with the company's
cash flows and the use of equity to repay debt. The rating
action would also acknowledge the progress Hollywood
Entertainment has made in turning around it s business since the
third quarter of 2001.

The proposed bank facility consists of a $25 million revolving
facility and a $150 million term loan. Financial covenants
include minimum fixed charge coverage, minimum interest
coverage, maximum leverage ratios, and maximum capital
expenditures. Pricing will initially be based on a ratings-based
grid, and thereafter will be based on a leverage-ratio grid. The
facility will be secured by inventory, accounts receivable, and
other tangible and intangible personal property assets of
Hollywood Entertainment and its subsidiaries. Standard & Poor's
assessment of the value of the company's discrete assets
considered the assets' potential to retain value over time and
an orderly liquidation under a default scenario. The bank
facility will be rated one notch above the corporate credit
rating, based on Standard & Poor's belief that the security
interest in the collateral offers reasonable prospects for full
recovery of principal if a payment default were to occur.
The rating is also based on preliminary terms and conditions,
and is subject to review once full documentation is received.

If Hollywood Entertainment is unable to secure at least $85
million of funding through the secondary common stock offering,
Standard & Poor's will fully review Hollywood Entertainment's
financing and operating strategies with the company's
management.

            Ratings Remaining on CreditWatch Positive

      Hollywood Entertainment Corp.         RATING
        Corporate credit rating             CCC
        Senior secured bank loan            CCC
        Subordinated notes                  CC
        Shelf registration:
         Senior unsecured debt      prelim. CCC
         Subordinated debt          prelim. CC


IT GROUP: Shaw Bidding Procedures Hearing Scheduled for Tomorrow
----------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates ask the Court to
approve a uniform set of bidding procedures to test the bid
submitted by The Shaw Group, Inc., to purchase substantially all
of their assets in the open market. The Debtors are convinced
that these Bidding Procedures are most likely to maximize the
realizable value of the Assets for the benefit of the Debtors'
estates, creditors and other interested parties.

Under the Bidding Procedures, only qualified bidders may submit
bids for the Assets or otherwise participate in the Auction.
Qualified Bidders are those entities who (i) have delivered
to The IT Group an executed confidentiality agreement in form
and substance substantially the same as the one executed by The
IT Group and Shaw (except that disclosure of the Qualified
Bidder's interest and proposal, but not its identity, shall be
permitted), (ii) have delivered to The IT Group a Qualified Bid
(as defined below) (including an indication of the assets sought
to be acquired which shall include substantially all of the
assets of the Debtors to be acquired by Buyer and a purchase
price range) that the Board of Directors of The IT Group
determines, in good faith and upon the advice of an independent
financial advisor of nationally recognized reputation, would
result in a transaction more favorable to the Debtors from a
financial point of view than the Asset Sale to Shaw, and (iii)
is reasonably likely (based on availability of financing,
experience and other considerations) to be able to consummate a
transaction based on the Competing Proposal, if selected as the
successful bidder.

Any Qualified Bidder who desires to make a competing offer for
all or some of the Assets must submit a written copy of its bid
to Skadden Arps, who shall then distribute copies of the bids to
(i) counsel for the Debtors (ii) counsel for the Prepetition
Lenders, (iii) counsel for Shaw, and (iv) counsel for the
Creditors' Committee.

A qualified competing bid is a competing proposal:

    (a) the value of which must be greater than the sum of:

        (1) the value of Shaw's offer, including but not limited
            to the amount of the cash and share consideration to
            be paid by Shaw and the amount of the Assumed
            Liabilities assumed by Shaw, which Assumed
            Liabilities shall include repayment of the amount
            outstanding under the Credit Agreement, and

        (2) $8,000,000, the initial Minimum Incremental Bid
            Amount;

    (b) that has substantially the same terms and conditions
        as the Agreement and proposes to purchase substantially
        all of the Assets, and

    (c) is accompanied by satisfactory evidence of committed
        financing or other ability to perform.

If the Debtors receive a Qualified Bid, the Debtors will conduct
the Auction at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, One Rodney Square, Wilmington, Delaware 19801, on the
date determined by the Court at the Bid Procedures hearing.
Bidding at the Auction will commence with the highest Qualified
Bid and continue in increments of not less than $2,000,000 until
all parties have made their final offers.

At the conclusion of the bidding, the Debtors will announce
their determination as to the person or entity submitting the
highest or best bid for the Assets.  In making that
determination, the Debtors will consider, among other things,
the total consideration to be received by their estates after
taking into account the payment of the Break-Up Fee and Expense
Reimbursement.

If the Debtors do not receive any Qualified Bids, the Debtors
will report the same to the Court at the Sale Hearing and
proceed with the Asset Sale with Shaw under the Agreement. If,
however, the Debtors receive one or more Qualified Bids and the
Auction is conducted, the Debtors will notify the Court of the
results of the Auction and proceed with the Asset Sale with the
Successful Bidder.

The Debtors will be deemed to have accepted a Qualified Bid only
when such Bid has been approved by the Court at the Sale
Hearing. Upon failure to consummate the Asset Sale because of a
breach or failure on the part of the Successful Bidder, the
Debtors may select in their business judgment the next highest
or otherwise best Qualified Bid to be the Successful Bid without
further order of the Court. By making a bid, a Qualified Bidder
shall be deemed to have agreed to keep its offer open until the
consummation of the Asset Sale.

The Debtors may: (a) determine, in their business judgment,
which Qualified Bid is the highest or otherwise best offer and
(b) reject at any time before entry of an order of the Court
approving a Qualified Bid, any bid that, in the Debtors' sole
discretion, is (i) inadequate or insufficient, (ii) not in
conformity with the requirements of the Bankruptcy Code, the
Bidding Procedures, or the terms and conditions of the
Agreement, or (iii) contrary to the best interests of the
Debtors, their estates and/or their creditors.

Judge Walrath will convene a hearing on February 12, 2002 to
consider these bidding procedures and any objections that may be
interposed. (IT Group Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


INNOVATIVE CLINICAL: Will Shut-Down Network Management Business
---------------------------------------------------------------
Innovative Clinical Solutions, Ltd. has determined to
discontinue operations of its Network Management business.  This
decision is due to a contract cancellation by the Company's
largest Network Management customer.  The Company has evaluated
the potential to continue operations, but determined that
continuation is not feasible financially in light of the changes
in the market and prospects for the future.

Innovative's Network Management division has notified all of its
remaining customers and employees and has begun an orderly
process of discontinuation.  This process will affect
approximately 80 employees at the West Palm Beach, Florida
location. The Company believes it will be able to meet its
obligations to its customers, providers, and employees. The
final day of business is scheduled for July 31, 2002.

In March of 2001, the Company had announced plans to pursue
strategic options for Network Management with the assistance of
Shattuck Hammond and Partners. That process has been terminated
due to the decision to discontinue operations.

Innovative Clinical Solutions, Ltd., headquartered in
Providence, Rhode Island, provides services that support the
needs of the pharmaceutical and managed care industries. *
Innovative Clinical Solutions is trying to reposition itself
after filing for Chapter 11 bankruptcy protection and
restructuring. The company has sold its physician practices and
medical service businesses; it also sold its clinical trial
support division, which served pharmaceutical and biotechnology
companies, to IMPATH. The company is now focused on its network
management services, which include managed care contracting and
disease management, although it may sell this division as well.
Investment firm EQSF Advisers owns almost half of the company.


INTEGRATED HEALTH: Wants Approval of Cananwill Premium Financing
----------------------------------------------------------------
In the normal course of operating their businesses, Integrated
Health Services, Inc., and its debtor-affiliates maintain
various types of insurance, including policies covering general
liability, property, workers' compensation and auto insurance.
Certain of the insurance polices to which Debtors are party
expired by their terms at the end of December 2001 and have been
renewed or replaced. However, as a result of the Debtors'
pending chapter 11 cases and their current financial condition,
the cost to obtain such renewals was significantly higher than
in past years. Furthermore, the Debtors have been required to
pay all renewal premiums in advance, therefore utilizing a
significant amount of cash resources.

The Debtors have determined that financing the premiums to be
paid under the insurance policies enables the Debtors to
maintain critical insurance coverage while preserving their
available cash.

The Debtors desire to renew certain insurance policies and to
enter into a Commercial Insurance Premium Finance And Security
Agreement with Cananwill, Inc. in connection with this.

Under the PFA, the Debtors are required to make an initial down
payment of $7,790,136.00 for the Policies covered in the
Agreement, representing 25% of the total insurance premiums. The
balance of the premiums, which the Debtors seek to finance, is
$23,370,408.00. The financed premiums would be payable to
Cananwill in 9 equal monthly installments of $2,639,200.26
commencing February 1, 2002, including interest at the rate of
3.91% per annum. The total payments to Cananwill for premiums
and interest would be $23,752,802.34.

The amount financed under the PFA is to be secured, pursuant to
Bankruptcy Code section 364(c)(2), by all sums payable to the
Debtors under the Policies, including any gross unearned
premiums and any payment on account of loss which results in a
reduction of unearned premium in accordance with the terms of
the Policies. If the Debtors default on any payment under the
PFA, Cananwill shall be entitled, without further order of the
Court, to terminate the Policies and collect the unearned
premiums (after providing the notice required under applicable
state law). If such collections are insufficient to pay amounts
due to Cananwill under the PFA, then the remaining amounts due
to Cananwill will be entitled to priority as an administrative
expense under section 503 of the Bankruptcy Code.

The Debtors note that the financing of insurance premiums
pursuant to the PFA will enable them to acquire essential
insurance coverage while managing their limited cash resources.

The Debtors submit that after reasonable inquiry, they believe
that they would be unable to finance the premiums under the
Policies with any other party on terms more favorable than those
offered by Cananwill and that such financing would, in any
event, not be available absent the grant of a security interest
as set forth above pursuant to section 364(c)(2) of the
Bankruptcy Code.

The proposed financing of the Policies through the PFA would
provide incremental capital to that available to the Debtors
under their debtor-in-possession financing facility. In
addition, the cost of funds under the PFA is lower than under
the debtor-in-possession financing facility, the Debtors tell
Judge Walrath. The Debtors note that it is more beneficial for
the Debtors to finance the Policies through Cananwill as
described above than to utilize borrowings under the debtor-in-
possession financing facility to pay the premiums under the
Policies.

The Debtors seek approval of the entire amount of the financing
under the PFA on an interim basis. If such interim approval is
granted, the Debtors would then provide notice of a final
hearing. The Debtors also request that if no objections to the
Motion are filed, the interim order be deemed a final order.
(Integrated Health Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


INVENTEK: Chapter 11 Case Summary
---------------------------------
Debtor: Inventek, Inc.
         601 Cleveland Street, Suite 520
         Clearwater, FL 337556457

Bankruptcy Case No.: 02-00977

Chapter 11 Petition Date: January 17, 2002

Court: Middle District of Florida (Tampa)

Judge: Thomas E. Baynes Jr.

Debtors' Counsel: David W. Steen, Esq.
                   McWhirter, Reeves, McGlothlin, Davidson,
                      Decker, Kaufman, Arnold & Steen, P.A.
                   Suite 2450, 400 North Tampa Street
                   P.O. Box 3350
                   Tampa, Florida 33601-3350
                   Telephone: 813-224-0866
                   Telecopier: 813-221-1854


KMART CORP: Brings-In Rockwood Gemini as Real Estate Advisors
-------------------------------------------------------------
Kmart Corporation currently operates some 2,114 stores in the
United States, Puerto Rico, the U.S. Virgin Islands and Guam.
Most of these store locations are leased from third parties.
Kmart also uses 14 hard-line and 4 soft-line distribution
centers.  Aside from that, Kmart also owns several other
properties.

With such vast holdings and leasehold interests, Kmart CEO
Charles C. Conaway asserts that the Debtors need qualified real
estate advisory services to help them evaluate these properties.
The Debtors have chosen Rockwood Gemini Advisors to help assist
them in this task, Mr. Conaway relates.

Rockwood Gemini Advisors is a joint venture consisting of
Rockwood Realty Associates LLC and Gemini Realty Advisors LLC.
Rockwood Realty is a real estate investment banking firm
specializing in providing real estate advisory and transactional
services to distressed corporations and their real estate
departments, insurance companies, real estate investment trusts,
pension fund advisors, foundations, lenders and private
investors.

Gemini Realty, on the other hand, is a real estate consulting
firm experience in advising distressed operating companies.  Its
activities include but are not limited to advising companies in
complex restructuring assignments concerning the reduction of
real estate operating and occupancy costs, and most efficient
operation and use of real estate assets, and advising companies
on all real estate matters during bankruptcy proceedings and
reorganization or liquidation efforts.

Under the terms of a Retention Agreement, Rockwood Gemini will:

(a) Prepare a proprietary financial model for the purpose of
     valuing the Debtors' portfolio of fee-hold and leasehold
     interests and calculate their value on a property-by-
     property basis in the current marketplace;

(b) Conduct in-depth meetings with key personnel of the Debtors
     to discuss valuation potentials and define any operational
     issues that may affect the valuation of the Debtors' real
     estate interests;

(c) Work with the Debtors to identify and, where possible,
     resolve or quantify any unresolved issues or detriments to
     value.  An important component of the initial evaluation of
     the real estate interests is the minimization of such
     issues, such as the effect of any new governmental zoning or
     environmental regulations;

(d) Review and analyze all pertinent and available documentation
     and data regarding the Debtors real estate assets,
     including, but not limited to, leases, lease amendments,
     etc.;

(e) Conduct in-depth market analyses utilizing proprietary
     databases, public records, GIS systems, Internet databases
     and interaction with local real estate professionals;

(f) Physically inspect, where necessary, the Debtors' real
     estate interests, including any improvements to the real
     estate, in order to evaluate location, site, physical
     condition and market appeal and constraints compared with
     competitive properties or future sites in the market area;

(g) Determine the maximum additional development potential for
     each parcel, if appropriate, and the potential impact on the
     value of existing improvements;

(h) To the extent deemed necessary and, with the prior approval
     of the Debtors, engage and supervise outside consultants
     including engineers, environmental consultants, architects,
     and zoning experts, to assist in specific critical areas
     that might include, but not necessarily be limited to:

         (i) analyzing the condition of the existing physical
             improvements,

        (ii) evaluating any environmental issues,

       (iii) summarizing existing zoning regulations, and

        (iv) ascertaining a "hard" price for any such work which
             might be required to realize the best value for the
             particular real estate interest;

(i) Determine if any development land or competing improved real
     property will be coming on the market and if there are any
     new developments contemplated or possible given the
     availability of suitable sites, and, if so, what impact they
     may have on the Debtors' real estate interest;

(j) Based largely upon the information obtained during the
     initial stages of the Assignment, prepare detailed financial
     models for the Debtors' real estate interests including a
     detailed discussion regarding the underlying assumptions
     utilized in developing the financial models;

(k) Based on due diligence, analysis and valuation, prepare a
     strategic action plan that:

         (i) clearly identifies and quantifies complex issues;

        (ii) assesses and values alternative courses of actions;

       (iii) provides for the most effective means of achieving
             the Debtors' objectives;

(l) Prepare a comprehensive written report for the Debtors' real
     estate interests, which will include thorough descriptive
     information, market data, area information, and all other
     information necessary for the Debtors to effectively
     evaluate the real estate interests in the marketplace;

(m) Prepare a portfolio database of the Debtors' real estate
     interests in Excel form for confidential internal use by the
     Debtors' management and its legal and other advisors;

(n) Work directly with the Debtors' management, staff, its
     counsel, its outside brokers and other advisors in their
     review of the Debtors' real estate interests, and the
     competitive marketplace for such assets; and

(o) Prepare and present regular and thorough status reports to
     the Debtors regarding the execution of the Assignment and
     attend regular Comdisco staff meetings with the Debtors
     regarding current real estate issues.

As compensation for the services, the Debtors will pay Rockwood
Gemini a flat monthly fee of $150,000.  The Debtors will also
pay Rockwood Gemini an additional $75,000 per month at such time
that Rockwood Gemini begins to assist the Debtors with any real
estate disposition matters, according to Mr. Conaway.

Furthermore, Mr. Conaway adds, the Debtors will reimburse
Rockwood Gemini for the actual and reasonable out-of-pocket
expenses incurred such as costs associated with preparation of
written reports, all travel-related expenses, outside printing
costs, database and licensing fees, and other administrative
expenses.

Upon execution of the Retention Agreement, Mr. Conaway informs
Judge Sonderby that Rockwood Gemini received a due diligence fee
of $300,000 together with $116,129 representing Rockwood
Gemini's monthly fee prorated for the period of January 8, 2002
through January 31, 2002.

Michael P. Deighan, managing director of Rockwood Realty
Associates, assures the Court that Rockwood Gemini, its
principals and its employees:

   (1) do not have any connection with the Debtors or their
       affiliates, their creditors, the U.S. Trustee or any
       person employed at the office of the U.S. Trustee, or any
       other party in interest, or their respective attorneys and
       accountants,

   (2) are "disinterested persons" as that term is defined in
       section 101(14) of the Bankruptcy Code, and

   (3) do not hold or represent any interest adverse to the
       Debtors' estates.

But Mr. Deighan admits that Rockwood Gemini has in the past been
retained by, and presently and likely in the future will perform
work for, certain creditors of the Debtors in matters unrelated
to such persons' claims against or interests in the Debtors or
to these chapter 11 cases.

Of the Debtors' largest pre-petition creditors, Mr. Deighan
informs Judge Sonderby that Rockwood Gemini currently performs
or has performed work for Credit Suisse First Boston and Shopko,
Inc. -- in matters unrelated to the Debtors' chapter 11 cases.

According to Mr. Deighan, Rockwood Gemini will periodically
review its files during the pendency of these chapter 11 cases
to ensure that no disabling conflicts or other disqualifying
circumstances exist or arise.  "If any new relevant facts or
relationships are discovered, Rockwood Gemini will use
reasonable efforts to identify such further developments and
will promptly file a Supplemental Affidavit," Mr. Deighan says.
(Kmart Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


KMART CORP: Lease Rejections May Affect CMBS Deals, Says S&P
------------------------------------------------------------
Standard & Poor's identifies those CMBS transactions it rates
that have exposure to Kmart Corp. (Kmart; 'D') lease rejections.
When Kmart filed its petition for reorganization under Chapter
11 of the U.S. Bankruptcy Code on Jan. 22, 2002, it also filed a
motion for an order authorizing a rejection of certain unexpired
leases, and included a schedule identifying those leases by
store number, city, state, tenant, and landlord.

The identification process has been hampered by the scarcity of
store location information because store numbers are not always
available, and there are often multiple store locations in the
same city. Neither property addresses nor zip codes were
provided. This has resulted in confusion in determining which
properties have lease rejections, given the difficulty in
successfully matching the schedule to specific loans in Standard
& Poor's-rated CMBS transactions.

An initial analysis by Standard & Poor's indicates that nine
lease rejections from the filing can be found in the following
four Standard and Poor's-rated CMBS transactions: Asset
Securitization Corp.'s series 1997-D5 (ASC 1997-D5), Credit
Suisse First Boston Mortgage Securities Corp.'s series 1998-C1
(CSFB 1998-C1), GMAC Commercial Mortgage Securities Inc.'s
series 1999-C1 (GMAC 1999-C1), and GS Mortgage Securities Corp.
II's series 1998-C1 (GSM2 1998-C1).

The nine lease rejections consist of three Builder's Squares and
six Kmarts.  The three Builder's Squares are found in ASC 1997-
D5, and total approximately $24.5 million, or 1.46% of the
transaction. One Kmart lease rejection was found in CSFB 1998-
C1, totaling approximately $1.6 million, or 0.06% of the current
outstanding pool balance.  Another Kmart lease rejection was
found in GMAC 1999-C1, totaling approximately $4.7 million, or
0.36% of the current outstanding pool balance.  An additional
four Kmart lease rejections were found in GSM2 1998-C1 totaling
approximately $15.5 million, or 0.87% of the current outstanding
pool balance.  Please note that the exposure balances are based
upon the loan amount, and thus might overstate the exposure.
However, the three Builder's Squares are credit tenant leases
(CTLs) and the two Kmarts in CSFB 1998-C1 and GMAC 1999-C1 also
appear to be CTLs. The four loans in the GSM2 1998-C1 are
secured by retail properties in which Kmart is a significant
tenant.

The list below is constrained by the lack of detail provided by
Kmart's Lease Rejection Motion dated Jan. 22, 2002, and should
be considered preliminary.  Standard & Poor's will continue its
attempts to identify additional lease rejections in CMBS deals.
It is likely that more lease rejections will be found in CMBS
transactions. In addition, Kmart has indicated that it will file
additional lease rejections and store closings on March 20.
While none of the lease rejections identified thus far will
affect the current ratings of these CMBS transactions, Standard
& Poor's will continue to monitor this situation.

                CMBS Deals With Rejected Kmart Leases

Transaction         Loan Name              Amount     % of Deal

ASC 1997-D5  Builders Square-Daytona       $8,838,427    0.53%

ASC 1997-D5  Builders Square-El Paso       $7,968,310    0.47%

ASC 1997-D5  Builders Square-San Antonio   $7,742,049    0.46%

CSFB 1998-C1   Kmart-Lackawanna            $1,601,937    0.06%

GMAC 1999-C1   K-Mart (Campbellsville)     $4,678,294    0.36%

GSM2 1998-C1   Ruston Center               $4,698,189    0.26%

GSM2 1998-C1   Sunshine Hts Shopping Ctr.  $4,359,954    0.24%

GSM2 1998-C1   Center of Clewiston         $3,360,417    0.18%

GSM2 1998-C1   Spring Pk Plaza Shop Ctr.   $3,038,288    0.17%


KMART CORP: Sterling Factors Agree to Provide Order Factoring
-------------------------------------------------------------
Sterling National Bank, the principal banking subsidiary of
Sterling Bancorp (NYSE: STL), said that through its subsidiary
Sterling Factors Corporation it has agreed to provide factoring
for Kmart (NYSE: KM) debtor-in-possession orders on regular
terms for its clients. Sterling Factors has recently released
debtor-in-possession orders for apparel, electronics, footwear,
jewelry and home furnishings, all bound for Kmart's store
shelves.

"Sterling is providing a variety of insurance options for
accounts receivables to vendors, both clients and non-clients,
that will offer necessary credit protection while still allowing
them to continue shipping merchandise to retailer customers that
are restructuring or filing for bankruptcy protection," stated
Stanley Officina, President of Sterling Factors. "After
reviewing the debtor-in-possession facility and working with
Kmart management, Sterling has decided to help support their
turnaround effort by factoring debtor-in-possession orders for
our vendor clients. We have every confidence that Kmart will be
successful and we want to help our clients continue to supply
their products to the retailer."

Sterling Factors Corporation is a full-service factor with over
70 years of experience providing tangible credit protection to
its vendor clients and the creditworthiness of their customers.
The veteran professionals at Sterling Factors have the breadth
of knowledge and the service options to respond to a broad range
of client needs.

"Bankruptcy protection allows retailers the opportunity to
restructure operations. During this period, retailers need to
maintain vendor relationships and keep merchandise on store
shelves.  Our dedicated team at Sterling Factors is highly
experienced in dealing with debtor-in-possession financings and
successfully factoring orders for clients," said Louis J.
Cappelli, Chairman of Sterling Bancorp.

Sterling Bancorp (NYSE: STL) is a financial holding company with
assets of $1.5 billion, offering a full range of banking and
financial services products. Its principal banking subsidiary is
Sterling National Bank, founded in 1929. Sterling provides a
wide range of products and services, including commercial
lending, asset-based financing, factoring/accounts receivable
management, international trade financing, commercial and
residential mortgage lending, equipment leasing, trust and
estate administration and investment management services.
Sterling has operations in the metropolitan New York area,
Virginia and other mid-Atlantic states and conducts business
throughout the U.S. More information is available on the
company's Web site, http://www.sterlingbancorp.com


LTV CORP: Retirees Retain Walter & Haverfield for Legal Advice
--------------------------------------------------------------
The Official Committee of Nonunion and Certain Union Retirees in
the chapter 11 cases of The LTV Corporation and its debtor-
affiliates asks Judge Bodoh approve its employment of Walter &
Haverfield LLP as legal counsel, and asks that Judge Bodoh order
that the Debtors are to compensate Walter & Haverfield for all
services rendered to and expenses incurred on behalf of the
Committee.

In order for the Committee to meet its obligations as the
authorized representative of all retirees receiving benefits not
conferred through a CBA, and to meet the requirements of the
Bankruptcy Code, the Committee needs legal representation and
thinks that Walter & Haverfield is the best firm for the job.

The firm will charge for their services on an hourly basis in
accordance with an hourly schedule which corresponds to the time
devoted and services rendered.  Walter & Haverfield's fees will
be incurred at an "average hourly rate" of $275.

The attorneys having primary responsibility for providing
services to the Retiree Committee are:

         Name                     Position           Hourly Rate
         ----                     --------           -----------
        Charles T. Riehl          Partner             $295
        Russell C. Shaw             -                 $275
        James D. Wilson           Partner             $265
        M. Bridey Matheney        Associate           $200

Mr. Riehl avers to Judge Bodoh that the firm served as legal
counsel for the first Retiree Committee empanelled in LTV's
first bankruptcy case.  In both the current and the previous
bankruptcy cases, the firm serves and served as counsel to the
Republic Steel Salaried Retirees' Association, which required
that the firm analyze and comprehend in-depth the medical
benefits and related issues within the scope of the Retiree
Committee responsibilities.  Members of the current Retiree
Committee are aware of the firm's services to the RSSRA.  Other
than this, the firm has no connection with the Debtors or these
estates, or any other party with an interest in these estates,
and is a disinterested person.

                       Judge Bodoh Agrees

In the absence of any opposition to this Application, Judge
Bodoh promptly enters his Order approving this Application, with
some limitations.  The payment of the fees and expenses
contemplated by this Application are subject to the terms and
conditions of the Debtors' asset protection plan and the related
budget.  In particular, without limiting the generality of this
limitation, the Committee costs are limited to a general figure
of $60,000 incorporated in the APP budget; provided, however,
that if the Committee's costs exceed $60,000, the Committee or
the applicable professionals may apply to Judge Bodoh for
allowance of such amounts in excess of $60,000 as an
administrative claim, subject to treatment on the same terms as
similar claims not included in and paid under the APP budget.
(LTV Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-00900)


LERNOUT & HAUSPIE: Dictaphone's Disclosure Statement is Approved
----------------------------------------------------------------
On January 31, 2002, Dictaphone filed its Third Amended
Disclosure Statement and related Third Amended Plan, which it
has circulating privately for some months, and Judge Judith
Wizmur immediately entered an Order approving the adequacy of
the information in the Third Amended Disclosure Statement and
set the date for voting on the Third Amended Pkan for March 3,
2002, and the hearing on plan confirmation for March 13, 2002.

                   Why Third Amended Disclosure
                       Statement Is Needed

Dictaphone explains why a Third Amended Disclosure Statement was
necessary even though Judge Wizmur had already approved the
Second Amended Disclosure Statement in this case.  On October
18, 2001, the Bankruptcy Court entered an order approving the
Second Amended Disclosure Statement and scheduled, among other
things, a hearing on confirmation of the Second Amended Plan.
However, because of additional events that transpired in Belgium
with respect to Dictaphone's corporate parent, L&H NV,
Dictaphone determined that it would be more prudent not to
solicit votes on the Second Amended Plan until there was clarity
as to the future direction of the Second Amended Plan's
confirmation process, at least as far as L&H NV's involvement
was concerned.

More specifically, various events in Belgium, including, but not
limited to the denial of L&H NV's new concordat proceeding,
which was initiated on October 22, 2001, the commencement of the
L&H NV Belgian Bankruptcy Case on October 24, 2001, and the
appointment of the Curators, led Dictaphone to determine that it
was in the best interests of its estate to temporarily delay
soliciting votes to accept or reject the Second Amended
Dictaphone Plan. Among other things, deferring the solicitation
process allowed Dictaphone to save the costs associated with
printing and mailing its solicitation packages that would be
incurred in the event revisions were necessary due to events
occurring in connection with the L&H NV Belgian Bankruptcy Case.

                        The Belgium Case

On November 29, 2000, L&H NV commenced a concordat proceeding in
the Ieper, Belgium Commercial Court. By order dated December 8,
2000, the Belgian Court denied the concordat petition
concluding, among other things, that L&H NV's proposed plan for
the concordat did not satisfy the conditions to obtain concordat
protection. On December 27, 2000, L&H NV commenced another
concordat proceeding in the Belgian Court, which the Belgian
Court granted on January 5, 2001. On May 21, 2001, L&H NV filed
the Recovery And Payment Plan in the Belgian Case, which the
creditors of L&H NV overwhelmingly approved on June 5, 2001. On
June 20, 2001, the Belgian Court declined to approve the Belgian
Plan as filed but extended the Belgian Case through September
30, 2001 to allow L&H NV to file a revised plan by September 10,
2001, which L&H NV filed on September 10, 2001.

On or about September 18, 2001, the creditors of L&H NV
overwhelmingly approved the Second Belgian Plan. The Belgian
Court conditionally approved the Second Belgian Plan on
September 21, 2001, and extended concordat protection to L&H NV
from creditors for an additional nine months. On October 5,
2001, L&H NV appealed the imposition of the conditions contained
in the September 21, 2001 order to the Ghent Court of Appeals.
Oral argument on such appeal was heard on October 10, 2001.

On October 18, 2001, the Ghent Court issued a ruling denying the
conditional approval of the Second Belgian Plan by the Belgian
Court and officially dismissing the Belgian Case. On October 22,
2001, L&H NV filed a new concordat proceeding with the Belgian
Court.

                     The "Tag-along" Agreement

On October 24, 2001, the Belgian Court (i) denied the New
Concordat Proceeding; (ii) declared L&H NV bankrupt and (iii)
appointed five curators -- Jean-Marc Vanstaen, Stefaan De Rouck,
Johan Houtman, Marnix Muylle and Frank Seys -- to oversee the
liquidating Belgian bankruptcy case of L&H NV. On October 29,
2001, the Curators sought and obtained from the judge-
commissaires appointed in the L&H NV Belgian Bankruptcy Case
approval to continue the Chapter 11 Case (including the Plan
confirmation process) subject to (i) obtaining a "tag-along"
right from certain of the Lenders, so that if the Lenders sell
the Dictaphone New Common Stock distributed to them under the
Plan, L&H NV (as holder of Allowed Class 8 Loan Agreement
Claims) would be entitled to sell the Dictaphone New Common
Stock distributed to it at the same time, on the same terms and
conditions, and in the same proportion as the Dictaphone New
Common Stock being sold by certain of the Lenders (as holders of
Allowed Class 5 Lenders' Guaranty Claims)) and (ii) attempting
to obtain a larger distribution of Dictaphone New Common Stock
from the Lenders. Other than the Chapter 11 Case, Dictaphone is
not the subject of any other bankruptcy or insolvency case.

Under the Tag-Along Agreement, (1) each of the parties is
afforded the right of first refusal in the event of a potential
transfer of the Dictaphone New Common Stock by another party to
the agreement; and (2) L&H NV is afforded the "tagalong" right
mentioned above in the event these Lenders sell their shares of
Dictaphone New Common Stock. The settlements embodied in the
Plan (as far as they affect L&H NV, as holder of Allowed Class 8
Loan Agreement Claims) and the Tag-Along Agreement remain
subject to approval by the Belgian Court, which Dictaphone
contemplates will take the matter under consideration in January
2002. Dictaphone promises that a copy of the Tag-Along Agreement
will be contained in the Plan Supplement Documents.

L&H NV and Dictaphone expect that the Plan confirmation process
will not be affected by the L&H NV Belgian Bankruptcy Case.

                        What's Changed

On January 31, 2002, Dictaphone filed a Third Amended Disclosure
Statement Pursuant To Section 1125 Of The Bankruptcy Code With
Respect To Third Amended Plan Of Reorganization Of Dictaphone
Under Chapter 11 Of The Bankruptcy Code and the Third Amended
Plan Of Reorganization Of Dictaphone Corporation Under Chapter
11 Of The Bankruptcy Code. On January 31, 2002, the Bankruptcy
Court entered an order amending the Disclosure Statement
Approval Order and approving the Third Amended Disclosure
Statement.  The Third Amended Disclosure Statement is a revised
version of the Second Amended Disclosure Statement. The Third
Amended Disclosure Statement modifies, amends and supercedes the
Joint Plan (as it relates to Dictaphone), the L&H Group
Disclosure Statement (as it relates to Dictaphone), the First
Amended Plan, the First Amended Disclosure Statement, the Second
Amended Plan and the Second Amended Disclosure Statement.

The only substantive difference between the Plan and the Second
Amended Plan involves a settlement reached among the Lenders and
L&H NV after the Second Amended Plan was filed. Specifically,
the Lenders have agreed to provide L&H NV with a larger
distribution of Dictaphone New Common Stock and therefore to re-
allocate the original distribution of Dictaphone New Common
Stock -- which formerly was sixty-five percent to the Lenders
and eight percent to L&H NV -- to a new allocation of sixty-
three percent to the Lenders and ten percent to L&H NV.
Furthermore, certain of the Lenders (specifically KBC Bank NV,
Fortis Bank nv-sa and Artesia Banking Corporation NV/SA) have
agreed to a "tag-along" right so that if these Lenders sell the
Dictaphone New Common Stock distributed to them under the Plan,
L&H NV (as holders of Allowed Class 8 Intercompany Loan
Agreement Claims) would be entitled to sell the Dictaphone New
Common Stock distributed to it at the same time, on the same
terms and conditions and in the same proportion as the
Dictaphone New Common Stock being sold by these Lenders (as
holders of Allowed Class 5 Lenders' Guaranty Claims)).

The agreements among the Lenders and L&H NV with respect to the
revised distribution percentages of Dictaphone New Common Stock
and among KBC Bank NV, Fortis Bank nv-sa, Artesia Banking
Corporation NV/SA and L&H NV with respect to the "tag-along"
right remain subject to approval of the Belgian Court.
(L&H/Dictaphone Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


MBC HOLDING: Seeking $2MM Loan Guarantee from Local Government
--------------------------------------------------------------
On January 24, 2002, MBC Holding Company announced that
beginning on Monday, January 28, 2002, its common stock would
begin trading on the Nasdaq OTC Bulletin Board for failure to
meet the Nasdaq requirements for continued listing on the Nasdaq
Small Cap Market.

In its Form 10-Q for the quarter ended September 30, 2001, filed
with the Securities and Exchange Commission on November 14,
2001, the Company reported a working capital deficit of $7.9
million at September 30, 2001.  As disclosed in the Form 10-Q,
as a result of the operating inefficiencies in the capacity
upgrade instituted during 2001, the Company became unable to
generate sufficient cash flow to pay all of its vendors in a
timely manner.

The Company continues in the process of attempting to
restructure its obligations and indebtedness.  In addition, the
Company continues to explore alternatives to obtain additional
permanent capital. If the Company is unable to successfully
restructure its indebtedness or obtain additional permanent
capital, it may have an adverse effect on the Company, including
its ability to continue operations. The Company is in non-
compliance with a number of the financial covenants under its
existing credit facility and was in an overadvance position of
$1.6 million. As a result, the lender advised the Company that
it was in default and that the lender was accelerating the
Company's indebtedness. The Company is negotiating with its
lender to resolve these matters.

As a result of its need for additional capital, the Company
approached the City of Saint Paul and requested that the City
guarantee a proposed $2.0 million loan to the Company from a
financial institution guarantee to enable MBC Holding Company to
upgrade its facilities. The City is currently reviewing the
proposal. The Company is also seeking a $3.0 million loan from
private investors.

As noted above, MBC Holding Company has requested the City of
Saint Paul to make a $2.0 million loan guarantee to enable MBC
Holding Company to upgrade its facilities. In connection with
the application, the Company provided the City with information
regarding the Company's future plans including its consideration
of a possible consolidation of MBC Holding Company, Gopher State
Ethanol, LLC and MG-CO2 St. Paul LLC. The Company has taken no
action to consolidate these entities, but is considering this as
part of a possible restructuring.

On January 28, 2002, the City of Saint Paul made public a credit
report about the Company's loan application and included
information about the Company's future plans and prospects.

In response it appears the appropriate staff of the City of
Saint Paul has made the following  Recommendation:

      "The repayment of this loan at its maturity date is
dependent on the successful consolidation of MBC, GSE and MG-CO2
and accompanying refinancing of each company's existing debts.
This consolidation and refinancing would only occur if MBC's
short-term workout plan were first successful and if conditions
were right for the consolidation. From a lending perspective,
there is a high level of risk associated with this proposition.

      "The proposed collateral for the loan guarantee would have
some value, however. There is no appraisal available for the
real estate and buildings, however the tax value of the land at
882 West Seventh Street is $641,600 and the ethanol plant,
completed in 2000, cost approximately $24 million to build. The
proposed $2 million third mortgage would bring the total
mortgage amount on the property to $15 million.

      "Based on the questionable nature of the loan's repayment
and the relative strength of the proposed collateral, staff
recommends that this proposed loan guarantee, with the
conditions listed in Section VI above, be given a risk rating of
DOUBTFUL."

The company rolls out a number of colorfully named brews,
including Grain Belt, Pig's Eye, and Yellow Belly (flavored malt
liquor). It also brews beer for third parties, which rings up
43% of the company's sales. Formerly Minnesota Brewing Company
(now a subsidiary), the firm adopted the MBC Holding name in
early 2000 to distance itself from its struggling brewery
operations. MBC Holding owns a minority stake in Gopher State
Ethanol and produces ethanol and carbon dioxide through a joint
venture with Messer Greisheim Industries. An investment group
headed by chairman Bruce Hendry owns more than 52% of MBC
Holding.


MARINER POST-ACUTE: Intercompany Claims Bar Date Extended
---------------------------------------------------------
Mariner Post-Acute Network, Inc.'s and its debtor and non-debtor
affiliates have again agreed to extend the Stipulated Bar Date
for intercompany claims and claims by non-debtor affiliates to
and including April 22, 2002. (Mariner Bankruptcy News, Issue
No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900)


MCLEODUSA INC: Court Approves Use of Existing Business Forms
------------------------------------------------------------
McLeodUSA Inc., and its debtor-affiliates requests for authority
to continue using all correspondence, business forms (including,
but not limited to, letterheads, purchase orders, and invoices)
and checks existing immediately before the Petition Date without
reference to the Debtor's status as debtor-in-possession, until
the Debtor's stock of existing Business Forms is exhausted.

Randall Rings, McLeodUSA's Group Vice President, Secretary and
General Counsel, says that parties it does business with
undoubtedly will be aware of its status as debtor-in-possession
as a result of the size and notoriety of the cases, the press
releases it issued and by general press coverage.

Mr. Rings says changing business forms would be expensive and
burdensome to the Debtor's estate and extremely disruptive to
its business operations. The costs and potential disruption are
not justified given its anticipation of an early emergence from
bankruptcy, Mr. Rings says.

"Motion granted," Judge Erwin Katz rules, noting that the
Debtor's bankruptcy filing is far from a secret -- the news
appears on the front page of The Wall Street Journal. (McLeodUSA
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


METALS USA: Secures Okay to Sell Lafayette Property for $1 Mill.
----------------------------------------------------------------
Metals USA, Inc., and its debtor-affiliates obtained Court
approval to sell their property located at 101 Metals Drive
in Youngsville, Louisiana, free and clear of all liens, claims
and encumbrances to Louisiana Valve Source Inc.

Carl Lenz, the Debtors' Vice President for Finance and
Administration, informs the Court that on September 27, 2001,
the Debtors and Louisiana Valve Source executed a Commercial
Agreement to Purchase and Sell the 6.75-acre property for
$1,000,000. Because the Bank Group holds a lien on all of the
Debtors' real estate, the sales proceeds will be applied
according to the post-petition loan agreement recently approved
by the Court. The group will be granted a replacement lien on
the cash proceeds of the sale.

Prior to listing the property in the market, Mr. Lenz relates
that the property was appraised by Associated Appraisers Ltd.
with a market value of $1,000,000. The Debtors also engaged R.
Hamilton Davis of Caldwell Banker Pelican Real Estate as the
listing broker, which engaged in substantial marketing efforts
to sell the property. Unfortunately, the Debtors received only
one sales contract that is the subject of this motion and are
not aware of any other potential purchasers.

The Debtors believe that the sales price constitutes the highest
and best value for the property for these reasons:

A. the sales price is the same amount as the market value placed
      on the property by Associated Appraisers and more than the
      property's book value of $478,407;

B. the broker's contract contains incentive to sell the property
      quickly and for a high value;

C. the real estate market in Louisiana is declining due to the
      general economic downturn and the uncertainty partly caused
      by the events of September 11, 2001.

According to Mr. Lenz, good cause and sound business reasons
exist to sell the property asset outside a plan of
reorganization because if the proposed sale does not close, it
is unlikely that a higher offer will be extended. The Debtors
have also consulted with the Creditors Committee and the Bank
Group, each of which support the sale. (Metals USA Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


NETWORK COMMERCE: Auditors Doubt Ability to Continue Operations
---------------------------------------------------------------
Network Commerce Inc. (OTCBB:NWKC), announced financial results
for its fourth quarter and year ended December 31, 2001.

Operating EBITDA loss in fourth quarter 2001 was $2.6 million,
versus $4.4 million in third quarter 2001. The improvements in
Operating EBITDA are the result of refocusing on core online
business services and restructuring infrastructure costs. For
the year, Operating EBITDA loss was $29.0 million, compared to
$70.4 million in 2000. Operating EBITDA excludes the effects of
interest, income taxes, depreciation and amortization, stock-
based compensation, and one-time non-recurring charges.

Net loss for the quarter, including extraordinary and one-time
items, was $7.8 million, versus a net loss of $18.5 million, in
the third quarter. For the year, net loss was $202.1 million,
compared to $262.0 million for 2000.

Revenues for fourth quarter 2001 were $2.0 million, compared to
$1.6 million for third quarter 2001. Revenues during the third
and fourth quarters were generated from the company's continuing
businesses, which consist of Internet commerce and hosting
services, and online database marketing services. On December
28, 2001, the company sold its FreeMerchant.com assets to
Digital River Inc., which contributed revenues of $470,000 in
fourth quarter 2001, compared to $335,000 in third quarter 2001.
The company anticipates receiving an additional $400,000 of the
purchase price in first quarter 2002, as well as, monthly
hosting fees from Digital River through the second quarter 2002.

For the year, revenues were $20.0 million, compared to $106.1
million in 2000. The reduction in revenues from 2001 is the
result of the disposition and closure of business units during
2001.

The company also reported cash and marketable equity securities
of $4.6 million at the end of fourth quarter. The historical
results of operations, the balance sheet and certain claims
against the company have led the company's auditors to issue a
going concern opinion in its most recent annual report.

"Clearly the economy has languished, yet Network Commerce has
improved its results," according to Dwayne Walker, chairman and
chief executive officer. "The benefits of our restructuring over
the last year were more apparent during this most recent
quarter."

Established in 1994, Network Commerce Inc. (OTCBB:NWKC) is the
technology infrastructure and services company. Network Commerce
provides a comprehensive technology and online business services
platform that includes domain registration, hosting, commerce,
and online database marketing services. Network Commerce is
headquartered in Seattle, WA.


NEW VISUAL: Auditors Issue Going Concern Opinion in Jan. Report
---------------------------------------------------------------
New Visual Corporation's January 2002 Auditors Report states
that the Company incurred net losses of approximately
$11,876,000, $12,725,000 and $2,045,000 during the years ended
October 31, 2001, 2000 and 1999, respectively. The Company
incurred losses from operations since inception and, as of
October 31, 1999, had an accumulated deficit of $12,300,033 and
a deficit accumulated during the development-stage of
$24,601,231 as of October 31, 2001. Those conditions raise
substantial doubt about the Company's ability to continue as a
going-concern.

Revenues for the fiscal year ended October 31, 2001 were $0.00.
Revenues for the fiscal year ended October 31, 2000 were
approximately $12,200 due to revenue recognized from the
Company's Impact Multimedia, Inc. subsidiary.

Operating expenses include amortization of project costs, write
down of project costs, compensatory element of stock issuances,
acquired in-process research and development expenses, research
and development expenses, and selling, general and
administrative costs. Total operating expenses decreased to
approximately $9,493,000 for fiscal 2001 from $12,302,000 for
fiscal 2000. The decrease was principally related to acquired
in-process research and development costs associated with New
Visual's fiscal 2000 acquisitions of New Wheel Technology, Inc.
and Impact Multimedia, Inc., which together amounted to
$6,050,000 in fiscal 2000. There was no such charge during 2001.
This reduction was offset by increases from 2000 to 2001 in the
compensatory element of stock issuances and selling, general and
administrative expenses. Compensatory element of stock issuances
and selling, general and administrative expenses over these
periods increased by approximately $300,000 and $2,045,000,
respectively, due to increases in technology development
activities and administrative infrastructure.

The Company has limited finances and requires additional funding
in order to accomplish its growth objectives and marketing of
its products and services. There is no assurance that the
Company can reverse its operating losses, or that it can raise
additional capital to allow it to expand its planned operations.
There is also no assurance that even if the Company manages to
obtain adequate funding to complete any contemplated
acquisition, such acquisition will succeed in enhancing the
Company's business and will not ultimately have an adverse
effect on the Company's business and operations. These factors
raise substantial doubt about the Company's ability to continue
as a going concern.

New Visual Corporation is developing advanced transmission
technology to enable data to be transmitted across copper
telephone wire at speeds and over distances that exceed those
offered by industry-leading DSL technology providers. The
Company intends to market this pioneering technology to leading
chipmakers, equipment makers, and service providers (such as
telephone companies) in the telecommunications industry. The
technology is designed to dramatically increase the capacity of
the copper telephone network, allowing these entities to provide
enhanced video, data and voice services over the existing copper
telecommunications infrastructure.


NEW WORLD RESTAURANT: S&P Assigns B- Rating to $155MM Debt Issue
---------------------------------------------------------------
Standard & Poor's assigned its single-'B'-minus rating to New
World Restaurant Group Inc.'s planned $155 million senior
secured note offering due 2009, to be issued under Rule 144A
with registration rights. Proceeds of the note issue will be
used to repay the company's existing $140 million notes and a
portion of its $36 million bridge loan due in June 2002.

At the same time, Standard & Poor's affirmed its single-'B'-
minus corporate credit rating on the company. The outlook is
negative.

The new note issue improves New World's financial flexibility by
replacing the existing $140 million notes due in June 2003.
Financial flexibility is further improved by a $15 million
revolving credit facility, which will be undrawn at the time of
closing. The company owns $61.5 million of subordinated
convertible debentures from the Einstein/Noah Bagel Corp.
bankruptcy. It is unclear if the proceeds from the Einstein
bonds will be sufficient to repay the unpaid portion of the $36
million bridge loan due on June 15, 2002.

The ratings reflect the risks associated with the company's
participation in the intensely competitive quick-service segment
of the restaurant industry, its relatively small size and EBITDA
base, and the challenges of integrating Einstein/Noah Bagel
Corp.

New World operates and franchises 788 bagel bakeries and coffee
bars in 35 states throughout the U.S. As of October 2, 2001, the
company's retail system consisted of 494 company-operated
locations primarily under the Einstein Bros. and Noah's New York
Bagels brands and 294 franchised locations primarily under the
Manhattan Bagel and Chesapeake Bagel brands. In addition, the
company operates three dough production facilities and one
coffee roasting plant.

The quick-service segment of the restaurant industry is
intensely competitive, with many well-established restaurants
having substantially greater financial and other resources than
New World. In addition, many competitors are less dependent on a
single primary product and day part (breakfast) than the
company.

Comparable-store sales for company-operated stores increased
3.6% for the 12 months ended October 2, 2001, after rising 4.6%
in 2000. However, the increase came after the closing of 84
underperforming stores. The company plans to improve operating
performance by realizing cost savings from the acquisition
through the consolidation of production facilities, improved
purchasing power, and reduced administrative costs.

Pro forma for the Einstein acquisition and the $155 million note
issue, EBITDA coverage of interest is about 2.2 times, but is
highly variable because of the company's small EBITDA base.
Future interest coverage could improve to the mid-2x area if the
company is able to realize the cost saving benefits from the
acquisition. New world is highly leveraged, with total debt to
EBITDA at about 4.5x.

                         Outlook: Negative

Standard & Poor's expects a gradual strengthening of the
company's ratios as New World captures the cost savings
associated with the Einstein acquisition. If New World fails to
capture the cost savings of the acquisition, experiences
integration problems, or sales begin to decline to the detriment
of credit protection measures, the ratings could be lowered.


PACIFIC GAS: Attorney-General's Suit Moved to Bankruptcy Court
--------------------------------------------------------------
PG&E Corporation (NYSE: PCG) filed a motion transferring the
lawsuit filed against it by the California Attorney General from
San Francisco Superior Court to the Northern District U.S.
Bankruptcy Court. The transfer is effective immediately.

"The attorney general's complaint is without merit, and clearly
appears to be part of his ongoing efforts to obstruct our
utility's plans for emerging from bankruptcy," said Bruce
Worthington, Senior Vice President and General Counsel for PG&E
Corporation. "It makes sense for the complaint to be moved to
Bankruptcy Court, which has original and exclusive jurisdiction
of claims involved in the bankruptcy process and participation
in that process."

The attorney general's complaint alleges that PG&E Corporation
and its directors made improper use of the Bankruptcy Court by
virtue of PG&E Corporation's co-sponsoring of the pending Plan
of Reorganization. It also seeks restitution of assets allegedly
wrongfully transferred to PG&E Corporation from Pacific Gas and
Electric Company.

"While both allegations are patently absurd, both provide
grounds to transfer this case to Bankruptcy Court," said
Worthington.

The financial transactions cited by the attorney general have
been thoroughly reviewed and audited multiple times -- by the
California Public Utilities Commission, and by the state
Legislature -- with no findings that the transactions were
anything but entirely appropriate and legal.

Please visit PG&E's Web site: http://www.pgecorp.com


PACIFIC GAS: Says Preemption Ruling Paves Way for Reorganization
----------------------------------------------------------------
Pacific Gas and Electric Company (NYSE: PCG) issued the
following statement after the U.S. Bankruptcy Court issued its
decision on preemption and sovereign immunity:

      "Based on the Court's ruling, PG&E will be able to proceed
with its plan of reorganization.

      "The court concluded that state law may be preempted based
on a showing of the need for preemption in order to implement
the plan.  Therefore, the Court's decision allows PG&E to
proceed with its plan of reorganization, with preemption issues
ultimately being addressed in the confirmation process.

      "Specifically, the Court found:

           'Nonetheless, the court believes that the Plan could
           be confirmed if Proponents are able to establish with
           particularity the requisite elements of implied
           preemption.  If the Disclosure Statement is amended
           consistent with this Memorandum Decision, the court
           will approve it and let the Proponents test preemption
           at confirmation.'

      "Thus, while the Court did not accept the utility's
argument that federal law automatically preempts state law, the
ruling does provide that preemption is possible, if necessary to
confirm the utility's plan of reorganization.

      "The Court also rejected arguments made by the California
Public Utilities Commission and the Attorney General that PG&E's
plan inappropriately seeks to escape from state regulation.

           '. . . [T]he State, the Commission and other objectors
           have argued that Proponents are abusing the bankruptcy
           process to escape the Commission's jurisdiction.  To
           the extent that this is a "facial invalidity"
           objection the court rejects it.'

      "PG&E intends to move forward with its plan, taking into
account the Court's direction in this ruling."


PARK PLACE: Fitch Cuts Low-B Ratings Owing to Reduced EBITDA
------------------------------------------------------------
Fitch Ratings has lowered the ratings on Park Place
Entertainment's (NYSE: PPE) $1.75 billion in senior unsecured
notes to 'BB+' from 'BBB-'. At the same time, the ratings on
$1.65 billion of senior subordinated notes have been lowered to
'BB-' from 'BB+' and commercial paper to 'B' from 'F3'. The
ratings have been removed from Rating Watch Negative and
assigned a Stable Rating Outlook.

The downgrade reflects the reduced cash flow generated,
principally at the company's Western region properties, as a
result of the events of September 11 and the economic downturn
and high leverage for the rating category. In addition, cash
flow from operations to total debt remains weak and Fitch
expects this trend to continue into 2002.

PPE generates approximately one-third of total cash flow from
its Western Region properties, which have been negatively
impacted by the economic downturn and the events of September
11. In particular, EBITDA declined by 42% to $60 million and by
24% to $405 million during the fourth quarter and full year
2001, respectively, versus the comparable periods last year.
While trends have been improving on a sequential monthly basis,
Fitch expects a moderate recovery over the next 18 months,
resulting in a gradual improvement in PPE's credit profile.
Recovery in Las Vegas has been slow to date due to a reliance on
fly-in visitors and convention business.

Leverage was high for the rating category prior to the events of
Sept. 11, with total debt/EBITDA of 4.4 times at June 30, 2001,
which has increased to 4.9x at December 31, 2001. While the
company has reduced its original planned capital expenditures to
around $450 million to further reduce debt, Fitch expects
leverage ratios to remain more appropriate for the current
rating category throughout 2002.

The Stable Rating Outlook reflects PPE's good geographic and
demographic diversity. In particular, nearly two-thirds of
EBITDA is generated from the company's Eastern and Mid-South
region properties, which rely primarily on drive in traffic and
have nearly recovered to pre-September 11th levels. Moreover,
PPE has good property locations within those markets. In
addition, the company has manageable, fixed rate maturities of
approximately $300 million in each of the next three years.
Availability under the company's $3.3 billion credit facilities
was approximately $1.5 billion at September 30, 2001. PPE's $2
billion credit facility, which matures in December 2003,
contains a $1.4 billion, 2-year extension.

DebtTraders reports that Park Place Entertainment's 9.375% bonds
due 2007 (PPE1) currently trade slightly above par, between
105.75 and 106.75. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=PPE1


SAFETY-KLEEN: Seeks Open-Ended Lease Decision Period Extension
--------------------------------------------------------------
Safety-Kleen Corporation seeks an order further extending the
time within which they must assume or reject their unexpired
leases of nonresidential real property, through and including
the effective date of any confirmed plan or plans of
reorganization in these chapter 11 cases, subject to the right
of each lessor under an Unexpired Lease to request, upon
appropriate notice and motion, that the Court shorten the
Extension Period with respect to a specific Unexpired Lease and
specify a period of time in which the Debtors must determine
whether to assume or reject such Unexpired Lease.

As of the date of this Motion, the Debtors are lessees under
numerous unexpired leases of nonresidential real property. Most,
if not all, of the Unexpired Leases are for (a) facilities used
by the Debtors to provide hazardous and industrial waste
disposal services to the Debtors' customers and/or (b) office
space used to house the administrative support personnel and
functions required to provide such services, and are assets of
the Debtors' estates. The Unexpired Leases and the premises
covered thereby thus are integral to the Debtors' continued
operations as they proceed toward a successful reorganization.

The Debtors expect that they ultimately may seek the Court's
permission to reject some of the Unexpired Leases prior to
confirmation of a Plan in these cases. Many of the Unexpired
Leases, however, will prove to be desirable -- or necessary --
to the future operation of the reorganized Debtors' businesses
and likely will be assumed pursuant to a Plan. Other Unexpired
Leases, while not necessary for the Debtors' post-
reorganization operations, ultimately may prove to be "below
market" leases that may yield value to the estates through
assumption and assignment to third parties.

Until the Debtors have had the opportunity to complete a
thorough review of all of their Unexpired Leases, however, they
cannot determine precisely which Unexpired Leases should be
rejected, assumed, or assumed and assigned.  The Debtors'
decision whether to reject, assume, or assume and assign
particular Unexpired Leases, as well as the timing of such
rejection, assumption, or assumption and assignment, depends in
large part on the Debtors' formulation of a comprehensive
business plan for the future (i.e., whether the leased premises
will play a role in the Debtors' operations upon emergence from
chapter 11) and the preparation of a reorganization plan to
implement the business plan. The necessary business plan is not
yet complete, however.

A further extension of the time within which the Debtors may
move to assume or reject any and/or all of their Unexpired
Leases is in the best interests of the Debtors, their estates,
their creditors and other parties-in-interest. Since the
commencement of these chapter 11 cases, the Debtors' focus has
been, first, on stabilizing their businesses and, second, on
formulation of a comprehensive business plan for the future.

Further, since entry of the Order granting the previous
extension, and notwithstanding the numerous difficult issues the
Debtors continue to face as they seek to reorganize, the Debtors
have been working tirelessly to resolve those matters whose
successful conclusion is a prerequisite to the Debtors' ability
to finalize the business plan, which, in turn, will form the
basis of a reorganization plan.

Because their focus properly has been on completion of the
restatement and the development of a business plan, the Debtors
have not yet been able to complete their analysis of the merits
of assuming or rejecting most of the Unexpired Leases. The
proposed extension of the time within which the Debtors can
determine whether to assume or reject the Unexpired Leases will
afford the Debtors the chance to finalize their business plan
and make an informed decision with respect to the benefits, if
any, to be derived from assumption and/or rejection of such
leases.

Moreover, upon finalization of the business plan, the Debtors
will need to assess, at least preliminarily, their actual and
projected performance under the plan, and to discuss the results
with their major creditor constituencies. This assessment
undoubtedly will impact the Debtors' decision as to the
appropriate treatment of many, if not all, of the Unexpired
Leases. The requested extension of time to reject, assume, or
assign the Unexpired Leases thus is intended to give the Debtors
sufficient time to complete their business plan and permit them
to make a fully informed decision with respect to each Unexpired
Lease.

                   Special Regulatory Requirements

Further, given special regulatory requirements that apply to the
Debtors' businesses and the related importance of making
successful transitioning arrangements in connection with any
rejection or assignment of a leased hazardous waste facility,
the Debtors must make decisions and negotiate transitioning
arrangements that will serve their customers and the public at
large. These decisions cannot be made responsibly, however,
without a further extension of the time within which the
Unexpired Leases must be assumed or rejected. The size and
complexity of the Debtors' chapter 11 cases alone constitutes
sufficient cause to further extend the time to assume or reject
the Unexpired Leases. As noted above, the seventy-four Debtors
whose cases are jointly administered herein constitute the
largest hazardous and industrial waste services company in North
America, collectively employing approximately 9,000 people and
serving more than 400,000 customers in 47 states, through a
network of almost 300 operating facilities.

                Leases Are Integral Component of Plan

Second, the Debtors' leased premises and facilities are vital to
their ongoing operations and thus may constitute an integral
component of the Debtors' strategic business plan. Even if the
Debtors ultimately decide to discontinue operations at a
particular leased facility, the Unexpired Lease for such
facility may contain favorable terms that would allow the
Debtors to assume and assign the lease for value. Further, as
noted above, given regulatory requirements, the Debtors must
make appropriate transitioning arrangements in connection with
the rejection or assignment of leases of certain facilities. The
Debtors are not yet in a position, however, to make a final
determination as to which facilities they will close and whether
any of the Unexpired Leases have any value to the Debtors and
their estates.

                     Rent Payments Are Current

Finally, the Debtors have remained current and will continue to
remain current on their postpetition rent obligations. Thus, the
relief requested herein will not prejudice any landlord under an
Unexpired Lease.  Indeed, through the operation of section
365(d)(3) of the Bankruptcy Code, the landlords enjoy a
preferred position that belies any notion that they could be
prejudiced.

                     If No Extension Is Granted
                         Bad Things Happen

In contrast, if the period within which the Debtors may assume
or reject Unexpired Leases is not further extended, the Debtors
will be compelled prematurely to assume substantial, long-term
liabilities under the Unexpired Leases (creating administrative
expense claims) and/or forfeit benefits associated with some
leases, to the detriment of the Debtors' ability to operate and
preserve the value of their businesses. To avoid forcing debtors
to make such critical decisions in a vacuum, the Second Circuit
has suggested that bankruptcy courts exercise their discretion
in appropriate cases to extend the section 365(d)(4) deadline.
Indeed, courts overseeing large chapter 11 cases routinely have
granted more than one extension of the assumption or rejection
time period.

For these reasons, the Debtors tell Judge Walsh he should extend
the time within which the Debtors must elect to assume or reject
any Unexpired Lease until the Effective Date, subject to the
rights of the landlord under an Unexpired Lease to request, upon
appropriate notice and motion, that the Court shorten the
Extension Period with respect to a specific Unexpired Lease and
specify a period of time in which the Debtors must determine
whether to assume or reject such Unexpired Lease. (Safety-Kleen
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


STRATUS SERVICES: Falls Short of Nasdaq Listing Requirements
------------------------------------------------------------
Stratus Services Group, Inc. (Nasdaq: SERVE), the SMARTSolutions
company, said it received a Nasdaq Staff Determination on
January 29, 2002 indicating that the Company currently does not
comply with the net tangible assets/shareholders' equity/market
capitalization/net income requirement as set forth in Nasdaq
Marketplace Rule 4310(c)(2)(B).  A hearing before a Nasdaq
Listing Qualifications Panel to review the Staff Determination
on this issue together with other issues previously cited has
been scheduled. There can be no assurance the Panel will grant
the Company's request for continued listing.  The Company's
request for a hearing with the Panel has stayed the delisting of
the Company's Common Stock pending the Panel's decision.  If the
Company is unsuccessful in its appeal, it will evaluate other
available alternatives.

Stratus is a national provider of business productivity
consulting and staffing services through a network of thirty-two
offices in eight states. Through its SMARTSolutions technology,
Stratus provides a structured program to monitor and reduce the
cost of a customer's labor resources.  The Company has a
dedicated engineering services staff providing a broad range of
staffing and project consulting.  Through its Stratus Technology
Services, LLC joint venture, the Company provides a broad range
of information technology staffing and project consulting.


SUN HEALTHCARE: Secures Approval of Crestwood Lease Settlement
--------------------------------------------------------------
Sun Healthcare Group, Inc., and its debtor-affiliates sought and
obtained the Court's permission to enter into a global
settlement with Crestwood Hospitals, Inc., and Monterey Pleasant
Hills LP concerning the disposition of 13 facilities that are
leased from the two companies under a Master Lease Agreement.

Under the Master Agreement, the Debtors and Crestwood executed
and delivered a series of promissory notes evidencing certain
debts owing between the parties as a result of the overall
transaction. SunBridge executed a note in the original principal
amount of $5,000,000 (SunBridge Note), in favor of Crestwood for
the leasehold rights of the facilities. On the other hand,
Crestwood executed two notes (Crestwood Note) in the amount of
$7,000,000 and $1,500,000, respectively, to pay the remaining
liabilities incurred during the time period that Crestwood
operated the Facilities and to fund Crestwood's payroll during
the acquisition period. Currently, the Crestwood Note still has
an outstanding balances of $5,200,000 and $1,000,000,
respectively, while the SunBridge Note has a balance of
$4,400,000. Crestwood though contest that SunBridge is
delinquent in its payment since January 2001.

Crestwood also executed and delivered a note in favor of
SunDance in the amount of $6,100,000 (SunDance Note) for
outstanding amounts owed to SunDance for services rendered to
Crestwood. There remains a balance of $2,500,000 so far.

According to Etta R. Wolfe, Esq., at Richards, Layton & Finger,
PA, in Wilmington, Delaware, an Offset Agreement and Assignment
Agreements were also executed, pursuant to the terms of the
Master Agreement. The Offset Agreement grants it certain offset
rights with respect to the amounts owing to SunBridge and
Sundance from Crestwood under the Leases and the Notes. The
Assignment Agreement on the other hand, assigns Crestwood's
leasehold rights to a long-term care facility in Fremont,
California. In this connection, SunBridge executed a note
(Westwood/Fremont Note) in the amount of $2,250,000, to become
due once certain occupancy requirements and licenses at the
Facility were satisfied. SunBridge was not able to obtain a
license while Crestwood did. Crestwood is asking SunBridge
$2,000,000 as operating cost (Westwood Operating Cost)
reimbursement.

Ms. Wolfe relates that after due analysis of the profitability
of Debtors' facilities, Debtors need to divest certain
facilities and retain those profitable ones. In this regard, a
Settlement Agreement was negotiated in these terms:

   (a) SunBridge shall release Crestwood from any further
       liability arising from the Crestwood Note and Sundance
       shall release Crestwood from the Sundance Note, all in the
       aggregate amount of approximately $8,700,000;

   (b) Subject to SunBridge paying to Crestwood the delinquent
       amount of $537,786 for the SunBridge Note, Crestwood shall
       release SunBridge from any further liability arising from
       the SunBridge Note, the Westwood/Fremont Note and the
       Westwood Operating Costs, all in the aggregate amount of
       approximately $8,700,000 provided that Crestwood shall
       waive payment of $500,000 from the delinquent amount of
       the SunBridge Note, with the balance paid in cash or
       applied against Crestwood's obligations relating to the
       closure cost of the Pleasant Hill Facility;

   (c) SunBridge and Crestwood shall amend each of the subleases,
       thereby releasing SunBridge from any further obligation to
       pay the Sublease Additional Rent due thereafter, in the
       amount of approximately $67,000 per month;

   (d) SunBridge and Monterey shall enter into a form lease
       termination agreement with respect to the Pleasant Hill
       Facility which shall

        (i) provide for a termination and rejection of the Lease
            with respect to the Pleasant Hill Facility and a full
            mutual release from liability arising thereunder,

       (ii) authorize SunBridge to close the Pleasant Hill
            Facility in accordance with applicable law, and

      (iii) provide for the return to SunBridge of the letter of
            credit, in the amount of $66,000, held by Monterey as
            a security deposit for the Lease obligations on the
            Pleasant Hill Facility;

   (e) The cost associated with the closing of the Pleasant Hill
       Facility shall be shared equally by SunBridge and
       Crestwood, provided the share of Crestwood shall not
       exceed $200,000; and

   (f) SunBridge shall pay to Crestwood the sum of $29,187 in
       full and complete settlement of the Other Offset Amount.
       Crestwood and SunBridge shall grant mutual release
       regarding any liability arising from the Other Offset
       Amounts.

With the conclusion of the Settlement Agreement, Debtors will
assume the leases of these facilities:

Crestwood Leases:

   Facility #          Name                      Address
   ----------          ----                      -------
     1652       SunBridge Hampton Care     442 Hampton Street
                Center                     Stockton, California

     1654       SunBridge Care Center      220 Tuolumne Street
                for Vallejo                Vallejo, California

     1655       SunBridge Elmhaven         6940 Pacific Avenue
                Care Center                Stockton, California

     1663       SunBridge Care Center      2490 Court Street
                for Redding                Redding, California

     1664       Chico Creek Care &         587 Rio Lindo Avenue
                Rehabilitation             Redding, California

     1665       SunBridge Fountainview     2540 Carmichael Way
                Care Center                Carmichael, California

     1666       SunBridge Care & Rehab     9461 Bailey Avenue
                for Elk Grove              Elk Grove, California

     1682       SunBridge Care & Rehab     2500 County Drive
                for Fremont                Fremont, California

Monterey Leases:

     1653       SunBridge Rosewood Care    1911 Oak Park Blvd.
                Center                     Pleasant Hill, CA

     1656       SunBridge Care Center      550 Patterson Blvd.
                for Pleasant Hill          Pleasant Hill, CA

     1683       SunBridge Care & Rehab     350 Iris Drive
                for Salinas (Sunridge)     Salinas, California

     1684       SunBridge Care Center      1575 Skyline Drive
                for Monterey               Monterey, California

     1686       SunBridge Care Center      348 Iris Drive
                for Salinas (Skyline)      Salinas, California
(Sun Healthcare Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


TECSTAR: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Lead Debtor: Tecstar Inc.
              15251 Don Julian Road
              City of Industry, CA 91745

Bankruptcy Case No.: 02-10378

Debtor affiliates filing separate chapter 11 petitions:

              Entity                        Case No.
              ------                        --------
              Tecstar Power Systems, Inc.   02-10379

Chapter 11 Petition Date: February 07, 2002

Court: District of Delaware

Debtors' Counsel: Tobey M. Daluz, Esq.
                   Reed Smith LLP
                   1201 Market Street
                   15th Floor
                   Wilmington, DE 19801
                   Tel: 302-778-7534
                   Fax: 302-778-7575

                        -and-

                   Jeffrey M. Reisner
                   Irell & Manella LLP
                   840 Newport Beach, CA 92660
                   Tel: 949 760 0991
                   Fax: 949 960 5200

Estimated Assets: $10 million to $50 million

Estimated Debts: $50 million to $100 million

Debtors' Consolidated List of 20 Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
AXT                         Trade Debt              $2,816,886
Morris Young
4487 Technology Drive
Fremont, CA 94538
Tel: 510 226 4300

Eagle Picher Technologies   Trade Debt              $1,419,222
PO Box 640664
Pittsburgh, PA 15264-0664
Tel: 800 331 3144

NREL                        Royalty Fees              $838,835
Linda Horrell
1617 Cole Blvd.
Golden, OH 80401-3393
Tel: 303 275 3038

Aixtron Technologies, Inc.  Trade Debt                $785,503
Elfi Mavronicles
1670 Barclay Blvd.
Buffalo Grove, IL 60089
Tel: 847 941 7197

S&C Electric Company        Trade Debt                $481,513
2010 Energy Drive
East Try, WI 53120
Tel: 262 642 7200

O'Melveny & Myers LLP       Legal Services            $298,796
John Laco
PO Box 504436
The Lakes, NV 88905-4436
Tel: 213 430 6544

Southern California Edison  Utility Bill              $297,380
PO Box 600
Rosemead, CA 91771-0000
Tel: 626 302 7048

Praxair Inc.                Trade Debt                $293,952
Debbie Santini
PO Box 840193
Dallas, TX 75284-0193
Tel: 203 837 227

Pilkington Optronics, Inc.  Trade Debt                $279,696
Mark Rees
560 West Terrace Drive
San Dimas, CA 91773
Tel: 777 663 4361

Akzo Nobel Chemicals Inc.   Trade Debt                $268,481
PO Box 905361
Charlotte, NC 28290-5361
Tel: 281 604 4914

SoCa Training Council       Trade Debt                $263,062
2062 Business Center Drive
Suite 225
Irvine, CA 92612
Tel: 800 346 1147

Wafer technology, Ltd.      Trade Debt                $179,535

Microsemi Santa Ana Div.    Unknown                   $162,309

Blue Shield of California   Insurance Premium         $145,594

Deloitte & Touche           Accoutning Fees           $142,982

Umicore                     Trade Debt                $133,470

Snowden Electric Company,   Trade Debt                $127,425
    Inc.

American Express            Trade Debt                $121,322

Praxair                     Trade Debt                 $79,496

Schwarzkopf Technologies    Trade Debt                 $69,940


TESORO PETROLEUM: Acquisition Plan Prompts S&P's Ratings Watch
--------------------------------------------------------------
Standard & Poor's placed its ratings for independent petroleum
refiner/marketer Tesoro Petroleum Corp., on CreditWatch with
negative implications following the company's announcement that
it plans to acquire the 168,000 barrels per day high complexity
Golden Eagle refinery from Valero Energy Corp. Tesoro is buying
the Northern California refinery for about $1.1 billion,
including $130 million for inventory.

In addition, the company could also pay up to a $150 million
market-based "earn-out" from cash flow over the next five years.
Although the acquisition would add a very attractive asset to
Tesoro's portfolio (raising it pro forma to 565,000 barrels per
day total refining capacity, with 750 retail gas stations),
further diversify cash flow (with six major assets), and
strengthen its niche position in high-margin West Coast
locations, the prospective new debt would raise debt leverage to
levels more commensurate with weaker credit ratings (pro forma
65% total debt to total book capital at year-end 2001). Standard
& Poor's had expected Tesoro to deleverage to the 45% to 50%
range by 2003 following its mid-2001 debt-financed acquisition
of two PADD IV refineries, retail, and logistics for $777
million. Standard & Poor's will resolve the CreditWatch listing
once the transaction is completed and upon more extensive review
of Tesoro's financial expectations.

                  Ratings Placed on CreditWatch
                    with Negative Implications

Tesoro Petroleum Corp.
        Corporate credit rating            BB+
        Senior secured debt                BBB-
        Subordinated debt                  BB-
        Shelf debt sr secd/sr unsecd/
          Sub/pfd  stk (prelim)            BB+/BB+/BB-/B+


TRILLIUM HOSPITAL: Union Files Suit to Protect Employees
--------------------------------------------------------
SEIU Going to Court to Protect Trillium Hospital Employees
Left Out in the Cold Trillium Hospital in Albion closed their
doors with less than a week's notice to employees. The hospital
is claiming financial hardship yet no bankruptcy has been filed.
Although required by law to negotiate the effects of the closing
on employees, Trillium management disappeared without offering
severance pay or even paying employees time they had already
accrued.

SEIU (Service Employees International Union) Local 79 filed
charges against Trillium Hospital in Albion for refusing to
negotiate the effects of the hospital closing for employees,
including nurses and nurse aides, who are represented by the
union. The union received a notice dated January 29 that the
hospital would be closing as of February 4.

The WARN Act requires that any workplace with more than 100
workers must give 60 days notice of layoffs/terminations.
However, Trillium Hospital gave less than one week's notice
before closing their doors for good, claiming "unforeseeable
circumstances."  Through its own research, SEIU has learned that
Trillium was well aware that closing was a possibility as early
as a year ago, when their own accounting firm wrote "The
hospital has suffered recurring losses from operations and has
eroded its net assets to the extent that it raises substantial
doubt about its ability to continue as a going concern."

When asked for copies of tax returns, which all non-profit
healthcare facilities must by law provide upon request, hospital
management declined and have since disappeared.  Even the
attorney representing Trillium told SEIU that he doesn't know
who has decision-making authority at this point.

For the time being, SEIU chose to file charges with the National
Labor Relations Board over the terms of the contract rather than
challenge the hospital on compliance with the WARN Act because
workers were told by Michigan Unemployment representatives that
any investigation of a WARN Act violation would prevent workers
from receiving unemployment benefits until the conclusion of the
investigation.

SEIU Local 79 President Willie Hampton is determined to fight
for Albion caregivers, stating, "What Trillium did is
unconscionable and illegal. Trillium has left its loyal
employees and the entire community out in the cold.  These
workers had their lives turned upside down very abruptly,
without any consideration by Trillium.  We have single mothers
with children who are suddenly without income or health
coverage.  This disregard for the community and for the workers
needs to be addressed, and we will not rest until the hospital
does right by its employees."


US INDUSTRIES: Fitch Downgrades Senior Secured Notes To B-
----------------------------------------------------------
Fitch Ratings lowers the rating on the $375 million rated senior
secured notes with US Industries, Inc.'s, USI American Holdings,
Inc., and USI Global Corporation as co-obligors to 'B-' and
remains on Rating Watch Negative. The notes are guaranteed by
USI Atlantic Corp.

The downgrade reflects the company's expected highly leveraged
profile post the asset disposal program currently underway. In
addition, uncertainty remains regarding the company's ability to
execute anticipated asset sales in a timely fashion and further
restructure its bank facilities. The Rating Watch Negative
recognizes that an unfavorable outcome regarding these future
transactions could lead to default. Also considered is the
company's bath and plumbing operations, which includes the
Jacuzzi, Zurn, and Eljer brands, which hold leading market
positions as well as its sensitivity to changes in consumer
spending and construction activity.

On August 15, 2001, USI reacquired the 75% of Rexair, Inc. it
did not already own and restructured its bank debt and the bank
debt of Rexair, Inc., extending the final maturity date to
November 30, 2002. As part of the restructuring, scheduled
permanent reductions of outstanding senior debt balances, which
includes both the restructured facilities and the senior notes,
were outlined. In order to meet the scheduled debt repayments,
the company will have to sell a significant amount of assets. On
December 28, 2001, the company's Board of Directors adopted a
formal plan to dispose of five businesses over the next 12
months with a net realizable value of $491.6 million.

In January 2002, the company sold one of these businesses, Ames
True Temper, for $165 million and also monetized an investment
in Strategic Industries notes for $107 million. As a result, the
company has more than met its cumulative $200 million obligation
under the mandatory repayment schedule until June 30, 2002 when
a cumulative $450 million is due. A portion of the proceeds have
been allocated to the senior secured notes whereby approximately
$70 million has been deposited to a cash collateral account for
the benefit of the note holders.

The remaining asset sales should allow the company to
significantly reduce its outstanding borrowings and meet is debt
repayments through October 15, 2002. However the remainder of
the debt will need to be restructured before November 30, 2002
and therefore, there exists significant refinancing risk. Fitch
will continue to closely monitor the company's ability to meet
scheduled debt reductions as well as extend the maturities on
its debt.


WARNACO GROUP: Lease Decision Period Further Extended to July 31
----------------------------------------------------------------
The Warnaco Group, Inc.'s time within which to decide whether to
assume, assume and assign, or reject unexpired Leases for:

     - 104 retail stores
     - 9 offices
     - 5 production and distribution centers
     - 8 showrooms
     - 3 storage and warehouses
     - 5 miscellaneous leases in Latin America and
     - 12 retail outlets in Canada

is extended through and including July 31, 2002. (Warnaco
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


WESTPOINT STEVENS: Dec. 31 Balance Sheet Upside-Down by $778MM
--------------------------------------------------------------
WestPoint Stevens Inc., (NYSE: WXS) --
http://www.westpointstevens.com-- reported results for the
fourth quarter and fiscal year ended Dec. 31, 2001.

The Company's net sales for the fourth quarter of 2001 increased
3.3% to $431.8 million compared with $418.2 million a year ago.
On a pro forma basis, excluding sales from the acquired Chatham
blankets unit, sales increased 0.4% in the period.

Net income for the fourth quarter of 2001, excluding charges
associated with the Eight-Point Plan, was a loss of $1.8 million
compared with income of $5.6 million.  This was in line with the
recent First Call consensus EPS estimate of a loss of $0.04,
excluding charges associated with the Eight-Point Plan.  The
Company recorded bad debt expense of $7 million net of taxes in
the quarter related to the write-down of receivables as a result
of Kmart Corporation's bankruptcy filing.  During the quarter,
the Company reviewed its litigation exposures and other
contingency issues and as a result of favorable litigation
settlements in 2001 and other evaluations reduced its reserves
for related exposures by approximately $5 million net of taxes.

During the fourth quarter of 2001, WestPoint recognized a $0.8
million charge net of taxes for the implementation of its Eight-
Point Plan compared with a charge of $14.5 million net of taxes
a year ago.  Including this charge, net income for the fourth
quarter of 2001 was a loss of $2.6 million compared with a loss
of $8.9 million for the fourth quarter of 2000.

Operating earnings for the fourth quarter of 2001, before
charges associated with the Eight-Point Plan, were $35.0 million
or 8.1% of sales compared with $40.3 million or 9.6% of sales
for the same period in 2000.  The fourth quarter results
reflected the impact in 2001 of increased raw material costs and
bad debt expense that were partially offset by favorable reserve
adjustments and cost savings from the implementation of the
Eight-Point Plan.

Holcombe T. Green, Jr., Chairman and CEO of WestPoint Stevens
commented, "We are pleased that we were able to increase sales
in the fourth quarter despite the effects of the ongoing
recession and sluggish retail environment. In order to control
inventory levels, we took additional downtime during the latter
part of the quarter that resulted in unabsorbed overhead of
roughly $5 million.  As a result, we were able to hold
inventories steady at $397 million compared with the third
quarter as inventories declined 2% or $10 million compared with
a year ago.  WestPoint Stevens is in compliance with all of its
financial covenants and continues to have substantial
liquidity."

M. L. "Chip" Fontenot, WestPoint Stevens President and COO,
added, "We do not expect the recent bankruptcy filing of Kmart,
one of our largest and longstanding customers, to have an
adverse financial impact on our Company. With the approval of
their debtor-in-possession financing, we have resumed shipments
to Kmart.  However, we do anticipate an impact to sales going
forward as Kmart reduces its store count.  We expect to mitigate
this with continued sales growth of our basic bedding and
bedding accessories products at targeted key growth accounts."

Anticipating a continued competitive retail environment, the
Company now expects sales for 2002 to increase approximately 4%
from 2001, EBITDA of $265 million to $270 million.

For the fiscal year ended Dec. 31, 2001, sales decreased 3% to
$1,765 million versus $1,816 million in 2000.  Operating
earnings for fiscal 2001, before charges associated with the
Eight-Point Plan, were $134 million or 7.6% of sales versus $229
million or 12.6% of sales in the comparable year-ago period.
Net income before charges for the Eight-Point Plan of $11.9
million, was a loss of $15.4 million compared with income of
$66.7 million in 2000 reflecting the impact of lower sales,
increased promotional activity, higher raw material costs,
increased bad debt expense and increased borrowing costs
associated with increased interest rates and higher debt levels.
Fully diluted earnings per share before charges associated with
the Eight-Point Plan decreased to a loss of $0.31 versus income
of $1.34 a year ago.  Including charges associated with the
Eight-Point Plan, net income increased to a loss of $27.3
million in fiscal 2001 compared with a loss of $63.3 million in
the comparable year ago period.  For fiscal 2001, fully diluted
earnings, including charges associated with the Eight-Point
Plan, were a loss of $0.55 per share compared with a loss of
$1.28 in 2000.

WestPoint Stevens Inc., is the nation's leading home fashions
consumer products marketing company, with a wide range of bed
linens, towels, blankets, comforters and accessories marketed
under the well-known brand names of GRAND PATRICIAN, PATRICIAN,
MARTEX, UTICA, STEVENS, LADY PEPPERELL, VELLUX and CHATHAM, and
under licensed brands including RALPH LAUREN HOME, DISNEY HOME,
SANDERSON, DESIGNERS GUILD, JOE BOXER and GLYNDA TURLEY.
WestPoint Stevens is also a manufacturer of the MARTHA STEWART
bed and bath lines.

At December 31, 2001, the company balance sheet reflects total a
shareholders' equity deficit of $778.4 million.

WestPoint Stevens can be found on the World Wide Web at
http://www.westpointstevens.com

DebtTraders reports that Westpoint Stevens Inc.'s 7.875% bonds
due 2005 (WSTVN1) are trading between 33 and 36. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WSTVN1for
real-time bond pricing.


WHEELING-PITTSBURGH: Court Okays Wage Deferral & Ohio Financing
---------------------------------------------------------------
The Official Noteholders' Committee of Wheeling-Pittsburgh
Corporation, Wheeling-Pittsburgh Steel Corporation, and its
related Debtors, appearing through Lawrence M. Handelsman, Esq.,
and Sherry J. Millman, Esq., at Stroock Stroock & Lavan LLP,
tells Judge Bodoh that in the Committee's opinion WPSC is in the
midst of a severe liquidity crisis. In eleventh-hour deals with
two states, WHX Corporation, the ultimate parent of the Debtors,
and the labor union, the Debtors are obtaining cash relief
sufficient to enable WPSC to continue operating through the
end of March 2002.  At that point, WPSC will once again be out
of cash and it is unclear what progress can be made in the
interim to change WPSC's financial and business prospects.

         The Debtors Should Have A Wind-Down Plan Ready

The Noteholders represented by this Committee constitute not
only the major portion of WPSC's creditor body, but also by far
the largest claimholders of WPC.  Although management's efforts
to keep the company alive and to save jobs may be considered
laudable, the Debtors also have a fiduciary duty to their
creditors and they are being derelict in that duty --
particularly as to the WPC creditors -- if they fail to ready a
"wind down" plan for implementation in the unfortunate event
that the Debtor is unable to reorganize.

The Committee states it does not have a formal objection to the
Motion because the transactions contemplated in it are
relatively neutral insofar as the creditors are concerned.
Rather, as watchdog for the WPC estate, the Committee once again
feels compelled to submit this statement to express its
continuing concern that (i) at every juncture in the case WPC's
assets are being put at risk to fund the losses of the steel
company, and (ii) the Debtors' failure to adequately prepare for
an orderly liquidation, as a contingency plan, will cost the
creditors their recoveries if a wind down proves to be the
necessary conclusion of these cases.

              WPSC Loses -- and Loses -- and Loses

When these cases were commenced in November 2000, assets of WPC
were pledged as part of the DIP financing arrangement put in
place to enable WPSC to continue to operate.  In May of 2001,
after the steel company continued to suffer staggering losses,
the Debtors, in a proposed settlement of intercompany disputes
with WHX, attempted to monetize assets of WPC, including its
interest in Pittsburgh-Canfield Corporation and its own
entitlement to recoveries on intercompany claims, again to fund
the failing steel company's operations.  Only through the
vigilance of the Committee did WPC ultimately obtain protection
for the use of its assets in the form of liens on the assets
of WPSC under a junior DIP financing facility.

Less than 5 months later, the steel company was desperate for
another cash infusion, which was the basis for the Debtors
entering into a modified labor agreement with the union and
related agreements with WPX.  Now, another four months later,
the Debtors are seeking to monetize assets so that the steel
company can operate for another brief period.

Mr. Handelsman directs Judge Bodoh's attention to the Debtors
financial statements for the period ending December 31, 2001:

   * Net losses from the Petition Date through December 31, 2001,
     now top $352 million;

   * WPSC posts negative gross profit each month -- since the
     Petition Date, WPSC has sold $934 million of product that
     cost $984 million to manufacture; and

   * the total shareholder deficit at December 31, 2001, stood at
     $355 million -- and the company's getting smaller every
     month.

The Committee's concern is that while the WPC estate might not
be adversely affected by the specifics of the instant
transactions, to the extent that WPSC is not successful in
stemming operating losses and becoming at least cash-flow
breakeven, there is an enormous risk of harm to WPC's creditors.
Under the circumstances, the DIP financing lenders will be more
likely to avail themselves of WPC collateral to satisfy the DIP
financing.  In addition, recoveries under the junior DIP
facility could be compromised if total WPSC asset values erode
through continued operating losses.

Accordingly, WPSC's primary objectives should be protecting its
assets such as its interests in two joint ventures, obtaining
relatively prompt recoveries for creditors before asset values
erode, establishing a reasonable time frame for the
implementation of an orderly shutdown should the reorganization
effort prove futile, and securing funds for the shutdown.
Should the Debtors fail to address these concerns on an
immediate basis, the Committee may be before this Court for
relief that will ensure that the Debtors are meeting their
fiduciary duties to this creditor body.

                       Judge Bodoh Approves
                            The Motion

As no statements, responses or objections were filed other than
the cautionary statement of the Noteholders' Committee, Judge
Bodoh approves the Debtors' requests and grants this Motion on
the terms and conditions stated in it, requiring that the Debtor
give notice of entry of the Order to the various significant
creditor constituencies through the Committees, and the US
Trustee.

                     The Interim Modification

On the oral request of counsel for the Debtors, Judge Bodoh
signs an ex parte Order modifying one paragraph of his Order
approving the wage deferral agreement to authorize the Debtors
to serve the USWA Order, together with a notice of final
hearing, one day later than his prior Order provided. (Wheeling-
Pittsburgh Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


ZILOG INC: Intends to File Prepackaged Chapter 11 by Month-End
--------------------------------------------------------------
ZiLOG(R) Inc., the Extreme Connectivity Company, reported net
sales of $41.4 million for the fourth fiscal quarter ended
December 31, 2001, a small decrease sequentially from its third
quarter sales of $42.7 million. EBITDA was $6.6 million for the
fourth quarter consistent with the third quarter. The Company
ended 2001 with $30.7 million of cash and cash equivalents, as
compared to $26.7 million at the end of the previous quarter.

"We are extremely pleased with the progress we have made in
improving our financial performance during the quarter despite
the difficult economic market," said Jim Thorburn, ZiLOG's Chief
Executive Officer. "We initiated several significant actions in
the past eight months and are now starting to see the benefits
of these decisions. Our restructuring actions are on track to
save approximately $50 million in cash on an annual basis as
compared to Q1 '01 levels. Our intent is to be aggressive in all
areas of our business to achieve this goal."

The Company generated $4 million in cash from operations during
the quarter despite the funding of more than $3 million in
restructuring activities. Additionally, gross margins continued
to improve and were 35% of sales for the quarter, which
represents a 4-percentage point increase over Q3 2001.

ZiLOG recently announced that it launched a solicitation of its
senior note holders and preferred shareholders to support its
recapitalization. Under the plan of reorganization, all existing
debt and equity securities of the Company will be cancelled.
ZiLOG's senior note holders will receive all of the Company's
newly issued common stock, except for 14% that will be issued or
reserved for issuance to the Company's employees, consultants
and directors under a management incentive plan. In addition,
ZiLOG's senior note holders will receive a preferred interest in
the Company's Mod III wafer fabrication plant. The solicitation
follows an agreement in principle reached in November 2001 with
holders of approximately 60% of the par value of the notes.

"Our debt recapitalization plan is now formally in process and
is a huge vote of confidence for the Company," Thorburn said.
"We expect to complete the recapitalization through a
prepackaged Chapter 11 process that should be finalized during
the second quarter of 2002."

The Company's operating loss in the fourth quarter of 2001 was
$2.2 million excluding special charges. Including special
charges of $47.5 million, the Company recorded an operating loss
of $49.7 million for the quarter. These special charges related
primarily to asset write-offs, severance benefits and debt
restructuring expenses. The Company's operating loss in the
third quarter of 2001 and fourth quarter of 2000 were $6.8
million and $18.2 million, respectively. "Our special charges
are consistent with the debt and operational restructuring plans
we set in place to reduce our costs," Thorburn said. "We expect
to have these actions substantially complete by the end of the
first half of 2002 at which time ZiLOG will be well positioned
to focus its resources on growth of its core micrologic
business."

During January 2002, ZiLOG announced the closure of its Austin,
Texas, design center effective immediately. In connection with
this action, the Company expects to record first quarter special
charges of approximately $3.5 million for asset write-offs,
relocation and severance benefits.

ZiLOG's Highlights:

      -- Completed the transfer of probe operations from Nampa,
Idaho, to the Philippines;

      -- Finalized transfer of related products to sub 0.5 micron
wafer fabrication foundries;

      -- Announced plans to move the Company's headquarters from
Campbell, Calif., to San Jose, Calif.

      -- Terminated investment relationship with Qualcore;

      -- Announced termination of Cartezian 32-bit microprocessor
activity in January 2002;

      -- Appointed KPMG LLP as the Company's new independent
auditor.

      -- Announced agreements with certain senior note holders to
support the Company's plan to recapitalize by exchanging $280
million in secured debt for equity. Commenced proceedings to
obtain all remaining note holder approvals. Copies of these
documents were filed with the SEC on January 30, 2002 on Form
8K.

      -- ZiLOG announced the first device in its new UltraSlim
IrDA transceiver family. This product family enables always-on,
power-efficient infrared connectivity to portable electronics
systems. The new family offers the smallest SIR and MIR
transceivers available in their classes. As a result, both
transceivers not only save space, but they also use power so
efficiently that users no longer have to worry about enabling
and disabling the infrared ports on their systems in order to
save on battery life. This is particularly critical with the
advent of Infrared Financial Messaging and the IrDA's recently
announced Universal Wireless "Point & Pay" Standard. IrFM will
allow consumers to use their portable IrDA-enabled mobile phones
and PDAs to point and pay for purchases at locations such as
vending machines, gas pumps and grocery stores.

      -- ZiLOG IrDA solutions are currently under evaluation by
several major cellular handset manufacturers. ZiLOG products
have been designed into the new PDA/Mobile phone of a major PDA
manufacturer. The new PDA/Mobile phone is expected to be
introduced in March 2002.

      -- ZiLOG announced that the eZ80 Webserver (eZ80190) is now
ready for production quantity shipments. The eZ80 enables easy,
cost-effective, direct connections to networks and the Internet.
The eZ80 Webserver was featured in the February 2002 issue of
Circuit Cellar, a trade publication that serves the
semiconductor design community.

      -- The eZ80 Webserver continues to garner attention in the
design community. Last quarter, ZiLOG sold more than 300
development kits and generated significant interest via hands-on
workshops conducted in more than 15 cities in North America, and
extensively in Asia and Europe. ZiLOG is planning a follow-on
seminar series in North America in April 2002 as the Company
releases new eZ80 products.

Other items of interest: Debt restructuring process

The debt restructuring process will, for legal and tax purposes,
require the Company to be recapitalized through a Chapter 11
bankruptcy process. The timing of the Company's debt
restructuring is expected to be as follows:

      -- January 28, 2002 - Solicit all bondholders' and
preferred shareholders' approval of the restructuring plan;

      -- January 30, 2002 - Recapitalization documents filed with
SEC on Form 8-K;

      -- February 26, 2002 - Voting deadline for bondholders and
preferred shareholders;

      -- February 28-March 4, 2002 - File Pre-packaged Chapter 11

      -- April - Court hearing on approval of plan after required
notice periods;

      -- April 30, 2002 - Exit Chapter 11 bankruptcy
(approximately 60 days after filing).

The timing of events outlined above are the Company's current
reasonable estimates and are subject to Court approval.

ZiLOG, Inc. designs, manufactures and markets semiconductors for
the communications and embedded control markets. Headquartered
in San Jose, Calif., ZiLOG employs approximately 800 people
worldwide. ZiLOG maintains design centers in San Jose,
California; Ft. Worth, Texas; Nampa, Idaho; Seattle, Wash.; and
Bangalore, India; as well as manufacturing facilities in Nampa;
and test operations in Manila, Philippines. At December 31,
2001, the company had a total shareholders' equity deficit of
$269.8 million.


* BOND PRICING: For the week of February 11 - 15, 2002
------------------------------------------------------
Following are indicated prices for selected issues:

Amresco 9 7/8 '05            25 - 27(f)
AMR 9 '12                    92 - 94
Asia Pulp & Paper 11 3/4 '05 24 - 26(f)
Bethlehem Steel 10 3/8 '03   12 - 14(f)
Chiquita 9 5/8 '04           89 - 90(f)
Conseco 9 '06                52 - 55
Enron 9 5/8 03               15 - 17(f)
Global Crossing 9 1/8 '04     4 - 5(f)
Level III 9 1/8 '04          36 - 38
Kmart 9 3/8 '06              46 - 47(f)
McLeod 11 3/8 '09            22 - 24(f)
NWA 8.70 '07                 83 - 85
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          66 - 68
USG 9 1/4 '01                83 - 86(f)
Westpoint 7 3/4 '05          28 - 31
Xerox 5 1/4 '03              91 - 93

                           *********

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

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

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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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
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.

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

This material is copyrighted and any commercial use, resale or
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                      *** End of Transmission ***