TCR_Public/020212.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

            Tuesday, February 12, 2002, Vol. 6, No. 30     


ADELPHIA BUSINESS: Myron Kaplan Discloses 5.2% Equity Stake
AETNA INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
ARMSTRONG HOLDINGS: Seeks to Expunge Asbestos-Related PD Claims
BETHLEHEM STEEL: Plan Filing Exclusive Time Extended to July 31
BLOUNT INC: Weak Financial Profile Prompts S&P to Lower Ratings

BURLINGTON: Court Approves Miscellaneous Asset Sale Procedures
CARMIKE CINEMAS: S&P Lifts Default Rating Following Emergence
CHARMING SHOPPES: S&P Assigns BB- to $375MM Senior Secured Loan
CIENA CORP: S&P Revises Outlook to Negative as Revenues Fall
COMDISCO INC: Court Okays Mr. Fortgang as Committee's Counsel

COVENTRY HEALTH: Offers 8-1/8% Notes to Buy Principal's Stake
EINSTEIN/NOAH: Plan Confirmation Hearing Set for March 26, 2002
ENRON CORP: Court Moves Lease Decision Deadline to Year-End
ENRON: Law Firm Probes Citigroup's Sale of Credit Linked Notes
EXODUS: Committee Gets OK to Hire Pachulski Stang as Co-Counsel

FEDERAL-MOGUL: Wants Professor McGovern Appointed as Mediator
FLORSHEIM GROUP: Fails to Meet Nasdaq Listing Requirements
GLENOIT CORP: Asks Court to Further Extend Exclusive Periods
GLOBAL CROSSING: Gets OK to Pay Prepetition Foreign Obligations
HARVARD SCIENTIFIC: Inks Deal to Acquire Smart Access Assets

IBIZ TECHNOLOGY: Completes Convertible Debentures Restructuring
ICG COMMS: DIP Lenders Agree Continued Use of Cash Collateral
ICH CORPORATION: Look for Schedules & Statements Around April 6
INSILCO HOLDINGS: Taps Gleacher to Review Strategic Alternatives
IT GROUP: Seeks Approval of $6 Million Shaw Group Break-Up Fee

INTEGRATED HEALTH: Butler Note Purchase Price Settlement Okayed
KMART CORP: Court Okays Trumbull's Appointment as Claims Agent
KNOWLES ELECTRONICS: Renegotiates Bank Covenants with Lenders
LTV CORP: Retirees Get OK to Hire Watson Wyatt as Consultants
LERNOUT & HAUSPIE: Rejecting Dictaphone Employee Pension Plan

LOG ON AMERICA: Settles Remaining Preferred Holders' Claims
MCLEODUSA INC: Will Be Honoring Prepetition Employee Obligations
MERISTAR HOSPITALITY: Completes $200 Million Senior Notes Offer
METALS USA: Court Okays Salisbury & Newark Asset Sales to Wells
METATEC INT'L: Inks New Long-Term Financing Pact with Bank Group

MOONEY AIRCRAFT: Court Allows AASI to Take Over Management
NATIONAL GOLF: Lenders Forbear Defaults Under Credit Agreement
NATIONSRENT: Committee & UST Balk At Zolfo's $2.5MM Success Fee
OWENS CORNING: Seeks Six-Month Exclusivity Extension
PHAR-MOR INC: Net Loss Tops $7.8 Million in 2002 2nd Quarter

PINNACLE HOLDINGS: S&P Junks Ratings on Likely Bankruptcy Filing
PRANDIUM INC: Unit Bolts on Deal to Sell Hamlet Group to Othello
PSINET INC: Court Extends Exclusive Plan Filing Time to April 30
RELIANCE GROUP: Obtains 90-Day Extension of Exclusive Periods
ROUGE INDUSTRIES: Working Capital Deficit Tops $42MM in Q4 2001

SAFETY-KLEEN: Wants to Expand Arthur Andersen's Audit Engagement
SAKS INC: Comparable Store Sales Rise 2.1% in January
SHILOH INDUSTRIES: S&P Cuts Ratings Citing Near-Term Concerns
STOCKWALK GROUP: Files Chapter 11 Petition with Prepackaged Plan
SUN HEALTHCARE: Court Okays Ernst & Young as Debtors' Advisors

TESORO PETROLEUM: Fitch Places Debt On Rating Watch Negative
TRANSCOM: Union Urges SEC to Probe Comfort Systems Board Member
TRISM INC: Sells Assets & Leases to Bed Rock & Tri-State Prop.
VELOCITY EXPRESS: No Date Yet for Special Shareholders' Meeting
WARNACO GROUP: Wins Nod to Auction Surplus Cut & Sew Equipment

WEBB INTERACTIVE: Sells 1.1 Million Shares to Jona for $1.1MM
WHEELING-PITTSBURGH: Gets OK to Borrow $5M from State of Ohio


ADELPHIA BUSINESS: Myron Kaplan Discloses 5.2% Equity Stake
Mr. Myron M. Kaplan is the beneficial owner of 7,005,133 shares
of the common stock of Adelphia Business Solutions, Inc., which
amount constitutes approximately 5.2% of the total number of
shares of common stock outstanding. This is based on Adelphia's
Information Statement to Stockholders dated January 8, 2002,
which reflected 134,517,284 shares outstanding.  Mr. Kaplan has
sole power to vote, or direct the voting of, and sole power to
dispose of, or direct the disposition of these shares.

Adelphia Business Solutions (ABIZ), formerly Hyperion
Telecommunications, is building a fiber-optic network to provide
integrated communications services to businesses, institutions,
and other telecom service providers. The company offers local
and long-distance phone service, broadband Internet access, and
data networking services. As a result of the economic downturn
that hit the telecom industry, ABIZ has cut back on its plan to
expand nationally. It reduced its workforce by 8% and sold
assets in four states to its parent company, Adelphia
Communications, which has announced plans to spin off the 79%-
owned subsidiary to Adelphia shareholders. At September 30,
2001, the company reported a working capital deficiency of close
to $30 million.

AETNA INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
Debtor: Aetna Industries, Inc.
        a.k.a. Aetna Manufacturing Canada, Ltd.
        24331 Sheerwood Ave.
        PO Box 3067
        Centerline, MI 48015

Bankruptcy Case No.: 02-10418

Type of Business: The Company is a leading direct supplier of
                  high quality modules, welded subassemblies
                  and chassis parts used as original equipment
                  components in the North American automobile

Chapter 11 Petition Date: February 11, 2002

Court: District of Delaware

Judge: Peter J. Walsh

Debtors' Counsel: Mark Minuti, Esq.
                  222 Delaware Ave, Suite 1200
                  P.O. Box 1266
                  Wilmington, DE 19899
                  302 421-6840
                  Fax : 302 421-5873

Estimated Assets: more than $100 million

Estimated Debts: more than $100 million

Debtor's 20 Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
Wells Fargo Bank Minnesota,  Senior Notes          $93,700,000
Lon LeClair
Corporate rust Services
Sixth & Marquette: N9303-120
Minneapolis, MN 55479
Tel: 612 667 4803

Daimler-Chrysler            Trade Debt             $5,997,350
Sarah Abraham
800 Chrysler Drive West
Auburn Hills, MI 48325
Tel: 248 576 5741

General Motors Corp.        Trade Debt             $2,883,522
Michail Duffield
Corporate Material Brokering
PO Box 78000, Dept 78095
Detroit, MI 48278
Tel: 989 757 7205

Shiloh Industries, Inc.     Trade Debt               $673,739
Thomas Dugan
5389 West 130th Street
Cleveland, OH 44130
Tel: 734 454 4000

Manufacturers Products      Trade Debt               $633,822
Michael MaGee
Department # 114201
PO Box 67000
Detroit, MI 48267
Tel: 810 755 0097

E&E Manufacturing Co. Inc.  Trade Debt               $616,597
Rose Mary
c/o New Liberty Bank
PO Box 6447
Plymouth, MI 48170
Tel: 734 457 7600

Treasurer, City of          Taxes                    $386,348
7070 E. Ten Mile Road
Centerline, MI 48015
Tel: 810 757 6800

Armo-Tool Ltd.              Trade Debt               $349,353
Danille Herman
9827 Longswoods Road
R.R. # 32
London, ON NSP 1
Tel: 513 652 3700

Gleason Holbrook Mfg. Co.   Trade Debt               $328,332
Don Gleason
36435 Groesbeck Highway
Clinton Twp., MI 48035
Tel: 810 791 2320

Ace Packaging systems, Inc. Trade Debt               $397,548
Heather Weahue
3746 Collection
Center Drive
Chicago, IL 60693
Tel: 734 586 9800

11 Powerlasers Limited      Trade Debt               $318,978
Phil Longaphil
55 confederation Parkway
Concord, Ontario L4K4Y

Radar Industries            Trade Debt               $264,866
Rochelle Melcher
28101 Groesbeck Hwy.
Roseville, MI 48066
Tel: 810 779 0300

MST Steel Corporation       Trade Debt               $243,299

Marwood Metal               Trade Debt               $195,550
   Fabrication Limited

Detroit Electro-Coating,    Trade Debt               $193,776

General Electric Capital    Trade Debt               $188,747

City of Sterling Heights    Taxes                    $176,890

City of Warren Treasurer    Taxes                    $163,050

Melaldyne                   Trade Debt               $149,108

Universal Engineering       Trade Debt               $129,054
   Stamping Limited

ARMSTRONG HOLDINGS: Seeks to Expunge Asbestos-Related PD Claims
Armstrong Holdings, Inc., and its debtor-affiliates bring an
Omnibus Objection to certain asbestos-related property damage
claims brought against one or more of the Debtors.  The Debtors
say that Nitram and Desseaux have no history with asbestos-
containing products, and no asbestos-related claims (personal
injury or property damage) have been asserted against them as of
the Petition Date.  Therefore, the primary objector here is AWI.

The Debtors ask Judge Newsome to disallow and expunge these
asbestos PD claims without prejudice to the Debtors' right to
object to any of these claims on any other ground whatsoever.

In support of its Objection, AWI repeats its oft-stated claims
that its floor-covering products, while containing asbestos, are
non-friable and therefore not harmful, and further that there
have been very few asbestos-related property damage claims made,
and none with merit.

When the Debtors filed their Schedules, they listed
approximately 182,584 claims, of which only 6 were identified by
the Debtors as arising out of or relating to asbestos-related
property damage, and all of these were classified by the Debtors
as contingent, disputed and unliquidated.  The Debtors object to
allowance of any of these proofs of claim and ask Judge Randall
Newsome to disallow and expunge them in their entirety:

      Claimant                               Claim Amount
      --------                               ------------
      Division St. Account                     $5,000,000
      Marc Associates                          $1,000,000
      Water St. Associates                     $1,000,000
      Ameritech, Inc.                          $5,000,000
      Banc One                               $120,000,000
      Comerica Bank                           $12,000,000
      Detroit Edison Co.                          $30,000
      Hall Financial Group                    $15,000,000
      Huron View Properties                      $250,000
      Mt. Ebo Venture                          $1,000,000
      Building Co.                               $500,000
      Park Shelton Apartments                  $1,000,000
      Pine & Kearney JV                        $1,000,000
      Port Huran Office Center LLP             $1,000,000
      Ramco-Gershenson, Inc.                  $10,000,000
      Russ Building Joint Venture              $1,000,000
      Safeway-Willard Venture                  $1,000,000
      Seven Hanover Associates                 $1,000,000
      Consumers Energy Co.                    $20,300,000
      TG Apartments, LLC                         $250,000
      TG Canton, Inc., &
         Cherry Hill Condominium Association     $250,000
      TG Kalamazoo, LLC                          $250,000
      TG Land LLC                                $250,000
      TG Marsham Inc.                            $250,000
      TG Midland LLC                             $250,000
      TG Properties, Inc.                        $250,000
      TG Warren, Inc.                            $500,000
      The Tobin Group                            $500,000
      Trizechaen Office Properties, Inc.      $25,000,000
      Wayne County                            $50,000,000
      Wezler-Arnon Investment Co.
         dba Home Depot                        $1,200,000
      Weiler-Benenson 4th Avenue Venture       $1,000,000

All of these claimants are represented by Phillip J. Goodman,
PC, of Birmingham, Michigan.

In addition, the Debtors object to the proofs of claim of:

      Claimant                               Claim Amount
      --------                               ------------
      California Dept. of General Services   $150,650,000
      California Dept. of General Services    $56,680,000
      California Dept. of General Services   $150,580,330
      Commonwealth of Pennsylvania            $42,000,000
      State of Louisiana                     $102,823,663
      New York City Housing Authority        Unliquidated
      State of New York                      Unliquidated
      Otter Tail Power Company               Unliquidated
      Sealing Equipment                      Unliquidated
      State of Kansas                        Unliquidated
      University of Pennsylvania                 $500,000
      State of Washington                     $22,241,842
      State of Wyoming                           $385,720
(Armstrong Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

BETHLEHEM STEEL: Plan Filing Exclusive Time Extended to July 31
Judge Lifland extended Bethlehem Steel's exclusive period within
which to file a plan until July 31, 2002 and its exclusive
period during which to solicit acceptances of that plan through
September 30, 2002. (Bethlehem Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

BLOUNT INC: Weak Financial Profile Prompts S&P to Lower Ratings
Standard & Poor's lowered its corporate credit, senior secured,
and subordinated debt ratings on Blount Inc. At the same time,
all the ratings were removed from CreditWatch where they were
placed October 25, 2001. The outlook is negative.

In addition, Standard & Poor's affirmed its bank loan rating on
Blount. The company's bank loan is now rated one notch higher
than the corporate credit rating, reflecting the facility's
senior secured and first priority claim status offering
reasonable recovery prospects.

The company's $150 million senior secured notes are now rated
two notches below the corporate credit rating. The senior notes
share equally and ratably in only certain of the assets relative
to the bank facility, which has a first priority claim on the
company's current assets. Therefore the notes would be in a
disadvantaged position in a default situation and full recovery
prospects would be unlikely.

The downgrades reflect Blount's very weak financial profile,
which offsets its strong position for outdoor products, and
decent position for industrial products. The rating actions take
into account the recent sale of the company's Sporting Equipment
Group (SEG), which helped reduce debt, however, the company's
debt burden remains onerous, not withstanding the sale.
Additionally, Standard & Poor's expects credit protection
measures to remain weak over the intermediate term.

Blount is the world's largest producer of saw chains and chain-
saw guide bars, and a leading producer of forestry equipment.
Blount's operating income is down due to the soft pulp and paper
markets and depressed timber/industrial equipment markets.
Operating income for the first nine months of 2001 was about $64
million (on a pro forma basis, adjusting for the sale of SEG)
compared with around $80 million in 2000. As a result, credit
protection measures are very weak, with total debt to EBITDA of
around 7.5 times and interest coverage slightly above 1x. During
2001, management continued to focus on improving profitability
and cash flow by reducing headcount, delaying capital spending,
closing facilities, and selling assets.

On December 7, 2001, Blount completed the sale of SEG to Alliant
Techsystems Inc. for gross proceeds of about $235 million. The
company used the proceeds to reduce bank debt by about $170
million. Total debt as of September 2001 was around $880
million. In addition, the company amended its bank credit
facility and revised its bank covenants to reflect the sale of

Although Blount's financial flexibility and liquidity have
improved due to the recent asset sale, credit measures remain
very stretched. Blount's credit measures are expected to remain
weak over the intermediate term with total debt to EBITDA in the
7x area and interest coverage in the 1.0x-1.5x range.

The bank credit facility is secured by substantially all of the
company's assets, offering reasonable prospects for recovery.
The company's cash flows were significantly discounted to
simulate a default scenario and capitalized at an EBITDA
multiple reflective of the market. Under this simulated downside
case, collateral value is expected to be sufficient to cover the
fully drawn bank facility if a payment default were to occur.

                    Outlook: Negative

Blount is expected to improve operating results and cash flow
generation as cost savings are realized, and the company's end
markets stabilize or improve. Failure to improve operating
results, realize cost savings, or a further weakening in the
company's end markets could result in increasing liquidity
pressures and additional downgrades.

              Ratings Lowered, Off CreditWatch

     Blount Inc.                       TO           FROM
       Corporate credit rating         B-           B
       Senior secured debt             CCC          B
       Subordinated debt               CCC          CCC+

              Rating Affirmed, Off CreditWatch

     Blount Inc.
       Bank loan rating                B

BURLINGTON: Court Approves Miscellaneous Asset Sale Procedures
Burlington Industries, Inc., and its debtor-affiliates obtained
Court's approval of uniform procedures to complete asset
sales falling within certain specified economic parameters.  

"The Debtors propose to utilize the Miscellaneous Sale
Procedures to obtain more expeditious and cost-effective review
by interested parties, in lieu of individual Court approval, of
certain sales involving smaller, less-valuable, non-core assets
outside the ordinary course of business," explained Rebecca L.
Booth, Esq., at Richards, Layton & Finger PA, in Wilmington,

All other sale transactions outside of the ordinary course of
the Debtors' businesses would remain subject to individual Court

In general, the Miscellaneous Sale Procedures will apply only to
asset sale transactions outside the ordinary course of business
involving, in each case:

(a) the transfer of:

      (i) less than $1,000,000 in Net Consideration, on account
          of the assets to be sold, or

     (ii) less than $5,000,000 in Net Consideration, if the
          transaction involves only the transfer of Equipment
          and the fair market value of each piece of Equipment
          is less than $150,000; and

(b) aggregate cure costs of less than $200,000 in connection
    with the assumption and assignment of any related executory
    contracts and unexpired leases.

In addition, Ms. Booth continues, parties-in-interest will
receive notice of proposed transactions under the Miscellaneous
Sale Procedures and have an opportunity to object to such

The Sale Notices would be served on these Interest Parties:

    (1) the primary parties representing the interests of
        unsecured creditors of the Debtors' estates (i.e., the
        U.S. Trustee and counsel to the Creditors' Committee);

    (2) the primary secured creditors in these cases (i.e.,
        counsel to the Secured Lenders);

    (3) the other parties with potential interests in the assets
        at issue (i.e., the known holders of liens, claims,
        encumbrances and other interests in the assets); and

    (4) the parties to executory contracts and unexpired leases
        proposed to be assumed and assigned if any.

Furthermore, Ms. Booth adds, the Miscellaneous Sale Procedures
also permit the Debtors to engage in certain de minimis asset
sales outside of the ordinary course of business without further
notice to parties in interest or approval from the Court.

Ms. Booth made it clear that the Miscellaneous Sale Procedures
specifically were not intended to encompass routine sales of
inventory, surplus equipment, production by-products or scrap
material that, prior to the Petition Date, the Debtors
conducted, and continue to conduct, in the ordinary course of
their businesses.  The Debtors contended that these Ordinary
Course Sales were clearly ordinary course transactions and,
therefore, would not require further Court approval or the
review of other parties pursuant to the Miscellaneous Sale

Pursuant to the terms of the Debtors' post-petition financing
agreement, the Debtors are prohibited from selling assets
"except for:

  (i) sales of inventory, fixtures and equipment in the ordinary
      course of business,

(ii) dispositions of surplus, obsolete or damaged equipment no
      longer used in production,

(iii) sales of Foreign Factoring Receivables which shall at no
      time exceed in the aggregate the Dollar equivalent of
      $15,000,000 based on the applicable Exchange Rate at any

(iv) sales in arm's length transactions, at fair market value
      and for cash in an aggregate amount not to exceed
      $25,000,000, and

  (v) following the sales permitted by clause (iv) above, sales
      in arm's length transaction, at fair market value and for
      cash in an aggregate amount not to exceed an additional

Accordingly, the Miscellaneous Sale Procedures are permitted
under the Post-petition Credit Agreement because:

  (a) sales of any Equipment under the Miscellaneous Sale
      Procedures generally will qualify as sales of "surplus,
      obsolete or damaged equipment no longer used in
      production", and

  (b) the Debtors currently do not believe that the aggregate
      amount of other sales consummated under the Miscellaneous
      Sale Procedures will exceed the limits established by
      Section 6.11(iv) and (v) of the Post-petition Credit
      Agreement.  (Burlington Bankruptcy News, Issue No. 7;   
      Bankruptcy Creditors' Service, Inc., 609/392-0900)   

CARMIKE CINEMAS: S&P Lifts Default Rating Following Emergence
Standard & Poor's raised its corporate credit rating on Carmike
Cinemas Inc., to triple-'C'-plus from 'D'. The current outlook
is stable.

At the same time, Standard & Poor's assigned its triple-'C'-
minus rating to the company's new 10.375% $154 million
subordinated notes. All previous issue ratings are withdrawn.

The rating actions follow the company's recently completed
bankruptcy reorganization and the funding of its new capital
structure. Carmike's debt now largely consists of the new
subordinated notes and an unrated bank loan consisting of a $50
million revolving line of credit and $231 million in term debt.

The ratings reflect Carmike's still-aggressive financial
profile, moderately high near-term principal repayments, and
improvements in the company's theater circuit. In addition, the
ratings incorporate consideration of the still-troubled, but
improving, industry operating environment and Standard & Poor's
view that Carmike will need to upgrade its theater circuit to
maintain and improve its market position.

Carmike is the third-largest theater chain based on screen
count, with approximately 2,300 screens in 35 states. The
quality of Carmike's circuit was improved by the closing of more
than 130 of its unprofitable theaters. Nonetheless, Carmike
still has a relatively high percentage of older theaters and a
low percentage of screens with popular features such as stadium
seating. In addition, more than 10% of its venues are second-run
theaters that are generally less profitable than first-run
locations (many of these will close in the near term). These
characteristics make Carmike's circuit more vulnerable to
underperformance if faced with new competition and suggest the
need for reinvestment. Still, the limited revenue potential of
Carmike's markets and the low level of industry building
activity provide a degree of insulation in the near term. The
company's competitive position benefits from having full access
to films at more than 70% of its screens and its cost structure
is helped by the lower real estate, rental costs, and salaries
of its markets.

Total debt to pro forma EBITDA is high at more than 5.5 times at
inception and should improve moderately by year-end due to
required debt reductions. Pro forma EBITDA coverage of interest
expense should exceed 2x in 2002, although EBITDA plus rent
(EBITDAR) coverage of interest expense plus rent should be
tighter at about 1.4x. Carmike historically generated favorable
margins relative to its peers and its pro forma EBITDAR margins
of 32.8% for 2002 are modestly higher than historical levels.
Pro forma margins should benefit from the company's closure of
underperforming theaters, however, profitability in 2002 could
be challenged if 2001's favorable industry attendance levels are
not maintained, especially given the lingering oversupply of
screens. Debt maturities start at relatively high levels and
increase modestly over time. These cash obligations could absorb
the majority of operationally generated cash, especially if
profits fall short of expectations, and limit Carmike's ability
to reinvest in its circuit. As a result, it will be important
for Carmike to maintain compliance with its financial covenants
and availability under its line of credit.

                         Outlook: Stable

Ratings stability will depend on Carmike's ability to generate
sufficient cash flow to meet its debt repayment schedule, comply
with its financial covenants, and gradually improve the quality
of its theater circuit.

                         Rating Raised
     Carmike Cinemas Inc.                   To             From
        Corporate credit rating             CCC+             D

                        Rating Assigned

     Carmike Cinemas Inc.                         Rating
        $154 mil. sr. sub. notes due 2009          CCC-

CHARMING SHOPPES: S&P Assigns BB- to $375MM Senior Secured Loan
Standard & Poor's assigned its double-'B'-minus rating to
Charming Shoppes Inc.'s new $375 million senior secured bank
facility.  At the same time, Standard & Poor's affirmed its
double-'B'-minus corporate credit and single-'B' subordinated
debt ratings on the company. The outlook is stable.

The credit facility is rated the same as the corporate credit
rating. The bank facility consists of a $75 million term loan
and a $300 million revolver, and matures on August 16, 2004.
Financial covenants include minimum EBITDA and tangible net
worth. The facility is secured by the company's merchandise
inventory, furniture, fixtures, and certain real properties and
other assets. The revolving facility is subject to borrowing
limitations based on eligible inventory and the value of certain
real property, and a three-year term loan. Standard & Poor's
assessed the value of the company's discrete assets based on the
market values using outside appraisals, the assets' potential to
retain value over time, and an orderly liquidation scenario.
Although the bank facility derives strength from its secured
position, under a simulated default scenario it is uncertain
that the collateral value would be sufficient to cover the
entire loan.

The ratings on Charming Shoppes reflect the company's high
business risk, given its participation in the highly competitive
and volatile specialty apparel industry. This is mitigated,
somewhat, by the company's good credit protection measures.
Charming Shoppes operates more than 2,400 women's specialty
apparel stores in 48 states, primarily under the names Fashion
Bug, Fashion Bug Plus, Catherine's Plus Sizes, and Lane Bryant.

After a period of consistent sales and profit growth, Charming
Shoppes' sales were impacted by the weakening economy, resulting
in a comparable-store sales decline of 4.0% in 2001 and a
decline in its operating margin to 13.1% for the trailing 12
months ended Nov. 3, 2001, from 15.2% in the same period the
previous year. The margin erosion is due to the lack of sales
leverage, higher promotional activity, and an increase in
occupancy expense. Still, the company's operating results have
improved since 1998. Same-store sales advanced 0.5% in 2000 on
top of increases of 8.7% in 1999 and 3.2% in 1998. In recent
years, management has closed underperforming stores, improved
product sourcing, streamlined distribution functions, and
realigned the pricing and merchandise strategy to better
target its lower- to middle-income Fashion Bug customer. The
company announced in January 2002 its plans to close its Added
Dimension/Answer chain (77 stores) and 130 underperforming
Fashion Bug stores. In addition, the company has targeted the
faster-growing large-size women's apparel segment, expanding its
plus-size Fashion Bug business with the acquisitions of
Catherines Stores, Modern Woman, and Lane Bryant.

Credit protection measures remain good, with EBITDA coverage of
interest 4.7 times and funds from operations to total debt of
23.2%. Leverage is moderate with total debt to EBITDA at 3.1x.
Financial flexibility is provided by a $375 million secured
credit facility, of which $111 million was available as of
November 3, 2001.

                      Outlook: Stable

Cash flow protection measures are expected to remain
satisfactory for the rating category as the company's operating
performance should remain relatively stable due to its position
in the faster-growing large-size women's specialty apparel

CIENA CORP: S&P Revises Outlook to Negative as Revenues Fall
Standard & Poor's said that it affirmed its single-'B'-plus
corporate credit and senior unsecured debt ratings on Ciena
Corp. The ratings outlook is revised to negative from stable,
reflecting a substantially larger-than-expected decline in
revenues for the quarter ended January 31, 2002, and likely
further revenue declines in a highly uncertain
telecommunications market.

Ratings continue to reflect Linthicum, Maryland-based Ciena's
narrow business position, substantial leverage, and the risks of
continuing technology evolution, offset by the company's good
financial flexibility. Ciena, which provides optical transport
systems, principally used in long-haul networks, remains heavily
reliant on a very limited customer base, with two customers
representing more than 50% of the company's sales in the fiscal
year ended October 31, 2001.

Sales have been declining since the peak $458 million reached in
the July 2001 quarter. On February 5, 2002, the company revised
its guidance for the January 2002 quarter's revenue to $160
million, from earlier expectations of about $240 million; final
results will be announced on February 21, 2002. Significantly,
the January quarter had historically been relatively strong,
as service providers renewed their capital expense budgets, but
that was not the case this year. Currently, the company expects
revenues for the April quarter to be flat to lower than January
levels, although conditions remain unclear.

While the company is restructuring to reduce its workforce by
about 12%, it will still report an operating loss for fiscal
2002. Operating cash flows for the year are now expected to be
negative, compared to previous breakeven guidance, as the
company continues to invest in its metropolitan fiber-optic
technologies. Still, with about $1.4 billion in cash, the
company's financial flexibility should remain sufficient for
operating requirements during the current year.

                       Outlook: Negative

The company's substantial reliance on a very limited customer
base and highly uncertain business conditions could lead to
significant further declines in revenues. Should conditions not
stabilize in the next few quarters, ratings could be lowered.

COMDISCO INC: Court Okays Mr. Fortgang as Committee's Counsel
The Official Committee of Unsecured Creditors of Comdisco, Inc.,
and its debtor-affiliates obtained Court's approval to retain
Chaim J. Fortgang as its counsel in these chapter 11 cases, on
an hourly basis at a rate of $750 per hour.

Among the professional services Mr. Fortgang may be called to
render are:

  (a) advisory, strategy and decision-making associated with
      negotiating the proposed sale transactions in conjunction
      with other advisors;

  (b) advising the Committee with respect to a plan of
      reorganization which may be proposed;

  (c) advocating the Committee's position in pleadings and in
      court appearances;

  (d) representing the Committee with respect to other
      transactions which may be proposed;

  (e) assisting in the examination of the Debtors' affairs and
      review of the Debtors' operations; and

  (f) attending hearings, and generally advocating positions and
      performing other professional services which further the
      interests of the creditors represented by the Committee.

Mr. Fortgang will work closely with Latham & Watkins -- the
Committee's proposed co-counsel -- so as not to duplicate
efforts on behalf of the Committee.

The Committee intends to reimburse Mr. Fortgang of actual
expenses incurred in connection with the case that are not fixed
and routine overhead expenses.  Among other things, these
expenses include: telephone and telecopier toll and other
charges, mail and express mail charges, special or hand delivery
charges, document processing, photocopying charges, travel
charges, expenses for "working meals", computerized research,
and transcription costs. ( (Comdisco Bankruptcy News, Issue No.
20; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

COVENTRY HEALTH: Offers 8-1/8% Notes to Buy Principal's Stake
Principal Health Care, Inc. is selling 7,000,000 shares of
Coventry Health Care, Inc.'s common stock. Coventry Health Care
will not receive any proceeds from the sale of the shares by
Principal.  Principal has granted the underwriters an option to
purchase up to 1,050,000 additional shares of common stock to
cover over-allotments.

Coventry's common stock is listed on the New York Stock Exchange
under the symbol "CVH." The last reported sale price of the
common stock on the New York Stock Exchange on January 28, 2002,
was $20.15 per share.

Concurrently with this offering of common stock, Coventry Health
Care is offering, pursuant to a separate offering memorandum,
$175.0 million aggregate principal amount of its 8-1/8% senior
notes due 2012 to qualified institutional buyers under Rule 144A
under the Securities Act of 1933, as amended, and to persons
outside the United States pursuant to Regulation S under the
Securities Act. The Company will use the net proceeds from the
offering of the senior notes and cash on hand to purchase the
7,053,487 shares of its common stock that currently are owned by
Principal and are not being sold in this offering and a warrant
owned by Principal to purchase up to 3,072,423 shares of
Coventry Health Care's common stock. The closing of this
offering of common stock is conditioned upon the substantially
concurrent closing of the offering of the senior notes and the
purchase, from Principal, of the shares of Coventry Health
Care's common stock and the warrant.

Created in 1998 when Coventry Corporation acquired Principal
Financial Group's health care unit (doubling its size), the firm
provides managed health care services to almost 1.5 million
enrollees in about 15 states, primarily in the Midwest and Mid-
Atlantic regions. Its plans include point of service, HMOs, and
PPOs, as well as Medicare and Medicaid products. The company
also administers self-insured health plans for large employers.
Coventry has acquired Wellpath, a subsidiary of Duke University
Health Systems. Principal Life Insurance, a unit of Principal
Financial, owns more than 25% of the firm. At September 30,
2001, the company had a working capital deficiency of $186

EINSTEIN/NOAH: Plan Confirmation Hearing Set for March 26, 2002
New World Restaurant Group, Inc. (OTC Bulletin Board: NWCI.OB)
announced that it had reached agreement on February 5 in the
U.S. Bankruptcy Court, District of Arizona, to support
confirmation of a modified Plan of Reorganization presented by
the administrator appointed to wind up the bankruptcy estates of  
ENBC, Inc. (formerly known as Einstein/Noah Bagel Corp.) and its
majority owned subsidiary ENBP, L.P. (formerly known as
Einstein/Noah Bagel Partners, L.P.).

In addition, the other principal parties in the case have
announced their support for the Plan, and the Court has
scheduled a confirmation hearing for March 26, at which time the
Plan is expected to be confirmed. As a result, New World has
withdrawn its previous plan.

"We are very pleased to report on this agreement which sets the
stage for a speedy resolution of the estates," said New World
General Counsel Michael Konig.

New World is a leading company in the 'fast/quick casual'
sandwich industry. The Company operates stores primarily under
the Einstein Bros and Noah's New York Bagels brands and
primarily franchises stores under the Manhattan Bagel and
Chesapeake Bagel Bakery brands. As of October 2, 2001, the
Company's retail system consisted of 494 company-owned stores
and 294 franchised and licensed stores. The Company also
operates three dough production facilities and one coffee
roasting plant.

ENRON CORP: Court Moves Lease Decision Deadline to Year-End
Judge Gonzalez extended the period within which Enron
Corporation and its debtor-affiliates may decide whether to
assume, assume and assign, or reject Unexpired Leases to
December 31, 2002 -- except for a lease agreement with Silicon
Valley Telecom Exchange LLC.  Judge Gonzalez intends to issue a
separate order regarding the Silicon Valley Lease. (Enron
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

ENRON: Law Firm Probes Citigroup's Sale of Credit Linked Notes
The law firm of Wechsler Harwood Halebian & Feffer LLP is
investigating reports that Citigroup Inc., may have misled
investors as to Enron's true financial condition in connection
with Citigroup's sale of $1.4 billion in credit-linked notes
which were directly tied to Enron's financial condition and
performance.  Citigroup sold the $1.4 billion of notes in order
to protect Citigroup's huge lending liability position with
Enron Corp.  The notes were sold between August 2000 and May
2001.  The largest sale of the notes occurred in May 2001 when
$885 million were issued.

Under the terms of the notes, upon Enron's bankruptcy, the funds
that purchasers invested to acquire the notes became the
property of Citigroup, and note purchasers were relegated to
Citigroup's position as a creditor in the Enron bankruptcy
proceeding.  As a tier one lender to Enron, Citigroup was likely
privy to negative and adverse Enron financial information not
available to other investors at the same time that the notes
were sold, and Citigroup may have protected its own financial
position at the expense of note purchasers who will likely
suffer very substantial losses.  Wechsler Harwood is seeking
additional information concerning these issues, and information
as to what note purchasers were told with respect to Enron's
financial condition. Wechsler Harwood is active in major
litigations pending in federal and state courts throughout the
United States and has taken a leading role in many important
actions on behalf of defrauded shareholders and investors. The
Wechsler Harwood Web site -- has more  
information about the firm.

If you would like to discuss the matter further or have any
additional information please contact John Halebian, Esq. at, or contact:

    Wechsler Harwood Halebian & Feffer LLP
    488 Madison Avenue 8th Floor
    New York, New York  10022
    Phone: 877-935-7400 (Toll Free)
    Attention: Ramon Pinon, IV,
               Wechsler Harwood Shareholder Relations Department

DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRON2) are trading between 16 and 18.5. See  
real-time bond pricing.

EXODUS: Committee Gets OK to Hire Pachulski Stang as Co-Counsel
The Official Committee of Unsecured Creditors of Exodus
Communications, Inc., and its debtor-affiliates obtained
approval of the Court with an order authorizing the employment
and retention of Pachulski Stang Ziehl Young & Jones P.C. as its
co-counsel in the above-captioned cases nunc pro tunc to October
11, 2001.

The Committee wanted to retain Pachulski as its attorneys
because of the firm's extensive experience and knowledge in the
field of debtors' and creditors' rights and business
reorganizations  under chapter 11 of the Bankruptcy Code and
because of the firm's expertise, experience, and knowledge
practicing before  this Court.

Thus, the Committee received approval of the nunc pro tunc
retention of Pachulski as it commenced work on several matters
requiring immediate attention in connection with the Debtors'
chapter 11 cases, including reviewing the first day orders and
commenting on the Debtors' ongoing bankruptcy proceedings,
immediately upon its retention on October 11, 2001. The
Committee anticipates that Pachulski will assist by:

A. serving as Delaware counsel to the Committee;

B. preparing necessary applications, motions, answers, orders,
     reports and other legal papers on behalf of the Committee;

C. appearing in court to present necessary motions, applications
     and pleadings and to otherwise protect the interests of the
     Committee; and

D. performing all other legal services for the Committee that
     may be necessary and proper in these proceedings.

The principal attorneys and paralegals presently designated to
represent the Committee and their current standard hourly rates

                Laura Davis Jones       $550
                James E. O'Neill         375
                Michael P. Migliore      215
                Timothy M. O'Brien       105
(Exodus Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

FEDERAL-MOGUL: Wants Professor McGovern Appointed as Mediator
Federal-Mogul Corporation, its debtor-affiliates and the
Official Committee of Asbestos Claimants move the Court to
appoint Professor Francis McGovern as Mediator and direct that
Prof. McGovern report back to the Court on the status of the
mediation process.

James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones
P.C. in Wilmington, Delaware, submits that Professor Francis E.
McGovern is well-qualified to serve as mediator in these cases
and has significant experience in mass tort cases.  Prof.
McGovern is presently serving as a mediator in the Babcock &
Wilcox asbestos-related bankruptcy cases and has served as a
special master, court expert, or other neutral party in numerous
mass tort cases, including Johns-Manville, UNR, National Gypsum,
Celotex Corporation, Dow Corning and A.H. Robbins.  The Debtors
and the Asbestos Claimants' Committee believe that Prof.
McGovern's experience makes him well-qualified to serve as
mediator in Federal-Mogul's chapter 11 cases.

Mr. O'Neill tells the Court that the Debtors don't think
mediation will adversely affect or delay any litigation or
proceedings in the Court and assure the Court that the pendency
of the mediation will not be used by any party as an excuse to
postpone any matter that the parties may choose to litigate
before the Court.  Further, in no event will the mediator be
limited in the performance of his duties by the fact that a
given matter in these cases may be pending before either the
District Court or Bankruptcy Court.

Mr. O'Neill submits that the Debtors and the Asbestos Committee
intend for the mediator to report to the District Court and
Bankruptcy Court on the status of mediation but in no event will
the mediator disclose the details of any settlement discussions.

             Unsecured Creditors' Committee Objects

The Official Committee of Unsecured Creditors objects to the
Motion to appoint mediator in these cases because of the issue
of confidentiality.  The Unsecured Creditors' Committee seeks
clarification that the Confidentiality of the Mediation
Proceedings is fully applicable to the requested mediation and
that nothing in the motion or proposed order detracts from or
modifies the confidentiality requirement of Local Rule 9019-3.

Eric M. Sutty, Esq., at The Bayard Firm, in Wilmington,
Delaware, explains that the Committee wants to be certain that
both the substance and the details of any settlement discussions
are held in confidence.  If Prof. McGovern is permitted to
disclose the substance of settlement discussions, the Committee
fears that disclosure would hurt negotiations and hobble the
mediation process. (Federal-Mogul Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

FLORSHEIM GROUP: Fails to Meet Nasdaq Listing Requirements
Florsheim Group Inc. (Nasdaq:FLSC), said it has received notice
from Nasdaq Stock Market, Inc., indicating that the Company
fails to comply with the net tangible assets, market
capitalization, and net income requirements for continued
listing on the Nasdaq SmallCap Market, as set forth in
Marketplace Rule 4310(c)(2)(B), and that the Company's common
stock is subject to delisting.

Nasdaq further advised that the Company's common stock will be
delisted at the opening of business on February 12, 2002.

The Company meets the eligibility criteria to have its common
stock quoted on the OTC Bulletin Board (OTCBB), and the common
stock may be quoted on the OCTBB following delisting from the
Nasdaq SmallCap Market. The OTCBB is a regulated quotation
service that displays real-time quotes, last-sale prices, and
volume information in over-the-counter securities. Information
regarding the OTCBB can be found on the internet at  

Florsheim Group Inc., designs, markets, and sources a diverse
and extensive range of products in the middle to upper price
range of the men's quality footwear market. Florsheim
distributes its products in more than 6,000 department stores
and specialty store locations worldwide, through approximately
122 company-operated specialty and outlet stores and 43 licensed
stores worldwide.

DebtTraders reports that Florsheim Group Inc.'s 12.750% bonds
due 2002 (FLSC1) are trading between 21 and 22. See  
real-time bond pricing.

GLENOIT CORP: Asks Court to Further Extend Exclusive Periods
Glenoit Corporation and its Debtor-Affiliates asks the U.S.
Bankruptcy Court for the District of Delaware to expand their
exclusive period during which to file a chapter 11 plan through
February 25, 2002.

The Debtors point out that they're asking for this extension
solely to finalize and obtain consensus on their plan.  Before
seeking this extension, the Debtors circulated a draft plan to
the Secured Lenders and the Unofficial Noteholders Committee.
The Debtors remind the Court that their counsels have also
discussed the terms of the plan with the U.S. Trustee.  However,
the Secured Lenders and the Unofficial Noteholders Committee
have both requested a few additional weeks to review the plan.

A hearing on this Motion is scheduled for February 21, 2002.

Headquartered in New York City, Glenoit Corporation is a
domestic manufacturer of small rugs, knit pile fabrics and an
importer and manufacturer of home products such as quilts,
comforters, shams, shower curtains, table linens, pillows and
pillowcases with operations in North Carolina, Ohio, California
and Canada. The Company filed for Chapter 11 protection on
August 8, 2000. Joel A. Waite at Young, Conaway, Stargatt &
Taylor represents the Debtors in their restructuring efforts.

GLOBAL CROSSING: Gets OK to Pay Prepetition Foreign Obligations
Global Crossing Ltd., and its debtor-affiliates sought and
obtained authority to pay approximately $25,000,000 of pre-
petition obligations owed to those Foreign Creditors the Debtors
reasonably determine lack minimum contacts with the United

Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP in New
York, New York, relates that to effectively operate the Network
and provide seamless communications services to their customers
in the multitude of countries outside of the United States, the
Debtors order and receive goods and services from vendors,
service providers, landlords and governments in each  
jurisdiction in which they operate outside of the United States.
The goods and services provided by the Foreign Creditors allow
the Debtors' to sell service, maintain the Network, and
administer the Debtors' properties around the world. The Debtors
estimate that, as of the Commencement Date, they have
$25,000,000 in outstanding obligations to Foreign Creditors for
goods and services received and taxes owed in the prepetition

Mr. Walsh explains that the Global Crossing Network has been
engineered from conception to be a seamless, broadband, global
city to city integrated network. The integrated global reach of
the Debtors' Network is the key component of the Debtors'
business plan, as it distinguishes Global Crossing from its
competitors, and upon which the Debtors' assets derive their
ultimate value.

Mr. Walsh fears that the failure to satisfy the obligations of
certain Foreign Creditors could have a ruinous effect upon the
Debtors' efforts to reorganize. Although section 362 of the
Bankruptcy Code provides that the filing of a chapter 11
petition "operates as a stay, applicable to all entities," of
creditor remedies, the power of a United States court to enforce
its jurisdiction against an entity without a presence in the
United States is dubious. Indeed, in the circumstances of these
cases, as many of the Foreign Creditors lack minimum contacts
with the United States, the Court will be unable to prevent such
Foreign Creditors from acting in contravention of and violating
the Automatic Stay by pursuing remedies against the Debtors'
property located outside of the United States.

Absent payment of prepetition obligations, Mr. Walsh submits
that certain Foreign Creditors will likely cease providing the
services necessary to maintain operation of the Debtors' Network
until their claims are paid in full. Furthermore, Foreign
Creditors may:

A. take enforcement action under local law,

B. move to revoke the licenses held by the Debtors and their

B. seize the Debtors' assets located in foreign countries,

D. bring civil and, in some cases, even criminal actions against
     the Debtors' officers and directors.

Without continuance of the Debtors' foreign operations, Mr.
Walsh claims that the Debtors will be unable to operate their
Network and will cause large segments of the Debtors' Network to
"go dark," cutting service to entire areas of the world and
thereby destroying the value of the Network. Uninterrupted
foreign operations are thus essential to the maintenance of the
Debtors' global Network. If the value of the Debtors' assets is
to be preserved, the Debtors must be allowed to fund and
maintain foreign operations. Failure to fund such operations
will result in the systematic dismemberment of the Debtors'
Network and will preclude any ability to reorganize.

The Debtors believe that it is in the best interest of their
estates, creditors, and other parties in interest, including the
Debtors' customers, to satisfy obligations to Foreign Creditors
lacking minimum contacts with the United States. In light of the
substantial, immediate, and irreparable harm to the Debtors'
business operations if certain Foreign Creditors are not paid,
the Debtors submit that cause exists for the entry of an order
authorizing such payment. Mr. Walsh contends that the amounts
that the Debtors propose to pay are reasonable in relation to
the size and importance of the Debtors' overall foreign

Mr. Walsh asserts that the satisfaction of obligations owed to
certain of the Debtors' Foreign Creditors is absolutely crucial
to the preservation and protection of the Debtors' estates, and
ultimately to a successful reorganization. Without the support
of their Foreign Creditors, the interests of all creditors will
suffer immeasurably as the value of the Debtors' estates is
likely to suffer drastic diminution. (Global Crossing Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-

HARVARD SCIENTIFIC: Inks Deal to Acquire Smart Access Assets
Harvard Scientific Corp. (OTC Bulletin Board: VGEN), said that
it has entered into a letter of intent to acquire all issued and
outstanding shares of Smart Access, Inc., an airport security
company founded in 1984 to provide state-of-the-art security for
airports and commercial establishments. To date, Smart Access
has installed access control systems for: both international and
regional airports, manufacturing facilities, correctional
facilities, chemical and industrial plants, hospitals,
government facilities, utility companies, medical facilities,
newspaper offices, police stations, courthouses, business
offices, universities, banks and credit unions.  More
information about Smart Access can be found at  

Commenting on the Letter of Intent, Harvard Scientific Corp's
Secretary and Treasurer Hank Higginbotham stated, "The letter of
intent is the first step in our plan of reorganization out of
bankruptcy which will be submitted to the Court for its review
and approval.  We are very pleased to work with Smart Access on
this acquisition.  Smart Access' reputation as a leader and
innovator in the industry, combined with their strategic
business model for the future, provides our shareholders and
creditors an excellent platform for future sales and profits."

Mehdi Daryadel, Majority Owner of Smart Access, Inc., stated,
"This merger potentially provides a tremendous value to the
current shareholders and creditors of Harvard and should enable
Smart Access to raise the capital necessary to enterprise on the
rapidly growing need for security throughout the world.

Smart Access designs and manufacturers both simple and complex
micro controller-based access and security systems for
commercial establishments and airports.  They are an industry
leader in innovative electronic security products featuring
fully integrated card access and computer-based identification
badging systems.  Smart Access continues to lead the way in
technology with their newly developed twelve-channel fiber-optic
multiplexer and digital, self-healing fiber-optic modems.  Their
Access Control Manager (ACM) is a multi-user software, running
in a Microsoftr Windows environment that offers complete control
of access, monitoring and response of alarms. The user-friendly
system also provides a sophisticated computer-based photo
identification badging system, as well as an integrated
personnel manager that stores a photo of each individual,
his/her employer and other pertinent information.

IBIZ TECHNOLOGY: Completes Convertible Debentures Restructuring
iBIZ Technology has completed its move to a new facility and
debt restructuring with its Convertible Debenture holders.  In
an effort to continue to bring costs in line with revenue, iBIZ
has moved its headquarters and product fulfillment center to a
new facility located at 2238 West Lone Cactus Drive, #200,
Phoenix, Arizona 85027.  The established iBIZ phone numbers will
remain the same. Additionally, the Convertible Debenture holders
have agreed to a floor and standstill agreement in an effort to
stabilize the price per share on the iBIZ Common Stock.

Ken Schilling, President and CEO commented, "Since March of
2001, iBIZ, like most technology companies has been impacted by
the down turn in the economy.  We watched the broadband industry
collapse, which ultimately led to the sale of our data center in
December of last year.  Combined with consumption falling and
investment capital drying up, our directors have helped iBIZ
drastically reduce expenses as well as restructure debt in an
effort to bring value to our share price and shareholder base."

Schilling further commented, "Our facility move combined with
the sale of the data center, the elimination of two officer
positions, a substantial reduction in the existing officers
salaries, the Convertible Debt restructuring and new money
coming into the company puts iBIZ in a position to take full
advantage the PDA industry, which is currently experiencing
tremendous growth potential.  We have reduced overhead by 75
percent of what it was just a few months ago.  Additionally, the
iBIZ brand has been established and through this restructuring
of overhead and debt, iBIZ is now completely focused on
exploiting the tremendous progress we've had in the past and
establishing ourselves as a leader in the PDA accessory market.

iBIZ is a leading manufacturer and distributor of accessories
for personal digital assistant and hand-held devices.  iBIZ is
recognized for innovative, high-quality, competitively priced
products available through major retailers.  For more
information on iBIZ products and services, go to
http://www.ibizcorp.comor email, or call to  
1-800 234-0707. For further information please contact Mark
Perkins, iBIZ Executive Vice President, +1-623-492-9200.

ICG COMMS: DIP Lenders Agree Continued Use of Cash Collateral
ICG Communications, Inc., and its debtor-affiliates present
Judge Peter Walsh with a Stipulation continuing adequate
protection and authorizing their continued use of cash
collateral under the $200 million Credit Agreement dated August
1999. The budget attached to the previous order only covered the
period from November 18, 2000, through December 31, 2001.  The
Debtors want to continue their previous agreement with their
prepetition lenders to use cash collateral, and have drafted a
new budget.  The revised budget indicates that the intercompany
lease payments for the months of January 2002 and February 2002
are to be accrued rather than paid. However, nothing in this
stipulation is to be construed as an agreement by or waiver by
the prepetition lenders to the nonpayment of these amounts.

The Debtors and the Lenders agree that the Debtors may continue
to use cash collateral for ordinary budget purposes up to the
date of the hearing on approval of the Debtors' disclosure

The Debtors agree to pay all unpaid out-of-pocket costs of the
Lenders, including professional fees, incurred in connection
with the Credit Agreement.

This agreement terminates, unless renewed by agreement of the
parties or by motion and order, on February 15, 2002. (ICG
Communications Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  

ICH CORPORATION: Look for Schedules & Statements Around April 6
ICH Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for an
extension, through April 6, 2002, to file their schedules of
assets and liabilities, schedules of executory contracts and
unexpired leases and statement of financial affairs.

The Debtors tell the Court that because of the scope of their
businesses, the complexity of their financial affairs, the
limited staffing available to perform the required internal
review of its accounts and affairs and the press of the Debtors'
businesses incident to the commencement of these cases, its
impossible for them to assemble all of the information necessary
to complete and file their
Schedules and Statements.

The Debtors assure the Court that they recognize the importance
of assembling this information and that they intend to complete
their respective Schedules and Statements as quickly as

ICH Corporation filed for chapter 11 protection on February 05,
2002. Peter D. Wolfson, Esq. at Sonnenschein Nath & Rosenthal
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed an
estimated debts and assets of $50 million to $100 million.

INSILCO HOLDINGS: Taps Gleacher to Review Strategic Alternatives
Insilco Holding Co. (OTCBB:INSL) stated that it expects to
report fourth quarter 2001 sales of $51.2 million and EBITDA of
$0.5 million. The Company expects to report an operating loss
for the quarter of $60.9 million, and a loss from continuing
operations of $72.4 million. The Company's operating results
will include $3.5 million in charges relating to severance
incurred and asset write-downs taken under the Company's cost
reduction plans, and $53.0 million in goodwill impairment
charges relating to certain of the Company's acquisitions. The
Company stated that it expects to be in compliance with its
credit facility covenants as of year-end 2001. The Company plans
to report fourth quarter results the week of March 4, 2002.

The Company also stated that it has initiated a review of its
strategic alternatives. Gleacher & Co. LLC has been retained by
the Company to assist management and the Board of Directors in
the review.

Insilco Holding Co., through its wholly-owned subsidiary Insilco
Technologies, Inc., is a leading global manufacturer and
developer of a broad range of magnetic interface products, cable
assemblies, wire harnesses, fiber optic assemblies and
subassemblies, high-speed data transmission connectors, power
transformers and planar magnetic products, and highly
engineered, precision stamped metal components.

Insilco maintains more than 1.5 million square feet of
manufacturing space and has 21 locations throughout the United
States, Canada, Mexico, China, Northern Ireland, Ireland and the
Dominican Republic serving the telecommunications, networking,
computer, electronics, automotive and medical markets. At the
end of June 2001, the company had a total shareholders' equity
deficit of about $309 million. For more information visit our
sites at http://www.insilco.comor

IT GROUP: Seeks Approval of $6 Million Shaw Group Break-Up Fee
The Shaw Group, Inc., has expended, and likely will continue to
expend, considerable time, money and energy pursuing the Asset
Sale and has engaged in extended arm's-length and good faith
negotiations.  In recognition of this expenditure of time,
energy and resources, and the benefits of securing a stalking
horse or minimum bid, The IT Group, Inc., and its debtor-
affiliates have agreed to provide the Bidding Protections to

Specifically, the Bidding Protections:

      (i) require Court approval the Break-Up Fee and Expense
          Reimbursement in the amount of $6,000,000,

     (ii) provide that Shaw's claim to the Break-Up Fee and
          Expense Reimbursement be entitled to superpriority
          Administrative claim treatment in these Cases, senior
          to All other superpriority claims,

    (iii) establish a date by which initial Qualified Bids must
          be submitted,

     (iv) establish the Sale Hearing procedures for an auction
          at which only Qualified Bidders who have previously
          submitted a Qualified Bid may bid,

      (v) set the minimum incremental bid amount at the Auction
          at $2,000,000,

     (vi) require the Debtors to promptly provide a copy of
          any Qualified Bid to Shaw and to any Qualified Bidder
          who has submitted a Qualified Bid and (vii) provide
          that notwithstanding the definition of "Qualified
          Bidder" the Prepetition Lenders of the Debtors may not
          credit bid. The secured debt of the Debtors held by
          such lenders.

The Bidding Protections, David S. Kurtz, Esq., at Skadden, Arps,
Slate, Meagher & Flom, argues, were a material inducement for,
and a condition of, Shaw's entry into the Agreement. The Debtors
believe that they are fair and reasonable in view of among other
things (a) the intensive analysis, due diligence investigation,
and negotiation undertaken by Shaw in connection with the Asset
Sale and (b) the fact that the efforts of Shaw have increased
the chances that the Debtors will receive the highest and
best offer for the Assets, to the benefit of the Debtors,
their estates, their creditors, and all other parties in

Shaw is unwilling to commit to hold open its offer to purchase
the Assets under the terms of the Agreement unless the
Procedures Order authorizes payment of the Break-Up Fee and
Expense Reimbursement. Thus, absent entry of the Procedures
Order and approval of the Bidding Protections, the Debtors may
lose the opportunity to obtain what they believe to be the
highest and best, and perhaps the only, available offer for the

The Debtors thus request that the Court authorize payment of the
Break-Up Fee and Expense Reimbursement pursuant to the terms and
conditions of the Agreement to compensate Shaw for serving as a
"stalking horse" whose bid will be subject to higher or better

The Debtors and Shaw believe that the Bidding Protections are
reasonable, given the benefits to the estates of having a
definitive Agreement and the risk to Shaw that a third-party
offer ultimately may be accepted, and that the Bidding
Protections are necessary to preserve and enhance the value of
the Debtors' estates.

Mr. Kurtz argues that bidding incentives encourage a potential
purchaser to invest the requisite time, money and effort to
negotiate with a debtor and perform the necessary due diligence
attendant to the acquisition of a debtor's assets, despite the
inherent risks and uncertainties of the chapter 11 process.
Historically, bankruptcy courts have approved bidding incentives
similar to the Bidding Protections under the "business judgment
rule," which proscribes judicial second-guessing of the actions
of a corporation's board of directors taken in good faith and
in the exercise of honest judgment. See, e.g., In re 995
Fifth Ave. Associates, L.P., 96 B.R. 24, 28 (Bankr. S.D.N.Y.
1992) (bidding incentives may "be legitimately necessary to
convince a white knight to enter the bidding by providing some
form of compensation for the risks it is undertaking") (citation
omitted); In re Integrated Resources, 147 B.R. 650, 657-58
(S.D.N.Y. 1992), appeal dismissed, 3 F.3d 49 (2d Cir. 1993)
(establishing three basic factors for determining whether to
permit such fees in bankruptcy: "whether (1) relationship of
parties who negotiated break-up fee is tainted by self-dealing
or manipulation; (2) whether fee hampers, rather than
encourages, bidding; and (3) amount of fee is unreasonable
relative to purchase price").

Recently, the United States Court of Appeals for the Third
Circuit established standards for determining the
appropriateness of bidding incentives in the bankruptcy context.
In Calpine Corp. v. O'Brien Envtl. Energy, Inc. (In re O'Brien
Envtl. Energy, Inc.), 181 F.3d 527 (3d Cir. 1999), the Court
held that even though bidding incentives are measured against a
business judgment standard in nonbankruptcy transactions, the
administrative expense provisions of Bankruptcy Code section
503(b) govern in the bankruptcy context. Accordingly, to be
approved, bidding incentives must provide some benefit to the
debtor's estate. See Id. at 533.

The O'Brien Court identified at least two instances in which
bidding incentives may provide benefit to the estate. First,
benefit may be found if "assurance of a break-up fee promoted
more competitive bidding, such as by inducing a bid that
otherwise would not have been made and without which bidding
would have been limited."  Id. at 537. Second, where the
availability of bidding incentives induce a bidder to research
the value of the debtor and submit a bid that serves as a
minimum or floor bid on which other bidders can rely, "the
bidder may have provided a benefit to the estate by increasing
the likelihood that the price at which the debtor is sold will
reflect its true worth." Id.

Under the "business judgment rule" and more importantly, under
the Third Circuit's "administrative expense" standard, the
Bidding Protections pass muster. The Agreement and the Bidding
Protections are the product of extended good faith, arm's-length
negotiations between the Debtors and Shaw. They are fair and
reasonable in amount, particularly in view of Shaw's efforts to
date, the risk to Shaw of being used as a "stalking horse," and
the stabilizing effect that the execution of the Agreement is
expected to have on the Debtors' business (thereby preserving
value for creditors and increasing the likelihood of additional
bidding).  Further, the Bidding Protections already have
encouraged competitive bidding, in that Shaw would not have
entered into the Agreement without these provisions. The Bidding
Protections thus have "induc[ed] a bid that otherwise would not
have been made and without which bidding would [be] limited."
Similarly, Shaw's offer, which was formulated only after an
expedited, but substantial due diligence review of the Assets
and their value, provides a minimum bid on which other bidders
can rely, thereby "increasing the likelihood that the price at
which the [Assets will be] sold will reflect [their] true
worth." Finally, the mere existence of the Bidding Protections
permits the Debtors to insist that competing bids for the Assets
be materially higher or otherwise better than the Agreement, a
clear benefit to the Debtors' estates. (IT Group Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-

INTEGRATED HEALTH: Butler Note Purchase Price Settlement Okayed
Integrated Health Services, Inc., and its debtor-affiliates
including Community Care of America of Alabama, Inc., obtained
the Court's approval of a Settlement Agreement, by and among:
(i) IHS, (ii) CCA, and (iii) South Butler Medical Services,
L.L.C. resolving a dispute over the purchase price for the
Georgiana Doctors Hospital that SBMS purchased from CCA in 1997
before CCA became affiliated with IHS.

The Hospital Purchase Agreement provided for an aggregate
purchase price of $3,140,000 a portion of which consisted of a
$1,500,000 promissory note executed by SBMS in favor of CCA.
Subsequent to the SBMS/CCA Transaction, IHS acquired the stock
of CCA and certain related entities.

SBMS has asserted that grounds exist for a reduction in the
Purchase Price under the Asset Purchase Agreement, and that such
grounds constitute a defense to the collection of the Note. In
essence, SBMS contends that the financial condition of the
Hospital may not have been fairly and accurately represented to
SBMS in connection with the Hospital Purchase.

The Debtors take the position that they disagree with SMBS's
position regarding the existence of a defense to collection of
the Note, but in view of the protracted process, expense and
uncertainty involved if the issue is resolved by litigation,
they have concluded that a consensual resolution of this issue
pursuant to the Settlement Agreement should be more beneficial
to the estate.

Pursuant to the Settlement Agreement, SBMS would pay the sum of
$700,000 in exchange for a full release and satisfaction of any
obligations under the Note.

The Debtors note that the proposed settlement is particularly
beneficial in view of the collectibility, or rather,
uncollectibility of the Note. In 1997, when IHS acquired CCA,
IHS deemed the Note uncollectible and established an accounting
reserve accordingly. IHS continues to believe that the Note must
be deemed uncollectible for accounting purposes based on the
following reasons:

-- Without the cooperation of the principals of SMBS pursuant to
   the Settlement Agreement, the Note is more than likely

-- The collectibility of the Note is in large part a function of
   the financial performance of the Hospital, which is a small
   facility of only 22 beds located in a rural county in
   southern Alabama with a population of approximately 20,000
   people. There are competing facilities in the areas and
   moreover, the value of the Hospital is dependent upon the
   continuing involvement of one of the SBMS principals, who is
   the primary admitting and attending physician for the

-- SBMS is highly leveraged, such that the Note is subordinate
   to a $1,800,000 line of credit (the PBT Credit Line) from
   Peoples Bank and Trust (PBT), of which approximately
   $1,500,000 has been drawn down and remains currently

-- The Note has a balloon payment which comes due in June 2002,
   and at such time as the Note comes due, SBMS may not be
   financially capable of paying the Note in full, repaying the
   PBT Credit Line, and continuing to fund the Hospital's

-- The Debtors have determined that the assets of SBMS are not
   sufficient to repay the Note. Moreover, there is also no
   reasonable likelihood that the financial performance or
   condition of SBMS, and therefore the collectibility of the
   Note, could or would be significantly improved in the future.

-- Significantly, the PBT Credit Line is personally guaranteed
   by the principals of SBMS, who have indicated that, due to
   their personal guarantees of the PBT Credit Line, they would
   opt to pay off the PBT Credit Line and cease operations at
   the Hospital, rather than cause SMBS to satisfy its
   obligations under the Note. (Integrated Health Bankruptcy
   News, Issue No. 28; Bankruptcy Creditors' Service, Inc.,

KMART CORP: Court Okays Trumbull's Appointment as Claims Agent
Kmart Corporation, and its debtor-affiliates sought and obtained
a Court order:

    (1) approving an agreement with Trumbull Services LLC, and

    (2) appointing Trumbull as claims and noticing agent of the
        Bankruptcy Court.

According to Kmart CEO Charles C. Conaway, the Debtors have
identified several hundred thousand creditors, potential
creditors and other parties-in-interest to whom certain notices,
including notice of the commencement of the Chapter 11 cases,
and voting documents, must be sent.  "But the Clerk of the
Bankruptcy Court for the Northern District of Illinois Eastern
Division is not equipped to efficiently and effectively docket
and maintain the extremely large number of proofs of claim that
likely will be filed in these cases," Mr. Conaway observes.  The
sheer magnitude of the Debtors' creditor body makes it
impracticable for the Clerk's Office to undertake that task and
send notices to the creditors and other parties-in-interest, Mr.
Conaway notes.

That's why, Mr. Conaway explains, the Debtors decided to engage
an independent third party to act as an agent of the Court in
order to accomplish the process of receiving, docketing,
maintaining, photocopying and transmitting proofs of claim in
these cases.

The Debtors also anticipate that the solicitation of votes on
their reorganization plan will necessitate the forwarding of
ballots, disclosure statements, and related solicitation
materials to many thousands of creditors, as well as the
accurate recordation and tabulation of the numerous ballots that
are returned by such creditors.

Mr. Conaway tells the Court that Trumbull has been selected to
assist the Debtors in this process.  Trumbull is a data
processing firm that specializes in noticing, claims processing,
and other administrative tasks in Chapter 11 cases.  "Trumbull's
assistance will expedite service of Rule 2002 notices,
streamline the claims administration process, and permit the
Debtors to focus on their reorganization efforts," Mr. Conaway

As claims and noticing agent, Trumbull will:

A) Prepare and serve required notices in these Chapter 11 cases

  (1) A notice of the commencement of these Chapter 11 cases and
      the initial meeting of creditors under section 341(a) of
      the Bankruptcy Code;

  (2) a Notice of the claims bar date;

  (3) Notices of objections to claims;

  (4) Notices of any hearings on a disclosure statement and
      confirmation of a plan or plans of reorganization; and

  (5) Such other miscellaneous notices as the Debtors or the
      Court may deem necessary or appropriate for an orderly
      administration of these Chapter 11 cases;

B) Within 5 business days after the service of a particular
   notice, file with the Clerk's Office a certificate or
   affidavit of service that includes:

  (1) a copy of the notice served,

  (2) an alphabetical list of persons on whom the notice was
      served, along with their addresses, and

  (3) the date and manner of service.

C) Maintain copies of all proofs of claim and proofs of interest
   filed in these cases;

D) Maintain official claims registers in these cases by
   docketing all proofs of claim and proofs of interest in a
   claims database that includes these information for each such
   claim or interest asserted:

  (1) The name and address of the claimant or interest holder,

  (2) The date the proof of claim or proof of interest was
      received by Trumbull or the Court,

  (3) The claim number assigned to the proof of claim or proof
      of interest;

  (4) The asserted amount and classification of the claim; and

  (5) The applicable Debtor against which the claim or interest
      is asserted;

E) Implement necessary security measures to ensure the
   completeness and integrity of the claims registers;

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

G) Maintain an up-to-date mailing list for all entities that
   have filed proofs of claim or proofs of interest and make
   such list available upon request to the Clerk's Office or any
   party in interest;

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

I) Record all transfers of claims and provide notice of such
   transfers as required by Rule 3001(e), if directed to do so
   by the Court;

J) Comply with applicable federal, state, municipal and local
   statutes, ordinances, rules, regulations, orders and other

K) Provide temporary employees to process claims, as necessary

L) Promptly comply with such further conditions and requirements
   as the Clerk's Office or the Court may at any time prescribe;

M) Provide such other claims processing, noticing, balloting,
   and related administrative services as may be requested from
   time to time by the Debtors.

In addition, Mr. Conaway continues, the Debtors also want
Trumbull to assist them with, among other things:

(1) the preparation of their schedules, statements of financial
    affairs, and master creditor lists, and any amendments

(2) the reconciliation and resolution of claims; and

(3) the preparation, mailing and tabulation of ballots of
    certain creditors for the purpose of voting to accept or
    reject a plan or plans of reorganization.

The Debtors intend to pay Trumbull's fees and expenses in the
ordinary course of business.  On a monthly basis, Mr. Conaway
says, Trumbull will submit to the Office of the United States
Trustee copies of the invoices it submits to the Debtors for
services rendered.

William R. Gruber, Jr., Assistant Vice President of Trumbull
Services LLC, assures the Court that:

(a) Trumbull will not consider itself employed by the United
    States government and shall not seek any compensation from
    the United States government in its capacity as the Claims
    and Noticing Agent in these Chapter 11 cases;

(b) By accepting employment in these Chapter 11 cases, Trumbull
    waives any rights to receive compensation from the United
    States government;

(c) In its capacity as Claims and Noticing Agent in these
    Chapter 11 cases, Trumbull will not be an agent of the
    United States and will not act on behalf of the United

(d) Trumbull will not misrepresent any fact to the public; and

(e) Trumbull will not employ any past or present employees of
    the Debtors in connection with its work as Claims and
    Noticing Agent in these Chapter 11 cases.

"To the best of my knowledge, neither Trumbull nor its employees
represent any interest adverse to the Debtors' estates with
respect to the matters upon which the firm is to be engaged,"
Mr. Gruber swears.

Trumbull will charge the Debtors for its services, pursuant to
these rates:

Schedule of Liability Preparation
Creditor Set-up
    Via electronic file               $180 per hour
    Manually created creditors          45 per hour
Schedule Creation
    Up to 3 sets                      $0.25 per page
    Additional sets                   $0.10 per page

Notice Printing
General Creditor
    Set up                            Waived
    Per page double sided             $0.25 per page
Acknowledgement Notice                $0.15 per card
Postage                               Actual Cost
Public Debt and Equity Holders        Price based on nature and
                                      type of security holders
Claims Docketing
Includes processing, examination,
docketing, data entry, etc.           $60 per hour

Document Management
Imaging                               $0.30 per image
Clerical                              $45 per hour

Bankruptcy Claims Management System
    Set up                             Waived
    Training                           Waived
    Remote Access                      Includes 3 users
                                       (additional users $250
                                        per month)
    License Fee and Database Storage   $0.10 per creditor -
                                       $3,000 per month minimum
Standard Reporting
Claims Registers, Service Lists,
Schedules, Exhibits, etc.             $75 per creation of report

Clerical                                     45 per hour
Bankruptcy Analyst                     60 -  75 per hour
Bankruptcy Administration Manager            95 per hour
Automation Consultant                  95 - 130 per hour
Sr. Automation Consultant             135 - 160 per hour
Bankruptcy Consultant                 165 - 185 per hour
Sr. Bankruptcy Consultant             190 - 250 per hour

Voting Tabulation and Reports
Per Ballot process charge             $0.80 each

Issuance                              Quote prior to printing

Travel                                Reimbursed at cost
Overnight shipping, fax, etc.         Reimbursed at cost
(Kmart Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

KNOWLES ELECTRONICS: Renegotiates Bank Covenants with Lenders
Knowles Electronics Holdings, Inc., announced its sales for the
fourth quarter and results for the year ended December 31, 2001.

The manufacturer of hearing aid components and other products
reported fourth quarter sales of $57.1 million, 7% less than the
$61.2 million reported for the fourth quarter of 2000. The
company's sales for the year totaled $223.7 million, 6% less
than the $238.1 million reported for 2000.

"Although we were pleased to see continued improvement in the
sales of our core products during the fourth quarter, our sales
did not meet our expectations," said President and CEO John Zei.
The company's KE hearing components Division reported a 8%
increase in sales compared to the fourth quarter of 2000, the
result of significantly increased orders from the company's
largest customer. Yet the gains the company made in the last
half of the year did not offset weak sales in first half, and
the division's sales were down 1% for the year. Sales of the
company's Automotive Components Group Division declined 28%
compared to the fourth quarter of 2000 and declined 18% for the
year, due to reduced worldwide demand for the SSPI solenoid
products used in off-road diesel equipment and the sensors
manufactured by the company's Ruf Electronics subsidiary. Two
factors account for the 24% decline in the Emkay Division's
fourth quarter sales. The consolidation and reorganization of
European cable operators in the second half of the year reduced
demand for the division's infrared products, which had enjoyed
strong sales during the first half of the year. Fourth quarter
sales of the division's finished goods declined in comparison to
the especially strong sales reported in the fourth quarter of
2000. Emkay's sales were down 5% for the year.

The company's results for the full year were affected by
unfavorable book to physical inventory adjustments,
manufacturing inefficiencies and short-term quality costs
related to outsourced material. For the year, EBITDA before
restructuring charges reached $56.7 million or 25.3% of sales.
In 2000, EBITDA before restructuring expenses totaled $66.8
million, or 28.1% of sales. The company reported a loss of $1.5
million for 2001, compared to a loss of $3.9 million for 2000,
when the company recorded an $18 million restructuring charge to
consolidate its operations, close five manufacturing facilities
and outsource some of its production.

"We are disappointed that our success in restructuring and
streamlining our operations is not reflected in our current
results," said James F. Brace, Executive Vice President and CFO.
"Gross margins had the potential to improve by several
percentage points as a result of restructuring, but actually
improved less than one percent due to the challenges we
encountered with inventory, outsourced quality and
manufacturing." SG&A expenses increased $6.5 million as the
company introduced new products and new product management teams
at its Emkay Division and incurred additional non-capitalized
expenses associated with the launch of its new enterprise
resource planning system. Operating income increased from $37.4
million in 2000 to $43.0 million in 2001, due to the lower
restructuring expense in 2001.

The company will report full results for the fourth quarter
later. The implementation of a new enterprise resource planning
system and a related physical inventory identified significant
material usage variances and increased levels of slow moving and
obsolete inventory at year-end.

At the same time, in accordance with generally accepted
accounting principles, the company capitalized previously
expensed software development costs, and it modified the way it
accounts for absorbing overhead into inventory due to the
shifting of manufacturing resources. Both of these changes had a
positive impact on fourth quarter earnings. The company
capitalized $3.3 million of the consulting expenses associated
with designing, testing and implementing its new enterprise
resource planning system. In addition, the company also changed
its method of accounting for inventory from LIFO to FIFO, noting
that this change had no impact on the company's income statement
for 2001, although 2000 cost of sales, inventory and equity have
been restated.

The company is reviewing the impact of spreading these fourth
quarter adjustments on the full year, to determine what the
appropriate changes, if any, are to the previously reported
quarterly results. The company expects to report quarterly
results in the next four weeks.

Lower than anticipated 2001 sales and earnings led the company
to renegotiate its agreements with lenders. The new covenants,
which took effect on December 31, 2001, permit higher leverage
and interest coverage ratios for five quarters. In exchange, the
company agreed to pay higher interest rate spreads over LIBOR
for the remainder of the agreement. The covenants revert to the
original terms of the bank agreement on March 31, 2003. Until
then, the company also has agreed to seek the approval of
lenders before making acquisitions over a nominal amount, to
limit 2002 capital expenditures to no more than $20 million, and
to use all cash proceeds from the sale of assets in excess of
$10 million to pay down bank debt. The banks agreed to the
proposed amendment on December 21, 2001 and the company passed
the revised covenants at the end of the fourth quarter. "We
expect to be able to meet the revised covenants through 2002,"
commented Brace.

"We are happy to put 2001 behind us," said Zei, "and even though
sales remain unpredictable, we are looking forward to 2002. We
have solved the problems related to outsourced quality, and we
have gained a much better understanding of the factors creating
the manufacturing inefficiencies. Meanwhile, our restructuring
plan has proven its worth, and our new ERP system is giving us
better information to use in running the business."

Although the company does not expect the infrared and finished
goods products made by its Emkay Division and the diesel
solenoids made by SSPI to contribute significantly to its
growth, it anticipates continued increases in sales of its core
KE Division products. It also plans to increase sales of its
Deltek volume controls and new silicon microphone products.
Microphones for applications other than hearing aids and far
field array products will open new opportunities for growth. To
concentrate on these areas, the company expects to complete the
planned sale of its Ruf subsidiary by the end of the first half
of 2002.

"Our strategies are clear, and the operating improvements we
have made will enable us to work more profitably and
productively," said Zei. "We lead our core markets, and the
demand for our products will continue to rise. We are committed
to significant improvement in 2002."

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

LTV CORP: Retirees Get OK to Hire Watson Wyatt as Consultants
The Official Committee of Nonunion and Certain Union Retirees of
The LTV Corporation, and its debtor-affiliates asks that Judge
Bodoh approve its employment of Watson Wyatt & Co. as a benefits
consultant to provide actuarial services.  The Committee also
asks that Judge Bodoh order that the Debtors are to compensate
Watson Wyatt for their services to 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 be properly advised as to
business issues, the Committee wants to hire Watson Wyatt,
saying that the Code provides the Committee with the same rights
to professional assistance, compensated by the Debtors' estates,
as official committees of unsecured creditors and equity
security holders.

Watson Wyatt will charge for their services on an hourly basis
with an average hourly rate of $355.  The personnel having
primary responsibility for providing services to the Retiree
Committee, and their hourly rates, are:

               Name                         Hourly Rate
               ----                         -----------
       Steven Likovich                        $425
       Susan Bookman                          $280
       David Millington                       $395
       Amy Orendi                             $255
       Derek Aldridge                         $450
       Andrea Sherry                          $255

Mr. Likovich, an employee of Watson Wyatt, avers that Watson
Wyatt has no connection with the Debtors, their creditors, the
US Trustee, or any party with an actual or potential interest in
the matters before the Retiree Committee.

Noting the Debtors' agreement with this Application, Judge Bodoh
promptly approves it, subject to the $60,000 cap on the
Committee's total costs. (LTV Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 609/392-00900)

LERNOUT & HAUSPIE: Rejecting Dictaphone Employee Pension Plan
Dictaphone Corporation asks Judge Wizmur to approve its
rejection of the Employee Benefit Plan Trust Agreement between
Dictaphone and State Street Bank & Trust Company first signed in
September 1995, and amended as recently as February 28, 2001.

                   Creation of Pension Plan

In August 1995 Dictaphone was sold by Pitney Bowes, Inc., to
Dictaphone Acquisition, Inc. under a Stock Purchase Agreement
dated April 25, 1995.  On September 22, 1995, the Board of
Directors approved the Pension Plan, appointing State Street as
its trustee.

The Pension Plan was preceded by the Dictaphone Pension Program
Plan A, which became effective in January 1976.  Under the terms
of the PBI APA and as part of the closing of the sale of
Dictaphone to PBI, PBI agreed to assume sponsorship of the prior
Pension Plan, and Dictaphone agreed to establish a new pension
plan for eligible employees.  Certain assets and liabilities of
the prior Pension Plan were transferred to the new Pension Plan.

                       The Plan's Terms

       (1) Eligibility.  An employee who was a participant in
the prior Pension Plan immediately commenced in the Pension Plan
as of its effective date.  Other employees began participating
in the Pension Plan on the first day of the month coinciding
with or following the date on which they had completed one year
of service with Dictaphone. If former employees were reemployed
by Dictaphone and performed an hour of service, they would be
considered reemployed if (a) they completed one year of service
subsequent to their reemployment; or (b) they had acquired a
fully vested, non-forfeitable right to a pension under the
Pension Plan during their prior period of employment.

       (2) Vesting: Upon termination of employment for any
reason other than retirement, a participant is entitled to:

             (i) 0% of the accrued benefit under the Pension
Plan vested, if employee has less than five years of service, or

             (ii) 100% of the accrued benefit under the Pension
Plan vested, if employee has more than five years of service.

       (3) Administration: The general administration of the
Pension Plan  and the responsibility for carrying out its  
provisions are placed in certain Committee(s) (as  defined in
the Pension Plan), which shall have  the powers necessary to
enable them properly to  carry out their duties, subject to the
limitations and conditions specified in or imposed by the
Pension Plan. Each Committee is designated as the "Plan
Administrator" for purposes of ERISA.

       (4) Trustees: Dictaphone agreed to enter into a trust
agreement or agreements providing for the administration of the
trust fund in such form and containing such provisions as
Dictaphone deemed appropriate, including provisions with respect
to the powers and authority of the trustees and the authority of
Dictaphone to amend the trust agreement, to terminate the trust,
and to settle the account of the trustee on behalf of all
persons having an interest in the trust fund.

The trustee has exclusive authority and discretion to manage and
control the assets of the Pension Plan held by its unless the
authority to manage, acquire, or dispose of those assets is
delegated to one or more investment managers.  The principal and
income of the trust fund are to be held and used for the
exclusive purpose of providing benefits to retired participants,
participants, vested former participants, and their spouses and
beneficiaries, and of defraying reasonable expenses of
administration of the Pension Plan that are not paid directly by
Dictaphone; and the assets of the Pension Plan do not inure to
the benefit of Dictaphone except to the extent permitted by the
Internal Revenue Code.

       (5) Termination of Plan or Trust: Dictaphone reserves the
right at any time to terminate the Pension Plan. Upon
termination or partial termination of the Pension Plan within
the meaning of section 411(d)(3) of the IRC, each participant
shall be one hundred percent vested in his accrued benefit under
the Pension Plan; provided, however, that in the event of a
partial termination, the non-forfeitable rights shall be
applicable only to the portion of the Pension Plan that is
terminated. The Trust shall continue until all assets of the
Trust Fund have been distributed in accordance with the terms of
the Pension Plan.

Distribution from the Trust shall be made at such time and in
such manner as the Committee shall determine in accordance with
the provisions of the Pension Plan. The Trustee  may distribute
cash, securities, or other assets in kind and may purchase
nontransferable annuity contracts on either an individual or
group basis.

                    Settlement Agreement

On August 11, 1995, PBI and its principal operating
subsidiaries, Pitney Bowes Credit Corporation and Pitney Bowes
Management Services, Inc., entered into a Settlement Agreement
with the Pension Benefit Guaranty Corporation, Dictaphone, and
Dictaphone Acquisition. Pursuant to the Settlement Agreement:

       * Effective with the closing of the PBI APA, Dictaphone
established the Pension Plan, which is covered by Title IV of
the Employee Retirement Income Security Act of 1974 for the
employees of Dictaphone.

       * PBI caused the Prior Pension Plan to transfer certain
of its assets and liabilities to the Pension Plan.  In the event
that the Pension Plan pursuant to ERISA section 4041(c), or the
PBGC were to determine that the Pension Plan should be
terminated pursuant to ERISA section 4042, the PBGC would
provide written notice to PBI that the Pension Plan was about to
be terminated.

       * PBI would have the option of assuming the Pension Plan
to prevent its termination. PBI would be required to notify the
PBGC and Dictaphone within 30 days after receipt of the
Termination Notice whether or not PBI intended to exercise its
option to assume the Pension Plan.

If PBI were to assume the Pension Plan, Dictaphone would
immediately take all actions necessary to permit and facilitate
the assumption of the Pension Plan by PBI, including amendment
of the Pension Plan to effectuate PBI's assumption of it.

If the Pension Plan were to terminate other than as a
termination in accordance with ERISA section 4041(b), the PBGC
could make a demand on Dictaphone for the payment of any
termination liability with respect to the Pension Plan. A
"demand" for payment may be made by filing a proof of claim in a
bankruptcy proceeding. If Dictaphone does not pay to the PBGC
the full amount of the termination liability for the Pension
Plan following a demand, the PBGC shall certify in writing to
PBI and the PBI Principal operating Subsidiaries the amount of
the payment due from PBI and its Principal operating

Within 90 days of their receipt of that certification, PBI and
the PBI Principal Operating Subsidiaries would pay to the PBGC
in cash the lesser of (a) the unpaid amount of termination
liability or (b) the "Guaranteed Amount, which is the excess of
(i) 193% of the FAS87 Accumulated Benefit Obligation for the
Pension Plan measured as of August 11, 1995, using the same
actuarial assumptions as those used to measure the December 31,
1994 ABO disclosed in the Form 10-K filed by PBI with the
Securities and Exchange Commission, over (ii) the market value
of assets transferred from the Prior Plan as part of the
Dictaphone Acquisition; plus interest on the excess until the
date of payment by PBI and its principal operating subsidiaries.  
Dictaphone believes that the Guaranteed Amount is approximately
$5.2-5.3 million.

              New Employee Benefits Program and
                   Freeze of Pension Plan

On December 13, 2000, the L&H Group filed its Motion of L&H
Group For Order, Under 11 U.S.C.  105 and 363, Approving and
Authorizing (1) Implementation of the New Employee Benefit
Program and (2) Freeze of the Dictaphone Pension Plan. The
Employee Benefit Program Motion was approved by Order of this
Court signed on December 20, 2000.  The Employee Benefit Program
Order allowed Dictaphone to freeze the Pension Plan with respect
to existing participants and benefits accrued thereunder and
allowed the implementation of the New Employee Benefit Program,
which includes medical benefits, dental benefits, life and
AD&D insurance, supplemental life and AD&D insurance, short-term
disability, long-term disability, and a 401-K plan.

Pursuant to section 10.06 of the Pension Plan and in accordance
with the Employee Benefit Program Order, the Chief Executive
officer of Dictaphone, Phillippe Bodson, adopted a Resolution of
Chief Executive officer, dated as of January 31, 2001, which
froze benefit accruals under the Pension Plan. Subsequently,
effective as of February 28, 2001, the Pension Plan was amended
by a Second Amendment, which implemented the foregoing
resolution by amending the eligibility requirement of the
Pension Plan to read: "[A]fter February 28, 2001 no Employee
shall commence participation in the [Pension] Plan."

The Pension Plan currently covers approximately 2600 current and
former employees, of which approximately 1730 are active
(current) employees, approximately 230 are retired and drawing
benefits, and approximately 640 are inactive employees (i.e.,
former employees who have not retired) who have vested rights
under the Pension Plan.

         Annual Projected Contributions To Pension Plan

If the Pension Plan is not rejected, the minimum required
contribution of Dictaphone for 2001 will be $326,078.00, to be
paid on or before September 13, 2002. The minimum required
contribution for 2002 will be based on the market value of the
assets of the Pension Plan as of December 31, 2001, including
the contribution receivable for 2001 that is payable in
September 2002. Based on the 2001 results, Dictaphone has
preliminarily estimated that quarterly contributions in the
amount of $81,520.00 will be due 2002, for an estimated total
payment of $325,000. If the current liability funded ratio is
not 80% or more on January 1, 2002, an additional funding charge
of $3 to $5 million will have to paid.  In 2003 and subsequent
years, the current liability funded percentage will have to be
90% in order to avoid additional funding charges.

             PBGC's Claim For Termination Liability

The PBGC has filed proofs of claim against Dictaphone, L&H NV,
and L&H Holdings. The P13GC asserts that if the Pension Plan is
terminated during the pendency of these cases, Dictaphone and
all of its "control group" (as defined in 29 U.S.C. S
1301(a)(14)) members (i.e., L&H NV and L&H Holdings) will be
jointly and severally liable on:

       (1) Unfunded benefit liabilities of the Pension Plan
under 29 U.S.C. S 1362(b) that the PBGC claims asserts will be
approximately $13.8 million (Dictaphone disputes the amount of
this claim);

       (2) Unpaid minimum funding contributions as may be
necessary to satisfy the minimum funding requirements under 26
U.S.C. S 412(c)(11) and 29 U.S.C.  1082(c)(11) (this claim is
contingent and unliquidated); and

       (3) Unpaid premiums under 29 U.S.C.  1307(a) that may
become due under the Pension Plan (this claim is also contingent
and unliquidated).

The PBGC also asserts that pursuant to 11 U.S.C.  507(a)(1), its
claims (if any) for unpaid postpetition minimum funding
contributions and unpaid postpetition premiums will be entitled
to administrative priority.

Dictaphone has concluded that there is no benefit to its estate
and its creditors in continuing the Pension Plan.  Dictaphone
believes that the New Employee Benefit Program is a more cost-
effective, alternative way to ensure that appropriate benefits
are provided to its employees. Accordingly, Dictaphone  requests
the entry of an order, under Bankruptcy Code section 365(a),
authorizing it to reject the Pension Plan.  Alternatively, if
Judge Wizmur determines that the Pension Plan is not an
executory contract capable of assumption or rejection,
Dictaphone requests that the Court enter an order providing that
all claims against Dictaphone arising under or relating to the
Pension Plan shall, to the extent allowed, constitute general
unsecured claims against Dictaphone that will be treated in
accordance with, and discharged under, a confirmed plan of
reorganization for Dictaphone. (L&H/Dictaphone Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)  

LOG ON AMERICA: Settles Remaining Preferred Holders' Claims
Log On America, Inc. (OTC Bulletin Board: LOAX.OB) -- which announced the settlement of its  
litigation with Promethean Asset Management L.L.C. and HFTP
Investments, also announced that it has entered into a
settlement agreement, which settled all claims with the
remaining holders of its Series A Convertible Preferred Stock
and their affiliates.  This settlement repairs the capital
structure of Log On America, preserves shareholder value, and
will allow the company to put its complete attention to growing
its business.

Pursuant to the settlement with the Remaining Holders, the
Company will pay the following amounts and issue the following
Promissory Note and Convertible Preferred Stock to them:

     (1) the sum of $500,000 within three business days of the
execution of formal settlement documents, which is expected to
occur on or about February 28, 2002;

     (2) $250,000 on or about May 1, 2002;

     (3) $500,000 on or about August 1, 2002, plus interest at
8% per annum;

     (4) on or about February 28, 2002, the Company will execute
a three year Promissory Note payable to the Remaining Holders in
the amount of $1,750,000, which will bear interest in the amount
of 9% per annum, paid semi-annually;

     (5) on or about February 28, 2002, the Company will issue
500,000 shares of its common stock to the Remaining Holders from
a partial conversion of the Series A Preferred Stock according
to its terms and the balance of the Series A Preferred Stock
will be exchanged for the Series C Convertible Preferred Stock
described below; and

     (6) the Company will issue Series C Convertible Preferred
Stock to the Remaining Holders with a face value of $1,725,000,
repayable in three years in cash or stock at the Company's
election, with a conversion price of $1.25 per share and bearing
interest at 9% payable semi-annually.  

In the event that the Company fails to make any of the payments
under (1), (2), (3) or (4) within five business days after
notice of a default in payment, judgment may be entered against
the Company and in favor of the Remaining Holders in the amount
of $5,752,775 less any payments made by the Company in
accordance with the above provisions.

David R. Paolo, the Company's Chairman and CEO, stated: "We are
pleased to have fully and finally resolved our disputes with the
Remaining Holders. After investigation, we concluded that the
Company's factual allegations against the Remaining Holders,
including their affiliates and employees, could not be
substantiated and, as a result, we believed it was appropriate
to enter into the Settlement Agreement."

Mr. Paolo continued: "This agreement brings final rest to the
capital structure problems that have plagued Log On America over
the past 2 years. Log On America will now have a finite capital
structure of approximately 12,000,000 shares including
conversion of all classes of Preferred Stock and long-term debt
of approximately $6,600,000."

Log On America is a full service provider of business
communication technologies.  We deliver a unique end-to-end
customer experience from consultation through professional
managed services.  Our core services include: Business Telephone
& Voicemail Systems, Dial-up & High-speed Internet Access, Web
site Creation & Hosting, Integrated Voice & Data Services,
Server Collocation, Niche ASP Applications, Managed Service
Level Agreements, and Network Consultancy, Architecture &
Implementation (LAN,WAN,VPN).  Our expertise lies in a wide
array of business communication solutions all of which may be
customized and scaled to the specific needs of your business
today and in the future.

MCLEODUSA INC: Will Be Honoring Prepetition Employee Obligations
McLeodUSA Inc., seeks an Order from the Bankruptcy Court giving
it permission to honor all prepetition employee-related
obligations, including:

  (a) unpaid prepetition wages, fees, and salaries, bonuses,
      commissions, holiday and vacation pay, and sick leave pay
      earned prior to the Petition Date; and reimbursable
      business expenses incurred before the Petition Date; and

  (b) employee health and welfare benefit claims arising before
      the Petition Date (including, without limitation,

         (i) medical, dental, mental health, prescription drug
             and vision claims under the Debtor's health care
             plan, COBRA,

        (ii) term and supplemental life insurance, accidental
             death and dismemberment, and long and short-term
             disability insurance,

       (111) employee assistance program and flexible spending

        (iv) workers' compensation claims arising before the
             Petition Date; and

         (v) pension and other retirement and supplemental
             retirement benefits).

Randall Rings, McLeodUSA's Group Vice President, Secretary and
General Counsel, relates that the Debtor employs 176 salaried or
hourly employees. Its workforce and that of the Non-Debtor
Affiliates, totaled 8,742 employees.  All payroll obligations
for employees of both Debtor and Non-Debtor Affiliates are
satisfied from the Concentration Account maintained by Debtor.  
Therefore, despite the fact that the Debtor only has 176
employees, the amounts payable by the Debtor from the
Concentration Account for Employee Obligations relate to all
employees working for the Debtor and Non-Debtor Affiliates.

Mr. Rings says the Debtor has endeavored to isolate amounts
payable to just its employees. However, due to the
interdependent nature of the Debtor's cash management system,
the Debtor is unable to provide separate amounts for all
categories of compensation and benefits paid to the Debtor's
employees and those paid to employees of Non-Debtor Affiliates.

The Debtor's salaried employees are paid bi-weekly and
currently, while hourly employees are paid either weekly or bi-
weekly and in arrears.

In addition, Mr. Rings says, during the course of the year,
employees accrue vacation, earned leave, personal time and
holiday pay which, under certain circumstances, may be paid in
the ordinary course of the Debtor's business during the calendar

Though the Debtor has remained current on its payroll, as of the
Petition Date, the Debtor owed its employees compensation in the
form of accrued but unpaid wages, salaries, and commissions in
the approximately aggregate amount of $147,397.00.

The Debtor seeks authority to pay such accrued compensation as
it becomes due and owing in the ordinary course.

Based on the length of employment, employees may carry a limited
amount of vacation days into the following year. The maximum
accrual of vacation time for the most senior employee is six
weeks. Employees are allowed to carry personal or sick time into
the following year.

As of the Petition Date, the cash value of the Debtor's
employees' accrued vacation time and unused personal and sick
leave was less than $1,000,000. The Debtor requests the
authority to continue to accrue such vacation and other leave
time in the ordinary course and to pay such accrued time to an
employee where such payment would become due under the customary
and/or contractual terms and conditions of such Employee's

Also, it is the Debtor's policy to reimburse employees for
certain expenses within the scope of their employment, including
expenses for travel, lodging, meals, supplies and other
miscellaneous expenses. The Debtor estimates that, as of the
Petition Date, less than $50,000 was owed to employees on
account of outstanding reimbursable business expenses. The
Debtor requests the authority to pay such accrued prepetition
reimbursement amounts.

                 Health and Welfare Benefits

The Debtor provides self-funded health and welfare benefits to
employees including, but not limited to, (i) medical, dental,
prescription drug, mental health, and vision claims under the
Debtor's health care plans, and COBRA; (ii) term and
supplemental life insurance, accidental death and dismemberment
coverage, and long and short term disability insurance; and
(iii) employee assistance program and flexible spending plans,
home and auto plan, and group legal plan.

These plans are administered by third parties. The Debtor also
provides workers compensation coverage. As of the Petition Date,
the Debtor estimates that the aggregate amount owed for these
benefits related to claims of its entire workforce is
approximately $5,200,000.

The Debtor seeks authority to pay the pre-petition amounts and,
in its sole discretion in the ordinary course of business, to
continue support for such health and welfare benefits during the
pendency of its Chapter 11 case.

Based on the past year's history, the Debtor estimates that the
monthly cost of continuing such benefits for its entire
workforce will be approximately $2,600,000, or approximately
$275 per employee per month. With 176 employees, the Debtor
estimates its monthly cost of continuing the benefits for its
employees to be approximately $47,850.

Accepting Mr. Rings contention that the Debtor's failure to to
honor their pre-petition employee-related obligations will
destroy employee morale, resulting in unmanageable employee
turnover during the critical stages of the Company's
restructuring and may give rise to litigation from employees
seeking payment of benefits due them, Judge Katz grants the
Debtor's Motion in all respects. (McLeodUSA Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)  

MERISTAR HOSPITALITY: Completes $200 Million Senior Notes Offer
MeriStar Hospitality Corporation (NYSE:MHX), the nation's third
largest hotel real estate investment trust (REIT), announced
that it had completed the sale of $200 million senior, unsecured

The 9.125 percent senior notes are an add-on to the company's
existing $200 million in senior notes due in January 2011.

"The proceeds of the sale will be used to pay down our revolving
credit facility," said John Emery, president and chief operating
officer. "The sale of the notes continues our effort to replace
bank debt that matures in 2003 with longer term, less
restrictive debt. We now have an average maturity of 7.3 years,
with less than $250 million of maturities through 2006."

Lehman Brothers Inc. was the sole book/lead manager for the
sale, and Deutsche Banc Alex. Brown, Salomon Smith Barney, and
S.G. Cowen were joint-lead managers.

Washington, D.C.-based MeriStar Hospitality Corporation owns 112
principally upscale, full-service hotels in major markets and
resort locations with 28,597 rooms in 27 states, the District of
Columbia and Canada. The company owns hotels under such
internationally known brands as Hilton, Sheraton, Marriott,
Westin, Radisson and Doubletree. For more information about
MeriStar Hospitality Corporation, visit the company's Web site:

METALS USA: Court Okays Salisbury & Newark Asset Sales to Wells
No competing bidders appeared at the January 29 Auction of
Metals USA, Inc.'s Salisbury and Newark assets and the Debtors
advised the Court that no other bids were received.

Accordingly, Judge Greendyke approves the Debtors' sale of its
facilities in Salisbury, North Carolina, and Newark, New Jersey,
to Wells Manufacturing Company under the terms of the Asset
Purchase Agreement.  The approximate $3,000,000 of sale proceeds
will be paid to the DIP Lenders in accordance with the DIP
Financing Agreement. (Metals USA Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

METATEC INT'L: Inks New Long-Term Financing Pact with Bank Group
Metatec International, Inc. (Nasdaq:META) said that it has
entered into a new long-term financing agreement with its
current bank group, representing yet another key step toward
Metatec's goal to return to profitability.

The agreement covers approximately $18 million in debt currently
outstanding under a term loan and a revolving credit program.
The new agreement runs from February 2002 to April 2004.

"We regard this agreement as an important vote of confidence in
our business plan," said Christopher A. Munro, president and
chief executive officer. "Our overall goal remains the same - to
return to profitability by focusing on the growth of our supply
chain services business while leveraging and properly sizing our
core CD-ROM and DVD manufacturing business."

Metatec provides supply chain solutions to major corporations in
the U.S. and Western Europe through a variety of services
including CD-ROM and DVD manufacturing, product packaging, sub-
assembly, procurement, warehousing, distribution and returns

Munro said that Metatec appreciated the banks' support as new
financing agreements were worked out.

Munro said that the new agreement is the most recent step in a
year-long process to restructure the company and return it to
profitability. During the past year, Metatec has:

     -- acquired new business in its supply-chain services

     -- sold the assets of its California-based manufacturing
        plant and eliminated $9.5 million in related lease

     -- reduced its workforce by 42 percent, and

     -- reorganized its sales operations into strategic business
        units to focus on growth within the computer hardware,
        software, media/publishing, telecommunications and
        certain industrial markets.

Metatec also announced that it will report financial results for
the fourth quarter and 2001 that will include certain
restructuring charges and asset writedowns expected to be in the
range of between $20 million and $25 million.

Most of those charges do not affect Metatec's cash position.
They include previously announced restructuring charges related
to the closing of Metatec's disc manufacturing operations in
California and workforce reductions in Dublin. Metatec is also
writing down the carrying value of certain impaired assets
following management's assessment of all operations, the current
economic environment and future estimated cash flows. Metatec
said that it continues to evaluate certain elements of the
restructuring charges and writedowns, and that it will provide a
definitive amount for the charges when its complete audited
financial results for 2001 are announced, most likely by mid-

Munro added that Metatec has completed a thorough analysis of
all operations, and he is focusing his full attention on the key
strengths that will drive results in 2002.

"We have streamlined Metatec to make it stronger and more
focused on the supply chain opportunities we have identified
while appropriately sizing our CD-ROM manufacturing business,"
Munro said. "We believe that we have now addressed the major
obstacles to our renewed growth and profitability and look
forward to continued progress in the coming year."

Metatec International enables companies in the computer
hardware, software, telecommunications and media/publishing
markets to streamline the process of delivering products and
information to market by providing technology driven supply
chain solutions that increase efficiencies and reduce costs.
Technologies include CD-ROM and DVD manufacturing services, a
full range of supply chain management services and secure
Internet-based software distribution services. Extensive real-
time customer-accessible online reporting and tracking systems
support all services. Metatec maintains operations in Ohio and
The Netherlands. At September 30, 2001, the company had a
working capital deficiency of about $16 million.

More information about Metatec is available by visiting the
company's Web site at

MOONEY AIRCRAFT: Court Allows AASI to Take Over Management
Advanced Aerodynamics & Structures, Inc. (OTC Bulletin Board:
AASI) announced that it has purchased Congress Financial Corp.'s
position as senior secured creditor for Mooney Aircraft
Corporation of Kerrville, Texas.  On February 6th, the US
Bankruptcy Court in San Antonio, Texas, approved an operating
agreement which allows AASI to manage Mooney while a plan of
reorganization is prepared for approval.  Mooney has operated
under the protection of Chapter 11 bankruptcy since July 2001.

AASI, located at Long Beach Airport, CA is developing a line of
high performance turboprop aircraft featuring exceptional safety
characteristics and ease of flight.  Mooney Aircraft Corporation
is the world's leading supplier of high performance single
engine general aviation aircraft primarily serving business and
owner-flown markets.  Mooney has produced over 10,000 aircraft
since its founding in 1947, and presently has over 8,000
aircraft in operation in the US alone.

AASI intends to acquire Mooney Aircraft's assets, and return to
full production of the Mooney Aircraft line.  The new company
formed from AASI and Mooney's assets will operate under the
Mooney name.  Citing a unique confluence of events including
general aviation tort reform, the availability of several top
quality general aviation lines, and the continued degradation in
the convenience of airline travel following September 11, Roy
Norris, the President and CEO of AASI and the former President
of Beach Aircraft summarized the Company's position as follows:
"We believe that we are on the doorstep of a major new growth
phase in small piston engine, turboprop and micro jet aircraft
as the only practical alternative for executive travel for
companies with $10 to $100 million in sales.  All of us at AASI
are very excited about this opportunity."

He added, "the acquisition of Mooney's assets is the first step
in our strategy to become a leading supplier of piston,
turboprop and light jet aircraft for the business and owner-
flown general aviation markets.  It is our intention to
accomplish this objective through both the acquisition of
existing high quality general aviation product lines and
development of revolutionary new aircraft models.  We have
received financing commitments to carry out the acquisition of
Mooney's assets."

Mr. Norris indicated that this strategy would include the
continued development of the JETCRUZER 500 as the safest and
easiest to fly business/owner-flown aircraft available.  To
enhance the JETCRUZER 500, the Company plans to evolve the
airplane's design with the goals of reducing weight and
manufacturing costs and introducing new avionics to enhance
safety of flight.

The Company believes that the redesigned JETCRUZER 500 will be
better positioned to serve as a step-up aircraft from Mooney
products through the use of similar interior and panel design
schemes.  AASI estimates that these design changes to the
JETCRUZER 500 will require approximately eighteen months
followed by an estimated 12-month flight-testing program,
culminating in FAA certification.  Commercial production at the
Kerrville facility will follow.

Mr. Norris stated, "As these JETCRUZER 500 design changes are
being completed, the Company will fully integrate the AASI and
Mooney operations. Our goals are to create a dynamic new general
aviation company, return Mooney to full production and create
substantial potential for earnings growth for the Company and
its shareholders."

It is the Company's intention to keep its headquarters,
development and marketing activities in its current Long Beach,
California airport facility. Upon integration of the product
lines, the Long Beach facility will become a major Mooney
factory service and delivery center for all of the Company's
aircraft models.  All manufacturing for the Mooney line, plus
future production of the JETCRUZER 500, is planned for
Kerrville, Texas.

The Company's immediate priority is to restore Mooney spare
parts manufacturing and customer support activities to ensure
that Mooney operators can obtain spare parts and service for
their airplanes.  Work will begin immediately to build inventory
levels of parts to permit a near term return to new aircraft

"A significant component of the factors that drove Mooney into
bankruptcy was spiraling costs that were passed along as price
increases for Mooney's products.  Our intentions are to reverse
this cost cycle prior to a return to full production," stated
Mr. Norris.  "We intend to produce a quality product at a
competitive price.  The rate of our return to full production
will be modulated by our success in achieving these cost
reductions," he added.

AASI is being advised by Balfour Advisors, LLC, a New York
investment firm which provides financial advisory services to
companies.  Balfour advised AASI in the acquisition of the
secured debt of Congress and is assisting in the reorganization
of Mooney Aircraft Corp.  "We think this is a tremendous
opportunity for this seasoned management team to turnaround a
brand name franchise.  We look forward for our continued
involvement with the Company," said Joseph E. Sarachek,
President of Balfour Advisors, LLC.   Balfour is actively
reviewing additional strategic opportunities for AASI.

AASI intends to seek further product line acquisitions in the
general aviation industry to complement the existing Mooney and
JETCRUZER product lines.

NATIONAL GOLF: Lenders Forbear Defaults Under Credit Agreement
National Golf Properties, Inc., (NYSE:TEE) confirmed that it was
in continuing discussions with various stakeholders, including
its primary tenant American Golf Corporation, regarding its
restructuring efforts.

While there can be no assurance that any transaction will be
completed, these discussions include, among other things, a
possible combination of National Golf Properties and American
Golf. In connection with its restructuring efforts, the Company
announced that it had reached a forbearance agreement with
certain of its lenders on account of defaults under its
$300,000,000 unsecured credit facility. The Company had been in
default under its credit facility due to American Golf's non-
compliance with a certain fixed charge coverage ratio in the
Company's credit facility, defaults under the provisions of
American Golf's debt instruments and American Golf's failure to
be fully current in its lease payments to National Golf
Operating Partnership, L.P. (NGOP), a less-than-wholly-owned
affiliate of the Company.

Separately, in an effort to increase financial flexibility as it
focuses on financing and strategic alternatives, the Company
announced its plan to suspend dividend payments on common stock.
Additionally, NGOP announced that it was suspending
distributions to its common and preferred equity holders. The
Company and NGOP intend to review future dividend and
distribution decisions on a quarterly basis.

National Golf Properties is the largest publicly traded company
in the United States specializing in the ownership of golf
course properties with 136 golf courses geographically
diversified among 23 states.

NATIONSRENT: Committee & UST Balk At Zolfo's $2.5MM Success Fee
The Official Committee of Unsecured Creditors asks the Court to
defer its decision on the portion of the NationsRent Inc., and
its debtor-affiliates' application providing for payment of a
$2,500,000 Consummation Fee to Zolfo Cooper.

Neil B. Glassman, Esq., at The Bayard Firm in Wilmington,
Delaware, relates that the Committee and its professionals need
additional time to review the application and communicate with
the Debtors to determine the exact scope of Zolfo Cooper's
retention.  The Committee has obtained assurances that the Zolfo
will not duplicate work performed by any other professional.  
The Committee, however, still has concerns including verifying
if the Debtors intend to hire other professionals based on the
same success fee type of arrangement.

Mr. Glassman says the Committee thinks the $2,500,000
Consummation Fee is excessive when considered in light Zolfo's
significant hourly rates.  The payment criteria is also not
adequately defined and additional details about the terms of the
Fee Structure is necessary regarding the circumstances giving
rise to Zolfo Cooper's entitlement of the Consummation Fee.

Zolfo Cooper's engagement provides that the payment of
Consummation Fee would be required if the firm succeeds in

A. A consensual restructuring, compromise or extinguishment of a
     substantial amount of the Debtors' existing indebtedness;

B. A final order approving a Reorganization Plan;

C. A sale of substantially all of the Debtors' assets.

Mr. Glassman finds those statements too open-ended and
sufficiently vague to give rise to disputes. The circumstances
leading to such payment, Mr. Glassman says, must be described in
more detail and the reference to "substantial amount" of
indebtedness must be quantified based on some objective measure.
Also, the advance approval of the Consummation Fee inappropriate
since based on the circumstances of the Debtors' cases, there is
no compelling reason why the Consummation Fee should be approved
in advance.

Mr. Glassman asserts that the perilous situation brought on by
the Consummation Fee is made worse by the fact that Zolfo Cooper
has the right to receive payment of such fee twelve months after
the termination of the engagement.  The Committee thinks the
Court should reduce the amount of the Consummation Fee and that
the payment of that Fee should be conditioned upon a showing of
results by Zolfo Cooper.

                       US Trustee Objects

The Acting United States Trustee for Region 3, Donald F. Walton,
asks the Court to deny the Debtors' application to employ Zolfo
Cooper as consultants.

Don A. Beskrone, Esq., in Wilmington, Delaware, states that the
services in connection with Zolfo Coopers' engagement do not
appear to include investment banking services and thus the firm
will not be marketing the Debtors' business for sale.  The
proposed fee structure, meanwhile, includes payment of Zolfo
Coopers' standard rates, which are asserted to be representative
of prevailing market rates, ranging up to $625 per hour, as well
as the payment of a Consummation Fee of $2,500,000.  The
proposed fee structure does not contain an agreement whereby
Zolfo Coopers would credit all or any portion of its hourly
compensation against the Consummation Fee.

Mr. Beskrone tells the Court that the US Trustee finds Zolfo
Coopers' hourly rates to be at the high end of normal market
rates.  The US Trustee also finds it is inappropriate to pay the
firm a Consummation Fee based upon a sale of the Debtors'
business when the description of services to be performed
indicate that Zolfo Coopers will not be acting as an investment
banker for any sale.

Even assuming that the Consummation Fee would otherwise be
appropriately awarded to a non-investment banker, Mr. Beskrone
states that the Consummation Fee which is based solely upon
confirmation of a Chapter 11 Plan or sale of substantially all
of the Debtors' assets without tying the amount to the results
achieved, would appear to provide Zolfo Coopers a windfall.
Every Chapter 11 Case, according to him, involves confirmation
of a Plan or a sale of assets unless the case in converted or

Mr. Breskone adds that the proposed success fee is not
structured to provide an incentive for Zolfo Coopers to maximize
value for the estate. Instead, it is simply a flat amount that
would become payable regardless of how well or poorly the
creditors are treated in the Chapter 11 case. Although, upon
information and belief, Zolfo Coopers has agreed that the
entirety of its fees shall be subject to review under and shall
not be subject to the protection provided in its terms of
engagement, advance approval of the Consummation Fee is

According to Mr. Breskone, the Court should only consider the
merits of Zolfo Cooper's request for payment of the Consummation
Fee only after the vague payment criteria in the engagement
letter have been satisfied. "At this time, there is no way that
the Court or parties in interest can make a reasoned judgment as
to whether ZC should be paid a Consummation Fee for a
reorganization which may ultimately prove unsuccessful," Mr.
Breskon says.

In addition, Mr. Breskone states that the tail provision of the
engagement letter of which would permit Zolfo Coopeers the right
to receive payment of the Consummation Fee of 12 months after
the termination of its engagement, further militates against
advance approval of the Consummation Fee.  Mr. Breskone adds
that Zolfo Coopers should not receive payment of the
Consummation Fee if the sale of the Debtors' assets or the
successful reorganization of the Debtors' business result
primarily from the efforts of other professionals that may also
be entitled to payment of similar success fees or bonuses.
(NationsRent Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

OWENS CORNING: Seeks Six-Month Exclusivity Extension
Owens Corning, and its debtor-affiliates request, pursuant to 11
U.S.C. Sec. 1121(d), ask for a third extension of the time
during which only Owens Corning may file a plan of
reorganization and solicit acceptances of that plan.  The
Debtors ask for a six-month extension, giving them through and
including August 2, 2002 to propose and file a plan and through
and including October 3, 2002, to solicit creditors' votes on a
plan, all without prejudice to the Company's right to seek
further extensions of the Exclusive Periods.

Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware, argues that the Exclusive Periods are intended to
afford the Debtors a full and fair opportunity to rehabilitate
their businesses and to negotiate and propose one or more
reorganization plans without the deterioration and disruption of
their businesses that might be caused by the filing of competing
plans of reorganization by non-debtor parties. Although the
Debtors have made significant progress towards reorganization
since the Petition Date, the Debtors are seeking to further
extend each of the Exclusive Periods by an additional six months
in order to afford the Debtors additional time to develop a
reorganization plan.

Mr. Pernick submits that the Debtors' cases are both exceedingly
large and complex with scheduled assets in excess of
$14,000,000,000 and scheduled liabilities in excess of
$11,000,000,000, and a 16,000 employee workforce.  Separate and
apart from their size, the Debtors' cases are extremely complex
as it involves eighteen debtors and dozens of non-debtor
entities, whose assets and business operations are spread
throughout the United States and numerous foreign countries. Mr.
Pernick adds that these cases have complex inter-creditor
issues, involving numerous competing creditor groups such as
bond holders, an unsecured bank group, trade creditors and those
creditors and other parties holding "present" and "future"
asbestos claims.  The multiple issues between and among these
constituencies add layers of complexity to these cases.

Separately, Mr. Pernick points out that the asbestos claims in
these cases raise many difficult issues for the Debtors'
reorganization. Among other things, due to the number of
asbestos claims in these cases, which is expected to number in
the hundreds of thousands, the Debtors face huge logistical
issues with respect to the establishment of bar dates,
associated notice issues and the processing of filed asbestos-
related claims. These logistical issues also arise in connection
with the Debtors' non-asbestos related claims, which although
not as numerous as the Debtors' anticipated asbestos claims are
expected to number in the tens of thousands.

Mr. Pernick contends that to terminate the Exclusive Periods
prematurely would deny the Debtors a meaningful opportunity to
negotiate with creditors and propose a confirmable plan and,
thus, would be antithetical to the purpose of Chapter 11.
Termination of the Exclusive Periods at this time and the
concomitant threat of multiple plans could lead to unwarranted
confrontations, resulting in increased administrative costs.

Mr. Pernick believes that the requested extension of the
Exclusive Periods will not prejudice the legitimate interests of
any creditor or equity security holder. To the contrary, the
extension will further the Debtors' efforts to preserve value
and avoid unnecessary and wasteful motion practice.

Mr. Pernick asserts that the Debtors should be afforded a full
and fair opportunity to negotiate, propose and seek acceptances
of a Chapter 11 plan. The Debtors submit that the extension
requested herein will increase the likelihood of a greater
distribution to creditors than would be possible if the Debtors
were required to file a plan prior to having such a full and
fair opportunity. Accordingly, the Debtors believe that the
requested extension is warranted and, indeed, appropriate under
the circumstances.

A hearing this request is scheduled for February 25, 2002.
(Owens Corning Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

PHAR-MOR INC: Net Loss Tops $7.8 Million in 2002 2nd Quarter
Phar-Mor, Inc., (OTC: PMORQ) announced the results for its
second quarter of fiscal 2002, the thirteen weeks ended December
29, 2001.

The Company reported a net loss of $7,007,000 for the thirteen
weeks ended December 29, 2001 compared to a net income of
$7,842,000 the comparable thirteen weeks ended December 30,
2000.  The current quarter results include a credit for
reorganization items of $4,849,000 while the prior year results
include an extraordinary gain on the early extinguishment of
debt of $17,097,000.

Comparable store sales for the continuing 74 stores declined
16.4% from $226,481,000 in the thirteen weeks ended December 30,
2000 to $189,361,000 in the thirteen weeks ended December 29,
2001.  Comparable store pharmacy sales increased 5.0% while
comparable store front-end sales decreased 25.3%. Front-end
sales were negatively impacted by interruptions in supply prior
to and after the Company's bankruptcy filing on September 24,
2001.  The Company did not advertise the first two weeks in
October as a result of the difficulty in obtaining sufficient
quantities of goods for products featured in its weekly
advertising circulars.

(For a more detailed discussion of the Company's financial
results for the thirteen weeks ended December 29, 2001, please
refer to the company's Form 10-Q filed on February 8, 2002, with
the Securities and Exchange Commission at

On November 12, 2001 the Company issued its condensed
consolidated financial statements for the thirteen weeks ended
September 29, 2001.  These financial statements included the
Company's equity in Chemlink's and Avatex's losses based on
information provided by Chemlink and Avatex as of the filing
date.  Avatex Corporation is the Company's principal
shareholder.  Subsequent to the issuance of these financial
statements, management determined that Chemlink and Avatex
recognized additional losses over the amount previously reported
to the Company, which was due to an impairment charge recorded
against certain patents held by Chemlink.

As a result, the Company has restated its condensed consolidated
financial statements for the three months ended September 29,
2001 to recognize an additional $2,423,000 of equity in the
losses of Chemlink and Avatex, the amount necessary to reduce
both of the investments to zero.  The Company does not have any
commitment to provide future financial support to Chemlink or
Avatex, therefore, pursuant to generally accepted accounting
principles, the Company will not recognize its equity in any
additional losses of Chemlink or Avatex.

Phar-Mor is a retail drug store chain operating 74 stores in 8
states. The company filed for Chapter 11 reorganization in the
U.S. Bankruptcy Court for the Northern District of Ohio on
September 24, 2001.

PINNACLE HOLDINGS: S&P Junks Ratings on Likely Bankruptcy Filing
Standard & Poor's lowered its ratings on Pinnacle Holdings Inc.
and subsidiary Pinnacle Tower Inc. The ratings remain on
CreditWatch with negative implications.

The downgrade is based on the company's public statements that
it may have to file for bankruptcy protection because Pinnacle
Tower's forbearance agreement with senior bank lenders prohibits
it from distributing funds to its parent for servicing of
interest payments on Pinnacle Holdings' $200 million 5.5%
convertible subordinated note issue. Failure to pay interest on
the convertible subordinated notes could result in an
acceleration of repayment of the notes as well as other debt.

               Ratings Lowered and Remaining
                   on CreditWatch Negative

Pinnacle Holdings Inc.                           TO    FROM
   Corporate credit rating                        CC    CCC+
   Senior unsecured debt                          C     CCC-
Pinnacle Towers Inc.
   $285 mil. secured revolving credit facility*   CC    CCC+
   $125 mil. secured term loan*                   CC    CCC+
   $110 mil. secured term loan*                   CC    CCC+
*Guaranteed by Pinnacle Holdings Inc.

PRANDIUM INC: Unit Bolts on Deal to Sell Hamlet Group to Othello
Prandium, Inc. (OTC Bulletin Board: PDIM), announced that on
February 6, 2002 its wholly owned subsidiary FRI-MRD Corporation
terminated the Stock Purchase Agreement between it and Othello
Holding Corporation for the sale of The Hamlet Group, Inc., the
operator of the 14 unit Hamburger Hamlet restaurant chain.  The
agreement, executed on October 23, 2001, was terminated in
accordance with certain provisions therein.

As previously disclosed in its public filings and press
releases, Prandium is currently negotiating with certain of its
creditors, including Foothill Capital Corporation as the
provider of its credit facility, the holders of FRI-MRD
Corporation's outstanding long-term debt and some of the holders
of Prandium's outstanding long-term debt, to reach agreement on
an acceptable capital restructuring of the Company and its
subsidiaries and to that end has negotiated and executed a term
sheet with an authorized representative of holders of a majority
of the FRI-MRD long-term debt.  This term sheet requires, as
part of the capital restructuring, the sale of the Hamburger
Hamlet business and therefore to fulfill the terms of the term
sheet, the Company must find an acceptable buyer.  Prandium
continues to explore and develop opportunities to sell the
Hamburger Hamlet business, including to Othello.  Although the
Company has not met certain deadlines contained in the term
sheet, the term sheet has not been terminated by the
representative of the FRI-MRD long-term debt holders.

As currently contemplated, in addition to the sale of the
Hamburger Hamlet business, the restructuring would involve a
prearranged or prepackaged plan of reorganization to be
implemented through the commencement of cases by Prandium and
FRI-MRD Corporation under chapter 11 of the United States
Bankruptcy Code. In light of the amount that the Company owes to
creditors and the size of the Company's operations, the Company
does not anticipate that, under any such prearranged or
prepackaged plan, there will be value available for distribution
to its current stockholders or the holders of Prandium's 10-7/8%
subordinated notes.

All restaurants continue operations.

Prandium does not currently plan that any prearranged or
prepackaged chapter 11 filing would involve any of its operating
subsidiaries (Chi-Chi's, Koo Koo Roo and Hamburger Hamlet).  The
Company believes its available cash balances will provide
sufficient financial resources to fully fund operations during
the anticipated restructuring period.

Prandium continues to support its Koo Koo Roo, Chi-Chi's, and
Hamburger Hamlet restaurants (approximately 190 locations) and
their customers with the same high quality customer service it
has always provided.  In addition, Prandium continues to
maintain all normal business functions including marketing and
concept development activities designed to generate new

Prandium cannot provide any assurance that it will be able to
sell the Hamburger Hamlet business on acceptable terms as
required by the FRI-MRD term sheet, that it will be able to
reach an acceptable agreement with its creditors on a capital
restructuring, on the terms of such an agreement, or on such an
agreement's effect on the Company's operations.  If the Company
cannot reach such an agreement, it will need to consider other
alternatives, including, but not limited to, a federal
bankruptcy filing without a prearranged or prepackaged
reorganization plan.  There can be no assurance that the Company
would be able to reorganize successfully in such a proceeding.  
Under any circumstances, the Company does not anticipate that
there will be value available for distribution to its current
stockholders or the holders of Prandium's 10-7/8% subordinated

Prandium operates a portfolio of full-service and fast-casual
restaurants including Hamburger Hamlet, Koo Koo Roo, and Chi-
Chi's in the United States. Prandium, Inc. is located at 2701
Alton Parkway, Irvine, CA 92606.  To contact the Company call
(949) 863-8500, or the toll-free investor information line at
(888) 288-PRAN, or link to

PSINET INC: Court Extends Exclusive Plan Filing Time to April 30
PSINet, Inc., and its debtor-affiliates sought and obtained a
second extension of their exclusive period to file a plan
through and including April 30, 2002, and a further extension of
their exclusive period to solicit acceptances of that plan
through and including July 1, 2002.

The Debtors tell Judge Gerber that their personnel and outside
advisors have been consumed during the first eight months of
these chapter 11 cases with a myriad of issues that have been
complex and time intensive. At this juncture, there is genuine
and legitimate need for an extension of the exclusive periods,
the Debtors represent.

Based on the factors that courts examine in granting extensions,
the Debtors believe that ample cause exists for the requested

First, the PSINet cases are large and complex, involving 26
separate debtors with several thousand creditors and
approximately $4.3 billion in estimated indebtedness and non-
debtor subsidiaries in numerous countries around the world, the
Debtors reiterate.

Second, significant progress has been made in these cases toward
reorganization, the Debtors submit. The Debtors' attorneys at
Wilmer, Cutler tell the Court that the Debtors have worked
diligently in their efforts to stabilize their business
operations and to implement certain restructuring strategies for
the benefit of their estates and creditors. In addition the
myriad of issues handled and advancements made in the
reorganization process (previously reported in the newsletter),
the Debtors draw the Court's attention to certain significant
matters which they have addressed:

   * gaining the support and confidence of their creditor body,
   * developing an effective restructuring strategy.
   * exploring a number of different reorganization alternatives
     including different asset dispositions and stand-alone
   * pursuing a dual track approach -- marketing businesses for
     sale while simultaneously developing and analyzing a stand-
     alone business plan which could serve as the basis for a
     plan of reorganization.

The Debtors advise that in the upcoming months, they may be in a
position to determine whether a potential sale of their business
or a stand-alone reorganization is in the best interest of these
Chapter 11 estates. With the assistance of their financial
advisors, the Debtors have been engaged in an extensive
marketing effort for their businesses - both as a world-wide
concern and as various regional and business segments. The
Debtors will negotiate in good faith with Cogent toward a sale
of their U.S. business, but are not bound to enter into a
definitive sale agreement with Cogent The Debtors estimate that
they have received or will receive approximately $25 million
from the sale of various businesses and assets already approved
by the Court.

The Debtors reassure that they are not seeking to extend the
Exclusive Periods to pressure creditors to accede to any
reorganization demands and they are paying their debts as they
come due. Further, extending the Exclusive Periods in these
cases will not prejudice the legitimate interests of any
creditor or equity security holder and will afford the parties
the opportunity to pursue to fruition the beneficial objectives
of a consensual plan of reorganization, the Debtors tell Judge

The Debtors indicate that the Committee supports the proposed
extension of the Exclusive Periods. (PSINet Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

RELIANCE GROUP: Obtains 90-Day Extension of Exclusive Periods
Pursuant to Section 1121(b) of the Bankruptcy Code, Reliance
Group Holdings, Inc., and Reliance Financial Services sought and
obtained an extension of their exclusive periods during which to
propose and file a plan of reorganization and solicit creditors'
acceptance of that plan.

Steven R. Gross, Esq., at Debevoise & Plimption, tells Judge
Gonzalez that Reliance has made progress toward formulating a
reorganization plan.  However, a number of factors have delayed
this goal, principally, the time and resources spent responding
to the numerous objections and motions filed by the Pennsylvania
Insurance Department.  Mr. Gross says that the Committees stand
by the Debtors in their efforts to defend the estates against
"the barrage of litigation launched by the Pennsylvania
Insurance Department."   This distraction has only recently
allowed the Debtors and the Committees the opportunity to resume
negotiations about a plan of reorganization.  In addition, Mr.
Gross asserts that there are complicated tax issues that need
resolution. Therefore, the Debtors need additional time to
continue negotiations with the Committees and investigate the
tax issues.

Mr. Gross assures the Court that the purpose of this request is
to preserve the value of the estate, not to prejudice creditors.
The Debtors have attempted to preserve assets and have kept
expenditures for administrative and maintenance expenses as low
as possible.

The Debtors obtained a 90-day extension of their exclusive
periods.  This means the Debtors' exclusive period during which
to propose and file a plan of reorganization will expire on May
8, 2002, and the Debtors' exclusive solicitation period expires
on July 8, 2002.  This request is without prejudice to the
Debtors' right to seek further extensions. (Reliance Bankruptcy
News, Issue No. 19; Bankruptcy Creditors' Service, Inc.,

ROUGE INDUSTRIES: Working Capital Deficit Tops $42MM in Q4 2001
Rouge Industries, Inc. (NYSE: ROU) reported a net loss of $14.1
million, for the fourth quarter of 2001.

The fourth quarter loss is net of a one-time gain totaling $25.7
million associated with the settlement of two contractual
disputes.  In one case, Rouge Steel, the Company's primary
operating subsidiary, and Ford Motor Company settled certain
claims related to the 1999 Powerhouse explosion.  The settlement
of these claims and adjustments relating to the Company's
remaining obligations resulted in a one-time non-cash profit
effect of $17.2 million. The Company also settled a claim
related to an energy supply contract, which resulted in a one-
time profit and cash flow effect of $8.5 million.

Also, at the end of the 2001 fourth quarter, the company's
balance sheet showed that its total current liabilities exceeded
its total current assets by about $42 million.

Shipments in the fourth quarter totaled 619,000 tons, 53,000
tons or 9.4% higher than the fourth quarter of 2000.  Sales in
the fourth quarter totaled $223.5 million, down $7.2 million or
3.1% from a year ago.

                        Full Year 2001

The Company reported a net loss of $111.5 million for the year
ended December 31, 2001.  This loss is net of a one-time gain of
$88.8 million associated with the settlement of claims relating
to the 1999 Powerhouse explosion ($80.3 million) and an energy
supply contract ($8.5 million).  Shipments and sales in 2001
totaled 2.4 million tons and $923.5 million, down 5.1% and
16.0%, respectively, from 2000.

                      Chairman's Comments

"2001 was a year of contradictions for our Company and the U.S.
steel industry in general.  Although the U.S. experienced its
third best automotive sales year, domestic steel industry
shipments were down nearly 10% and an increasing number of steel
companies sought bankruptcy protection or shut down completely,"
remarked Carl L. Valdiserri, the Company's chairman and chief
executive officer.  "The conditions that led to steel company
failures were primarily attributable to liquidation-level
pricing for steel products caused by the continuing effects of
low-priced and unfairly traded steel imports into our country.  
Now, as we approach the Section 201 remedy decision by the Bush
Administration, we have witnessed some semblance of price
improvement due to domestic steel company closures and less
aggressive actions from importers, which we believe is a
temporary and preemptive attempt by foreign producers to
mitigate the level and scope of tariffs and quotas that
potentially will be imposed on them.

"We are encouraged that key members of the domestic steel
industry, including major integrated and mini-mill companies,
have reached agreement on a proposed restructuring plan that
addresses the primary obstacles to consolidation.  We are
hopeful that the Bush Administration and Congress will give
favorable consideration to the elements of this plan in
recognition of the painful consequences of inaction.

"Despite a very difficult year, we maintained our focus on the
needs and expectations of our customers.  Rouge Steel led all of
its competitors in implementing cost reduction suggestions at
one of its largest automotive customers.  Our Advanced Materials
Engineering group expanded the scope and level of its structural
design and analysis capabilities to further improve the cost,
quality, weight and safety advantages of steel products in
vehicles. Rouge Steel continued to upgrade its strong hot dip
galvanized order book and expand its sale of high carbon and
alloy products.

"I am particularly pleased that through the dedicated efforts of
our people, on December 14, 2001, Rouge Steel earned ISO 14001
certification by Lloyd's Register Quality Assurance," added Mr.
Valdiserri.  ISO 14001 is the internationally recognized
standard for environmental management systems, which Ford Motor
Company, DaimlerChrysler and General Motors Corporation are now
requiring from their leading suppliers.

"We are also very proud that Rouge Steel recently received
DaimlerChrysler's Director's Award for 2001.  The Director's
Award is presented to those suppliers that have demonstrated the
best overall performance to DaimlerChrysler's Balanced Score
Card metrics including Quality, Delivery, Technology and Cost.  
This is particularly gratifying since it comes barely ten months
after being named General Motors Flat Rolled Steel Supplier of
the Year for 2000.  Both awards signify Rouge Steel's continuing
commitment to supplying the best products and services to its
customers," concluded Mr. Valdiserri.

                       Double Eagle Update

On December 15, 2001, a fire in the upper plating section halted
production at Double Eagle Steel Coating Company, a Dearborn
based electrogalvanizing line jointly owned and operated by
United States Steel Corporation (NYSE: X) and Rouge Steel.  All
employees were safely evacuated from the facility.  Rouge Steel
has already made arrangements to reallocate its portion of
Double Eagle's production to other domestic coating facilities.
The Company does not anticipate any lost sales as a result of
the fire.

Rouge Steel has an insurance program that provides coverage for
damage to property destroyed, interruption of business
operations and expenses incurred to minimize the period of
disruption to operations.  The Company believes that its share
of such damages and losses will be substantially covered by its
insurance program above a $7.5 million deductible.  The Company
incurred fire- related expenses totaling $700,000 in the fourth
quarter but will not report any insurance recovery until costs
incurred are in excess of the deductible. It is expected that
this will occur during the first quarter of 2002.  At this
point, Rouge Steel and U.S. Steel are assessing the damage and
determining the costs and time necessary to repair Double Eagle.  
Once the owners agree on a course of action, a separate
announcement will be issued.


The Company closed on a new credit facility during the fourth
quarter of 2001, which provides up to $75 million in additional
liquidity to meet the Company's cash requirements in the months
ahead.  Although this new subordinated agreement was initially
set to expire on March 29, 2002, the Company has since reached
an agreement to have this facility extended through December 31,
2002.  The Company is continuing negotiations with its lender to
achieve a further extension into 2003.

"The Company's debt at the end of December 2001 totaled $145.5
million, $16.3 million higher than the end of the third quarter
and $79.0 million higher than year-end 2000," said Gary P.
Latendresse, vice chairman and chief financial officer.  "The
increase in debt is the result of low steel selling prices, a
weakened U.S. economy and less favorable sales mix.  We are
pleased that we were able to reach a conclusion on certain
financing matters and contractual issues late last year.  In the
first quarter, spot market selling prices have begun to
strengthen and sales volumes are at reasonable levels. Although
cash will remain a concern, if the Bush Administration
implements meaningful and comprehensive Section 201 import
restraints in early March, conditions for the domestic steel
industry should continue to improve in 2002. We are grateful for
our many customers and suppliers who have offered their support
and assistance to Rouge Steel during this very difficult period
for our Company, our industry and our country," concluded Mr.

                         NYSE Notice

The Company also announced that it has been notified by the New
York Stock Exchange ("NYSE") that its share price had fallen
below the continued listing criteria relating to the minimum
share price.  The NYSE requires an average closing price of not
less than $1.00 per share over a consecutive 30-day trading
period.  The Company's share price closed under $1.00 from
shortly after September 11 until the end of November.  Following
such notification by the NYSE, the Company is required to return
its share price and average share price to above $1.00 within
six months or face possible delisting.  The Company is currently
pursuing alternatives that will bring its share price into
compliance with NYSE requirements.  However, in the event that
the NYSE undertakes delisting procedures with respect to Rouge
Industries' shares, the Company believes that an alternate
trading venue would be available.  The Company's share price
closed above $1.00 on December 3, 2001, and, except for December
19, 2001, has remained at or above that level since then.

SAFETY-KLEEN: Wants to Expand Arthur Andersen's Audit Engagement
Safety-Kleen Corporation and its related and subsidiary Debtors
bring a second Application for an Order further modifying and
expanding the Debtors' employment and retention of Arthur
Andersen LLP as auditors, accountants and tax advisors to these
chapter 11 estates, nunc pro tunc to June 29, 2000, and
authorizing Andersen to be compensated retroactively for these
additional services.  The Debtors remind Judge Walsh that on
September 14, 2000, he entered his Order authorizing the nunc
pro tunc employment of Andersen as auditors and accounting
advisors to the Debtors retroactive to June 29, 2000.

In May 2001 the Debtors brought their first Application for an
Order expanding and modifying the scope of employment of
Andersen as auditors, accounting and tax advisors to the
Debtors.  By this Application, the Debtors sought to encompass
the additional services identified in six engagement letters
attached to the Application. These additional services included
(i) a review of the processes and supporting systems for the
Debtors' various finance, accounting and administrative
functions; (ii) development of recommendations for the
improvement of these functions; (iii) assistance to the Debtors'
staff, as needed, with the implementation of such
recommendations; (iv) audit of the Debtors' consolidated balance
sheet as of August 31, 2001, together with the related
consolidated statements of income and cash flows for the year
then ending; (v) review of the quarterly financial information
to be included in the Debtors' reports filed with the Securities
& Exchange Commission; (vi) providing personnel to assist the
Debtors' accounting staff in accumulating and analyzing
information required for the completion of the financial
statements; (vii) providing personnel to assist the Debtors with
various tax-related matters; and (viii) assistance with the
preparation of income and property tax returns to be filed in
Puerto Rico.  On July 19, 2001, Judge Walsh entered his Order
granting this Application nunc pro tunc, and declared that
Andersen was to be compensated for the additional services in
accordance with the terms of the various engagement letters.

Subsequent to the entry of the Order granting the Application
for expanded services, the Debtors identified three respects in
which the order needed to be supplemented.  These are: (i) the
need to include certain exhibits which were omitted from an
attachment to the previous Order approving an expanded scope of
employment for Andersen; (ii) to expand Andersen's engagement to
include certain audit services to Safety-Kleen Envirosystems
Company of Puerto Rico, Inc., and (iii) to clarify the expanded
scope order as to reimbursement of certain fees. To that end, on
September 28, 2001, the Debtors brought an Application to
Supplement Order Expanding Scope of Employment and Retention of
Arthur Andersen.

After discussions with the United States Trustee, the Debtors
submitted a revised Expanded Scope Order which clarified the
scope of attorney's fees for which Arthur Andersen could seek
reimbursement.  This Order has not been entered by Judge Walsh.  
The Debtors say they are not aware of any pending objections to
the Supplemental Application, and await Judge Walsh's entry of
their proposed Order.

The Debtors have now identified six further areas in which the
scope of Arthur Andersen's engagement should be modified and
expanded. Accordingly, the Debtors bring this Application
seeking an Order further modifying and expanding the scope of
Arthur Andersen's engagement.

                      Accounting Assistance

First, by an additional Engagement Letter dated March 23, 2001,
Arthur Andersen agreed to provide personnel to assist the
Debtors' accounting staff's anticipated completion of the work
described on or before December 31, 2001.  The Debtors have
determined that this deadline is not feasible.  Accordingly,
this Additional Engagement Letter should be amended to extend
the deadline for expiration of the engagement until such time as
the Debtors determine that their quarterly and annual financial
statements for fiscal 2001 and prior periods have been

                        Tax-Related Matters

Second, the Additional Engagement Letter dated May 4, 2001, by  
which Andersen agreed to assist in specified tax-related
matters, anticipated completion of the work described on or
before December 31, 2001. Again, the Debtors have determined
that this deadline is not feasible. Accordingly, this Additional
Engagement Letter should be amended to extend the deadline until
the earlier of (i) December 31, 2002 and (ii) the date the
Debtors confirm a plan of reorganization in these cases.

                  Finance And Accounting Processes

Third, the Additional Engagement Letter dated February 1, 2001,
provides that for each specific function within finance and
accounting for which Arthur Andersen is asked to review and
evaluate processes, Arthur Andersen will prepare a rider to this  
arrangement letter that outlines the detailed scope for that
respective effort. Consistent with that letter, Arthur Andersen
and the Debtors have prepared and executed such a rider with
respect to the next phase of process review to be performed by
Arthur Andersen. The Debtors believe that the Form Rider and the
review and evaluation described in that Rider are appropriate
and consistent with Arthur Andersen's previously approved
engagement, and that they and all future riders in substantially
the same form as the Form Rider should be approved.

                       Plan And Tax Services

Fourth, the Additional Engagement Letter dated March 31, 2001,
provided an initial estimate of $3,000,000 for the fees to be
incurred in auditing the Debtor's consolidated financial
statements for the year ending August 31, 2001. This estimate
contemplated that the annual financial statements and supporting
audit documentation would be completed by November 2001. This
deadline has proven not feasible. The resulting change in timing
has increased the overall cost of the engagement, such that fees
for the services referred to in the Additional Engagement Letter
dated March 31, 2001 are now estimated to be approximately
$4,250,000 to $4,750,000, assuming no further changes in timing.

The Debtors submit that these audit services remain vitally
important to their bankruptcy estates, and request that Judge
Walsh confirm Andersen is authorized to continue working on this
portion of the engagement consistent with the revised estimate.

                     Tax Implications Of Plan

Fifth, the Debtors have now determined that they require
assistance and advice regarding the tax implications of any
proposed plan of reorganization and other tax-related matters.  
Arguably, the Plan and Tax Services are within the scope of the
Additional Engagement Letter authorizing assistance on tax-
related matters. However, to avoid any uncertainty or ambiguity
on this issue, the Debtors are seeking confirmation that
Andersen is authorized to perform the Plan and Tax Services. The
Debtors submit that the Plan and Tax Services are essential,
warranted, and appropriate, and that, to the extent necessary,
the scope of Arthur Andersen's engagement should be expanded
to include such services.

                Reimbursement of AA's Attorney's Fees

The Debtors further submit that Andersen should be reimbursed
for the attorneys' fees incurred in connection with the
performance of the Plan and Tax Services to the same extent as
allowed for the other Additional Services.

                   CSD Audit Services & More Fees

The Debtors have determined that they require Andersen's
services in connection with the audit of consolidated balance
sheets as of August 31, 2001, August 31, 2000, and August 31,
1999 of the Debtors' Chemical Service Division.  As the Court is
aware, the Debtors are presently pursuing the potential
divestiture of certain of the Debtors, significance assets and
businesses. The Debtors thus submit that Andersen's employment
to perform the CSD Audit Services is necessary and appropriate
and should be approved by the Court. The Debtors further submit
that Andersen should be reimbursed for the attorneys' fees
incurred in connection with the performance of the CSD Audit
Services, to the same extent as allowed for the other Additional
Services. (Safety-Kleen Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    

SAKS INC: Comparable Store Sales Rise 2.1% in January
Retailer Saks Incorporated (NYSE:SKS) announced that comparable
store sales for the four weeks ended February 2, 2002 compared
to the four weeks ended January 27, 2001 increased 2.1% on a
total company basis. On a calendar-adjusted basis, comparing the
four weeks ended February 2, 2002 to the four weeks ended
February 3, 2001, comparable store sales increased 1.7% on a
total company basis. Sales below are in millions and represent
sales from owned departments only.

On a fiscal calendar basis, for the four weeks ended February 2,
2002 compared to the four weeks ended January 27, 2001, owned
sales were:

                                   Total     Comparable
                                  Increase    Increase
         This Year    Last Year  (Decrease)  (Decrease)
          ------       ------       ---         ---
SDSG      $183.4       $178.0       3.0%        7.9%
SFAE       145.1        156.1      (7.0%)      (4.4%)
          ------       ------       ---         ---
Total     $328.5       $334.1      (1.7%)       2.1%

On a calendar-adjusted basis, comparing the four weeks ended
February 2, 2002 to the four weeks ended February 3, 2001,
comparable store sales increases (decreases) were:

     SDSG                     6.5%
     SFAE                    (3.9%)
     Total                    1.7%

R. Brad Martin, Chairman and Chief Executive Officer of Saks
Incorporated, noted, "While January is primarily a clearance-
driven period, we are seeing positive momentum at SDSG
attributable to the execution of our customer-focused strategies
and the diversification of SDSG's market position. SFAE's
results reflect an underlying improvement in the sales trends
from the depressed levels experienced in prior months.
Additionally, the Company achieved its inventory objectives in
regard to both level and composition, ending the fiscal year
with consolidated comparable store inventories down
approximately 9% from last year's levels." Comparable store
sales for the Saks Fifth Avenue flagship store in New York City,
which represents approximately 7% of total Company sales and
approximately 17% of total SFAE sales on a normalized annual
basis, declined approximately 3% for January on a fiscal basis
and 1% on a calendar-adjusted basis.

For the 13 weeks ended February 2, 2002 compared to the thirteen
weeks ended January 27, 2001, owned sales were:

                                       Total    Comparable
          This Year      Last Year   (Decrease)  (Decrease)
          --------       --------       ---         ---
SDSG      $1,179.1       $1,267.7      (7.0%)      (2.0%)
SFAE         715.8          753.3      (5.0%)      (3.4%)
          --------       --------       ---         ---
Total     $1,894.9       $2,021.0      (6.2%)      (2.5%)

On a year-to-date basis for the 52 weeks ended February 2, 2002
compared to the 52 weeks ended January 27, 2001, owned sales

                                      Total     Comparable
          This Year      Last Year   (Decrease)  (Decrease)
          --------       --------       ---         ---
SDSG      $3,601.0       $3,842.6      (6.3%)      (2.1%)
SFAE       2,419.8        2,603.5      (7.1%)      (7.8%)
          --------       --------       ---         ---
Total     $6,020.8       $6,446.1      (6.6%)      (4.5%)

Merchandise categories with the best sales performances for SDSG
in January were women's apparel (better, moderate, and special
sizes), junior's apparel, and children's apparel. Categories
with softer sales performances for SDSG in January were soft
home, dresses, and intimate apparel. Categories with the best
sales performances for SFAE in January were women's contemporary
sportswear, bridge women's apparel, bridal, and fine jewelry.
Categories with the softest sales performances for SFAE in
January were women's designer apparel, outerwear, and men's

Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE),
which consists of 61 Saks Fifth Avenue stores and 51 Saks Off
5th stores. The Company also operates its Saks Department Store
Group (SDSG) with 41 Parisian specialty department stores and
202 traditional department stores under the names of Proffitt's,
McRae's, Younkers, Herberger's, Carson Pirie Scott, Bergner's,
and Boston Store.

                           *   *   *

As reported in the Feb. 1, 2002, edition of Troubled Company
Reporter, Standard & Poor's assigned its double-'B'-plus rating
to Saks Inc.'s $700 million senior secured bank credit facility
that expires in November 2006.

At the same time, Standard & Poor's affirmed its double-'B'
corporate credit and senior unsecured debt ratings on Saks. The
preliminary double-'B' senior unsecured and preliminary single-
'B'-plus subordinated ratings on the company's shelf
registration were also affirmed. The outlook is negative.

SHILOH INDUSTRIES: S&P Cuts Ratings Citing Near-Term Concerns
Standard & Poor's lowered its ratings on Shiloh Industries Inc.
At the same time, the ratings remain on CreditWatch with
negative implications, where they had been placed December 12,

The rating actions reflect Standard & Poor's increased concern
over the company's near-term operating outlook and the belief
that the company's financial flexibility has become quite

Shiloh produces blanks, stamped components, and modular
assemblies primarily for the North American automotive and
heavy-duty truck industry. The company also performs
intermediate steel processing for steel producers. The ratings
reflect the company's leveraged capital structure, limited
financial flexibility, and exposure to cyclical and competitive

Shiloh's operating results have come under pressure in recent
quarters due to softness in its end markets. The company
recently named a new CEO and cited this action as a reason for
delaying the filing of its 10K for fiscal year 2001 (fiscal
year-end is October.) In its notification of the late filing to
the SEC, Shiloh also stated that the results of operations of
the company for fiscal year 2001 will be significantly worse
than the operating results for fiscal year 2000. Specifically,
the company stated that it had experienced a significant
increase in net loss due to the overall decline in the
automotive and heavy truck markets.

Previous ratings had been based on an expectation that cost-
cutting actions would help offset industry pressures and lead to
improved operating results. However, given the company's
characterization of fiscal 2001 results and continuing difficult
industry fundamentals, Standard & Poor's no longer believes that
Shiloh will be able to achieve the expected improvement. Debt
to EBITDA at July 31, 2001, was close to 6 times and will likely
be higher at fiscal year-end.

Shiloh has limited flexibility for dealing with a period of
extended industry pressures. In May 2001, Shiloh amended its
revolving credit facility. At July 31, 2001, the company was in
compliance with covenants and had $72 million in borrowing
capacity under its bank lines. However, with the continued
softening in Shiloh's end markets in subsequent months, Standard
& Poor's believes that liquidity pressures have increased and
that the company is probably facing covenant issues.

Although Shiloh is public company, it is 56%-owned by MTD
Products Inc. (MTD), a private company, and operates as a stand-
alone entity. The ratings reflect Shiloh's financial and
business profile on a stand-alone basis due to its lack of
strategic importance to MTD, the arm's-length relationship
between the two companies, Shiloh's independent capitalization,
and separate bank agreements.

Standard & Poor's will assess Shiloh's financing and investment
requirements, sources of liquidity, and earnings and cash
generating potential over the near to intermediate term. If it
appears that the company will face continued earnings weakness
and increased liquidity pressures, the ratings are likely to be
lowered again.

       Ratings Lowered; Remain on CreditWatch Negative

     Shiloh Industries Inc.             TO      FROM
       Corporate credit rating          B-      BB-
       Senior secured debt              B-      BB-

STOCKWALK GROUP: Files Chapter 11 Petition with Prepackaged Plan
Stockwalk Group, Inc. (Nasdaq: STOK), filed a reorganization
petition under Chapter 11 of the U.S. Bankruptcy Code.   Under
the proposed plan of reorganization, Stockwalk will pay its
creditors 72% of annual net income (as defined in the plan)
until all creditors are paid in full. Details are contained in
the Plan of Reorganization and Disclosure Statement, which will
be filed with the court on February 12, 2002.  The plan has the
support of a committee of Stockwalk's creditors.

David Johnson, the company's chief executive officer, views the
reorganization as an opportunity for the company to make a fresh
start. "Unfortunately, without the reorganization, the company
could not survive and our creditors would only receive pennies
on every dollar.  However, with this plan in place, the company
has a chance to be profitable once again, and the creditors will
be the primary beneficiaries of that profitability."

Based in Minneapolis, Minn., Stockwalk Group, Inc., is the
parent company of Miller Johnson Steichen Kinnard, Inc., a full-
service brokerage firm of 300 investment executives in six
states; and, Inc., an online trading company (AOL
keyword: Stockwalk). Stockwalk Group, Inc. common stock trades
on the Nasdaq Stock Market under the symbol STOK.  Its broker
dealer subsidiaries are members of the National Association of
Securities Dealers (NASD) and the Securities Investor Protection
Corporation (SIPC). For more information, visit
http://www.stockwalkgroup.comor contact

SUN HEALTHCARE: Court Okays Ernst & Young as Debtors' Advisors
Judge Walrath approves Sun Healthcare Group, Inc., and its
debtor-affiliates' application to employ Ernst & Young as its
medical compliance, risk and quality management advisors nunc
pro tunc to November 16, 2001, provided that this portion of the
Engagement Letter is deleted and shall be of no force and

     "Ernst & Yong LLP's total aggregate liability under
      this Agreement or with respect to the services
      provided hereunder will be limited to the fees to be
      received by Ernst & Young LLP under this Agreement.
      In no event will Ernst & Young LLP be liable for
      consequential, incidental, indirect, punitive, or
      special damages, including loss of profits, date,
      business, or goodwill (collectively, "Excluded
      Damages"), even if advised of the likelihood of
      such damages. Recourse with respect to any liability
      or obligation of Ernst & Young LLP hereunder will be
      limited to the assets of Ernst & Young LLP, and no
      one will have recourse against, or will bring a claim
      against, any partner or employee or Ernst & Young LLP
      or any of the assets thereof. The provisions of this
      paragraph (i)will operate for the benefit of, and will
      be enforceable by, any Ernst & Young LLP International
      member or affiliated firm that is providing services
      hereunder with Ernst & Young LLP, and (ii) will apply
      to SUN and will apply regardless of whether Excluded
      Damages or liability is based upon breach of contract,
      tort, failure of essential purpose, or any other basis."

Ernst & Young will assist the Debtors in complying with its
Corporate Integrity Agreement obligations and that the Firm is
expected to:

  (i) address the Debtors' need for clinical quality improvement
      by providing comprehensive performance measures which
      enable quality improvement targets to be identified;

(ii) generate facility-specific reports immediately usable by
      clinical and administrative managers in order to improve
      facility operations;

(iii) address the Debtors' need for corporate integrity by
      introducing software which will help prevent false claims;

(iv) provide reports that assist executives with the
      identification of strengths and weaknesses of particular
      facilities, regions and managers;

  (v) address the Debtors' need for fair reimbursement by
      helping to identify inaccurate reporting of a patient's
      clinical status. (Sun Healthcare Bankruptcy News, Issue
      No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

TESORO PETROLEUM: Fitch Places Debt On Rating Watch Negative
Fitch Ratings has placed the debt of Tesoro Petroleum
Corporation on Rating Watch Negative following the company's
announcement it will acquire Valero's 168,000-bpd Golden Eagle
refinery and 70 associated marketing sites for $945 million plus
working capital estimated at $130 million. The agreement also
requires Tesoro to make up to $150 million of contingency
payments to Valero if California refining industry margins
exceed a certain threshold. Fitch currently rates Tesoro's
senior secured revolving credit facility at 'BB+' and the
company's subordinated debt 'BB-'.

Tesoro's initial plans to finance the acquisition include an
issuance of new debt and $250 million of equity. Fitch will
continue to review additional details on the transaction, which
will be incorporated into Fitch's ratings for the company.
Tesoro's debt is being placed on Rating Watch pending the
closing, which is expected to occur in April of 2002. A
downgrade to the ratings of Tesoro's debt is likely at that

The addition of Golden Eagle provides Tesoro with a complex
refinery in the highly margin state of California. Although
Fitch views the acquisition as a significant positive from an
operational and geographical diversification standpoint, the
acquisition will require the addition of a significant
amount of debt. The Golden Eagle acquisition follows closely
behind Tesoro's debt financed acquisition of two refineries and
associated retail assets from British Petroleum (BP) in
September 2001 for approximately $670 million.

Tesoro operates five wholly owned refineries with a total
combined capacity of 390,000 bpd. Tesoro refocused its business
strategy in the late 1990s, becoming primarily a downstream
player in the oil industry. The Washington and Hawaii refineries
were acquired in 1998 and in late 1999, Tesoro sold its
exploration and production assets to EEX Corp., effectively
exiting the upstream end of the business.

The company sells refined products wholesale or through
approximately 675 retail outlets and is beginning to market
through the Mirastar brand at Wal-Mart sites in 17 states in the
western United States. Tesoro is also the largest operator of
marine terminals along the Louisiana and Texas Gulf Coast with
16 terminals and operates several marine terminals on the West
Coast as well.

TRANSCOM: Union Urges SEC to Probe Comfort Systems Board Member
The Sheet Metal Workers' International Association has asked the
Securities and Exchange Commission to investigate Comfort
Systems USA (NYSE: FIX) for failing to disclose a board position
that Steven Harter held with another public company.

Harter was elected to the board of Transportation Components,
Inc. on October 15, 1999, but this fact was not disclosed in two
subsequent Comfort Systems proxy statements.

Transportation Components, also known as TransCom USA, filed for
Chapter 11 bankruptcy in June 2001.  The company was told in
February 2001 that it had fallen below the listing criteria for
the New York Stock Exchange and was subsequently delisted in May

Harter has been more than just a board member of both companies.  
Through his firm Notre Capital Ventures, Harter was a main
creator of TransCom and Comfort Systems by a process known as a

Two other roll-ups founded by Harter's firm have faced similar

     * The Physicians Resource Group was delisted by the New
       York Stock Exchange in 1998 and filed for Chapter 11
       bankruptcy in early 2000.

     * Metals USA was delisted from the New York Stock Exchange
       on November 14, 2001, concurrent with that company's
       filing for a Chapter 11 bankruptcy.

Comfort Systems USA is a leading provider of commercial and
industrial heating, ventilation and air conditioning services

The Sheet Metal Workers' International Association represents
over 150,000 members in the sheet metal industry, including
approximately 500 of Comfort Systems employees.

TRISM INC: Sells Assets & Leases to Bed Rock & Tri-State Prop.
TRISM, Inc. (OTC Bulletin Board: TSMX), formerly the nation's
leading transportation company specializing in the
transportation of environmental and secured materials such as
hazardous waste, explosives, military munitions and radioactive
materials, announced that it has sold substantially all of its
assets and certain of its executory contracts and leases to Bed
Rock, Inc., a Missouri corporation and Tri-State Properties,
LLC, a Missouri limited liability company.

On December 18, 2001, the Company announced that it had filed a
petition for voluntary reorganization of its operations under
Chapter 11 with the U.S. Bankruptcy Court for the Western
District of Missouri.  Since then the Company has operated as
debtor-in-possession and continued business as usual pending a
sale being approved by the Bankruptcy Court.

On January 30, 2002, the U.S. Bankruptcy Court for the Western
District of Missouri filed a Second Amended Order Pursuant to
Section 363 & 365 of the Bankruptcy Code Authorizing (A) Sale of
Certain Assets Free and Clear of Liens, Claims, Interest and
Encumbrances, and (B) Assumption and Assignment of Certain
Executory Contracts and Leases.  The order affects not only
TRISM, Inc. but also its various subsidiaries.

Pursuant to the Order, on February 5, 2002, the Company sold
substantially all of its assets and assigned certain executory
contracts and leases to Bed Rock, Inc. and Tri-State Properties,

The Company is now in the process of winding up its business and
disposing of its remaining assets in a manner consistent with
the best interests of the Company, and as permitted and approved
by the Bankruptcy Court.

VELOCITY EXPRESS: No Date Yet for Special Shareholders' Meeting
Velocity Express Corporation, a Delaware corporation formerly
known as United Shipping & Technology, Inc., is preparing to
hold a special meeting of its stockholders.  The date and time
has yet to be announced, however, the meeting will be held in
the Bloomington Room at the Radisson South Hotel, 7800
Normandale Blvd., Bloomington, Minnesota, for the following

     1. To approve an amendment to the Company's Certificate of
        Incorporation to effect a reverse stock split of the
        Company's outstanding common stock, whereby the Company
        will issue one new share of common stock in exchange for
        between two and five shares of the outstanding common

     2. To approve an amendment to the Company's Certificate of
        Incorporation to (i) eliminate the provisions providing
        for cash redemption of the Company's Series B, Series C
        and Series D Preferred Stock at a specified date and for
        redemption of the Company's Preferred Stock at the
        election of the holder thereof upon a change of control
        of the Company and (ii) grant to the holders of the
        Company's Preferred Stock certain approval rights with
        respect to changes of control of the Company;

     3. To approve an amendment to the Company's Certificate of
        Incorporation to reduce the conversion price for the
        Company's Series B Preferred Stock to $6.2224 per share,
        the conversion price for the Company's Series C
        Preferred Stock to $4.2645 per share, and the conversion
        price for the Company's Series D Preferred Stock to
        $0.7912 per share in order to reflect adjustments
        required by prior dilutive events;

     4. To approve an amendment to the Company's Certificate of
        Incorporation to reduce the conversion prices for the
        Company's Series B Preferred Stock and Series C
        Preferred Stock pursuant to an agreement with an
        investor to $1.3988 per share and $1.3867 per share,
        respectively; provided that, for purposes of determining
        the voting rights of the Series B and Series C Preferred
        Stock, the number of shares of common stock into which
        such Preferred Stock is convertible will not include
        any common stock issuable as a result of such reduction
        in conversion price; and

     5. To transact such other business as may properly come
        before the Meeting or any adjournment or postponement

Only stockholders of record holding shares of the Company's
common stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred
Stock and/or Series F Convertible Preferred Stock at the close
of business on January 2, 2002, are entitled to receive notice
of, and to vote at, the Meeting.

United Shipping and Technology, formerly U-Ship, offers same-
day, on-demand delivery service through its main operating
subsidiary, Velocity Express. In addition to time-sensitive
deliveries, the company provides support services for customers,
including logistics, warehousing, on-site services, fleet
replacement, and international air courier services. United
Shipping and Technology serves the financial, healthcare, and
retail industries through 210 locations in the US and Canada
using a fleet of some 9,000 vehicles. Investment firm TH Lee
Putnam Ventures controls about 33% of United Shipping and
Technology. At September 29, 2001, the company had a total
shareholders' equity deficit of about $35 million.

WARNACO GROUP: Wins Nod to Auction Surplus Cut & Sew Equipment
After hearing The Warnaco Group, Inc., and its debtor-
affiliates' motion and General Electric Capital Corporation's
objection, Judge Bohanon allows the Debtors to auction their
surplus cut and sew equipment, provided that:

-- Of the Sale Assets sold at the Auctions which are
   deemed subject to that certain Master Lease Agreement
   between GE Capital and Warnaco, the Debtors shall transfer to
   GE Capital no later than 2 business days after receipt

    (a) 50% of the proceeds from such sales (minus the
        applicable buyer's premium paid by the buyer(s) and
        GE Capital's pro rata share of the reasonable
        expenses for conducting the Auctions) from those GE
        Capital Assets subject to the 1997 Lease and which were
        located outside the United States on the Petition Date,

    (b) 100% of the proceeds of such sales (minus the applicable
        buyer's premium paid by the buyer(s) and GE Capital's
        pro rata share of the reasonable expenses for
        conducting the Auctions) from those GE Capital
        Assets subject to the 1994 Lease and which were located
        outside the United States on the Petition Date, plus

    (c) 100% of the proceeds from such sales (minus the
        applicable buyer's premium paid by the buyer(s) and
        GE Capital's pro rata share of the reasonable
        expenses for conducting the Auctions) from those GE
        Capital Assets subject to the 1997 Lease or the 1994
        Lease and which were located within the United States on
        the Petition Date, without the Debtors, the Committee or
        GE Capital waiving  any other rights, remedies,
        claims, actions or defenses that have arisen or may
        arise in connection the allocation of the proceeds of
        the sale of the GE Capital Assets at the Auctions.

-- GE Capital and the GE Capital Agent shall have the right to
   review and contest:

    (a) any or all of the expenses or the pro-ration thereof for
        reasonableness; and

    (b) whether any GE Capital Asset is subject to the
        1994 Lease or the 1997 Lease.

-- Any disputes concerning any expenses that cannot be resolved
   by the Debtors and GE Capital, shall be submitted to the
   Court for adjudication. (Warnaco Bankruptcy News, Issue No.
   19; Bankruptcy Creditors' Service, Inc., 609/392-0900)  

WEBB INTERACTIVE: Sells 1.1 Million Shares to Jona for $1.1MM
Jona, Inc., has acquired for $1,100,000, 1,100,000 Units of the
securities of Webb Interactive Services, Inc., in accordance
with the terms of a Securities Purchase Agreement dated January
17, 2002, between the Company and Jona, Inc. Each Unit consists
of one share of the Company's common stock and a warrant
representing the right to purchase an additional share of common
stock at $1.00. In accordance with the terms of the SPA, Jona,
Inc. has agreed to acquire an additional 3,900,000 Units for
$3,900,000, subject to prior approval by the Company's
shareholders. The SPA also grants to Jona, Inc. an option to
purchase up to an additional 2,500,000 Units for $2,500,000 on
or before August 31, 2002, again subject to prior approval by
the Company's shareholders.

Pursuant to the terms of the SPA, the Company has agreed to

     (1) amend its Bylaws to require the unanimous consent and
approval of all members of the Board of Directors in attendance
at a duly convened meeting of the Board of Directors prior to
(i) incurring indebtedness for borrowed money, if such borrowing
would result in the Company's then outstanding liability for all
such then outstanding borrowings to exceed $1,000,000; (ii)
taking any action that results in the redemption of any of the
Company's outstanding shares of common stock or preferred stock;
(iii) approving any merger, other corporate reorganization, sale
of control of the Company or any transaction which substantially
all of the assets of the Company are sold; or (iv) approving an
amendment to or waiving any of the provisions of the Company's
Articles of Incorporation or Bylaws;

     (2) cause two nominees of Jona, Inc. to be elected to the
Company's Board of Directors; and

     (3) use its best efforts to cause the Jona directors to be
elected to the Board of Directors so long as Jona, Inc.
beneficially owns 25% or more of the Company's common stock.

In connection with the purchase of the Units, Jona, Inc. loaned
the Company $900,000 pursuant to the terms of a Promissory Note
dated January 17, 2002, bearing interest at the rate of 10% per
annum. In addition, in connection with a letter of intent with
respect to the purchase of the Units, Jona, Inc. loaned the
Company $300,000. All principal and accrued interest under both
the Note and the Bridge Loan is due and payable upon demand at
any time on or after April 30, 2002. The repayment of the Note
and Bridge Loan is secured by an aggregate of 4,800,000 shares
of the Company's Series C Convertible Preferred Stock of Jabber,
Inc., a subsidiary of the Company. In addition, in connection
with the Bridge Loan, Jona, Inc. was issued a warrant to
purchase 60,000 shares of the Company's common stock at a
current exercise price of $1.00 per share.

Concurrent with the purchase of the Units by Jona, Inc. and in
lieu of resetting conversion prices for outstanding securities
in accordance with their terms, the Company agreed with Castle
Creek Technology Partners LLC to exchange up to 2,500 shares of
the Company's senior convertible preferred stock and $1,212,192
principal amount of the Company's 10% convertible note payable
for an aggregate of up to 4,484 shares of the Company's Series D
Junior Convertible Preferred Stock plus warrants to purchase
750,000 shares of the Company's common stock for $1.00 per share
and a reduction in the exercise price to $1.00 for warrants for
650,116 shares owned by CC. The Series D Junior Convertible
Preferred Stock will be convertible into up to 4,484,000 shares
of the Company's common stock. If the senior preferred stock and
note had not been amended, in accordance with their terms, they
would have been convertible into 3,712,192 shares of the
Company's common stock plus CC would have been entitled to
additional warrants for 2,500,000 shares at $1.00 per share. The
Company intends to use $720,000 of the proceeds received from
the second closing of the purchase of the Units as described
above to make a repayment of principal on the 10% convertible
note, at which time, CC has agreed to exchange the remaining
principal balance of the note.

Webb Interactive Services' AccelX division helps local
businesses establish an e-commerce presence with a suite of XML-
based applications for Web site building, lead generation, and
customer management. Through its subsidiary, Webb
offers an open source instant messaging application. Unlike most
of its competitors in the instant messaging market, which focus
on consumers, focuses on messaging for businesses and
service providers. Webb's services (nearly half of sales)
include consulting, implementation, and training. The company's
top three customers (VNU Publitec, VetConnect, and Switchboard)
collectively account for 65% of sales. At Sept. 30, 2001, the
company reported an upside-down balance sheet, showing a total
shareholders' equity deficit of about $3 million.

WHEELING-PITTSBURGH: Gets OK to Borrow $5M from State of Ohio
The Noteholders' Committee incorporates the same warning in
response to this Motion as to Wheeling-Pittsburgh Steel Corp.,
and its debtor-affiliates' Motion to borrow money from the State
of Ohio.

Judge Bodoh immediately enters an Order providing interim
approval of this loan, and scheduling a hearing on entry of a
final order later this month.  In his Order, Judge Bodoh also
authorizes immediate borrowing. (Wheeling-Pittsburgh Bankruptcy
News, Issue No. 17; Bankruptcy Creditors' Service, Inc.,


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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
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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.

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