TCR_Public/020304.mbx          T R O U B L E D   C O M P A N Y   R E P O R T E R

              Monday, March 4, 2002, Vol. 6, No. 44

                           Headlines

360NETWORKS: Seeks Okay to Assume Qwest Oregon Fiber Contract
A.B. WATLEY: Violates Nasdaq Continued Listing Requirements
AEI RESOURCES: Files Prepack Chapter 11 Petition in Lexington
AEI RESOURCES HOLDING: Chapter 11 Case Summary
ANC RENTAL: Statutory Committee Taps Young Conaway as Co-Counsel

ADVANCED SWITCHING: Fourth Quarter Net Loss Tops $17 Million
ANCHOR GAMING: Changes Fiscal Year End Date to June 29, 2002
AVIATION SALES: Completes Restructuring of $150MM 8-1/8% Notes
BETHLEHEM STEEL: Court Declines to Appoint Equity Committee
BORDEN CHEMICALS: Closes Sale of PVC Plant to Shintech Louisiana

BURNHAM PACIFIC: Sells Shopping Center to Management-Led LAV LLC
COVANTA ENERGY: Fitch Junks $650 Mill. Solid Waste Debt Ratings
EGAMES INC: Seeking A New Independent Auditor to Replace KPMG
ENRON CORPORATION: Signs-Up Swidler Berlin as Employees' Counsel
EXODUS COMMS: Qwest Corp. Asks Court for Adequate Protection

FEDERAL-MOGUL: Future Claimants Tap Resolutions as Consultants
FLEETWOOD ENTERPRISES: Posts $17M Q3 Loss on $522M of Revenue
GAINSCO INC: Reaches Accord to Resolve Loan Covenant Violations
GLOBAL CROSSING: Wins Nod to Hire Ordinary Course Professionals
GLOBAL CROSSING: Asia Global Crossing Facing Its Own Traumas

GLOBIX CORPORATION: Case Summary & Largest Unsecured Creditors
HIGH SPEED ACCESS: Completes Sale of All Assets to Charter Comm.
I/NET INC: Working with Creditors for Long-Term Debt Reduction
IT GROUP: Blackwell Seeks Stay Relief to Prosecute ERISA Suit
IMPERIAL PETROLEUM: Grant Thornton Questions Firm's Viability

INTEGRATED HEALTH: Rotech Gets Access to $575MM Exit Financing
JPM COMPANY: Files for Chapter 11 Protection in Delaware
JPM COMPANY: Case Summary & 20 Largest Unsecured Creditors
JAM JOE: Signing-Up Kurtzman Carson as Notice and Claims Agents
K2 INC: Gets Lenders' Nod to Modify Covenants Under Credit Pacts

KAISER ALUMINUM: Will Continue Use of Existing Bank Accounts
KMART: Pays $10,000,000 of Liquor Vendors' Prepetition Claims
KMART CORP: Exact Store Closing Figures Expected on March 11
LTV CORP: Mexican Unit Selling Shares to Thyssen for $6 Million
LA PETITE: Posts Improves Operating Results in January Quarter

LASON: Hearing on Disclosure Statement Scheduled for Wednesday
MCLEODUSA: US Trustee Appoints Unsecured Creditors' Committee
MCLEODUSA INC: Plan Confirmation Hearing Set for April 5, 2002
METALS USA: Selling Hazel Park Michigan Property for $2.35 Mill.
MOTHERNATURE.COM: Reports Liquidation Distribution of $3 Million

MPOWER HOLDING: Seeking Acceptances of Proposed Recapitalization
NET2000: Committee Engages Bayard Firm as Bankruptcy Co-Counsel
NETWORK PLUS: Broadview Networks Agrees to Acquire All Assets
NOMURA ASSET: Fitch Slashes Ratings on 1994-MD1 Certificates
PENN SPECIALTY: Has Until May 6 to File Removal Notices

PHILIPS: CA Plaintiff Seeks OK to Appeal Denial of Certification
POLAROID CORP: Stephen Morgan Seeks Equity Committee Appointment
POLAROID CORP: Phronesis Partners Discloses 7.22% Equity Stake
POLAROID CORP: Books $36MM Loss on ID Business' Sale to Digimarc
PSINET INC: Finova Wants to Sue Two Ex-Officers for Fraud

REVLON CONSUMER: Completes Private Offering of 12% Senior Notes
RURAL/METRO: Fails to Meet Nasdaq SmallCap Listing Standards
SEPP'S GOURMET: U.K. Unit Files for Receivership
SOLUTIA INC: Refinancing Risks Prompt Fitch's Low-B Ratings
STATIA TERMINALS: Closes Sale of Units to Kaneb Entity for $311M

STRATUS SERVICES: Violates Nasdaq Continued Listing Requirements
STREAMEDIA: Auditor Airs Doubt About Ability to Continue
SUN COUNTRY: US Bank Seeks Stay Relief to Ease Asset Transfer
SUN HEALTHCARE: Plan of Reorganization Declared Effective
SUNBEAM CORP: Decisions on Unexpired Leases Expected by June 3

SUPREMA SPECIALTIES: BDO Seidman Resigns as Independent Auditors
TRENWICK GROUP: Fitch Concerned About Refinancing Risk Exposure
U.S. WIRELESS: Committee Taps Kornfield for Klarman Litigation
VALLEY MEDIA: Taps Morris Nichols as Bayard Firm's Replacement
VECTOUR: Selling Assets of 3 Affiliates to Coach USA for $9 MM

W.R. GRACE: Seeks Warren Smith's Appointment as Fee Auditor
WARNACO GROUP: Mills Lease Decision Period Extended to May 6
WILLCOX & GIBBS: Wants Plan Filing Period Stretched to July 2
WILLIAMS COMPANIES: Fitch Concerned About Unit's Restructuring
Z-TEL TECHNOLOGIES: Dec. Balance Sheet Upside-Down by $67 Mill.

ZILOG INC: Files Chapter 11 with Prepackaged Plan in San Jose

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

                           *********

360NETWORKS: Seeks Okay to Assume Qwest Oregon Fiber Contract
-------------------------------------------------------------
360networks inc., its debtor-affiliates and Qwest Communications
Corporation are parties to a Lease Agreement wherein the Debtors
agreed to lease to Qwest certain optical fibers from
Springfield, Oregon to Oakridge, Oregon and associated property
on a fiber optic communication system.

According to Shelley C. Chapman, Esq., at Willkie Farr &
Gallagher, in New York, New York, the Lease Agreement also
provided that Qwest had the option to acquire an indefeasible
right of use in the fibers.  "The Lease fee payable under the
Lease Agreement is $95,976 per year and Qwest is substantially
current on fees due under the Lease Agreement," Ms. Chapman
notes.

Furthermore, Ms. Chapman adds, the Lease Agreement required the
Debtors to test the fiber to ensure that was installed and
operated in accordance with the Contract's specifications.  The
Debtors were to maintain and operate the System upon its
completion and Qwest was to pay $350 per route mile per year for
maintenance and operation of the System.  Ms. Chapman relates
that the Debtors also agreed to provide collocation and
regeneration space to Qwest along the System.  However, to date,
Qwest has not utilized any of the space provided for under the
License Agreement.

By this motion, the Debtors seek the Court's approval to amend
and assume:

     (i) a Fiber Optic Lease and IRU Agreement with Qwest; and

    (ii) a License Agreement with Qwest.

Ms. Chapman reports that Qwest has remitted the agreed upon fee
for such conversion in the amount of $1,504,500 which is being
held in escrow and is to be paid to the Debtors upon the
approval of this motion.

Under the proposed amendment, Ms. Chapman relates that the
Debtors would extend to Qwest fiber routes to include an
additional 134 miles.  "The First Amendment also provides that
Qwest would exercise its option of the Agreement to convert its
interests in the Qwest Fibers from a lease to an indefeasible
right of use," Ms. Chapman explains.  In addition, Ms. Chapman
continues, the First Amendment also amends the License Agreement
that the Debtors will lease two regeneration facilities to Qwest
along the System.  "This obligates Qwest to pay the Debtors
approximately $350 per month for the lease of the facilities,"
Ms. Chapman states.

Although the Agreements might give rise to certain
administrative liabilities, the Debtors do not believe that any
substantial claims will be asserted based on such provisions.
Ms. Chapman explains that the First Amendment limits the total
administrative claims Qwest may assert to $1,500,000.  "Any
claims in excess shall be treated as pre-petition unsecured
claims," Ms. Chapman adds.

Therefore, the Debtors ask the Court for authority to assume and
amend the License and Lease Agreements. (360 Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)


A.B. WATLEY: Violates Nasdaq Continued Listing Requirements
-----------------------------------------------------------
A.B. Watley Group Inc. (NASDAQ:ABWG), premier financial services
software provider - http://www.abwatley.com-- announced that it
received a Nasdaq Staff Determination on February 21, 2002
indicating that the Company fails to comply with the filing
requirement for continued listing set forth in Marketplace Rule
4310(C)(14) and the requirement to list additional shares set
forth in Marketplace Rule 4310(C)(17).

Anthony Huston, President of the Company, stated "the failure to
timely file the Company's quarterly report for the first quarter
of fiscal 2002 and an inadvertent omission to list shares of the
Company's common stock recently issued in an acquisition are the
causes for such Determination and, as a result, Watley's
securities are subject to delisting from The Nasdaq National
Market." In accordance with Watley's request, a hearing before a
Nasdaq Listing Qualifications Panel to review the Staff
Determination will be held on March 21, 2002. Mr. Huston
continued, "Although there can be no assurance the Panel will
grant the Company's request for continued listing, we are
optimistic that Watley can clear up any regulatory issues and
maintain its listing."

A.B. Watley Group Inc., is a financial services software company
that owns and operates A.B. Watley, Inc., a New York-based NASD
registered broker/dealer. A.B. Watley, Inc. is among the largest
direct-access brokerage firms in the industry and operates an
Institutional Sales and Trading Division specializing in the
execution of complex and sensitive large-block equity
transactions for institutions in the buy-side community.

A.B. Watley Group licenses software technology and provides
trading solutions for E-Brokerages, banks, SOES firms and
clearing corporations. Watley Group additionally owns and
operates its own 'ticker-plant' allowing it to redistribute an
equity and equity option data feed at greatly reduced costs.
Through A.B. Watley, Inc. the firm provides one of the highest
quality trading platforms available at among the lowest costs in
the industry. Watley Group's technology has been featured in
three (3) case studies by Sun Microsystems and was featured in
the SUNW annual report.

A.B. Watley Group Inc.'s competitors include NYFIX, E-Speed, OM
Group, Trade Cast, Ameritrade and Schwab. The firm is located at
40 Wall street and on the web at http://www.abwatley.com


AEI RESOURCES: Files Prepack Chapter 11 Petition in Lexington
-------------------------------------------------------------
AEI Resources Holding, Inc., a major U.S. coal producer in
Central Appalachia, the Illinois Basin and the Rocky Mountains,
said that its voting noteholders and senior lenders have
unanimously approved the Company's debt-restructuring plan.  To
effect the restructuring, AEI and its subsidiaries have filed
voluntary petitions for reorganization under Chapter 11 of the
Bankruptcy Code, accompanied by a pre-packaged plan of
reorganization.  In addition, AEI has asked the Court for
permission to pay employees and pre-petition trade claims in
full on their normal schedule.

In other developments, AEI also asked the Court:

      *  To grant a stay, if and when necessary, allowing AEI to
         continue coal-mining operations while new bonding is
         completed with American International Companies and
         Travelers to replace bonds issued by Frontier Insurance
         Co.

      *  To grant AEI access to up to $150 million in debtor-in-
         possession (DIP) financing, a substantial portion of
         which would be utilized to replace the Frontier bonds.

      *  To grant permission to continue wages and benefits as
         normal.

"We hope to complete the restructuring process within 60 days
and to emerge with significantly reduced debt and as a
reorganized Company better able to handle the challenges of the
industry and to take advantage of opportunities in the
marketplace," said AEI Chairman and Chief Executive Officer Don
Brown.  Under the proposed restructuring, AEI's debt would be
reduced from approximately $1.3 billion to approximately $925
million.

Mr. Brown added, "We wish to express our gratitude to our
suppliers, customers and employees whose commitment and support
have allowed us to continue operating without interruption.  We
expect no change in the Company's operations as a result of the
Chapter 11 process.  Our customers should see no interruption in
the supply of coal."

In addition to the $150 million in DIP financing that would help
augment cash flow and fund operations during the Chapter 11
process, AEI also has a commitment for up to $250 million in
exit financing available after it emerges from the
reorganization proceedings.  Both are from a lender group led by
Bankers Trust Company and Deutsche Bank.

Of the three eligible classes of creditors involved in the
consent solicitation, each class unanimously approved the debt-
restructuring plan. More than 98% of secured bank claims, more
than 87% of senior notes and industrial revenue bonds, and more
than 94% of subordinated notes voted.  The timing and success of
the restructuring process will depend on various factors,
including final confirmation of the plan by the Court.

The Company filed its petitions in the U.S. Bankruptcy Court for
the Eastern District of Kentucky in Lexington.

Mr. Brown said AEI's restructuring was necessary because of the
need to reduce debt and because the Company had been harmed by
severe financial difficulties at Frontier, which caused a number
of states to refuse to accept bonds issued by Frontier.  AEI
incurred significant costs in connection with arranging to
replace these bonds and remain in compliance with state
regulations, including being required to post large amounts of
cash as collateral and to pay significantly higher premiums.

AEI is the fourth-largest steam coal producer in the United
States as measured by revenues and the second-largest steam coal
producer in the Central Appalachian coal region as measured by
production.  AEI primarily mines and markets steam coal from
mines in Kentucky, West Virginia, Tennessee, Indiana, Illinois
and Colorado.  Its 27 surface mines and 17 underground mines are
operated in three regions -- Central Appalachia, the Illinois
Basin and the Rocky Mountains.


AEI RESOURCES HOLDING: Chapter 11 Case Summary
----------------------------------------------
Lead Debtor: AEI Resources Holding, Inc.
              2000 Ashland Dr
              Ashland, KY 41101-7058

Bankruptcy Case No.: 02-10150

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                     Case No.
      ------                                     --------
      AEI Resources, Inc.                        02-10162

Chapter 11 Petition Date: February 28, 2002

Court: Eastern District of Kentucky (Ashland)

Judge: William S. Howard

Debtors' Counsel: Randy D. Shaw, Esq.
                   Frost Brown Todd LLC
                   2700 Lexington Financial Center
                   250 West Main Street
                   Lexington, Kentucky 40507-1742
                   Telephone: 859-231-0000
                   Fax: 859-231-0011

                   Ronald E Gold, Esq.
                   Frost Brown Todd LLC
                   2200 PNC Center
                   201 East Fifth Street
                   Cincinnati, Ohio 45202
                   Telephone: 513-651-6800
                   Fax: 513-651-6981

                   Robert J. Rosenberg
                   Latham & Watkins
                   885 Third Avenue, Suite 1000
                   New York, New York 10022-4802
                   Telephone: 212-906-1200
                   Fax: 212-751-4864

ANC RENTAL: Statutory Committee Taps Young Conaway as Co-Counsel
----------------------------------------------------------------
The Statutory Committee of Unsecured Creditors in the chapter 11
cases of ANC Rental Corporation, and its debtor-affiliates, asks
the Court for authorization to employ Young Conaway Stargatt &
Taylor as co-counsel to Wilmer Cutler & Pickering, nunc pro tunc
to November 27, 2001.

Committee Chair Duncan M. Robertson tells the Court that Young
Conaway was chosen to act as co-counsel to Wilmer during a
Committee meeting held on November 27, 2001 and was selected
because of its extensive experience and knowledge of Chapter 11
business reorganizations. Apart from this, Young Conaway also
has to show for its experience and expertise in the Court's
proceedings.

Specifically, Young Conaway will:

A. Consult with the Committee, the Debtors and the U.S. Trustee
      concerning the administration of these Chapter 11 cases;

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

C. Assist the Committee in any investigation of the acts,
      conduct, assets, liabilities and financial condition of the
      Debtors, the operation of the Debtors' businesses and any
      matters relevant to theses Chapter 11 cases in the event
      and to the extend required by the Committee;

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

E. Represent the Committee in connection with the exercise of
      its powers and duties under the Bankruptcy Curt and
      connection with these Chapter 11 cases;

F. Perform all other necessary legal services in connection with
      these Chapter 11 cases.

Mr. Robertson submits that Young Conaway's location at The
Brandywine Building, 1000 West Street, 17th Floor, P.O. Box 391,
Wilmington, Delaware is advantageous in that the firm is able to
respond to hearings and emergency matters on short notice,
maximizing its ability to represent the Committee in a very
effective and efficient manner.

Aside from reimbursement of actual out-of-pocket expenses, Young
Conaway will be compensated based on the standard hourly rates
of its attorneys and paralegal, who are:

                  Brendan Linehan Shannon     $380
                  John D. McLaughlin Jr.      $375
                  Sean M. Beach               $260
                  Maribeth L. Minella         $260
                  Bridget Vazquez             $180

Young Conaway partner Brendan Linehan Shannon, Esq., states that
in recent weeks, Young Conaway and certain of its partner and
associates have rendered legal services to the Committee.
Recently it hired John D. McLaughlin Jr., Esq., who was formerly
employed as an attorney advisor with the Department of Justice
in the Office of the United States Trustee for Region 3.  Mr.
Shannon adds that over the years, Young Conaway has worked with
Wilmer on various other court proceedings.

Mr. Shannon does not specify any relationship that Young Conaway
previously or currently has with any party-in-interest in these
cases.  He admits, however, that certain of the firm's partners,
counsel and associates may have in the past represented, may
currently represent and in the future will likely represent the
said parties in matters unrelated to these Chapter 11 cases but
that none of these representations are material. (ANC Rental
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


ADVANCED SWITCHING: Fourth Quarter Net Loss Tops $17 Million
------------------------------------------------------------
Advanced Switching Communications, Inc. (Nasdaq: ASCX), reported
its results for the fourth quarter and full year 2001.

For the three months ended December 31, 2001, the Company
reported revenue of $0.4 million, a net loss of $17.1 million
compared to revenue of $13.4 million, a net loss of $2.1 million
for the three months ended December 31, 2000.

For the year ended December 31, 2001, the Company reported
revenue of $15.5 million, a net loss of $54.1 million compared
to revenue of $37.4 million, a net loss of $14.4 million for the
year ended December 31, 2000.

The net loss for the three months and the full year ended
December 31, 2001 includes an $800,000 charge for a reduction in
force completed in the fourth quarter and a $6.1 million charge
to reflect the impairment of assets in connection with the
Company's winding down of operations.

As of December 31, 2001, the Company reported assets totaling
$82.9 million, including $77.8 million in cash and marketable
securities -- and virtually no debt.  At the end of December
2000, the Company reported assets of $137.3 million, including
$112.5 million in cash and securities.

In addition, as part of its plan to wind down operations, ASC
implemented a 90 percent reduction in its workforce earlier this
month.  This reduction will reduce the company's expenditures
and assist it in its efforts to preserve its cash reserves.  ASC
expects to incur a charge of approximately $4.0 million in the
first quarter of 2002 to cover costs associated with the
workforce reduction.  In connection with its planned liquidation
of net assets, the Company also expects to incur costs of at
least $1.5 million that will be recorded as a charge in the
first quarter of 2002.

The Company also announced that, on February 21, 2002, a
complaint was filed in the United States District Court for the
Eastern District of Virginia against the Company and certain of
its current and former officer and directors.  The plaintiffs in
this action claim to own a total of 100 shares and purport to
act on behalf of a class of other shareholders.  The complaint
alleges violations of the federal securities laws in connection
with the Company's initial public offering and subsequent public
statements.  The Company believes the claims asserted in the
complaint are without merit and intends to contest these claims
vigorously.  However, the outcome of the suit cannot be
predicted.  The existence of these claims could delay the making
of any distributions to the Company's stockholders or reduce the
amount available for distribution in connection with the
proposed plan of liquidation.

The Company previously announced the adoption of a plan of
complete liquidation and dissolution, subject to stockholder
approval.  The proposed plan of liquidation will be presented to
the Company's stockholders for approval at a special meeting.  A
proxy statement describing the plan will be mailed to
stockholders prior to the meeting.  Stockholders are strongly
advised to read the proxy statement when it becomes available,
because it will contain important information.  The proxy
statement will be filed by the Company with the Securities and
Exchange Commission (SEC).  Investors may obtain a free copy of
the proxy statement (when available) and other documents filed
by Advanced Switching Communications, Inc. at the SEC's web site
at http://www.sec.gov The proxy statement and related materials
may also be obtained for free by directing such requests to
Advanced Switching Communications, Inc., 8330 Boone Boulevard,
Vienna, 22182, Attention: Investor Relations.


ANCHOR GAMING: Changes Fiscal Year End Date to June 29, 2002
------------------------------------------------------------
Anchor Gaming, a Nevada corporation, has changed its fiscal year
end from June 30 to the Saturday closest to June 30, with this
change effective for fiscal 2002 so that the last day of fiscal
2002 will be Saturday, June 29, 2002. The end of the third
quarter of fiscal 2002 will be March 30, 2002. The transition
period will be covered in the Company's Quarterly Report on Form
10-Q for the quarter ended March 30, 2002.

The company manufactures and markets a variety of slot and video
gaming machines, including its popular Wheel of Fortune game
(produced through a joint venture with International Game
Technology). Unlike many of its competitors, Anchor Gaming
doesn't sell its machines but leases them under royalty, revenue
participation, or rental fee agreements. In addition, the
company markets and installs systems for lottery ticket sales
and operates gaming machine routes in Nevada and Montana. Anchor
also owns and operates two casinos in Colorado and operates a
third in California. It was acquired by rival International Game
Technology in late 2001. At September 30, 2001, the company
reported that its total liabilities exceeded its total assets by
about $31 million.


AVIATION SALES: Completes Restructuring of $150MM 8-1/8% Notes
--------------------------------------------------------------
TIMCO Aviation Services, Inc., (formerly known as Aviation Sales
Company (OTCBB:TMAS; formerly OTCBB:AVIO) announced the
completion of its previously announced restructuring.

In the note exchange portion of the restructuring, the Company
exchanged $148,753,000 of its old 8-1/8% senior subordinated
notes due 2008 for $5.1 million in cash, $100 million of its new
8% senior subordinated convertible PIK notes, 4.5 million shares
of its post-reverse split common stock, and five year warrants
to purchase 3.0 million shares of its post-reverse split common
stock at an exercise price of $5.16 per share. In the rights
offering portion of the restructuring, the Company sold 24.0
million shares of its post-reverse split common stock, raising
gross proceeds of $20 million. The net proceeds of the rights
offering, approximating $11.0 million after payment of the cash
proceeds of the Note Exchange Offer and expenses of the
restructuring, will be used by the Company for working capital.
After completion of the restructuring, Lacy J. Harber, the
Company's principal stockholder, owns in excess of 60% of the
Company's outstanding common stock.

The Company also reported that its previously announced one-
share-for-ten-shares reverse split of its outstanding common
stock became effective at the opening of the market this
morning. Also effective as of the opening of the market this
morning was the change in the Company's corporate name from
"Aviation Sales Company" to "TIMCO Aviation Services, Inc." and
the change in the trading symbol for the Company's common stock
on the Bulletin Board maintained by the NASD from "AVIO" to
"TMAS." The Company also reported that it has distributed five
year warrants to purchase 3.0 million shares of its post-reverse
split common stock at an exercise price of $5.16 per share to
its stockholders of record at the close of business on February
27, 2002 (immediately prior to the closing of the Rights
Offering and the Note Exchange Offer).

Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive
Officer, stated: "We are very pleased to complete our
restructuring and appreciative of the strong support which we
received from our customers, stockholders and noteholders during
this restructuring process. The restructuring will provide
working capital for our operations and will allow us to once
again focus all of our future efforts on meeting the
requirements of our customers and returning our Company, which
is the largest independent provider of airframe heavy
maintenance in the world, to profitability."

Lacy J. Harber, the Company's principal stockholder, stated: "I
am pleased to continue my association with TIMCO Aviation
Services. I believe strongly in the Company's business franchise
and am very supportive of the Company's new management team. I
am convinced that with the hard work and continued dedication of
all of our employees and management, we will continue to provide
industry leading quality and delivery performance and expand our
position as a leader in the airframe heavy maintenance market."

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

DebtTraders reports that Aviation Sales Company's 8.125% bonds
due 2008 (AVIO08USR1) are trading between 19 and 25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AVIO08USR1
for real-time bond pricing.


BETHLEHEM STEEL: Court Declines to Appoint Equity Committee
-----------------------------------------------------------
Certain shareholders of Bethlehem Steel Corporation ask Judge
Lifland to order the United States Trustee to appoint an
Official Committee of Equity Security Holders. These
shareholders, who hold about 12% of the common stock of
Bethlehem, are:

    Shareholder                             Number of shares
    -----------                             ----------------
    Dimensional Fund Advisors                  7,882,092
    Frank R. Williams                             27,000
    Greenway Partners, LLP and affiliates      7,000,000

Emilio A. Galvan, Esq., at Berlack, Israels & Liberman, LLP, in
New York, relates that the 3 shareholders were prompted to seek
the appointment of an official committee because of these recent
developments:

   (a) On December, 2001, the International Trade Commission
       recommended imposition of 20%-40% tariffs on foreign steel
       dumped in the US pursuant to section 201 of the 1974 Trade
       Act, and President Bush has until the end of February 2002
       to implement relief in accordance with that
       recommendation;

   (b) Steel executives have recently urged Congress to assign
       legacy costs to existing government agencies, a step
       contemplated in the Steel Revitalization Act introduced in
       the House and Senate in 2001, and which, if taken, could
       relieve Bethlehem of up to $3 billion, or about seventy
       percent (70%) of its balance sheet liabilities;

   (c) Overcapacity in the domestic steel sector has been reduced
       in the past year by the idling of significant facilities,
       including the steel-making operations of LTV, Acme,
       Northwestern Steel, Gulf States, Geneva, Trico and
       Laclede;

   (d) Steel analysts predict a pricing rebound in 2002; and

   (e) Bethlehem has been involved in serious consolidation
       discussions with other domestic producers regarding
       consolidation of the industry, which culminated on January
       15 with a reported agreement between the major producers.

Mr. Galvan asserts that the creation of an Official Committee of
Equity Holders is appropriate and necessary because:

   -- Bethlehem's stock is widely held;

   -- the Chapter 11 case is large and complex;

   -- the equity holders' need for adequate representation is not
      significantly outweighed by the cost of an additional
      committee; and

   -- other factors also indicate that Bethlehem's shareholders
      would not be represented effectively in these proceedings
      absent the appointment of an equity committee.

At present, Mr. Galvan notes, the Board of Directors of
Bethlehem only owns approximately 1% of the outstanding common
shares.  On the other hand, Mr. Galvan points out, the 3
shareholders cannot be expected to shoulder the cost of
representing the other shareholders holding the remaining 88% of
the common stock.

                           Objections

In three separate objections, the Debtors, the United States
Trustee and the Committee of Unsecured Creditors argues that the
motion is unwarranted because the Shareholders failed to meet
their burden for the establishment of an official committee of
equity security holders in these cases.

Tracy Hope Davis, trial attorney for the United States Trustee,
asserts that the Shareholders have also failed to demonstrate:

   (i) that the appointment of an equity committee is necessary
       to adequately represent equity security holders interests,
       and

  (ii) that the Court should exercise its discretion and order
       such an appointment.

Furthermore, Ms. Davis points out that the Debtors are insolvent
and so, no equity interest to be protected by an official
committee of equity security holders exist.

The Debtors agree with the U.S. Trustee.

George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New
York, New York, reminds the Court that the Debtors are patently
insolvent.  Based on the Debtors' schedules of assets and
liabilities, Mr. Davis reports that the book value of the
Debtors' assets is pegged at $3,700,000,000 while the Debtors'
liabilities is almost twice as much at $6,400,000,000 as of the
Petition Date.  "At this juncture, the stockholders simply have
no financial stake in these cases," Mr. Davis asserts.

The Creditors' Committee emphasizes that it does not dispute the
fact that the Debtors' securities are widely held or that the
Debtors' bankruptcy cases are complex.

But Thomas Moers Mayer, Esq., at Kramer, Levin, Naftalis &
Frankel LLP, in New York, New York, reasons that the last thing
the Debtors need is another demand on their time by a
constituency with no observable economic stake in the estate.
"The Shareholders' hope for a government bailout does not
sufficiently rebut the demonstrated worthlessness of their
position," Mr. Mayer maintains.

Thus, the U.S. Trustee, the Debtors, and the Creditors'
Committee ask Judge Lifland to deny the Shareholders' motion.

                      Shareholders Respond

In turn, the Shareholders ask the court to adjourn the hearing
on this issue and set a trial date within 30 to 60 days to
address the evidentiary matters raised in the objections.  The
Shareholders explain that they need time to fully prepare a
witness, and to examine any witnesses and documents that may be
proffered in support of the allegations made in the objections.
According to the Shareholders, the evidentiary hearing will
determine whether Bethlehem's 30,000 public shareholders whose
book equity was worth in excess of $1,000,000,000 at the end of
the 2000, will receive any representation in this proceeding.

                        *     *      *

After hearing all the arguments, Judge Lifland upholds the
decision of the U.S. Trustee and denies the Shareholders' motion
to create an Official Equity Holders' Committee. (Bethlehem
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


BORDEN CHEMICALS: Closes Sale of PVC Plant to Shintech Louisiana
----------------------------------------------------------------
Borden Chemicals and Plastics Operating Limited Partnership
announced that it has completed the sale of the assets of its
polyvinyl chloride (PVC) plant in Addis, La., to Shintech
Louisiana, LLC (Shintech). As previously disclosed, Shintech
paid $38 million for the plant, property and equipment and an
additional amount for inventory and accounts receivable. BCP
announced on December 4, 2001, that it had accepted the purchase
offer from Shintech, subject to bankruptcy court approval and a
bidding process open to other bidders. The Federal Trade
Commission cleared the transaction.

BCP and its advisors continue to negotiate with prospective
buyers for the possible sale of the BCP plants in Geismar,
Louisiana, and Illiopolis, Illinois, both of which continue to
operate. The company expects to have resolutions regarding these
facilities soon.

"We are glad to have closed the sale of Addis," said Mark J.
Schneider, president and chief executive officer, BCP
Management, Inc. (BCPM), the general partner of BCP. "The
patience of our customers has contributed to the success of this
transaction. Overall, the efforts of all BCP employees to manage
costs and serve our customers created the stability needed to
reach this resolution."

Shintech Louisiana, LLC is a wholly owned subsidiary of Shintech
Inc., a leading U.S. producer of PVC resins with headquarters in
Houston and plants in Freeport, Texas, and Addis, La. Shintech
Inc. is a wholly owned subsidiary of Tokyo-based Shin-Etsu
Chemical Co., Ltd., the world's largest producer of PVC, with
plants in the U.S., Asia and Europe.

BCP and its subsidiary, BCP Finance Corporation, filed voluntary
petitions for protection under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware on April 3, 2001. BCPM and Borden Chemicals and
Plastics Limited Partnership (BCPLP), the limited partner of
BCP, were not included in the April 3, 2001 Chapter 11 filings.
(Two other separate and distinct entities, Borden, Inc., and its
subsidiary, Borden Chemical, Inc., are not related to the
filings.)

DebtTraders reports that Borden Chemical & Plastics' 9.5% bonds
due 2005 (BCPU05USR1) are trading between 5 and 9. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BCPU05USR1
for real-time bond pricing.


BURNHAM PACIFIC: Sells Shopping Center to Management-Led LAV LLC
----------------------------------------------------------------
On February 22, 2002, Burnham Pacific Properties, Inc. sold its
interest in the Lake Arrowhead Village shopping center to LAV,
LLC, an entity formed by Scott C. Verges, the Company's Chief
Executive Officer, and Daniel B. Platt, the Company's Chief
Financial Officer, for a net purchase price of approximately
$19.1 million. Under the Purchase and Sale Agreement and Joint
Escrow Instructions, dated November 26, 2001, as subsequently
amended on February 12, 2002,

      (1) LAV, LLC assumed all of the outstanding mortgage
indebtedness secured by the asset in satisfaction of the payment
of the purchase price,

      (2) the Company advanced $2 million into an escrow account
to be controlled by the mortgage lender from which LAV, LLC may
draw amounts necessary to fund the costs of significant
structural repairs to the center's seawall and parking garage,
and

      (3) Messrs. Verges and Platt personally agreed to repay a
$500,000 portion of the Construction Credit advance and $377,000
of certain other credits in 30 equal monthly installments.

The $19.1 million of outstanding mortgage indebtedness assumed
by LAV, LLC bears interest at an annual rate of 9.375%, matures
in 2011 and cannot be prepaid until 2011. Messrs. Verges and
Platt also separately agreed to forfeit all severance benefits,
which would have cost the Company an aggregate of approximately
$4.8 million, which they otherwise would have been entitled to
receive no later than January 15, 2002.

The Company's Board of Directors considered other offers for the
Lake Arrowhead Village shopping center and ultimately determined
that the transactions with Messrs. Verges and Platt would result
in greater net proceeds to the Company than any of the other
offers. In connection with this transaction, the Company
received a fairness opinion from Houlihan Lokey Howard & Zukin
Financial Advisors, Inc. to the effect that the consideration to
be received by the Company is fair to the Company from a
financial point of view.


COVANTA ENERGY: Fitch Junks $650 Mill. Solid Waste Debt Ratings
---------------------------------------------------------------
Fitch Ratings downgrades to 'CCC' from 'B' the unenhanced or
underlying ratings of approximately $650 million of outstanding
solid waste project bonds (primarily tax-exempt bonds), listed
below, which are payable from revenues associated with waste-to-
energy projects owned or leased by subsidiaries of Covanta
Energy Corp. (Covanta), formerly Ogden Corp. The 'CCC' ratings
remain on Rating Watch Evolving, indicating the reasonable
probability that they may be further revised up or down in the
near term. Prior to Thursday's rating actions, Fitch downgraded
the same securities to the 'B' rating level on January 30, 2002,
and put those ratings on Rating Watch Evolving. Thursday's
downgrades reflect further assessments made by Fitch since
January 30 of Covanta's financial condition and the structures
of the project bonds.

Fitch Ratings believes that debt service on bonds payable from
revenues associated with these plants may be vulnerable to
interruptions resulting from future changes in Covanta's
corporate credit quality. Covanta's recently rapid credit
deterioration has increased the risk of corporate bankruptcy,
which could threaten the continued timely payment of debt
service on the affected bonds. Fitch also is concerned about the
potential for deterioration in Covanta's financial condition to
negatively affect the level and quality of operations at the
subject waste-to-energy projects, which could degrade the
technical and financial performance of these projects. In line
with our aforesaid concern, a February 22 press release, issued
by the Onondaga County Resource Recovery Agency (based in North
Syracuse, NY), announced the intent of the agency to terminate
its relationship with Covanta 'to assure everyone that the funds
will be available to operate, maintain, and make needed repairs'
at its waste facility. Fitch does not rate Covanta Energy's
securities.

Downgraded to 'CCC' and remaining on Rating Watch Evolving are
the approximately $650 million outstanding bonds listed below,
which are payable primarily from revenues associated with five
Covanta-owned or Covanta-leased waste-to-energy projects:

      --Bristol Resource Recovery Facility Operating Committee,
CT solid waste revenue bonds (Ogden Martin Systems of Bristol,
Inc. Project), 1995 series, unenhanced rating downgraded to
'CCC' from 'B' - Rating Watch Evolving;

      --Massachusetts Industrial Finance Agency and Massachusetts
Development Finance Agency resource recovery revenue bonds
(Ogden Haverhill Project), unenhanced rating downgraded to 'CCC'
from 'B' - Rating Watch Evolving;

      --Onondaga County Resource Recovery Agency, NY project
revenue bonds, series 1992, unenhanced rating downgraded to
'CCC' from 'B' - Rating Watch Evolving;

      --Suffolk County Industrial Development Agency, NY solid
waste disposal facility revenue bonds (Ogden Martin Systems of
Huntington Limited Partnership Recovery Facility), series 1999
(insured: Ambac), unenhanced rating downgraded to 'CCC' from 'B'
- Rating Watch Evolving;

      --Union County Utilities Authority, NJ solid waste landfill
taxable revenue bonds, series 1998 (insured: Ambac), unenhanced
rating downgraded to 'CCC' from 'B' - Rating Watch Evolving;

      --Union County Utilities Authority, NJ solid waste facility
senior lease revenue bonds, series 1998 A & B (Ogden Martin
Systems of Union, Inc. Lessee), unenhanced rating downgraded to
'CCC' from 'B' - Rating Watch Evolving; --Union County Utilities
Authority, NJ solid waste facility senior lease revenue bonds
(Ogden Martin Systems of Union, Inc. Lessee) series 1998A
(insured: Ambac), unenhanced rating downgraded to 'CCC' from 'B'
- Rating Watch Evolving; and

      --Union County Utilities Authority, NJ solid waste
facilities subordinate lease revenue bonds, series 1998A (Ogden
Martin Systems of Union, Inc. Lessee) (insured: Ambac),
unenhanced rating downgraded to 'CCC' from 'B' - Rating Watch
Evolving.

'CCC' category ratings indicate that default is a real
possibility. Capacity for meeting financial commitments is
solely reliant upon sustained, favorable business or economic
developments.

Approximately $850 million of outstanding municipal bonds,
secured by payment obligations of certain public entities, are
affirmed at their existing ratings and remain on Rating Watch
Negative or Evolving, as listed below, in recognition of
possible operating and other risks that could result from
Covanta's continuing credit troubles:

      --Lee County, FL solid waste system refunding revenue
bonds, series 2001 (insured: MBIA), unenhanced rating of 'A-' -
Rating Watch Negative;

      --Lee County, FL solid waste system revenue bonds, series
1995 (insured: MBIA), unenhanced rating of 'A-' - Rating Watch
Negative;

      --Northeast Maryland Waste Disposal Authority, MD solid
waste revenue bonds (Montgomery County Resource Recovery
Project), series 1993 A and B, unenhanced rating of 'AA-' -
Rating Watch Negative; and

      --Onondaga County Resource Recovery Agency, NY system
revenue bonds, 1992 series, unenhanced rating of 'B' - Rating
Watch Evolving.

Many of the bonds listed are insured by one of the major bond
insurers. This rating action affects only unenhanced and
underlying ratings. Enhanced ratings, where applicable, are
unchanged.


EGAMES INC: Seeking A New Independent Auditor to Replace KPMG
-------------------------------------------------------------
On February 19, 2002, eGames, Inc., received notice from its
independent auditor, KPMG LLP, of its resignation as the
Company's certifying accountant. The Company is actively seeking
a new independent auditor.

KPMG's audit report on the Company's consolidated financial
statements as of and for the fiscal  years ended June 30, 2001
and June 30, 2000 did not contain an adverse opinion or a
disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles, except as
follows: KPMG's audit report on the Company's consolidated
financial statements as of June 30, 2001 and for the years ended
June 30, 2001 and 2000 included a separate paragraph as follows:
"The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  As discussed in Note 1 to the consolidated financial
statements,  the Company has working capital and stockholders'
deficits at June 30, 2001, suffered a net loss,  incurred
negative cash flows from operations for the year ended June 30,
2001, and no longer has a credit facility available for future
borrowings. These matters raise substantial doubt about the
Company's ability to continue as a going concern. .....The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty."

KPMG advised the Company that, in connection with KPMG's audit
of the Company's consolidated financial statements for the year
ended June 30, 2001, KPMG had noted a matter involving the
Company's internal control procedures and its operation that
KPMG considered to be a reportable condition of a material
weakness under standards established by the American Institute
of Certified Public Accountants. KPMG advised the Audit
Committee that the Company did not have sufficient internal
controls in place to ensure that shipments with FOB destination
shipping terms were recognized as revenue only after the
customer had received these shipments. KPMG advised the Audit
Committee of the foregoing in a letter to the Audit Committee
dated February 11, 2002, although KPMG had previously
communicated this issue to the Audit Committee prior to the date
of the letter. The Company's says its management has implemented
the procedures recommended by KPMG in its February 11, 2002
letter, to obtain the requisite proof of delivery documentation
for product shipments made during approximately the last two
weeks of a reporting period, in order to enable the Company to
comply with accounting principles generally accepted in the
United States of America. The Company has authorized KPMG to
respond fully to the inquiries of any successor auditor
concerning this matter.


ENRON CORPORATION: Signs-Up Swidler Berlin as Employees' Counsel
----------------------------------------------------------------
Enron Corporation, and its debtor-affiliates seek the Court's
authority to employ and retain the law firm of Swidler Berlin
Shereff Friedman LLP, nunc pro tunc to December 10, 2001, to
represent certain current and former employees in connection
with government and other investigations relating to the Company
and its employee benefit plans.

Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that various government entities and agencies have
commenced investigations concerning the Enron Companies, the
precipitous decline in their financial condition, the events
leading to the filing of the Debtors' chapter 11 petitions,
their employee benefit plans, and other related issues.

Among the governmental entities and agencies that have commenced
such investigations include the Securities and Exchange
Commission, numerous Congressional committees, the Department of
Justice, and the Department of Labor.

Mr. Rosen tells the Court that more than 70 current and former
employees of the Enron Companies have been asked to participate
in the investigations.  The Debtors believe that the cooperation
of the Employees is critical to the timely completion of the
Investigations, which will foster the Debtors' reorganization
effort.  That's why, Mr. Rosen explains, the Debtors want to
facilitate the Employees' cooperation while assuring that the
Employees' legal rights are fully protected.

According to Mr. Rosen, Swidler Berlin is well qualified to
represent the Employees in connection with the Investigations.
The Debtors expect Swidler Berlin to provide these services:

   (a) representing the Employees in connection with specific
       Investigations or other regulatory matters relating to the
       Debtors involving any branches and agencies of the
       United States Government (including, by way of
       illustration only, any hearings and investigations
       initiated by the United States Congress, the Federal
       Energy Regulatory Commission, the Department Of Labor, the
       SEC and the Department of Justice), as well as similar
       matters initiated by foreign or domestic state or local
       governmental entity;

   (b) representing the Employees in any litigation or
       arbitration matters;

   (c) attending meetings with third parties on behalf of the
       Employees;

   (d) appearing before the Bankruptcy Court, any district or
       appellate courts, and the United States Trustee on behalf
       of the Employees;

   (e) facilitating and coordinating communications between the
       Employees and other parties in connection with the
       Investigations; and

   (f) performing on behalf of the Employees the full range of
       legal services normally associated in these matters.

Mr. Rosen assures the Court that Swidler Berlin will work
closely with the Debtors' other professionals such as Skadden,
Arps, Slate, Meagher & Flom, to avoid unnecessary duplication of
effort with such other professionals.  Mr. Rosen also makes it
clear that although the Debtors are retaining Swidler Berlin,
the attorney-client relationship will be between Swidler Berlin
and the Employees.  "Swidler Berlin's ethical obligations will
run directly and solely to the Employees," Mr. Rosen says.  This
means that Swidler Berlin will treat any communications between
Swidler Berlin and the Employees as privileged and confidential.
Likewise, Mr. Rosen adds, Swidler Berlin will take instruction
directly from the Employees and not the Debtors.

Mr. Rosen advises the Court that if any Employee participating
in the Investigations resign, "he or she will continued to be
represented by Swidler Berlin provided his or her interests
continue to remain aligned with those of the other Employees and
the interests of the Debtors in facilitating a timely completion
of the Investigations".

At the moment, Mr. Rosen says, the Debtors and Swidler Berlin do
not anticipate that any of the Employees will become targets of
any of the Investigations or that their interests in connection
with the Investigations will conflict with the interest of the
Debtors in facilitating a timely completion of the
Investigations.  However, Mr. Rosen states, in the event that
any of the Employees becomes a target of any of the
Investigations, such party will be required to retain a separate
counsel because Swidler Berlin will no longer represent such
Employee.

Mr. Rosen further clarifies that Swidler Berlin will not be
representing any of the Employees in matters that are unrelated
to the Investigations.

The Debtors urge the Court to approve the employment of Swidler
Berlin.  The Debtors fear that if they can't get a counsel for
their Employees, such Employees might not be cooperative in the
Investigations.  As a result, Mr. Rosen anticipates, this will
delay the progress and possibly prevent the Investigations from
coming to a fair conclusion, which will likely harm the Debtors'
reorganization efforts.

The Debtors propose to compensate Swidler Berlin based on the
firm's current hourly rates:

              Partners              $290 - 580
              Counsel                280 - 355
              Associates             145 - 350
              Legal Assistants       105 - 145

The firm also charges for reimbursement of out-of-pocket
expenses including photocopying, telephone and telecopier, toll
and other charges, travel expenses, expenses for "working
meals", computerized research, transcription costs, and non-
ordinary overhead expenses such as secretarial and other
overtime.

Michael N. Levy, a member of the law firm Swidler Berlin Shereff
Friedman LLP, in New York, New York, informs Judge Gonzalez that
Swidler Berlin has taken various steps to determine whether or
not any conflict of interest exists that would preclude the
Debtors' retention of the firm.

Based on the partial result of the conflicts check, Mr. Levy
concludes that Swidler Berlin has not represented, and does not
currently represent or hold any interest adverse to the Debtors
or their estates.  When the conflicts check is completed,
Swidler Berlin promises to file a supplemental disclosure with
the Court.

"As far as I have been able to ascertain to date, Swidler Berlin
is 'disinterested' as such term is defined in the Bankruptcy
Code," Mr. Levy says. (Enron Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


EXODUS COMMS: Qwest Corp. Asks Court for Adequate Protection
------------------------------------------------------------
Qwest Corporation asks the Court for adequate assurance in the
form of Deposits and other security from Exodus Communications,
Inc., and its debtor-affiliates for payment of obligations for
certain regulated and unregulated telecommunications and other
related services under certain agreements between the parties.

Katharine L. Mayer, Esq., at McCarter & English LLP in
Wilmington, Delaware, tells the Court that the Debtors' total
average monthly usage for regulated wholesale and retail
accounts with Qwest is $91,755. Qwest had earlier filed and
served a Request for Additional Assurances in the Form of
Deposits or Other Security upon counsel for the Debtors. In
order to facilitate the matter, shortly thereafter, drafted a
stipulation to resolve its request for adequate assurances in
the form of deposits and other security.

In order to resolve the matter, Qwest drafted a stipulation as
to adequate assurances and Qwest sent a letter to the Debtors'
counsel requesting the Debtors to file a motion for
determination of adequate assurance of payment. As of the Date
of the motion, Mr. Mayer submits that the Debtors still have to
act on Qwest's request and comply with the Court's order
determining that a utility company could request from the
Debtors additional assurance in the form of deposits or other
security. The same order provides that if the Debtors believe
that the request for additional assurance was unreasonable and
the parties could not resolve the request, the Debtors are
required to file a motion for determination of adequate
assurance of payment and to schedule the motion for a hearing no
more than twenty days after the date of the request.

Ms. Mayer informs the Court that Qwest is filing this motion to
acquire adequate assurance if payment from the Debtors in the
form of immediate payment of all pre-petition amounts due,
immediate payment of post-petition amounts due and a deposit in
the amount of two months average monthly usage of $183,510. As a
utility company, Qwest is entitled to adequate assurance of
payment in the form of a deposit or other security, otherwise,
Qwest will be forced to discontinue supplying services to
Debtors. She assures the Court that if the Court approves the
motion and the Debtors will make an advance payment of two
months, Qwest will every four weeks confer with the Debtors to
reconcile and adjust the payment amounts per the terms outlined
in the proposed stipulation.

Ms. Mayer states that since Qwest's services are necessary to
enable the Debtors to continue to operate daily and thus clearly
are actual and necessary costs of preserving the Debtors' estate
and entitles Qwest to administrative priority. She adds, "the
Debtors would not have sufficient services, and its ability to
generate post-petition income would be substantially impaired
without the services provided by Qwest".

Ms. Mayer also asks the Court to compel the Debtors to make
payments in full within ten days after the Court issues an
order. And if the Debtors default under the terms of the
proposed agreement or a subsequent Court order, that Qwest be
permitted to discontinue providing services to the Debtors if
they fail to make payment as due, and fail to cure any default
within five days. (Exodus Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


FEDERAL-MOGUL: Future Claimants Tap Resolutions as Consultants
--------------------------------------------------------------
Eric D. Green, the Legal Representative for the Future Asbestos-
Related Claimants in the chapter 11 cases of Federal-Mogul
Corporation, and its debtor-affiliates, seeks an order from the
Court authorizing his employment and retention of Resolutions
LLC as consultants, nunc pro tunc to February 4, 2002.

Mr. Green explains that he seeks to employ Resolutions LLC
because of the firm's experience in arbitration and dispute
resolution and asbestos-related litigation. Resolutions LLC is
an arbitration and dispute resolution firm with a wide variety
of court appointments and out-of-court engagement. The Futures
Representative intends to utilize Resolutions LLC for general
administrative support services as well as for assistance with
analyzing and summarizing the voluminous data that will be
produced by the Debtors during the course of these cases.

Mr. Green informs the Court that compensation will be payable to
Resolutions LLC on an hourly basis plus reimbursement of actual,
necessary and reasonable costs incurred by the firm. The
professionals who will assist the Futures Representative in
these cases together with their respective hourly rates are:

       Douglas C. Allen (Analyst)               $250/hour
       Cathy Kern (executive Assistant)         $ 60/hour

Mr. Green contends that Resolutions LLC, its consultants,
analysts, or employees does not hold or represent any interest
adverse to the Debtors in matters for which it is to be
employed, except that:

A. Mr. Green is the founder and 50% owner of Resolutions LLC;

B. Carmine Reiss, the President of Resolutions LLC, is his wife;
       and

C. Mr. Green has been appointed as the legal representative to
      future asbestos-related claimants in the case of Babcock &
      Wilcox in the Bankruptcy Court for the Eastern District of
      Louisiana. (Federal-Mogul Bankruptcy News, Issue No. 12;
      Bankruptcy Creditors' Service, Inc., 609/392-0900)


FLEETWOOD ENTERPRISES: Posts $17M Q3 Loss on $522M of Revenue
-------------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE), the nation's largest
manufacturer of recreational vehicles and a leading producer and
retailer of manufactured housing, announced results for the
third quarter and nine months ended January 27, 2002.  The
Company reported a third quarter net loss of $17.3 million.  As
the result of the required accounting treatment for the after-
tax gain on its recent exchange transaction of convertible trust
preferred securities, the Company reported positive earnings of
$0.31 per diluted share.  The Company lost $205.0 million in
last year's third quarter, which included a non-cash charge of
$163.2 million for goodwill impairment and $10.9 million for
other non-recurring charges.

"Our quarterly revenues were up slightly on a year-over-year
basis, and our gross margins improved significantly across all
product lines from last year's third quarter," David Engelman,
interim president and CEO, commented. "However, despite
improvement in most of our business segments, we continued to
wrestle this quarter with some of the challenges we have faced
throughout the past fiscal year."

For the first nine months of fiscal 2002, the Company incurred a
net loss of $40.8 million compared with a loss of $239.5 million
in the prior year. The year-to-date earnings per share for
fiscal 2002 were also affected by the required accounting
treatment of the Company's recent securities exchange offer.  As
a result, the Company reported a year-to-date loss of $0.34 per
diluted share compared with a loss of $7.31 per diluted share,
including $5.40 per share in non-recurring charges, for the
first nine months of the prior year.

In the exchange offer, Fleetwood exchanged new 9.5% convertible
trust preferred securities with a liquidation value of $37.95
million for 6% convertible trust preferred securities with a
liquidation value of $86.25 million.  The $29.4 million after-
tax difference between the liquidation values of the two
securities is not reported on the income statement but does
increase shareholders' equity, and is therefore treated as
additional earnings attributable to Common shareholders in
calculating earnings per share.

Consolidated revenues for the third quarter totaled $522.4
million, up 1 percent from $514.8 million in the third quarter
of fiscal 2001.  Nine-month revenues were down 16 percent to
$1.68 billion from $1.98 billion for the same period last year.

Manufactured housing revenues in the third quarter declined 8
percent to $235.9 million from $257.1 million last year. Housing
revenues included $163.1 million of wholesale factory sales to
independent retailers and $72.8 million of retail sales from
Company-operated sales centers.  This compares with $135.6
million and $121.5 million, respectively, last year. Gross
manufacturing revenues rose 6 percent to $202.1 million from
$190.6 million last year, and included $39.0 million of
intercompany sales to Company-owned stores.  Manufacturing unit
volume was up 4 percent to 7,075 homes while homes sold at the
reduced number of Fleetwood retail stores dropped 41 percent to
1,650.

For the first nine months of the fiscal year, manufactured
housing revenues were down 22 percent to $811.5 million from
$1.04 billion in the prior year.  Revenues included $542.5
million of wholesale factory sales to independent retailers and
$269.0 million of sales to Company-operated stores, down from
$583.6 million and $458.7 million respectively last year.  Gross
manufacturing revenues, including intercompany sales, were
$658.4 million this year compared with $792.4 million last year.
Unit shipments from manufacturing plants declined 20 percent to
23,547, while Fleetwood retail store sales dropped by 38 percent
to 6,508.

Manufacturing profit in the Housing Group, before intercompany
profit in inventory, was $2.7 million during the quarter, down
65 percent from $7.7 million in the prior year.  The retail
division lost $9.6 million compared with a loss of $35.8 million
last year, which included $10.6 million of non-recurring, non-
cash charges.  Retail sales were down 40 percent to $72.9
million, largely due to a similar percentage decrease in the
number of stores.

For the year to date, the Housing Group's manufacturing division
contributed $45.0 million, excluding non-recurring charges, to
operating income, which was a 37 percent increase from the prior
first nine months.  The retail division lost $30.6 million
compared with $34.5 million last year.

"While gross profits were up due to selling price increases and
operating efficiencies, overall profitability in our Housing
Group for the third quarter was adversely affected by asset
impairment charges of $3.5 million on two closed plants, as well
as increased warranty and service costs," Engelman said.  "Also,
the consumer finance environment continues to be problematic.
Not only are lenders restricting the amount of funds that they
devote to this business, but two significant participants
announced this quarter that they were no longer going to be
providing manufactured housing loans."

Quarterly revenues in the RV Group were up 11 percent to $278.3
million from $250.4 million.  The Company experienced an
increase in motor home and travel trailer orders during and
immediately after the industry trade show in late November.  As
a result, motor home sales for the third quarter increased 25
percent from last year to $184 million.  In the towable
category, despite increased orders resulting from the trade
show, travel trailer sales ended the quarter at $68 million,
down 12 percent from the prior year, and folding trailer sales
stayed approximately even at $26 million.

Nine-month RV sales were off 8 percent to $841.5 million
compared with last year's $917.2 million.  Motor home revenues
rose slightly to $489 million versus $482 million last year.
Travel trailer sales declined to $268 million from $347 million
a year ago, while folding trailer revenues dropped slightly to
$84 million from last year's $88 million.

Overall, the RV Group lost $9.2 million for the quarter,
compared with a loss of $29.7 million last year.  For the year
to date, RVs lost $36.0 million compared with $39.7 million for
the first nine months of fiscal 2001.

"Our RV Group's results were mixed," Engelman said.  "We were
pleased with the performance of the motor home division, which
recovered from a loss position last year to an operating profit
of $5.6 million this quarter. Travel trailers' performance
improved compared to last year, but we still have work to do to
eliminate this division's losses.  Earnings for both divisions
were affected by promotional costs.  Fortunately, sales are
improving and our new products are generating improved backlogs.

"While we are not satisfied with our financial performance and
although we will not be profitable in the final quarter of the
fiscal year, we are encouraged by our progress in key areas,"
Engelman continued.  "For next quarter, we look for our motor
home division to again be profitable but, despite expected
increases in travel trailer sales, we don't believe that
division will reach breakeven.  In manufactured housing, the
industry is making progress in reducing inventory levels and
production capacity, but until there is improvement in the
availability and cost of retail financing, we are not likely to
see any truly significant upturn in industry performance."

The #1 US maker of RVs, Fleetwood also is the #2 maker of
manufactured housing (behind Champion Enterprises). Manufactured
housing accounts for about half of Fleetwood's sales. Housing
features include vaulted ceilings, walk-in closets, and porches.
Fleetwood's RVs come in three types: motor homes (brands such as
American Dream, American Eagle, Southwind, and Tioga), travel
trailers, and folding trailers. Its building-supply operations
include two fiberglass companies and a lumber producer.
Fleetwood operates manufacturing facilities in 16 US states and
in Canada; it sells through about 190 company-owned outlets and
independent distributors.

                          *   *   *

As reported in the Dec. 17, 2001 edition of Troubled Company
Reporter, Standard & Poor's lowered its corporate credit rating
on Fleetwood Enterprises Inc. to double-'B'-minus and at the
same time dropped the rating on Fleetwood Capital Trust 'D'.
Both ratings were removed from CreditWatch, where they were
placed on March 1, 2001, but the ratings outlook remains
negative.

In the same report, the international rating agency said that
"[t]he lowered corporate credit rating reflects a materially
weakened business position, due to the continued, very
competitive industry conditions for both of Fleetwood's major
business segments. In addition, Fleetwood's financial profile
remains constrained, as reflected by the granting of security to
the company's bank lenders and the recent discontinuation and
deferral of the company's common and preferred dividends,
respectively."


GAINSCO INC: Reaches Accord to Resolve Loan Covenant Violations
---------------------------------------------------------------
GAINSCO, Inc. (NYSE: GNA), reported a net loss for the fourth
quarter 2001 of $62.2 million.  The Company has made several
restructuring decisions which impacted the results, including
the February 7, 2002 announcement to cease writing commercial
lines insurance business.

The 2001 fourth quarter loss compares to a fourth quarter 2000
net loss of $10.8 million.

"This quarter GAINSCO took action to reduce its exposure to the
insurance industry and begin a long-term process of capital
redeployment. These actions were determined to be essential to
the process of preserving the capital and future of our
Company," said Glenn W. Anderson, GAINSCO's president and chief
executive officer.

"Operationally, the Company announced its decision this month to
cease writing commercial lines insurance due to continued
adverse claims development and unprofitable underwriting
results. Despite concerted past efforts intended to restructure
GAINSCO's commercial lines business into a profitable business
platform, the Company concluded this quarter that it could no
longer expose its capital to the ongoing volatility and
unpredictability of claims trends that have continued to erode
Company and industry results.

Accordingly, the Company has begun the process of eliminating
approximately $70 million of in force commercial lines business
over the next twelve months.

"In conjunction with this action, the Company announces the
following additional capital management actions," stated
Anderson.

      -- "First, the Company recorded an increase in estimated
ultimate claims liabilities of approximately $20.0 million in
the fourth quarter 2001. The Company also recorded during this
same quarter a provision for potential uncollectible receivables
of $2.7 million.  On business to be eliminated, the Company has
$104.8 million in reserves as of year-end 2001 for approximately
2,400 existing and incurred but not reported claims. The Company
expects to focus on effectively managing the disposition of this
remaining inventory of claims.

      -- "Second, the Company has recorded an impairment of
approximately $13.4 million on the outstanding amount of
goodwill on its balance sheet associated with its 1998
acquisition of the Lalande Group, a Miami, Florida-based
nonstandard private passenger automobile operation. The
remaining goodwill is approximately $3.5 million. This
action was taken to reflect estimated market valuation levels of
agencies in the personal automobile marketplace.  Additionally,
the Company continues to review current trends and projected
profitability of our nonstandard personal automobile business.
The Lalande Group produced approximately $40 million of gross
premiums written in 2001.

      -- "Third, the Company recorded a valuation allowance of
$31.5 million against its deferred Federal income tax asset.
The reason for this action is the uncertainty of future
profitability levels. GAINSCO's right to utilize net operating
loss carry forwards tax benefit of $19.9 million for Federal
income tax purposes in the future, as the Company transitions
its business platform, is not affected by this action.

      -- "Finally, the Company has reached an agreement with its
bank that will resolve the Company's previously announced breach
of covenants under terms of an existing credit agreement.  As
part of an overall restructuring of this credit agreement,
GAINSCO will prepay $6.1 million of the loan in March 2002.
Additionally, several covenants will be eliminated and the
interest rate will be changed to a base rate (which approximates
prime) plus 175 basis points. The $4.2 million balance of the
loan after the March 2002 prepayment will be payable in 2003.
The Company is providing for funding of the 2002 prepayment and
for holding company liquidity through a $7.2 million ordinary
dividend from GAINSCO's principal insurance subsidiary,
General Agents Insurance Company of America, Inc., and through
the mutually-agreed early exercise for cash of a $2.1 million
'put' option on certain illiquid investments to Goff Moore
Strategic Partners, L.P."

Shareholders' Equity at year-end 2001 is approximately $27.5
million.  At year end 2001, $13.1 million has yet to be charged
to Shareholders' Equity related to the accretion of the discount
on the preferred stock.  Book Value per common share
(Shareholders' Equity, less unaccreted discount on preferred
stock, divided by common shares outstanding) is approximately
$0.68. Combined statutory surplus at the end of the fourth
quarter 2001 was $49.8 million.  This amount does not include
approximately $5.4 million of unrealized gains that existed in
the statutory bond portfolios at the end of
the fourth quarter 2001.

              Full Year and Fourth Quarter 2001 Recap

For the twelve months ended December 31, 2001, the Company
reported a net loss of $75.6 million.  This compares to a net
loss for the twelve months of 2000 of $19.6 million.  For the
fourth quarter and full year 2001 and 2000, the effects of
common stock equivalents and convertible preferred stock are
antidilutive due to the net losses.

The result for the twelve months of 2001 includes a pre-tax
increase in estimated ultimate liabilities related to prior
accident years totaling approximately $30.5 million.  Of this
amount, approximately $9 million was recognized as a reinsurance
recovery due to reinsurance protection the Company has in place
covering commercial automobile losses from accident years 2000
and prior.  Under generally accepted accounting principles, the
reinsurance recovery is deferred and recorded as income in
future periods.  For the fourth quarter and year ended 2001, the
Company recognized approximately $1.1 million of the
approximately $9 million reinsurance recovery available under
generally accepted accounting principles.  Under statutory
accounting principles, this reinsurance recovery is immediate
and is included in other income in the results for 2001.

The statutory combined ratio for the twelve months of 2001 was
163.0%, compared to a combined ratio of 124.2% for the twelve
months of 2000.  The statutory claim ratio for the twelve months
of 2001 was 124.6%, compared with 95.6% for the twelve months of
2000.  The statutory combined ratio for the fourth quarter of
2001 was 238.8%, compared to a combined ratio of 127.3% for
the 2000 fourth quarter.  The statutory claim ratio for the 2001
fourth quarter was 194.9%, compared with 121.1% for the fourth
quarter of 2000.

Continued listing on the New York Stock Exchange involves the
Company meeting certain quantitative and qualitative criteria of
the NYSE.  As a result of the actions, together with recent
market prices for the common stock, the Company may be
considered below these criteria.  The Company has been advised
by the NYSE that it is reviewing the situation.

The results announced entitle a non-affiliated reinsurer to
direct that certain assets held in a trust account under a
reserve reinsurance cover agreement with that reinsurer be
transferred to the reinsurer.  Such action, however, should not
affect the reinsurance provided.

GAINSCO, Inc., is a Fort Worth, Texas-based holding company.
The Company's nonstandard personal automobile insurance products
are distributed through retail agents in Florida.  Its primary
insurance subsidiaries are General Agents Insurance Company of
America, Inc., MGA Insurance Company, Inc., GAINSCO County
Mutual Insurance Company and Midwest Casualty Insurance
Company.


GLOBAL CROSSING: Wins Nod to Hire Ordinary Course Professionals
---------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates sought and
obtained authority to retain those professionals that are
utilized by the Debtors in the ordinary course of business
without the submission of separate employment applications,
affidavits, and the issuance of separate retention orders for
each individual professional.

The Court permits the Debtors to pay each Ordinary Course
Professional, without a prior application to the Court, 100% of
the fees and disbursements incurred, upon the submission to, and
approval by, the Debtors of an appropriate invoice setting forth
in reasonable detail the nature of the services rendered and
disbursements actually incurred, up to the lesser of:

      A. $30,000 per month per Ordinary Course Professional or

      B. $300,000 per month, in the aggregate, for all Ordinary
         Course Professionals.

In the event that an Ordinary Course Professional seeks more
than $30,000 in a single month or $100,000 in the aggregate in
these chapter 11 cases, that professional will be required to
file a fee application for the full amount of their fees in
accordance with sections 330 and 331 of the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure, the Local Bankruptcy
Rules for the Southern District of New York, orders of the Court
and Fee Guidelines promulgated by the Office of the United
States Trustee for the Southern District of New York.

The Debtors reserve the right to supplement the list of Ordinary
Course Professionals from time to time as necessary. In such
event, the Debtors propose to file a notice with the Court
listing the additional Ordinary Course Professionals that the
Debtors intend to employ and to serve the notice on:

      A. the U.S. Trustee;

      B. the attorneys for the Debtors' prepetition lenders;

      C. the JPLs and their attorneys;

      D. the attorneys for certain of the Debtors' bondholders;

      E. the attorneys for any statutory committees of unsecured
         creditors appointed in these cases; and

      F. all other parties that have filed a notice of appearance
         in these chapter 11 cases.

The Debtors further propose that if no objection to any such
additional Ordinary Course Professional is filed with the Court
and served on the Debtors within 15 days after the service of
the Ordinary Course Professional Notice, retention of the
Ordinary Course Professional(s) would be deemed approved by the
Court in accordance with the provisions of this Motion without
the need for a hearing or further order.

Within 15 days of the later of Court approval of the Ordinary
Course Professional's retention or the engagement of such
professional by the Debtors, each Ordinary Course Professional
will serve upon the Office of the United States Trustee for the
Southern District of New York and the Debtors and file with the
Court:

      A. an affidavit certifying that such professional does not
         represent or hold any interest adverse to the Debtors or
         their estates with respect to the matter on which such
         professional is to be employed;

      B. a completed retention questionnaire.

Although certain of the Ordinary Course Professionals may hold
unsecured claims against the Debtors for prepetition services
rendered to the Debtors, the Debtors do not believe that any of
the Ordinary Course Professionals has an interest adverse to the
Debtors, their creditors or other parties-in-interest on the
matters for which they would be employed, and thus, all of the
Ordinary Course Professionals proposed to be retained meet the
special counsel retention requirement under section 327(e) of
the Bankruptcy Code.

Other than Ordinary Course Professionals, Mr. Walsh submits that
all professionals utilized by the Debtors in connection with the
prosecution of these chapter 11 cases will be retained by the
Debtors pursuant to separate retention applications. Such
professionals shall be compensated in accordance with the
applicable provisions of the Bankruptcy Code, or the Bankruptcy
Rules.

The Debtors desire to continue to employ the Ordinary Course
Professionals to render many of the services to their estates
similar to those services rendered prior to the Commencement
Date. Mr. Walsh explains that these professionals render a wide
range of legal, accounting, tax, real estate, and other services
for the Debtors that impact the Debtors' day-to-day operations.
It is essential that the employment of the Ordinary Course
Professionals, many of whom are already familiar with the
Debtors' affairs, be continued on an ongoing basis so as to
avoid disruption of the Debtors' normal business operations.

Mr. Walsh tells the Court that the relief requested will save
the estates the substantial expenses associated with applying
separately for the employment of each professional. Further, the
requested relief will avoid the incurrence of additional fees
pertaining to preparing and prosecuting interim fee
applications. Likewise, the procedure outlined above will
relieve the Court and the U.S. Trustee of the burden of
reviewing numerous fee applications involving relatively small
amounts of fees and expenses.

The Debtors submit that, in light of the additional cost
associated with the preparation of employment applications for
professionals who will receive relatively small fees, it is
impractical and inefficient for the Debtors to submit individual
applications and proposed retention orders for each Ordinary
Course Professional. (Global Crossing Bankruptcy News, Issue No.
3; Bankruptcy Creditors' Service, Inc., 609/392-0900)


GLOBAL CROSSING: Asia Global Crossing Facing Its Own Traumas
------------------------------------------------------------
DebtTraders reports that resulting from the investigations into
accounting practices at its parent corporation, Asia Global
Crossing has delayed reporting its results until the
investigation is complete. By that time, Asia Global Crossing's
10K will be filed.

Also, according to the report, Asia Global Crossing did report
fourth quarter revenue of $46.7 million and full year revenue of
$125.5 million. Cash on hand at year end was $53.0 million. In
addition, Asia Global Crossing reported that there is
significant likelihood that operating cash flow from Pacific
Crossing 1 will not satisfy debt payments at Pacific Crossing
Limited. Therefore, creditors of Pacific Crossing Limited will
have the right to the equity of Pacific Crossing Limited and
will thus control Pacific Crossing 1, which we believe will
hinder the asset value of East Asia Crossing and therefore be
detrimental to bondholders. Furthermore, there is a significant
probability that the Company's auditors will express substantial
doubt as to the Company's ability to remain a going concern.

DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA,
advise that Asia Global Crossing's 13.375% notes due 2010 is one
of its Actives. The same debt issues are currently trading
between 22 and 23.5. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1


GLOBIX CORPORATION: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Globix Corporation
              139 Centre Street
              New York, New York 10013

Bankruptcy Case No.: 02-10647

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                     Case No.
      ------                                     --------
      ATC Merger Corp.                           02-10648
      Comstar.net, Inc.                          02-10650

Type of Business: The Debtor is a leading full-service provider
                   of Internet solutions to businesses. The
                   Debtor's solutions include secure and fault-
                   tolerant Internet data centers with network
                   services providing connectivity to the
                   Internet and Internet-based application
                   services such as dedicated hosting, streaming
                   media and content delivery, and messaging
                   services.

Chapter 11 Petition Date: March 01, 2002

Court: District of Delaware

Judge: Peter J. Walsh

Debtors' Counsel: Jay Goffman, Esq.
                   Skadden, Arps, Slate, Meagher & Flom LLP
                   Four Times Square
                   New York, New York 10036
                   (212) 735-3000

                   Gregg M. Galardi, Esq.
                   Skadden, Arps, Slate, Meagher & Flom LLP
                   One Rodney Square
                   Wilmington, Delaware 19801
                   (302) 651-3000

Total Assets: $524,149,000

Total Debts: $715,681,000

Debtor's 20 Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
HSBC Bank USA               Public Debt           $600,000,000
c/o HSBC Issuer Services
Attn: Anthony R. Bulinsky, VP
10 E 40th St., 14th Floor
New York, NY 10018
Tel: (212) 525-1386
Fax: (212) 525-1300

EYP Mission Critical        Trade Debt                $206,677
  Facilities, Inc.

Worldcom                    Trade Debt                $180,171

Covad Communications Co.    Trade Debt                $167,790

Verizon Data                Trade Debt                $165,442

Zurich-American Ins.        Trade Debt                $157,582
  Group

Micromuse, Inc.             Trade Debt                $119,075

Con Edison                  Trade Debt                $115,187

Verizon Communications      Trade Debt                $108,218

Giantloop Network           Trade Debt                 $54,816

Sprint Corp.                Trade Debt                 $45,657

Telx Communications Corp    Trade Debt                 $45,000

Cable & Wireless USA, Inc.  Trade Debt                 $41,390

Unity Electric Co., Inc.    Trade Debt                 $40,489

Global Crossing             Trade Debt                 $24,558
  Association

Data Support Association    Trade Debt                 $23,397

AT&T Broadband              Trade Debt                 $22,516

Micromedia Fiber Network    Trade Debt                 $10,825
  Services

AT&T                        Trade Debt                  $8,813

Qwest Communication Corp.   Trade Debt                  $8,610


HIGH SPEED ACCESS: Completes Sale of All Assets to Charter Comm.
----------------------------------------------------------------
High Speed Access Corp. (Nasdaq: HSAC), announced that it
completed its previously announced sale of substantially all of
its assets to Charter Communications (Nasdaq: CHTR) immediately
after receiving approval of its shareholders.

Concurrent with the completion of the asset sale to Charter, HSA
also completed its previously announced purchase of 20,222,139
shares of its common stock held by Vulcan, Inc.  The common
stock HSA purchased from Vulcan represented all of the shares of
common stock held by Vulcan and reduced the number of shares of
HSA common stock outstanding by one-third, from approximately
60.4 million to 40.2 million shares.

                  Delisting Notice from Nasdaq

On February 14, 2002, HSA received a letter from the Nasdaq
Stock Market indicating that HSA is not in compliance with the
$1.00 minimum bid price requirement for continued listing.
According to Nasdaq's letter, HSA's common stock must maintain a
closing bid price of at least $1.00 for a minimum of 10
consecutive days prior to May 15, 2002, or it will become
subject to delisting from the Nasdaq National Market.  If
compliance with the minimum bid price is not achieved, HSA can
either appeal the delisting from the Nasdaq National Market or
permit the common stock to trade on the OTC-Bulletin Board.

                          HSA's Future

HSA's Board of Directors continues to evaluate options for HSA's
future strategic direction.  As previously disclosed in the
definitive proxy statement seeking approval of the asset sale to
Charter, the Board of Directors is currently considering various
possibilities for HSA's future.


I/NET INC: Working with Creditors for Long-Term Debt Reduction
--------------------------------------------------------------
I/NET, Inc., (OTC Bulletin Board: INNI) announced higher
earnings in the fourth quarter and year ended December 31, 2001.

The Kalamazoo, Michigan-based developer of software, Internet
and telematics solutions earned $643,081 on net revenues of
$308,458 in the fourth quarter of 2001, compared with a net loss
of $13,194 on net revenues of $393,371 in the same period last
year.  The 2001 fourth-quarter results include an income tax
benefit of $229,000 related to a loss carryforward and an
extraordinary gain of $444,383 related to the retirement of two
notes by creditors.

For the year ended 2001, I/NET reported net earnings of $399,114
on net revenues of $1.4 million, versus a net loss of $60,455 on
net revenues of $1.5 million last year.  I/NET said revenues
from NASA contract work and outside Web development projects
helped offset lower sales of the Company's mid-range software.

Over the last year, I/NET reached agreements with three
noteholders who have forgiven approximately $733,000 of debt and
related interest.  I/NET is working with additional creditors to
secure agreements that would further reduce long-term debt.
I/NET reports that it expects the financial impact of these
agreements to be reflected in its financial results for the
first quarter of 2002.

Gross profit decreased in 2001, reflecting lower revenues and
increased cost of sales.  I/NET said costs increased due to
investments in personnel and the opening of a new Chicago office
to provide service under two contracts with the National
Aeronautics and Space Administration (NASA) and to develop new
technologies, including the Company's conversational interface
software.

I/NET's conversational interface software is similar to voice
recognition, but allows extended dialogues when statements are
ambiguous or require multiple exchanges of information.  In a
telematics application, for example, if a car driver said "turn
up the seat warmer," and there were two seat warmers in the car,
both of which are turned off, the conversational interface will
ask whether the driver meant the driver's seat warmer or the
passenger's seat warmer.

In December 2001, I/NET announced it has received a six-month
contract from NASA to advance the development of the Company's
conversational interface technology.  I/NET plans to market
conversational interface technology to the automotive,
industrial and telematics industries.

"We made substantial progress as a company in 2001.  Most
significantly we put people and technology in place to best
position I/NET for future growth," said Stephen J. Markee,
president and chief executive officer.

"Over the last year, we have invested in the development and
refinement of our conversational interface technology.  We have
received encouraging feedback from NASA, as well as from the
automotive and telematics industries. Though it is too early to
gauge the financial impact of our conversational interface
software, we are confident that this product is the future of
I/NET. As part of our strategy of the commercialization of this
technology, we have already begun seeking partners to help us
finance these developments."

I/NET provides software and services to small businesses and
Fortune 500 corporations.  Established in 1982 as a contract
software development firm, I/NET has been a pioneer in the areas
of digital imaging, voice recognition and multimedia.  Visit
http://www.inetmi.com


IT GROUP: Blackwell Seeks Stay Relief to Prosecute ERISA Suit
-------------------------------------------------------------
Robert J. Blackwell, Jr., moves the Court for relief from
automatic stay to proceed with his suit against The IT Group,
Inc., and its debtor-affiliates pending in the U.S. District
Court for the District of Columbia, which was scheduled for a
one-day non-jury trial in February when the Debtors filed their
chapter 11 case.

William F. Sheehan, Esq., at Shea & Gardener in Washington, DC,
explains that Mr. Blackwell was an employee of OHM Company,
which was acquired by the Debtors in 1998. As an employee, he
was a party to an employment agreement that provided him certain
benefits if OHM was acquired and was fired by the new owner.
Upon the acquisition of the Debtors, it proceeded to fire Mr.
Blackwell and refused to honor the employment agreement.

Mr. Blackwell's complaint against the Debtors contain two
central claims:

A. the Debtors' refusal to honor the employment agreement
      violated the ERISA  or if the agreement was not covered by
      the ERISA, constitutes common law breach of contract; and

B. the Debtors' simultaneous refusal to credit Blackwell with
      certain amounts to which he was entitled under the
      company's SERP also violated ERISA or was a common law
      breach of contract.

On October 17, 2000, Mr. Sheehan relates that the Court granted
Mr. Blackwell a summary judgment on virtually all aspects of him
employment claim. That left for trial only the determination of
the covenant's value, the arithmetic calculation of the contract
payment and Blackwell's entitlement to attorney's fees under the
employment agreement. The amount in controversy including
interest, is approximately $1,410,302 for the employment
agreement claim, $184,764 for the SERP claim and $310,545 in
attorney's fees. (IT Group Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


IMPERIAL PETROLEUM: Grant Thornton Questions Firm's Viability
-------------------------------------------------------------
Imperial Petroleum Recovery Corporation, with its wholly owned
subsidiary Petrowave, is a high tech company committed to being
the global leader in developing and marketing innovative
commercial Radio Frequency (RF) energy applications for the
petroleum industry.   It utilizes a proprietary, patented
process using high-energy microwaves to separate oil emulsions.
The Company calls the process "Microwave Separation Technology",
and reports it has proven that it can provide an effective,
ecologically sound and economical method of processing crude oil
emulsions.  The use of microwave energy for emulsion remediation
and oil recovery reduces usage of energy, chemical pollutants,
reagents and solvents, and minimizes the generation of by-
products or waste streams.  Processing time normally is reduced.
Laboratory work and oilfield operations have shown that the
microwave system is 50% faster than conventional emulsion
cracking systems.

The MST process recovers usable hydrocarbon compounds from
material that otherwise would be of little value or require
disposal.  Based on results of current operating equipment,
management has shown that approximately 90% of the entrained
crude oil in an emulsion can be recovered through the MST
process and reclaimed as usable products.

Imperial's number one priority during fiscal year 2001 was to
improve its cash flow position.  The lack of outside cash flow
has put downward pressure on its marketing and manufacturing
efforts and has deflected its management's resources away from
the operational growth envisioned for the year.  Several
investment organizations were contacted to arrange for a cash
infusion, but in all cases but one the cost of the investment
was too prohibitive and did not bring enough benefit to IPRC and
its shareholders to warrant continuing negotiations.

                       Results of Operations

During the fiscal year 2001, the Company recognized $507,682 in
revenue compared to $318,847 in fiscal year 2000. The fiscal
year 2001 revenue was comprised of revenue earned from leases of
the MST-1000, partial proceeds from the sale of a MST 1000 and
fees charged to reimburse set-up costs incurred by the Company
to demonstrate the MST-1000 at various locations. During fiscal
year 2000, the revenue was comprised of revenue earned from
leases of the MST-1000 and fees charged to reimburse costs to
demonstrate the MST-1000 to potential customers.

During the fiscal years ended October 31, 2001 and 2000, the
Company identified $921,451 and $816,830 respectively, in costs
that were specifically identified to contract revenue. During
the fiscal year 2001, the costs were primarily comprised of
approximately $179,215 in personnel costs, $278,435 for
costs incurred to set-up and support equipment leases, $177,815
in costs to demonstrate the MST at various locations and
$115,390 in equipment rental costs. During the same period in
the prior year, the Company incurred $179,951 in payroll and
related charges, $468,747 in costs to support MST-1000 leases,
$239,345 in costs to demonstrate the MST-1000 at various
locations, and $7,573 in rental equipment costs.  Additionally,
during fiscal years 2001 and 2000, the Company recorded charges
of $74,474 and $73,569, respectively, against income for
depreciation of the leased equipment.

As a consequence of the Company's financial situation, Grant
Thornton LLP of Salt Lake City, independent auditors for the
Company states, in a recent Auditors Report:

      "The Company is in the development stage as of October 31,
2001.  Recovery of the Company's assets is dependent on future
events, the outcome of which is indeterminable.  In addition,
successful completion of the Company's development plan and its
transition, ultimately, to attaining profitable operations, is
dependent upon obtaining adequate financing to fulfill its
development activities and achieving a level of sales adequate
to support the Company's cost structure.

      "As shown in the financial statements, the Company has
incurred consolidated cumulative net losses of $14,383,201 since
inception of operations and as of October 31, 2001, the
Company's current liabilities exceeded its current assets by
$2,609,628, it had $752,500 of debt obligations that were past
due, and it had a stockholders' deficit of $3,014,623.  These
factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern."


INTEGRATED HEALTH: Rotech Gets Access to $575MM Exit Financing
--------------------------------------------------------------
Following consummation of the Rotech Plan, Rotech will emerge
from chapter 11 as an independent operating company, wholly
owned by the Debtors' prepetition Senior Lenders.  Because
Rotech will no longer be a wholly owned subsidiary of IHS,
Rotech will need its own sources of working capital and other
funds to replace the funding it formerly received as a wholly
owned subsidiary of IHS.

Rotech projects that working capital will not be available from
the net proceeds of the Senior Subordinated Note issue or the
Term Loan B Note issue, since those proceeds will be distributed
to the Senior Lenders.  Moreover, under the Rotech Plan, the
Rotech Debtors will pay on the Effective Date or as soon
thereafter as is reasonably practicable, in cash, all allowed
Administrative Expense Claims owed by the Rotech Debtors under
sections 503(b), 507(a)(l) and 1114(e) of the Bankruptcy Code,
as well as certain priority claims.  The Rotech Debtors estimate
that on the Effective Date the Administrative Expense Claims and
Priority Claims will aggregate $22 million.  In addition, the
Rotech Debtors estimate that they will require a working credit
line in an aggregate amount of $75 million.

To this end, the Rotech Debtors sought and obtained the Court's
approval to obtain exit financing of approximately $575 million,
to execute the Exit Financing Documents and to pay to UBS
Warburg, Goldman Sachs nad the other initial purchasers of the
Senior Subordinated Notes a purchase discount in the amount of
2.75% on the closing date of the Senior Subordinated Notes
offering.

The Exit Financing of $575 million will consist of:

      (a) Senior Secured Credit Facilities consisting of

              - a $75 million Revolving Credit Facility and
              - a $200 million Term Loan B Facility and

      (b) a $300 million Senior Subordinated Note offering.

UBS Warburg, the Debtors' financial advisors, will act as lead
underwriter with respect to the issuance of the Senior
Subordinated Notes pursuant to the term of a Engagement Letter,
approved by the Court in 2000 granting UBS Warburg a right of
first refusal.

With respect to the Senior Secured Credit Facilities, the
Debtors selected UBS AG to act as administrative agent, Goldman
Sachs Credit Partners L.P. (GSCP) to act as syndication agent,
and UBS Warburg and GSCP to act as joint lead arrangers and
joint bookrunners after a process in which other major financial
institutions were approached.

The Rotech Debtors entered into the Senior Secured Credit
Facilities Commitment Letter and the Senior Secured Credit
Facilities Fee Letter following the approval by the Court at the
confirmation hearing on the Rotech Plan. The Rotech Debtors
anticipate entering into the definitive documentation relating
to the Senior Secured Credit Facilities and Senior Subordinated
Notes upon the Effective Date of the Rotech Plan. The parties
have agreed upon a term sheet with respect to the proposed high-
yield offering of Senior Subordinated Notes.

Reorganized Rotech is the proposed Borrower under the Senior
Secured Credit Facilities Commitment Letter and the issuer under
the term sheet for the Senior Subordinated Notes. However, in
the event that the Restructuring Transactions (as defined in the
Rotech Plan) occur, Reorganized Rotech may, under certain
circumstances, assign its rights and obligations under the
relevant documents to New Rotech.

The major elements of the Exit Financing Documents and the Exit
Financing are:

* Facilities

The Exit Financing of $575 million will consist of: (a) a Senior
Secured Credit Facilities consisting of (i) a $75,000,000
Revolving Credit Facility and (ii) a $200,000,000 Term Loan B
Facility; and (b) a $300,000,000 issuance of Senior Subordinated
Notes.

* Interest Rate

At the option of the Borrower, the Revolving Credit Facility and
the Term Loan B Facility will bear interest at a Base Rate plus
a margin or Eurodollar Rate plus a margin. The Base Rate will he
the highest of the Administrative Agent's prime rate, the
secondary market rate for three-month certificates of deposit
(adjusted for statutory reserve requirements) plus 1% and the
overnight federal funds rate plus 0.50%. The margin for the Term
Loan B Facility will he 2.5O% over the Base Rate or 3.50% over
the Eurodollar Rate. The margin for the Revolving Credit
Facility will range from 1.25% to 2.25% over the Base Rate or
2.25% to 3.25% over the Eurodollar Rate depending on the
consolidated leverage ratio of the Borrower. The interest rate
to be paid on the Senior Subordinated Notes will be determined,
as is customary, immediately prior to the issuance thereof based
upon prevailing market conditions.

* Guarantors.

All obligations of the Borrower under the Senior Secured Credit
Facilities and the Senior Subordinated Notes will be
unconditionally guaranteed by substantially all of the direct
and indirect subsidiaries of Reorganized Rotech.

* Collateral.

The Senior Secured Credit Facilities will be secured by
substantially all the assets of Reorganized Rotech and its
subsidiaries.

* Mandatory Prepayment.

The Senior Secured Credit Facilities are subject to mandatory
prepayment from a certain percentage of (a) excess cash flow,
(b) net proceeds from certain asset sales and other dispositions
(including as a result of casualty or condemnation), and (c) the
net proceeds of future issuances of new equity and debt.

* Commitment Fee.

A quarterly commitment fee will he payable at a rate ranging
from 0.50% to .75% of the unused portion of the Revolving Credit
Facility depending on the percentage of usage.

* Underwriting Fee.

An underwriting fee in an amount equal to the greater of
$4,125,000 and 1.50% of the aggregate amount of the Revolving
Credit Facility and the Term Loan B Utility, payable to UBS
Warburg and GSCP on the Closing Date; provided that, under
certain specified circumstances, 25% of the Underwriting Fee may
be payable regardless of whether the Closing Date occurs.

* Structuring Fee.

A structuring fee in an amount equal to the greater of
$1,375,000 and .50% of the aggregate amount of the Revolving
Credit Facility and the Term Loan B Facility, payable to UBS
Warburg and GSCP on the Closing Date.

* Ticking Fee

A ticking fee in an amount equal to .50% per annum on each of
UBS Warburg's and GSCP's committed portion of the Revolving
Credit Facility and the Term Loan B Facility, beginning to
accrue on the effective date of the Senior Secured Credit
Facilities Commitment Letter and continuing until the earlier of
the closing under the facility and the termination of the Senior
Secured Credit Facilities Commitment Letter, and payable at such
time.

* Administration Fee.

An Administration fee of $125,000 per annum, payable to UBS AG,
as administrative agent, on the Closing Date of the Senior
Secured Credit Facilities and on each anniversary thereo.

* Purchase Discount.

UBS Warburg, Goldman Sachs and the other initial purchasers will
purchase the Senior Subordinated Notes at a discount from their
principal amount. The purchase discount will be 2.75%.

The Rotech Debtors estimate that the fees and expenses to be
paid in connection with the Senior Secured Credit Facilities
will aggregate approximately $6.5 million by the initial
drawdown thereof. This represents approximately 2.4% of the
total Senior Secured Credit Facilities and is in line with
current market conditions for loan facilities of this type. The
Rotech Debtors will also pay an annual fee in a yet to be
determined amount to the indenture Trustee under the Indenture
that will govern the Senior Subordinated Notes.

In addition, the Senior Secured Credit Facilities Commitment
Letter requires standard indemnification of UBS Warburg, UBS AG
and GSCP and their affiliates, respectively, by the Rotech
Debtors, including reimbursement of reasonable out-of-pocket
expenses. Reorganized Rotech and the initial purchasers will
each be responsible for payment of their own costs and expenses
related to the offering. (Integrated Health Bankruptcy News,
Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900)


JPM COMPANY: Files for Chapter 11 Protection in Delaware
--------------------------------------------------------
The JPM Company (OTCBB:JPMXE) announced that it has filed a
Chapter 11 in the United States Bankruptcy Court for the
District of Delaware.

Also filing were three subsidiaries: The JPM Company of
Delaware, Inc.; JPM Technologies, Inc.; and Denron Inc.

The Chapter 11 proceedings allow the Company to continue to
operate its facilities while simultaneously conducting an
expedited sales process on a competitive bid basis for its
remaining operations.

JPM believes that using the procedures and protections available
under the Bankruptcy Code will afford it the likeliest
possibilities of finding financially sound purchasers of the
operations as going concerns with substantially all of the
workforce in place.

However, as a requirement of law, employees in Lewisburg and
Beaver Springs, Pennsylvania have been issued Worker Adjustment
and Retraining Notification Act notifications informing them The
JPM Company will no longer be their employer in sixty days.

In addition to its Lewisburg and Beaver Springs, Pennsylvania
operations, JPM will also be offering for sale its operations in
Singapore, Europe (Germany and the Czech Republic) and Brazil.
As previously announced, JPM has been working with its bank
lenders to sell assets to generate cash to reduce bank debt. In
the past three months, JPM has sold its Mexican and Canadian
operations.

The proceeds of the sale of the Mexican and Canadian operations
were used to repay a portion of JPM's bank debt. JPM similarly
expects that the net proceeds of the additional asset sales will
go to creditors and that there will be no amounts allocated to
the JPM shareholders.

The JPM Company is a leading independent manufacturer of cable
assemblies and wire harnesses for original equipment
manufacturers and contract manufacturers in the
telecommunications, networking, computer and business automation
sectors of the global electronics industry.

The decision to sell its businesses and commence a Chapter 11
case was precipitated by a combination of many events, all of
which resulted in substantial demands on JPM's limited cash
flow. JPM suffered a decrease in revenue attributable to lower
sales to substantially all of its customers, particularly those
in the struggling telecommunications industry.

JPM had made significant debt-financed investments in growth
opportunities. The decline in sales could not be balanced with a
sufficient reduction in operating costs, thereby leaving JPM
with debt far in excess of its current capacity to meet its
obligations to its banks.

In order to move forward with the sale of JPM's remaining
operations, JPM's banks have agreed to ongoing use of cash in
accordance with a budget submitted to the Bankruptcy Court.

JPM believes that the support being provided by its banks will
be sufficient to permit payment in full of all expenses incurred
in operating the business after the bankruptcy filing until such
time as its operations are sold.

John Mathias, Chairman of JPM stated: "We deeply regret to be in
the process of selling a business that my father founded in
1949. From a small start, my family and our dedicated employees
nurtured JPM into a public company with annual revenues in
excess of $170 million for the fiscal year ended 2000.
Unfortunately, we now find the marketplace in which we operate
so depressed we must sell JPM for the benefit of our creditors.
We continue to work to maximize value and are hopeful, based
upon the parties we expect will participate in the bankruptcy
sale process, to see an environment that causes spirited bidding
for our U.S. facilities as going concerns so that our loyal and
talented workforce will still remain employed."


JPM COMPANY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: The JPM Company
              155 North 15th Street
              Lewisburg, PA 17837

Bankruptcy Case No.: 02-10643

Debtor affiliates filing separate chapter 11 petitions:

      Entity                                     Case No.
      ------                                     --------
      The JPM Company of Delaware, Inc.          02-10641
      JPM Technology, Inc.                       02-10644
      Denron, t/d/b/a The JPM Company            02-10644

Type of Business: Design and manufactures cable assemblies &
                   wire harnesses for original equipment
                   manufacturers and contract manufacturers in
                   the telecommunications networking computer &
                   business automation sectors of the global
                   electronics industry.

Chapter 11 Petition Date: March 01, 2002

Court: District of Delaware

Judge: Mary F. Walrath

Debtors' Counsel: John T. Carroll, III, Esq.
                   Cozen O'Connor
                   1201 North Market Street
                   Chase Manhattan Centre
                   Wilmington, DE 19601
                   302-295-2000
                   Fax: 302-295-2013

Total Assets: $8,500,000

Total Debts: $64,000,000

Debtor's 20 Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
First Union National Bank      Bank Debt          $30,403,058
Jill Akre                                         ($3,167,500
Widener Building, 4th Floor                         secured)
1 South Penn Square
Philadelphia, PA 19107
267-321-6903

Mellon Bank, N.A.              Bank Debt          $16,426,170
Susan Saxer                                        (2,125,000
Mellon Bank Center                                  secured)
1735 Market Street
Philadelphia, PA
  19101-7899
215 553-4560

Bank of America                Bank Debt          $15,355,141
David Colmie                                       (1,770,833
100 N. Tryon Street,                                secured)
NC1-001-13-26
Charlotte, NC 02825-5001
704 386-5856

PNC Bank                       Bank Debt          $12,284,113
Greg Misterman                                     (1,416,666
Special Assets Department                           secured
201 Penn Avenue
Scranton, PA 18503
215 585-8713

CIT Financial USA, Inc.        Trade Payable         $972,024
Heidi H. Smith, Esq.
Processing Center
21886 Network Place
Chicago, IL 60673-1218
973 740-5595

The Realty Associate           Trade Payable         $353,717
  Fund III, L.P.
Thomas Caudill, Esq.
1025 North Fourth Street
San Jose, CA 95112-4942
408 296-5148

Longwell Company               Settlement            $245,000
                                Agreement

Tyco Electronics               Trade Payable         $243,974
  Corporation

Madison Cable Corporation      Trade Payable         $139,203

Anixter Inc.                   Trade Payable         $116,594

The University of Tennessee    Service Payable       $111,765
Center for Executive
  Education

Spang Tim and Edna             Service Payable        $66,323

Norcom/CDT Corp                Trade Payable          $41,798

Avaya                          Trade Payable          $37,656

The Pennsylvania State         Trade Payable          $37,597
  University

Krone Optical/Northern         Trade Payable          $35,617
  Lights

Lehman Brothers Inc.           Service Payable        $35,591

Andrew Corporation             Trade Payable          $32,119

FCI Electronics                Trade Payable          $29,834

Endicott Precision Inc.        Trade Payable          $24,779


JAM JOE: Signing-Up Kurtzman Carson as Notice and Claims Agents
---------------------------------------------------------------
Jam Joe, LLC asks permission from the U.S. Bankruptcy Court for
the District of Delaware to employ Kurtzman Carson Consultants
LLC as its notice, claims and balloting agent.

Kurtzman Carson Consultants LLC is run by Jonathan A. Carson,
President and maintains business address in 5301 Beethoven
Street, Suite 102, Los Angeles, California 90066.

The Debtors believe that appointing KCC as its notice, claims
and balloting agent will greatly benefit its estates, and
particularly its creditors.  The Debtors will gain from KCC's
experience as a notice, claims and balloting agent in other
cases and the efficient and cost-effective methods that KCC has
developed.

KCC is fully equipped to manage the volume involved in properly
sending the required notices and processing the claims and
ballots of creditors and other interested parties in these
cases.

As notice, claims and balloting agent, KCC is expected to:

      a) prepare and serve required notices in these chapter 11
         cases;

      b) file with the Clerk's Office a certificate or affidavit
         of service that includes a copy of the notice involved,
         an alphabetical list of the persons to whom the notice
         was mailed and the date and the manner of mailing;

      c) maintain copies of all proofs of claims and proofs of
         interest filed;

      d) maintain official claims registers;

      e) implement necessary security measured to ensure the
         completeness and integrity of the claims' registers;

      f) transmit to the Clerk' Office a copy of the claims
         registers on a weekly basis, unless requested 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 a proof of claim of proof of interest,
         which list shall be available upon request of a party in
         interest or the Clerk's Office;

      h) provide access to the public for examination of copies
         of the proofs of claim or proof of interest without
         charge during regular business hours;

      i) record all transfers of claims and provide notice of
         such transfers as required;

      j) comply with applicable federal, state, municipal, and
         local statutes, ordinances, rules, regulations, orders,
         and other requirement;

      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 advise to the Debtors and their professionals
         regarding all aspects of the Plan Solicitation process,
         including timing issues, voting and tabulation
         procedures, and documents needed for voting;

      n) mail voting documents to creditors and equity holders,
         if necessary;

      o) receive and examine all ballots and master ballots cast
         by creditors and equity security holders; and

      p) tabulate all ballots and master ballots received prior
         to the voting deadline in accordance with established
         procedure and prepare a vote certificate for filing with
         the Court.

KCC will charge the Debtors for services on an hourly basis:

     Clerical                          $40-$60 per hour
     (data input)
     Bankruptcy Analyst                $75-125 per hour
     (document review and data entry)
     Bankruptcy Consultant             $125-$195 per hour
     (general consulting document
      data review)
     Sr. Bankruptcy Consultant         $200-$250 per hour
     (general consulting document
      data review)
     Technology/Programing Consultant  $125-$175 per hour
     (Bankruptcy Administration
      System maintenance and support)

Jam Joe, L.L.C. filed for bankruptcy protection Under Chapter 11
of the U.S. Bankruptcy Code on July 23, 2001. Christopher S.
Sontchi, Esq., at Ashby & Geddes represents the Debtors in their
restructuring efforts.


K2 INC: Gets Lenders' Nod to Modify Covenants Under Credit Pacts
----------------------------------------------------------------
K2 Inc. (NYSE:KTO) announced results for the fourth quarter and
year ended December 31, 2001 that were consistent with
previously announced expectations.

For the 2001 fourth quarter, net sales totaled $128.0 million,
compared with $157.9 million in the comparable 2000 period. Loss
from continuing operations for the fourth quarter ended December
31, 2001 was $2.5 million, or $0.14 per diluted share, as
compared with income from continuing operations of $2.5 million,
or $0.14 per diluted share a year ago. Net loss for the fourth
quarter ended December 31, 2001 was $2.5 million, or $0.14 per
diluted share, as compared with net income of $2.0 million, or
$0.12 per diluted share in the year ago period.

For the year ended December 31, 2001, net sales decreased to
$595.5 million, compared with $670.8 million in the 2000 year.
In the third quarter, the company recorded charges for
restructuring and downsizing of $11.7 million, or $0.65 per
diluted share, net of tax. Income from continuing operations,
before the impact of the previously reported third quarter
restructuring and downsizing charges, totaled $4.0 million, or
$0.22 per diluted share, compared with income from continuing
operations of $16.7 million, or $0.93 per diluted share,
reported in the prior year period. Net loss for the year ended
December 31, 2001 was $7.7 million (after the $11.7 million, net
of tax, restructuring and downsizing charge), or $0.43 per
diluted share, as compared with net income of $16.6 million, or
$0.92 per diluted share in the year ago period.

Commenting on the quarter, K2 President and Chief Executive
Officer Richard M. Rodstein said, "Our financial results for the
quarter were consistent with our expectations, reflecting the
challenging industry conditions that have affected our inline
skate business for most of the year. The quarter also reflected
the softness we expected in reorder sales of winter sports
products, resulting from retailer caution caused by the effects
of the recession and exacerbated by mild winter conditions in
parts of the US and Europe. Early indications, however suggest
that we gained market share in several key winter sports
categories. Quarterly comparisons also suffered from the
collapse of the scooter market worldwide. Despite these
declines, sales of our domestic fishing tackle business
increased over the prior year reflecting an increase in our
market share within an industry that has historically fared well
during periods of economic slowdown. Consistent with our third
quarter announcement, we began to see the effects of our cost
and expense reduction efforts in the quarter, although sales of
closeout skates at reduced prices had a negative impact on
overall margins."

Mr. Rodstein continued, "For the year, 84 percent of the decline
in sales was due to the drop in inline skate sales and the
collapse of the scooter market. Absent the drop in small-wheeled
product sales and its impact on earnings, our operating income
for the year would have exceeded prior year levels. This
improvement was driven by broad based gains in our sporting
goods segment, including earnings improvements in domestic
fishing tackle, Stearns, skis, snowboards and bikes. During
2001, we took aggressive actions to downsize our worldwide
skate business in order to return inline skates to profitability
on a lower sales base. We also made the difficult decision to
permanently close four manufacturing plants, including our ski
manufacturing facility in Washington. Additionally, we reduced
our salaried work force, instituted hiring freezes and reduced
spending in several other areas of the company. At the same
time, we continued to invest in new product development to build
a platform for future growth. Of the remaining businesses,
recession-related sales declines were experienced by our
industrial and Hilton apparel businesses."

                           Segments

The Sporting Goods segment includes K2's ski and snowboard
businesses, K2 inline skates, Shakespeare fishing tackle and
Stearns outdoor products. Sales of the sporting goods group for
the fourth quarter totaled $92.5 million, compared with $122.0
million in the year-ago quarter. For the year ended December 31,
2001, sales of the sporting goods group totaled $445.2 million,
compared with $509.6 million in the year-ago period.

"Sales of K2 skis grew for the year, despite historically low
reorder sales caused by the economy and poor snow conditions,
reflecting gains in market shares in the North American market.
The success of the K2 Axis ski line with the consumer has been
gratifying, and we believe that K2 had among the highest sell-
through rates this season. Historically low fourth quarter
reorder sales rates for the snowboard group caused by the
economy and poor snow conditions offset strong preseason gains.
As a result, sales declined for the year despite market share
gains achieved in snowboards and bindings. Our winter sports
businesses benefited from lower manufacturing costs in China
resulting in earnings improvements for both skis and
snowboards," said Rodstein. "As previously reported, the inline
skate market has been sluggish in Europe and the US since the
second quarter of the year, resulting in a decline in purchases
by cautious retailers as they managed down their inventory
levels. Although sales of inline skates have continued to be
soft in the fourth quarter, the magnitude of the decline
lessened reflecting the demand for our new laceless Slip Fit(TM)
technology skates and lower retail inventory levels. We continue
to have a dominant market share in Europe and the US in the
performance segment and our market share will continue to
benefit from our worldwide softboot patents. The collapse in the
scooter market, together with the slowdown in inline skate sales
resulted in a decline in small-wheeled product sales of $63
million for the year. By contrast, our domestic fishing tackle
business has increased despite a slowing economy, due entirely
to growth in the U.S. market and gains in market share in rod
and reel kits, the fastest growing segment of the market, and in
reels driven by new model introductions. The year also benefited
from sales of our Pfleuger rods and reels. Growth of new
products at Stearns resulted in a modest sales gain for the
year."

The Recreational Products segment includes K2's skateboard shoe
and apparel business and its corporate casuals business. Sales
of the recreational products group for the fourth quarter
totaled $10.8 million, compared with $11.4 million in the year-
ago quarter. For the year ended December 31, 2001, sales of the
recreational products group totaled $39.7 million, compared with
$42.2 million in the year-ago period. The company's growth in
skateboard shoes, particularly in its Adio and Hawk brands
partially offset the recession-related decline of sales and
earnings in its corporate casuals business.

The Industrial Products segment includes K2's monofilaments,
marine antennas and composite light poles. The company's
industrial sales for the fourth quarter of 2001 were $24.7
million, as compared to $24.4 million during the prior year's
quarter and for the 2001 year, sales declined to $110.5 million
from $119.0 million in the prior year because of soft demand for
paperweaving and other monofilaments, composite light poles and
marine antennas. "We have recently seen an improvement in our
profitability for the group from aggressive cost reduction
measures taken," Rodstein explained.

Excluding the impact of the restructuring charges, gross profit
as a percentage of sales in the year decreased to 30.5 percent,
compared with 31.1 percent in the prior year. Higher sales of
reduced margin products, including close out sales of skates in
Europe, fewer winter sports reorder sales and the impact of
lower sales volume offset cost reductions obtained from selling
product manufactured in China.

                          Liquidity

For the year ended December 31, 2001, the company reduced total
debt by approximately $13 million. As previously reported, since
the third quarter of 2001, K2 has not been in compliance with
covenants in its bank credit facility and two long-term notes.
K2 has now reached an understanding with the lenders and note
holders on the principal terms of amendments intended to enable
K2 to operate in compliance with the applicable provisions.
Completion of the amendments is subject to approval of
definitive documentation. Short-term waivers have been received
to allow time for documentation.

                          Business Outlook

In looking ahead, Mr. Rodstein said, "Despite the current
difficult economic environment, we see some encouraging bright
spots throughout the company. Based on early indications in our
winter sports preseason order writing, we appear to have
positive momentum in skis, snowboards and snowboard bindings.
The domestic fishing tackle business continues to be a very
positive story, and growth appears to be accelerating based on
an order position that is ahead of last year's pace by strong
double digits. Stearns is also reporting broader listings across
all major customers. Within our sporting goods segment only our
inline skate business continues to be soft. Since the decline in
inline skate sales occurred first in the second quarter of 2001,
first quarter 2002 order levels, although lower than the prior
year, are in line with expectations. Spring retail sales
activity will begin to provide us with additional insight into
the probable size of the inline skate market for 2002. Within
our industrial group, some segments are beginning to regain
momentum in the marketplace. In addition to these favorable
sales growth opportunities, the company should benefit from cost
and expense reduction initiatives implemented in 2001 that have
the potential to impact earnings by up to $15 million in 2002,
helping to reduce the impact of an unfavorable first quarter
skate comparison. While we are confronted with uncertainty, we
are confident that we have taken several steps to provide the
company with the opportunities to report strong earnings growth
in 2002."

K2 Inc., is a leading designer, manufacturer and marketer of
brand-name sporting goods, recreational and industrial products.
The company's sporting goods and recreational products include
well-known names such as K2 and Olin alpine skis; K2, Ride and
Morrow snowboards, boots and bindings; K2 inline skates; Stearns
sports equipment; Shakespeare fishing tackle; K2 bikes; and Dana
Design backpacks. K2's other recreational products include
Planet Earth apparel, Adio skateboard shoes and Hilton corporate
casuals. K2's industrial products include Shakespeare extruded
monofilaments, marine antennas and composite light poles.


KAISER ALUMINUM: Will Continue Use of Existing Bank Accounts
------------------------------------------------------------
Kaiser Aluminum Corporation, and its debtor-affiliates sought
and obtained entry of an order approving the continued use of
the Debtors' existing bank accounts and existing business forms.

To avoid substantial disruption to the normal operation of their
businesses and to preserve a "business as usual" atmosphere,
Joseph Bonn, the Debtors' Executive Vice President, believes
that the Debtors also should be permitted to continue to use the
Prepetition Bank Accounts. Authorizing the continuation of these
accounts with the same account numbers will assist the Debtors
in accomplishing a smooth transition to operating in chapter 11.

To protect against the possible inadvertent payment of
prepetition claims, Mr. Bonn assures the Court that all banks in
which the Debtors maintain the Prepetition Bank Accounts will be
advised immediately not to honor checks issued prior to the
Petition Date, except as otherwise ordered by the Court. The
Debtors, moreover, have the capacity to draw the necessary
distinctions between pre- and postpetition obligations and
payments without closing the Prepetition Bank Accounts and
opening new ones.

According to Daniel J. DeFranceschi, Esq., at Richards Layton &
Finger in Wilmington, Delaware, in the ordinary course of
business, the Debtors use a multitude of checks and other
business forms. By virtue of the nature and scope of the
Debtors' business operations and the large number of suppliers
of goods and services with whom the Debtors deal on a regular
basis, it is important that the Debtors be permitted to continue
to use their existing checks and other business forms without
alteration or change. To avoid disruption of their Cash
Management System and unnecessary expense, the Court rules that
the Debtors are not required to include the legend "Debtor in
Possession" or a "debtor in possession number" on any checks or
other business forms.

The Court also orders that all applicable banks and other
financial institutions be authorized and directed, as of the
Petition Date, to receive, process, honor and pay any and all
checks drawn on the Debtors' disbursement accounts to pay
employee wages and compensation and various federal, state and
local taxes relating to such wages and compensation regardless
of whether such checks were presented prior to or after the
Petition Date, provided only that sufficient funds are available
in the applicable accounts to cover such payments. Because a
substantial majority of these checks are drawn on separate and
identifiable disbursement accounts, Mr. DeFranceschi submits
that checks other than those drawn on the Payroll Accounts and
the Payroll Tax Accounts should not be honored inadvertently.

The Court further directs the banks that participate in the Cash
Management System are permitted to charge back returned items
against amounts from time to time on deposit in the Prepetition
Bank Accounts, regardless of whether such amounts were deposited
before or after the Petition Date and regardless of whether the
returned items relate to pre- or postpetition items. Each such
bank also will be entitled to receive payment of both
prepetition and postpetition service and other fees, costs,
charges and expenses to which such bank may be entitled under
the terms of and in accordance with its contractual arrangements
with the Debtors.

Consistent with their current guidelines, the Debtors propose to
make investments only in United States government securities,
certificates of deposit, commercial paper with a grade of A-1,
P-1 or better, repurchase agreements, and money market funds
comprised of the preceding investments and other comparable
securities. Consistent with the objectives of section 345(b) and
the requirements of the DIP Facility, the Court authorizes the
Debtors to invest and deposit funds in a safe and prudent manner
in accordance with the Investment Guidelines, notwithstanding
that such guidelines may not strictly comply in all respects
with the approved investment guidelines; and that applicable
institutions be authorized and directed to accept and hold or
invest such funds in accordance with the Investment Guidelines.
(Kaiser Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


KMART: Pays $10,000,000 of Liquor Vendors' Prepetition Claims
-------------------------------------------------------------
Kmart Corporation, and its debtor-affiliates brought an
Emergency Motion before Judge Sonderby asking for permission to
pay pre-petition amounts owed to certain liquor suppliers,
vendors and wholesalers, amounting to $10,000,000.  Judge
Sonderby gave the Debtors permission to make the payments.

J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Chicago, Illinois, told the Court that the Debtors need the
immediate approval of this request several Liquor Vendors have
already stopped shipping -- as allegedly required by state and
local laws that prohibit them from extending credit on unpaid
balances for the sale of liquor.  Naturally, Mr. Ivester notes,
the Debtors cannot restore the shipments without satisfying the
Liquor Vendors' Claims.

"The state laws barring Liquor Vendors from shipping to buyers
on credit may not be preempted by the Bankruptcy Code because of
the 21st Amendment to the Constitution of the United States,
which can be interpreted to cede control over the regulation of
liquor sales to the States," Mr. Ivester observes.

According to Mr. Ivester, the Debtors propose to condition the
payment of Liquor Vendor Claims on the agreement of individual
Liquor Vendors to continue supplying liquor and related products
to the Debtors on the customary trade terms.  If a Liquor Vendor
refuses to supply liquor and related products to the Debtors on
Customary Trade Terms after receipt of payment on its claim,
then the Debtors seek authority to declare that provisional
payments made to Liquor Vendors on account of Liquor Vendor
Claims be deemed to have been in payment of then-outstanding
post-petition claims of such vendors without further order of
the Court.  In the event that happens, Mr. Ivester continues, a
Liquor Vendor shall then immediately repay to the Debtors any
payment made to it on account of its claims to the extent that
such payments exceed the post-petition claims of such vendors.
In sum, the Debtors seek to return the parties to their position
immediately prior to the entry of the Order approving this
motion with respect to all pre-petition claims in the event a
Liquor Vendor refuses to supply liquor and related products to
the Debtors on the Customary Trade Terms after receipt of
payment on its claims.

In addition, Mr. Ivester notes, some of the Liquor Vendors also
may have obtained mechanics' liens, possessory liens, or other
similar state law trade liens on the Debtors' assets, based upon
Liquor Vendor Claims held by such vendors.  As a further
condition of receiving payment on a Liquor Vendor Claim, Mr.
Ivester adds, a Liquor Vendor must agree to take over whatever
action is necessary to remove the Trade Lien at such Liquor
Vendor's sole cost and expense.

The Debtors urge the Court to approve the payment of the Liquor
Vendor Claims to ensure their continued ability to provide their
customers with liquor, a product that is an important component
of the Debtors' inventory mix. (Kmart Bankruptcy News, Issue No.
5; Bankruptcy Creditors' Service, Inc., 609/392-0900)


KMART CORP: Exact Store Closing Figures Expected on March 11
------------------------------------------------------------
DebtTraders reports that Kmart Corporation Chairman James
Adamson dismisses the 500 store closures rumors circulating in
the market, as the number will be lower than this estimate.  In
addition, the report says that the retailer, which filed for
bankruptcy protection in January, is expected to disclose the
exact store closing figures on Monday, March 11.

DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA,
advise that Kmart Corporation's 12.500% bonds due 2005 (KMART9)
are one of its 'Actives', and are trading between 43.5 and 45.5.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART9
for real-time bond pricing.


LTV CORP: Mexican Unit Selling Shares to Thyssen for $6 Million
---------------------------------------------------------------
LTV Steel De Mexico, Ltd, one of the LTV Corporation's debtor-
affiliates, gives notice of its intent to sell LTV Mexico's
3,916,250 Class I Series B shares, and 9,580,358 Class II Series
B shares of Lagermex, S.A. de C.V., an entity that is a joint
venture between LTV Mexico and Thyssen Drupp Werkstofte GmbH, to
Thyssen Tailored Banks, S.A. de C.V., for a total consideration
of $6 million in cash and notes.

LTV Steel, through a wholly owned subsidiary, and Thyssen are
members in TWB Company, L.L.C. in which Thyssen owns 33%, LTV
Steel owns approximately 11%, Worthington Steel of Michigan,
Inc. owns 33%, and Bethlehem Blank Welding, Inc. owns
approximately 11%.  Aside from LTV Steel's interest in TWB, and
LTV Mexico and Thyssen's shared interest in Lagermex, Thyssen
and the Purchaser are not affiliated in any way with the
Debtors.

The terms of the proposed sale are set out in a Share Purchase
Agreement, dated as of the proposed sale's closing date, between
LTV Mexico and the Purchaser, and a letter dated as of December
12, 2001, from Thyssen to LTV Mexico, which includes the
Purchaser's intent to sign at closing the form of Share Purchase
Agreement proposed by the Debtor, and an earlier letter of
November 19, 2001, from Lagermex to The LTV Corporation
acknowledging Lagermex's intent to pay before, or simultaneously
with, the consummation of the sale, the stated purchase price.
The terms in summary are:

        (1)  Thyssen's Mexican affiliate, Thyssen Tailored
Blanks, S.A. De C.V. will purchase the stock.

        (2) Lagermex will pay the principal and accrued interest
on a $2 million promissory note that was issued by Lagermex in
favor of The LTV Corporation on January 10, 2000, and an
additional $4 million in cash to LTV Mexico.

        (3) The property will be transferred to the Purchaser (a)
"as is" and "where is", without any representations or
warranties from LTV Mexico as to the quality or fitness of the
Property for either their intended or any particular purpose,
and (b) free and clear of all liens, claims, encumbrances or
other interests, with any valid, non-avoidable liens, claims,
encumbrances or other interests attaching to the proceeds of the
sale.

LTV Mexico announces that it does not believe this conveyance
requires the consent of any applicable lenders under the
Revolving Credit and Guaranty Agreement of March 2001, among LTV
Corporation as Borrower, the subsidiaries of the Borrower, as
Guarantors, The Chase Manhattan Bank as Administrative,
Documentation and Collateral Agent, and Abbey National Treasury
Services plc as co-Agent, nor are any foreign or domestic
governmental or regulatory approvals required.

Unless objections are timely made in writing, the sale will be
deemed approved and will be consummated. (LTV Bankruptcy News,
Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900)


LA PETITE: Posts Improves Operating Results in January Quarter
--------------------------------------------------------------
La Petite Academy Inc., operated 721 schools at the end of the
second quarter of fiscal year 2002 as compared to 749 schools
for the same period of fiscal year 2001. The net decrease of 28
schools is a result of 38 closures and 10 openings. The closures
resulted from management's decision to close certain schools
located in areas where the demographic conditions no longer
supported an economically viable operation. New schools, as
defined by the Company, are schools open less than two years at
the start of the current fiscal year.

                      Results of Operations

Operating revenue for the twelve weeks ended January 12, 2002,
increased $0.9 million, or 1.0%, from the same period last year.
This revenue increase is a result of a $1.9 million increase at
established academies, a $1.0 million increase at new academies,
and a $0.2 million increase in other revenue, offset by a
reduction in revenue from closed academies of $2.2 million. The
revenue increase is principally due to a 7.3% increase in the
average weekly FTE tuition rate offset by a decline in the FTE
attendance of 6.1%. The increase in the average weekly FTE
tuition rate was principally due to selective price increases
that were put into place in January 2001 and September 2001
based on geographic market conditions and class capacity
utilization. The decrease in FTE attendance was due to a 4.0%
decline at established schools (schools which were open prior to
the 2000 year) and a 98.7% decline at closed schools, offset by
a 35.2% increase at new schools.

Salaries, wages, and benefits decreased $0.9 million, or 1.8%,
from the same period last year. As a percentage of revenue,
labor costs decreased to 55.0% from 56.6% in the prior year. The
changes in salaries, wages, and benefits includes a decrease in
labor costs of $0.2 million at established academies, an
increase in labor costs of $0.6 million at new academies, a
decrease in field management and corporate administration labor
costs of $0.1 million, increased costs for benefits of $0.3
million, and a decrease in labor costs of $1.5 million at closed
academies. The decrease in labor costs at established schools
was mainly due to a 5.0% increase in average hourly wage rates
offset by a 6.7% decline in labor hours compared to the prior
year.

Facility lease expense increased $0.4 million, or 3.8%, from the
same period last year. This increase was principally due to
lease renewals on certain academies, which were completed during
the spring and summer of last year.  Depreciation and
amortization decreased $0.1 million from the same period last
year. This decrease was mainly due to the closings that occurred
in fiscal year 2001.

Provision for doubtful accounts decreased $0.5 million from the
same period last year. The decrease is reflective of reductions
in parent receivables offset somewhat by increases in third
party receivables.

Other operating costs increased $0.7 million, or 3.6%, from the
same period last year. Other operating costs include repair and
maintenance, utilities, insurance, marketing, real estate taxes,
food, supplies, transportation, recruitment and training. The
increase was due primarily to higher marketing, insurance,
repair and maintenance, utilities, and meeting costs, offset by
decreases in food, supplies, and recruitment and training costs.
As a percentage of revenue, other operating costs increased to
24.3% as compared to 23.6% during the same period last year.

As a result of the foregoing, the Company had operating income
of $3.0 million, an increase from last year of $1.2 million, or
61.4%.

Operating revenue for the twenty-eight weeks ended January 12,
2002, increased $3.9 million, or 2.0% from the same period last
year. This revenue increase is a result of a $7.4 million
increase at established academies, and a $2.0 million increase
at new academies, offset by a reduction in revenue from closed
academies of $5.3 million and a $0.2 million decrease in other
revenue. The revenue is principally due to a 7.7% increase in
the average weekly FTE tuition rate offset by a decline in the
FTE attendance of 5.2%. The increase in the average weekly FTE
tuition rate was principally due to selective price increases
that were put into place in January 2001 and September 2001
based on geographic market conditions and class capacity
utilization. The decrease in FTE attendance was due to a 2.9%
decline at established schools (schools which were open prior to
the 2000 year) and a 89.0% decline in closed schools, offset by
a 28.0% increase at new schools.

Salaries, wages, and benefits decreased $0.8 million, or 0.7%,
from the same period last year. As a percentage of revenue,
labor costs decreased to 55.3% from 56.8% in the prior year. The
changes in salaries, wages, and benefits includes a increase in
labor costs of $1.3 million at established academies, an
increase in labor costs of $1.1 million at new academies, a
decline in field management costs, field bonuses and corporate
administration labor costs of $0.3 million, increased costs for
benefits of $0.3 million, and an incremental decline in labor
costs of $3.2 million at closed academies. The increase in labor
costs at established schools was mainly due to a 5.5% increase
in average hourly wage rates offset by a 4.9% decline in labor
hours compared to the prior year.

Facility lease expense increased $0.7 million, or 2.8%, from the
same period last year. This increase was principally due to the
increase of monthly lease expense on certain academies where
operating performance payments were eliminated.  Depreciation
and amortization decreased $0.3 million from the same period
last year. This decrease was mainly due to the closings that
occurred in fiscal year 2001.

Provision for doubtful accounts decreased $0.5 million from the
same period last year. The decrease is reflective of reductions
in parent receivables offset somewhat by increases in third
party receivables.

Other operating costs increased $3.4 million, or 7.1%, from the
same period last year. Other operating costs include repair and
maintenance, utilities, insurance, marketing, real estate taxes,
food, supplies, transportation, recruitment and training. The
increase was due primarily to higher marketing, insurance,
utilities, property taxes, travel and meeting costs, offset by
decreases in food, repair and maintenance, recruitment and
training, and transportation costs. As a percentage of revenue,
other operating costs increased to 25.4% as compared to 24.2%
during the same period last year.

As a result of the foregoing, the Company had operating income
of $5.1 million, an increase from last year of $1.4 million, or
38.7%.

EBITDA was $6.5 million for the 12 weeks and $13.1 million for
the 28 weeks ended January 12, 2002 as compared to $5.4 million
and $12.0 million for the same periods of fiscal year 2001.
EBITDA as a percentage of revenue improved to 7.6% in the second
quarter of fiscal 2002 as compared to 6.4% in the second quarter
of fiscal 2001. The increase in EBITDA in the second quarter of
fiscal 2002 is principally due to increased revenues, reduced
labor costs and a reduction in the provision for doubtful
accounts, offset by higher other operating expenses including
marketing, insurance, utilities, property taxes, travel and
meeting costs.

The cost to open a new school ranges from $1.0 million to $1.5
million, of which approximately 85% is typically financed
through a sale and leaseback transaction. Alternatively, the
school may be constructed on a build to suit basis, which
reduces the working capital requirements during the construction
process. The Company intends to explore other efficient real
estate financing transactions in the future as needed. As of
January 12, 2002, the Company had $1.5 million invested in new
school development. No new schools were opened in the second
quarter of fiscal year 2002.

Purchasers of schools in sale and leaseback transactions have
included insurance companies, bank trust departments, pension
funds, real estate investment trusts and individuals. The leases
are operating leases and generally have terms of 15 to 20 years
with one or two five-year renewal options. Most of these
transactions are structured with an annual rental designed to
provide the owner/lessor with a fixed cash return on their
capitalized cost over the term of the lease. In addition, many
of the Company's leases provide for contingent rentals if the
school's operating revenue exceeds certain levels. Although the
Company expects sale and leaseback transactions to continue to
finance its expansion, no assurance can be given that such
funding will always be available.

Total capital expenditures for the 28 weeks ended January 12,
2002 and January 13, 2001, were $3.1 million, and $7.3 million,
respectively. The decrease in total capital expenditures is a
result of reduced spending on maintenance capital expenditures.
The Company views all capital expenditures, other than those
incurred in connection with the development of new schools, to
be maintenance capital expenditures. Maintenance capital
expenditures accounted for all of the capital expenditures for
the 12 weeks ended January 12, 2002 and January 13, 2001.

In addition to maintenance capital expenditures, the Company
expends additional funds to ensure that its facilities are in
good working condition. Such funds are expensed in the periods
in which they are incurred. The amounts of such expenses for the
28 weeks ended January 12, 2002 and January 13, 2001, were $6.4
million and $6.6 million, respectively.

Current indebtedness consists of Senior Notes in the aggregate
principal amount of $145 million, a term loan under the Credit
Agreement in the aggregate principal amount of $36.7 million at
January 12, 2002 and the revolving credit facility under the
Credit Agreement providing for revolving loans to the Company in
an aggregate principal amount (including swingline loans and the
aggregate stated amount of letters of credit) of $25 million.
Borrowings under the Senior Notes bear interest at 10% per
annum. Borrowings under the Credit Agreement bear interest at a
rate per annum equal (at the Company's option) to: (a) an
adjusted London inter-bank offered rate ("LIBOR") not to be less
than an amount equal to 2.50% per annum, plus a percentage based
on the Company's financial performance; or (b) a rate equal to
the higher of The Chase Manhattan Bank's published prime rate, a
certificate of deposit rate plus 1% or the federal funds
effective rate plus 1/2 of 1% plus, in each case, a percentage
based on the Company's financial performance. The borrowing
margins applicable to the Credit Agreement are currently 3.25%
for LIBOR loans and 2.25% for ABR loans. The Senior Notes will
mature in May 2008 and the Credit Agreement will mature in May
2005. The term loan amortizes in an amount equal to $0.5 million
in the remainder of fiscal year 2002, $1.0 million in fiscal
year 2003, $7.8 million in fiscal year 2004 and $27.5 million in
fiscal year 2005. The term loan is also subject to mandatory
prepayment in the event of certain equity or debt issuances or
asset sales by the Company or any of its subsidiaries in amounts
equal to specified percentage of excess cash flow (as defined).

To reduce the impact of interest rate changes on the term loan,
the Company entered into interest rate collar agreements during
the second quarter of fiscal year 1999. The collar agreements
cover the LIBOR interest rate portion of the term loan,
effectively setting maximum and minimum interest rates of 9.5%
and 7.9%. The interest rate collar agreements were terminated on
January 28, 2002.

La Petite Academy Inc., is the nation's #2 for-profit operator
of preschool and childcare facilities, behind KinderCare
Learning Centers. La Petite Academy operates about 725 centers
that enroll some 70,000 children ranging in age from six-week-
old infants to 12-year-olds. The academies are located across
the country in 36 states and Washington, DC. Founded in 1968, La
Petite provides both full- and part-time childcare, educational
and developmental programs, workplace childcare, and Montessori
schools. J.P. Morgan Partners owns a controlling interest in the
company. At October 20, 2001, the company's working capital
deficiency amounted to around $22 million, while its
shareholders' equity deficit totaled $242 million.


LASON: Hearing on Disclosure Statement Scheduled for Wednesday
--------------------------------------------------------------
On February 21, 2002, Lason, Inc., filed with the United States
Bankruptcy Court for the District of Delaware in Wilmington an
amended proposed Disclosure Statement and First Amended Joint
Plan of Reorganization of the Company and its Subsidiary
Debtors. The Disclosure Statement was amended primarily for the
purpose of including certain required financial exhibits. A
hearing on the Disclosure Statement is scheduled for March 6,
2002.

The Plan and Disclosure Statement outline the proposed capital
structure and business operations for the reorganized company,
as well as the treatment of Lason's various creditors and other
parties in interest. In particular, under the proposed Plan all
shares of the Company's currently issued common stock will be
cancelled with current shareholders receiving no distribution.
The Plan also provides that the reorganized company will issue
new common stock for its unsecured creditors on a pro rata basis
as detailed in the Plan. Before the Plan can be presented to
certain classes of the Company's creditors for acceptance, the
Bankruptcy Court must determine whether the Disclosure Statement
contains adequate information, as required by the Bankruptcy
Code.


MCLEODUSA: US Trustee Appoints Unsecured Creditors' Committee
-------------------------------------------------------------
The United States Trustee appoints these creditors to serve on
the Official Committee of Unsecured Creditors in the McLeodUSA
Inc.'s chapter 11 case:

       1. The Bank of New York, as Indenture Trustee
          5 Penn Plaza, New York, NY 10001
          Attn: Anthony A. Bocchino
          Tel: 212-896-7215
          Fax: 212-328-7302

       2. SAI High Yield
          c/o AIG Global Investment Corp.
          175 Water Street
          New York, NY 10038
          Attn: Joseph Francois
          Fax: 212-458-2970

       3. Obsidian Offshore
          c/o Black Rock Financial Management Inc.
          345 Park Avenue
          29th Floor, New York, NY 10154
          Attn: Mark Glass
          Tel: 212-754-5307
          Fax: 212-754-8756

       4. OCM Yield Fund II, L.P.
          c/o Oaktree Capital Management, LLC
          333 South Grand Avenue
          28th Floor, Los Angeles, CA 90071
          Attn: Desmund Shirazi
          Tel: 213-830-6461
          Fax: 213-830-8561

       5. Federated High Yield Fund
          c/o Federated Investors, Inc.
          1001 Liberty Avenue, Pittsburgh, PA 15222
          Attn: Kathryn P. Heagy
          Tel: 412-761-9229
          Fax: 412-288-6737. (McLeodUSA Bankruptcy News, Issue
          No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
          0900)


MCLEODUSA INC: Plan Confirmation Hearing Set for April 5, 2002
--------------------------------------------------------------
McLeodUSA Incorporated, one of the nation's largest independent
competitive local exchange carriers, announced that the
bankruptcy court approved the disclosure statement in connection
with its previously announced Plan of Reorganization. The
disclosure statement was approved without objection, and
McLeodUSA may now begin soliciting acceptances for its proposed
Plan of Reorganization. The confirmation hearing on the Plan of
Reorganization is scheduled for April 5, 2002.

The Company also announced that the official creditors committee
has expressed its strong support for the Plan of Reorganization
and has furnished the Company with a letter to the unsecured
creditors recommending approval of the plan.

McLeodUSA believes that the approval of the disclosure statement
is an important milestone in the Company's recapitalization
process. The Company remains on schedule to complete its
reorganization by the end of April 2002.

As previously announced, with the support of its Board of
Directors, Secured Lenders, Forstmann Little & Co., the ad hoc
committee of its bondholders and certain of its preferred
stockholders, the Company filed a pre-negotiated plan of
reorganization through a Chapter 11 bankruptcy petition filed in
the United States Bankruptcy Court for the District of Delaware.
The Company has signed lock-up and support agreements with
stockholders holding approximately 45% of its Series A, Series D
and Series E Preferred Stock, including funds managed by
Forstmann Little & Co., to support the Plan of Reorganization.
In addition, advisors to the ad hoc committee of the
bondholders, have advised McLeodUSA that holders representing a
total of approximately $1.2 billion of bonds, or 40% of the
outstanding bonds, have expressed support for the reorganization
plan. Included in the $1.2 billion are bondholders representing
approximately $690 million, or 23%, who have signed lock-up and
support agreements to vote in favor of the Plan of
Reorganization.

McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of December 31, 2001, 42
ATM switches, 60 voice switches, 485 collocations, 525 DSLAMs,
over 31,000 route miles of fiber optic network and more than
8,600 employees. Visit the Company's Web site at
http://www.mcleodusa.com

DebtTraders reports that McLeodusa Inc.'s 11.375% bonds due 2009
(MCLD2) are trading between 24.5 and 25.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MCLD2for
real-time bond pricing.


METALS USA: Selling Hazel Park Michigan Property for $2.35 Mill.
----------------------------------------------------------------
Metals USA, Inc., and its debtor-affiliates sought and obtained
Court approval to sell:

A. An approximate 7-acre parcel of land located at 1471 East
      Nine Mile Road, in the City of Hazel Park, Oakland County,
      Michigan together with the approximately 81,932 square foot
      warehouse building located thereon and all other structures
      and improvements, all of the fixtures and all rights of
      way, roadways, easements, rights privileges, and
      appurtenances thereto; and

B. Certain personal property consisting of a certain shop floor
      sweeper currently at the Hazel Park property and other
      personal property as well as licenses, permits, approvals,
      consents, drawings, plans, surveys and reports relating to
      real estate.

Zack A. Clement, Esq., at Fulbright & Jaworski LLP in Houston,
Texas, told the Court that this matter is being expedited
because the Buyer needs to have possession of the property no
later than May 15, 2002.

The Hazel Park property is part of the Debtors' Meier Hazel Park
Michigan facility, which has been used as a warehousing and
processing facility for nonferrous metal (like aluminum, brass
and copper) were sawed, cut and stored for ultimate customer
delivery.  This property has proven to be unprofitable for the
Debtors so they decided to sell it.  Mr. Clement reminds the
Court that it previously approved the sale of inventory and
equipment from the Meier Hazel Park Michigan facility.  Mr.
Clement submits that the sooner the Meier Hazel Park Michigan
facility is sold, the sooner the Debtors will be relieved of
operational expenses, taxes, insurance and maintenance costs,
which are substantial.

Mr. Clement tells the Court that efforts to sell the Hazel Park
property began in October 2001. The Debtors engaged Jeffrey
Buckler at Cushman & Wakefield of Michigan, Inc., as the listing
broker and the sale of the property was advertised.  C&W showed
the property to at least five potential buyers.

On February 6, 2002, Sam Haddad -- on behalf of an entity that
still has to be formed -- presented his Offer to Purchase Real
Estate contract, the terms of which include:

A. Property to be purchased. An approximately 7-acre parcel of
      land located at 1471 East Nine Mile Road in the City of
      Hazel Park, Oakland County, Michigan, as is together with
      the approximately 81,932 square foot warehouse building
      located thereon and any and all other structures and
      improvements, all of the fixtures attached thereto and all
      rights of way, roadways, easements, rights, privileges and
      appurtenances. Certain personal property and other personal
      property as well as licenses, permits, approvals, consents,
      drawings, plans surveys and reports relating to the real
      estate.

B. Proposed Purchaser. Sam Haddad on behalf of an entity to be
      formed. Haddad's address is P.O. Box 71857, Madison
      Heights, Michigan 48071. Haddad's attorney is Joel M.
      Krugel, Miro, Weiner & Kramer 38500 Woodward Avenue, Suite
      100, Bloomfield Hills, MI 48304.

C. Purchase Price. The purchase price for the Hazel Park
      Property shall be the sum of $2,350,000.

D. Broker Commission. The Broker's commissions are five percent.
      A normal commission is six percent. In addition, the Broker
      is deducting $10,000 from his commission.

E. Leaseback. Purchaser and Seller shall enter into a Lease
      Agreement at Closing under which:

      a. Seller shall lease the entire property from Purchaser
           for a limited period from the Closing Date until May
           15,2002 at a rental rate of $27,310.66 per month,
           triple net, the amount of which shall be prepaid by
           the seller and credited against the Purchase Price due
           from Purchaser at closing and

      b. at the expiration of the initial occupancy period,
           seller shall vacate the property except fir the east
           side of the office at building of approximately of
           2,880 square feet which the Seller shall lease for a
           term of three years at a rental rate equal to $3,300
           per  month, triple net, with a two-year option at a
           rental rate which is 10% greater than the rental rate
           under the initial three year term.

      Among other restrictions to be contained in the lease,
      Seller shall not be permitted to assign the lease of
      sublease the leased premises without Purchaser's prior
      written consent, which may be given or withheld in
      Purchaser's sole and absolute discretion. Notwithstanding
      any contradictions to other provision, from and after April
      15, 2002, Purchase shall have the ability to use the west
      side of the offices at the building, at no cost, to store
      any equipment, furniture or other items to be used at the
      Property after Closing. Purchaser will use the west side of
      the warehouse at the building at its sole risk and agrees
      to indemnify, defend and save harmless Seller from any
      claim, loss, liability or obligation arising from any
      inquiry including death to any person whomsoever and from
      any loss or damage to any property whatsoever, cause in
      whole or in part by Purchaser's use of such office space.
      Purchaser agrees to provide Seller prior to use of such
      office space, a certificate of public liability insurance
      naming Seller as an additional insured, in such coverage
      amounts and with such deductibles and terms and Seller's
      risk manager may reasonably request.

Mr. Clement advises that the Bank Group led by the Bank of
America N.A. will be granted a replacement lien on the sale
proceeds and those proceeds will be used to pay-down the DIP
Facility. (Metals USA Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


MOTHERNATURE.COM: Reports Liquidation Distribution of $3 Million
----------------------------------------------------------------
MotherNature.com, Inc., (MTHR.OB) announced an interim
distribution of liquidation proceeds to its shareholders of
record at close of business on March 7, 2002. The distribution
will total approximately $3.1 million, or $0.20 per common
share, and will be paid on March 21, 2002. As of the record
date, the Company's stock books will be closed to further
transfers of the Company's shares.

The Company is pleased to note that this distribution, combined
with the initial distribution of $0.85 per share paid in
December, 2000, will return to shareholders a cumulative $1.05
per share. The Company believes it has retained sufficient
reserves to cover known and contingent liabilities, and no
further distributions to stockholders are currently projected.
Remaining funds, if any, will be distributed to shareholders in
a final distribution within three years.

The Company ceased active business operations in December, 2000.
Since that time, the Company has been engaged in an orderly
wind-down of its affairs, including the liquidation of
inventories and fixed assets, sale and license of various
intellectual property, and extinguishment of liabilities. The
Company has filed its Certificate of Dissolution with the
Secretary of State of Delaware. Operation of the Company's Web
site, http://www.mothernature.comhas been resumed by
Naturalist.com, Inc. under a license agreement with the Company.
Naturalist.com, Inc. is not connected with MotherNature.com,
Inc. in any way, and no customer data was shared with
Naturalist.com in this arrangement.


MPOWER HOLDING: Seeking Acceptances of Proposed Recapitalization
----------------------------------------------------------------
Mpower Holding Corporation (Nasdaq: MPWR), a facilities-based
broadband communications provider, announced that it has
launched the solicitation of holders of its 13% Senior Notes due
2010 in connection with its previously announced proposed
recapitalization plan.

The solicitation will give each of the holders of the 2010
Senior Notes the opportunity to enter into a voting agreement
with the company to support Mpower's proposed recapitalization
plan announced on February 25, 2002. Subject to the terms and
conditions of the solicitation, each 2010 Senior Noteholder who
signs a voting agreement in support of the proposed plan by the
end of the solicitation period will receive a consent fee equal
to their pro rata share of $19 million in cash, which represents
5% of the outstanding amount of the 2010 Senior Notes.

The solicitation will only be made pursuant to a solicitation
statement and related documents to be delivered to holders of
the 2010 Senior Notes.  In order to become a party to the voting
agreement and to be eligible to receive the consent fee, 2010
Senior Noteholders must comply fully with each of the terms,
conditions and procedures specified in the solicitation
statement by March 20, 2002, the end of the solicitation period,
unless otherwise extended, terminated or waived in accordance
with the terms and conditions of the solicitation. Following the
successful completion of the solicitation, as previously
announced, Mpower and its wholly owned subsidiary Mpower
Communications Corp., intend to implement the proposed
reorganization plan by commencing a voluntary pre-negotiated
Chapter 11 proceeding.

Questions regarding the solicitation should be directed to D.F.
King & Co., Inc., the Information Agent for the solicitation, at
toll free: (800) 714-3305 or collect: (212) 269-5550; attention:
Edward McCarthy.

Mpower Holding Corporation (Nasdaq: MPWR) is the parent company
of Mpower Communications Corp., a facilities-based broadband
communications provider offering a full range of data,
telephony, Internet access and Web hosting services for small
and medium-size business customers.  Further information about
the company can be found at http://www.mpowercom.com


NET2000: Committee Engages Bayard Firm as Bankruptcy Co-Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the retention and employment of The Bayard Firm as Co-Counsel
for the Official Committee of Unsecured Creditors in of Net2000
Communications' chapter 11 cases, nunc pro tunc to November 29,
2001.

Specifically, The Bayard Firm will be:

     a) providing legal advise with respect to its powers and
        duties as an official committee;

     b) assisting in the investigation of the acts, conduct,
        assets, liabilities, ad financial condition of the
        Debtors, the operation of the Debtors' businesses, and
        any other matters relevant to the case or to the
        formulation of a plan or reorganization or liquidations;

     c) preparing on behalf of the Committee necessary
        applications, motions, complaints, answers, orders,
        agreements and other legal papers;

     d) reviewing, analyzing and responding to all pleadings
        filed by the Debtors and appearing in court to present
        necessary motions, applications and pleadings; and

     e) performing all other legal services for the Committee
        which may be necessary and proper in these proceedings.

The Committee intends to work closely with The Bayard Firm and
Lowenstein Sandler PC, its lead counsel, to ensure that there is
no unnecessary duplication of services performed or charged to
the Debtors' estates.

Net2000 Communications, Inc., providers of state-of-the-art
broadband telecommunications services to high-end customers,
filed for chapter 11 protection on November 16, 2001. Michael G.
Wilson, Esq. at Morris, Nichols, Arsht & Tunnell represents the
Debtors in their restructuring effort. When the Company filed
for protection from its creditors, it listed $256,786,000 in
assets and $170,588,000 in debts.


NETWORK PLUS: Broadview Networks Agrees to Acquire All Assets
-------------------------------------------------------------
Broadview Networks, a network-based electronically integrated
communications provider (e-ICP), announced that it has signed a
Letter of Intent (LOI) with Network Plus Corp, the Randolph-
based communications provider that filed a voluntary petition
with bankruptcy court in Delaware this month.

The LOI outlines the business terms under which Broadview
Networks wants to purchase all of the assets of Network Plus.

"Our intent is to acquire Network Plus 'lock, stock and barrel:'
its customers, employees and network," said Vern Kennedy,
Broadview Networks president and CEO. "We hope to retain the
employees currently there and to hire back many who have been
let go, especially from the sales team. We also intend to make
the transition for Network Plus customers to Broadview Networks
as free of disruption as possible."

Kennedy added that the company has secured commitments for
substantial investment from its existing pool of investors to
fund the transaction.

"Broadview Networks is a very successful competitor with a solid
track record for quality service," said Network Plus executive
vice president and COO, James C. Crowley. "They are in a strong
position to preserve the continuity of service to our customers,
which is our top priority at this time." This transaction is
subject to higher and better offers, customary due diligence,
regulatory approval and approval by the bankruptcy court.

Kennedy noted that "Broadview Networks still has to prevail at
the auction. Although the LOI is non-binding, we firmly believe
that our offer is a win-win for the two companies and in the
customers' best interest."

Broadview Networks -- http://www.broadviewnet.com-- is a
network, electronically-integrated communications provider (e-
ICP) serving small and medium-sized businesses and
communications-intensive residential customers in the
northeastern and mid-Atlantic United States. The New York City-
based company offers integrated communications solutions,
including local, long-distance and international voice services;
data services; and dial-up and high-speed Internet services
using digital subscriber line (DSL) and other advanced
technologies. Customers receive a single, easy-to-understand
bill and have one point of contact for real-time, personal
customer care.

Network Plus -- http://www.networkplus.com-- is a network-based
integrated communications provider headquartered in Randolph,
Massachusetts. Network Plus offers broadband data and
telecommunications services, primarily to small and medium-sized
business customers located in major markets in the Northeastern
and Southeastern regions of the United States. Network Plus's
bundled product offerings include local and long distance
service as well as enhanced, high-speed data and internet
services.


NOMURA ASSET: Fitch Slashes Ratings on 1994-MD1 Certificates
------------------------------------------------------------
Nomura Asset Securities Corp. commercial mortgage pass-through
certificates, series 1994-MD1 ratings are changed as follows:
$24.6 million class B-2 is downgraded from 'BB' to 'B'; and
$24.8 million class B-3A, $1,503 class B-3B and $8.0 million
class B-3P are downgraded from 'CCC' to 'C' and are placed on
Rating Watch Negative. Fitch affirms the $23.7 million class A-3
and interest-only class A-3X at 'AAA' and the $26.7 million
class B-1 at 'BBB+'. The rating actions resulted from Fitch's
on-going analysis of the two specially serviced loans in the
transaction, Rolling Acres and Canton Centre, both of which are
real estate owned (REO).

The remaining pool consists of three loans. The performing loan,
OLY Realty One, comprises 54% of the transaction. The loan is
collateralized by 21 limited service hotels located in the
Eastern United States. The properties underwent a major
renovation, including flag changes, in 2001. The trailing twelve
months financial statements as of November 2001 show a recovery
in the debt service coverage ratio from 0.96 times (x) as of
year-end 2000 to 1.15x. The increase is due to the renovated
rooms coming back into the market. The occupancy has remained in
the mid- to high 50% range throughout the renovation process and
Fitch expects the occupancy to stabilize in the mid-60's by
year-end 2002. After the renovations, the average daily rate of
the properties has been increased from an average of $59.00 per
room to over $70.00 per room. The revenue per available room has
almost returned to where it was prior to the renovation.

The Canton Centre loan, 17%, became REO in November 2001. The
loan is collateralized by a regional mall in Canton, OH. Lennar
Partners Inc., as special servicer, has continued negotiations
with potential tenants for the dark Montgomery Wards space. The
mall benefits from its in-fill location in Canton, however
competition from other malls in the area remains strong.

The third loan, Rolling Acres, 29%, has been REO since January
2000. Lennar has listed the property for sale and will be
evaluating offers over the next few months. The property
benefits from its anchors tenants, Target, Dillards Clearance
Center, Sears, Kauffmans, and JC Penney Outlet. However, the
competition in the immediate area continues to draw shoppers
away from Rolling Acres.

Fitch's analysis looks to the recovery on both REO loans as they
near disposition. Although an exact dollar amount can not be
quantified, Rolling Acres will incur losses to the most
subordinate B-3A, B-3B and B-3P classes, as losses are
distributed pro-rata to the B-3 classes. The 'C' rating more
accurately reflects the imminent default that will occur to
these classes of certificates. The three classes will remain on
Rating Watch Negative as Fitch receives more information about
the Rolling Acres sale. The downgrade of class B-2 reflects the
lack of credit enhancement in the pool after this sale and loss.
Lastly the rating affirmations are a result of the recoveries
associated with both the Canton Centre and Rolling Acres loan in
conjunction with the improved performance in the OLY Realty
loan, which is fully amortizing.

Fitch will continue to monitor this transaction, as surveillance
is ongoing.


PENN SPECIALTY: Has Until May 6 to File Removal Notices
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extends
the time period within which Penn Specialty Chemicals, Inc. and
debtor-affiliates must file all notices to remove pending pre-
petition actions and proceedings from Courts outside the
District of Delaware to Delaware for continued litigation.  The
new deadline is May 6, 2002.

Penn Specialty, one of the world's largest suppliers of
specialty chemicals THF and PTMEG, filed for chapter 11
protection on July 9, 2001.  Deborah E. Spivack, Esq., at
Richards, Layton & Finger, in Wilmington, Delaware, represents
the Debtors in their restructuring efforts.


PHILIPS: CA Plaintiff Seeks OK to Appeal Denial of Certification
----------------------------------------------------------------
On February 19, 2002, Philips International Realty Corp.
(NYSE:PHR), a real estate investment trust, announced that the
Court denied the plaintiff's motion for class certification
pertaining to the class action complaint filed on October 2,
2000 in the United States District Court for the Southern
District of New York against the Company and its directors.

Subsequently, plaintiff has sought permission from the Court of
Appeals for the Second Circuit to appeal the denial of class
certification. In order for plaintiff to obtain permission to
appeal, it must demonstrate that the denial of class
certification effectively terminates the litigation and that the
District Court's decision was an abuse of its discretion. The
Company has opposed plaintiff's application. If the Court of
Appeals grants plaintiff's request, plaintiff will then be able
to appeal the District Court's denying class certification.

On October 10, 2000, the Company's stockholders approved the
plan of liquidation, which at that time was estimated to
generate approximately $18.25 in the aggregate in cash for each
share of common stock in two or more liquidating distributions.
To date, a total of $15.25 per share has been distributed. The
Company's five remaining assets are currently being offered for
sale.


POLAROID CORP: Stephen Morgan Seeks Equity Committee Appointment
----------------------------------------------------------------
Stephen J. Morgan of Natick, Massachusetts, owns 200,000 shares
of Polaroid common stock.  Mr. Morgan contends that stockholders
are not adequately represented and protected by Polaroid
Corporation and its debtor-affiliates' management or any other
party in these chapter 11 proceedings.  Mr. Morgan asks the
Court to appoint an Equity Security Holders Committee to provide
that representation.  Mr. Morgan claims he has the support of
about 600 shareholders holding around 27% of the Debtors' common
stock.

C. Peter R. Gossels, Esq., in Boston, Massachusetts, informs
Judge Walsh that before filing this motion, Mr. Morgan asked the
U.S. Trustee to create an Equity Holders' Committee.  But the
U.S. Trustee denied Mr. Morgan's request, explaining that the
creation of the Equity Holders' Committee is not warranted at
the moment.

Mr. Morgan believes otherwise, asserting:

   (a) Polaroid is a viable business with sufficient equity to
       pay all of its creditors and retirees if Debtors' affairs
       were property managed under the jurisdiction of the Court;

   (b) Polaroid's management has grossly understated the assets
       in Debtor's estate;

   (c) Polaroid acknowledged to its employees thru email that the
       Debtors' financial situation "has improved over the past
       six weeks and the $50,000,000 DIP financing has not been
       tapped";

   (d) Polaroid's managers have unjustly enriched themselves and
       their former colleagues and continue to enrich themselves
       at the expense of the Debtors' creditor's bondholders and
       stockholders;

   (e) There is evidence of collusion between Debtors' management
       and at least one of the secured creditors, State Street
       Corporation, which may have sold about 19% of the common
       stock of Polaroid  it has held for Polaroid employees,
       without consulting them;

Mr. Morgan contends that an Equity Committee will be of material
assistance to a trustee or an examiner in conducting an
investigation of the Debtors' affairs and to assist in the
formulation of a successful plan of reorganization. (Polaroid
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


POLAROID CORP: Phronesis Partners Discloses 7.22% Equity Stake
--------------------------------------------------------------
Phronesis Partners, L.P., a Delaware limited partnership, and
general partner James Wiggins, beneficially own 339,100 shares
of the common stock of Polaroid Corporation, representing 7.22%
of the outstanding common stock of Polaroid.  Phronesis
Partners, L.P. has sole power to vote or dispose of the total
339,100 shares, while James Wiggins shares such powers on the
339,100 shares held.

Polaroid Corporation is the worldwide leader in instant imaging.
Polaroid supplies instant photographic cameras and films;
digital imaging hardware, software and media; secure
identification systems; and sunglasses to markets worldwide. The
company filed for chapter 11 reorganization on October 12, 2001,
in the U.S. Bankruptcy Court for the District of Delaware.


POLAROID CORP: Books $36MM Loss on ID Business' Sale to Digimarc
----------------------------------------------------------------
DebtTraders reports that according to a recent bankruptcy filing
in the chapter 11 cases of Polaroid, the company incurred a $36
million loss on the sale of its identification business to
Digimarc, a developer of anti-counterfeiting systems. The ID
business was sold for $56.5 million.

In the same report, DebtTraders says that Polaroid intends to
fast-track the sale of part or all of its assets.

DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA,
advise that Polaroid Corporation's 6.75% bonds due 2002 were
last quoted at a price of 6.0. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRD1


PSINET INC: Finova Wants to Sue Two Ex-Officers for Fraud
---------------------------------------------------------
Finova sued two former officers of PSINet, William L. Schrader
and Lawrence S. Winkler in the United States District Court for
the Eastern District of Virginia. The Complaint is captioned
FINOVA Capital Corporation v. William L. Schrader and Lawrence
S. Winkler, Civ. No. 01-1867-A. Finova has asserted tort claims
against Schrader and Winkler. Finova alleges that due to the
former officers' misrepresentations, it made two loans to PSINet
and suffered losses amounting to $7 million in remaining
principal owed on the two loans, plus pre-judgment interest.
Finova thus seeks compensatory damages against Messrs. Schrader
and Winkler of more than seven million dollars based on fraud,
or in the alternative, constructive fraud. Finova also seeks
punitive damages, attorney fees, and costs and prejudgment
interest.

The Debtors filed a Complaint for Injunction Relief and
commenced an Adversary Proceeding in its chapter 11 cases
seeking judgment against Finova. PSINet also filed a Motion for
Preliminary Injunction in the adversary proceeding seeking an
order from the Court preliminarily enjoining FINOVA from further
prosecution of the Finova Action through confirmation of a plan
or plans of reorganization in the PSINet chapter 11 cases.
Finova has answered the Complaint and responded to the Motion
for Preliminary Injunction and the Debtors have filed a Reply
Brief in Support of their Motion for Preliminary Injunction.

           FINOVA's Claims Against Schrader And Winkler

According to Finova, in December of 1998, FINOVA agreed to
"lease" PSINet approximately seven million dollars of
telecommunications equipment. This lease was not a "true lease",
but rather a method of secured financing. The lease actually was
a three-year loan secured by the equipment. In December of 1999,
FINOVA again agreed to provide similar secured financing of
approximately eight million dollars to PSINet for a term of four
years. PSINet effectively purchased the equipment from a vendor,
Ascend Communications, Inc. (which later became Lucent
Technologies), using financing provided by FINOVA and the
equipment was shipped directly from Lucent Technologies to
PSINet, Finova relates. Finova tells the Court that at no point
during either loan was Finova ever in possession of the
equipment, nor did Finova ship the equipment to PSINet.

"In order to obtain the loans, Schrader and Winkler signed
documents that stated that all of the equipment had been
installed at two locations in Virginia and New York," Finova
alleges, "FINOVA now has learned that both Schrader and
Winkler's statements regarding the location and installation of
the equipment were false. In reality, the equipment was shipped
pursuant to PSINet's instructions and installed in many
locations throughout the United States, Canada, Europe and
Asia."

At the time they signed the documents, William Schrader was the
Chairman and Chief Executive Officer of PSINet, and Lawrence
Winkler was the Vice President and Treasurer of PSINet, both
acting solely in their capacities as such.

FINOVA tells the Court it would not have made the two loans had
it known that its collateral would be scattered around the
globe.

In the Virginia lawsuit, Finova alleges that Messrs. Schrader
and Winkler, acting solely on behalf of, and in their capacities
as officers and authorized agents of, PSINet, made false
statements in 1998 and 1999 in certain documents relating to
transactions between Finova and PSINet, which Finova claims were
material to its decisions to enter into those transactions and
lease equipment to the Debtors for use in the Debtors' worldwide
network. Finova seeks to recover damages from Schrader and
Winkler for their own false statements.

      Debtors' Complaint and Motion for Preliminary Injunction

PSINet tells Judge Gerber that the Finova Action is a blatant
attempt to circumvent the automatic stay of actions in PSINet
chapter 11 cases and to pursue a prepetition claim against them.
Finova's allegations and claims make clear that PSINet is the
real party in interest, the Debtors tell the Court.

The Debtors' attorneys at Wilmer, Cutler & Pickering tell Judge
Gerber that:

-- Finova's claims, if resolved against defendants Schrader and
    Winkler, could result in liability to PSINet's estate by
    application of the doctrines of collateral estoppel, res
    judicata, and respondeat superior.

-- The prosecution of the Finova Action could also result in the
    assertion of substantial indemnification claims against
    PSINet by Messrs. Schrader and Winkler.

-- Discovery would consist of documents and information in
    PSINet's possession. If discovery is permitted to proceed,
    PSINet's current officers, directors and in-house legal staff
    will have to devote significant time to the Finova Action.

-- Finova would be able to enhance its recovery by seeking
    "whole dollar" recovery of prepetition claims outside the
    bankruptcy process, while other similarly situated creditors
    receive fractional recoveries.

-- PSINet would be forced to spend postpetition dollars to
    defend what is really the continuation of a prepetition claim
    against PSINet.

The Debtors tell Judge Gerber that the Debtors they would suffer
burdens that would interfere with their reorganization efforts
if the Finova Action is permitted to proceed.

In view of these, the Debtors request that the Court

(1) enforce Sections 362(a)(1) and (a)(3) of the Bankruptcy Code
     as against Finova and

(2) issue a preliminary injunction pursuant to Section 105(a) of
     the Bankruptcy Code and Bankruptcy Rule 7065 enjoining
     Finova from pursuing or taking any action in furtherance of
     the Finova Action pending confirmation of a plan or plans of
     reorganization in the Debtors' Chapter 11 cases.

The Debtors' attorneys argue that the claims asserted against
the Defendants require Finova to prove:

-- that the equipment listed on the schedules in fact had not
    been delivered and/or installed at the locations specified in
    the schedules,

-- that Finova, who shipped the equipment after PSINet provided
    it with instructions, was not aware of the actual location of
    the delivery or installation of the equipment (to the extent
    it was, in fact, different from the locations specified or
    allegedly specified in the schedules),

-- that Messrs. Schrader and/or Winkler - two of the company's
    senior-most officers, whom PSINet had authorized to execute
    the certificates and schedules on PSINet's behalf - had the
    detailed data required to show that they knew or should have
    known that not all of this equipment had in fact been
    delivered and/or installed in locations in Herndon, Virginia
    or Troy, New York,

-- that they further knew or should have known that certain of
    the equipment had been installed in locations outside the
    United States, and

-- that they knew that Finova would not have entered into these
    contracts had it known that certain of the equipment had been
    delivered or had been or would be installed outside the
    United States.

The Debtors point out that Finova, in its objection to the sale
of PSINet's Canadian assets, did not raise the issue of the
locations at which equipment had been delivered and/or installed
under PSINet's contract with Finova, or Finova's purported
reliance on alleged representations regarding such locations for
making loans to PSINet. The delivery and/or installation of
equipment in Europe should be no different from that in Canada,
the Debtors argue. Therefore, Finova should be estopped from
raising any issue regarding locations at which equipment had
been delivered and/or installed, the Debtors argue.

The Debtors also point out that Finova has not ascribed any
reason as to why either defendant would have had to engage in
the alleged fraud.

The Debtors' attorneys argue that under Section 362(a), Finova
is stayed, restrained and enjoined from proceeding against the
Debtors that was or could have been commenced before the
commencement of the PSINet Chapter 11 cases or to recover a
claim against the Debtors that arose pre-petition. The attorneys
argue that the automatic stay also operates to stay the
prosecution against third-party, non-debtor defendants where
liability for the debtors may well be created in absentia. The
attorneys draw Judge Gerber's attention to Section 105(a) which
empowers the Bankruptcy Court, in the exercise of its equitable
powers, to fashion relief that is necessary or appropriate to
carry out the provisions of Title 11, including Section 362(a)
of the Bankruptcy Code.

Accordingly, the Debtors seek entry of a judgment staying and
preliminarily enjoining Finova, pending confirmation of a plan
or plans of reorganization in the Debtors' Chapter cases, from
pursuing or taking any action or continuing in furtherance of
the Finova Action.

                     Finova's Response

Finova tells the Court that PSINet's motion for an injunction is
an attempt to prevent FINOVA from pursuing valid and independent
claims against Schrader and Winkler. PSINet has mischaracterized
both FINOVA's claims and the effects those claims will have on
its efforts to reorganize, Finova tells Judger Gerber.

Finova tells the Court that:

-- its proceeding against the two former officers of PSINet is
    relatively simple and small, its claims are narrow, discrete,
    and limited in scope, given that FINOVA is a single plaintiff
    targeting two former officers who no longer have any contacts
    with PSINet.

-- Any costs to PSINet that FINOVA's litigation may cause are
    miniscule in comparison to PSINet's much larger bankruptcy,
    which is particularly true considering the tens of thousands
    of dollars in monthly attorneys' fees that PSINet's
    reorganization already is spending.

-- It is simply not credible that FINOVA's action against
    Winkler and Schrader will inhibit PSINet's efforts to
    reorganize in any way.

-- The equitable and balanced result is to allow FINOVA's claims
    to go forward, and deny PSINet's motion because PSINet would
    not suffer any prejudice if FINOVA is allowed to pursue its
    valid claims, whereas if the Court issues the injunction,
    FINOVA will suffer real harm.

-- that FINOVA's case will be resolved quickly, with limited
    discovery and expense is especially true because FINOVA's
    case was filed in the Eastern District of Virginia, which is
    commonly known as the "Rocket Docket." The Eastern District
    of Virginia is part of a pilot program that strives to have
    cases completed in as little time as possible, and often
    tries cases within months of filing.

-- FINOVA is ready, willing and able to try its case against
    Schrader and Winkler in weeks. It is therefore conceivable,
    if not likely, that FINOVA's claims could be resolved before
    PSINet is finished with its reorganization.

Finova argues that the Section 362(a) Stay does not apply to
non-debtors.

Finova also tells Judge Gerber that PSINet has not satisfied its
burden of showing that FINOVA's lawsuit should be enjoined
pursuant to the Court's General Equity Powers Under Sec. 105. A
preliminary injunction is only appropriate, Finova notes, if the
movant establishes that: (a) the injunction is necessary to
prevent irreparable harm, and (b) either (i) likelihood of
success on the merits, or (ii) sufficiently serious questions
going to the merits of the claim that the balance of hardships
tips decidedly in favor of the movant. Malkentzos v. DeBuono,
102 F.3d 50, 54 (2nd Cir. 1996). "PSINet must establish more
than a mere "possibility" of irreparable harm," Finova argues,
"Rather, it must show that irreparable harm is "likely" to
occur. PSINet has not satisfied its burden for obtaining a
preliminary injunction."

Finova tells the Court that PSINet failed to proffer any
evidence, save an equally unsupported Declaration, evidencing
any contractual indemnification obligation. Conclusory
statements that the estate will suffer irreparable injury
because the third party lawsuit will deplete estate assets,
potentially prejudice subsequent lawsuits and prevent the debtor
reaching a settlement in the form of a consensual plan fall well
short of the showing needed to obtain an injunction extending
the stay to non-debtors, Finova tells Judger Gerber. Further,
FINOVA points out that the actual fraud counts against the
former officers of PSINet allege bad faith and deliberate
dishonesty, Schrader and Winkler could very well not be entitled
to PSINet's indemnification for liability to FINOVA.

In addition, even if PSINet is required to indemnify Schrader
and Winkler, numerous courts have refused to extend the stay to
non-debtors even when the debtor was obligated to provide
indemnification, Finova remarks. "Potential indemnification
obligations do not warrant extending the Stay," Finova argues,
"PSINet's naked claim that 'the FINOVA Action will almost
certainly result in the assertion of substantial indemnification
claims against PSINet' is insufficient to prove irreparable
harm."

Schrader and Winkler, not PSINet, are the real party defendants,
Finova tells Judge Gerber. "Schrader and Winkler either
committed actual fraud or constructive fraud against FINOVA,"
Finova says, "and these tort causes of action are distinct from
the breach of contract claim FINOVA asserts against PSINet. The
fact that they committed those acts in their capacities as
PSINet employees does not affect their individual liability
under Virginia law."

Finova refutes PSINet's collateral estoppel argument as being
misplaced for several reasons:

-- First, the possibility of collateral estoppel being asserted
    in some future unspecified litigation is not enough by itself
    to warrant extension of the stay, Finova says.

-- Second, FINOVA has not named PSINet as a co-defendant in its
    fraud action but has only filed a proof of claim against the
    estate for breach of contract, and PSINet already is in
    breach of its contract with FINOVA because it has failed to
    pay the amounts due and owing under the contract. PSINet
    therefore cannot be concerned about the possible application
    of collateral estoppel principles, since the only claim
    FINOVA is asserting against it cannot implicate the doctrine.

-- Finally, PSINet has suggested that because Winkler and
    Schrader's testimony could be used against it in some later
    litigation, PSINet needs to "monitor" FINOVA'S action against
    them. However, Schrader and Winkler have an obligation to
    testify truthfully. Their testimony in any litigation
    concerning FINOVA's breach of contract claim against PSINet,
    therefore, will be the same as their testimony in the FINOVA
    action against them. PSINet will suffer no prejudice if it
    hears the testimony for the first time in litigation with
    FINOVA in this Court, instead of in FINOVA's suit against
    Schrader and Winkler. PSINet therefore does not need to spend
    money monitoring FINOVA's fraud action against its former
    employees.

Finova also argues hat it will not receive a whole dollar
recovery from the estate to the detriment of other creditors
because:

(a) FINOVA's claims against the estate are distinctly different
     from those against Schrader and Winkler. The former are
     based on breach of contract, while the latter are based on
     fraud.

(b) Even if PSINet could overcome its evidentiary problems with
     regard to proving indemnification obligations, the fact that
     PSINet may have to indemnify Schrader and Winkler is
     inconsequential for two reasons: (1) PSINet can set-off any
     recovery FINOVA obtains from Schrader and Winkler from
     FINOVA's breach of contract claim, and (2) Schrader's and
     Winkler's potential right to indemnification will be claims
     against the estate to be paid pro rata with other similarly
     situated creditors.

(c) PSINet's mere mention of the doctrine of respondeat superior
     is woefully insufficient to prove irreparable harm. Leaving
     aside the fact that FINOVA will be barred from ever bringing
     a fraud claim against PSINet once the February 5, 2002 bar
     date passes, any recovery that FINOVA obtains from Schrader
     and Winkler would be deducted from any liability PSINet may
     have to FINOVA under FINOVA's breach of contract claim.

Finova concludes that the balance of hardships favors it and
requests that the court deny PSINet's motion for a preliminary
injunction.

                        PSINet's Reply

PSINet reiterates that Finova is straining to characterize its
fraud action against PSINet's former officers, William L.
Schrader and Lawrence S. Winkler as something other than a
brazen attempt to obtain PSINet's assets by circumventing the
automatic stay but in fact its multi-million dollar claims
stemming from PSINet's bankruptcy and subsequent non-payment of
amounts due under its leases with Finova are claims against
PSINet and have nothing to do with any alleged conduct by the
individual Defendants.

PSINet challenges the basis for allegation by Finova of the
simplicity of its claims and the "limited" discovery that would
be required. PSINet tells the Court that more than 3,300
separate pieces of equipment were delivered and subsequently
installed since 1998 and 1999. It would be wishful thinking, the
Debtors say, to believe that only limited discovery would be
required. What is almost certain, PSINet points out, is that
Messrs. Schrader and Winkler will have no documents or
information relevant to the events underlying this litigation,
the only connection they have to which is the fact that they
were authorized by PSINet to execute certifications in the name
of the company and on its behalf. Permitting these bogus "fraud"
claims to proceed flies in the face of the intent of the
automatic stay and will impose precisely the burdens on PSINet
that the automatic stay is designed to avoid, the Debtors tell
Judge Gerber.

The Debtors argue that it is well-established that Section 362
can be applied to actions against non-debtors.

"PSINet is the real party in interest," the Debtors tell the
Court, "Relief under both Sections 362 and 105 is particularly
appropriate in this case because the Finova Action is a
transparent attempt to make an end-run around the automatic
stay."

Finova's assertions that Messrs. Schrader and Winkler "had a
central role" in the underlying transactions find no support in
Finova's Complaint, the Debtors note. The Debtors tell the Court
that, contrary to Finova's allegations, the Certificates upon
which Finova's claims are entirely based plainly state that they
are certifications by PSINet. Further, the Schedules and
Certificates that Finova's claims are based on simply do not
constitute personal representations made by either Defendant,
the Debtors tell the Court.

Therefore, the substantive allegations in Finova's complaint
center on the terms of contracts between Finova and PSINet, and
the receipt and installation of equipment by PSINet, and
Finova's "independent" claims against the Defendants are
indistinguishable from claims that could be brought against
PSINet itself, the Debtors argue.

The Defendants' entitlement to indemnification from PSINet
further evidences the unity of interests between Debtor and the
non-debtor Defendants, the Debtors argue. While Finova cites
cases in which indemnification was not sufficient to support
extension of the stay, the Debtors note that those decisions
generally were based on more tenuous relationships between
debtors and nonbankrupt co-defendants but here Finova seeks to
hold the Defendants liable for PSINet's performance under a
contract between Finova and PSINet, based solely on the
Defendants' execution of contracts in their official capacities
in PSINet's name. Here, the close relationship is unquestionable
and the Defendants' right to indemnification is indisputable,
the Debtors argue.

The Debtors tell Judge Gerber that permitting the Finova Action
to go forward would interfere with PSINet's reorganization
efforts.

Collateral estoppel concerns also cannot be brushed aside, the
Debtors maintain. There are numerous issues that will have to be
resolved in the Finova Action that will be relevant to (if not
dispositive of) matters that will have to be resolved if Finova
litigates its claim against PSINet, the Debtors note, citing
examples such as rulings on whether particular documents
constitute company business records, findings concerning the
location and timing of delivery and installation of equipment
leased by Finova, and determinations about the materiality of
any alleged breach with respect to the location of any of the
equipment.

Whether or not PSINet would be formally estopped from
relitigating any given issue, its determination in the Finova
Action will certainly have precedential effect in any subsequent
litigation between PSINet and Finova, the Debtors maintain.

"Moreover, Finova's simplistic assertion that PSINet need not
participate in the litigation because the Defendants' testimony
must be truthful ignores the practical realities of litigation,"
the Debtors argue, "If cross-examination were meaningless, then
interested parties would have no reason to engage in it." Finova
would no doubt seek to admit against PSINet any testimony it
obtains in the Finova Action in any subsequent litigation with
PSINet, the Debtors remind the Court.

In the event that Finova were successful in its claims against
either Defendant for "constructive fraud," they would have
indemnification claims against PSINet as well as claims against
PSINet's limited insurance coverage, the Debtors point out.

Further, the Debtors caution that, permitting the Finova Action
to go forward poses a risk that the plaintiffs in the pending
securities class actions will seek to lift the consent stay
currently in place because the Securities Class Action
Plaintiffs would almost certainly not sit by and permit a claim
that would impact the available Director & Officer insurance
coverage to proceed while their own claims against non-Debtors
are stayed.

The Debtors also maintain that, permitting The Finova Action to
go forward would give Finova an unfair advantage over other
prepetition creditors because PSINet will still be obliged to
spend to respond to discovery and to defend against Finova's
claims. The proposed set-off of any recovery from the Defendants
against Finova's contract claim against PSINet does not account
for all these postpetition dollars, PSINet argues.

There would be no hardship to Finova if its claims were stayed,
the Debtors tell the Court. Finova's assertion that the
individual Defendants might "deplete their assets or hide them
from FINOVA" if the action is stayed is completely unsupported
by any reasonable inference from any facts in the record, the
Debtors remark.

As regards the "Rocket Docket" in the U.S. District Court for
the Eastern District of Virginia, the Debtors tell Judge Gerber
that this presents a far greater burden on the Debtor than the
pace at which discovery proceeds in most jurisdictions --
imposition of a short deadline for completion of all of all
discovery, almost all of it from PSINet.

For these reasons, the Debtors request that the Court
preliminarily stay and/or enjoin, through confirmation of a plan
or plans of reorganization in the Debtors' Chapter 11 cases,
Finova, its counsel, and its agents from prosecuting any claims
against the Debtors and either of the Defendants. (PSINet
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


REVLON CONSUMER: Completes Private Offering of 12% Senior Notes
---------------------------------------------------------------
On November 26, 2001, Revlon Consumer Products Corporation
completed the private offering of $363,000,000 aggregate
principal amount of 12% senior secured notes due 2005. As part
of that offering, Revlon entered into a registration agreement
with the initial purchasers of these original notes in which the
Company agreed, among other things, to deliver a prospectus and
to complete an exchange offer for the original notes. Below is a
summary of the exchange offer.

SECURITIES OFFERED..........  Up to $363,000,000 aggregate
                               principal amount of new 12% senior
                               secured exchange notes due 2005,
                               which have been registered under
                               the Securities Act. The form and

                               terms of these exchange notes are
                               identical in all material respects
                               to those of the original notes.
                               The exchange notes, however, will
                               not contain transfer restrictions
                               and registration rights applicable
                               to the original notes.

THE EXCHANGE OFFER..........  Revlon is offering to exchange
                               $1,000 principal amount of its 12%
                               senior secured exchange notes due
                               2005, which have been registered
                               under the Securities Act, for each
                               $1,000 principal amount of its
                               outstanding 12% senior secured
                               notes due 2005.

                               In order to be exchanged, an
                               original note must be properly
                               tendered and accepted. All
                               original notes that are validly
                               tendered and not withdrawn will be
                               exchanged. There are $363,000,000
                               principal amount of original notes
                               outstanding. Revlon will issue
                               exchange notes promptly after the
                               expiration of the exchange offer.

ACCRUED INTEREST ON THE
  EXCHANGE NOTES AND
  ORIGINAL NOTES.............  The exchange notes will bear
                               interest from the most recent date
                               to which interest has been paid
                               on the original notes. Interest is
                               paid on the notes on June 1 and
                               December 1 of each year,
                               beginning June 1, 2002. If the
                               original notes are accepted for
                               exchange, then holders will
                               receive interest on the exchange
                               notes and not on
the
                               original notes.

EXCHANGE AGENT............... Wilmington Trust Company is
                               serving as exchange agent in
                               connection with the exchange
                               offer.

USE OF PROCEEDS.............. Revlon will not receive any
                               proceeds from the issuance of
                               exchange notes in the exchange
                               offer, but will pay all expenses
                               incident to the exchange offer.

The Company has not indicated an expiration date for the
exchange at this time but will have that information available
when notice has been mailed.

Revlon has the look of a leader in the US mass-market cosmetics
business, along with L'Oreal's Maybelline and Procter & Gamble's
Cover Girl. In addition to Revlon's makeup and skin care
products (Revlon, Almay, and Ultima II), the company makes
fragrances (Charlie) and personal care products (Flex hair care,
Mitchum deodorant). Its products are sold in about 175
countries, primarily through drugstores, supermarkets, and mass
merchandisers.  Ron Perelman's MacAndrews & Forbes Holdings
controls 97% of Revlon's voting power.  Though Perelman's
involvement with Revlon has fed his celebrity status, in 1999 he
put the heavily indebted cosmetics company up for sale before
opting to sell only minor parts of it. At September 30, 2001,
the company had a working capital deficit of $$87 million, and a
total shareholders' equity deficit of $1.2 billion.

DebtTraders reports that Revlon Holdings Inc.'s (with Revlon
Consumers Products as underlying issuer) 12% bonds due 2004
(REVLON4) are trading between 96.5 and 97. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=REVLON4for
real-time bond pricing.


RURAL/METRO: Fails to Meet Nasdaq SmallCap Listing Standards
------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RURL), a national leader in
ambulance transportation and fire protection services, announced
that it has received notification from Nasdaq indicating the
Company does not currently comply with certain standards for
continued listing on the Nasdaq SmallCap Market.

Jack Brucker, President and Chief Executive Officer, said, "We
believe we have strong arguments for continued listing and are
hopeful that the progress we have made in recent months will be
taken into consideration. While this could potentially affect
the market our common shareholders utilize to trade our stock,
and we regret any inconvenience that may cause, it has
absolutely no bearing on our ability to deliver the highest
quality services to our patients and customers now or in the
future."

Brucker continued, "As we work diligently to achieve further
improvements to our financial performance, we remain focused on
serving the needs of our customers as we have for more than 50
years. We are a stronger company today and are fully prepared to
demonstrate our achievements and improve the long-term value of
Rural/Metro for all of our stakeholders."

The Company Tuesday last week submitted its request for a Nasdaq
Qualifications Panel hearing to consider its continued listing.
The hearing has not yet been scheduled. Rural/Metro's common
stock will continue to be traded on the Nasdaq SmallCap Market
pending a final decision by the Nasdaq Qualifications Panel,
which could occur as early as April.

The Nasdaq Staff Determination notice cited the Company's
current inability to meet continued listing standards for net
tangible assets, stockholders' equity, market capitalization, or
net income as set forth in Marketplace Rule 4310(C)(2)(B). In
the event the Company's common stock is delisted from the Nasdaq
SmallCap Market, the Company believes its common stock would be
quoted on the OTC Bulletin Board operated by the National
Association of Security Dealers.

Rural/Metro Corporation provides emergency and non-emergency
ambulance transportation, fire protection and other safety-
related services to municipal, residential, commercial and
industrial customers in more than 400 communities throughout the
United States and Latin America.


SEPP'S GOURMET: U.K. Unit Files for Receivership
------------------------------------------------
Sepp's Gourmet Foods Ltd. (TSE-SGO) announced that the Directors
of its wholly-owned subsidiary, McIntosh of Dyce, have filed for
receivership.

McIntosh, a UK company with operations in Aberdeen and Dundee,
Scotland, was unable to adapt to changing conditions in the UK
food industry.  As a result, the operating performance of
McIntosh continued to deteriorate, lines of credit were
maximized and additional funds could not be raised to continue
operations.

McIntosh employs 350 people. Sepp's regrets the disruption that
this action will have on the employees and other stakeholders of
McIntosh.

McIntosh incurred pre-tax losses of $1.44 million in 2001. In
2001, Sepp's wrote off $5.33 million of goodwill related to the
purchase of McIntosh and expects to have a loss on disposal of
discontinued operations. There will be no other negative
financial impact to Sepp's. Sepp's has not guaranteed the loans
of McIntosh and is not otherwise liable for the obligations of
McIntosh. The Canadian operations of Sepp's reported pre-tax
income of $1.42 million in 2001 on sales of $41.6 million.

Sepp's will work with the receiver of McIntosh to maximize
shareholder value.


SOLUTIA INC: Refinancing Risks Prompt Fitch's Low-B Ratings
-----------------------------------------------------------
Fitch Ratings has lowered Solutia Inc.'s senior secured debt
rating to 'BB+' from 'BBB' and the senior unsecured debt rating
to 'BB' from 'BBB-'. Solutia's short-term rating has been
downgraded to 'B' from 'F3'. The ratings have been placed on
Rating Watch Negative.

The ratings downgrade is based in part on heightened refinancing
risk associated with the $150 million maturity due October 2002
and the $800 million credit facility that is up for renewal in
August 2002. The ongoing polychlorinated biphenyl (PCB)
contamination litigation contributed to the two-notch downgrade,
mainly because the current PCB litigation is creating an
unfavorable environment in which Solutia must refinance its
maturing debt. Solutia expects to continue to pay $30 million to
$40 million per year to meet environmental remediation
commitments, although settlement costs related to litigation
could result in additional cash outflows. Solutia has
substantial insurance coverage that mitigates litigation-related
cash payments, however the ultimate size of the gross PCB
liability remains uncertain.

The Rating Watch Negative status reflects continuing concerns
surrounding the company's ability to refinance approximately one
half of its $1.31 billion debt. Plans for refinancing have been
delayed a number of times, each time facing an increasingly
negative lending environment. Solutia's cyclically weak
operating cash flows continue to be a concern, however, Fitch
does not expect a deterioration of operating fundamentals in
2002. Once Solutia's refinancing has successfully been
completed, Fitch expects that the Rating Watch Negative will be
removed. Once additional details of the refinancing package are
known, Fitch will evaluate the notching between the secured bank
facility, the new notes and existing notes.

Solutia's ratings are supported by the company's diverse
business portfolio, integrated nylon position, and the brand
recognition of some of its major product lines (e.g. Wear-Dated
carpet and Saflex plastic interlayer). Weak economic conditions
have pressured the company's earnings in recent years. Lower
earnings, together with Solutia's high debt level, have weakened
the company's credit statistics.

For the trailing 12-month period ending Dec. 31, 2001, EBITDA-
to-interest has declined to 2.8 times from 3.7x at the end of
2000. For the same period, total debt-to-EBITDA has increased to
5.1x from 3.4x at the end of 2000. These credit ratios are
expected to improve slightly in 2002 with recovering EBITDA.
Capital spending is expected to be at lower levels than in
previous years. Due to cyclically lower earnings, free cash flow
will likely not allow significant debt reduction until after
2002.

Solutia is a specialty chemical company with $2.8 billion in
sales in 2001. This diverse company produces films, resins, and
nylon plastics and fibers for domestic and international
markets. Some of Solutia's products are name brands, such as
Saflex plastic interlayer for windows and Wear-Dated carpet
fibers. End-use markets for Solutia's products include
construction and home furnishings, automotive,
aviation/transportation, electronics, and pharmaceuticals.


STATIA TERMINALS: Closes Sale of Units to Kaneb Entity for $311M
----------------------------------------------------------------
Statia Terminals Group N.V., (formerly Nasdaq:STNV) announced
that it has completed the sale of substantially all of its
assets consisting of the stock of its three subsidiaries (Statia
Terminals International N.V., Statia Technology, Inc., and
Statia Marine, Inc.) to an entity affiliated with Kaneb Pipe
Line Partners, L.P. (NYSE:KPP). The purchase price paid by Kaneb
at closing was approximately $311.4 million and included
approximately $19.9 million of cash on hand and approximately
$106.7 million of Statia's former subsidiaries' debt. The
purchase price is subject to adjustment. In accordance with an
amendment to Statia's Articles of Incorporation adopted on
February 22, 2002 by the Company's shareholders, Statia has
begun the process of distributing the proceeds from the sale
transaction to its shareholders of record at the end of the
trading day on February 28, 2002. Holders of Statia's class A
common shares and class B subordinated shares will receive
distributions of $18.4998 per share and $16.8844 per share,
respectively. Statia estimates that its class C shareholder will
receive a distribution, in the aggregate, of approximately $10.0
million, consisting of approximately $7.0 million following the
completion of the sale and approximately $3.0 million following
Statia's liquidation assuming no significant purchase price
adjustment.

Statia's class A common shares have been delisted from the
Nasdaq National Market and Statia's transfer agent ceased
recording transfers of the shares at the end of trading on
February 28, 2002. Statia will begin the process of liquidation
in the Netherlands Antilles, which is anticipated to be
completed by December 31, 2002. Shareholders of record at the
end of trading on February 28, 2002, will remain shareholders
until the liquidation is complete. After satisfaction of
Statia's creditors, any cash remaining at the end of the
liquidation period will be paid to the holder of Statia's class
C shares. No further distributions will be made in respect of
its class A common shares and class B subordinated shares.


STRATUS SERVICES: Violates Nasdaq Continued Listing Requirements
----------------------------------------------------------------
Stratus Services Group, Inc., the SMARTSolutions(TM) company,
announced that the Nasdaq Stock Market Listing Qualifications
Panel had made a determination that the Company is not in
compliance with the Continuing Listing Standards of the Nasdaq
SmallCap Market. The Panel indicated to the Company that its
stock would be delisted from the Nasdaq SmallCap Market. The
Company believes that its shares would be eligible to begin
trading on the OTC Bulletin Board. The Panel stated that it had
based its decision on the failure of the Company to maintain
compliance with the $2.5 million Stockholder's Equity standard
and that the company failed to present a plan to achieve long-
term compliance. Stratus announced that it intends to appeal
this decision and request a review of this decision
by the Listing Council.

Commenting on the events, Joseph J. Raymond, Stratus' Chairman
and CEO stated, "We are extremely disappointed with Nasdaq's
decision [Wednes]day and believe that the Panel may have
misinterpreted information we had provided them regarding our
future performance and enhancements to Stockholder's Equity
that have already occurred subsequent to December 31, 2001.
Furthermore, we believe they may not have fully taken into
account the sale of our Engineering Division and other measures
being implemented to improve the Company's financial condition
that we are currently undergoing. Combined, these items
would increase Stockholder's Equity by over $5.5 million. We
anticipate that beginning with the quarter ended March 31, 2002,
and continuing into the foreseeable future we will be in
compliance with Nasdaq SmallCap Market Continuing Listing
Standards. We intend to vigorously appeal this decision
and have already had discussions with Nasdaq regarding the
timing of the appeal process. However, regardless of the outcome
of the appeal we will continue to implement our business plan to
move forward building the premier staffing and productivity
consulting services firm."

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


STREAMEDIA: Auditor Airs Doubt About Ability to Continue
--------------------------------------------------------
According to Thomas Monahan, Certified Public Accountant of
Paterson, New Jersey, and the auditor for Streamedia
Communications Inc., Streamedia has incurred operating losses
since the date of inception and requires additional capital to
continue operations.  These conditions raise substantial doubt
about the Company's ability to continue as a going concern.

XXIS CORP., (the Company) was incorporated in the State of
Delaware in 1998.  The Company's two divisions are The
Streamedia Networks and Business Services. In December 1999, the
Company  completed its initial public offering. The net proceeds
from the Offering were approximately $8,447,000.

The Company provides website owners and content publishers with
services and tools for streaming, or broadcasting, live and on-
demand video and audio content over the Internet.  The Company
also operates a broadcast content website, Bijou Cafe.com.

The Streamedia Business Services division markets Internet and
intranet broadcasting services to a wide spectrum of
enterprises, such as, but not limited to, businesses,
associations, electronic publishers and off-line media
generators, which are attempting to obtain an Internet broadcast
presence.

The Company offers consulting services to businesses,
corporations, and agencies that wish to broadcast or otherwise
transmit high-quality video and audio over the Internet.  It
also offers broader digital solutions.  Streamedia provides end-
to-end solutions which integrate into the clients existing
infrastructure. Streamedia Digital Solutions is a suite of
business solutions that utilize digital technologies to improve
communications between its clients and their customers,
employees and others.

The Company's revenues decreased by $336,312, or 67%, to
$164,977 for the nine months ended September 30, 2001, as
compared to $501,289 for the comparable period of 2000. Revenues
for the  nine-month periods ended September 30, 2001, were
primarily generated from the Company's performance of Internet
professional services, launched in May 2000.

Total operating expenses decreased by $3,846,326, or 64%, to
$2,144,806 for the nine months ended  September 30, 2001, as
compared to $5,991,132 for the comparable period of 2000. The
decreases in operating expenses for the three and nine month
periods ended September 30, 2001, were due to salaries,
consultant fees and other general and administrative expenses.

The Company's cash position decreased $61859 from a balance of
$104,142 at December 31, 2000 to $42,283 at September 30, 2001.
Working capital at December 31, 2000 and September 30, 2001 was
negative at $788,548 and $468,614 respectively.  The Company
continued to be funded in part through  the net proceeds of the
exercise of options aggregating $350,943.

Streamedia has incurred net losses every quarter since
inception.  For the nine months ended  September 30, 2001, the
Company incurred a net loss of $2,048,919, a decrease of 62% as
compared to a net loss of $5,369,909 for the nine months ended
September 30, 2000.  It has financed its operations  primarily
through sales of equity securities and the private placement of
debt instruments.  On September 6, 2000, Streamedia
Communications, Inc. sold 940,000 shares of common stock with
net aggregate proceeds of  $931,520 pursuant to a private
placement.

From January 13, 1998 (the date of inception) to September 30,
2000, Streamedia has raised a total of approximately $14 million
from the sale of common stock and the placement of debt (before
underwriting discounts and offering costs).  It completed its
initial public offering on December  27, 1999, and repaid
$1,878,125 in debt and interest.  On September 30, 2000, its
principal source of liquidity is $910,101 of cash and cash
equivalents.


SUN COUNTRY: US Bank Seeks Stay Relief to Ease Asset Transfer
-------------------------------------------------------------
Sun Country Airlines' lender, U.S. Bank, has filed a motion in
the United States Bankruptcy Court, District of Minnesota, for
an expedited hearing and relief from the automatic stay to
facilitate a potential asset transfer to MN Airlines, LLC.

Sun Country expects its lender to sign a purchase agreement for
certain assets with a new holding company, MN Airlines, later
today or tomorrow which coincides with the launch of Sun Country
Airlines' new 12 city schedule. A separate agreement, expected
to be signed at the same time, will also allow Sun Country to
immediately receive new funding for operations from the new
ownership group.

A hearing on the motion has been scheduled for March 6 at 2:30
p.m.

Under the expected agreement the bank, which holds liens on
virtually all of Sun Country's assets, would transfer ownership
of certain assets in an out-of-court foreclosure to the
acquiring company, MN Airlines, including certain aircraft
parts, office equipment, and the right to use Sun Country
Airlines' name.

The lender told the court in Thursday's motion that because Sun
Country's entire business is encumbered by liens in the bank's
favor, and the value of those assets is not enough to cover the
airline's financial obligation to the bank, it would prefer the
assets be transferred to the new investment group out of
bankruptcy as an offset to the liens.

Sun Country Airlines President and CEO David Banmiller said,
"The timing of this motion is important because it allows Sun
Country to continue its newly scheduled service to this
community and 11 other cities. The deal would allow our lender
to more quickly recoup some funds and provide the new buyer with
a new company that it is not burdened by excessive past debt."

Also in support of the schedule launch, Sun Country's flights
are now available for booking by travel agents in Worldspan, the
reservations system preferred by most Minnesota travel agents.
Sun Country Airlines is also available for bookings in the Sabre
reservations system.

The airline has already recalled about 100 pilots, flight
attendants, mechanics and customer service agents to operate the
new schedule, which will initially utilize four airplanes with
continued growth planned for the future.

Sun Country's new schedule includes service to Minneapolis/St.
Paul, Laughlin, Phoenix, Seattle, San Jose, Denver, San Antonio,
Pensacola, Ft. Myers, Miami and Orlando. The airline plans to
replace San Jose and Denver at the end of March with flights to
Portland and Dallas.


SUN HEALTHCARE: Plan of Reorganization Declared Effective
---------------------------------------------------------
As previously reported, on February 6, 2002, the U.S. Bankruptcy
Court for the District of Delaware entered an order approving
the joint plan of reorganization of Sun Healthcare Group, Inc.,
and certain of its subsidiaries.

The Plan was declared effective Thursday, February 28, 2002,
meaning that the Company has formally emerged from chapter 11
under the terms outlined in the Plan.

The principal provisions of the Plan are:

   * Approximately 88% to 90% of the New Common Stock
     and a cash payment of $6,651,557 will be issued to
     the Company's senior secured creditors.

   * Approximately 8% to 10% of the New Common Stock are to be
     issued to the holders of general unsecured claims that are
     greater than $50,000.

   * Approximately 2% of the New Common Stock as well as warrants
     to purchase an additional 5% of the New Common Stock are to
     be issued to the holders of senior subordinated notes.

   * Holders of general unsecured claims of $50,000 or less shall
     receive cash at the rate of 7% of their claims;

   * Holders of the Company's common stock, convertible
     subordinated debt, and convertible trust-issued preferred
     securities are to receive no distribution and those
     instruments will be canceled; and

   * The board of directors of the reorganized Company are to
     consist of:

        -- Richard K. Matros, Chairman of the Board and Chief
           Executive Officer of Sun Healthcare Group, Inc.;

        -- John W. Adams, President of Smith Management Company;

        -- Gregory S. Anderson, President and Chief Executive
           Officer of Quality Care Solutions, Inc.;

        -- Charles W. McQueary, former President of ProMedCo,
           Inc.;

        -- John F. Nickoll, President, Chairman and Chief
           Executive Officer of the Foothill Group, Inc.;

        -- Sanjay H. Patel, Co-President of GSC Partners;

        -- Bruce C. Vladeck, Ph.D, Senior Vice President for
           Policy for Mount Sinai NYU Health;

        -- Steven L. Volla, President of Health Equities
           Management, Inc.; and

        -- Milton J. Walters, a Principal of Tri-River Capital.

The Plan requires that certain administrative claims and any
amounts outstanding under the Company's debtor-in-possession
financing facility be paid on the Effective Date.

As of February 6, 2002, there were 63,012,316 shares of the
Company's pre-Chapter 11 common stock issued and outstanding.
Under the provisions of the Plan, the outstanding pre-Chapter 11
common stock will be canceled.  In effecting the Plan, the
Company will issue 10,000,000 shares of new common stock (the
"New Common Stock"), par value  $0.01, to its creditors in
accordance with  the Plan provisions.  An additional 150,000
shares of the New Common Stock and options to purchase an
additional 736,500 shares of New Common Stock will be issued to
certain key employees in accordance with a new management
incentive plan.  The new management incentive plan will allow
the Company to grant options to purchase 13,500 shares of New
Common Stock in the future in addition to the options being
granted to key employees.

In addition, in effecting the Plan, the Company will issue
warrants to purchase 500,000 shares of New Common Stock.  This
represents approximately 5% of the New Common Stock to be issued
under the provisions of the Plan, before dilution for stock
issuances or the exercise of options under the new management
incentive plan previously described. (Sun Healthcare Bankruptcy
News, Issue No. 33; Bankruptcy Creditors' Service, Inc.,
609/392-0900)

                          *   *   *

      "We are emerging a smaller company that is better focused
on our core business-proving quality healthcare services to the
thousands of elders entrusted to our care," said Richard K.
Matros, Sun's CEO and Chairman of the Board. "During Sun's
reorganization, the Company continued to provide vital services
to its patients and residents while realigning operations and
ancillary businesses to better serve our core business. As we
emerge, Sun is well-positioned to continue improving its
operating performance and reestablishing itself as a leading
provider of care to our nation's most frail citizens."

      The Plan of Reorganization provides that general unsecured
creditors with claims of $50,000 or less will receive cash
payments equal to seven percent of their allowed claims. General
unsecured creditors with claims of more than $50,000 will share
between eight percent and 10 percent of Sun's new common stock.
Sun's senior lenders will receive between 88 percent and 90
percent of the new common stock and cash payment of $6,651,557.
Sun's senior subordinated noteholders will receive two percent
of the new common stock and warrants to purchase an additional
five percent of the new common stock. The Plan extinguishes
Sun's current common stock, and existing holders of Sun's common
stock, convertible subordinated debt, and convertible trust-
issued preferred securities will receive no distribution under
the Plan.

      Sun also announced that it has obtained a $150 million
senior secured credit facility with certain lenders, led by
Heller Healthcare Finance, Inc., a GE Capital company, as
collateral agent and Citicorp USA, Inc., as administrative
agent. Sun also has obtained a $40 million junior secured credit
facility with certain lenders, with U.S. Bank as agent. The
credit facilities will be used to fund obligations under the
Plan of Reorganization, including paying down the Company's
debtor-in-possession financing agreement and to fund future
working capital needs.

      Sun and its subsidiaries voluntarily filed for Chapter 11
protection on October 14, 1999, citing drastic cuts in Medicare
reimbursement and continued underpayment by most state-funded
Medicaid systems. Headquartered in Albuquerque, N.M., Sun
Healthcare Group, Inc., through its subsidiaries is a leading
long-term care provider in the United States, operating nearly
250 long-term and postacute facilities in 25 states. Sun
companies also provide high-quality therapy, pharmacy, home care
and other services for the healthcare industry.


SUNBEAM CORP: Decisions on Unexpired Leases Expected by June 3
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approves the motion of Sunbeam Americas and its debtor-
affiliates to extend their time period to determine whether to
assume, assume and assign, or reject nonresidential real
property leases.  The Court says that the Debtors may assume or
reject remaining unexpired leases through the earlier of June 3,
2002 or confirmation of the Company's chapter 11 plan.

The Court's order provides that the motion is granted provided
that the extension will not prejudice Gordmans, Inc.'s right to
pursue relief from automatic stay and terminate a lease with
Coleman Company, Inc.

Sunbeam Corporation, the largest manufacturer and distributor of
small appliances, sells mixers, coffeemakers, grills, smoke
detectors, toasters and outdoor & camping equipment in the
United States, filed for chapter 11 protection on February 6,
2001. George A. Davis, Esq., of Weil Gotshal & Manges LLP,
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$2,959,863,000 in assets and $3,201,512,000 in debt.


SUPREMA SPECIALTIES: BDO Seidman Resigns as Independent Auditors
----------------------------------------------------------------
On February 18, 2002, BDO Seidman, LLP resigned as the
independent auditors for Suprema Specialties, Inc.

BDO has indicated to the Company that the following were among
the factors BDO considered in deciding to resign: (1) the
resignation of both the Company's Chief Financial Officer and
its Controller in December 2001, (2) the recent seizure of
certain financial and other corporate records from the Company's
principal executive offices by representatives of certain
government agencies, (3)the uncertainties regarding the outcome
of the investigation of the Company's financial records being
conducted by the Audit Committee of the Company's Board of
Directors and by Deloitte & Touche LLP, who have been engaged to
assist the Audit Committee in the investigation and (4) the
inability of BDO to determine whether (a) the Company has the
internal controls necessary to develop reliable  financial
statements, (b) the Company's prior financial statements
contained any material inaccuracies or (c) BDO could continue to
rely on the representations of the Company's management.

Suprema Specialties, Inc., manufactures, shreds, grates and
markets gourmet all natural Italian variety cheeses under the
Suprema Di Avellinor brand name as well as under private label.
Suprema's product lines consist primarily of domestic
mozzarella, ricotta and provolone cheeses, grated and shredded
parmesan, romano cheeses, and imported parmesan and pecorino
romano cheeses, including "lite" versions of certain of these
products containing less fat, and fewer calories. The Company
operates facilities in New Jersey, New York, California and
Idaho. The Company supplies cheeses to foodservice, retail, and
food manufacturing companies. The company filed for Chapter 11
protection on February 24, 2002, in the U.S. Bankruptcy Court
for Southern District of New York.


TRENWICK GROUP: Fitch Concerned About Refinancing Risk Exposure
---------------------------------------------------------------
Fitch Ratings has assigned 'BB-' long-term issuer ratings to
Trenwick Group, Ltd. (TWK), Trenwick America Corporation (TAC),
and LaSalle Re Holdings, Ltd. (LRH). In addition, Fitch has
assigned a 'BB-' rating to TAC's senior notes due 2003, a 'B+'
rating to Trenwick Capital Trust I's (TCT) preferred capital
securities due 2037, and a 'B' rating to LRH's cumulative
preferred stock. The Rating Outlook is Evolving.

Fitch's ratings are heavily influenced by the company's non-
laddered debt structure, which exposes the group to significant
refinancing risk. TWK is currently evaluating different
financing options to term out a portion of its debt structure.
If the company completes this process on favorable terms and
profitability improves, the ratings will likely be upgraded.
Conversely, if the company is unable to restructure its current
debt structure and its profitability remains poor, the ratings
may be downgraded.

Positive factors supporting the ratings include the Trenwick
organization's diversified operating profile, and the acceptable
capitalization and high-quality and liquid investment portfolios
of the organization's operating companies.

Offsetting these positives is the organization's recent poor
earnings and interest coverage, relatively high financial
leverage and limited financial flexibility.

TWK is an insurance holding company whose lead operating
subsidiaries include Trenwick America Reinsurance Corp., LaSalle
Re Ltd., and Trenwick International Ltd. These companies
specialize in different segments of the reinsurance market and
collectively provide TWK with a diverse platform of reinsurance
products and access to reinsurance markets worldwide.

At year-end 2001, TWK's capital structure included $73 million
of senior notes due 2003 and $218 million of debt composed
primarily of bank debt borrowed under a revolving credit
facility. In November 2001, the company exercised an option to
convert the bank debt to a four-year term loan with semi-annual
payments starting in mid-2002. In addition, TWK negotiated
amendments to certain covenants in the credit facility.

Fitch believes that TWK's financial flexibility is limited due
to its non-laddered debt structure and covenants that are
triggered by rating downgrade provisions in its existing credit
facility. The most onerous covenant accelerates repayment of all
bank debt in the event of an A.M. Best downgrade of TWK's
primary operating subsidiaries below 'A-'. The A.M. Best ratings
are currently at 'A-' and carry a negative outlook. In addition,
Fitch believes that the current market price of TWK's common
stock, which has recently traded at a significant discount to
book value, effectively reduces the company's ability to raise
equity.

TWK's 2001 earnings and interest coverage suffered from heavy
catastrophe related losses and adverse reserve development. The
company reported pretax losses from the events of September 11
(net of reinsurance) of approximately $100 million. Fitch
considers this a reasonable estimate and notes that LaSalle Re
Ltd., is a party to a financial contract that could provide up
to $55 million of preferred equity if additional property line
losses develop.

TWK's 2001 results also include a $76 million pretax charge for
adverse reserve development on prior accident years. Fitch
believes that the adverse reserve development somewhat reduces
the quality of the company's past, and generally more favorable,
underwriting results.

Favorably, TWK's results in the fourth quarter 2001 showed signs
of improvement that indicate that the company's business profile
held up reasonably well during the January renewal season.

Entity/Type/Issue           Action     Rating/Outlook

Trenwick Group, Ltd.
-- Long-term                Assign    'BB-'/Evolving.

Trenwick America Corp
-- Long-term                Assign    'BB-'/Evolving.

LaSalle Re Holdings, Ltd.
-- Long-term                Assign    'BB-'/Evolving.

Trenwick America Corp.
-- Senior debt              Assign    'BB-'/Evolving.

Trenwick Capital Trust I
-- Preferred capital sec    Assign    'B+'/Evolving.

LaSalle Re Holdings, Ltd.
-- Preferred stock          Assign    'B'/Evolving.


U.S. WIRELESS: Committee Taps Kornfield for Klarman Litigation
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the application of the Official Committee of Unsecured Creditors
of U.S. Wireless, to employ and retain Kornfield, Paul & Nyberg,
P.C., to act as its special litigation counsel.

Brobeck, Phleger & Harrison, LLP, as the Debtors' special
counsel and in the Debtors' behalf, alleged that the Debtors'
former general counsel, David Klarman, and the Debtors' former
Chief Executive Officer, Oliver Hilsenrath, engaged in a
campaign to defraud the Debtors by issuing bogus stock options
to off-shore companies that they owned or controlled.

Mr. Klarman claimed that the Brobeck Firm provided legal
services to him on prior occasions, thus establishing a conflict
of interest.  This allegation forced the Brobeck Firm to
withdraw as counsel to the Debtors in connection with litigation
against Mr. Klarman in State Court and the Bankruptcy Court.

As a result of the Brobeck Firm's conflict of interest and by
agreement with the Debtors, the Committee agreed to assume
prosecution of the Klarman State Court Litigation and the
Klarman Bankruptcy Litigation on the Debtors' behalf and chose
Kornfield, Paul & Nyberg, P.C. to represent the Committee in the
Klarman litigation.

Kornfield will:

     (a) review the legal theories involving the claims asserted
         against Klarman and the lis pendens;

     (b) undertake discovery and all other actions necessary to
         develop the factual record in connection with the
         Klarman litigation;

     (c) continue prosecution of the appeal of the Bankruptcy
         Court's remand of the litigation to the California State
         Court;

     (d) file appropriate motions to preserve the Debtors' rights
         with respect to the litigation;

     (e) if necessary, conduct a trial of the claims; and

     (f) perform  any other and further tasks as may be required
         to adequately represent the Debtors' interests in
         connection with the litigation.

U.S. Wireless Corporation is a research and development company
on wireless location technologies. The Company filed for chapter
11 protection on August 29, 2001. David M. Fournier, Esq. at
Pepper Hamilton LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $17,688,708 in assets and
$22,239,832 in liabilities.


VALLEY MEDIA: Taps Morris Nichols as Bayard Firm's Replacement
--------------------------------------------------------------
Valley Media, Inc. asks the U.S. Bankruptcy Court for the
District of Delaware for an authority to employ and retain
Morris, Nichols, Arsht & Tunnell as substitute counsel in this
chapter 11 case, nunc pro tunc to January 11, 2002. The Bayard
Firm has withdrawn as counsel for the Debtor as of January 12,
2002.

Among the reasons cited by the Debtor on its choice to retain
Morris Nichols is that the firm has extensive experience and
knowledge in practicing before this Court, its proximity to the
Court, and its ability to respond quickly to emergency hearings
and other matters in this Court.

Subject to approval, the professional services that Morris
Nichols shall render to the Debtor are:

     a) perform all necessary services as the Debtor's counsel in
        connection with this Chapter 11 case including providing
        the Debtor with advice concerning its rights and duties
        as a debtor-in-possession, representing the Debtor, and
        preparing all necessary documents, motions, applications,
        answers, orders, reports and papers in connection with
        the administration of this Chapter 11 case on behalf of
        the Debtor;

     b) take all necessary actions to protect and preserve the
        Debtor's estate during its chapter 11 case, including
        prosecuting actions by the Debtor, defending actions
        commenced against the Debtor, negotiating litigation in
        which the Debtor is involved, and objecting to claims
        filed against the estate;

     c) represent the Debtor at hearing, meeting, conferences,
        etc., on matters pertaining to the affairs of the Debtor
        as debtor-in-possession; and

    d) perform all other necessary legal services.

The Debtor proposes to pay Morris Nichols on its customary
hourly rates plus reimbursement on actual and necessary
expenses. The current hourly rates of Morris Nichols'
professionals are:

              Partners             $340 to $480
              Associates           $210 to $320
              Paraprofessionals    $155
              File Clerks          $80

In connection with this engagement, the debtor has agreed to
provide Morris Nichols with $200,000 retainer. The Debtor
assures the Court that the Committee and Congress Financial
Corp. have agreed to the Retainer.

Valley Media Inc, a distributor of music and video entertainment
products, filed for chapter 11 protection on November 20, 2002.
Neil B. Glassman, Esq., Steven M. Yoder, Esq., and Christopher
A. Ward, Esq. at The Bayard Firm represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed $241,547,000 in total assets and
$259,206,000 in total debts.


VECTOUR: Selling Assets of 3 Affiliates to Coach USA for $9 MM
--------------------------------------------------------------
VecTour Inc., and its affiliated debtors wish to sell
substantially all assets of the Chicago-based Tri-State Coach
Lines, Inc. and United Lines, Inc., businesses and their VecTour
of California, Inc., in San Francisco, to Coach, USA, Inc. for
approximately $9 million.  The Debtors ask for approval from the
U.S. Bankruptcy Court for the District of Delaware to sell the
assets and assume and assign relevant contracts.

Objections to the sale motion are due by March 8, 2002 and a
hearing will be held on March 14, 2002, at 10:30 a.m. in
Wilmington.

The principal purchase price to be paid by the Purchaser for the
Purchased Assets is $9 million, including a $200,000 deposit.
All competing bids, in order to be "Qualified Bids," must exceed
Purchaser's price by at least $200,000.

The Debtors are convinced that the best course of action with
respect to many of the Debtors' businesses is to sell them as
going concerns to yield the highest value for the liquidation of
the San Francisco and Chicago Businesses.

In accordance with previously-approved Bidding Procedures, the
Debtors intend to conduct an auction of the Purchased Assets
requiring other bidders to conform to the material terms of the
Asset Purchase Agreement. The Auction is currently scheduled to
take place on March 12, 2002

The Debtors entered into an Asset Purchase Agreement effective
February 12, 2002 which provides for a sale of substantially all
the San Francisco and Chicago Business assets of Debtors VecTour
of California, Inc., Tri-State Coach Lines, Inc. and United
Limo, Inc., including these assets:

     (a) vehicles, including buses;

     (b) machinery and equipment, and other personal property;

     (c) leases and executory contracts; and

     (d) miscellaneous assets, including telephone and fax
         numbers, e-mail addresses, books and records, customer
         lists, intangible property, good will, prepaid expenses
         and deposits.

The Debtors also proposed that the Purchaser will become
responsible for postclosing obligations under the executory
contracts, but cure payments to be made in connection with the
assumption and assignment will be the Debtors' responsibility.
The Debtors will not sell accounts receivable to Purchaser.

If the closing does not occur by June 30, 2002, either party may
terminate the Asset Purchase Agreement.

Because the Asset Purchase Agreement was negotiated at arms
length and in good faith, and is subject to higher and better
offers, the Debtors are confident that this Court shall approve
the Motion.

VecTour, Inc., is a leading nationwide provider of ground
transportation for sightseeing, tour, transit, specialized
transportation, entertainers on tour, airport transportation and
charter services. The Company filed for chapter 11 protection on
October 16, 2001. David B. Stratton, Esq. and David M. Fournier,
Esq. at Pepper Hamilton LLP represent the Debtors in their
restructuring effort.


W.R. GRACE: Seeks Warren Smith's Appointment as Fee Auditor
-----------------------------------------------------------
In response to a direction by Judge Fitzgerald, W. R. Grace &
Co., and its debtor-affiliates ask the Court to approve their
selection of a fee auditor in these cases to aid the Court's
review of the fee applications filed in these chapter 11 cases
and to promote the Court's efficiency. Judge Fitzgerald noted at
a recent hearing that "there are so many professionals in all of
these [asbestos] cases that it's quite difficult to review the
[fee] applications."  Judge Fitzgerald stated she was reluctant
to appoint a fee auditor, but in order to provide fair service
to everyone she thought it necessary that the Debtors prepare an
application for such a position.

The Debtors therefore propose to employ Warren H. Smith &
Associates as the fee auditor.  Mr. Smith will monitor and
independently review the professionals' monthly, quarterly and
final fee applications.  Mr. Smith will provide a disinterested
means of identifying and reporting on problems with the fee
applications filed in these cases.  His reports will then enable
the professionals to prepare explanations or clarifications of
any potential problems with their fee applications prior to
scheduled fee application hearings.

In support of this Application, Mr. Smith, as the sole director
and shareholder of Warren H. Smith & Associates with offices in
Dallas, Texas, advises that he and his company are disinterested
parties, and that he is licensed to practice law in Texas.  Mr.
Smith discloses that, until October 1, 2001, he was employed by
Winstead Secrest & Minick and a predecessor firm, Donohoe,
Jameson & Carroll PC.  Winstead had a broad client list and may
have, at some time, represented, employed, or been employed by,
one or more of the potential applicants in these cases, the
Debtors, directors, or officers.  However, Mr. Smith is not
aware of any such employment, and does not presently have access
to Winstead's client or conflict databases.  If he discovers any
such representation, he will make a timely disclosure.

WHS will apply to the Court for approval of compensation.  Mr.
Smith, as the principal attorney designated to serve as fee
auditor, will charge $275 per hour.  The hourly rates for
paralegal services are $75 to $135.  These rates are subject to
periodic adjustment to reflect economic and other conditions.
Other attorneys and paralegals may render services in this
matter from time to time. (W.R. Grace Bankruptcy News, Issue No.
19; Bankruptcy Creditors' Service, Inc., 609/392-0900)


WARNACO GROUP: Mills Lease Decision Period Extended to May 6
------------------------------------------------------------
Mills Corporation and The Warnaco Group, Inc., and its debtor-
affiliates revise their previous stipulation to provide that:

  (1) The time to assume or reject the Leases is further extended
      through and including May 6, 2002 subject to the terms set
      in this Stipulation, without prejudice to the rights of the
      Debtors to seek further extensions or for Mills to object
      to same;

  (2) The Debtors shall provide Mills at least 30 days prior
      written notice of rejection for each of the Leases prior to
      the later of:

       (i) the date of the entry of the order approving each such
           rejection, and

      (ii) the rejection effective date(s) set forth in the order
           approving each such rejection;

  (3) The Debtors shall continue to perform obligations as
      lessee(s) pursuant to the terms of the Lease(s) through the
      term of this extension, i.e., through and including May 6,
      2002, and in the event that one or more of the stores
      subject to the Leases "go(es) dark" or otherwise operates
      in violation of the terms of the Lease(s) prior to May 6,
      2002, Mills may present an order to this Court (subject to
      the Debtors' objection) rejecting the Lease for the
      particular store that has "gone dark" in violation of the
      terms of the Lease, after providing five business days
      notice to:

          (i) Sidley Austin Brown & Wood LLP
              Attention: Kelley A. Cornish, Esq.
              counsel to the Debtors

         (ii) Weil, Gotshal & Manges LLP
              Attention: Brian S. Rosen, Esq.
              counsel to the Debtors' post-petition secured
              lenders,

        (iii) Shearman & Sterling
              Attention: James L. Garrity, Esq.
              counsel to the Debt Coordinators for the Debtors'
              pre-petition banks

         (iv) the Office of the United States Trustee
              Attention: Mary Tom, Esq.

          (v) Otterbourg, Steindler, Houston & Rosen, P.C.
              Attention: Scott L. Hazan, Esq.
              counsel to the Official Committee of Unsecured
              Creditors. (Warnaco Bankruptcy News, Issue No. 20;
              Bankruptcy Creditors' Service, Inc., 609/392-0900)


WILLCOX & GIBBS: Wants Plan Filing Period Stretched to July 2
-------------------------------------------------------------
Willcox & Gibbs, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend their
exclusive period during which to file a chapter 11 plan through
July 2, 2002 and extend their exclusive period to solicit
acceptances of that plan through August 20, 2002.

The Debtors say that their time had been consumed by the sale
preparations in connection to their various asset sales.  Since
the Petition Date, the Debtors have devoted a substantial amount
of time evaluating their business operations and exploring the
options available in order to emerge from these chapter 11
cases.  The Debtors believe that the requested extension of the
exclusive periods will provide them with the time needed to
properly evaluate their assets and estates, develop their
chapter 11 plan and solicit acceptances of such plan.

Objections to the Debtors' motion, if any, are due on March 7,
2002 and a hearing is currently scheduled for March 13, 2002.

Through the operations of six principal business units, Willcox
& Gibbs, Inc.'s business activities consist of the distribution
of certain replacement parts, supplies and ancillary equipment
to the apparel and other sewn products industry. The Company
filed for chapter 11 protection on August 6, 2001. Edwin J.
Harron, Esq. and Brendan Linehan Shannon, Esq. at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $36,393,000 in assets and
$29,994,000 in debts.


WILLIAMS COMPANIES: Fitch Concerned About Unit's Restructuring
--------------------------------------------------------------
The Williams Companies, Inc.'s (WMB) outstanding 'BBB' senior
unsecured notes and debentures and 'F2' commercial paper are
affirmed by Fitch Ratings. In addition, WMB's pipeline issuing
subsidiaries, Northwest Pipeline Corp., Texas Gas Transmission
Corp., and Transcontinental Gas Pipe Line Corp., are affirmed at
'BBB+'. The Rating Outlook is revised to Negative from Stable.

The revised Rating Outlook reflects the challenges WMB faces in
the coming months as it works to achieve its targeted year-end
2002 debt reduction plan. In addition to the more difficult and
volatile capital market environment currently plaguing the
energy sector, a near term concern is the recent announcement by
Williams Communications Group (WCG; 'CC' senior unsecured debt
rating, Rating Watch Negative by Fitch) that it has expanded the
scope of potential restructuring options to include a Chapter 11
reorganization. WMB currently maintains financial exposure to
WCG of approximately $2.2 billion consisting of a contingent
equity obligation under the $1.4 billion WCG Note Trust and the
guarantee of a $750 million synthetic lease. While these
obligations have already been factored into Fitch's rating
analysis, payment under these transactions could be accelerated
under a WCG bankruptcy scenario thus placing greater than
anticipated liquidity pressure on WMB in the near term.

WMB is in the process of renegotiating terms of the WCG Note
Trust transaction in a manner, which, if ultimately approved,
would extend payment of principal to the original maturity date
of March 15, 2004 even in the event of a WCG bankruptcy.
Similarly, Fitch believes that WMB would ultimately seek to
negotiate with lenders to extend payment terms of the $750
million lease in order to avoid immediate payment acceleration.
While Fitch believes that WMB currently maintains sufficient
financial flexibility to fulfill its WCG obligations if
necessary under a downside scenario, a favorable outcome of
these negotiations would enable WMB to avoid near term liquidity
pressures.

Since announcing its balance sheet enhancement program in
December 2001, WMB has taken initial steps to reduce debt and
shore up its liquidity position. Positively, WMB completed the
issuance of $1.1 billion of Feline PACs in January 2001 with
proceeds utilized primarily to repay short-term bank debt and
commercial paper. WMB's liquidity position is further augmented
by its ability to reduce corporate overhead expenses and
monetize high quality energy assets at fair market value via
Williams Energy Partners, L.P., WMB's publicly traded master
limited partnership affiliate. Moreover, WMB's underlying
business fundamentals remain sound with its core gas pipeline
and integrated energy service businesses continuing to generate
stable earnings and cash flow measures.

DebtTraders reports that Williams Communications Group Inc.'s
10.875% bonds due 2009 (WCG2) are trading between 13 and 15. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCG2for
real-time bond pricing.


Z-TEL TECHNOLOGIES: Dec. Balance Sheet Upside-Down by $67 Mill.
---------------------------------------------------------------
Z-Tel Technologies, Inc. (Nasdaq:ZTEL), a leading provider of
telecommunications services to residential and small business
customers, announced its fourth quarter and fiscal year 2001
financial results. For the three-month period ended December 31,
2001, the Company reported revenues of $59.1 million, compared
to $69.1 million for the same prior year period. The Company
narrowed its EBITDA loss to $3.9 million, compared to an EBITDA
loss of $24.4 million reported for the fourth quarter of 2000.
Net loss from operations for the fourth quarter of 2001 was $8.9
million compared to $26.4 million for the same prior year
period.

Revenues for 2001 were $275.9 million, compared to $177.7
million for 2000, representing an increase of 55%. Net loss
attributable to common stockholders for 2001 was $170.5 million
compared to $111.7 million for 2000. Net loss from operations
for 2001 was $146.1 million compared to $88.0 million for 2000.
Excluding nonrecurring, incremental charges related to asset
impairment of $59.3 million and bad debt expenses of $29.9
million, net loss from operations for 2001 totaled $56.9
million.

At December 31, 2001, the company's balance sheet that its
working capital deficit amounted to about $12 million, and its
shareholders' equity deficit totaled $67 million.

Gregg Smith, President and Chief Executive Officer, commented,
"2001 was a challenging year for Z-Tel, but we are pleased to
report that we consistently delivered significant operating
improvements during the course of the year, made possible by the
aggressive steps we took to reduce our cash burn rate and to
approach a neutral operating cash flow position. The underlying
drivers toward these ends were the enhancements we made to the
quality of our subscriber base. With 254,000 active residential
lines in service at the end of 2001, we believe that the
majority of our subscriber management challenges are now behind
us.

"Because of this increased level of confidence, we began
increasing our investment in sales and marketing initiatives
during the latter part of the fourth quarter. We have already
resumed a moderate rate of line and revenue growth, and we are
confident that we will continue to deliver meaningful revenue
and line growth during 2002, independent of any additional
benefits we may gain from other business initiatives or future
regulatory improvements."

Trey Davis, Chief Financial Officer, added, "Last year, we
reevaluated our business plan and took several critical steps
that strengthened our position within a very turbulent
telecommunications industry. Specifically, we enhanced the
quality of our assets, significantly reduced cash spending,
terminated thousands of poor-performing accounts and adopted
stricter subscriber management policies.

"Because of these steps, our EBITDA loss was significantly
reduced over the second half of 2001, and had it not been for
the increased investment in sales and marketing initiatives
during the latter part of the fourth quarter, our operating
improvement would have been even more pronounced."

Mr. Davis continued, "With these improvements already realized,
we believe that it is prudent and timely to begin increasing our
marketing investment once again in an effort to deliver value
added growth through our subscriber base and revenue stream.
Today, our typical customer generates average monthly revenue of
greater than $70 and has been a Z-Tel customer for almost a full
year. When one combines a mid 40% gross margin with these
dynamics, our subscriber economics become very compelling."

Mr. Davis remarked, "Adding to the positive momentum that we
created during the last half of 2001, we expect several recent
initiatives to further lower our operating costs, enhancing our
ability to devote additional resources to our future expansion
efforts. The most significant of these initiatives is the access
rate reduction in New York State that the New York Public
Service Commission passed in late January 2002, which becomes
effective March 1. Not only do we anticipate a significant
retroactive benefit, but we will also enjoy substantial and
immediate rate reductions for all of our active New York lines
in service. We anticipate these rate reductions, coupled with
the incremental growth we anticipate in our subscriber base, to
help us generate a positive EBITDA during the second quarter,
despite probable conservative increases in marketing
expenditures."

Mr. Smith added, "Now that we have largely completed the cost
reduction initiatives that we implemented during the second half
of last year, we plan to leverage the excess operational
capacities that exist within our Company. In addition, our
operating model continues to become more refined, which we
expect to help us internally fund our incremental growth into
the coming year. For instance, now that we have shown success on
the subscriber front, we are increasing our focus on support
cost segments, including reducing the average cost of providing
customer care and billing and collections activities. Already
this year, we have increased the overall quality of our
customers' experience, and we have reduced the financial
resources required to do so. Due to the nature of our business,
small percentage changes in our key subscriber metrics translate
into sizeable raw dollar improvements."

Mr. Smith concluded, "2001 was a year of change for Z-Tel, a
year dictated by cost reduction and repositioning. As we enter
2002, our focus has shifted to delivering consistent, profitable
growth in terms of our core business over the course of the new
year, even as we continue to invest in wholesale market
opportunities. We are pleased with the positive momentum that we
worked hard to create in 2001, and we are confident that it will
now serve as a basis for us to achieve our goals of generating
operating profitability and delivering value-added expansion for
our shareholders during 2002."

                          Guidance for 2002

The Company is offering the following guidance for the first
half of 2002. These forecasts are subject to risks and events
that could cause actual results to differ materially from
expectations.

Z-Tel Financial Guidance:

                   First Quarter 2002        Second Quarter 2002
                   ------------------        -------------------

Subscriber Lines     260,000 - 270,000         265,000 - 280,000

Revenue              $60 - $64 million         $62 - $66 million

Gross Margin         46% - 48%                 47% - 49%

EBITDA               $1 - $(3) million         $3 - $(1) million

Capital Expenditures $2 - $3 million           $2 - $3 million

Z-Tel was founded in the wake of the Telecommunications Act of
1996. With the establishment of the Unbundled Network Element-
Platform (UNE-P), competitive telecommunications companies
became able to provide telephone service to end-users over the
incumbent local telephone providers' network. Z-Tel was formed
around UNE-P with the vision of developing technology that would
imbue the home phone with "Intelligent Dial Tone," wherein home
phone service can be personalized to meet consumers' diverse
communications needs in an intelligent, intuitive way.

Z-Tel's flagship service, Z-LineHOMET, bundles local and long
distance phone service with unlimited member-to-member long
distance calling and Web-enhanced communications features, such
as Find Me, a multiple-number call forwarding feature. Z-Tel
currently offers Z-LineHOME service in 37 states, representing
over 65% of the nation's total residential phone market. For
more information about Z-Tel's innovative services or about Z-
Tel, please visit the Company's Web site at http://www.ztel.com


ZILOG INC: Files Chapter 11 with Prepackaged Plan in San Jose
-------------------------------------------------------------
ZiLOG,(R) Inc., the Extreme Connectivity(TM) Company, announced
that it received 100 percent approval from the required majority
of holders of its 9-1/2 percent Senior Secured Notes and of its
preferred stock to proceed with the Company's prepackaged
reorganization plan. ZiLOG Thursday filed a voluntary petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code
to gain final approval of the prepackaged plan. The filing was
made in the U.S. Bankruptcy Court in San Jose, California.
Because its voting noteholders and preferred shareholders
unanimously voted to accept the plan, ZiLOG expects to quickly
emerge from Chapter 11.

"Yesterday's legal filing is a significant step for ZiLOG," said
Jim Thorburn, ZiLOG's Chairman and Chief Executive Officer. "Our
undisputed bondholder support indicates that the debt to equity
exchange is the right step for ZiLOG and creates a capital
structure that will allow the Company to Focus on its core
business and grow."

With Thursday's filing, ZiLOG also filed a variety of "first-day
motions" that would allow the Company to conduct business as
usual with its customers, employees and suppliers and to
maintain its existing cash management systems.

The Chapter 11 filing includes only ZiLOG and its wholly owned
subsidiary, ZiLOG-MOD III, Inc. ZiLOG's non-U.S. subsidiaries,
including those in Europe and Asia, are not part of or impacted
by the filing.

Thursday's action follows an agreement in principle, announced
last November, with certain key holders of its 9 1/2 percent
Senior Secured Notes to support the Company's recapitalization
plan.

"ZiLOG has significantly improved its operational performance
over the last year and is now showing strong EBITDA results,"
Thorburn said. "And we have focused our business on innovative,
high value microcontroller, microprocessor and wireless
semiconductor products, shipping the first products in our new
eZ80 Webserver and our UltraSlim IrDA transceiver families."

Under the reorganization plan, the Company's unsecured
creditors, including its trade creditors, will be paid in full,
in the ordinary course of business. The Senior Noteholders will
receive stock in the reorganized Company in exchange for their
notes, and all existing debt and equity securities of the
Company will be cancelled.

The Offering Memorandum and Disclosure Statement, which was
approved by the noteholders and holders of the Company's
preferred stock, was filed with the Court Thursday and describes
the proposed distributions. Upon confirmation of the plan by the
court, a new capital structure will relieve the Company of $280
million in debt and the associated debt service cost allowing it
to focus the Company's resources to the growth of its business.
As part of the plan, ZiLOG will not make any further interest
payments on its Senior Notes, including the interest payment due
March 1, 2002.

The Company retained Skadden, Arps, Slate, Meagher & Flom LLP in
Los Angeles as its Chapter 11 counsel. Lazard Freres & Co., LLC
advised the Company in connection with negotiations with its
bondholders and the formulation of the plan.

ZiLOG, Inc. designs, manufactures and markets semiconductors for
the communications and embedded control markets, providing
leading connectivity, and consumer and industrial control
solutions. Headquartered in San Jose, Calif., ZiLOG employs
approximately 800 people worldwide. ZiLOG maintains design
centers in San Jose, Calif.; Ft. Worth, Texas; Nampa, Idaho;
Seattle, Wash.; and Bangalore, India; manufacturing in Nampa;
and test operations in Manila, Philippines.

ZiLOG is a registered trademark of ZiLOG, Inc. in the United
States and in other countries. All other product and or service
names mentioned herein may be trademarks of the companies with
which they are associated.


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

Amresco 9 7/8 '05                25 - 27(f)
AES 9 1/2 '09                    65 - 67
AMR 9 '12                        94 - 96
Asia Pulp & Paper 11 3/4 '05     21 - 24(f)
Bethlehem Steel 10 3/8 '03       12 - 14(f)
Chiquita 9 5/8 '04               86 - 87(f)
Enron 9 5/8 '03                  12 - 14(f)
Global Crossing 9 1/8 '04         3 - 4(f)
Level III 9 1/8 '04              39 - 41
Kmart 9 3/8 '06                  43 - 45(f)
McLeod 11 3/8 '09                22 - 24(f)
NWA 8.70 '07                     88 - 90
Owens Corning 7 1/2 '05          37 - 39(f)
Revlon 8 5/8 '08                 42 - 44
Trump AC 11 1/4 '06              67 - 69
USG 9 1/4 '01                    84 - 86(f)
Westpoint 7 3/4 '05              32 - 34
Xerox 5  1/4 '03                 90 - 92

                           *********


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

A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.

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

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

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

                           *********

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

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

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

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