TCR_Public/020531.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

              Friday, May 31, 2002, Vol. 6, No. 107     

                          Headlines

ADELPHIA COMMS: New Director Dr. Tow Wants to Stop the Show
ADELPHIA COMMS: Asks Dr. Tow to Detail Concrete Alternatives
ANC RENTAL: Court Allows Ops. Consolidation at Las Vegas Airport
ACME METALS: Seeks to Extend Credit Facility through August 31
ACTERNA CORP: March 31 Balance Sheet Upside-Down by $437 Million

AMERICAN COMMERCIAL: Danielson Holding Closes Asset Acquisition
AMSCAN HOLDINGS: S&P Puts B+ Corp. Credit Rating on Watch Dev't
ARCH WIRELESS: Joint Reorg. Plan Declared Effective May 29, 2002
BLUEGREEN: S&P Concerned About High Debt Level & Risk Exposure
BURLINGTON: Court Approves Asset Purchase Agreement with Springs

CELESTRON: Commences Liquidation with Assets Assigned to Trustee
CELL-LOC INC: Working Capital Deficit Reaches $4.6 Million
CHELL GROUP: NTN Unit Launches iTrivia with Bell ExpressVu
CHOICE ONE: S&P Further Junks Corp. Credit Rating Down 2 Notches
COASTAL BANCORP: Fitch Affirms Low-B & Junk Ratings

COLUMBIA HOUSE: S&P Assigns B+ Rating to $175M Credit Facilities
COVANTA ENERGY: Look for Schedules and Statements on June 14
DAIRY MART: Asks Court to Stretch Exclusivity through August 3
DIVA SYSTEMS CORPORATION: Voluntary Chapter 11 Case Summary
DYNASTY COMPONENTS: Gets CCAA Protection Extension Until June 28

EEX CORP: Inks New $250M Credit Agreement Expiring in March 2003
ENRON CORP: Proposes Uniform Storage Capacity Release Protocol
ENRON CORP: Enron Capital Wants to Enter Loan with Spanish Unit
ESNI INC.: Files Chapter 11 and Will Pursue Claims Against CRC
EXIDE TECHNOLOGIES: Court OKs JA&A Services as Crisis Managers

FEDERAL-MOGUL: Wins Nod to Assume Employment & Severance Pacts
FLAG TELECOM: Taps Brunswick Group as Communications Consultant
FOOT LOCKER: Moody's Ups Low-B Ratings over Improved Financials
GEOWORKS CORP: Expects Auditors to Raise Going Concern Doubt
GLADSTONE CAPITAL: Says S&P's Report of Bankruptcy is "False"

GLENOIT CORPORATION: Seeks Nod to Implement Severance Program
GLOBAL CROSSING: Committee Taps Cox Hallett as Bermuda Counsel
HA-LO INDUSTRIES: Seeks DIP Financing Extension through July 31
HELLER EQUIPMENT: Fitch Lowers 4 Receivable-Backed Notes Classes
IT GROUP: Court Allows Debtor to Reject 23 Nonresidential Leases

INTEGRATED HEALTH: Seeks Okay of American Appraisal Engagement
KMART: Bluelight.com Intends to Reject Totality Services Pact
LERNOUT & HAUSPIE: Court Approves Holdings' Disclosure Statement
MDC CORP: S&P Revises BB- Credit Rating Outlook to Negative
N2H2 INC: Adopts Rights Plan to Protect Shareholders' Interests

NATIONAL STEEL: Intends to Implement Key Employee Retention Plan
NATIONSRENT: Retains Exclusive Right to File Plan Until Aug. 16
NORTEL NETWORKS: Mulls-Over Actions to Strengthen Balance Sheet
O.D. HOPKINS: Will Auction-Off Concord Facility on Tuesday
OMNA MEDICAL: Confirmation Hearing in Delaware on June 27

OWENS CORNING: Asks Court to Appoint WH Smith as Fee Auditor
PILLOWTEX CORP: Citicapital Will Hold a $1.5MM Unsecured Claim
PILLOWTEX CORP: Emerges From Chapter 11 Bankruptcy Protection
POLAROID CORP: Shareholder's Pitch for Equity Panel Under Fire
POLAROID CORP: Asset Sale Hearing Going Forward June 28, 2002

PSINET INC: Court Okays Special Beneficial Owners' Ballot Form
SAFETY-KLEEN CORP: Obtains Fifth Exclusive Period Extension  
SIERRA PACIFIC: Deferred Ruling Has Less Impact on S&P's Ratings
SILICON GRAPHICS: S&P Affirms CCC- Corporate Credit Rating
SONO-TEK CORP: Fourth Quarter Net Sales Narrows to $768K

SPIEGEL GROUP: Closes Deals With MBIA & OCC Re Unit's Securities
TELIGENT: Files Joint Liquidating Plan and Disclosure Statement
TRAILMOBILE CANADA: March Working Capital Deficit Reaches $14MM
TRUSERV: Reports Improved First Quarter 2002 Financial Results
UNITED REFINING: S&P Affirms B- Corporate Credit Rating

W.R. GRACE: Property Claimants Intends to Appeal Bar Date Order
WAVEPOINT: Will File for BIA Protection as Fundraising Backfires
WESTAFF INC: Closes New Five-Year $65 Million Credit Facilities
WHEELING-PITTSBURGH: Court Approves Exclusive Period Extensions
YORK RESEARCH: Expects to File for Bankruptcy Protection Soon

*BOOK REVIEW: The Oil Business in Latin America: The Early Years

                          *********

ADELPHIA COMMS: New Director Dr. Tow Wants to Stop the Show
-----------------------------------------------------------
One minute after the markets closed yesterday, Dennis J. Block,
Esq., at Cadwalader, Wickersham & Taft, delivered a copy of a
letter to Adelphia Communications from Director Leonard Tow to
the Securities and Exchange Commission saying:

                           LEONARD TOW
                     160 LANTERN RIDGE ROAD
                      NEW CANAAN, CT 06840  

May 30, 2002

Mr. Erland E. Kailbourne
Chairman and Interim CEO
Adelphia Communications
One North Main Street   
Coudersport, PA  16915  

Dear Mr. Kailbourne,  

It has come to our attention that certain negotiations are being
conducted to quickly sell Adelphia's most valuable cable
properties. While we have asked for a full and candid briefing
on where Adelphia stands with respect to sale transactions and
not withstanding the formality of Saturday's meeting, it appears
our request remains unfulfilled. It is now our understanding
that the discussions are at an advanced stage with internal
Adelphia directions to complete such a transaction by Friday
evening. Such a sale would strip the company of its ability to
conduct an orderly and profitable disposition of the remainder
of the company's cable assets when and if it is necessary.

Additionally, it is not clear that such a transaction would be
deleveraging and may adversely affect free cash flow. Because of
the complexities of Adelphia's financial structure, sales of
assets without careful planning as to the availability of
proceeds could have an unfair impact on creditors.  The
restrictions on flows of disposition proceeds may in fact
structurally subordinate senior lenders. The consequences of
such an action could be devastating to Adelphia's future.

As directors who are knowledgeable and deeply experienced in the
business of cable television operations and transfers, we
strongly object to such a sale agreement at this time. It is
incumbent on members of this board to bring such a prospective
sale before the board of directors in advance of entering into
such an agreement.  

Because of our fine relationship with the lending community as
well as the financial institutions who have invested at the
equity level, we are highly confident that we are able to bring
about a revitalization of Adelphia's financial standing. This
would only be possible if no attempt is made at this crucial
time to remove from the company its most valuable assets in an
atmosphere of desperation.

Once we are given the opportunity to restore Adelphia to a firm
financial footing there will be ample time to carefully,
judiciously and with sound business judgment consider the
variety of opportunities which would restore to the creditors
and shareholders of Adelphia the true value of their investment.

To add further experience and reputation to this board and its
ability to wisely conduct business, we ask that Adelphia's
contractual agreement to appoint Rudy Graf to this board be
honored at this time.  The shareholders are entitled to have his
wisdom and knowledge brought to serve on this board immediately.

We look forward to our board meeting scheduled for Saturday,
June 1 when we can systematically and intelligently proceed for
the benefit of Adelphia's investors, employees and lenders and
restore the public confidence such that Adelphia can go forward
in capable and honorable hands.

Sincerely,

/s/ Leonard Tow

Leonard Tow

Cc:  Adelphia Board Members


ADELPHIA COMMS: Asks Dr. Tow to Detail Concrete Alternatives
------------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAE) responded in
short order to new Director Dr. Leonard Tow's letter, saying:  

May 30, 2002

Leonard Tow
160 Lantern Ridge Road
New Canaan, CT 06840

Dear Dr. Tow:

I was, as I am sure you realize, surprised to receive your
letter of earlier today.  We have told you that we would brief
you on the asset sale proposals in detail at the Board meeting
Saturday.  We have also explained the general goals and progress
to you orally.  Your letter is the first suggestion that you
felt you needed more detail before Saturday.

Your letter is also the first indication that you object to the
company's need to address its liquidity issues through asset
sales -- proposed asset sales that I thought you fully agreed
were essential to the company's survival.  We have asked you for
any concrete proposal you have as to how to restructure the
company's debt.  While I did not intend to press you for any
specific plan you might have until Saturday, in light of your
objection to the planned asset sales I would ask you to provide
me in as much detail as you are now able, what specific,
concrete alternative or alternatives you propose. You will, I
know, understand that general ideas without concrete details as
to how they will be implemented are of little use at this time.

Les Gelber has shared with me your proposal that you be elected
Chairman of the company.  I certainly hope that your letter is,
and your participation as a member of the Board, will be
directed towards what will benefit all of the company's
shareholders and not in pursuit of a separate agenda.

Incidentally, you earlier asked and were specifically told that
no transaction would be completed internally or otherwise before
the Board meeting.  I cannot understand what purpose you believe
is served by including a knowingly false statement in a letter
-- particularly a letter that I understand you released to the
press contemporaneously with faxing it to me.

Sincerely,

Erland E. Kailbourne


ANC RENTAL: Court Allows Ops. Consolidation at Las Vegas Airport
----------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates obtained Court
approval to assume and assign the National Concession Agreement
and the National Lease to ANC.  This allowed ANC to consolidate
its operations under the National and Alamo tradenames at the
McCarran/Las Vegas Airport and secure significant cost savings
at the existing Alamo facility while at the same time improving
service to its customers.

In addition, the Debtors have agreed to enter into a Settlement
with the National and Clark County in Nevada. The assumption
and assignment of the agreement is foreseen to result in savings
to the Debtors of over $1,500,000 per year in fixed facility
costs and other operational cost savings. (ANC Rental Bankruptcy
News, Issue No. 13; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


ACME METALS: Seeks to Extend Credit Facility through August 31
--------------------------------------------------------------
Acme Metals Incorporated and its debtor-affiliates seek court
approval to extend their existing post-petition credit facility
with BankAmerica Business Credit, Inc.  BankAmerica serves as
agent for a syndicate of lenders, for the exclusive purpose of
securing Acme Debtors' reimbursement obligations for an
outstanding $1 million Letter of Credit issued under the
Existing Facility beyond the current expiration date of the
Existing Facility, which is May 31, 2002.

The Debtors relate to the U.S. Bankruptcy Court for the District
of Delaware that they wish to amend the Existing Facility and to
extend its terms until the earliest of:

     i) August 31, 2002,

    ii) the date that all letters of Credit which are
        outstanding on May 31, 2002 are returned to Bank of
        America and cancelled, and

   iii) the date no Letter of Credit are outstanding and all
        obligations have been paid.

Bank of America has agreed to reduce its non-refundable monthly
amendment/extension fee from $10,000 to $7,500 for each month.
The maximum revolver amount under the Existing Facility will
remain at $1,500,000.

If the Existing Facility is not extended, the Acme Debtors will
be required to obtain L/C backing from another financing
institution -- on less favorable terms than those offered under
the Existing Facility.

The Debtors assure the Court that the terms of the Existing
Facility and the amendment were negotiated at arm's-length and
in good faith with Bank of America.

Acme Metals, together with its debtor-affiliates, filed for
chapter 11 bankruptcy protection on September 28, 1998. Brendan
Linehan Shannon, Esq. and James L. Patton, Esq. at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the company filed for protection
from its creditors, it listed assets of $813 million and
liabilities of $541 million.


ACTERNA CORP: March 31 Balance Sheet Upside-Down by $437 Million
----------------------------------------------------------------
Acterna Corporation (Nasdaq:ACTR), the world's second largest
provider of communications test and management solutions, and
the parent company of Itronix Corporation, AIRSHOW and da Vinci
Systems, reported its results for the fourth quarter of fiscal
2002, ended March 31, 2002.

Net sales for the fourth quarter of fiscal 2002 were $212
million, down 46 percent from the same period last year and 15
percent sequentially. Net sales were down 43 percent from $371
million on a pro forma basis (which adjusts for acquisitions and
dispositions) for the same period last year and down 13 percent
sequentially on a pro forma basis. Net sales of communications
test products were $147 million, which compared to $299 million
a year earlier and $187 million in the third quarter of fiscal
year 2002.

Orders were $175 million in the fourth quarter, which, on a pro
forma basis, were down 22 percent sequentially and down 59
percent from the prior year. Communications test product orders
were $122 million, down 28 percent from the previous quarter,
and down 66 percent from the prior year. As indicated on the
last earnings call, the communications test orders include $28
million of de-bookings primarily related to orders originally
booked in the fourth quarter of fiscal 2001. Adjusting for the
de-bookings, communications test product orders were down 11
percent sequentially and 58 percent year over year.

For the fourth quarter of fiscal 2002, the company reported a
net loss of $147 million, which includes charges of $174 million
and a recorded tax benefit of $80 million. The charges include:
a $151 million impairment charge associated with intangible
assets in the communications test segment, a restructuring
charge of $17 million primarily related to severance, and a
charge for purchase commitments related to suppliers of $6
million. The income statement also reflects a tax benefit of $80
million, the majority of which resulted from the U.S. tax law
change in March. For the same period a year ago, the company
reported a net loss of $21 million.

Pro forma loss from operations (earnings (loss) before interest,
taxes, amortization and special charges) after integration
expenses was a loss of $24 million for the fourth quarter. Cash
loss per share in the fourth quarter excluding the benefit of
the tax adjustment was $0.24, which compared to cash earnings
per share of $0.11 in the prior year on a comparable basis.
Gross margin for the fourth quarter was 49 percent, versus 60
percent for the year ago quarter on a pro forma basis. The gross
margin was impacted by the $6 million purchase commitment charge
described above. Excluding that charge, the gross margin would
have been approximately 51 percent for the quarter.

As of March 31, 2002, the company had total debt of $1.1 billion
and liquidity of $138 million, comprised of $43 million of cash
and unused borrowing capacity of $95 million under its $175
million revolving credit facility. In addition to the $138
million of liquidity, as a result of the previously mentioned
new U.S. tax legislation that allows a company to carry losses
back five years instead of two years, the company received a $61
million tax refund in May.

At March 31, 2002, the company's balance sheet shows a total
shareholders' equity deficit of close to $437 million.

     Expanded Cost-Cutting Initiative and Other Actions

The company also announced it would expand its cost-cutting
efforts to include a workforce reduction of about 8 percent or
approximately 400 jobs worldwide. Acterna will also further
consolidate some of its locations and reduce its spending on its
ERP integration project. The company expects to realize
approximately $75 million in savings as a result of these cost-
cutting programs and will take a restructuring charge of
approximately $17 million related to these actions.

In addition, Acterna has announced the sale of its product line
for testing cellular phones to Willtek Communications Holding
GmbH, for an undisclosed amount. Acterna will continue to be a
distributor of these products under the terms of the new
agreement. The company's focus in wireless remains on providing
manufacturers and operators with systems for load testing of 2.5
and 3G network elements, wireless monitoring and quality of
service testing, and portable units for wireless coverage area
testing.

Upon completion of the actions announced today, Acterna will
have reduced its headcount to approximately 4,100, a 36 percent
reduction since the beginning of fiscal 2002. Headcount for the
company at the end of fiscal 2002 was approximately 5000, down
from approximately 6400 at the beginning of the year.

"Given the continued weakness in the technology sector and
recent announcements of additional capital expenditure
reductions by many of our communications test customers, we are
taking further steps to reduce our cost structure and improve
our operating results," said Ned C. Lautenbach, chairman and
CEO.

                    Fiscal Year Results

For the full fiscal year 2002, Acterna Corporation reported net
sales of $1,133 million, down 17 percent compared to the prior
year. Fiscal year 2002 pro forma net sales of $1,097 million are
down 21 percent from a year ago on a comparable basis. For
fiscal year 2002, the reported net loss was $375 million, as
compared to a net loss of $172 million for fiscal year 2001.
Fiscal year 2002 pro forma profit from operations was $12
million, compared to a profit of $167 million last year on a
comparable basis. Pro forma cash loss per share for fiscal year
2002 was $0.12, which compared to pro forma cash profit of $0.34
per share for the prior year.

                    First Quarter Fiscal Year 2003
                      Quarter Management Outlook

Management guidance for revenue for its fiscal year 2003 first
quarter ending June 30 is $185 - $190 million. The company
expects pro forma cash EPS for its first quarter of $(0.20)-
$(0.22). With the implementation of the latest cost reductions,
the company expects to achieve a cost structure after the
restructurings are complete that would result in breakeven EBITA
performance at approximately $190 million of quarterly sales.

"We continue to have limited visibility in our communications
test business as a result of the industry's prolonged downturn,"
said John Peeler, president of Acterna Corporation and head of
the company's Acterna unit. "However, we remain well positioned
to resume growth when the industry rebounds. We have an
excellent product and services portfolio, a strong penetration
among the world's largest communications companies, an enviable
R&D track record, and a very productive global sales force."

Based in Germantown, Maryland, Acterna Corporation (NASDAQ:ACTR)
is the holding company for Acterna, AIRSHOW, da Vinci Systems
and Itronix. Acterna is the world's second largest
communications test and management company. The company offers
instruments, systems, software and services used by service
providers, equipment manufacturers and enterprise users to test
and optimize performance of their optical transport, access,
cable, data/IP and wireless networks and services. AIRSHOW
supplies in-flight passenger information systems to the aviation
industry while da Vinci Systems designs and markets video color
correction systems to the video postproduction industry. Itronix
sells ruggedized computing devices for field service
applications to a range of industries. Additional information on
Acterna is available at http://www.acterna.com  

Acterna Corp.'s 9.750% bonds due 2008 (ACTR08USR1), DebtTraders
says, are quoted at a price of 22. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACTR08USR1
for real-time bond pricing.


AMERICAN COMMERCIAL: Danielson Holding Closes Asset Acquisition
---------------------------------------------------------------
American Commercial Lines LLC (ACL) and Danielson Holding
Corporation (Amex: DHC) announced the completion of the
acquisition of ACL by Danielson.

Danielson's President and Chief Operating Officer, David M.
Barse, said, "We are extremely excited about successfully
completing the ACL acquisition and related restructuring.  This
acquisition resulted from a great deal of effort examining
numerous potential deals and patience in the process.  We look
forward to working with ACL's strong management team to continue
growing their business."

ACL's President and Chief Executive Officer, Michael C. Hagan,
said, "We believe this restructuring will position our company
for future growth and will benefit our customers, employees,
noteholders and vendors.  In addition, as a wholly-owned
subsidiary of Danielson, we believe we will have better access
to capital markets should the right opportunity present itself."

In connection with the transactions, ACL has completed its
exchange offer for its 10-1/4% Senior Notes due June 30, 2008.  
As previously announced, $284.5 million, or approximately 96.4%,
of the Existing Senior Notes were tendered in the exchange
offer.  Holders of Existing Senior Notes who tendered their
Existing Senior Notes pursuant to the exchange offer received
approximately $134.7 million aggregate principal amount of 11-
1/4% Senior Notes due January 1, 2008 and approximately $112.9
million aggregate principal amount of 12% pay-in-kind Senior
Subordinated Notes due July 1, 2008.  $10.5 million of the
Existing Senior Notes will remain outstanding.  In addition,
ACL's existing senior credit facility was amended and restated
to, among other things, reduce term loans thereunder by
$25 million, resulting in outstanding debt under the senior
credit facility of approximately $372 million.

Also, in connection with these transactions, Danielson has
successfully completed its previously announced rights offering.  
The rights offering closed today and raised gross proceeds
before expenses of approximately $43.5 million, with 8,705,219
shares of common stock being issued at an exercise price of
$5.00 per share.  Danielson contributed $25.0 million, which was
used to reduce borrowings under ACL's senior credit facility as
described above, and approximately $58.5 million of Existing
Senior Notes to ACL Holdings in connection with the
transactions.

American Commercial Lines LLC is an integrated marine
transportation and service company operating approximately 5,100
barges and 200 towboats on the inland waterways of North and
South America.  ACL transports more than 70 million tons of
freight annually.  Additionally, ACL operates marine
construction, repair and service facilities and river terminals.

Danielson Holding Corporation is an American Stock Exchange
listed company, engaging in the financial services and specialty
insurance business through its subsidiaries.  Danielson's
charter contains restrictions which prohibit parties from
acquiring 5% or more of Danielson's common stock without its
prior consent.


AMSCAN HOLDINGS: S&P Puts B+ Corp. Credit Rating on Watch Dev't
---------------------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
rating for decorative party-goods maker Amscan Holdings Inc. on
CreditWatch with developing implications. The CreditWatch
placement followed Amscan's announcement that it is reviewing
options to effect a recapitalization of the company.

Developing implications mean that the ratings on Elmsford, New
York-based Amscan could be raised, lowered, or affirmed,
depending on Standard & Poor's evaluation of the impact on
credit quality when a transaction or strategic plan is
announced. Total debt outstanding was about $300 million as of
March 31, 2002.

"Amscan is considering several alternatives, including a new
bank facility, an initial public offering or a private sale of
equity or debt securities. At the same time, Amscan is exploring
strategic alternatives to enhance stockholder value, including
asset purchases, sales, and other acquisition or disposition
transactions," said Standard & Poor's credit analyst Jean Stout.

Amscan participates in the fragmented and highly competitive
party-goods industry. The company also serves the home, baby,
and wedding products markets.


ARCH WIRELESS: Joint Reorg. Plan Declared Effective May 29, 2002
----------------------------------------------------------------
Arch Wireless, Inc. one of the leading two-way wireless
messaging and mobile information providers in the United States,
and its subsidiaries announced that their First Amended Joint
Plan of Reorganization, which was confirmed by the United States
Bankruptcy Court, District of Massachusetts, Western Division on
May 15, 2002, became effective Wednesday, May 29, 2002, thereby
marking their formal emergence from Chapter 11.

Under terms of the Joint Plan, Arch Wireless, Inc. is issuing 20
million shares of new common stock and Arch Wireless Holdings,
Inc., is issuing two new issues of notes:  (1) $200 million
principal amount of 10% Senior Subordinated Secured Notes due
2007; and (2) $100 million principal amount of 12% Subordinated
Secured Compounding Notes due 2009.  The new shares and notes
are being issued in full satisfaction, release, discharge and
cancellation of all claims against AWI and its subsidiaries
based on transactions or occurrences prior to December 6, 2001,
and all equity securities of AWI, including common stock (OTC
Bulletin Board: ARCHQ) and preferred stock, and all options and
other rights to acquire AWI securities, that were outstanding as
of the Effective Date of the Joint Plan, are canceled.

Shares of new Arch common stock are eligible to begin trading
tomorrow, May 30, under the ticker symbol "AWIN" with CUSIP
number 039392-60-0.  AWHI's 10% Senior Subordinated Secured
Notes due 2007 will trade in the over-the- counter market with
the CUSIP number 039392-AA-3, and AWHI's 12% Subordinated
Secured Compounding Notes due 2009 will trade in the over-the-
counter market with the CUSIP number 039392-AB-1.

"While it has been a difficult process for all of our
stakeholders, we are very pleased to complete our
reorganization," said C. Edward Baker, Jr., chairman and chief
executive officer.  "I would like to extend my appreciation once
again to Arch's customers and employees, whose support helped us
complete this restructuring process quickly and successfully.  
We look forward to solidifying our leadership position in
traditional paging and two-way wireless messaging."

Lyndon R. Daniels, president and chief operating officer, added:
"Numerous operating efficiencies implemented during the
reorganization will allow us to compete more effectively going
forward in markets throughout the United States.  Our successful
reorganization also allows us to renew our focus on providing
the best possible service to our customers."

Arch Wireless, Inc., headquartered in Westborough,
Massachusetts, is a leading two-way wireless messaging and
mobile information company with operations throughout the United
States.  The company offers a full range of wireless messaging
services to business and consumers nationwide, including paging,
wireless e-mail and messaging and mobile data solutions for the
enterprise. Arch provides wireless services to customers in all
50 states, the District of Columbia, Puerto Rico, Canada, Mexico
and in the Caribbean principally through its nationwide sales
force, as well as through resellers, retailers and other
strategic partners.  Additional information on Arch Wireless is
available on the Internet at http://www.arch.com

DebtTraders reports that Arch Communications Inc.'s 13.75% bonds
due 2008 (ARCH08USR1), with Arch Wireless Inc. as underlying
issuer, are quoted at 0. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=ARCH08USR1


BLUEGREEN: S&P Concerned About High Debt Level & Risk Exposure
--------------------------------------------------------------
Standard & Poor's affirmed its single-'B' corporate credit
rating on Bluegreen Corp. and removed it from CreditWatch, where
it was placed on September 21, 2001.

At the same time, Standard & Poor's affirmed all other ratings
on the Boca Raton, Florida-based company. The outlook is stable.
Bluegreen develops, markets, and sells timeshare interests in 12
resorts, and develops and markets residential homesites.

"The rating reflects the company's high debt level, its reliance
on capital market appetite for receivable sales, exposure to
timeshare and residential real estate development risk, and the
high level of competition in the timeshare industry," said
Standard & Poor's analyst Stella Kapur. These factors are
partially offset by the company's focus on drive-to vacation
destinations and its experienced management team.

Bluegreen's timeshare sales were not materially affected by
reduced travel following the September 11 terrorist attacks due
to its portfolio of primarily drive-to destination timeshares.
However, marketing expenses did increase. Total revenue growth
has remained positive despite a slowing economy and decreased
travel, with 8% growth in its first three quarters ended
December 2001, compared with the same period in 2000. The
company benefited from higher timeshare and homesite prices, the
introduction of its Big Cedar Wilderness Club, and lower
operating costs due to the closing of two sales offices and cost
control efforts. Although demand for timeshare products has been
relatively healthy during the past several years, the
competitive landscape has become more intense because of
continued development by major hospitality companies.

The stable outlook is based on expectations that the company
will continue to maintain its sales levels and that the company
will be able to access the securitization markets.


BURLINGTON: Court Approves Asset Purchase Agreement with Springs
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved the Asset Purchase Agreement dated April 11, 2002
between Burlington Industries, Inc. and Springs Industries Inc.
This agreement provides that the Debtors sell the assets free
and clear of all property interests and assume certain contracts
and assign them to Springs.

The significant terms of the Asset Purchase Agreement are:

   -- Purchase Price. The Purchase Price of $25,000,000 is
      subject to certain reductions and post-closing adjustments
      for, among other things, the value of the Inventory and
      Receivables, in accordance to certain procedures of the
      Asset Purchase Agreement. The Purchase Price will be paid
      to the Debtors at Closing by wire transfer.

   -- The Assets. At Closing, the Debtors agree to sell,
      transfer and convey to the Buyer the Assets including,
      among other things:

      (a) the Debtors Assets;

      (b) the Burlmex Assets; and

      (c) certain other intellectual property, contracts,
          permits, inventory and accounts receivable relating to
          the Window Treatment and Bedding Business.

   -- Assumed Executory Contracts and Leases. At Closing, the
      Debtors agree to assume and assign to the Buyer all of
      Their rights, title and interests in the executory
      contracts relating to the Window Treatment and Bedding
      Business.  To the extent any of the Executory Contracts
      Require payment of monies to cure any default or breach,
      the Debtors will be responsible for such payments.

   -- Additional Transactions. The Debtors and the Buyer agree
      to enter into several related agreements such as:

     (a) an agreement under which the Debtors license certain
         intellectual property relating to the Window Treatment
         and Bedding Business to the Buyer;

     (b) an agreement under which the Debtors operate certain
         domestic manufacturing facilities in connection
         with the Window Treatment and Bedding Business for the
         benefit of the Buyer at the Buyer's expense for a
         period of up to 12 months following the Closing;

     (c) an agreement under which the Debtors agree to provide
         certain informational services in connection with the
         Window Treatment and Bedding Business for the benefit
         of the Buyer following the Closing;

     (d) an agreement under which the Debtors agree to make
         available for purchase by the Buyer certain fabrics
         used in connection with the Window Treatment and
         Bedding Business; and

     (e) a noncompetition agreement under which the Debtors
         will be restricted from competing with the Buyer in
         connection with the Window Treatment and Bedding
         Business. (Burlington Bankruptcy News, Issue No. 13;
         Bankruptcy Creditors' Service, Inc., 609/392-0900)   

Burlington Industries' 7.25% bonds due 2005 (BRLG05USR1),
DebtTraders says, are trading at about 16. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1
for real-time bond pricing.


CELESTRON: Commences Liquidation with Assets Assigned to Trustee
----------------------------------------------------------------
Meade Instruments Corp. (Nasdaq:MEAD) confirmed that it had
recently explored the feasibility of acquiring certain of the
assets of Tasco Worldwide, Inc., a distributor of telescopes,
recreational binoculars, and rifle/pistol scopes, and Celestron
International, Inc., a manufacturer and distributor of
telescopes and binoculars. No agreement was reached with either
Tasco or Celestron and negotiations ceased several weeks ago.

The Company cooperated with the Federal Trade Commission in its
inquiry into Meade's interest in acquiring all or some of the
assets of Celestron. Wednesday, the FTC authorized its staff to
seek a court order prohibiting the Company from acquiring any
stock or assets of Celestron should Meade renew its interest in
making such an acquisition. The FTC took no similar action with
respect to Tasco.

It is reported that Tasco and Celestron have initiated
liquidation proceedings pursuant to which their respective
assets have been assigned to a trustee. Such an assignment for
the benefit of creditors can serve as an alternative to a
voluntary Chapter 7 petition for bankruptcy.

The Company remains interested in acquiring certain of the
assets of Tasco, but has entered into no agreement to do so.

Meade is a leading designer and manufacturer of optical products
including telescopes and accessories for the beginning to
serious amateur astronomer. Meade also offers a complete line of
binoculars that address the needs of everyone from the casual
viewer to the serious sporting or birding observer. The Company
distributes its products worldwide through a network of
specialty retailers, mass merchandisers and foreign
distributors. Additional information is available at
http://www.meade.com


CELL-LOC INC: Working Capital Deficit Reaches $4.6 Million
----------------------------------------------------------
Cell-Loc Inc. (TSX: CLQ) reported its financial results for the
third quarter ended March 31, 2002. The net loss for the quarter
was $2.1 million compared to $18.4 million for the same period
last year.

"Effective June 1, 2002, Cell-Loc will hand-off its commercial
Calgary Cellocate Beacon(TM) Network to IQ2 Communications,"
said Dr. Michel Fattouche, President & CEO, Cell-Loc Inc.
"Concurrently with Cell-Loc's final testing, IQ2 is completing
its testing, and upon completion we are confident that IQ2 will
make a declaration of the contractual obligation being met by
Cell-Loc, and will commence offering location-based services
through TimesThree Calgary."

                      Corporate Highlights

                  $40 Million Line of Equity

On May 16, 2002, the Company announced that it had received
final receipts from the Alberta and Ontario securities
commissions and closed its prospectus offering of subscription
shares and commitment warrants under an equity line of credit
for proceeds of up to $40 million (US). The Company has not yet
drawn on this equity line of credit.

                  Joint Venture Agreement

On December 5, 2001, the Company entered into joint venture
agreement to license and manufacture Cell-Loc's proprietary
Cellocate(TM) CDMA technology in China. The joint venture
entity, Cell-Loc (Chongqing) Wireless Location Inc will hold the
license from Cell-Loc for exclusive use in China, including Hong
Kong and Macau. Cell-Loc will hold a 35 percent ownership in the
joint venture. The other joint venture partners are A-INFO
Electronic Technology Group Inc. (12 percent ownership) and
Chongqing Jinmei Communications Co. Ltd. (53 percent ownership).
In addition to the partnership interest, Cell-Loc will have the
right to purchase Cellocate(TM) CDMA equipment manufactured by
the joint venture under advantageous terms for sale and use
worldwide and will also retain the rights to its technology
outside of China, including any improvements achieved by the
joint venture.

               Board and Executive Appointments

Mr. Sergio Leite was appointed to the Cell-Loc board of
directors on March 27, 2002. Mr. Leite is the President of PST
Industria Electronica da Amazonia Ltda., Cell-Loc's Cellocate
BeaconT manufacturing partner. Mr. Leite has over 15 years of
experience in the consumer electronics market and the car and
truck manufacturing industry.

                       Private Placement

In April 2002, the Company completed a private placement of
290,000 units with Halidon Investing Inc., a private company of
which Mr. Leite holds the position of President. This placement
resulted in net proceeds of approximately $565,500.

           Interim Management Discussion & Analysis

During the quarter ended March 31, 2002 the Company incurred a
loss of $2.05 million. The loss is a substantial decrease from
the $18.3 million loss for the same period last year, which
included $14.4 million of restructuring charges. The improved
performance can be attributed to a commitment to commercialize
our product, the continued focus on core competencies and
limiting capital and discretionary expenditures. The company
used $1.5 million for operations this quarter, which is a 28
percent decrease from the $2.1 million for the quarter ended
December 2001 and a 75 percent decrease from the same quarter
last year. Network and capital expenditures for the quarter
increased to $134,000 from $6,000 last quarter and $1.5 million
for the quarter ended March 2001.

                         Deferred Revenue

In March 2002, the Company received $800,000 which has been
recorded as deferred revenue from the license agreement with IQ2
Communications Corp., for exercising its option to acquire from
Cell-Loc the sole rights to Cell-Loc's intellectual property for
use in the Austin, Texas geographic market, subject to an
agreement between the parties dated October 5, 2001.

                            Advances

In February 2002, the Company received $238,000 from Jinn-Mei.
This payment covered equipment provided by Cell-Loc to Cell-Loc
(Chongqing) as well as general and administrative costs incurred
by the company on behalf of the joint venture.

                           Operations

Operation expenses decreased 9 percent to $579,000 from the
previous quarter and from $1.639 million for the same quarter
last year. The reduction of costs can be largely attributed to
an amendment in the length of the term of some US tower lease
contracts. The lease terms have been adjusted and reflected in
the commitment note in the financial statements. Cost savings
continue to be realized through consolidation of the number of
inventory storage facilities.

               Marketing and Business Development

Expenses for marketing and business development for the quarter
ended March 2002 were $54,000. This number has decreased
substantially from $134,000 for last quarter and decreased 80
percent from the same period last year. The reductions this
quarter were realized as a result of the restructuring program
undertaken in September 2001 and a continued focus on reducing
travel and related expenses.

                   General and Administration

A reduction to $346,000 of general and administrative expenses
can also be attributed to the restructuring program of September
2001. The reduction of staff levels and the focus on ensuring
expenditures are limited to core projects and essential items
have resulted in a consistent level of general and
administrative expenditures. The current quarter shows a 49
percent reduction from the $675,000 spent during the quarter
ended December 2001 and is a 71 percent decrease from the $1.121
million for the same period in March 2001.

                    Research and Development

As the company continues to upgrade and develop the Cell-Loc
technology, research and development expenses will be required.
The expenditures are and will continue to be specifically
related to the ongoing technical development and refinement
required to commercialization our products. The $666,000 of
expenses this quarter reflects no change from the $666,000 last
quarter, and reflects a marginal decrease from the $693,000 for
the quarter ended March 2001.

                    Liquidity and Capital Resources

The March 31, 2002 total cash balance of $2.5 million represents
a $400,000, or 14 percent, decrease from the December 31, 2001
quarter cash balance of $2.9 million. The working capital
balance has decreased from a $1.72 million surplus from the
previous year at this time to a $4.57 million deficit for the
quarter ending March 31, 2002. The increase in working capital
deficit for the period ended March 2002 is a direct result of
deferring the funds received from IQ2 Communications Corp. The
monthly burn continues to be scrutinized to ensure optimal use
of the Company's cash resources.

                    Business Risks and Prospects

The Company is actively negotiating commercial contracts. The
joint venture agreements, as executed, are examples of the
focused business strategy that Cell-Loc has now undertaken.
Joint venture arrangements, such as those negotiated with IQ2,
Cell-Loc (Chongqing) and PST, will enable the company to
introduce the Cell-Loc technology to the global market.

The ability to source products and continue research and
development is contingent on the Company's ability to be able to
continue the working relationships that have been established
with the vendors and creditors who supply goods and services to
Cell-Loc.

The Company's ability to continue to generate revenue and
achieve positive cash flow in the future is dependent upon
various factors, including the level of market acceptance of its
services, the degree of competition encountered by the Company,
the cost of acquiring new customers, technology risks, the
ability to fund continued network deployment and operations,
general economic conditions and regulatory requirements.

Cell-Loc Inc. -- http://www.cell-loc.com-- a leader in the  
wireless location industry, is the developer of Cellocate(TM), a
family of network-based wireless location products that enable
location-based services. Located in Calgary, Alberta, Cell-Loc
currently develops, markets and supports its patented wireless
location technology globally. Cell-Loc is listed on the Toronto
Stock Exchange under the trading symbol: "CLQ."


CHELL GROUP: NTN Unit Launches iTrivia with Bell ExpressVu
----------------------------------------------------------
Chell Group Corporation (NASDAQ:CHEL), a technology holding
company announces that its wholly-owned subsidiary NTN
Interactive Network and Bell ExpressVu, Canada's Direct-to-Home
leader in digital home entertainment with 1.1 million
subscribers, recently launched a new interactive TV service,
extending Bell ExpressVu's lead in interactive programming. Bell
ExpressVu customers with a model 3100 or a Personal Video
Recorder set-top box can now enjoy a variety of exciting games
and trivia challenges, provided by NTN Interactive.

Dave Redgers, President, NTN Interactive Networks noted "This is
an exciting new partnership for us and represents a big step
forward as we expand our trivia offerings into new services and
new markets."

"Bell ExpressVu is excited to offer this exclusive entertainment
choice to our customers," said Stuart Morris, Vice President of
Marketing and Sales for Bell ExpressVu. "We are changing the way
people watch TV and we are providing the ultimate TV experience.
Our Personal Video Recorder allows you to watch what you want
when you want and now with our new iTV services you become an
active participant instead of just a spectator," said Mr.
Morris.

By subscribing to the service, at a cost of $1.99 per month,
trivia fans can practice their trivia skills with a wide
selection of questions in 6 categories ranging from
entertainment to sports to Canadian trivia. Bell ExpressVu
customers can find the new services with the on-screen Program
Guide by selecting channel 277 for I Trivia.

NTN Interactive is the exclusive licensee of NTN Communications,
Inc. (AMEX:NTN) a leading producer and programmer of interactive
television, on-line and Internet entertainment. NTN Interactive
distributes programming via satellite including QB1 the "Live"
Football strategy game to 3500 Hospitality venues in North
America with 500 of those in Canada and over 3 million
participants in Canada in each month month.

With more than 1,000,000 subscribers, Bell ExpressVu is Canada's
leader in digital home entertainment and broadcasts more than
275 video digital channels to an 18-inch dish - the smallest in
Canada. Bell ExpressVu was launched in September 1997 and since
then has become the largest and fastest-growing direct-to-home
broadcast company in Canada. Bell ExpressVu is a limited
partnership, wholly owned by BCE Inc.

Chell Group Corporation (NASDAQ Small Cap: CHEL) is a technology
holding company in business to acquire and grow undervalued
technology companies. Chell Group's portfolio includes wholly-
owned Logicorp Ltd., http://www.logicorp.ca,NTN Interactive  
Network Inc. http://www.ntnc.com GalaVu Entertainment Network  
Inc. http://www.galavu.com and Engyro Inc. (investment  
subsidiary) http://www.engyro.comand cDemo Inc. (investment  
subsidiary) http://www.cdemo.com  For more information on the
Chell Group, please visit http://www.chell.com

At November 30, 2001, Chell Group's balance sheet showed a
working capital deficit of about $3.2 million.


CHOICE ONE: S&P Further Junks Corp. Credit Rating Down 2 Notches
----------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
facilities-based competitive local exchange carrier (CLEC)
Choice One Communications Inc. to triple-'C'-minus from triple-
'C'-plus based on Standard & Poor's belief that the company's
default risk has increased substantially.

The rating remains on CreditWatch with negative implications,
where it was placed January 25, 2002, due to concerns over weak
liquidity. Rochester, New York-based Choice One had about $500
million total debt outstanding as of the end of the first
quarter of 2002.

"Choice One's liquidity has weakened to the point where it would
be challenging for the company to maintain its business plan in
the near term," Standard & Poor's credit analyst Michael Tsao
said. "The company has less than $34 million in cash, virtually
all of it from the complete drawdown of its revolving bank
facility on May 20, 2002, and no additional identifiable sources
of liquidity."

"Based on our projection, this amount, along with about $20
million in cash from operations in the second half of 2002, will
have difficulty covering more than $22 million in cash interest
expense and more than $30 million in capital expenditures for
the remainder of the year," Mr. Tsao added.

Choice One provides local, long-distance, Internet services, and
Web hosting to small and midsize businesses in Tier II and Tier
III metropolitan cities in 30 markets in the Northeast and
Midwest. The company primarily uses a smart-build approach,
which involves installing its own switch and leasing local fiber
capacity from incumbent carriers in many of its markets. Aside
from liquidity, Choice One has historically generally
demonstrated good operations by maintaining low churn,
increasing on-switch penetration of addressable business lines,
and increasing the number of markets that have become EBITDA
positive.


COASTAL BANCORP: Fitch Affirms Low-B & Junk Ratings
---------------------------------------------------
Fitch Ratings has affirmed the ratings of Coastal Bancorp, Inc.,
and has assigned ratings for its subsidiaries.

CBSA is a $2.5 billion Houston-based thrift holding company
operating through 50 retail banking offices in the southeast
quadrant of Texas. CBSA's ratings are based on the company's
current financial condition, growth prospects and strategic
transition stage of its business model. The company's risk
profile and return measures are representative of its thrift
origin. Earnings reflect gradual improvement with incremental
steps toward commercial lending. Aided by a declining rate
environment, commercial portfolio loan growth and investment
portfolio reductions, CBSA has reached an intermediary goal of
improving net interest margin performance to the 2.5%-3.0%
range. This also enabled CBSA to reach return on average assets
approximating 0.70% for 2001 and first quarter 2002. Earning
assets include a high percentage of residential loans and
mortgage-backed securities, though CBSA has made progress in
growing its commercial book. Recent asset quality measures
reflect an increase in problem loans (mainly in residential
mortgages), but net charge-offs (at 0.10% for first quarter
2002) remain quite low. Capital has trended favorably over the
past two years in the absence of acquisitions and repurchase
activity, and while consolidated ratios are low in relation to
peers, this is offset by CBSA's lower risk loan portfolio.
Repurchase activity during 2002 will reverse some of the
positive trend in consolidated common equity accretion. While
Fitch is comfortable with current levels, intentions to increase
commercial lending and re-enter the acquisition market will make
capitalization levels more critical.

                        Ratings Affirmed:

                  Coastal Bancorp, Inc. --LT Senior 'BB';

                        --ST Senior 'B';

                        --Individual 'C'

                        --Support '5'.

                        Ratings Assigned:

             Coastal Bank ssb --Long-Term Deposits 'BB+';

                        --Long-Term Senior 'BB';

                        --Short-Term Deposits 'B';

                        --Short-Term Senior 'B';

                        --Individual 'C';

                        --Support '5'

                        --Rating Outlook 'Stable'.

            Coastal Capital Trust I Trust Preferred 'BB-'.


COLUMBIA HOUSE: S&P Assigns B+ Rating to $175M Credit Facilities
----------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to CH Sub
LLC's $175 million senior secured credit facilities. The
facilities are guaranteed by all subsidiaries of the borrower,
including The Columbia House Co. Proceeds of the credit
facilities will partially finance the acquisition of The
Columbia House Co. by BCP Acquisition Company LLC.

A single-'B'-plus corporate credit rating was also assigned to
The Columbia House Co. The outlook is stable. New York, New
York-based Columbia House is a club-based direct marketer of
music and video products, selling directly to consumers through
catalogs and the Internet.

"The rating on Columbia House is based on its participation in
the intensely competitive music and video retailing industries,
mature sales trends for compact discs, the company's dependency
on movies studios and music labels for quality content, and high
debt leverage," Standard & Poor's credit analyst Ana Lai said.
"These risks are partially mitigated by the favorable prospects
of the DVD industry, and the company's improving operating
performance."

Standard & Poor's said that, pro forma for the buyout
transaction, total debt to EBITDA will be high at about 4.4
times. Debt leverage is expected to improve slowly as Columbia
House uses its operating cash flow to repay the senior secured
credit facilities over the next few years. Pro forma EBITDA
interest coverage is adequate for the rating at 2.8x. However,
total debt service is substantial as the credit facilities
require increasing quarterly amortization payments and there is
a 75% free cash flow sweep.

Financial flexibility is adequate, provided by $30 million in
availability under the company's revolving credit facility and
cash balances of about $50 million. In addition, the $100
million holding company seller notes are pay-in-kind until the
credit facility is fully repaid.

The bank facility, which is comprised of a $145 million term
loan and $30 million revolving credit facility maturing in 2007,
is rated the same as the corporate credit rating. The facility
is secured by substantially all of the company's assets, which
may provide some measure of protection to lenders. However,
based on Standard & Poor's simulated default scenario, it is not
clear that a distressed enterprise value would be sufficient to
cover the entire loan facility.


COVANTA ENERGY: Look for Schedules and Statements on June 14
------------------------------------------------------------
Pursuant to Section 1007(c) of the Bankruptcy Code, Covanta
Energy Corporation and its debtor-affiliates sought and obtained
the Court's approval to extend the deadline to file Schedules to
June 14, 2002 -- for a second time -- without prejudice to
requests for additional extension.

Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton,
in New York, relates that since the Petition Date, the Debtors
have been "working diligently to assemble the information to be
included in the Schedules."  However, due to the complexity and
diversity of the Debtors' operations and financial affairs, as
well as the loss of certain staff, it has been difficult to
assemble the information and to create the Schedules.  The
Debtors anticipate that they will be in a position to file the
Schedules on or prior to June 14, 2002. (Covanta Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)   


DAIRY MART: Asks Court to Stretch Exclusivity through August 3
--------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. and its affiliated debtors
ask for more time from the U.S. Bankruptcy Court for the
Southern District of New York to propose and file a plan and to
solicit acceptances of that plan. The Debtors want to stretch
their exclusive right to file a plan through August 3, 2002 and
ask for an extension of their exclusive solicitation period
through October 4, 2002.

Dairy Mart tells the Court that they have been working
diligently since the commencement of these cases to arrive at a
viable reorganization plan. Due to the size and complexity of
these cases, however, Dairy Mart is not yet in a position to
formulate and file a reorganization plan.

Dairy Mart, with the help of its financial advisors, is still in
the process of comparing the likely values to the estates and
their creditors of both the sale and the stand-alone plan
scenarios. Since February 22, 2002, the bar date established in
these cases, the claims reconciliation process is still ongoing.
Without finalizing this process, Dairy Mart will not be in a
position to formulate a plan of reorganization.

The Debtors relate that Dairy Mart's management and retained
professionals have been consumed with pressing administrative
and operational matters in these cases.  The company's progress
to date includes:

     -- negotiating and documenting the terms of a post-petition
        financing facility and obtaining court approval to
        implement the same;

     -- analyzing executory contracts and unexpired leases to
        determine the economic benefit of each lease and
        contract and obtaining court approval to reject those
        leases and contracts that provide no economic benefit;

     -- implementing various programs designed to retain valued
        employees and sustain employee morale, including a
        severance and retention plan;

     -- preventing creditors' efforts to collect against the
        members of Dairy Mart in violation of the automatic
        stay;

     -- establishing procedural mechanisms to manage, assess and
        analyze pre-petition claims asserted against Dairy Mart
        and obtaining court approval for the establishment of a
        bar date relating to such claims;

     -- evaluating, with the help of its legal and financial
        advisors, competing courses of action, such as
        reorganization through a stand-along plan or the sale of
        Dairy Mart's businesses as a going concern;

     -- continuing discussions with the Committee regarding
        potential emergence strategies; and

     -- responding to various motions threatening the integrity
        of the reorganization process.

Dairy Mart Convenience Stores, Inc. filed for chapter 11
protection on September 24, 2001. Dennis F. Dunne, Esq. at
Milbank, Tweed, Hadley & McCloy LLP represents the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed debts and assets of
over $100 million.


DIVA SYSTEMS CORPORATION: Voluntary Chapter 11 Case Summary
-----------------------------------------------------------
Debtor: Diva Systems Corporation
        800 Saginaw Drive
        Redwood City, California 94063

Bankruptcy Case No.: 02-31453

Type of Business: The Debtor provides the operating system
                  needed to deliver interactive, on-demand TV
                  programming including more than 4,000
                  licensed titles. DIVA Systems partners with
                  cable operators AT&T Broadband, Charter, and
                  Insight in the US, and with NTL in the UK.

Chapter 11 Petition Date: May 29, 2002

Court: Northern District of California (San Francisco)

Judge: Dennis Montali

Debtor's Counsel: Michael H. Goldstein, Esq.
                  Stutman, Treister and Glatt
                  3699 Wilshire Blvd. 9th Floor
                  Los Angeles, California 90010
                  213-251-5100

Total Assets: $53,043,000 (as of December 31, 2001)

Total Debts: $402,296,000 (as of December 31, 2001)


DYNASTY COMPONENTS: Gets CCAA Protection Extension Until June 28
----------------------------------------------------------------
Dynasty Components Inc. (TSE:DCI) has obtained a 30 day
extension of its protection under the Companies' Creditors
Arrangement Act in order to continue its restructuring process.
The effect of the Order is to continue the stay of proceedings
in respect of claims existing against the Company as at Friday,
November 30, 2001 until, June 28, 2002. At the same time, the
Company sought and has obtained an order of the Court appointing
Deloitte & Touche Inc. as the Interim Receiver of DCI so that
D&T may, at its discretion, assist in the operation of the
business and, if required, effect a sale of the assets of the
Company.

DCI has refocused its business strategy entirely on its wholly-
owned subsidiary, Parts Logistics Management Corp., which
continues to operate normally. Parts Logistics Management Corp.
provides web-based B2B e-procurement and fulfillment logistics
solutions. Focused almost exclusively on the Information
Technology industry, PLM provides logistics solutions to IT
outsourcing service providers, assisting them in managing the
procurement, delivery and tracking of IT parts, as well as parts
disposition and logistics management services to computer
original equipment manufacturers.


EEX CORP: Inks New $250M Credit Agreement Expiring in March 2003
----------------------------------------------------------------
EEX Corporation (NYSE:EEX) has entered into a definitive merger
agreement with Newfield Exploration Company (NYSE:NFX).

Under the agreement, each share of EEX common stock would
receive 0.05703 shares of Newfield common stock. EEX's common
shareholders will also have the option to elect to receive units
in a new trust in lieu of Newfield stock. Approximately 42.5
million trust units will be available. For each unit that an EEX
shareholder elects to receive, the number of shares of Newfield
common stock that the shareholder would otherwise receive will
be reduced by 0.00054 of one share. The trust will own
overriding royalty interests in future production from defined
intervals generally below 20,000 feet from certain Gulf of
Mexico lease blocks in which EEX owns or may acquire an
interest. There is no production currently associated with the
royalty interests.

The holders of EEX's preferred stock, each of whom has signed a
voting agreement to vote its shares in favor of the merger, will
receive a total of 4.7 million shares of Newfield common stock
in the merger.

Tom Hamilton, Chairman and President, Chief Executive Officer,
said, "This merger combines two strong onshore U.S. production
companies and will provide significant economies of scale in
their operation. The combined companies will have the strong
balance sheet necessary to realize the potential value
represented by EEX's Llano area assets and Gulf of Mexico deep
prospect exploration inventory. In addition to the Newfield
shares, the royalty trust arrangement provides the EEX
shareholders an opportunity to realize incremental value from
the exploration potential of our deep shelf program."

This merger is structured to be a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, except to the
extent of cash paid in lieu of fractional shares and units in
the royalty trust.

The merger is subject to the approval of EEX's shareholders,
certain regulatory approvals and other conditions. The
transaction is expected to close in the third quarter of 2002.
Morgan Stanley & Co. Incorporated and J.P. Morgan Securities
Inc. are acting as financial advisors and have provided fairness
opinions to EEX in this transaction.

EEX has also entered into a new $250 million secured revolving
credit agreement with its banks that replaces the current
agreement under which EEX was in default. This new bank
agreement expires March 31, 2003.

EEX Corporation is an oil and natural gas exploration and
production company with activities currently focused in Texas,
Louisiana and the Gulf of Mexico.

For additional information, call 1-888-EEX-NEWS, or visit its
Web site at http://www.eex.com


ENRON CORP: Proposes Uniform Storage Capacity Release Protocol
--------------------------------------------------------------
Prior to the Petition Date, Gregory M. Petrick, Esq., at
Cadwalader, Wickersham & Taft, in New York, relates that Enron
Corporation entered into firm transportation and storage
agreements with numerous entities that own or operate interstate
natural gas pipelines.  Over 100 agreements are still in effect.

Pursuant to those agreements, Mr. Petrick says, the Debtors
reserved capacity on the pipelines in order to transport natural
gas to their customers or reserved capacity in storage
facilities.  According to Mr. Petrick, the Debtors are not
currently using, and do not anticipate using in the future,
substantial amounts of the reserved pipeline and storage
capacity.

By this application, the Debtors seek to establish Court-
authorized procedures permitting the release of unused
transportation and storage capacity in accordance with the
regulations of the Federal Energy Regulatory Commission or
otherwise permitting a disposition of the capacity.

The Debtors claim that the Official Committee of Unsecured
Creditors supports the relief requested.

Mr. Petrick further explains that the maximum quantity of gas
that the Debtors can request the pipeline to transport is fixed
by the agreement.  The Debtors pay a fixed monthly charge for
the reserved capacity as well as a volumetric charge for the gas
actually transported.  According to Mr. Petrick, the Debtors'
transportation rates are generally limited to a maximum tariff
that is established and published in accordance with FERC
regulations and the particular rate proceeding applicable to the
individual pipeline.

Pursuant to the governing FERC regulations, Mr. Petrick says,
interstate pipelines that offer transportation services on a
firm basis must provide a capacity release mechanism, so that
shippers, such as the Debtors, can voluntarily reallocate all or
part of their firm transportation rights to another entity that
desires to acquire that capacity.  "If capacity is released on a
permanent basis in accordance with the FERC regulations, the
shipper has no further liability for costs associated with the
released capacity," Mr. Petrick notes.

To release capacity, Mr. Petrick explains that the shipper would
notify the pipeline of the terms and conditions under which the
shipper is willing to do so.  The governing FERC regulation
provides two methods for capacity release:

  (1) A shipper electing to release capacity could post its
      offer of capacity for bid (which includes the volumes of
      capacity available, the location of the capacity, and a
      period for which the capacity is available, as well any
      other conditions) on the pipeline's website so that all
      interested parties may bid on the offered capacity. Once
      the bid is posted, the bid period begins and at the end of
      the period the highest bidder is awarded the capacity.

  (2) Alternatively, the shipper could post on the pipeline's
      Web site a prearranged agreement for the release of
      capacity to a party acceptable to the pipeline. If the
      prearranged release is not at the maximum rate for the
      pipeline, another party could submit a higher bid for the
      capacity.

In most cases where capacity is released, Mr. Petrick says, the
pipeline then bills the releasing shipper for its firm capacity,
simultaneously credits the releasing shipper for the amount bid
by the replacement shipper, and bills the replacement shipper
for the amount of its bid.  Similar procedures govern the
release of storage capacity, Mr. Petrick relates.

Now, the Debtors propose these release procedures wherein they
would provide the Official Committee of Unsecured Creditors:

  -- a written notification identifying the contract under which
     they seek to release capacity, and

  -- a concise statement of the reasons that the estate proposes
     to do so.

The statement would include:

    (1) identification information for the contract at issue,

    (2) whether the contract is at maximum rate or a discounted
        rate,

    (3) the term of the contract,

    (4) whether the release contemplated is to a prearranged
        bidder,

    (5) the process engaged in by the Debtors to determine
        whether or not to utilize a prearranged bidder,

    (6) the reasons why the Debtors have concluded that release
        of the capacity is in the best interests of the estates,
        and

    (7) a copy of the contract at issue.

In addition, Mr. Petrick continues, there may be instances where
the Debtors and a pipeline can agree to a termination or other
settlement of a transportation or storage agreement without a
capacity release.  In such cases, Mr. Petrick says, the
statement sent by the Debtors to the Committee would include
items (1), (2), (3), and (7), a copy of the termination or
settlement agreement and an explanation of why the termination
or settlement agreement is in the best interests of the estate.  
Then, the Committee would have 10 business days from its receipt
of the Debtors' statement in support of a release, termination
or other settlement, to serve a written objection to the
proposed action.

If the Committee objects, Mr. Petrick relates, the Debtors could
seek Court approval for the capacity release, termination or
other settlement:

    (i) by motion pursuant to Rule 9014 of the Federal Rules of
        Bankruptcy Procedure or,

   (ii) if the counterparty has filed a motion under Section
        365(d)(2) of the Code, by presentation of a stipulation
        at the scheduled hearing on the motion.

Moreover, Mr. Petrick adds, the Debtors could also notice a
rejection of the contract under the rejection procedures
previously established by the Court.

However, if the Committee does not object, the Debtors would be
authorized to release the capacity by utilizing the procedures
set forth in the FERC regulations or to implement the
termination or settlement agreement, without further Court
approval.

Under the applicable FERC procedures, Mr. Petrick explains, the
Debtors, as releasing party, are entitled to specify a minimum
bid when posting capacity for release.  "In instances where the
bid process does not generate an acceptable bid, the Debtors and
the pipeline may determine to enter into a termination agreement
or settlement agreement for the resolution of issues under the
transportation agreement," Mr. Petrick relates.  The Debtors may
also determine to reject the agreement pursuant to the
procedures previously established by the Court, Mr. Petrick
adds.

Mr. Petrick emphasizes that the Debtors utilized the FERC
capacity release procedures in the ordinary course of business
prior to the Petition Date.  By filing this application, Mr.
Petrick clarifies that the Debtors only seek to eliminate any
question as to their continuing authority to effect releases and
as to the fact that a release eliminates all obligations of the
Debtors' for charges attributable to periods after the release.
In addition, Mr. Petrick notes, the requested order clarifies
that a permanent release of capacity terminates the contract and
does not require either a rejection or an assumption.

Mr. Petrick asserts that the implementation of these procedures
would be of substantial benefit to the Debtors' estates and
would not prejudice any party since:

  (a) the procedures would permit the Debtors to expeditiously
      release unused capacity, thereby relieving the bankruptcy
      estates of further financial liability on account of that
      capacity;

  (b) the procedures would further relieve the Debtors of the
      financial and administrative burden of rejecting the
      transportation or storage agreements each time the Debtors
      decide that it would be in the estate's interest to
      release capacity;

  (c) notice to the Committee of the Debtors' intention to
      release capacity would provide a check on the Debtors'
      decisions, and Court approval would be required as to any
      releases to which the Committee objects; and

  (d) the pipelines would suffer no prejudice by virtue of the
      proposed procedures, but would be benefited.

Under the applicable FERC regulations, Mr. Petrick says, the
replacement party awarded the released capacity would be
obligated to pay for that capacity going forward.  Absent a
release, Mr. Petrick points out that the pipelines' claims
against the Debtors on account of unused transportation or
storage capacity are not entitled to administrative priority.

Accordingly, Mr. Petrick contends that the Debtors' release of
unused capacity without undue delay or administrative burden
would be in the pipelines' interest. (Enron Bankruptcy News,
Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900)


ENRON CORP: Enron Capital Wants to Enter Loan with Spanish Unit
---------------------------------------------------------------
Enron Capital and Trade Resources International Corp., one of
the Debtors in these cases, seeks the Court's authority to enter
into a profit sharing loan with Enron Holdings 1, S.L., a
Spanish company and an indirect subsidiary of Enron Corporation.

Enron Holdings' primary business consists of importing and
selling oil and gas to the Spanish retail market.  Enron
Holdings has determined to discontinue operations and its assets
are being realized with the intention of achieving a liquidation
as soon as possible.  Its business is managed by an agent, who
is now engaged in the process of collecting the receivables due
to Enron Holdings and satisfying various outstanding obligations
of Enron Holdings.

Under the profit sharing loan, Martin A. Sosland, Esq., at Weil,
Gotshal & Manges LLP, in New York, explains that Enron Capital
will subordinate a portion of inter-company debt owed by Enron
Holdings.  "Although Enron Holdings has significant cash
reserves, Enron Holdings' balance sheet indicates that it may be
insolvent as a result of its inter-company obligations to Enron
Capital and other Enron affiliates," Mr. Sosland explains.

As of April 30, 2002, Enron Holdings' books and records reflect
assets totaling approximately $48,244,000 (unaudited), of which
approximately:

           $36,347,000 represents cash,
             3,097,000 represents accounts receivables, and
             8,801,000 represents inventory.

Liabilities total approximately $49,150,000 (unaudited), of
which approximately $49,102,000 represents inter-company debt
owed to three affiliates:

           $25,348,000 -- Enron Europe Ltd.
                16,000 -- ECT Europe Inc., and
            23,738,000 -- Enron Capital and Trade Resources.

Based on the assets and liabilities, Enron Holdings appears to
be insolvent due to a deficit of approximately $906,000.

Under Spanish law, Mr. Sosland tells the Court, an insolvent
company is subject to compulsory winding-up, a lengthy and
potentially costly procedure.

Mr. Sosland explains that the purpose of the subordination is to
augment Enron Holdings' balance sheet to ensure that the company
remains solvent.  Once the profit sharing loan is consummated,
Mr. Sosland says, Enron Holdings can liquidate the remainder of
its inventory, satisfy third party obligations, and
substantially satisfy its inter-company obligations, including
its obligations to Enron Capital.  On the other hand, by
agreeing to subordinate a portion of the inter-company debt,
Enron Capital will effectively liberate Enron Holdings'
significant cash reserves. Here, Mr. Sosland illustrates, the
subordination of approximately $3,384,000 of inter-company debt
will result in an immediately payment to Enron Capital of
approximately $16,121,000.  "If Enron Holdings is able to avoid
Spanish insolvency proceedings, Enron Capital will eventually
receive approximately 91% of the $23,738,000 inter-company debt
owed by Enron Holdings," Mr. Sosland anticipates.

Mr. Sosland assures the Court that a profit sharing loan will
ensure that Enron Holdings remain balance-sheet solvent because
the obligations under the load will only be repaid after all
other obligations are satisfied.

According to Mr. Sosland, the Subordination will occur through
three profit sharing loans:

  (1) between Enron Holdings and Enron Europe Ltd. for
      approximately $3,613,000 has already been approved by
      PricewaterhouseCoopers, the administrator overseeing Enron
      Europe Ltd's administration in the United Kingdom;

  (2) between Enron Holdings and ECT Europe, Inc. for
      approximately $2,000 needs no Court approval as neither
      Enron Holdings nor ECT Europe are currently in Chapter 11
      or other insolvency proceedings; and

  (3) between Enron Holdings and Enron Capital for approximately
      $3,384,000.

The salient terms of the Enron Capital Profit Sharing Loan are:

Lender:       Enron Capital & Trade Resources International
              Corp., a company duly incorporated under the laws
              of the State of Delaware, USA and having its
              principal place of business at 1400 Smith Street,
              Houston TX 77002, USA

Borrower:     Enron Holdings 1, S.L. a company duly incorporated
              and validly existing, with registered office at
              Principe de Vergara 132, Madrid, Spain, and
              recorded with the Mercantile Registry of Madrid

Type of Loan: Profit-sharing loan, as defined in Article 20 of
              Royal Decree-Law 7/1996, of June 7, as amended by
              Second Additional Disposition of Law 10/1996, of
              December 18.

Amount:       $3,384,000 US dollars

Maturity Date: October 15, 2002 (subject to extension)

               Principal and interest accrued on the Loan shall
               be paid on the Maturity Date.

Interest Rate: Interest accrues monthly at EURIBOR + 20 basic
               points, and is subject to the condition that
               EBITDA of the Borrower of the relevant month is
               over 10% of the stock capital and reserves of the
               Borrower.

Prepayment:   The Borrower may prepay, either totally or
              partially, and without any penalty related to such
              prepayment, any outstanding amounts of the Loan,
              provided, however, that prepayments may only be
              effected if an equivalent increase in the
              Borrowers' net worth is carried out (always
              provided that it has not been carried out through
              an update of assets) as set out in Article 20 of
              Royal Decree-Law 7/1996, of June 7, as amended.

Ranking:      The Lender accepts that the payment obligations of
              the Borrower under the ECTRIC Profit Sharing Loan
              agreement (including the payment of principal and
              interest thereunder, as well as any other
              obligations) are subordinated to any other known
              payment obligations of the Borrower either present
              or future including, for the avoidance of doubt,
              amounts owing to the Lender, ECT Europe Inc. and
              Enron Europe Limited, which are not subject to
              profit sharing loan agreements. For the avoidance
              of doubt, payment obligations of the Borrower
              arising out of the profit sharing loan to be
              entered into between the Borrower and Enron Europe
              Ltd and the Borrower and ECT on the same date as
              the Enron Capital Profit Sharing Loan will rank
              pari passu with the payment obligations of the
              Borrower in respect of the Enron Capital Profit
              Sharing Loan. Furthermore, it is acknowledged that
              the payment obligations arising under the Enron
              Capital Profit Sharing Loan will be repaid in full
              before any payments are made by the Borrower to
              its shareholders.

Early
Termination:  In the event of the winding-up of the Borrower,
              the Enron Capital Profit Sharing Loan will be
              deemed terminated and the Borrower will be
              obliged to pay the principal plus the interest
              accrued on the Enron Capital Profit Sharing Loan.
              Notwithstanding this, payment will be made
              following the ranking criteria set forth under
              clause 5 of the Enron Capital Profit Sharing Loan.

Governing Law: The interpretation and performance of this
               agreement will be governed by Spanish law.

Jurisdiction: The Parties, expressly waiving their right to any
              other jurisdiction to which they may be entitled,
              submit themselves to the jurisdiction and
              authority of the Courts and Tribunals in the city
              of Madrid for the resolution of any issues or
              disputes which may arise in connection with this
              Agreement.

Mr. Sosland further relates that Enron Holdings' obligation to
repay to Enron Capital is reflected in Clause 6 of the Enron
Capital Profit Sharing Loan and qualified by the terms of two
letter agreements.  "The purpose of the Side Letters is to
ensure that the obligations under the Enron Capital Profit
Sharing Loan will not be paid if such repayment would force
Enron Holdings to become insolvent," Mr. Sosland explains.  
Under the terms of the Side Letters, the parties confirm that,
with the purpose of avoiding the insolvency of Enron Holdings,
the outstanding amount of the Enron Capital Profit Sharing Loan
will be payable only up to the amount of the proceeds
outstanding after:

  (i) Enron Holdings' assets are sold,

(ii) Enron Holdings' debts, other than Enron Holdings' debts as
      a result of the Loans, are satisfied, and

(iii) withholding the amount corresponding to certain provision
      of Spanish accountancy rules.

Because of the Side Letters, Mr. Sosland says, the obligations
under the Enron Capital Profit Sharing Loan will only be repaid
if there is any equity remaining in Enron Holdings after it
completes a solvent winding up process.  Moreover, Mr. Sosland
continues, the Side Letters also provide for the extension of
the maturity date for all or part of the obligations under the
Enron Capital Profit Sharing Loan in order to avoid Enron
Holdings' insolvency in the event Enron Holdings has not
satisfied its other obligations as of the maturity date.

Mr. Sosland adds that an initial amount of $3,000,000 will be
retained in the Spanish bank after payment of all existing third
party liabilities to cover ongoing storage costs for the
Inventory, liquidating costs, future VAT payments, and ongoing
operating costs until the liquidation date. (Enron Bankruptcy
News, Issue No. 30; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


ESNI INC.: Files Chapter 11 and Will Pursue Claims Against CRC
--------------------------------------------------------------
ESNI, Inc. (OTC BB: ESNI) had filed for protection under Chapter
11 of the US Bankruptcy code.

According to Michael A. Clark, President, "We are very
disappointed that the lack of performance by CRC under our
agreements -- specifically CRC's failure to meet its loan
commitments which would have enabled ESNI to settle out all the
claims of our unsecured creditors - has left us with little
alternative but to file for protection while we vigorously
pursue our claims against CRC on behalf of all ESNI
stakeholders. If we are successful, we believe the Company can
reorganize and emerge from bankruptcy."

                     About ESNI, Inc.

Headquartered in Trumbull, CT, ESNI, Inc. (OTC BB: ESNI) is a
holding company that owns a majority share in E-Sync Networks,
LLC. E-Sync Networks, LLC is a joint venture between ESNI and
Charles River Consultants, Inc., providing an array of
enterprise messaging and network solutions, including: IT
infrastructure and network design and implementation; reliable,
high-quality messaging; secure, high-performance hosting; system
management and integration services, technical help desk and
application development. ESNI's largest stockholders are New
York-based venture fund Commercial Electronics Capital
Partnership, LP and Viventures, the venture capital arm of
Vivendi (NYSE: V). More information can be found on the Internet
at http://www.esyncnetworks.com


EXIDE TECHNOLOGIES: Court OKs JA&A Services as Crisis Managers
--------------------------------------------------------------
Judge Ackard approves Exide Technologies' retention of JA&A
Services as their crisis managers, provided that:

A. The employment agreement is revised to provide that JAS
   employees serving as officers of the Debtors shall be
   entitled to receive only whatever indemnities are made
   available, during the term of JAS' engagement, to other
   officers of the Debtors, whether under the Debtors' by-laws,
   certificate of incorporation, applicable corporation laws, or
   contractual agreements of general applicability to the
   Debtors;

B. To the extent that the "Break-up Fee" did not expire upon its
   own terms, JAS is deemed to have waived its right to
   receive any break-up fee;

C. The portion of the motion regarding the performance fee will
   be considered on June 14, 2002;

D. The employment agreement is revised to provide that the
   Debtors shall not owe any payment to JAS in the event that
   the Debtors hire an employee of JAS, provided that the
   Debtors shall not affirmatively recruit or solicit JAS
   employees; and

E. the provision of the employment agreement relating to
   arbitration in the event a dispute arises between the Debtors
   and JAS is revised to provide that the arbitration
   shall apply only to the extent that the Bankruptcy Court or
   the District Court does not retain jurisdiction over a
   controversy or claim. (Exide Bankruptcy News, Issue No. 5;
   Bankruptcy Creditors' Service, Inc., 609/392-0900)

  
FEDERAL-MOGUL: Wins Nod to Assume Employment & Severance Pacts
--------------------------------------------------------------
Judge Newsome approves Federal-Mogul Corporation and its debtor-
affiliates' assumption of the Employment and Severance
Agreements with their executives provided that the Change of
Control Agreements that are being assumed are amended and
restated.  A Change of Control means:

A. the acquisition by an entity of beneficial ownership of 20%
   or more of either the Outstanding Company Common Stock or the
   Outstanding Company Voting Securities.  This is provided,
   however, that the following acquisition does not constitute a
   Change of Control;

B. Individuals who, as of the Reorganization Date, constitute
   the Incumbent Board cease for any reason to constitute at
   least a majority of the Board;

C. Consummation or a reorganization, merger or consolidation or
   sale or other disposition of all or substantially all of the
   assets of the Company;

D. Approval by the shareholders of the Company of a complete
   liquidation or dissolution of the Company.

In addition, Judge Newsome authorizes the Debtors to enter into
severance agreements with all of their executives who are
parties to the Change of Control Agreements (other than Messrs.
Macher and McClure).  This is provided that these severance
agreements constitute an amendment and restatement of the
existing severance agreements the Motion sought to assume. Judge
Newsome also directs the Debtors to provide the Committees and
the Representative for Future Asbestos Claimants with not less
than 30 days' advance notice of:

A. any proposed increases in base salaries for 2003 and
   succeeding years prior to confirmation of a plan of
   reorganization by more than 10% for any executive that is a
   party to a Change of Control Agreement;

B. any proposed material increases in compensation for any
   executive that is a party to a Change of Control Agreement.
   This is provided, however, that no such advance notice is
   necessary in exigent circumstances:

   a. involving any such individual executive whose continued
      services arc essential to Federal-Mogul;

   b. where the proposed compensation increases do not exceed
      $250,000 per year (excluding the first $250,000 per year
      in increases in long-term incentive programs that cover a
      span of years); and,

   c. where there is a good faith reasonable belief by Federal-
      Mogul that the executive is likely to terminate employment
      absent a commitment by Federal-Mogul to promptly provide
      the proposed compensation increase;

C. any proposed increases in direct cash compensation for all of
   the Debtors' employees aggregating in excess of 5% during any
   12-month period; and,

D. any proposal to add any employee as a participant in Federal-
   Mogul's SKEPP, and in the absence of this Court's approval,
   not implement any such proposed compensation increase or
   proposed addition to SKEPP with respect to which any
   committee or the Representative for Future Asbestos Claimants
   files an objection with this Court within such 30-day notice
   period. (Federal-Mogul Bankruptcy News, Issue No. 17;
   Bankruptcy Creditors' Service, Inc., 609/392-0900)


FLAG TELECOM: Taps Brunswick Group as Communications Consultant
---------------------------------------------------------------
FLAG Telecom Holdings Limited and its debtor-affiliates seek to
employ and retain Brunswick Group Inc. as communications
consultants.  Brunswick has rendered advisory assignments on the
Chapter 11 restructurings involving Enron Corp., NTL Inc., TWA
and Zenith.

Kees van Ophem, Secretary General and Counsel of FLAG Telecom
Holdings Ltd., says Brunswick has rendered communications
consulting services to the Debtors in connection with their
restructuring efforts and has become familiar with the Debtors'
operations.

                          Disinterestedness

Mike Buckley, a partner at Brunswick, says that the Firm does
not have any connection with the Debtors, their creditors, other
parties in interest, their respective attorneys, or the United
States Trustee or any person employed in the office of the
United States Trustee.

Mr. Buckley says Brunswick and its members and employees:

  (a) are not creditors, equity security holders or insiders of
      the Debtors;

  (b) are not, and were not, investment bankers for any
      outstanding security of the Debtors;

  (c) have not been, within three years before the date of the
      filing of the Debtors' Chapter 11 petitions, (i)
      investment bankers for a security of the Debtors, or (ii)
      attorneys for such investment bankers in connection with
      the offer, sale, or issuance of a security of the Debtors;
      and

  (d) have not been, within two years before the date of filing
      of the Debtors' Chapter 11 petitions, directors, officers,
      or employees of the Debtors or of any investment banker as
      specified in subparagraph (b) or (c).

Before the Chapter 11 filing, Brunswick performed consulting
services for the Debtors in connection with their restructuring.
The Debtors do not owe Brunswick any sums for those services.

A conflict check was conducted by Brunswick, and in that
connection, Mr. Buckley tells the Court that the Firm performs
communications consulting work for:

    (1) Barclays Capital
    (2) Goldman Sachs Asset Management
    (3) Aetna
    (4) Tyco
    (5) Person Plc, owner of the Financial Times.

                          Compensation

The Debtors have paid Brunswick for services rendered before the
Chapter 11 filing a retainer of $250,000 for the first month of
services, and have agreed to pay Brunswick $100,000 per month
for services provided thereafter.

The initial term of the Brunswick engagement concludes in July
2002, subject to the Debtors requesting additional services on a
monthly basis. (Flag Telecom Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


FOOT LOCKER: Moody's Ups Low-B Ratings over Improved Financials
---------------------------------------------------------------
Moody's Investors concluded its review of Foot Locker, Inc.
which began in March 2002 and reported its debt ratings on the
company.

Rating Action                           To             From

* Senior implied rating                 Ba2             Ba3

* Senior unsecured notes and MTN's      Ba3             B1

* Senior unsecured issuer rating        Ba3             B1

* $150 million convertible
  subordinate notes due 2008            B1              B2

Moody's changed the company's outlook to positive from stable.

The ratings upgrade is the result of overall improved
performance by the company -- reduced leverage, stronger cash
flow and its successful execution of its European strategy and
growth in the U.S. market. However, the ratings also reflect the
market risks that its kind of business encounters and the risk
of potential changes to the company's financial and growth
strategies in the near to medium term.

Foot Locker is a leading retailer of U.S. athletic footwear with
an estimated 18% share of the U.S. market and 6% of the European
market. On November 2001 it exited the last of its non-athletic
businesses to concentrate on athletic apparel and footwear.
However the lack of diversity increases the company's risk to
volatile fashion swings.

Foot Locker is the largest retailer of athletic shoes and
apparel in the U.S. and is growing a presence in Europe. The
company is based in New York City. It posted revenues of $4.3
billion for the fiscal year 2001.


GEOWORKS CORP: Expects Auditors to Raise Going Concern Doubt
------------------------------------------------------------
Geoworks Corporation (Nasdaq: GWRX) reported financial results
for the quarter and fiscal year ended March 31, 2002.  The
Company also provided guidance regarding projected future
operating results and reported on its efforts to sell assets and
resolve contractual obligations resulting from the Company's
reorganization announced January 29, 2002.

        Financial Results for the Fourth Fiscal Quarter
                    ended March 31, 2002

Revenue for the fourth fiscal quarter ended March 31, 2002 was
$2,430,000, a decrease of 39% as compared to the third quarter
ended December 31, 2001. This decrease is consistent with the
Company's exit from the software products business as announced
in the reorganization.  Software and related services revenue
was $135,000 in the fourth fiscal quarter, a decrease of $2.1
million, or 94%, as compared to the third fiscal quarter.  
Software and related services revenue in the quarter ended
December 31, 2001 had included $1,750,000 in licensing and
royalties received in connection with the conclusion of a single
software contract.  Professional services revenue in the fourth
fiscal quarter was $2,295,000, an increase of $567,000 or 33%,
as compared to the third fiscal quarter.  This increase is
primarily due to the recognition of approximately $500,000 of
fees related to services performed over the last 24 months that
did not become contractually payable until January 2002.

Total operating expenses for the quarter ended March 31, 2002
were $3,951,000.  Operating expenses, excluding amortization,
restructuring charges and the write down of goodwill and other
long-lived assets, decreased $1,376,000, or 31%, to $3,070,000
in the quarter ended March 31, 2002 as compared to the quarter
ended December 31, 2001.  This decrease is primarily the result
of the Company reorganization announced in January 2002.

Restructuring charges for the quarter were $581,000, net of
certain reversals.  The net restructuring charges included
severance and benefits of $845,000 and lease terminations costs
for the Company's New Jersey facility of $767,000 resulting from
the January 2002 reorganization.  In this reorganization the
Company terminated 40 employees, approximately 45% of its
workforce, including all of the employees in New Jersey
supporting the AirBoss Application Platform.  These
restructuring costs from the January 2002 reorganization were
partially offset by the reversal of approximately $1,000,000 of
restructuring liabilities for lease and service contract
terminations resulting from the renegotiation or resolution of
certain liabilities that had been recorded primarily as a result
of a previous reorganization in June 2001.

The Company recorded other income of $500,000 in the quarter as
a result of the sale of several patents.

The reported net loss for the fourth fiscal quarter was
$1,000,000, compared with a net loss of $13,992,000 in the third
fiscal quarter.

               Financial Results for Fiscal Year 2002

Revenue for the fiscal year ended March 31, 2002 was
$11,694,000, a 29% decrease as compared to the prior fiscal
year.  The decrease is primarily due to reduced software and
related services revenue and this was a primary factor in the
Company's exit from the software products business.  Software
and related services revenues decreased $4.1 million as compared
to the prior fiscal year.  Professional services revenues
decreased $784,000, or 9%, as compared to the prior fiscal year,
primarily due to reduced budgets for such services from the
Company's two principal professional services customers.

Total operating expenses for the fiscal year ended March 31,
2002 were $58,842,000.  Operating expenses, excluding
amortization, restructuring costs, purchased in-process research
and development and the write-down of goodwill and other long-
lived assets, were $22.8 million in fiscal year 2002, a 28%
reduction as compared to $31.6 million in the prior fiscal year
as the Company reorganized and restructured operations in the
face of reduced revenues and limited financial resources.

As a result of reorganization and restructuring during the
fiscal year, the Company recorded restructuring charges of
$3,272,000.  The write-down of goodwill and other long-lived
assets for the year, $27,557,000, includes related impairment
charges as well as $24.2 million to write-down a portion of the
goodwill and other intangibles resulting from the AirBoss
acquisition in July 2000.

Other income for the year includes $4.0 million in other income
resulting from the sale of the Company's investment in Wink
Communications and related derivatives as well as the $500,000
recorded in the quarter ended March 31, 2002 as a result of the
sale of several patents.

The reported net loss for the fiscal year ended March 31, 2002
was $42,600,000, compared with a net loss of $21,058,000 in the
prior year.

                           Other

As announced on January 29, 2002 and discussed in the Company's
Form 10-Q filed on February 14, 2002, Geoworks continues to
explore the sale of non-strategic assets and to reduce costs in
order to conserve resources.  As noted above, several patents
were sold during the fourth quarter and the Company has
terminated the lease of its former New Jersey facility.  In
addition, the Company headquarters have been relocated to a
significantly smaller office space in Emeryville and the Company
expects to conclude negotiations in the near future regarding
lease termination of the former Alameda facility.  As of March
31, 2002, the employee terminations announced January 29, 2002
were complete and operations now consist entirely of personnel
supporting the professional services business.

As a result of the reorganization, operating expenses, excluding
amortization, are projected to decrease to between $1.5 and $1.7
million in the quarter ending June 30, 2002.  Total revenues for
the quarter are also projected to decrease to between $800,000
and $1,000,000.

As of March 31, 2002, Geoworks had $3.1 million in cash and
investments. The Company expects to use between $1.4 and $1.8
million in cash in the quarter ended June 30, 2002, including
payments for various lease and contract terminations resulting
from the reorganization.  In the following quarter, the
Company's cash requirements are expected to be primarily for
operations and are projected to be significantly less than those
of the quarter ended June 30, 2002.

The Company's future capital needs remain highly dependent on
the success of its efforts to realize the value of the
professional services business by, among other things, adding
customers, increasing revenues and adding the personnel
necessary to support those customers.  As the Company's
projections of future cash needs and cash flows are subject to
substantial uncertainty, the Company expects that the opinion of
its independent auditors, with respect to the consolidated
financials statements for the year ended March 31, 2002, will
express uncertainty about the Company's ability to continue as a
going concern.

Geoworks Corporation is a provider of leading-edge software
design and engineering services to the mobile and handheld
device industry. With nearly two decades of experience
developing wireless operating systems, related applications and
wireless server technology, Geoworks has worked with industry
leaders in mobile phones and mobile data applications including
Mitsubishi Electric Corporation and Nokia. Based in Emeryville,
California, the Company also has a European development center
in the United Kingdom. Additional information can be found on
the World Wide Web at http://www.geoworks.com


GLADSTONE CAPITAL: Says S&P's Report of Bankruptcy is "False"
-------------------------------------------------------------
Gladstone Capital Corp. (NASDAQ:GLAD) announced that the
Standard & Poor's Stock Report that is currently available to
users is not correct. In the "News Headlines" of the Stock
Report on Gladstone Capital, the report states that Gladstone
Capital has "filed for protection under Chapter 11 of the
Federal Bankruptcy Code." That information is false.

"We want to assure all shareholders and interested persons that
Gladstone Capital has never filed, and is not planning to file,
for bankruptcy," said a spokesperson for the company. "With
approximately $85 million in cash and $45 million in performing
loans, and no debts, the company is in no danger of bankruptcy.
Gladstone Capital is a profitable company."


GLENOIT CORPORATION: Seeks Nod to Implement Severance Program
-------------------------------------------------------------
Glenoit Corporation and its debtor-affiliates seek authority to
enter into a severance agreement with one of the newly appointed
employees, Mr. Scott Kauffman, implement the Severance Program,
and honor all of its obligations under the Program.

The Debtors relate that over the past 18 months, Glenoit has
lost several key executives, particularly those in the finance
area.  In light of this, Mr. Kauffman, who has served Glenoit
for several years as assistant controller, has been appointed by
the Debtors' board as Executive Vice President and Chief
Financial Officer of each of the Debtors.  While Mr. Kauffman
does not have an employment agreement with the Debtors, the
Debtors' current status does warrant the execution of the
Severance Agreement to let him remain with the Debtors, even if
an exit strategy is determined that may result in the loss of
his job.

In addition, the Debtors' sale of two of their operating
divisions in the last six months has necessitated certain
downsizing efforts by the Debtors with respect to middle
managers and other back-office personnel.  This may result in
the permanent elimination of 10-25 jobs, at an annual cost
savings of as much as $1.5 million or more.  To ensure the
undivided loyalty of the Debtors' employee base during this
uncertain time, the Debtors also seek approval of a company-wide
severance program.

               The Kauffman Severance Agreement

The proposed Severance Agreement for Mr. Kauffman is the
identical form of Agreement that was held by Mr. Kauffman's
predecessors, Mr. William Rymer and that was approved by this
Court.

Under the Severance Agreement, Mr. Kaufman will be entitled to
severance payments under certain circumstances, if he is
terminated or if he voluntary terminates his employment. If
terminated, he will receive severance if the termination was not
the result of:
          
     i) his death,
    ii) his permanent disability,
   iii) his retirement on or after age 65, or
    iv) cause

If Mr. Kauffman voluntarily terminates his employment, he will
only receive severance if the termination was preceded by "Good
Reason" defined as:

     i) a reduction in his base pay or the termination or
        material reduction of his benefits,
    ii) a material diminution in his duties,
   iii) a demand that he relocate his place of work more than
        25 miles from his current place of work, or
    iv) the failure to obtain the assumption of the obligations
        under the Severance Agreement by any successor.

Provided the severance obligation is triggered, Mr. Kauffman
will then be entitled to one year's Base Pay.

                The Company-Wide Severance Program

The severance program proposed for the remainder of the Debtors'
employees is based on years of services.  Any employee that is
terminated, other than for cause, would be entitled to:

          Less than 2 years     2 weeks' salary
          2-5 years             3 weeks' salary
          5-10 years            4 weeks' salary
          10-15 years           6 weeks' salary
          over 15 years         8 weeks' salary

Under the Severance Program, an employee must actually be
terminated to receive any payments.

The Debtors tell the Court that they will need to rely heavily
on Mr. Kauffman during the coming months, as well as the
remainder of its management in the restructuring of its
operations. The Debtors also adds that all of the Debtors'
employees are aware of the fact that the Debtors may soon be
owned by another entity, and that in such a takeover, their jobs
may be at risk. The Debtors believe that executing the Severance
Agreement and adopting the Severance Program resolves these
issues, and result in a continuation of all employees' strong
efforts on behalf of the Debtors' estates.

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


GLOBAL CROSSING: Committee Taps Cox Hallett as Bermuda Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Global Crossing
Ltd. and its debtor-affiliates, sought and obtained the Court's
permission to retain Cox Hallett Wilkinson as special Bermuda
insolvency counsel to the Committee nunc pro tunc to February
19, 2002. Specifically, the Committee seeks authorization for
Cox Hallett to advise and represent the Committee in Bermuda in
relation to all aspects of Bermuda Corporate Insolvency,
Restructuring and Liquidation law.

Joel L. Klein, Co-Chairperson of the Committee, relates that
they have selected Cox Hallett because if its extensive
experience and knowledge of bankruptcy mattes, and believes Cox
Hallett is well qualified to represent the Committee in these
cases. Cox Hallett will not serve as bankruptcy and
reorganization counsel to the Committee with respect to matters
pertaining to United States Bankruptcy law, and the Committee
believes that the services Cox Hallett will provide will be
complementary rather than duplicative of the services to be
performed by Brown Rudnick Berlack Israels LLP as its bankruptcy
counsel.

Mr. Klein submits that the filing of bankruptcy petitions by
certain of the Global Crossing United States companies, required
the commencement of winding up proceedings in Bermuda, for the
Bermuda Group, pursuant to the Bermuda Companies Act of 1981. As
a result, the review and analysis of various laws of Bermuda
will be necessary on an ongoing basis. Accordingly, the
Committee has selected Cox Hallett to advise and represent the
Committee on all aspects of Bermuda Corporate Insolvency,
Restructuring and Liquidation law.

David Kessaram, a Partner of the firm of Cox Hallett Wilkinson,
assures the Court that the firm is a disinterested person, and
does not hold or represent an interest adverse to the Debtors'
estates with respect to the matters for which the firm is to be
employed.

It is anticipated that the primary attorney who will represent
the Committee is David Kessaram, Esq. (a partner of the firm
whose current hourly rate is $380). Other Cox Hallett attorneys
or paraprofessionals will from time to time provide legal
services on behalf of the Committee in connection with the
matters herein described. The following hourly rates for CHW
attorneys and paraprofessionals are currently in effect, but are
subject to periodic adjustments:

       Attorneys              $380 - $400 per hour
       Associates             $275 - $350 per hour
       Paraprofessionals      $ 75 - $150 per hour
(Global Crossing Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


HA-LO INDUSTRIES: Seeks DIP Financing Extension through July 31
---------------------------------------------------------------
Ha-Lo Industries, Inc. and its debtor-affiliates submit an
emergency motion to the U.S. Bankruptcy Court for the Northern
District of Illinois, asking for authority to execute and
deliver a Sixth Amendment to the Revolving Credit Agreement that
provides funding for the company's post-petition working capital
needs.

The Debtors relate to the Court that they have been unable to
obtain sufficient unsecured credit allowable as an
administrative expense, with which to pay wages and salaries,
purchase inventories and supplies, pay rent and utilities,
otherwise operate their businesses.  The Debtors believe that
they may face immediate and irreparable harm if the Sixth
Amendment is not granted immediately.

Approving the Sixth Amendment, the Debtors believe, will
minimize disruption of their businesses and will preserve their
going concern value.  The Debtors further assert that the
proposed extension of the DIP Financing is necessary to preserve
the assets of the estate.

          The Sixth Amendment to DIP Credit Agreement

The Banks are willing to extend the maturity date of the DIP
Financing for an additional 61 days through July 31, 2002.  The
Proposed Sixth Amendment contains terms including:

     a) downward adjustment of the Revolving Credit Maximum
        Amount and the Applicable Sublimits to reflect the
        Debtors' reduced borrowing needs;

     b) the payment of an extension fee of $50,000 on June 1,
        2002 and $100,000 on July 30, 2002. In the event that as
        of July 30, 2002, the Revolving Credit Maximum Amount is
        below $4,000,000 and the Debtors have no less than
        $3,000,000 in excess availability

     c) the $25,000 collateral audit fee provided in DIP Credit
        Agreement for the month of July 2002 shall be waived;
        and

     d) any proceeds from any sale of any business unit shall
        result in the permanent reduction in the Revolving
        Credit Maximum Amount in the Applicable Sublimits.

The Debtors are currently negotiating with the Banks over the
final terms of the extension of the DIP Financing. Given their
time constraints however, the Debtors determined that it is
necessary to file this request even before these negotiations
are concluded.

Ha-Lo Industries, Inc. provides full service, innovative brand
marketing in the custom and promotional products industry. The
Company filed for chapter 11 protection on July 30, 2001. Adam
G. Landis, Eric Lopez Schnabel, Mary Caloway at Klett Rooney
Lieber & Schorling represent the Debtors in their restructuring
efforts.


HELLER EQUIPMENT: Fitch Lowers 4 Receivable-Backed Notes Classes
----------------------------------------------------------------
Fitch Ratings downgrades the following classes of securities:

          Heller Equipment Asset Receivables Trust 1999-2
                          (HEART 1999-2)

--Class B Receivable-Backed Notes downgraded to 'A' from 'AA-';

--Class C Receivable-Backed Notes downgraded to 'BB' from 'BBB';

--Class D Receivable-Backed Notes downgraded to 'B' from 'BB';

--Class E Receivable-Backed Notes downgraded to 'CCC' from 'B-';

All classes remain on Rating Watch Negative.

The class A-1 and A-2 receivable-backed notes, both rated 'AAA',
have been fully repaid. The class A-3 has been affirmed and
removed from Rating Watch Negative. Class A-4 remains on Rating
Watch Negative.

In addition, the class C and class D of Heller Equipment Asset
Receivables Trust 1999-1 remain on Rating Watch Negative.

These rating actions are the result of continued adverse
collateral performance and deterioration of asset quality
outside of Fitch's original base case expectations.
Specifically, both the aggregate amount and rate of gross
defaults and net losses has significantly impaired the
collateralization position in the transaction, reducing the
remaining credit enhancement available to all classes of
securities. In the past two months defaults have continued to
increase dramatically, with a combined total of $3,036,883.
Recoveries continue to come in slower and lower than expected,
further exacerbating the undercollateralization position. While
recovery realizations have served to partially offset the amount
of gross defaults, both the pace and the percentage of these
recoveries are occurring slower than Fitch's expectations based
on the company's historical performance. Cumulative gross
defaults and cumulative net losses through the May 14, 2002,
distribution dates are 6.59% and 3.95%, respectively. These
levels are significantly higher than historical static pool data
provided to Fitch before the transaction closed.

To date, the recovery realization experience in the HEART 1999-2
transaction is 40.1%. However, when isolating just the gross
defaults that have been fully written off (contracts where all
recovery effort exhausted) the recovery realization percentage
is approximately 94%. The significant differential in recovery
realization rates is attributed to the time it takes the
servicer to remarket, repossess and recover on defaulted
contracts. Historically, the timing lag in recovery realization
was between three and six months, but in the HEART 1999-2
transaction, Fitch is observing timing lags of more than one
year.

The rate and timing of recovery realizations becomes a critical
remedy impacting credit enhancement because of the severe
undercollaterization position in HEART 1999-2. Fitch will
continue to closely monitor this transaction and may take
additional rating action in the event of further default and
recovery deterioration.


IT GROUP: Court Allows Debtor to Reject 23 Nonresidential Leases
----------------------------------------------------------------
Judge Walrath permits The IT Group, Inc., and its debtor-
affiliates to reject 23 nonresidential real property leases
effective as of March 31, 2002.  This is with the exception of
these leases which will be rejected effective April 24, 2002:

   Landlord/ Non-debtor Party               Site
   --------------------------  ---------------------------------
   Highwoods Realty            Patewood Dr, Greenville SC
   Gateway 51 Partnership      Columbia Gateway Dr, Columbia, MD
   Washington Real Estate Inv  Parklawn Dr., Rockville, MD
   W. 42nd Street Realty       E. Wood St., Phoenix, AZ
   Starwood Asset Management   Washington, DC

According to Judge Walrath, affected parties intending to assert
rejection damages claim must file proof of claim not later than
the later of June 9, 2002 or the applicable bar date to be
established in these cases.

                            *   *   *

As previously reported, The IT Group, Inc. and its debtor-
affiliates have determined that 23 office and warehouse spaces
are no longer needed in the Debtors' ongoing operations.
Rejection of these nonresidential real property leases will help
the Debtors to save approximately $171,128 a month.

The leases and subleases to be rejected are:

   Landlord/ Nondebtor Party               Site
   -------------------------   ---------------------------------
   Prudential Jack White       Business Park Blvd, Anchorage, AK
   Fyfe Partnership            East 59th St, Anchorage, AK
   East-West Towers            Suite 200, Bethesda, MD
   Gateway 51 Partnership      Columbia Gateway Dr, Columbia, MD
   Oregon Venture Group        Bertelsen Rd, Eugene, OR
   Global Finance              Airport Way, Fairbanks, AK
   College Partners            College Ave, grand Rapids, MI
   PARMCO                      Broadway SW, Grandville MI
   Highwoods Realty            Patewood Dr, Greenville SC
   Hunter's Chase Apartments   Marlton, NJ
   H & W Realty                Boundary Rd., Midlothian, VA
   Cary Gateway                Morrisville, NC
   Skillman Corp.              New Brighton, MN
   Woodmen of the Word Society Farnam, St., Omaha, NE
   W. 42nd Street Realty       E. Wood St., Phoenix, AZ
   Washington Real Estate Inv  Parklawn Dr., Rockville, MD
   Technology Park Partners    San Bernardino, CA
   Transcontinental Realty     San Francisco, CA
   Starwood Asset Management   Washington, DC
   Geis Realty Group           Drummers Lane, Wayne, PA
   Promenade Office Park       Westlake Village, CA
   Walter M. Rose              Kennedy Business Pk, Windsor, CT
   Windsor Industrial Park.    Windsor, NJ
(IT Group Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  


INTEGRATED HEALTH: Seeks Okay of American Appraisal Engagement
--------------------------------------------------------------
Integrated Health Services, Inc., and its debtor-affiliates ask
the Court to authorize the retention and employment of American
Appraisal Associates, Inc. as an expert witness in connection
with the Debtors' litigation with Litchfield over the use and
occupancy value for the Facilities, nunc pro tunc to March 1,
2002.

As previously reported, IHS-Lester is a lessor of 43 long term
care facilities owned by Litchfield Investment Company, LLC. The
underlying leases for the Facilities were rejected by IHS-Lester
pursuant to an order of the Court dated December 26, 200l. IHS-
Lester currently occupies the Facilities and is in litigation
with Litchfield to establish, among other things, the Debtors'
existing and future use and occupancy obligations to Litchfield.
The matter has been argued before the Court and is currently sub
judice.

In early March 2002, the Debtors' counsel approached American to
serve as an expert witness in connection with the use and
occupancy issue. The Debtors selected American to serve as an
expert witness because American has expertise in appraising
nursing home facilities such as the ones involved here and
American has agreed to offer its services at a reasonable rate.

American was asked to evaluate, prepare an expert report and
testify to its opinion as to the fair use and occupancy value
for the Facilities. Because of the time-sensitive nature of the
engagement, which would require American to prepare an analysis
to be used in the litigation (which at the time was expected to
be tried before the Court in late March or early April) American
promptly commenced its services for the Debtors, with the final
terms of its engagement to be negotiated thereafter.

By late March, American had prepared a draft of a market-based
fair rental value study for the Facilities. In early April,
American agreed to (i) provide the draft to Debtors' counsel and
complete the study thereafter, in exchange for a flat fee of
$13,000; and (ii) appear and testify as an expert witness, as
well as provide further consulting services upon request, to be
compensated at a rate of $250 per hour. As the beneficiary of
American's services, the Debtors agreed to pay American's fees
and to indemnify American for losses by American arising in
connection with the engagement.

Thereafter, American was deposed by Litchfield and completed its
fair rental value study. American also appeared and testified
before the Court in early May at the hearings on the use and
occupancy issue. As such, the Debtors believe that the services
required of American have been substantially completed.

The Debtors believe that the retention of American falls outside
the scope of Section 327(a) of the Bankruptcy Code.  They also
believe that given the limited scope of the engagement and the
relatively small cost involved, payment of American's fees is an
"ordinary course" use of the Debtors' property for which Court
approval is not required. Moreover, although the obligations to
pay and indemnify American will be borne by the Debtors,
American was retained by the Debtors' counsel. The Debtors
believe there is decisional authority that an expert witness is
not a "professional" for purposes of Section 327(a) of the
Bankruptcy Code and need not be authorized by the Court prior to
its retention. For these reasons, the Debtors believe the
retention and payment of American for its services as an expert
witness do not require Court approval. Nevertheless, the Debtors
seek approval in an abundance of caution and in an effort to
give American assurance that Court approval of its engagement,
to the extent necessary, has been obtained.

To the extent that the Court finds that the relief requested
falls within the scope of Section 327(a), the Debtors request
that the Court grant American's retention nunc pro tunc to March
1, 2002. The Debtors explain that, at the time American was
engaged by the Debtors' counsel, American was asked to produce
its fair rental value study on an expedited basis.

American will apply for compensation in connection with this
limited engagement and for reimbursement of actual and necessary
expenses incurred, in accordance with the applicable provisions
of the Bankruptcy Code, the Bankruptcy Rules, and the local
rules and orders of this Court. The Debtors request that
American not be required to submit time records in connection
with the preparation of the fair rental value study, which
American provided the Debtors in exchange for a flat fee of
$15,000.

Although American was also asked to conduct a conflicts check
and prepare an affidavit of disinterestedness, American's lack
of familiarity with the professional retention process, combined
with the demands it faced in preparing the study within a tight
time frame and preparing for the deposition and trial, resulted
in a delay until May 6, 2002, of American's completion of its
conflicts check and affidavit.  To the best of the Debtors'
knowledge, information, and belief, American does not have any
connection with the Debtors.  They do not have any connection
with their creditors or any other parties in interest in the
Chapter 11 cases or its respective attorneys, except in matters
unrelated to and having no effect upon or influence on the
Debtors' Chapter 11 cases. The Debtors believe that American is
a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code, as modified by section 1107(b)
of the Bankruptcy Code. (Integrated Health Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


KMART: Bluelight.com Intends to Reject Totality Services Pact
-------------------------------------------------------------
Bluelight.com and Totality Corporation are parties to a Master
Services Agreement dated September 1, 2001.  Totality agreed to
perform services for Bluelight, including maintaining and
administering certain computer hardware.  In addition, Totality
provided Bluelight with production support and change control
for their software, servers and networks.

J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom,
in Chicago, Illinois, relates that Bluelight.com has completed
the outsourcing of certain business e-commerce and ISP
operations, which were supported by Totality.  Mr. Ivester notes
that the hardware that Totality was maintaining has been
returned to the lessors and Bluelight no longer needs the
support services for the operations that they have outsourced.

According to Mr. Ivester, Bluelight.com was paying Totality
approximately $170,000 a month for the Services.  To avoid
incurring unnecessary expenses, Bluelight has decided to reject
the Master Services Agreement.  The Debtors ask the Court to
authorize the rejection of the Agreement effective May 1, 2002.
(Kmart Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   


LERNOUT & HAUSPIE: Court Approves Holdings' Disclosure Statement
----------------------------------------------------------------
In the only response filed to L&H Holdings USA's First Amended
Disclosure Statement, James Baker, Janet Baker, JK Baker LLC and
JM Baker LLC request the inclusion of a statement making clear
that nothing in the Disclosure Statement, the plan of
liquidation of L&H Holdings USA, Inc, to which the Disclosure
Statement pertains, the Plan itself, or any order approving or
denying approval of such Plan is designed or intended to, or in
any way does or will, modify, amend or alter the terms of the
Stipulation and Order by and between the Bakers, L&H Holdings
USA, Inc. and Lernout & Hauspie Speech Products N.V. approved by
the Bankruptcy Court, including but in no way limited to the
scope of and limitation on the persons and entities released by
the Bakers and the treatment of claims assigned to the Debtors,
including in the event of payment of the unsecured creditors of
L&H Holdings, Inc.  Gregory Werkheiser, Esq., representing L&H
Holdings, announces that the Bakers' request has been resolved
by the parties, and that resolution will be reflected in the
Order approving the Disclosure Statement.

In the absence of any objection and after hearing evidence and
the arguments of counsel, Judge Judith Wizmur approves the
adequacy of the information in Holdings' Disclosure Statement.
(L&H/Dictaphone Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  


MDC CORP: S&P Revises BB- Credit Rating Outlook to Negative
-----------------------------------------------------------
Standard & Poor's revised its outlook on marketing communication
and secure transaction services provider MDC Corp. Inc. to
negative from stable following asset sales and a shift in long-
term strategy.

At the same time, the double-'B'-minus long-term corporate
credit rating and single-'B' subordinated debt rating on the
Toronto, Ontario-based company were affirmed. MDC has C$350
million of pro forma lease-adjusted debt outstanding.

"The outlook revision reflects the uncertainty surrounding MDC's
long-term business strategy and risk profiles following the sale
of its Canadian check printing subsidiary, Davis + Henderson, in
March 2002, which also resulted in a significant shift in the
company's business mix," said Standard & Poor's credit analyst
Barbara Komjathy.

The ratings reflect MDC's number-two market position in the
competitive, but growing U.S. direct-to-consumer check printing
industry, and the business and geographic diversity provided by
its marketing communication subsidiary, Maxxcom, and its secured
ticket and stamp printing groups. The ratings also take into
consideration MDC's lower debt levels following the repurchase
of US$112.5 million of its senior subordinated notes in a
modified Dutch action in April 2002, offset by its smaller pro
forma cash flow base.

Standard & Poor's considers MDC's business profile weaker
following the sale of Davis + Henderson, which generated close
to 50% of the company's EBITDA historically, and provided stable
cash flows, geographic diversity, and contractual relationships
with major Canadian financial institutions. MDC's pro forma
EBITDA base of C$75 million is about 50% lower than its 1999-
2000 base, and is generated by more cyclical and competitive
businesses. The company expects future growth will be driven by
the business opportunities derived from its U.S. direct-to-
consumer check operations and the Canadian smart card business.

MDC's pro forma financial profile, particularly leverage and
interest coverage measures, has improved, reflecting about C$475
million in net proceeds from asset sales, including the sale of
Regal Greetings & Gifts in December 2001 and Davis + Henderson,
which were used mainly to reduce outstanding debt. Standard &
Poor's estimates that pro forma lease-adjusted total debt to
EBITDA improved to 4.7 times for the last 12 months ended March
31, 2002, compared with 5.4x for the last 12 months ended Sept.
30, 2001. This leverage is further offset by MDC's cash position
of C$70 million at March 31, 2002.

The company is expected to demonstrate in the medium term that
it can maintain financial and business profiles in line with the
rating category, in light of a pro forma business mix that has
higher cyclicality, and lower inherent profitability and cash
flow generation than in the past.


N2H2 INC: Adopts Rights Plan to Protect Shareholders' Interests
---------------------------------------------------------------
N2H2, Inc. (OTC Bulletin Board: NTWO), an Internet access
management company specializing in fast and scalable filtering
solutions, announced that its Board of Directors has adopted a
Shareholder Rights Plan and declared a dividend distribution of
one Preferred Share Purchase Right on each outstanding share of
N2H2 common stock.

The rights are designed to ensure that all N2H2 shareholders
receive fair and equal treatment in the event of a proposed
takeover of N2H2, and to guard against unsolicited attempts to
acquire control of N2H2 that do not offer an adequate price to
all shareholders or are otherwise not in the best interests of
N2H2 and its shareholders.  N2H2 did not adopt the plan in
response to any specific effort to acquire control of the
company, and it is not aware of any such takeover plans at this
time.

The nontaxable dividend distribution will be made on May 31,
2002, payable to shareholders of record on that date.  The
rights will expire on May 24, 2012.

N2H2 Inc. is an Internet access management company specializing
in fast and scalable filtering solutions. N2H2 Internet
filtering optimizes Web access -- enabling organizations of any
size to limit potential legal liability, conserve bandwidth and
increase user productivity.

Based in Seattle, Washington, N2H2 has more than 16.5 million
users -- including an international presence in over 20
countries.  The company has developed the highest quality
database of its kind through a unique combination of advanced
artificial intelligence and expert human review.  N2H2 develops
flexible Internet management solutions for organizations through
its alliances with leading technology partners including
Microsoft, Cisco, and Check Point. Additional information about
the company is available at http://www.n2h2.comor by calling  
206-336-1501 or 800-971-2622.

As previously reported, N2H2 Inc. was delisted from Nasdaq
National Market for failure to comply with the continued listing
requirements. It has been trading on OTC Bulletin Board
effective March 31, 2002.


NATIONAL STEEL: Intends to Implement Key Employee Retention Plan
----------------------------------------------------------------
National Steel Corporation and its debtor-affiliates seek the
Court's authority to:

    (i) implement an employee retention program and a severance
        program; and

   (ii) continue an existing executive deferred compensation
        plan.

Mark A. Berkoff, Esq., at Piper Rudnick, in Chicago, Illinois,
tells the Court that the Retention Program, Severance Program,
and Deferred Compensation Plan are part of a comprehensive
program designed by the Debtors to minimize management and other
key employee turnover.  The Debtors intend to do this by
providing incentives for employees, including senior management,
to remain in their employ and work towards a successful
reorganization of the estates.  After extensive negotiations,
Mr. Berkoff says, the Debtors were able to get the support of
the Creditors' Committee in the relief requested.

The Debtors are concerned that uncertainty surrounding their
Chapter 11 cases may lead to employee resignations and reduced
employee morale.  Mr. Berkoff relates that losing key employees
will severely harm the Debtors in many ways:

  (1) key employees are difficult to replace because experience
      job candidates often find the prospect of working for a
      Chapter 11 company unattractive;

  (2) the Debtors will have to pay huge sums -- to executive
      search firms to find suitable replacement for senior
      management employees, and to the qualified candidates to
      accept the employment; and

  (3) the loss of any important employee generally leads to
      additional employee departures.

To address these problems, the Debtors turned to Ernst & Young
LLP for assistance in the analysis and development of a market
competitive and effective employee retention program.  According
to Mr. Berkoff, Ernst & Young developed an overall retention
program that incorporates competitive compensation targets and
the most effective components of the plans used in other Chapter
11 cases.

The Debtors also asked the Creditors' Committee for its views on
the proposed terms and conditions of the retention program.
"Modifications were made to result in significantly reduced
obligations to covered employees," Mr. Berkoff notes.

The Program has four key components:

(a) Retention Program -- covers 95 key employees;

(b) General Severance Program -- covers 1,500 non-union
    employees without employment contracts; it is designed to
    ensure basic job protection for employees at all levels;

(c) Senior Management Severance Program -- covers 11 key
    executive officers and nine other key management employees
    that have pre-petition contracts; and

(d) Deferred Compensation Plan -- it is designed to ensure
    continuation of certain existing benefits to 11 key
    executives.

The Debtors contend that:

  -- the number of executives and employees covered by the
     Retention Program and Severance Program is within range of
     competitive practice; and

  -- the amount of the proposed bonuses, severance and other
     benefits is within the range of competitive practice.

A. The Retention Program -- Pay to Stay and Emergence Bonuses

  The Retention Program provides for distribution of pay-to-stay
  bonuses to 95 key employees based on a percentage of the
  employee's annual base salary.  The Retention Program is
  designed to incentivize these key employees to remain in the
  employ of the Debtors throughout these reorganization cases.
  Specifically:

  (a) Tier I Employees -- up to 12 current key employees,
      comprised of the Chief Executive Officer, the Chief
      Operating Officer and Vice-Presidents of the Debtors,
      shall receive Pay-to-Stay Bonuses equal in the aggregate
      to 47% of their Annual Base Compensation;

  (b) Tier II Employees -- up to 62 current key employees,
      comprised of certain general managers and certain director
      level employees of the Debtors, shall receive Pay-to-Stay
      Bonuses equal in the aggregate to 31% of their Annual Base
      Compensation; and

  (c) Tier III Employees -- up to 21 current key employees,
      comprised of certain other director level employees, shall
      receive Pay-to-Stay Bonuses equal in the aggregate to 21%
      of their Annual Base Compensation.

  The proposed Pay-to-Stay Bonuses shall accrue from the
  Petition Date until 22 months later.  Pay-to-Stay Bonuses
  shall be payable in four equal installments on specified dates
  in arrears, provided that the respective employee remains in
  the Debtors' employ on each payment date.  If approved by
  the Court, the Debtors will pay the Pay-to-Stay Bonuses on
  these dates:

       -- July 6, 2002 (4 months after the Petition Date);
       -- January 6, 2003 (10 months after the Petition Date);
       -- July 6, 2003 (16 months after the Petition Date); and
       -- January 6, 2004 (22 months after the Petition Date).

  The cost of providing the Pay-to-Stay Bonuses will be at most
  $4,000,000.

  The Retention Program also provides for the Debtors to pay
  bonuses to these 95 key employees upon Emergence.
  Specifically, the Tier I, II and III Employees shall receive
  an Emergence Bonus equal to 47%, 31% and 21% of their Annual
  Base Compensation, respectively.  The total maximum cost of
  providing the Emergence Bonuses is $4,000,000.

  Under the Retention Program, Emergence means the earlier of:

       (a) the effective date of a confirmed plan of
           reorganization; or

       (b) the date of a Change-in-Control.

    A Change-in-Control means:

       (i) the sale, disposition or other transfer of all or
           substantially all of the assets of the Debtors on an
           operating basis in one or a series of related
           transactions, or

      (ii) any entity, other than NKK Corporation or any
           subsidiary thereof, becoming the beneficial owner,
           directly or indirectly, of securities of the Debtors
           representing at least a majority of the combined
           voting power of the Debtors' then outstanding voting
           securities.

  In sum, the Emergence Bonus is designed so that it is payable
  only upon a successful outcome for these cases, i.e.,
  confirmation of a reorganization plan or a transaction
  involving substantially all of the Debtors' assets.

  In total, the Tier I, II and III Employees have the potential
  to receive Pay-to-Stay and Emergence Bonuses aggregating 94%,
  62% and 42% of their Annual Base Compensation, respectively,
  for an estimated total maximum cost of approximately
  $8,000,000.  Notwithstanding the foregoing, the Chief
  Executive Officer and Chief Operating Officer will not receive
  interim Pay-to-Stay Bonuses like the other Participants, but
  instead will only receive their Pay-to-Stay Bonuses upon
  Emergence in a lump sum.

  Finally, if the date of Emergence occurs prior to the 22-month
  anniversary of the Petition Date (January 6, 2004), then
  within three business days from the date of the Emergence, a
  Participant will be paid a hump-sum cash amount equal to the
  aggregate value of all the Participant's Retention Payments,
  including any applicable Emergence Bonus, less any Retention
  Payments paid to the Participant prior to the date of
  Emergence.

B. The General Severance Program (Non-Union Employees Without
   Employment Contracts)

  The Debtors propose to make severance payments to employees
  that are involuntarily terminated by the Debtors without
  cause.  The Debtors propose to cover approximately 1,500
  non-union employees under the General Severance Program.
  Consistent with prior business practices, an employee's
  entitlements under the General Severance Program will depend
  on whether the employee has signed a wavier that releases the
  Debtors from any and all potential claims of the terminated
  employee.

  Specifically, if a terminated employee does not sign a waiver,
  then the employee would be entitled to one week of pay for
  each full year of service, with a maximum of up to four weeks
  of pay, and would be paid any unused vacation. The employee,
  however, would not be eligible to receive Company-paid COBRA
  benefits.

  If a terminated employee signs a waiver, then the employee
  would be entitled to receive between two to nine months of
  pay, with the actual amount payable dependant on both the
  individual employee's years of service and tier level of
  employment within the Debtors. Moreover, during the two to
  nine months severance period, the terminated employee would be
  eligible to receive Company-paid COBRA benefits. Finally, the
  employee would also be paid any unused vacation.

  Assuming that all 1,500 employees were summarily terminated
  (which, of course, is not anticipated to occur), the
  theoretical total cost of the General Severance Program would
  be approximately $43,600,000.

  Notwithstanding these theoretical costs, the Debtors have
  agreed with the Creditors' Committee to impose three
  limitations on the Debtors' ability to pay severance under the
  General Severance Program:

  (1) No employee will be entitled to payments under the General
      Severance Program if the employee is terminated in
      connection with or after the announcement of the closing
      or substantial closing of a major operating facility of
      the Debtors;

  (2) The Debtors may not continue to make severance payments
      under the General Severance Program if and after an
      aggregate total of $6,900,000 has been spent; and

  (3) The Debtors may not continue to make severance payments
      under the General Severance Program if and after the
      aggregate number of persons severed reaches 15% of the
      salaried workforce as of the date the Court approves the
      General Severance Program.

  Notwithstanding these limitations, if there is a Change-in-
  Control of the Debtors, the Debtors shall be authorized to
  make payments under the General Severance Program totaling $
  17,000,000 in the aggregate, inclusive of any severance
  amounts actually paid prior to the Change in Control.  An
  employee shall be entitled to severance in a Change-in-Control
  if the employee is not employed by the acquirer or successor
  company or is terminated without cause less than three months
  after the Change-in-Control.  Finally, any payments under the
  General Severance Program (which shall not be paid in a lump
  sum, but shall be paid in the form of continuing salary) are
  subject to mitigation by the terminated employee upon
  obtaining other employment.

C. The Senior Management Severance Program (Non-Union Employees
   With Employment Contracts)

  As of the Petition Date, 20 key employees of the Debtors had
  employment contracts with the Debtors.  The Debtors are not
  seeking to assume or reject these employment contracts at this
  time.  With one exception, none of these Key Officers are part
  of the General Severance Program, however, and thus as part of
  the Program, the Debtors are seeking to provide the Key
  Officers with certain severance and other benefits that are
  currently provided for in the their Employment Contracts.  The
  Key Officers consist of:

  Name                   Title
  ----                   -----
  Hisashi Tanaka         Chairman and CEO
  John Maczuzak          President and COO
  Kirk Sobecki           SVP and Chief Financial Officer
  Ronald Werhnyak        SVP, General Counsel and Secretary
  John Kaloski           SVP - Commercial and Planning
  John Davis             VP - Purchasing, IT and Engineering
  Michael Gibbons        VP and GM - Granite City Division
  Stephen Denner         VP - Research and Technology
  Daniel Joeright        VP and GM - Regional Division
  William McDonough      VP and Treasurer
  Lawrence Zizzo         VP - Human Resources
  Thomas Peluso          VP/GM of National Steel Pellet Company
  Robert Foley           Asst. Controller - Accounting
  Stephen Thomas         Asst. Treasurer
  Scott Ryan Hunter      Asst. Controller - Finance
  John Moran Jr.         Senior Counsel and Asst. Secretary
  Tamara Freeman         GM - Safety, Health & Employee Welfare
  Vikram Singh           Director - Human Resources of National
                         Steel Pellet Company
  Scott Montross         GM - Sheet, Tin and Appliance Sales

  The Debtors believe that these Key Officers are entitled to
  certain severance and other protections, which are typical for
  senior executives and managers, are necessary to ensure their
  continued employment and efforts in these cases for the
  benefit of all constituencies.

  Each Key Officer under the Senior Management Severance Program
  shall be entitled to severance payments in the amounts subject
  to certain limitations.  Severance payments provided under the
  Employment Contracts range from one to two times the sum of
  the terminated employee's Annual Base Compensation plus Bonus.
  The aggregate potential cost of severance benefits provided
  under the Senior Management Severance Program equals
  $8,900,000.

  The severance benefits, while generally as set forth in the
  Employment Contracts, shall be limited in the Senior
  Management Severance Program as:

  (1) For all Key Officers other than the CEO and COO, upon a
      severance event, rather than receiving all severance
      payments in a single lump sum as provided for in the
      Employment Contracts, the terminated Key Officer will
      receive in a lump sum the lesser of:

           (i) the severance payment specified in the relevant
               Employment Contract, or

          (ii) a payment equal to one year's Annual Base
               Compensation plus Bonus.

      Any severance amounts specified in the relevant Employment
      Contract in excess of the Lump Sum Payment are fully
      earned but subject to mitigation by the terminated Key
      Officer upon obtaining new employment.

  (2) With respect to the CEO and COO, although their employment
      contracts provide for two years' severance, these Key
      Officers will initially be entitled under the Senior
      Management Severance Program to only one year of
      severance, but shall earn an additional month of severance
      entitlement for each month of continuing employment by the
      Debtors after the Petition Date, capped at two years.

  (3) The CEO and COO shall not receive any severance in a lump
      sum, but instead, as to them, all severance payments shall
      be paid in the form of continuing salary, subject to
      mitigation upon obtaining new employment.

  With respect to severance after a Change-in-Control, severance
  shall only be payable if payable under the pre-petition
  employment contracts, if the employee is not employed by the
  acquirer or successor company or if the employee is terminated
  within six months of the Change-in-Control.

  In addition to the severance entitlements, under the Senior
  Management Severance Program, the Key Officers shall be
  entitled to indemnification by the Debtors to the extent set
  forth in Debtors' charter or bylaws, the Employment Contracts
  and indemnification agreements with the Key Officers, but the
  indemnification shall be limited to:

  (a) available director and officer liability insurance
      coverage, and

  (b) advancement of attorney fees and expenses and amounts not
      covered by an insurer as a result of deductibles or
      retention provisions.

  This ensures that the Key Officers have appropriate coverage
  from the Debtors for amounts not covered by director and
  officer liability insurance, but not coverage in a potentially
  unlimited amount.

D. The Deferred Compensation Plan

  Before the Petition Date, the Debtors maintained the Deferred
  Compensation Plan for 11 senior executives.  The Deferred
  Compensation Plan is intended to be a non-qualified retirement
  plan under the Internal Revenue Code and the Employee
  Retirement Income Security Act of 1974, as amended.  The
  Deferred Compensation Plan provides supplemental benefits to
  these executives in addition to benefits that the employees
  may be eligible to receive under the Debtors' qualified
  retirement plans.  These 11 senior executives funded the
  Deferred Compensation Plan by deferring receipt of wages they
  had earned from the company and contributed the wages to the
  plan.  This type of plan is common in large corporations and
  is commonly funded through a "Rabbi Trust".  Rabbi Trusts are
  grantor trusts that qualify for certain tax benefits under the
  Internal Revenue Code, but to do so also require that, in the
  event of bankruptcy of the company, the funds in the trust
  become subject to the claims of the company's general
  unsecured creditors.

  The Debtors' grantor trust contains funds with an approximate
  value of $870,000, which covers the deferred compensation
  earned by these officers as of December 31, 2001.  Rather than
  forcing the employees to lose previously earned compensation
  that they voluntarily deferred, the Debtors propose to
  continue the Deferred Compensation Plan post-petition and
  exempt these funds from creditors' claims.  Because these
  funds were already earned by the executives, the Debtors
  believe that it would be extremely unfair to these employees
  if their own deferred compensation were to vanish, and that to
  retain these key personnel, other compensation would have to
  be provided in any event. (National Steel Bankruptcy News,
  Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-
  0900)


NATIONSRENT: Retains Exclusive Right to File Plan Until Aug. 16
---------------------------------------------------------------
NationsRent Inc. and its debtor-affiliates, Judge Walsh rules,
will retain the exclusive right to propose and file a plan
through and including August 16, 2002, and retains the exclusive
right to solicit creditors' acceptances of that plan through and
including October 16, 2002.  Judge Walsh makes it clear that
these extensions are without prejudice to the Company's right to
request further extensions. (NationsRent Bankruptcy News, Issue
No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900)


NORTEL NETWORKS: Mulls-Over Actions to Strengthen Balance Sheet
---------------------------------------------------------------
Nortel Networks Corporation (NYSE:NT) (TSX:NT.) reconfirmed its
expectation for improved pro forma net loss from continuing
operations(a) performance in the second quarter of 2002 compared
to first quarter of 2002. The company said it now expects
revenues in the second quarter of 2002 to be flat to down 5
percent, compared to the first quarter of 2002, updating its
previous sequential revenue guidance of "not significantly up or
down."

Nortel Networks also announced plans to further realign its
Optical Long Haul business, including optical components, to the
current market conditions given that it does not expect a
meaningful recovery in the long haul optical market before late
2003/early 2004. The company plans to streamline the business
and focus on the capabilities that will be required when
increased spending in the long haul optical market is expected
to resume, including optical switching (OPTera HDX/DX), next
generation photonic transport capabilities and end-to-end
network management and intelligence. The plan includes the
potential sale and/or resizing of the optical components
business.

"We are aligning our optical business model to where we see the
industry going to ensure we are well positioned when spending
resumes," said Frank Dunn, president and chief executive
officer, Nortel Networks. "Optical backbone networks are the
foundation of multimedia broadband networks and we expect Nortel
Networks to remain an industry leading provider of end to end
optical networking solutions. Going forward, we will focus on
our leadership in optical systems and work with our partners to
ensure ready access to high performance, low cost optical
components."

Dunn added, "Our focus is to bring all of our business units
into a profitable position at the current market levels. These
actions help to do that and will reduce our overall break even
cost structure to approximately US$3.2 billion of quarterly
revenues (not including costs related to acquisitions and any
special charges or gains), down from the previous target of
approximately US$3.5 billion. We expect this cost structure to
be in place by the fourth quarter of 2002. We also continue to
work closely with our customers and are seeing excellent
acceptance of our market leading solutions, even in this
difficult market, particularly in next generation wireless
networks, enterprise solutions, metro optical and voice over
packet."

The realignment of the Optical Long Haul business, including
optical components, is expected to be completed by the end of
the third quarter of 2002 and is intended to impact
approximately 3,500 related positions. Nortel Networks plans to
record charges of approximately US$600 million, the majority of
which is expected to be recorded in the second and third
quarters of 2002. The cash component of this charge is expected
to be up to US$200 million. These charges are incremental to the
expected charge of approximately US$150 million to be taken in
the second quarter of 2002 related to previously announced
workforce reductions.

The company noted that, taking into account these announced
plans, it has sufficient liquidity to fund these actions and its
operations, and expects to be in compliance with its covenants
under various bank facilities, all of which are undrawn. To
further strengthen its balance sheet and supplement its
liquidity, the company continues to consider opportunities to
raise additional capital and may pursue an equity-based
financing transaction as market conditions permit.

Taking into consideration changes to previously anticipated
divestiture plans and the completion of Wednesday's announced
actions, some of which were considered in its previous headcount
target estimate of 44,000, the company now expects a workforce
of approximately 42,000. Going forward, Nortel Networks will
continue to monitor the market and adjust its business model, as
appropriate, in its drive to return to profitability in the near
term.

Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Metro and Enterprise Networks,
Wireless Networks and Optical Long Haul Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com  

As previously reported, Moody's has downgraded Nortel Networks'
debt ratings to a low-B Level and its 2001-1 Certificates to
Ba3. Meanwhile, Standard & Poor's lowered the company's Lease
Pass-Through Certificates Rating to BB-.

Nortel Networks Ltd.'s 6.125% bonds due 2006 (NT06CAN1),
DebtTraders says, are trading at about 73.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for  
real-time bond pricing.


O.D. HOPKINS: Will Auction-Off Concord Facility on Tuesday
----------------------------------------------------------
A 68,000+/- Sq.Ft. Manufacturing Facility in Concord, New
Hampshire will go on the Auction Block on Tuesday, June 4th at
10:00 a.m.  The facility was home to O.D. Hopkins Associates,
Inc., a manufacturer of amusement rides.  O.D. Hopkins
Associates, Inc. filed for Chapter 7 Bankruptcy last fall.  The
Auction is being conducted to foreclose on the mortgage held by
Bank of New Hampshire.  The building, built in 1995, is located
just off of Route I-93 in the village of Penacook, and is
situated on 11+/- acres.

Also being sold at Auction by way of Secured Party's Sale is all
of the remaining manufacturing equipment and office furniture.

Paul McInnis, Inc. of North Hampton, New Hampshire will be
conducting the Auction.  A Preview is scheduled for Monday, June
3rd from 9:00 a.m. to 12:00 noon.  More information is available
at http://www.paulmcinnis.comor by calling 1- 800-242-8354.


OMNA MEDICAL: Confirmation Hearing in Delaware on June 27
---------------------------------------------------------
Bankrupt Omna Medical Partners Inc., a health care provider
facing lawsuits against its officers and directors, received
court approval on Tuesday, May 28, 2002, for a proposed
reorganization plan that would give unsecured creditors up to a
50 percent recovery on their $1.2 million claim, reported The
Daily Deal.  According to Adam Friedman, Esq., the lawyer in the
case, Judge Randall Newsome in the U.S. Bankruptcy Court for the
District of Delaware approved a disclosure statement for the
plan, which also calls for Omna to fully pay Fleet Capital Corp.
on its $20 million post-petition claim.

Boca Raton, Florida-based Omna will also sell its last operating
facility back to a medical group, Clearwater, Florida-based
Spinecare Associates for $5 million, reported the Deal.  Omna
will then liquidate.  Omna sought chapter 11 bankruptcy
protection on March 24, 2000.  A confirmation hearing for Omna's
liquidation plan has been set for June 27. (ABI World, May 29,
2002)


OWENS CORNING: Asks Court to Appoint WH Smith as Fee Auditor
------------------------------------------------------------
Owens Corning and its debtor-affiliates ask the Court to approve
the application to appoint Warren H. Smith & Associates P.C. as
fee auditor in the Debtors' Chapter 11 cases, nunc pro tunc to
April 29, 2002.

Norman L. Pernick, Esq., at Saul Ewing LLP in Wilmington,
Delaware, tells the Court the appointment of a fee auditor is
necessary in order to aid the Court's review of the fee
applications filed in the Debtors' Chapter 11 cases. The
appointment of the Fee Auditor, he goes on to say, will provide
the Court with a disinterested means of identifying and
reporting on problems with the fee applications filed in the
cases.

The number of legal, financial and other professionals retained
in the Debtors' cases has increased with the appointment of the
Official Committee of General Unsecured Creditors and the
Official Committee of Asbestos Claimants, as well as the
appointment by the Court of James J. McMonagle, Esq., as Futures
Representative. The fee applications filed by the retained
professionals are both numerous and lengthy, involving
significant amounts of review time on a monthly basis. These
have been administered pursuant to the Amended Compensation
Order but nonetheless, the Court at a hearing on February 25,
2002, directed the Debtors to prepare the papers necessary for
the retention of a fee auditor.

Mr. Pernick states that the appointment of WH Smith would vacate
the Amended Compensation Order since the application largely
incorporates the terms of that Order.

WH Smith will abide by these procedures in performing its
duties:

A) Review in detail Interim Fee Requests and final fee
   applications filed with the Court by Applicants in these
   cases pursuant to Sections 330 and 331 of the Bankruptcy
   Code, and Delaware Bankruptcy Court Local Rule 2016-2. To the
   extent reasonably practicable, the Fee Auditor will avoid
   duplicative review when reviewing final fee applications
   comprised of Interim Fee Requests that have already been
   reviewed by the Fee Auditor.

B) During the course of its review and examination, the Fee
   Auditor shall consult with each Applicant concerning such
   Applicant's Fee Application if it notes any areas of concern
   regarding reasonable, actual and necessary fees and expenses.

C) During the course of its review, the Fee Auditor may review
   any filed documents in these cases and will be responsible
   for general familiarity with the docket in these Chapter 11
   cases. The Fee Auditor will be deemed to have filed a request
   for notice of papers filed in these cases under Bankruptcy
   Rule 2002. The Fee Auditor will be served with all the
   papers.

D) Each Applicant will serve each of its Fee Applications, in
   hardcopy format, on the Fee Auditor. In addition, each
   Applicant will also e-mail to the Fee Auditor and the United
   States Trustee the Fee Detail supporting the Fee Application
   in an electronic format such as Excel, Microsoft Word, or
   WordPerfect, but not Adobe Acrobat. If any Applicant cannot
   reasonably convert its fee detail to one of the three
   electronic formats described above, the Fee Auditor will work
   with the Applicant to find an appropriate electronic format.

E) Within 30 days after the latter of the due date of a Fee
   Application or the service of a Fee Application, the Fee
   Auditor shall communicate in writing to the Applicant
   concerning the Fee Auditor's findings regarding the Fee
   Application as an initial report.

F) Within 15 days after the date of the Initial Report, if
   the Fee Auditor has noted any issues with respect to an
   Applicant's Fee Application in the Initial Report, the Fee
   Auditor must contact the affected Applicant concerning such
   Initial Report, and the Fee Auditor and the affected
   Applicant will engage in an informal response process. The
   purpose of this informal response process is to resolve
   matters raised in the Initial Report. The Fee Auditor must
   endeavor in good faith to reach consensual resolutions with
   each Applicant with respect to that Applicant's requested
   fees and/or expenses and matters raised in the applicable
   Initial Report. Each Applicant may provide the Fee Auditor
   with such verbal or written supplemental information as the
   Applicant believes is relevant to the applicable Initial
   Report.

G) Within 45 days after the date of the Initial Report, the Fee
   Auditor must conclude the informal response process
   by filing with the Court a final report with respect to each
   Fee Application. This period may be extended by mutual
   consent of the Fee Auditor and the Applicant.

H) The Fee Auditor must serve each Final Report upon the
   affected Applicant and the Notice Parties. The Final Report
   will be in a format designed to opine whether the requested
   fees of the applicable Applicant meet the applicable
   standards of Section 330 of the Bankruptcy Code and Delaware
   Bankruptcy Court Local Rule 2016-2.

I) Within 20 days after the date of the Final Report, the
   subject Applicant may file with the Court a response to the
   Final Report. This response must be served upon the persons
   identified in Paragraph 6(g) above. Hearings on all Fee
   Applications for a particular interim Fee Application period
   shall be scheduled by the Court in consultation with Debtors'
   counsel after the Fee Auditor has filed Final Reports for all
   Fee Applications filed for such period or at such other time
   as the Court may direct.

J) The Fee Auditor must be available for deposition and cross-
   examination by the Debtors, each of the Committees, the
   United States Trustee and other interested parties,
   consistent with Rule 706 of the Federal Rules of Evidence.

For its services, WH Smith will be paid either the lesser of:

A) the ordinary hourly rate of the Fee Auditor or

B) 1.25% of the aggregate billings, i.e., fees and expenses,
   reviewed by the Fee Auditor over the life of the Debtors'
   bankruptcy proceedings.

Mr. Pernick states that the relief requested is necessary in
order to promote fairness for all professionals in these cases
since the Fee Auditor's reports will enable professionals to
prepare explanations or clarifications of any potential problems
with their fee applications prior to the scheduled hearings. The
relief requested will also facilitate the Court's mandatory,
independent review obligations under Sections 330 and 331 of the
Bankruptcy Code and enhance judicial economy. (Owens Corning
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   


PILLOWTEX CORP: Citicapital Will Hold a $1.5MM Unsecured Claim
--------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates obtained Court's
authority to assume, as modified, three lease agreements with
Citicapital SKA wherein the Debtors lease certain production
equipment they use in their manufacturing operations.

Judge Robinson rules that Citicapital SKA have an allowed
unsecured claim of $1,510,250 for the write-down of the lease
obligations under the Lease Agreements.

The material terms of the Amendments as:

   -- The Lease Agreements will be assumed, as modified by the
      Amendments.

   -- Each of the Lease Agreements will have a 60-month term,
      beginning January 1, 2002, and ending December 31, 2006.

   -- The aggregate balance due under the Lease Agreements as of
      January 1, 2002 is $2,970,250. As of January 1, 2002,
      Citicapital will reduce the aggregate balance due under
      the Lease Agreements to $1,460,000, the agreed fair market
      value of the Production Equipment. The new aggregate
      balance due under the Lease Agreements is equal to the
      Fair Market Value plus the Cure Amount.

   -- The New Principal Balance will be amortized over the new
      term, with aggregate monthly payments of $29,215.16.

   -- The Debtors will pay interest on the New Principal Balance
      at the rate of 7.5%, compounded annually.

   -- Citicapital would be entitled to submit an unsecured claim
      against the Debtors' estates for $1,510,250, which is the
      difference between the Old Lease Balance and the New
      Principal Balance.

   -- Provided that the Debtors remain current under the Lease
      Agreements, as modified, the Debtors would have the option
      to acquire title to the Production Equipment at the end of
      the new term for no additional consideration. (Pillowtex
      Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
      Service, Inc., 609/392-0900)    


PILLOWTEX CORP: Emerges From Chapter 11 Bankruptcy Protection
-------------------------------------------------------------
Pillowtex Corporation, (OTC Bulletin Board: PTEXQ) a leader in
the home fashions industry, announced that it emerged
successfully from Chapter 11 bankruptcy reorganization
on May 24, 2002 after satisfying all conditions of the Company's
Plan of Reorganization.  The Plan of Reorganization was
confirmed by the U.S. Bankruptcy Court on May 1, 2002.

The Company emerges from its 18-month reorganization process in
a much more solid financial position and with a clear strategy
for the future.

"The reorganization process provided an opportunity for our
Company to restructure to meet the current needs of the home
fashions market more effectively," said Tony Williams, President
and Chief Operating Officer.  "The benchmarks we have set for
success are clear -- strong brand marketing, more effective
employment of our manufacturing capacity, the development of
strategic sourcing partnerships and a fanatical focus on
quality.  Taken together our goal is to be the industry leader
in customer service.  With the reorganization behind us, we are
now in a position to focus our full attention to meet that goal
and do so with a much improved balance sheet."

The Company has reduced its debt from $1.1 billion prior to
filing the bankruptcy petition to approximately $205 million.

Mike Harmon, Chief Financial Officer, said, "The Company's
emergence is financed by a $112 million term loan, and a $200
million syndicated revolving credit facility provided by
Congress Financial Corporation, as Agent.  At emergence, the
Company has approximately $100 million of availability under
the revolving credit facility."

The Company anticipates changing its name in the near future.

Pillowtex Corporation, with corporate offices in Kannapolis,
North Carolina, is one of America's leading producers and
marketers of household textiles including towels, sheets, rugs,
blankets, pillows, mattress pads, feather beds, comforters and
decorative bedroom and bath accessories.  The Company's brands
include Cannon, Fieldcrest, Royal Velvet, Charisma and private
labels. Pillowtex currently employs approximately 8,300 people
in its network of manufacturing and distribution facilities in
the United States and Canada.

DebtTraders reports that Pillowtex Corp.'s 10% bonds due 2006
(PTX2) are quoted at a price of 1. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PTX2for  
real-time bond pricing.


POLAROID CORP: Shareholder's Pitch for Equity Panel Under Fire
--------------------------------------------------------------
John Fouhey, Esq., at Davis Polk & Wardwell, in New York,
representing JPMorgan Chase Bank, contends that Stephen J.
Morgan's Motion to create an Equity Committee in Polaroid
Corp.'s chapter 11 cases should be denied because:

  (a) the evidence is overwhelming evidence that the Debtors
      are "hopelessly insolvent" and the proposed committee
      lacks a constituency with any meaningful interest in the
      estate;

  (b) Mr. Morgan has not, and cannot, sustain his burden of
      proving inadequate representation by, or a conflict with,
      the Official Committee when their pursuit of a stand-
      alone reorganization is the same argument being fought by
      the Official Committee and the Retirees' Committee; and

  (c) the added cost of retaining another set of investment
      banks, accountants and lawyers for the proposed committee
      cannot be justified with the concern for adequate
      representation.

(2) United States Trustee

Donald F. Walton, Acting U.S. Trustee for Region 3, relates that
Mr. Morgan has requested his office for the creation of the
equity committee on December 13, 2001.  Mr. Walton reports that
the U.S. Trustee conducted "a full and fair analysis of the
request" by:

  (a) examining the capital structure, organizational structure
      and financial posture of the debtors-in-possession as
      reported by them in their bankruptcy petitions and
      schedules;

  (b) soliciting comments from the Debtors, the Official
      Committee of Unsecured Creditors and the Official
      Committee of Retirees with regard to the disability of
      appointing an equity committee;

  (c) telephonically soliciting comments from the SEC, which is
      responsible for the oversight of publicly traded
      companies that file bankruptcy petitions;

  (d) telephonically conferring with Mr. Morgan's counsel and
      considered his oral and written comments as well as
      written comments submitted by interested equity holders;
      and

  (e) reviewing written materials received from Mr. Morgan's
      counsel.

However, after conducting the evaluation, the U.S. Trustee
denied the request on January 14, 2002 because of these
findings:

    (a) The Motion is not untimely;

    (b) the Debtors' common stock is widely held and publicly
        traded;

    (c) although the Debtors are large in dollar terms, their
        capital structure is not complex;

    (d) the Debtors' common stock appears to currently have no
        value, as the Debtors' assets, whether in a liquidation
        or reorganization scenario, greatly exceeds liabilities;
        and

    (e) appointment of an official committee of equity security
        holders would result in substantial additional cost to
        the Debtors' estates and creditors without corresponding
        benefit to either the estate or the equity security
        holders.

Accordingly, the Motion should be denied because:

    (a) the U.S. Trustee's decision was made without abuse of
        discretion;

    (b) the Equity interests are already adequately represented
        and an Equity Committee would serve no purpose;

    (c) appointment of an equity committee would only add
        unnecessary administrative expense; and

    (d) even if the Court would direct the appointment of an
        equity committee, the selection of the committee members
        is the responsibility of the U.S. Trustee.

Mr. Walton notes that as alternative, Mr. Morgan may assert his
interests pursuant to Section 1109(b) of the Bankruptcy Court --
Unofficial Equity Committee, to have their costs reimbursed.

(3) Debtors

Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher
& Flom, LLP, in Wilmington, Delaware, contends that Mr. Morgan's
motion should be denied because:

    (a) the Debtors are insolvent;

    (b) the Debtors' Board of Directors are well aware of the
        fiduciary responsibilities to its constituencies,
        including equity security holders; and

    (c) the U.S. Trustee already ruled that the committee
        creation is inappropriate.

(4) Unsecured Creditors' Committee

The Committee is in agreement with the arguments made by the
Debtors, the U.S. Trustee and the Agent.

(5) Retiree Committee

Although the Retiree Committee did not formally file an
objection to the Motion at the Court, the Retiree Committee,
through its Web site at http://www.retireeinfo.comhas this to  
say:

     The Retirees' Committee has closely monitored the efforts
of Mr. Steve Morgan to appoint an equity committee, particularly
since many retirees either still hold stock or believe that the
value of Polaroid stock can be restored. After Mr. Morgan
initially requested that the U.S. Trustee appoint an equity
committee, the attorney for the U.S. Trustee solicited input
from all constituencies in the bankruptcy process. Our letter to
the Trustee dated January 31, 2002 to the attorney for the U.S.
Trustee stated our perspective at that time:

      "The Retiree Committee agrees with [Polaroid's] current
      assessment of the value of the Debtors' assets as listed
      on the schedules and statements and their value upon
      disposition. In addition, the Retiree Committee
      understands that most likely equity shareholders will
      receive nothing in these cases. Accordingly, under these
      circumstances, the appointment of an equity committee
      would serve no useful purpose."

      After the U.S. Trustee refused to appoint an equity
committee, Mr. Morgan filed a motion with the Bankruptcy Court
asking Judge Walsh to appoint such a committee. The U.S.
Trustee, Polaroid, its lenders, and the Creditors Committee all
vigorously opposed the motion for various reasons.

      The Retiree Committee did not formally object to Mr.
Morgan's motion, however. Although the Retiree Committee would
gladly support any fundamentally sound initiative that could
restore the value of Polaroid's common stock, after evaluating
all the information available thus far, including evaluating the
steps that the U.S. Trustee took in making the determination not
to appoint an equity committee, we are convinced that
appointment of an equity committee would not serve a useful
purpose at this time. This is particularly so given the amount
of debt, and the relative priority of equity holders in the
bankruptcy process. For more information on the manner in which
claims are typically paid in a bankruptcy proceeding.
Accordingly, we cannot endorse Mr. Morgan's approach as it is
currently developed because we believe it is unrealistic.

                      Mr. Morgan Responds

After getting all the objections, Eedward B. Rosenthal, Esq., at
Rosenthal, Monhait, Gross & Goddess, PA, in Wilmington,
Delaware, still insists that the creation of the equity
committee is warranted because:

    (a) pursuant to Section 1102(a)(2), the appointment of an
        equity committee is within the discretion of the Court;

    (b) the Debtors' stock is publicly traded and widely held;

    (c) the motion was timely filed - within two months from the
        Petition Date;

    (d) the case is large and complex;

    (e) the additional cost that will be incurred must be
        balance on the fact of Mr. Morgan's accomplishment so
        far:

        -- discovery that the Debtors failed to include in their
           Schedule at least three parcels of real estate in
           Waltham and Westwood, Massachusetts, worth more than
           $645,700;

        -- discovery that the assessed value of the Debtors'
           real estate in Massachusetts is $59,204,591 greater
           than the book value set forth in the Schedule;

        -- discovery that the Debtors understated the value of
           the machinery and equipment at the New Bedford,
           Massachusetts facility, alone, by $192,000,000; and

        -- discovery that the notes to the Debtors' 2000
           financial statement reported its "long-lived assets"
           in foreign countries as worth $155,900,000;

    (f) the notion that the Debtors are "hopelessly insolvent"
        is nothing more than mere speculation; and

    (g) the Board of Directors only own 1% of the equity and
        cannot adequately represent the stock holders.

Thus, Mr. Morgan pleads Judge Walsh to appoint an Official
Committee of Equity Holders. (Polaroid Bankruptcy News, Issue
No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900)


POLAROID CORP: Asset Sale Hearing Going Forward June 28, 2002
-------------------------------------------------------------
             IN THE UNITED STATES BANKRUPTCY COURT
                 FOR THE DISTRICT OF DELAWARE

In re:                         )   Chapter 11
                               )
POLAROID CORPORATION, et al.,  )   Case No: 01-10864 (PJW)
                               )   Jointly Administered
         Debtors.              )   Related Docket No.: 865

             NOTICE OF AUCTION AND SALE HEARING
             ----------------------------------

      PLEASE TAKE NOTICE THAT:

      Pursuant to the Order Under 11 U.S.C. Secs. 105 and 363
and Fed. R. Bankr. P. 6004 (I) Approving Bidding Procedures,
Termination Payment, and Expense Reimbursement in Connection
with the Proposed Sale of Substantially All of the Debtors'
Assets, (II) Scheduling a Hearing Date, Auction, and Bidding end
Objection Deadlines in Connection with Such Sale, and (III)
Approving Form and Manner of Notice Thereof, approved by the
United States Bankruptcy Court for the District of Delaware on
May 10, 2002, Polaroid Corporation and certain of its
subsidiaries and affiliates as debtors and debtors in
possession, will conduct an auction of substantially all of the
Debtors' assets and unexpired leases and executory contracts.

      The Sale.  Under the terms of the Asset Purchase Agreement
by and among certain the Debtors, as Sellers, and OEP Imaging
Corporation, the Debtors are selling the Acquired Assets and
assuming and assigning the Assumed Contracts to the Purchaser,
free and clear of liens; claims, encumbrances and interests
(except for certain express assumed liabilities and permitted
encumbrances), subject to higher and better offers and Court
approval.

      The Auction.  The Debtors will conduct an Auction for the
Acquired Assets and the Assumed contracts beginning on June 26,
2002 at 9:00 a.m. (prevailing Eastern time) at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New
York, New York 10036. All interested parties are invited to
prequalify for the Auction and to present competing offers to
purchase the Acquired Assets and the Assumed Contracts in
accordance with the Bidding Procedures (as hereinafter defined).

      Bidding Procedures.  Attendance and participation at the
Auction is subject to certain terms, conditions, and procedures
described in the Procedures Order. All capitalized terms not
otherwise defined herein shall have the meaning ascribed to them
in the Bidding Procedures or the Procedures Order (as
applicable).

      The Auction.  If the Debtors receive a Qualified Bid, the
Debtors will conduct the Auction. Bidding at the Auction will
commence with the highest Qualified Bid and continue in
increments of not less than $1,000,000 until all parties have
made their final offers. At the conclusion of the bidding, the
Debtors will announce their determination of the person or
entity submitting the highest or best bid for the Acquired
Assets and the Assumed contracts. If the Debtors do not receive
any Qualified Bids, the Debtors will report the same to the
Court at the Sale Hearing (as hereinafter defined) and proceed
with a sale of the Acquired Assets and the Assumed Contracts to
the Purchaser under the Agreement. If, however, the Debtors
receive one or more Qualified Bids and the Auction is conducted,
the Debtors will notify the Court  of the results of the Auction
and proceed with a sale to the Successful Bidder. The Debtors
will have accepted a bid only when the bid has been approved by
the Court at the Sale Hearing.

      The Sale Hearing.  A hearing to approve the Sale of the
Acquired Assets and the assumption and assignment of the Assumed
Contracts to the highest and best bidder will be held on June
28, 2002 at 9:00 a.m. at the United States Bankruptcy Court for
the District of Delaware, 624 Market Street, Wilmington,
Delaware 19801, before the Honorable Peter J. Walsh, Chief
United States Bankruptcy Judge.

     Objections to the Sale of the Assumed Assets.  An objection
to the Sale of the Assumed Assets and the assumption and
assignment of the Assumed Contracts must be in writing, conform
to the requirements of the Bankruptcy Rules and the Local Rules
of the United States Bankruptcy Court for the District of
Delaware, set forth the name of the objector, set forth the
nature and amount of the objector's claim against or interests
in the Debtor's estates or property and state the legal and
factual basis for the objection and the specific grounds
therefore, and be filed with United States Bankruptcy Court for
the District of Delaware, 524 Market Street, Wilmington,
Delaware 19801 and served so as to be received by (i) Skadden,
Arps, Slate, Meagher & Flom LLP, One Rodney Square, P.O. Box 638
Wilmington, Delaware 19099-0838, Attention: Gregg M. Galardi,
Esq., (ii) Dechert, 30 Rockefeller Plaza, New York, New York,
10112, Attention: Joel H. Levitin, Esq. (iii) Davis, Polk &
Wardwell, 450 Lexington Avenue; New York, New York, Attention:
Marshall S. Huebner, Esq.; (iv) Morgan, Lewis & Bockius, 101
Park Avenue, New York, New York 10178, Attention: Robert
Scheibe, Esq.; (v) Young Conaway Stargatt & Taylor LLP, The
Brandywine Building, 17th Floor, 1000 West Street, P.O. Box 391,
Wilmington, Delaware 19899, Attention: Brendan Linehan Shannon,
Esq. and Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison
Avenue, New York, New York 10022, Attention: Fred Hodara, Esq.;
(vi) Greenberg Traurig, LLP, The Brandywine Building, 1000 West
Street, Suite 1540, Wilmington, Delaware 19801, Attention: Scott
D. Cousin, Esq. and Scott Salerni, Esq.; and (vii) the Office of
the United States Trustee, J. Caleb Boggs, Federal Office
Building, 844 King Street, Suite 2313, Wilmington, Delaware
19801 Attention: Mark S. Kenney, Esq., by 4:00 p.m. (prevailing
Eastern Time) on June 21, 2002.

      This notice is qualified in its entirety by the Procedures
Order.  All persons and entities are urged to read the
Procedures Order and the provisions thereof carefully.  To the
extent this notice is inconsistent with the Procedures Order,
the terms of the Procedures Order shall govern.

      Copies of the Procedures Order, the Agreement and the
motion seeking approval of the same are available from IKON
Office Solutions, 901 North Market Street, Suite 718,
Wilmington, Delaware 19801, telephone number (302) 777-4500.

                         Dated: Wilmington, Delaware
                                May 10, 2002
       
                                SKADDEN, ARPS, SLATE,
                                MEAGHER & FLOM LLP
                                Gregg M. Galardi (I.D. No. 2991)
                                Eric M. Davis (I.D. No. 3621)
                                One Rodney Square
                                Wilmington Delaware 19899-06836
                                   Attorneys for Debtors and
                                   Debtors-in-Possession


PSINET INC: Court Okays Special Beneficial Owners' Ballot Form
--------------------------------------------------------------
At PSINet, Inc.'s behest, the Court has approved a special form
of Beneficial Owner Ballot for use in tabulating votes of
beneficial owners of the Senior Notes of PSINet Inc. in
connection with the Debtors' proposed joint liquidating plan of
reorganization.

The Debtors will forward the Beneficial Owner Ballot to holders
of record of the Senior Notes in lieu of the form of Ballot
previously approved by the Voting Procedures Order.

Each record holder will be asked to "prevalidate" the Beneficial
Owner Ballot by completing and executing the portions of the
Ballot relating to the amount of Senior Notes their clients hold
and provide their account numbers.  The record holder will then
be required to forward copies of the prevalidated Beneficial
Owner Ballot to each beneficial Senior Note owner, who will then
be asked to complete a Ballot by indicating whether he or she
accepts or rejects the Debtors' Plan.  Beneficial Owners will be
instructed to return their ballots directly to the Debtors'
Balloting Agent, Bankruptcy Services, LLC, by the Voting
Deadline. (PSINet Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   


SAFETY-KLEEN CORP: Obtains Fifth Exclusive Period Extension  
-----------------------------------------------------------
Judge Walsh has entered an order under 11 U.S.C. 1121(d) further
extending Safety-Kleen Corp. and its debtor-affiliates'
Exclusive Periods. Thus, the Debtors' exclusive period within
which to propose and file a Plan of Reorganization has been
extended through and including October 31, 2002, and their
exclusive period within which to solicit acceptances of that
plan through and including December 31, 2002.


SIERRA PACIFIC: Deferred Ruling Has Less Impact on S&P's Ratings
----------------------------------------------------------------
Standard & Poor's said that the deferred power cost recovery
decision by the Public Utility Commission of Nevada allowing
Sierra Pacific Power Co. (B+/Watch Neg/--) to recover $149
million out of $205 million in deferred costs will not affect
ratings on Sierra Pacific Resources (SRP; B+/Watch Neg/--) or
its utility subsidiaries, Nevada Power Co. (B+/Watch Neg/--) and
Sierra Pacific Power.

Standard & Poor's lowered the ratings of SRP and subsidiaries to
'B+' in April 2002 following an analysis of the liquidity
position of SRP pursuant to the PUCN's decision to disallow $437
million of deferred power costs incurred by Nevada Power. In
this analysis, Standard & Poor's had factored in a disallowance
for Sierra Pacific Power that is largely comparable with the
commission's actual order today. While this order is
considerably more supportive than the nearly 50% disallowance
for Nevada Power, SRP continues to face a critical liquidity
situation as the summer approaches. The ongoing negotiations
with power suppliers, which account for about half of the
utility's summer energy needs, remain critical to SRP's
financial solvency.


SILICON GRAPHICS: S&P Affirms CCC- Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's revised its outlook on Silicon Graphics Inc.,
to positive from negative reflecting SGI's recent progress in
stabilizing its operations.

At the same time, Standard & Poor's affirmed its triple-'C'-
minus corporate credit rating on the Mountain View, California-
based company.

"Although SGI has a strong technology position in high-end
computing and graphics solutions, the company has been
struggling to restore revenue growth and profitability in the
highly competitive technical workstation and server markets,"
said Standard & Poor's analyst Martha Toll-Reed. In addition,
economic weakness and reduced levels of information technology
spending will continue to pressure the company's efforts to
stabilize revenues.

Despite a difficult market environment, SGI has demonstrated
significant operational progress. The company reported EBITDA of
$48.6 million for the nine months ended March 29, 2002, compared
with an EBITDA loss of $143 million in the previous year period.
In addition, the company generated positive cash flow from
operations in the March 2002 quarter, and halted the erosion in
its cash balances.

Near-term liquidity is adequate. Unrestricted cash balances were
$167 million as of March 29, 2002, up from $116 million at the
end of the December 2001 quarter. The company has limited
availability under its $75 million credit facility expiring in
April 2003, and Standard & Poor's has concerns about the
company's ability to access capital to refinance significant
debt maturity in September 2004.

Sustainable improvements in operating income and cash flow could
lead to ratings improvement in the near to intermediate term.


SONO-TEK CORP: Fourth Quarter Net Sales Narrows to $768K
--------------------------------------------------------
Sono-Tek Corporation (OTC Bulletin Board: SOTK) announced sales
and profit for the fourth fiscal quarter ended February 28,
2002. These results, as well as comparisons for preceding
periods, are shown below:

Quarter Ending:    May 31,   Aug. 31,    Nov. 30,    Feb. 28,
                    2001       2001        2001         2002
                   -------   --------    --------    --------

    Net Sales     $ 704,285  $970,046   $1,026,452   $768,626

Net (Loss) Income $(850,073) $54,045    $482,073     $127,564

    LPS/EPS       $(.09)     $.01       $.05         $.01

The Company experienced a turn-around during the past three
quarters of the year as a result of changes in management,
discontinuance of unprofitable business segments, reductions in
the cost structure, and settlements with creditors. The
remaining goodwill of the discontinued operation was written off
at the end of the first quarter, as reflected in the loss shown.
The Company returned its focus to its core business, ultrasonic
nozzles and systems, and offset the downturn in the electronics
industry by developing new uses for its products in the growing
medical products field, as well as in the rejuvenated defense
industry.  As part of its strategy to focus on its core
business, Sono-Tek has introduced new products into the
marketplace including the MicroFlux XL selective fluxing system
used for precise flux deposition, particularly in the
semiconductor industry; the SonoFlux XL spray fluxing system for
printed circuit board assemblies, the successor to the industry-
proven SonoFlux 9500 series; the Medisonic
polymer/pharmaceutical coating system, designed specifically for
use by medical device manufacturers to coat stents and other
implant devices; and the Thinsonic chemical vapor deposition
system used to apply very thin films in industrial applications
and homeland defense systems, such as toxic gas sensors.

"We are extremely pleased with the acceptance of our new
products and the turn-around in our business, and we look
forward to adding new applications as we pursue our goal of
diversifying our product line based on Sono-Tek's core
ultrasonic nozzle business", stated Dr. Christopher Coccio,
Sono-Tek's CEO and President.

For further information, contact Dr. Christopher L. Coccio, at
845-795-2020, or visit our Web site at http://www.sono-tek.com


SPIEGEL GROUP: Closes Deals With MBIA & OCC Re Unit's Securities
----------------------------------------------------------------
The Spiegel Group (Nasdaq: SPGLE) has reached an
agreement with MBIA Insurance Corporation regarding certain
asset-backed securities issued by its credit-card bank
subsidiary, First Consumers National Bank.  The company also
announced that FCNB has entered into an agreement with the
Office of the Comptroller of the Currency, the bank's primary
federal regulator.

The company stated that the agreement with MBIA resolves the
declaration of a "Pay Out Event" by MBIA regarding two asset-
backed securities offerings involving credit-card receivables
originated by FCNB.  The company agreed to dismiss its
litigation against MBIA and The Bank of New York, and MBIA
agreed to withdraw its letter declaring the "Pay Out Event."  
The company said that the agreement strengthens the insured
transactions.

FCNB's agreement with the OCC calls for FCNB to comply with
certain requirements with respect to capital, liquidity, growth,
product offering, and transactions with affiliates.  The
agreement, among other things, includes restrictions on
extending credit to certain customers and requires the bank to
obtain a $198 million guarantee, which has been provided through
the company's majority shareholder.  In addition, the bank must
provide to the OCC the details of a plan to sell, merge or
dispose the bank.  The agreement (Consent Order) is available on
the OCC Web site at http://www.occ.treas.gov  

Martin Zaepfel, vice chairman, president and chief executive
officer of The Spiegel Group, stated, "The terms and conditions
of the bank's agreement with the OCC are consistent with our
internal objectives which are focused on improving the quality
of our credit-card portfolios while continuing our efforts to
sell our credit-card business.  These efforts are ongoing and we
are actively engaged in discussions with interested parties."

On February 21, 2002, the company announced plans to sell its
credit-card operations in 2002, including FCNB.  In addition,
the company stated that it plans to form a relationship with a
third party to continue to provide private-label credit-card
programs to customers of its retail brands, allowing the brands
to maintain an important connection with their customers.

The Spiegel Group is a leading international specialty retailer
marketing fashionable apparel and home furnishings to customers
through catalogs, nearly 580 specialty retail and outlet stores
and e-commerce sites, including eddiebauer.com, newport-news.com
and spiegel.com.  The Spiegel Group's businesses include Eddie
Bauer, Newport News, Spiegel and First Consumers National Bank.
The company's Class A Non-Voting Common Stock trades on the
Nasdaq National Market System under the ticker symbol: SPGLA,
now SPGLE. Investor relations information is available on The
Spiegel Group Web site http://www.thespiegelgroup.com

                         *   *   *

As reported in the April 23, 2002 edition of Troubled Company
Reporter, The Spiegel Group continued to work closely with its
bank group to restructure its credit facilities.  The company
had previously announced that it expected to reach an agreement
with its lenders by mid-April.  However, negotiations with the
bank group extended beyond that time.  Meanwhile, the company
continued to rely on liquidity support provided through its
majority shareholder. The funding provided to date from this
source was approximately $160 million.

In addition, the report said, due to these outstanding business
developments, the company was not able to file its Form 10-K for
the 2001 fiscal year. Consequently, the company received a
Nasdaq Staff Determination on April 17, 2002.  The Staff
Determination indicated that the company had not complied with
Marketplace Rule 4310c(14) by not filing its Form 10-K for the
fiscal year ended December 29, 2001.  Filing of a Form 10-K is
required for continued listing of the company's securities.

In accordance with Nasdaq procedures, Spiegel, Inc. requested a
hearing with the Nasdaq Listing Qualifications Panel to review
the Staff Determination.  


TELIGENT: Files Joint Liquidating Plan and Disclosure Statement
---------------------------------------------------------------
After evaluating their remaining alternatives for emerging from
chapter 11 bankruptcy, Teligent, Inc. and its debtor-affiliates
filed their Joint Liquidating Chapter 11 Plan and an
accompanying Disclosure Statement with the U.S. Bankruptcy Court
for the Southern District of New York. Full-text copy of the
Debtors' Chapter 11 Plan and Disclosure Statement are available
at:

  http://www.researcharchives.com/bin/download?id=020528012213

  http://www.researcharchives.com/bin/download?id=020528012133

The Debtors assure the Court that the Plan is the product of
substantial discussions and negotiations among the Debtors and
their primary creditor constituents, principally the Lenders.  
The Debtors believe that the terms of the Plan are fair to all
party-in-interest.  

At this time, the Debtors do not believe that there is a viable
alternative for emerging from chapter 11 other than through the
confirmation of the Plan.  If the Plan is not confirmed, the
Debtors believe that these Chapter 11 Cases will be converted to
chapter 7.  Based on negotiations with the Lenders,
distributions are being made available to Holders of General
Administrative Claims, Priority Claims, Other Secured Claims and
Unsecured Claims pursuant to the Plan that would not be
available if the cases were converted to chapter 7. Pursuant to
the plan, all existing interests in the Debtors (including
without limitation all issued and Outstanding preferred and
common stock, warrants and options) will be extinguished and
canceled.

The Debtors anticipate emerging from chapter 11 as Reorganized
Teligent and operating the remaining business.  All of the
Property of the Debtors (including cash of $10 million currently
being held by the Agent) will revest in Reorganized Teligent.  
Reorganized Teligent is expected to be debt free and funded for
at least two years, and have approximately 50 employees.
Pursuant to the Plan, the Lenders will receive 100% of the
capital stock of Reorganized Teligent.  

Teligent, Inc., a provider of broadband communication services
offering business customers local, long distance, high-speed
data and dedicated Internet services over its digital SmartWave
local networks in major markets throughout the United States,
filed for chapter 11 protection on May 21, 2001.  James H.M.
Sprayregen, Esq., Matthew N. Kleiman, Esq., and Lena Mandel,
Esq., at Kirkland & Ellis represent the Debtors in their
restructuring effort. When the Company filed for protection from
its creditors, it listed $1,209,476,000 in assets and
$1,649,403,000 debts.


TRAILMOBILE CANADA: March Working Capital Deficit Reaches $14MM
---------------------------------------------------------------
Trailmobile Canada Limited (TMX: TSE) announced its second
quarter results for the six months ended March, 2002.

Revenues in the second quarter of fiscal 2002 totaled $18.0
million and represent a 5% increase over the same quarter of
fiscal 2001. Revenue for the six months ended March 2002 were
$34.3 million compared to 38.4 million for the same period last
year. The lowest demand for dry van trailers in ten years
continues to put pressure on both revenues and gross profit
margins. There was a slight improvement ($0.1 million) in gross
profit margins for the second quarter of fiscal 2002. The
Company recorded a net loss for the six months ended March 2002
of $2.89 million. The majority of the loss is the result of the
Chapter 11 bankruptcy filing in the USA by Trailmobile Trailer
LLC. A $2.4 million provision was charged in the first quarter
relating to monies due from Trailmobile Trailer Canada Ltd, a
subsidiary of Trailmobile Trailer LLC. The Company expects the
industry demand for trailers to remain weak over the near term
with increased order demand in the later part of fiscal 2002.

On May 3, 2002 the Company's majority shareholder, 1314385
Ontario Limited, completed its cash offer to purchase all the
outstanding common shares of the Company, acquiring 90.36% of
the common shares it did not already own and increasing its
position to 96.3% of the Company. The common shares of the
Company were voluntarily delisted from the Toronto Stock
Exchange at the request of the Company on May 13, 2002 and the
Offeror is proceeding to take the Company private through a
Compulsory Acquisition under the provisions of the Ontario
Business Corporations Act.

The Company also wishes to advise that Mr. Gary Barnes has
resigned as a director of the Company. The Board of Directors
wishes to thank Mr. Barnes for his years of service to the
Company and in particular his diligence as Chairman of the
Independent Committee of the Board of Directors.

Trailmobile Canada Limited manufactures dry-freight trailers for
commercial trucking customers in Canada and the United States.
The company is majority owned by Chicago-based Trailmobile
Corporation. Trailmobile is one of North America's largest
trailer manufacturers, with an extensive sales and distribution
network in both the USA and Canada. Trailmobile Canada Limited's
head office and manufacturing facility are located in
Mississauga, Ontario.

                    Results Of Operation

Overview

The discussion and analysis that follows relates to the
Company's results of operations for the six months ended March
28, 2002 along with the comparative figures for March 31, 2001.

Revenue

Revenues for the second quarter were $18 million, this
represents an increase of 5% when compared to the same quarter
last year, when reported revenues were $17.1 million. The
company reported revenues of $34.3 million for the first six
months ended March 2002 and $38.4 million for the same period
last year.

Gross Profit

Gross profit for the three months ended March 28, 2002 was $1.1
million. This represents an increase of $0.1 million when
compared to the gross profit for three months ended March 31,
2001.

General & Administrative Expenses (G&A)

General and administrative expenses totaled $0.6 million or 3.1%
of revenues, a decrease of $34,000 when compared to the three
months ended March 31, 2001.

Amortization

Amortization charges for the three months ended March 28, 2002
totaled $0.3 million or 1.6% of revenues, a marginal decrease of
$53,000 when compared to the three months ended March 31, 2001.
The deferral of capital purchases due to the slowing economic
conditions resulted in a lower amortization charge for fiscal
2002.

Financing

Financing charges for the three months ended March 28, 2002 were
$0.4 million or 2.4% of revenues, a decrease of $79,000 when
compared to the three months ended March 31, 2001. The decrease
in financing charges is mainly due to lower borrowing levels.

Liquidity And Capital Resources

As of March 28, 2002 the company had a working capital
deficiency of $13.8 million. This represents an increase in
working capital deficiency of $2.7 million when compared to
March 31,2001. The increase deficiency is the result of a $2.4
million provision charged in the first quarter of fiscal 2002.
The provision was a result of the Chapter 11 bankruptcy filing
of Trailmobile Trailer LLC.

Risk And Uncertainties

Trailmobile Canada Limited faces a number of risks and
uncertainties, including:

Competition

Trailmobile Canada Limited faces competition from numerous truck
trailer manufacturers located in both Canada and the United
States, some of which have greater financial resources and
higher revenues. Certain competitive factors and market
conditions may affect Trailmobile Canada's ability to compete
with these companies.

Business Cycle

The truck trailer manufacturing industry is dependant on the
demand for its products from the trucking industry. Unit sales
of new truck are subject to cyclical variations. Historically,
periods of economic recession in Canada and the United States
have caused declines in the demand for new truck trailers

Distributors

Trailmobile Canada Limited's success depends on the ability of
it channel partners to sell its products.

Financing

Trailmobile Canada Limited is dependant upon CIT "Tyco Capital"
to finance its inventory and accounts receivable.

Suppliers

Trailmobile Canada Limited relies on several key suppliers for
materials. Delays in receipt of these materials may affect the
Company's ability to fulfill customer orders.

Currency fluctuations

A portion of Trailmobile Canada Limited's transactions are in US
funds and are therefore subject to exchange rate fluctuations
that may have a positive or negative affect on the Company's
financial statements.

Commodity prices

Certain raw material costs are dependent on worldwide commodity
pricing. Any increase in commodity costs may translate to
increases in raw material input costs, which may or may not be
passed on to customers due to the competitive landscape.

                           Outlook

Despite many truck fleets pre-buying of power units ahead of the
October 1st.mandate for cleaner engines, there appears to be a
modest momentum building for new trailer demand as well. "With
the support of our valued employees, we are continuing to take
cost out of the system through lean manufacturing techniques and
continuous improvement in order to better position ourselves to
take advantage of a turnaround in the industry", said Tom
Wiseman, President of Trailmobile Canada Limited

Trailmobile Canada Limited is committed to servicing the North
American marketplace.

As of March 2002, Trailmobile Canada Limited has a total
shareholders' equity deficit of about $11.7 million.


TRUSERV: Reports Improved First Quarter 2002 Financial Results
--------------------------------------------------------------
TruServ (Chicago, Illinois) reported net income of $600,000 for
the month ended April 27, compared to a net loss of $2.0 million
during April 2001.  The bottom line improvement came despite an
8.9% drop in revenues to $189.0 million.  For the year-to-date
period, net income was $5.2 million, compared to a net loss of
$15.9 million for the same period a year ago, on a revenue
decline of 13.9% to $742.3 million.  Approximately $54.0
million, or 45% of the year-to-date sales decline, reflects the
sale of the Company's lumber and Canadian businesses.

Commenting on the results, president & CEO Pamela Forbes
Lieberman said that operations in April continued to generate
earnings even though the Company incurred more than $500,000 of
financial amendment closing costs in the month.  She went on to
indicate that the Company is "delivering" on its business plan
and that "By streamlining operations, reducing expenses and
improving productivity, [it has been] able to report four
consecutive months of profit."  However, we won't know if these
improvements came at the expense of the co-op's members until
the second quarter 10-Q is filed in mid-August.

In the meantime, the SEC is keeping an eye of the Company.  In
relation to an informal inquiry into charges and losses recorded
in 1999, the Midwest office of the SEC is recommending that the
Commission initiate a proceeding seeking a cease and desist
order to compel the Company to keep in place the corrective
internal accounting controls, which were instituted as a result
of the previous accounting errors.  According to the Company,
there has been no allegation of fraud and no civil monetary
penalty has been requested.

At September 29, 2001, TruServ Corp. had a working capital
deficiency of about $177 million.


UNITED REFINING: S&P Affirms B- Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's affirmed its single-'B'-minus corporate credit
rating on petroleum refiner United Refining Co. and at the same
time, revised the company's outlook to negative from stable.

"The negative outlook reflects Warren, Pennsylvania-based United
Refining's weakening financial profile, which has been
exacerbated by an extremely poor refining margin environment,"
noted Standard & Poor's credit analyst Steven K. Nocar. "Without
a recovery in sector margins, United Refining's liquidity (cash
flow generation and ability to borrow under its revolver) could
become strained," he continued. United Refining's cash flow
generation usually improves during the summer asphalt season as
it liquidates inventory; in the near term, a potential ratings
downgrade could be highly influenced by United Refining's
performance during this peak business period. For the longer
term, a downgrade could be prompted by the high spending
requirements associated with new clean fuels standards.

The ratings on United Refining reflect the company's weak credit
profile as a small, independent refiner/marketer with
substantial debt and thin, erratic cash flow. United Refining's
primary assets are a small, medium-complexity refinery (with
processing capacity of 65,000 barrels per day) and a network of
approximately 370 company-operated, branded service stations,
located primarily in more remote areas of western New York and
Pennsylvania. The company benefits from its transportation cost
advantage, as the nearest competing fuel refiner is more than
160 miles away and pipeline competition is limited by high
trucking costs. However, the refinery lacks the economies of
scale and operational flexibility of larger, more sophisticated
facilities and historically has been only marginally profitable.

Financial flexibility remains limited by high debt leverage and
weak free cash flow generation. United Refining has about $30
million available on a $50 million secured revolving credit
facility. In the near term, United Refining's liquidity could be
strained if poor industry conditions continue. For the longer
term, United Refining will need to conserve capital to make
investments to comply with Tier-2 clean fuels specifications.
The company estimates its expenditures for Tier-2 compliance at
about $25 million to $30 million and all expenditures must be
completed by 2008.

Without a strong recovery in industry conditions such that
United Refining's leverage, cash flow, and financial flexibility
improve, the company's weak liquidity position may deteriorate.

DebtTraders reports that United Refining Co.'s 10.75% bonds due
2007 (UNITED1) are quoted at a price of 80. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UNITED1for  
real-time bond pricing.


W.R. GRACE: Property Claimants Intends to Appeal Bar Date Order
---------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants of
W. R. Grace & Co., and its debtor-affiliates, gives notice to
Judge Fitzgerald of its intent to appeal from the General Claims
Bar Date Order to the U.S. District Court for the District of
Delaware.

Theodore J. Tacconelli, Esq., at Ferry, Joseph & Pearce,
representing the PD Committee, says that the Committee intends
to put two questions before the District Court for review:

     a. Whether the Bankruptcy Court erred in issuing the Bar
        Date Order in light of the fact that no bar date order
        has been issued in respect of other asbestos claimants;
        and

     b. Whether the PD Proof of Claim Form exceeds permissible
        bounds.

The PD Committee wants the District Court to vacate the Bar Date
Order:

     a. to the extent that it imposes a bar date on PD Claimants
        before the determination by the District Court of
        whether a bar date will be required for all asbestos
        claimants; and

     b. to the extent that it requires the PD Proof of Claim
        Form.

             PD Committee's Motion for Leave to Appeal

The Official Committee of Asbestos Property Damage Claimants,
speaking through its counsel Theodore J. Tacconelli of the
Wilmington firm of Ferry, Joseph & Pearce, asks the District
Court for leave to appeal from Judge Fitzgerald's Order as to
all Non-Asbestos Claims, Asbestos Property Damage Claims, and
Medical Monitoring Claims: (I) Establishing Bar Date, (II)
Approving Proof of Claim Forms and (III) Approving Notice
Program.  The PD Committee recalls that, on June 27, 2001, as
revised on February 12, 2002, the Debtors, pursuant to
Bankruptcy Rule 8003, filed a Motion for (i) entry of case
management, (ii) establishment of Bar Dates, (iii) approval of
proof of claim forms, and (iv) approval of the notice program.  
The Bar Date Motion was heard by Judge Fitzgerald in April,
2002. Thereafter, the Bar Date Order was entered granting the
Bar Date Motion and establishing March 31, 2003 as the date by
which all traditional asbestos property damage claims must be
filed.  Significantly, there is no bar date order which applies
to other asbestos claimants, including asbestos personal injury
claimants or Zonolite Attic Insulation claimants.  Additionally,
the Bar Date Order requires that all holders of PD Claims file a
proof of claim that substantially exceeds Official Form 10
promulgated by the United States Supreme Court for proofs of
claim.

                     Reasons Why Leave To Appeal
                         Should Be Granted

Final orders of a bankruptcy court are subject to mandatory
review. Interlocutory orders, however, are subject to the
discretion of the federal district court and may be heard "with
leave of court" as provided in 28 U.S.C. Sec. 158(a)(3).
Bankruptcy Rule 8003 directs a putative appellant in the manner
in which a motion for leave to appeal is to be filed.  Neither
the Bankruptcy Code nor the Bankruptcy Rules set forth the
applicable standard for leave to appeal an interlocutory order
by a federal district court. Some courts look to 28 U.S.C. Sec.
1292(b) -- the statute governing appeals from the district
courts to the courts of appeals -- for guidance.

Section 1292(b) permits appeal where the interlocutory order
"involves a controlling question of law as to which there is a
substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation."

The Bar Date Order meets the requirements of Section 1292(b).  
By imposing a bar date on PD Claimants, without a corresponding
bar date applicable to other asbestos claimants, the Bar Date
Order treats PD Claimants differently than other asbestos
claimants by subjecting their claims to a rigorous proof of
claim process within an inordinately short period of time to
file proofs of claim while, for example, the claims of PI
Claimants are subject of mere conjecture. As a consequence, by
example, collectively, PI Claimants may attain economic
advantage by the sheer size of the speculated value of their
claims. There is no justification for this disparate treatment;
to the extent that a bar date is not required of other asbestos
claimants, it should not be imposed upon PD Claimants.

The Bar Date Order is also subject to interlocutory appeal as
the PD Proof of Claim Form required by the Order impermissibly
exceeds the requirements of applicable law. The PD Proof of
Claim Form is overly burdensome, unduly complex and designed
solely to support the Debtors' stated objections to all PD
Claims. Contrary to the purpose of Official Form 10 which is to
facilitate the filing of claims, the PD Proof of Claim Form may
likely have the opposite result and discourage the filing of PD
Claims. (W.R. Grace Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


WAVEPOINT: Will File for BIA Protection as Fundraising Backfires
----------------------------------------------------------------
WavePOINT Systems Inc. (WVP - CDNX) reported that the Company is
in financial difficulty and is no longer able to meet its
obligations generally as they become due.   

As previously announced, the Company had intended to pursue a
private placement offering designed to fund working capital and
future expansion.  Unfortunately, fundraising efforts to date
have been unsuccessful.  The Board of Directors has therefore
resolved that the Company make an assignment pursuant to the
Bankruptcy and Insolvency Act.  For that purpose, an officer of
the Company has been authorized to execute such documents in
connection therewith as may be required.  Deloitte and Touche
Inc. has been appointed trustee in bankruptcy.

The Company further reported that all directors have tendered
their resignations from the Company's Board of Directors.


WESTAFF INC: Closes New Five-Year $65 Million Credit Facilities
---------------------------------------------------------------
Westaff, Inc. (NASDAQ:WSTF), a leading provider of temporary
office and light industrial staff, reported financial results
for the second fiscal quarter, which ended April 20, 2002.

Comparing the fiscal 2001 and 2002 second quarters, sales of
services and license fees decreased from $127.5 million to
$109.7 million - or 14.0%. The decline reflects last year's
economic recession as well as current economic conditions. The
decline compares favorably, however, with the first quarter of
fiscal 2002 sales decline of 21.9% as compared to the first
quarter of fiscal 2001. The slowing rate of decline for the
second quarter is indicative of improving economic conditions
for the temporary staffing industry.

"We are aggressively implementing a multi-faceted program to
increase sales and improve margins and the overall productivity
of our sales force," said Dwight S. Pedersen, Westaff's
President and Chief Executive Officer. "The increases and
improvements we are seeing with this program, coupled with the
improving domestic economy, make us optimistic about Westaff's
return to profitability in the third quarter of fiscal 2002."

Westaff also reported a loss from continuing operations of $1.7
million for the second quarter of fiscal 2002. The loss compares
to income from continuing operations of $0.5 million for the
corresponding fiscal 2001 quarter.

The fiscal 2002 loss includes selling and administrative
expenses of $0.9 million relating to the write-off of costs
associated with the Company's former revolving credit agreement
and senior note facilities. The loss also includes costs of
approximately $0.2 million relating to the termination of its
operations in Mexico.

Partially offsetting these costs was a reduction to selling and
administrative expenses of $0.7 million relating to the
arbitration award originally reported during the fourth quarter
of fiscal 2001. The final arbitration award included a lesser
total amount for opposing counsel's attorneys' fees and costs
than was originally estimated by the Company. Finally, the
fiscal 2001 quarter included approximately $2.1 million in one-
time gains associated with the sale of two of the Company's
licensed operations during that quarter.

Excluding the effects of the items noted above, selling and
administrative expenses declined $4.7 million for the second
quarter of fiscal 2002 as compared to the second quarter of
fiscal 2001.

"In the second quarter, we continued to make very good progress
with respect to our cost containment programs," Pedersen said.
"We believe that the entire third quarter will benefit from the
cuts made during the first and second quarters."

For the first 24 weeks of 2002, sales of services and license
fees were $216.7 million, a decrease of $47.9 million or 18.1%
over the same period in fiscal 2001. The Company reported a net
loss from continuing operations of $6.4 million for the first
twenty-four weeks of fiscal 2002 compared to income from
continuing operations of $1.1 million for the same period in
fiscal 2001.

As previously announced, Westaff closed a new five-year $65
million revolving credit and term loan facility on May 17, 2002
and obtained $3 million of additional subordinated debt.

Senior Vice President and Chief Financial Officer Dirk Sodestrom
commented, "This facility should provide Westaff with the long-
term financing structure we need to support our ongoing business
and projected future growth.

"Furthermore, based on our current projections, this facility
will allow us to fully replace our outstanding surety bonds with
letters of credit on November 1, 2002," Sodestrom said. "We
believe this facility fully addresses the going concern issues
raised in the audit opinion relating to our fiscal 2001
financial statements."

Westaff provides staffing services and employment opportunities
for businesses in global markets. Westaff annually employs
approximately 175,000 people and services more than 20,000
clients from more than 325 offices located throughout the U.S.,
the United Kingdom, Australia, New Zealand, Norway and Denmark.
Westaff achieved fiscal 2001 system revenues of more than $580
million. For more information, please visit our Web site at
http://www.westaff.com  

                         *   *   *

As reported in the March 8, 2002 edition of Troubled Company
Reporter, Westaff President and CEO Dwight S. Pedersen said that
"[i]n the second quarter, [the company would be] continuing a
program of cost containment."

Also, the report said that Westaff was out of compliance with
certain of its senior secured note financial covenants and
revolving credit agreement covenants.


WHEELING-PITTSBURGH: Court Approves Exclusive Period Extensions
---------------------------------------------------------------
Pittsburgh-Canfield Corporation, through Scott N. Opincar, Esq.,
at Calfee Halter & Griswold LLP; the Official Committee of
Unsecured Noteholders represented by Jean R. Robertson, Esq., at
Hahn Loeser & Parks LLP; and the Official Committee of Unsecured
Trade Creditors represented by Marc E. Richards, Esq., at Blank
Rome Tenzer & Greenblatt, present an Agreed Order extending the
periods within which the Debtors may exclusively file a plan of
reorganization to and including Monday, June 24, 2002, and
further extending the time in which the Debtors may solicit
acceptances of that plan to and including August 23, 2002.

Judge Bodoh signs this Agreed Order. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


YORK RESEARCH: Expects to File for Bankruptcy Protection Soon
-------------------------------------------------------------
York Research Corporation (Nasdaq: YORK - news; "York") expected
to file for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code shortly.

As previously reported, the $150,000,000 12% Senior Secured
Bonds due October 30, 2007 issued by York Power Funding (Cayman)
Limited, and secured by all of York's operating projects are in
default, and an involuntary bankruptcy petition was previously
filed against York by certain creditors of York's 85%-owned
subsidiary, North American Energy Conservation, Inc., which is
in a Chapter 7 bankruptcy proceeding. York has, over the past
several months, been in negotiations with the Informal Committee
of holders of the Portfolio Bonds in connection with a proposed
funding of the bankruptcy of York. While these negotiations
continue, whether or not they are successful York will shortly
become unable to continue operations and will seek protection
under the bankruptcy code.

Whatever the outcome of such negotiations, it is anticipated
that York's operations will be limited to maintenance of its
existing operational and development projects. No recovery is
expected for the holders of York's common stock. Further, York
will not be filing any further reports under the Securities
Exchange Act of 1934, including its 10-K for the fiscal year
ended February 28, 2002. York's common stock, which was delisted
from the NASDAQ Stock Market on Friday, May 24, will cease being
traded on the NASDAQ system.


*BOOK REVIEW: The Oil Business in Latin America: The Early Years
----------------------------------------------------------------
Author:  John D. Wirth Ed.
Publisher:  Beard Books
Softcover:  282 pages
List price:  $34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://amazon.com/exec/obidos/ASIN/1587981033/internetbankrupt  

This book grew out of a 1981 meeting of the American Historical
Society. It highlights the origin and evolution of the state-
owned petroleum companies in Argentina, Mexico, Brazil, and
Venezuela.

Argentina was the first country ever to nationalize its
petroleum industry, and soon it was the norm worldwide, with the
notable exception of the United States. John Wirth calls this
phenomenon "perhaps in our century the oldest and most
celebrated of confrontations between powerful private entities
and the state."

The book consists of five case studies and a conclusion, as
follows:

     * Jersey Standard and the Politics of Latin American Oil
          Production, 1911-30 (Jonathan C. Brown)

     * YPF: The Formative Years of Latin America's Pioneer State
          Oil Company, 1922-39 (Carl E. Solberg)

     * Setting the Brazilian Agenda, 1936-39 (John Wirth)

     * Pemex: The Trajectory of National Oil Policy (Esperanza
          Duran)

     * The Politics of Energy in Venezuela (Edwin Lieuwen)

     * The State Companies: A Public Policy Perspective (Alfred
          H. Saulniers)

The authors assess the conditions at the time they were writing,
and relate them back to the critical formative years for each of
the companies under review. They also examine the four
interconnecting roles of a state-run oil industry and
distinguish them from those of a private company. First, is the
entrepreneurial role of control, management, and exploitation of
a nation's oil resources. Second, is production for the private
industrial sector at attractive prices. Third, is the
integration of plans for military, financial, and development
programs into the overall industrial policy planning process.
Finally, in some countries is the promotion of social
development by subsidizing energy for consumers and by promoting
the government's ideas of social and labor policy and labor
relations.

The author's approach is "conceptual and policy oriented rather
than narrative," but they provide a fascinating look at the
politics and development of the region. Mr. Brown provides a
concise history of the early years of the Standard Oil group and
the effects of its 1911 dissolution on its Latin American
operations, as well as power struggles with competitors and
governments that eventually nationalized most of its activities.
Mr. Solberg covers the many years of internal conflict over oil
policy in Argentina and YPF's lack of monopoly control over all
sectors of the oil industry. Mr. Wirth describes the politics
and individuals behind the privatization of Brazil's oil
industry leading to the creation of Petrobras in 1953. Mr. Duran
notes the wrangling between provinces and central government in
the evolution of Pemex, and in other Latin American countries.
Mr. Lieuwin discusses the mixed blessing that oil has proven for
Venezuela., creating a lopsided economy dependent on the ups and
downs of international markets. Mr. Saunders concludes that many
of the then-current problems of the state oil companies were
rooted in their early and checkered histories." Indeed, he says,
"the problems of the past have endured not because the public
petroleum companies behaved like the public enterprises they
are; they have endured because governments, as public owners,
have abdicated their responsibilities to the companies."

Jonh D. Wirth is Gildred Professor of Latin American Studies at
Standford University.

                          *********


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.

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

Troubled Company Reporter is a daily newsletter co-published by
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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.  Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each.  For subscription information, contact Christopher
Beard at 240/629-3300.

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