TCR_Public/020723.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

             Tuesday, July 23, 2002, Vol. 6, No. 144     

                          Headlines

3DFX INTERACTIVE: Files Petition for Court-Supervised Winding-Up
360NETWORKS: Overview of Subsidiaries' Reorganization Plan
ANC RENTAL: Consolidating Operations at Nashville Airport
AAMES FINANCIAL: Extends Exch. Offer for 5.5% Notes to August 2
ADELPHIA COMMS: Look for Schedules & Statements on September 23

AEGIS REALTY: Taps Robertson Stephens to Pursue Potential Sale
AMERICA WEST: Second Quarter Net Loss Narrows to $8.5 Million
APPLIED DIGITAL: Files Amended Form 10-Q/A for First Quarter
ARMSTRONG HOLDINGS: Asks Court to Further Extend Removal Period
ASIACONTENT.COM: DoubleClick Seeking Strategic Business Options

CANADIAN IMPERIAL: Starts Debt Settlement Talks with Creditors
CIRCUIT RESEARCH: Altschuler Melvoin Airs Going Concern Doubt
COMDISCO INC: Court Approves Asset Purchase Agreement with CLIX
CONSUMERS FIN'L: Commences Tender Offer to Buy 8.5% Preferreds
CONTOUR ENERGY: Wants More Time to File Schedules & Statements

COVANTA ENERGY: Court Approves Loader & Tractor Equipment Sales
DALEEN TECHNOLOGIES: Second Quarter Net Loss Drops to $2.3 Mill.
EASTERN CASUALTY: Liquidity Concerns Spur S&P to Cut Ratings
ENCOMPASS SERVICES: Says Has Ample Cash Flow to Fund Operations
ENRON CORP: Court Approves EESI's Settlement Agreement with PJM

ENRON CORP: Wins Nod to Obtain $250MM Letter of Credit Facility
FEDERAL-MOGUL: Has Until Jan. 1, 2003 to Remove Pending Actions
FLAG TELECOM: Gets Extension to Use Lenders' Cash Collateral
FORMICA CORP: Wants to Continue KPMG Engagement as Accountants
FRIEDE GOLDMAN: Seek Court Approval to Pay $50MM of Secured Debt

HASBRO: Board Declares Quarterly Cash Dividend on Common Shares
HAYES LEMMERZ: Appoints Officers to Strengthen Leadership Team
HEALTHCARE INTEGRATED: Fails to Meet AMEX Listing Guidelines
HORIZON PCS: Will Publish Second Quarter Results on August 13
HUDSON RESPIRATORY: March 31 Working Capital Deficit Tops $300K

IMPSAT FIBER: U.S. Trustee Names Unsecured Creditors' Committee
INFU-TECH: UST Appoints Jacobson as Successor Chapter 7 Trustee
INTERLINK HOME: Intrepid Win Right to Operate Company's Business
KMART CORP: US Trustee Amends Institutional Committee Membership
KMART CORP: Equity Committee Taps Saybrook as Investment Bankers

LAIDLAW INC: Court Further Extends Exclusive Periods to Oct. 31
MALDEN MILLS: Maintains Plan Exclusivity Through August 14
MICROFORUM: Closes Sale of CALMS Services Unit to White Clarke
MIDLAND COGENERATION: Fitch Places BB+ Rating on Watch Negative
NATIONAL STEEL: Asks Court to Allow Set-Off with Metal Building

NEWPOWER HOLDINGS: Southern Company Acquires Georgia Business
NORSKE SKOG: Completes Financial Restructuring with New Facility
NORTHWEST PHYSICIAN: Liquidity Decline Spurs S&P's Bpi Ratings
PANACO INC: Hires Neligan Stricklin as Bankruptcy Counsel
PAYLESS CASHWAYS: Trustee Hires Glidewell for Expense Recovery

PHAR-MOR INC: Commences GOB Liquidations at 54 Store Locations
PILLOWTEX CORP: Gets Nod to Assume Lease Pact with Transamerica
POWERBRIEF: Court Sets Plan Confirmation Hearing for Sept. 23
PSINET: Court OKs Stipulation with Committee re Fee Applications
QUINTALINUX LTD: Fails to Meet Nasdaq Continued Listing Criteria

RADIO UNICA: Fails to Comply with Nasdaq Listing Requirements
RELIANCE GROUP: Liquidator Sues Saul Steinberg & 17 Ex-Directors
RESOURCE AMERICA: Moody's Junks Senior Unsecured Rating
RHYTHMS NETCONNECTIONS: Hires Rosen & Slome as Special Counsel
SAFETY-KLEEN: Further Delays Completion of Form 10-Q for Q2

SCIENTIFIC LEARNING: Commences Trading on OTC Bulletin Board
SEITEL INC: Noteholders Agree to Further Extend Standstill Pact
SHELBOURNE: Urging Shareholders to Vote for Plan of Liquidation
SPIGADORO: Selling Operating Subsidiary Assets to Carlo Petrini
STARBAND COMMS: Committee Seeks Okay to Tap Bayard as Counsel

TIMELINE INC: Auditors Doubt Ability to Continue Operations
TRENWICK GROUP: Re-Sets Release of Q2 Results for August 7, 2002
TYCO INT'L: Sets Special Shareholders' Meeting for September 5
USDATA CORP: Second Quarter Revenues Plummet 30% to $2.7 Million
VELOCITA CORP: Secures Court Nod to Appoint BSI as Claims Agent

WINSTAR COMM: Holding Asks Court to Enforce Order on Receivables
XO COMMS: Has Until Year-End to Make Lease-Related Decisions
XO COMMS: Court to Consider Two-Pronged Reorg. Plan on August 26
ZENITH ELECTRONICS: Commences Tender Offer for 8.19% Debentures

                          *********

3DFX INTERACTIVE: Files Petition for Court-Supervised Winding-Up
----------------------------------------------------------------
3dfx Interactive, Inc. (OTCBB:TDFX), announced that, as part of
its effort to wind up its business, it has filed a petition with
the Superior Court of Santa Clara County in San Jose, California
requesting that the Court take jurisdiction over its winding up
proceeding as allowed by the California corporate law.

The Court will have broad authority under law to make orders on
all matters concerning the winding up of the Company.

"3dfx believes that court supervision will better enable it to
resolve outstanding issues with a few of its remaining
creditors, thereby better enabling 3dfx to conduct its
liquidation in an orderly fashion for the benefit of all of its
creditors and shareholders," said Richard A. Heddleson,
President and Chief Executive Officer of the Company. "3dfx
intends to proceed with its winding up and liquidation as
expeditiously as possible, and while there are uncertainties
involved that could delay the process, we are hopeful that the
winding up and liquidation will be completed by the end of this
year."


360NETWORKS: Overview of Subsidiaries' Reorganization Plan
----------------------------------------------------------
360Networks President and Chief Executive Officer Greg Maffei
reports that the Debtors' North American operations will
continue.  To fund its future working capital needs on the
Plan's Effective Date, the Debtors will retain at least
$35,000,000 free cash on hand.

The Prepetition Lenders will receive $215,000,000 New Senior
Secured Notes.  "The notes will be secured by substantially all
of Reorganized 360's assets," Mr. Maffei says.  Creditors and,
to a limited extent, employees will receive 100% of the New
Parent Stock -- to be issued on the Effective Date.  All shares
of New Parent Stock will be subject to dilution based on future
issuances of additional shares of New Parent Stock, including
under the employee stock option program.

The Prepetition Lenders assert a $1,200,000,000 Claim against
each of the Debtors based on loans to 360networks (USA) inc.  
The Prepetition Lenders further assert that the Claims are
secured by substantially all assets of the Debtors, with the
exception of postpetition avoidance actions.  Moreover, to the
extent, the Debtors have unliened assets, the Prepetition
Lenders assert that the value of any unliened assets:

    (i) should be exhausted by postpetition fees and expenses of
        the Debtors' Chapter 11 estates; and

   (ii) largely should flow to the Prepetition Lenders' in any
        event on the basis that the bulk of any remaining
        unliened asset values would be allocable to the Pre-
        petition Lenders due to both the Prepetition Lenders'
        unsecured deficiency Claims and the Intercompany Claims
        on which the Prepetition Lenders assert a lien.

Mr. Maffei states that the Creditors' Committee has raised two
major challenges to the Prepetition Lenders' position.  First,
the Committee asserts that certain of the Debtors' assets are
not covered by valid, binding, and perfected liens of the
Prepetition Lenders.  Therefore, all unsecured creditors should
share the value of the unliened assets.  As to non-cash assets,
the Committee contends the value of the assets may be
substantial because the assets are integral to the Debtors'
network.  As to the Debtors' Cash as of the Petition Date, the
Committee asserts that the Prepetition Lenders did not have a
lien on any of the Cash, and that the Cash Collateral Orders
have preserved the value of the unencumbered Cash.  Second, the
Committee asserts that a substantial portion of the Prepetition
Lenders' loans were fraudulent transfers and the related claims
and liens may be invalidated and preserved for the benefit of
general unsecured creditors.

The Plan effectively eliminates any need to allocate value
between the U.S. Debtors and the CCAA Plan Debtors.  Instead,
the Plan is premised primarily on the relative rights of the
Class 4 Prepetition Lenders and Class 7 General Unsecured
Creditors.   Mr. Maffei states that under the CCAA Plan, holders
of general unsecured claims against the CCAA Plan Debtors --
which are anticipated to aggregate almost one fifth of the
amount of the General Unsecured Claims against the U.S. Debtors
-- will receive 2% of the New Parent Stock in contrast to the
10% going to holders of Class 7 General Unsecured Claims under
the Plan. Notably, there is no provision in the CCAA Plan
corresponding to the Plan provision for Class 7 General
Unsecured Creditors to receive 80% of most Net Preference
Recoveries.

                    Allocation of Proceeds

According to Mr. Maffei, holders of Allowed Class 7 Claims will
receive 80% and the Reorganized Debtors will receive 20% of Net
Preference Recoveries from Committee Claims.  However, to the
extent the Debtors fail to provide the $1,000,000, the Debtors'
20% share shall be setoff by the unfunded amount and the setoff
funds shall be applied to satisfy the Debtors' related
obligation.  Net Preference Recoveries from Carve-Out Claims
that may be incorporated in any broader settlement with the
preference recipient shall belong entirely to the Debtors.  Net
Preference Recoveries from Carve-Out Claims that are resolved
individually, rather than as part of a broader settlement, shall
be split on the 80%/20% basis.

Under the CCAA Plan, the treatment of priority, tax, and secured
claims other than those of the Prepetition Lenders follows the
dictates of Canadian Law.  The treatment of the Prepetition
Lender Claims under the CCAA Plan is a joint treatment with the
treatment of the Claims under the Plan.  Intercompany Claims and
Interests in Canada are treated the same under the Plan.  The
current ultimate parent of the Debtors, 360networks Inc., is not
included in the CCAA Plan.

                 Prosecution of Preference Claims

The Reorganized Debtors will control and retain 100% of
recoveries on all claims against any member of the Ledcor Group,
Netrail, Inc., or Debtor Professionals, including Preference
Claims.  "Any settlement of claims against the Ledcor Group
shall require the waiver of all General Unsecured Claims against
the Debtors asserted by each member of the Ledcor Group or an
alternative resolution satisfactory to the Committee," Mr.
Maffei adds.  Absent a settlement of the Debtors' Preference
Claims against the Ledcor Group on or before April 30, 2003, the
claims shall be treated in all respects as Committee Claims.  
However, the first $500,000 of recoveries on the claims against
the Ledcor Group shall be paid to the Reorganized Debtors or
applied against the $1,000,000 payable by the Reorganized
Debtors before the 80%/20% split for Net Preference Recoveries.

The Committee will:

    (i) be authorized and have the exclusive right to prosecute
        all Committee Claims on behalf of the Debtors' estates;

   (ii) deposit all proceeds from the prosecution or settlement
        of Committee Claims into the Preference Account;

  (iii) be responsible for resolution of any General Unsecured
        Claims asserted by targets of Committee Claims.

Any Committee Claim which the potential defendant has asserted a
General Unsecured Claim against the Debtors and with respect to
which:

    (i) the Committee has not filed an adversary proceeding or a
        motion objecting to the prepetition claim of the target
        of the Committee Claim by 60 days after the Effective
        Date, or the date as may be agreed among the Committee,
        the Debtors, and the Prepetition Agent, or ordered by
        the Court; or

   (ii) as to which on or before the date the Committee has
        informed the Reorganized Debtors in writing that the
        Committee does not intend to pursue the Committee Claim,

shall revert to the Reorganized Debtors' control and be deemed
to be a Carve Out Claim.  On or before the Effective Date, the
Debtors shall provide the Committee with a schedule of potential
books and records objections related to Committee Claims.

                      Preference Account

The Committee will maintain a Preference Account that:

    (a) will hold funds advanced by the Debtors or Reorganized
        Debtors for Committee Preference Fees incurred after the
        Effective Date and the proceeds from Committee Claims;

    (b) from which will be paid post Effective Date Committee
        Preference Fees, Requested Debtor Fees, and any fees
        associated with maintaining or making distributions from
        such account; and

    (c) which shall constitute the source of distributions to be
        made under the Plan with respect to Net Preference
        Recoveries.

Mr. Maffei informs the Court that no distributions from the
Preference Account shall be made unless and until the
Reorganized Debtors first have been paid from the account an
amount equal to all outstanding Requested Debtor Fees.  Subject
only to the limited right of set-off, the Reorganized Debtors
shall receive their 20% share of Net Preference Recoveries from
the Preference Account on or before the date that any of the 80%
share of the Net Preference Recoveries are distributed to
holders of Allowed Class 7 Claims.  The Committee promptly shall
provide the Reorganized Debtors with copies of the monthly
statements for the Preference Account together with a schedule
of all deposits into and withdrawals from the Preference
Account.  The Reorganized Debtors shall have the right to audit
the Preference Account, at the Reorganized Debtors' expense,
upon reasonable notice.  Either the Committee or the Reorganized
Debtors shall have the right to object in the Bankruptcy Court
on the basis that the Committee Preference Fees or Requested
Debtor Fees are unreasonable.

                     Debtors' Contribution

Subject to the potential reduction, the Reorganized Debtors
shall provide $1,000,000 to cover Committee Preference Fees or
as a contribution to recoveries on Committee Claims.  For
Committee Preference Fees incurred and billed during the period
from the Effective Date until July 1, 2003, upon receipt of
monthly bills the Reorganized Debtors promptly shall deposit an
amount sufficient to pay the fees into the Preference Account so
long as the aggregate amount paid by the Reorganized Debtors for
Committee Preference Fees does not exceed $1,000,000.  As soon
as practicable after July 1, 2003, the Debtors will deposit into
the Preference Account, as a contribution to the Preference
Account, an amount equal to $1,000,000 less the sum of:

    (i) the aggregate amount paid by the Debtors for Committee
        Preference Fees for the period from July 1, 2002 to June
        30, 2003; plus

   (ii) any unreimbursed Requested Debtor Fees for the period.

Any additional funding to cover Committee Preference Fees shall
be paid only from net recoveries on Committee Claims. (360
Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service,
Inc., 609/392-0900)


ANC RENTAL: Consolidating Operations at Nashville Airport
---------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates acquired
authority to reject the Alamo Concession Agreement and the Alamo
Lease and to assume the National Concession Agreement and the
National Lease and assign them to ANC Rental Corporation.  The
agreements were entered into by the Debtors and the airport
authority of the Nashville Airport.

Since the National agreement do not prohibit dual branding by
the concessionaire, Elio Battista Jr., Esq., at Blank Rome
Comisky & McCauley LLP in Wilmington, states that ANC would able
to operate both the Alamo and National brand names from a single
location.

Mr. Battista claims that, pursuant to Section 365(b)(1) of the
Bankruptcy Code, the Debtors will have to pay the airport
authority $162,168 in prepetition expenses incurred by National
and $36,670 in prepetition expenses by Alamo.  The airport
authority will draw upon the Letter of Credit posted by Alamo
pursuant to its concession and lease in the amount of Alamo's
pre-petition dues.

Mr. Battista expects the consolidated operations at the
Nashville airport to result in savings for the Debtors, pegged
at $1,871,000 per year in fixed facility costs and other
operational cost savings. (ANC Rental Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)


AAMES FINANCIAL: Extends Exch. Offer for 5.5% Notes to August 2
---------------------------------------------------------------
Aames Financial Corporation (OTCBB:AMSF) announced that the
expiration date of its offer to exchange its newly issued 4.0%
Convertible Subordinated Debentures due 2012 for any and all of
its outstanding 5.5% Convertible Subordinated Debentures due
2006 has been extended to 5:00 p.m., New York City time, on
Friday, August 2, 2002. The Exchange Offer had been scheduled to
expire today, Friday, July 19, 2002, at 5:00 p.m., New York City
time. The Company reserves the right to further extend the
Exchange Offer or to terminate the Exchange Offer, in its
discretion, in accordance with the terms of the Exchange Offer.

To date, the Company has received tenders of Existing Debentures
from holders of approximately $42.8 million principal amount, or
approximately 37.6%, of the outstanding Existing Debentures.

As previously announced, Wilmington Trust Company, as successor
indenture trustee with respect to the Company's 9.125% Senior
Notes due 2003, brought an action against the Company seeking to
prevent the Company from consummating the Exchange Offer. On
July 1, 2002, the Supreme Court of the State of New York denied
the Trustee's request for an order preliminarily enjoining the
Company from proceeding with the Exchange Offer. On July 12,
2002, the Company filed a motion to dismiss the Trustee's
complaint.

The Company is a consumer finance company primarily engaged in
the business of originating, selling and servicing home equity
mortgage loans. Its principal market is borrowers whose
financing needs are not being met by traditional mortgage
lenders for a variety of reasons, including the need for
specialized loan products or credit histories that may limit the
borrowers' access to credit. The residential mortgage loans that
the Company originates, which include fixed and adjustable rate
loans, are generally used by borrowers to consolidate
indebtedness or to finance other consumer needs and, to a lesser
extent, to purchase homes. The Company originates loans through
its retail and broker production channels. Its retail channel
produces loans through its traditional retail branch network and
through the Company's National Loan Centers, which produce loans
primarily through affiliations with sites on the Internet. Its
broker channel produces loans through its traditional regional
broker office networks, and by sourcing loans through
telemarketing and the Internet. At March 31, 2002, the Company
operated 100 retail branches, 5 regional wholesale loan offices
and 2 National Loan Centers throughout the United States.

                         *    *    *

As reported in Troubled Company Reporter's June 19, 2002
edition, Moody's Investors Service took several rating actions
on Aames Financial Corporation. The investors service lowered
the company's Senior Debt Rating to Caa3 from Caa2. It also
affirmed its Ca rating on Aames' Subordinated Debenture. Rating
outlook stays at negative.

It is Moody's belief that potential loss severity to senior
unsecured bondholders would increase after Aames started its
previously announced exchange offer of its outstanding 5.5%
convertible subordinated debentures due 2006.

The company's liquidity and financial flexibility remain
constrained. It appears that Aames may have difficulty obtaining
the necessary resources to pay for its approximately $150
million unsecured senior debt maturing on November 15, 2003. It
also has short-term warehouse facilities with financial
covenants maturing before October 2003 and which critically
needed to be renewed to maintain its limited financial
flexibility.


ADELPHIA COMMS: Look for Schedules & Statements on September 23
---------------------------------------------------------------
Adelphia Communications and its debtor-affiliates sought and
obtained an extension of the time to file their lists of
creditors, lists of equity security holders, schedules of assets
and liabilities, schedules of executory contracts and unexpired
leases and statements of financial affairs.  Judge Gerber gives
ACOM an extension through September 23, 2002, to comply with the
requirements imposed on every debtor under 11 U.S.C. Sec. 521(1)
and Rule 1007 of the Federal Rules of Bankruptcy Procedure.

The Debtors submit that "cause" to extend the time to file the
Schedules and the Lists exists because of the facts and
circumstances of these cases.  Because of the sheer magnitude
and complexity of these cases, the Debtors have not had
sufficient time to collect and assemble the requisite financial
data and other information in order to prepare the complete and
coherent Lists, Schedules and Statements.  The Debtors are
hopeful that they can assemble the data by September 23, but
ACOM cautions that it may return in September and ask for more
time. (Adelphia Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are
trading at 38-cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.


AEGIS REALTY: Taps Robertson Stephens to Pursue Potential Sale
--------------------------------------------------------------
Aegis Realty, Inc., (AMEX:AER) is continuing to work with
Robertson Stephens, Inc., as the Company's investment advisor,
under the directive of the Board of Directors, to pursue the
potential sale of the Company or its assets as previously
announced.

While FleetBoston Financial has announced a decision to wind
down the investment banking operations of Robertson Stephens, a
small group of employees, including the team assigned to the
Company, will continue with the firm during a transition period,
and will continue to advise the Company.

Aegis Realty, a geographically diversified real estate
investment trust, has property holdings in 15 states. The
Company's current portfolio includes direct or indirect
interests in 28 neighborhood shopping centers and two garden
apartment complexes. For more information, please contact the
Shareholder Services Department directly at 800/831-4826.


AMERICA WEST: Second Quarter Net Loss Narrows to $8.5 Million
-------------------------------------------------------------
America West Holdings Corporation (NYSE: AWA), parent company of
America West Airlines, Inc. and The Leisure Company, reported a
second quarter net loss of $8.5 million. For the same period a
year ago, America West reported a net loss of $42.5 million.

Excluding the recognition of additional federal grant proceeds
received, America West's net loss this quarter was $9.9 million.
In comparison, excluding special charges taken and a year-over-
year change in Excess Reorganization Value amortization, the
company's second quarter 2001 loss was $15.3 million.

America West produced a nominal net profit in June, typically
one of its strongest months for financial performance, and a
modest operating profit for the quarter.

"While America West's second quarter net loss reflects the
continued economic challenges facing the airline industry, we
are encouraged to be the only major airline to report a year-
over-year improvement in earnings," said W. Douglas Parker,
chairman and chief executive officer. "This improvement is
driven by the success of our new fare structure, our outstanding
airline operations and the significant cost reductions achieved
during our recent restructuring process."

Operating revenues for the quarter were $544 million, down 7.3
percent from the same period in 2001. Available seat miles
(ASMs) declined 0.7 percent. Revenue passenger miles were 5.2
billion, down 0.3 percent from second quarter 2001. The
airline's passenger load factor was a record 75.8 percent.

Passenger yields fell 7.0 percent to 9.78 cents due primarily to
an industry-wide decline in business travel. The decrease in
yields caused passenger revenue per available seat mile (RASM)
to decline 6.7 percent to 7.41 cents. This decline in RASM was
less than the domestic industry average decline despite the fact
that America West's ASMs declined only 0.7 percent in the
quarter while industry's domestic ASMs fell more than 10
percent.

"We are very pleased with our revenue performance versus the
industry," said Parker. "Consumer support for our new, flexible
fare structure has been overwhelming and exceeds our
expectations. Indeed, if not for aggressive retaliatory pricing
by some of our high-cost competitors, America West would have
been profitable in the second quarter. We believe there is
additional revenue upside as our everyday low fares become more
widely appreciated throughout the travel agent and corporate
purchasing communities."

Operating cost per available seat mile (CASM) for the second
quarter of 2002, excluding special charges, decreased 9.4
percent due in part to more favorable fuel prices. Average fuel
price excluding tax was 70.5 cents per gallon versus 84.5 cents
in the second quarter of 2001. Excluding fuel expense, CASM
decreased 7.7 percent due in large part to negotiated reductions
in aircraft rent and lower travel agent commissions.

America West's cash and short-term investments increased by $66
million to a record $486 million in the second quarter.
Excluding a non-recurring tax refund, the company's cash balance
increased by $40 million during the quarter. Due to lower cash
payments for aircraft rent and higher sales volume, the second
quarter is seasonally America West's strongest for cash flow.
The company made semi-annual aircraft lease payments of
approximately $60 million on July 2, 2002.

America West continued its outstanding airline operations
through the second quarter of 2002, earning the best year-to-
date on-time performance among major airlines as reported by the
Department of Transportation (DOT).

For the quarter, 84.2 percent of America West flights arrived on
time, compared with 75.2 percent in the same quarter of 2001.
Completed flights increased to 99.0 percent from 98.0 percent in
2001. Additionally, America West posted a 12.6 percent
improvement in mishandled baggage.

As a result of the dramatic improvements, customer complaints to
the DOT dropped more than 50 percent.

"Our 13,000 employees deserve full credit for this remarkable
operational turnaround," said Parker. "We are proud to say that
at a time when other airlines are still eliminating positions,
we have recalled all employees who were furloughed after
September 11, and we have resumed hiring in nearly all work
groups."

America West initiated service to Raleigh-Durham during the
second quarter and earlier this week announced new service to
five markets that do not have significant low-fare competition:
Medford, Ore.; Billings, Mont.; Pittsburgh; Washington, D.C.,
Dulles; and Calgary, Alberta, Canada.

"While much of the industry is focused on a reassessment of its
business model, we believe America West has taken the proper
steps to ensure long-term success," said Parker. "Our new fare
structure has squarely positioned us as the nation's second
largest low-fare airline. We are expanding our system into
markets best served by this fare structure. We have committed
ourselves to operational excellence. And, importantly, we have
widened our strategic cost advantage through our recent
restructuring."

"It is difficult to say when the industry or America West will
return to profitability," added Parker. "However, if we continue
to execute our strategy as we did in the second quarter, we
believe this will be the first of a string of quarterly
improvements in year-over-year earnings. As a result, we would
expect to be among the first of the major airlines to return to
profitability."

America West Holdings Corporation is an aviation and travel
services company. Wholly owned subsidiary America West Airlines
is the nation's eighth largest carrier serving 88 destinations
in the U.S., Canada and Mexico. The Leisure Company, also a
wholly owned subsidiary, is one of the nation's largest tour
packagers.

As reported in Troubled Company Reporter's June 6, 2002 edition,
Standard & Poor's raised America West's junk corporate credit
rating to 'B-'.


APPLIED DIGITAL: Files Amended Form 10-Q/A for First Quarter
------------------------------------------------------------
Applied Digital Solutions, Inc. (Symbol: ADSX), an advanced
technology development company, has filed its reviewed financial
statements in its amended Form 10-Q/A for the first quarter
ended March 31, 2002.

The results incorporate changes discussed with the Securities
and Exchange Commission.

The Company's Form 10-Q/A reflects certain changes from the
original 10-Q filed May 20, 2002. The changes arise, in part,
from the clarification of two accounting issues. The first item
concerns the equity method of accounting, as originally filed,
versus the consolidation method of accounting for the March 27,
2002, merger of Digital Angel Corporation. The 10-Q/A reflects
the consolidation method of accounting, combining the balance
sheet of Applied Digital Solutions and Digital Angel
Corporation.

Future financial presentations will include consolidating data
on the balance sheet, cash flows and operating results. The
second item resolves the expense treatment in accounting for
stock options outstanding prior to the merger. The originally
filed 10-Q expensed those options. This treatment will remain in
effect.

The impact of the accounting changes and other adjustments to
the condensed balance sheet reflects an increase in total assets
from $138.5 million to $197 million. For the same period,
stockholders' equity also reflects an increase from $20.5
million to $37.4 million.

Originally reported in the 10-Q, the net loss available to
common stockholders was $17.0 million. Applied Digital
Solutions' portion of the stock option expense was $14.3
million, which was revised upward by $4.4 million, bringing that
total expense to $18.7 million.

For the three months ended March 31, 2002, Applied Digital
Solutions was in compliance with the financial covenants of the
Company's credit facility. The amended 10-Q/A reflects a net
loss for the first quarter of 2002 of $24.0 million, or $.09 per
share, compared to a net loss of $11.2 million, or $.13 per
share for the first quarter of 2001.

Revenue from continuing operations in the first quarter of 2002
was $28.2 million. For the same three-month period in 2001, the
Company's revenue from continuing operations was $47.4 million.
The decrease in comparative quarterly revenues was primarily the
result of the sale or closure of business units in 2001.

Commenting on the filing of the amended Form 10-Q, Scott R.
Silverman, President of Applied Digital Solutions, stated:
"We're obviously pleased that this process is finally complete.
While we sought SEC guidance that the one-time non-cash charge
should be capitalized, we are pleased that we are now able to
consolidate the financial results of Applied Digital and Digital
Angel Corporation because we feel it more accurately reflects
the financial performance of the Company. The consolidation of
Digital Angel's results is also significant in that it sets the
groundwork for the future consolidation of businesses as they
evolve from VeriChip(TM) and Thermo Life(TM).

"As stated in our press release on July 15, 2002, we remain
perplexed at the Nasdaq listing qualifications panel's decision
to delist the Company's securities from Nasdaq-NMS. Throughout
the SEC guidance process, we have kept the Nasdaq staff fully
advised. We hope that we will be successful in our effort to
overturn or appeal the delisting decision and will keep our
shareholders apprised of developments as they occur. We remain
fully committed to our business model as an advanced technology
development company, and we believe the SEC guidance is a
positive development from that perspective."

VeriChip, first announced on December 19, 2001, is a
miniaturized radio frequency identification device (RFID) that
can be used in a variety of security, financial, emergency
identification and healthcare applications. About the size of a
grain of rice, each VeriChip product contains a unique
verification number and will be available in several formats,
some of which will be insertable under the skin. The
verification number is captured by briefly passing a proprietary
scanner over the VeriChip. A small amount of radio frequency
energy passes from the scanner energizing the dormant VeriChip,
which then emits a radio frequency signal transmitting the
verification number. VeriChip Corporation and its parent
company, Applied Digital Solutions, are working with federal
regulators to ensure full compliance with applicable
regulations. VeriChip Corporation is a wholly owned subsidiary
of Applied Digital Solutions.  

On March 27, 2002 Digital Angel Corporation completed a merger
with Medical Advisory Systems, Inc., which for two decades has
operated a 24/7, physician-staffed call center in Owings,
Maryland. Prior to the merger, Digital Angel Corporation was a
93% owned subsidiary of Applied Digital Solutions, Inc.  Digital
Angel(TM) technology and patents represent the first-ever
combination of advanced sensors and Web-enabled wireless
telecommunications linked to Global Positioning Systems (GPS).
By utilizing advanced sensor capabilities, Digital Angel will be
able to monitor key functions - such as ambient temperature and
physical movement - and transmit that data, along with accurate
emergency location information, to a ground station or
monitoring facility. The Company also invented, manufactures and
markets implantable identification microchips the size of a
grain of rice for use in companion pets, fish, and livestock.
Digital Angel Corporation owns patents for its inventions in
applications of the implantable microchip technology for animals
and humans. For more information about Digital Angel
Corporation, visit http://www.digitalangel.net  

Thermo Life is a miniaturized, thermoelectric generator powered
by body heat. On July 9, 2002, the Company announced that it had
achieved an important breakthrough: 3.0-volts of electrical
power successfully generated by Thermo Life in laboratory tests.
The Company believes Thermo Life technology has a wide variety
of potential uses, including the powering of various electronic
devices, wristwatches, medical devices, smoke detectors and
other heat-related sensors. If Thermo Life performs as expected
in commercial applications, this technology could effectively
eliminate the need to periodically replace the power source of
these devices. Thermo Life technology can also provide an
independent, heat-generated power source for security related
sensors. Thermo Life Energy Corporation is a wholly owned
subsidiary of Applied Digital Solutions.

Applied Digital Solutions is an advanced technology development
company that focuses on a range of life-enhancing, personal
safeguard technologies, early warning alert systems,
miniaturized power sources and security monitoring systems
combined with the comprehensive data management services
required to support them. Through its Advanced Technology Group,
the company specializes in security-related data collection,
value-added data intelligence and complex data delivery systems
for a wide variety of end users including commercial operations,
government agencies and consumers. Applied Digital Solutions is
the beneficial owner of a majority position in Digital Angel
Corporation. For more information, visit the company's Web site
at http://www.adsx.com


ARMSTRONG HOLDINGS: Asks Court to Further Extend Removal Period
---------------------------------------------------------------
Armstrong World Industries, Inc., Nitram Liquidators, Inc., and
Desseaux Corporation of North America, ask Judge Randall J.
Newsome to again extend the time period during which the Debtors
may file notices to remove litigative and administrative matters
which were pending on the Petition Date.  Specifically, the
Debtors propose that the time by which they must file notices of
removal with respect to any actions pending on the Petition Date
be extended through and including the later of (i) January 31,
2003, or (ii) 30 days after entry of an order terminating the
automatic stay with respect to any particular action sought to
be removed. (Armstrong Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1),
DebtTraders says, are quoted at 60 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for  
real-time bond pricing.


ASIACONTENT.COM: DoubleClick Seeking Strategic Business Options
---------------------------------------------------------------
DoubleClick Media Asia Limited, a joint venture between
DoubleClick International Internet Advertising Limited and
Asiacontent.com, Ltd., that engages in online media sales,
announced its intent to make changes to its business. Given that
Asiacontent.com, Ltd., the majority partner in the joint
venture, has announced plans to liquidate its business,
DoubleClick Media Asia is looking for strategic alternatives.

DoubleClick International Internet Advertising Limited and
Asiacontent.com, Ltd., formed DoubleClick Media Asia in 1999,
comprising media sales networks in Taiwan, Singapore, Korea,
Hong Kong and China.

DoubleClick Media Asia intends to transfer its business in its
subsidiaries in Korea, Taiwan and Hong Kong to current
management in these countries. If agreements are reached, to
ensure continuity, each new local entity would be led by its
former country manager. In addition, the new Korean, Taiwan, and
Hong Kong entities would use DoubleClick technology products for
their ongoing ad serving needs.

"These businesses in Asia have grown significantly during the
first half of this year. In order to continue this growth it
makes the most sense to run the businesses under local
ownership," said Scott Knoll Managing Director of Asia,
DoubleClick TechSolutions. "The restructure of this business
venture would enable DoubleClick to focus on its core technology
and email services business."

DoubleClick Media Asia will continue to look for strategic
alternatives for its operations in China and Singapore.
DoubleClick Media Asia expects the terms of these agreements to
be finalized by the end of the third quarter 2002.

These changes would allow DoubleClick Inc., to focus its
resources in the technology and email business, consistent with
its operations in the rest of the world. Currently,
DoubleClick's technology and email business in Asia consists of
230 customers including, Dell, Ikea, Ming Pao Daily News,
Eachnet.

As previously announced, Asiacontent.com Ltd., commenced
voluntary winding up on July 10, 2002. Asiacontent.com, Ltd.,  
expects liquidation to be completed in 24 months.

DoubleClick is the leading provider of tools for advertisers,
direct marketers and web publishers to plan, execute and analyze
their marketing programs. DoubleClick's online advertising,
email marketing and database marketing solutions help clients
yield the highest return on their marketing dollar. In addition,
the company's marketing analytics tools help clients measure
within and across channels. DoubleClick Inc., has global
headquarters in New York City and maintains 26 offices around
the world.


CANADIAN IMPERIAL: Starts Debt Settlement Talks with Creditors
--------------------------------------------------------------
Canadian Imperial Venture Corp., gives the following update on
its Garden Hill drilling operations:

Drilling operations on the Company's ST-2 well commenced on July
3, 2002. To date the program is on schedule and all work has
been performed without incident. Drilling and testing of ST-2
are scheduled to be completed on or before the end of this
month.

The Company also announces that subject to TSX Venture Exchange
acceptance, it has negotiated a shares for debt settlement with
certain creditors. Upon the closing of the debt settlement, a
total of 5,273,566 common shares of the Company will be issued
at a deemed price of $0.25 per share in full satisfaction of
aggregate outstanding debt of $1,318,391.32. Upon issuance, all
of the said common shares will be subject to a four-month hold
period.

At a meeting of the shareholders of the Company on May 22, 2002,
the Company received disinterested shareholder approval for its
Incentive Share Option Plan under which the Company reserved
2,972,444 shares in the capital of the Company for issuance
under stock options.

Subject to final approval by the Exchange, the Company has
granted to directors and employees of the Company incentive
stock options to purchase up to 2,960,000 Common Shares at an
exercise price of $0.25 per Common Share. Subject to the early
termination provisions in the Plan, the Options will expire on
July 19, 2007. In accordance with the Plan, the Options will
vest quarterly in equal amounts over an 18-month period.

Also, Company officials have just returned from Iraq as part of
a delegation under the United Nations Oil for Food program.
Further details should be announced in two weeks.

Canadian Imperial Venture Corp., (TSX: CQV) is an independent
Newfoundland- based energy company.

                         *    *    *

As reported in Troubled Company Reporter's July 10, 2002,
edition, Canadian Imperial is in discussions with the Creditor's
Committee that was established under the Debt Restructure
Agreement to waive or amend various requirements under the
Agreement. The Company is formally seeking to have the
Creditor's Committee waive strict compliance with the
requirement to raise a total of $4,000,000 by July 15, 2002 and
to amend the Company's exploration program.


CIRCUIT RESEARCH: Altschuler Melvoin Airs Going Concern Doubt
-------------------------------------------------------------
Circuit Research Labs Inc., develops, manufactures and markets
high-quality electronic audio processing, transmission encoding
and noise reduction equipment for the worldwide radio,
television, cable, Internet and professional audio markets. Its
main product lines control the audio quality and range of radio,
television, cable and Internet audio reception and allow radio
and television stations to broadcast in mono and stereo.  Its
Orban division manufactures and markets audio processing
equipment, primarily using digital technology, under the Orban,
Optimod, Audicy and OptiCodec brand names.  Its CRL division
also manufactures and markets audio processing equipment,
primarily using analog technology, under the CRL, Millennium,
TVS and Amigo brand names.  

The Company was founded in 1974 as a broadcast industry
consulting company. Building upon its understanding of the
broadcast industry's needs, it expanded into product development
and manufacturing and was incorporated in Arizona in March 1978.
Since the introduction of its first product which was designed
to improve the "coverage and quality" of AM radio stations, the
Company has been committed to improving broadcast quality.  It
was a major participant in the National Radio Systems Committee
(NRSC) which developed the standards for AM radio stations that
were adopted by the Federal Communications Commission. During
1987, the Company developed and produced equipment enabling AM
radio stations to meet certain NRSC standards, and Circuit
Research Labs believes that it is a market leader in the
manufacture of AM radio signal processing equipment.  The
Company is a member of the National Association of Broadcasters.  
The NAB is the world's largest broadcasters' association,
offering a wide variety of services to radio and television
stations as well as organizations that provide products and/or
services to the broadcast industry.

On January 18, 2002, Circuit Research Labs acquired the assets
of Dialog4 System Engineering GmbH.  Dialog4, a German
corporation based in Ludwigsburg, Germany, is a worldwide leader
in ISO/MPEG, audio, ISDN, satellite transmission, networking and
storage.  Dialog4 has been designing and manufacturing equipment
for the codec market for over ten years.  Its products,
available in Europe since 1993, include the MusicTaxi codec for
encoding and decoding audio and data over TCP/IP on the
Internet, ISDN and satellite.

Circuit Research Labs purchased the assets of Dialog4 pursuant
to an Asset Sale and Purchase Agreement for $2 million,
comprised of 1,250,000 shares of restricted common stock, valued
at $1.00 per share, and $750,000 cash to be paid at a later date
either by Circuit Research Labs from its working capital or by
the Company's President and Chief Executive Officer, Charles
Jayson Brentlinger.  On April 8, 2002, the Company executed an
amendment to the Asset Sale and Purchase Agreement with Dialog4.
The amended agreement extends the term of payments to Dialog4
over twenty months while reducing the amount of the monthly
payment installments to $37,500 plus interest on the remaining
principal balance at a rate of 10 percent per annum.  The
monthly installments of principal and interest are due and
payable on the twentieth day of each month commencing April 20,
2002.

In connection with the acquisition, Berthold Burkhardtsmaier,
Dialog4's managing director, has become Circuit Research Labs
Vice President of European Operations and has been appointed to
its Board of Directors.

The Company had negative net working capital of approximately
$6.6 million at December 31, 2001, and the ratio of current
assets to current liabilities was 0.37 to 1. At December 31,
2000, the Company had positive net working capital of
approximately $2.1 million and a current ratio of 1.94 to 1.  
The decrease in working capital resulted from the conversion to
demand notes of a $3.5 million short-term note and a $5 million
long-term note payable to Harman Acquisition Corporation. The
notes are payable on the demand of Harman or, if no demand is
sooner made, on the following dates and in the following
principal amounts, as specified in the Amended Credit Agreement
that was entered into with Harman on October 1, 2001:

             Specified Payment Date      Payment Amount
             ----------------------      --------------
                     April 30, 2002          $1,250,000
                      June 30, 2002             250,000
                 September 30, 2002             250,000
                  December 31, 2002             250,000
                     March 31, 2003           3,000,000

Circuit Research Labs' substantial obligation to Harman may have
important consequences for the Company, including the following:

     * Its ability to continue as a going concern will depend in
       part on whether Harman demands payment on the $8.5
       million debt, or any portion thereof;

     * A significant portion of the cash flow from operations
       will be dedicated to servicing debt obligations and will
       not be available for other business purposes;

     * The terms and conditions of indebtedness limit the
       Company's flexibility in planning for and reacting to
       changes in its business, and in making strategic
       acquisitions;

     * The ability to obtain additional financing in the future
       for working capital, capital expenditures and other
       purposes may be substantially impaired; and

     * The Company's substantial leverage may make it more
       vulnerable to economic downturns and competitive
       pressures.

Circuit Research Labs ability to meet debt service obligations
and reduce total indebtedness to Harman depends in part on its
future operating performance.  Future operating performance will
depend on its ability to expand its business operations by
growing core audio processing business, expanding product
offerings and penetrating new and emerging markets, which is
anticipated will require additional financing.  In addition,
future operating performance will depend on economic,
competitive, regulatory and other factors affecting its business
that are largely beyond Company control.  If the Company is
unable to expand its business operations as planned, it has
indicated that it may not be able to service its outstanding
indebtedness to Harman.

Altschuler, Melvoin and Glasser LLP, of Los Angeles, California,
independent auditors for Circuit Research Labs Inc., in its
March 29, 2002 Auditors Report stated that "the Company's
deteriorating financial results and liquidity have caused it to
renegotiate certain loan agreements.  These events and
circumstances raise substantial doubt about the Company's
ability to continue as a going concern."


COMDISCO INC: Court Approves Asset Purchase Agreement with CLIX
---------------------------------------------------------------
Comdisco, Inc., and its debtor-affiliates obtained Court
approval of its proposed Asset Purchase Agreement with CLIX
Network, Inc., for the foreclosed assets.

As previously reported, Felicia Gerber Perlman, Esq., at
Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois,
provided the salient terms of the Agreement:

   -- at closing, the Debtors will sell, assign and transfer to
      CLIX, and CLIX agrees to purchase and acquire all of the
      Debtors' right, title and interest to the assets, free and
      clear of all mortgages, liens, security interests, claims,
      charges, pledges, rights, restrictions and encumbrances.

   -- CLIX will not assume any of the Debtors' liabilities with
      respect to the assets.

   -- the closing of the transactions will take place at the
      offices of Skadden, Arps, Slate, Meagher & Flom, at One
      Rodney Square, Wilmington, Delaware.  If the Closing Date
      does not occur on or before August 15, 2002, this
      Agreement and all rights and obligations of the parties
      will terminate and be of no effect except to the extent
      that the failure to close was due to breach of this
      Agreement by either of the parties.

   -- at the closing, against delivery of appropriate
      instruments of sale, transfer, conveyance and assignment
      of the assets, CLIX shall deliver to the Debtors the
      Purchase Price as:

      (a) $1,980,000 by wire transfers of immediately available
          U.S. funds to an account, which the Debtors will
          designate, 48 hours prior to the closing;

      (b) $500,000 in the form of three-year subordinated,
          secured promissory note; and

      (c) warrants exercisable for $500,000 of capital stock of
          CLIX.

   -- both parties will bear their own expenses in connection
      with the preparation, execution, delivery and performance
      of this Agreement.

   -- both parties will share equally any state or local tax
      payable in connection with the sale of the assets.  Any
      taxes arising post-closing as a result of actions of CLIX
      will be their responsibility.

   -- at the closing, the parties will execute and deliver:

        (a) a bill of sale and assignment;

        (b) assignment of patents;

        (c) assignment of trademarks;

        (d) assignment of copyrights;

        (e) U.S. Patent & Trademark Office Assignment form
            evidencing the Debtors' security interest in the
            assets; and

        (f) an officer's certificate of both parties. (Comdisco
            Bankruptcy News, Issue No. 31; Bankruptcy Creditors'
            Service, Inc., 609/392-0900)   


CONSUMERS FIN'L: Commences Tender Offer to Buy 8.5% Preferreds
--------------------------------------------------------------
Consumers Financial Corporation has commenced a tender offer to
purchase all of the outstanding shares of its 8-1/2 % Preferred
Stock, Series A at a price of $4.40 per share, net in cash to
the seller, plus accrued dividends on such shares.

The offer document was mailed to all shareholders Friday. The
tender offer will expire at 12:00 midnight, Eastern Daylight
Time, on August 16, 2002, unless it is extended by the Company.
There are 452,614 shares of preferred stock outstanding.

The Company has been completing a plan of liquidation approved
by its common and preferred shareholders in 1998, but recently
signed an option agreement with CFC Partners, Ltd., a New York-
based investor group, which permits the investor group to
acquire a 51% interest in the Company's common stock through the
issuance of new shares.

The Company's Board of Directors determined that a transaction
of this type would be preferable to liquidating the Company
because it has the potential to produce future value for the
common shareholders, who are projected to receive nothing in the
liquidation.

The Board also concluded that, in proceeding with this approach,
the Company's preferred shareholders should have the option,
prior to the change in control, of tendering their shares in
exchange for cash or continuing to hold the shares.

The Company believes the $4.40 tender offer price is
approximately the same as the amount which would be distributed
to the preferred shareholders if the Company was liquidated. On
June 19, 2002, the Company completed the sale of its life
insurance company subsidiary, which provided it with the liquid
funds to proceed with the tender offer.

StockTrans, Inc., located in Ardmore, Pennsylvania, is serving
as the depositary and the information agent for the tender
offer. Preferred shareholders can call StockTrans at (610) 649-
7300 if they have questions about the tender offer process.

The Company's preferred shareholders should read the tender
offer statement on Schedule TO, as filed with the Securities and
Exchange Commission, when it becomes available, because it
contains information about the tender offer. Shareholders can
obtain the tender offer statement on Schedule TO and other filed
documents at no charge at the Securities and Exchange
Commission's Web site at http://www.sec.gov


CONTOUR ENERGY: Wants More Time to File Schedules & Statements
--------------------------------------------------------------
Contour Energy Co., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of Texas to grant
them an extension of time to file their schedules of assets and
liabilities, statements of financial affairs, and consolidated
creditors list, as required by 11 U.S.C. Sec. 521(1) and Rule
1007 of the Federal Rules of Bankruptcy Procedure.

The Debtors tells the Court that they have operations throughout
Texas, Louisiana, and in the Gulf of Mexico. Given the urgency
with which the Debtors sought chapter 11 relief and the more
weighty matters that the limited staff must address, the Debtors
ask more time to complete the Schedules and Statement through
August 14, 2002.

Contour Energy Co., a company engaged in the exploration,
development acquisition and production of oil and natural gas,
filed for chapter 11 protection on July 15, 2002. John F.
Higgins, IV, Esq., at Porter & Hedges, LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $153,634,032 in
assets and $272,097,004 in debts.


COVANTA ENERGY: Court Approves Loader & Tractor Equipment Sales
---------------------------------------------------------------
Pursuant to Section 363 of the Bankruptcy Code, Covanta Energy
Corporation and its debtor-affiliates obtained Court's authority
to sell certain non-core Miscellaneous Assets, including but not
limited to, office furniture, office equipment, art, machinery
and other equipment. The sale will be free and clear of all
liens, claims and encumbrances and without need for further
Court authorization as long as the Miscellaneous Assets' fair
market value in the aggregate is not more than $250,000.

Subject to the terms of the DIP Agreement, Judge Blackshear
authorizes the Debtors to market and sell, without conducting an
auction, any Miscellaneous Asset or group of Miscellaneous
Assets having a fair market value of less than or equal to
$250,000. Judge Blackshear also allows the sale of Small
Miscellaneous Asset with a fair market value of not more than
$25,000, provided that no more than $100,000 in assets may be
sold as Small Miscellaneous Assets.  All sales shall be subject
to the Miscellaneous Sale Procedure the Debtors proposed to the
Court. However, these items shall not be subject to the approved
Sale Procedure without the written consent of:

A. Volvo Commercial Finance LLC The Americas and VFS Leasing Co:

    (a) 2001 Volvo L120D Wheel Loader bearing serial number
        L120DV63170;

    (b) 2000 Volvo L90D Wheel Loader bearing serial number
        L90DV64265; and

    (c) 2001 Volvo L90D Wheel Loader bearing serial number
        L90DV64532.

B. Caterpillar Financial Services Corporation:

    (a) CAT 966G Wheel Loader bearing serial number 3SW01405;

    (b) CAT 938G Wheel Loader bearing serial number 4YS02144;

    (c) CAT 938G Wheel Loader bearing serial number 4YS01787;

    (d) CAT 9501G Wheel Loader bearing serial number 3JW02490;

    (e) CAT 980G Wheel Loader bearing serial number 2KR01996;

    (f) CAT 375L Excavator bearing serial number 1JM00137;

    (g) CAT 980G Wheel Loader bearing serial number 2KR01333;

    (h) CAT D8T Track-Type Tractor bearing serial number
        7XM01408; and

    (i) CAT 980G Wheel Loader bearing serial number 2KR02482.

In addition, the Bankruptcy Court approved these Miscellaneous
Sale Procedures:

  (a) the Debtors or their agents will determine, in their
      reasonable discretion, the highest and best offer for
      each Miscellaneous Asset or group of Miscellaneous
      Assets;

  (b) the Debtors will file with the Court and serve, by
      facsimile or electronic mail, a notice of the highest and
      best offer for sale of a Miscellaneous Asset to the
      counsel to the agents of the lenders providing pre-
      petition financing and postpetition financing,
      counsel to the Official Committee of Unsecured Creditors,
      counsel to the informal committee of 9.25% debenture
      holders, the respective financial advisors for the
      Lenders, the Committee and the 9.25% Committee, the
      United States Trustee and any known creditors asserting
      a lien on the applicable Miscellaneous Asset;

  (c) the Notice of Sale will contain a description of the
      relevant Miscellaneous Asset, the name of the purchaser
      of the Miscellaneous Asset, the relationship, if any, of
      the purchaser to the Debtors, the marketing efforts
      undertaken to sell the Miscellaneous Asset, the purchase
      price, the expected net proceeds after sales costs and
      the basis for the Debtors' conclusion that the sale is in
      the best interests of the estate;

  (d) the Lenders, the Committee, the 9.25% Committee, the
      United States Trustee or any known creditors asserting a
      lien on the applicable Miscellaneous Asset may object to
      the sale by filing an objection with the Court and
      serving it upon the Debtors within five business days
      after receipt of the Notice of Sale;

  (e) if an objection is filed and served within the five-day
      period but cannot be resolved consensually, the Debtors
      will not transfer the Miscellaneous Asset to the buyer
      without further court order;

  (f) the sale of each of the Miscellaneous Assets will be
      negotiated at arms' length, without collusion, and in
      good faith as that term is used in Section 363(m) of the
      Bankruptcy Code;

  (g) any and all liens, claims, interests and encumbrances in
      the relevant Miscellaneous Asset will attach to the
      proceeds of the sale of the Miscellaneous Asset with the
      same validity, priority, force and effect on the lien,
      claim, interest and encumbrance had upon the
      Miscellaneous Asset immediately prior the closing of the
      sale, subject to any claims and defenses the Debtors,
      Lenders or 9.25% Holders may have with respect thereto;
      and

  (h) any and all proceeds from the sale of any Miscellaneous
      Asset will be forwarded to the Debtors in accordance
      with the Debtor-in-Possession Credit Agreement. (Covanta
      Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
      Service, Inc., 609/392-0900)   


DALEEN TECHNOLOGIES: Second Quarter Net Loss Drops to $2.3 Mill.
----------------------------------------------------------------
Daleen Technologies, Inc., (Nasdaq:DALN) a global provider of
high performance billing and customer care software solutions
that manage the revenue chain, reported its second consecutive
quarter of revenue growth, while continuing to hold expense
levels for the second quarter of 2002. The company reported
revenues of over $2.0 million for its second quarter of 2002.
Net loss for the quarter was $2.3 million, compared with a $2.8
million net loss during the first quarter of 2002, and compared
to a net loss of $18.0 million in the second quarter of 2001.

Second Quarter Highlights:

     --  Daleen recorded an increase in revenue from existing
customers, including $700,000 in growth-related new license
revenue from Integra Telecom, a provider of local, long distance
and Internet services for small and midsize businesses.

     --  Total expenses were $4.8 million for the second quarter
of 2002, which included $745,000 in restructuring charges,
compared to total expenses of $4.8 million for the first quarter
of 2002, and compared to total expenses of $21.8 million for the
second quarter of 2001. Total expenses in the second quarter of
2001 included restructuring charges of $4.8 million. The reduced
level of expenses reflects the company's continued improvements
in sustaining a lower cost of operations.

     --  Total expenses for the six months ended June 30, 2002
were $9.7 million, compared to $49.5 million for the same period
in 2001. Total expenses for the six months ended June 30, 2002
and 2001 included $745,000 and $7.8 million of restructuring
charges, respectively.

     --  The company realized a gain of $391,000 in non-
operating income on the sale of its subsidiary, Partner
Community, Inc.

     --  Daleen was recognized as a finalist in the Operational
Excellence category of the 2002 Billing World Excellence Awards,
which the telecom community has come to regard as an important
acknowledgement of the best the industry has to offer.

"I believe our quarter and year-to-date results clearly
demonstrate that we are making real progress in our business
operations," said Jeanne Prayther, chief financial officer for
Daleen. "We are continuing to close the gap between our revenues
and operating costs."

The company has methodically reduced expenses and cash used to
support operations over the previous eighteen months to bring
its business in line with a severe downturn in overall market
conditions and in order to reach profitability as quickly as
possible. Daleen anticipates lower expense levels in the third
quarter and a further reduction in its use of cash.

Daleen's key financial objectives include: increasing revenue in
each of the coming quarters, maintaining operating expenses
below $3.5 million per quarter and keeping cash used in the
third quarter to below $2.5 million.

"Although the communications industry itself still holds some
challenges, we've successfully stabilized our cost structure,
and put ourselves a step closer to reaching our goal of
achieving profitability," said James Daleen, president and chief
executive officer for Daleen.

Daleen Technologies, Inc., is a global provider of high
performance billing and customer care software solutions that
manage the revenue chain for traditional and next-generation
communication service providers, retailers and distributors of
digital media, and technology solutions providers. Offering
proven integration with leading CRM and other legacy enterprise
systems, Daleen's RevChain software and pure Internet
Integration Architecture (IIA(TM)) leverage open Internet
technologies to enable providers to achieve peak operational
efficiency while driving maximum revenue from their product and
service offerings. The company is currently ranked No. 1
worldwide in overall customer satisfaction based on timeliness
of delivery, functionality, delivery within budget, vendor
support and maintenance, system flexibility and
interoperability. Additional information is available at
http://www.daleen.com  

                         *    *    *

As reported in Troubled Company Reporter's May 24, 2002 edition,
Daleen Technologies, Inc., received a Nasdaq Staff Determination
that the company has not met the minimum bid price requirement
set forth in Marketplace Rule 4450(a)(5) for continued listing
on The Nasdaq National Market, and that it anticipates receiving
a similar Nasdaq Staff Determination this week that it has not
met the minimum market value of publicly held shares requirement
set forth in Marketplace Rule 4450(a)(2).

As a result of each of these determinations, the company's
common stock is subject to delisting from The Nasdaq National
Market.


EASTERN CASUALTY: Liquidity Concerns Spur S&P to Cut Ratings
------------------------------------------------------------
Standard & Poor's lowered its counterparty credit and financial
strength ratings on Eastern Casualty Insurance Co., to double-
'Bpi' from triple-'Bpi' citing a decline in capitalization and
weak profitability and liquidity.

Based in Marlborough, Mass., this stock company writes mainly
workers' compensation. Until 2000, the company had acted as a
servicing carrier and voluntary direct assignment carrier for
the Massachusetts Workers' Compensation Assigned Risk Pool. In
fourth-quarter 2001, the company declined to renew its entire
WCARP book. Currently, just more than 95% of the company's
business lies within its major states of operations --
Massachusetts, New Hampshire, and Connecticut -- and its
products are distributed primarily through independent agents.
The company, which began business in 1980, is licensed in
Connecticut, Massachusetts, New Hampshire, New Jersey, New York,
Rhode Island, and Vermont.

Ratings with a 'pi' subscript are insurer financial strength
ratings based on an analysis of an insurer's published financial
information and additional information in the public domain.
They do not reflect in-depth meetings with an insurer's
management and are therefore based on less comprehensive
information than ratings without a 'pi' subscript. Ratings with
a 'pi' subscript are reviewed annually based on a new year's
financial statements, but may be reviewed on an interim basis if
a major event that may affect the insurer's financial security
occurs. Ratings with a 'pi' subscript are not subject to
potential CreditWatch listings.

Ratings with a 'pi' subscript generally are not modified with
"plus" or "minus" designations. However, such designations may
be assigned when the insurer's financial strength rating is
constrained by sovereign risk or the credit quality of a parent
company or affiliated group.


ENCOMPASS SERVICES: Says Has Ample Cash Flow to Fund Operations
---------------------------------------------------------------
Encompass Services Corporation is one of the largest providers
of facilities services in the United States. The Company
provides electrical and mechanical contracting services and
cleaning and maintenance management services to commercial,
industrial and residential customers nationwide, including
construction, installation and maintenance. On February 22,
2000, the shareholders of GroupMAC and Building One approved the
merger of the two companies. In connection with the Merger,
GroupMAC changed its name to Encompass Services Corporation.
GroupMAC was the surviving legal entity in the Merger. However,
for accounting purposes, Building One was deemed to be the
acquiror and, accordingly, the Merger was accounted for as a
"reverse acquisition".

The Company's revenues decreased $77.5 million, or 2%, to
$3,825.3 million for the year ended December 31, 2001 from
$3,902.7 million for the year ended December 31, 2000. The
decrease is primarily attributable to decreases in revenues from
technology and telecommunications customers in the West and
Southwest regions of the Company's Commercial/Industrial
Services Group partially offset by the inclusion of a full year
of the GroupMAC businesses, which were acquired in the February
22, 2000 Merger, and an 11% increase in Cleaning Systems Group
revenues.

Gross profit decreased $91.0 million, or 13%, to $603.7 million
for the year ended December 31, 2001 from $694.7 million for the
year ended December 31, 2000. This decrease in gross profit is
primarily due to increased pricing pressures on projects as a
result of deteriorating economic conditions, a greater than
normal level of losses recorded on certain fixed-price projects
and reduced levels of work done for customers in the higher
margin technology and telecommunications sectors.

Gross profit margin decreased to 15.8% for the year ended
December 31, 2001 compared to 17.8% for the year ended December
31, 2000. This decline is primarily attributable to the lower
volume of technology projects in 2001 which tend to be higher
margin, increased price competition as a result of general
economic weakness, and the increased job losses on fixed-price
projects mentioned above.

The Company finances its operations and growth from internally
generated funds and borrowings from commercial banks or other
lenders. Management anticipates that the Company's cash flow
from operations and borrowing capacity under its bank credit
facilities, as amended effective as of June 26, 2002, will be
adequate for the Company to fund its normal working capital
needs, debt service requirements and planned capital
expenditures for 2002.

As of December 31, 2001, the Company had a $700 million Credit
Facility, consisting of approximately $400 million in Term Loans
and a $300 million Revolving Credit Facility, increasing to $350
million once certain debt leverage ratios are achieved.
Effective as of June 26, 2002, the Company amended the Credit
Facility.  The Amended Facility consists of approximately $400
million in Term Loans and a $300 million Revolving Credit
Facility, temporarily limited to $250 million until the funding
of the Apollo investment discussed below.

Under the Amended Facility, the Company is required to maintain
compliance with the following financial covenants, measured as
of the end of each fiscal quarter: (1) a minimum Fixed Charge
Coverage Ratio (as defined); (2) a maximum ratio of senior debt
to pro forma EBITDA (as defined); (3) a maximum ratio of
Funded Debt (as defined) to pro forma EBITDA (as defined); (4) a
minimum amount of Consolidated Net Worth (as defined); and (5) a
maximum amount of capital expenditures. In addition, the Amended
Facility restricts the Company's ability to make acquisitions,
pay dividends, capital expenditures and investments and requires
debt prepayment with future asset sales, issuances of debt or
equity, and excess cash flow (as defined in the Amended
Facility).

On June 27, 2002, the Company entered into a Securities Purchase
Agreement with affiliates of Apollo, whereby Apollo agreed to
purchase $35.0 million of equity securities of the Company. In
connection therewith, the Company plans to enter into a rights
offering whereby holders of common stock, certain options and
warrants, and the Convertible Preferred Stock will receive
rights to purchase up to $50.0 million of Company equity
securities, including the Apollo Investment. If the rights
offering is fully subscribed, the total amount raised, including
the Apollo Investment, will be $72.5 million. Pursuant to the
Amended Facility, proceeds from the $35.0 million Apollo
Investment, net of up to $4.0 million of certain permitted
expenses, are required to be applied against the terms loans,
and 50 percent of the proceeds received from the rights offering
in excess of the Apollo Investment, net of certain permitted
expenses, will be applied toward permanent reduction of the
revolving credit facility and the term loans under the Amended
Facility, on a pro rata basis. In the event the Apollo
Investment is not received by October 15, 2002, the Company will
be in immediate default under the Amended Facility.


ENRON CORP: Court Approves EESI's Settlement Agreement with PJM
---------------------------------------------------------------
Enron Energy Services, Inc., obtained Court approval of its
Settlement Agreement with PJM Interconnection LLC, pursuant to
Bankruptcy Rule 9019.

PJM Interconnection LLC manages certain transmission and
regeneration lines used in the interchange of electric capacity
between Pennsylvania, New Jersey, and Massachusetts.

The salient terms of the Settlement Agreement and Full and Final
Release are:

   (a) EESI must pay PJM $477,830 in full satisfaction of any
       and all claims by PJM for capacity deficiency charges for
       the Winter Interval;

   (b) EESI will be considered to have relinquished its
       membership in PJM, along with any ability or entitlement
       to participate in the PJM markets as of May 1, 2002;

   (c) Within five days of receipt of evidence of court approval
       of the Settlement Agreement, PJM will return the Deposit
       and earned interest, calculated at the overnight rate
       that is or would have been received by PJM from the PNC
       Bank N.A., to EESI, after reduction for energy and
       related charges incurred by EESI prior to the Petition
       Date in the amount of $143,008, and any postpetition cost
       of carry at the then current quarterly Federal Energy
       Regulatory Commission refund rate with an accounting by
       PJM for all the reductions;

   (d) After these payments, PJM unconditionally releases EESI
       from any and all claims, which PJM now has or will ever
       have against EESI;

   (e) Upon the return of the Deposit by PJM, EESI
       unconditionally releases PJM from any and all claims
       which EESI now has or will ever have against PJM;

   (f) EESI and PJM agree that these releases do not embrace any
       properly incurred invoices from PJM pursuant to the PJM
       Agreements for the period from December 3, 2001 to and
       including April 30, 2002, including any retroactive
       "true-ups", regardless of when issued, up to a collection
       maximum of $10,000; etc.

                         *    *    *

As previously reported, Enron Energy Services Inc., and PJM are
parties to certain operating contracts pursuant to which EESI
provided electric energy to its retail end use customers located
in the service territories of the public electric utilities in
the service territory of PJM.

To secure EESI's obligations under the PJM Agreements prior to
the Petition Date, Enron North America Corp., deposited
$1,000,000 in collateral with PJM to secure, among other things,
EESI's obligations under the PJM Agreements. EESI owes PJM
$143,008 for prepetition energy and related charges.  As for
postpetition performance, PJM complains that EESI failed to
properly schedule electric power to PJM.  

On the other hand, EESI had disputed whether it's alleged
failure to schedule power postpetition gave rise to an
enforceable claim in the penalty amount of $1,200,000 against
EESI's estate.

However, EESI had determined that it could not service the
Retail Customers and had decided to reject all of its contracts
with the Retail Customers. (Enron Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


ENRON CORP: Wins Nod to Obtain $250MM Letter of Credit Facility
---------------------------------------------------------------
Judge Gonzalez overrules all objections and authorizes Enron
Corporation and its debtor-affiliates to obtain a credit post-
petition superpriority secured financing facility to back
letters of credit totaling up to $250,000,000.

The Court also allows the Debtors to take all necessary steps to
ensure that their indirect subsidiary, Enron Northwest Assets
LLC, does not exercise any of its rights under the Option
Agreement dated May 7, 2001, including, without limitation, the
right to purchase any shares of common stock of Portland General
Electric Company.

                         *     *     *

The Associated Press quotes Enron's chief financial officer Ray
Bowen as saying that Enron hasn't borrowed any money under that
facility because asset sales, like the one involving its prized
trading business to UBS Warburg, has provided the company with
enough money to stay afloat and also reduced its cash needs.
However, Bowen explains, Enron needs the new financing to assure
its business partners that they can do business with Enron and
expect to get paid. (Enron Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRN03USR1) are trading at about 11.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.


FEDERAL-MOGUL: Has Until Jan. 1, 2003 to Remove Pending Actions
---------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates sought and
obtained another extension, through and including January 1,
2003, of the period within which they may file notices of
removal with respect to civil actions pending as of the Petition
Date.

"While the Debtors do not believe that claims against them
(including asbestos claims or claims for contribution,
indemnity, and subrogation) need to be removed in order for
those claims to be heard before this Court, the Unsecured
Creditors' Committee has asked the Debtors to request an
extension of any applicable time period for the Debtors to
remove those actions or claims," according to James E. O'Neill,
Esq., at Pachulski Stang Ziehl Young & Jones P.C., in
Wilmington, Delaware.

Mr. O'Neill says that the Debtors have been in an ongoing
process since the beginning of these Chapter 11 cases of
evaluating those actions in which one or more of the Debtors is
the plaintiff in order to determine which actions might be
suitable for removal. With respect to actions unrelated to
asbestos, the Debtors believe that their analysis was largely
complete as of July 1, 2002.  The Debtors, however, do not
presently intend to remove any of those actions.

"The process of assessing for removal the Debtors' asbestos
related actions or claims against others is ongoing and the
Debtors wish to extend the time for them to remove any of those
actions or claims," Mr. O'Neill also submits.

Mr. O'Neill deems that the rights of the Debtors' adversaries
will not be prejudiced by the extension.  Any party to a
prepetition action that is removed may seek to have it remanded
to the state court from which the action was removed pursuant to
Judicial Code Section 1452(b).  Moreover, rescheduling the
removal deadline will maximize the Debtors' likelihood of a
successful reorganization thus, benefiting the Debtors, their
estates and their creditors because. (Federal-Mogul Bankruptcy
News, Issue No. 20; Bankruptcy Creditors' Service, Inc.,
609/392-0900)

Federal-Mogul Corporation's 8.80% bonds due 2007 (FMO07USR1),
DebtTraders says, are quoted at 21.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FMO07USR1for  
real-time bond pricing.


FLAG TELECOM: Gets Extension to Use Lenders' Cash Collateral
------------------------------------------------------------
FLAG Telecom Holdings Ltd.'s continued use of the Lenders' cash
collateral is approved, and Judge Allan L. Gropper issued a
final Order granting certain Debtors emergency post-petition
financing on these revised terms:

The Lender: FLAG Telecom Holdings Limited

Debtor-Borrowers: FLAG Limited, FLAG Telecom Group Services
      Limited and FLAG Asia Limited as debtors in possession in
      cases under Chapter 11 of the Bankruptcy Code.

The Non-Debtor Subsidiaries: FLAG Telecom Ireland Limited and
      FLAG Telecom Development Limited.

The Borrowers: The Debtor-Borrowers and the Non-Debtor
      Subsidiaries are referred to herein collectively as the
      "Borrowers" and individually as a "Borrower."

Use of Cash of FTHL: The Borrowers are authorized to use the
      cash of FTHL to pay actual expenses incurred in the
      ordinary course of business as consistent with past
      practice and of the types and in the amounts set forth in
      the monthly budget, pursuant to inter-company loans on
      borrowing terms consistent with past practice; provided,
      however, that the amount of the Debtors' disbursements
      does not exceed 110% of the total amount set forth in the
      budget without consent of a majority of the Official
      Committee or Committees of Unsecured Creditors, or if no
      Creditors' Committee has been duly appointed, by consent
      of a majority of a committee composed of the bondholders
      of FTHL willing to serve, the bondholders of FLAG Limited
      willing to serve, Alcatel Submarine Networks (if willing
      to serve) and Reach Ltd. (if willing to serve) (the
      "Steering Committee").

      The Debtors must provide the Creditors' Committee, or the
      Steering Committee if no Creditors' Committee has been
      duly appointed, with a proposed monthly budget 10 days
      prior to the end of each month for the next month's
      expenses. The Creditors Committee, or the Steering
      Committee if no Creditors' Committee has been duly
      appointed, will have five days to object by written notice
      to counsel to the Debtors to the proposed budget. If no
      written objection is given, then the monthly budget will
      become an approved budget. If such written objection is
      given, then if the Creditors' Committee, or the Steering
      Committee if no Creditors' Committee has been duly
      appointed, seeks to prohibit the use of cash, it must file
      an objection with the Court objecting to the Borrower's
      continued use of FTHL's cash. The authority of the
      Borrowers to use the FTHL cash in accordance with the
      proposed budget will continue until the Court has issued
      an order, upon which the Borrowers' right to use FTHL's
      cash will be determined by the Court's order.

      Nothing herein restricts the ability of the Borrowers
      and/or FTHL to move the Court for additional use of FTHL's
      cash. If an order for use of additional cash is granted,
      the use of such additional cash shall be governed by the
      Court's order.

Disclosure of Use of Cash: The Debtors must disclose to the
      Creditors' Committee, or the Steering Committee if no
      Creditors' Committee has been duly appointed, the use of
      the FTHL cash on a rolling weekly basis for each week. The
      disclosure of each week's cash use must be transmitted to
      counsel to the Creditors' Committee, or if no Creditors'
      Committee has been duly appointed, then to Kasowitz,
      Benson, Torres & Friedman LLP (counsel to the ad hoc FTHL
      bondholders' committee), Proskauer Rose LLP (counsel to
      Alcatel) and Akin, Gump, Strauss, Hauer & Feld (counsel to
      the ad hoc FLAG Limited bondholders' committee) within 7
      days after the end of each weekly period.

Adequate Protection by Debtor-Borrowers for Use of Cash: As
      adequate protection for the use of the FTHL's cash, FTHL
      shall be granted (A) a superpriority administrative claim,
      subject only to (i) a $6.9 million carve-out for
      professionals authorized to be paid from the Debtors'
      estates, (ii) a $100,000 carve-out for expenses of the
      trustee in the event of a conversion to a case under
      chapter 7 of the Bankruptcy Code and (iii) a carve-out for
      statutory amounts owed to the United States Trustee
      (together, the "Carve-Out"), pursuant to Section 364(c)(1)
      against each Debtor-Borrower receiving cash, in the amount
      of cash received by such Debtor-Borrower that cash has not
      be repaid to FTHL and (B) a lien on such Debtor-Borrower's
      inter-company accounts receivable.

Borrowing by Non-Debtor Subsidiaries: Any disbursement of FTHL
      cash to a Non-Debtor Subsidiary (which may occur through
      direct or indirect funding by FTHL) will be deemed to be
      an inter-company loan to such Non-Debtor Subsidiary. Such
      inter-company loans must be secured by a lien on the
      inter-company account receivable of the Non-Debtor
      Subsidiary receiving FTHL cash.

Borrowing by FLAG Atlantic: If the financial institutions that
      lent money to FLAG Atlantic Limited pursuant to that
      certain Credit Agreement dated as of October 8, 1999
      consent, which consent must be communicated to the Debtors
      and the Court by the agent, then FTHL's cash will be lent
      to FLAG Atlantic pursuant to an approved budget in
      accordance with the provisions regarding Use of Cash of
      FTHL and Disclosure of Use of Cash, above.

Adequate Protection for Borrowing by FLAG Atlantic: As adequate
      protection for the use of FTHL's cash to FLAG Atlantic,
      FTHL must receive a priming lien on all assets of FLAG
      Atlantic, its wholly-owned subsidiaries and FLAG Atlantic
      Holdings Limited pursuant to section 364(d), and a
      priority administrative expense claim pursuant to section
      364(c) in the amount of FTHL cash received by FLAG
      Atlantic.

Events of Default and Remedy: If the Borrowers (i) fail to
      provide a monthly budget five days prior to the end of
      each month for the next month's expenses or (ii) in any
      month, use cash in an amount that exceeds 110% of the
      total amount set forth in the budget for that month
      without the consent of the Creditors' Committee, or the
      Steering Committee if no Creditors' Committee is duly
      appointed, in accordance with the provisions regarding Use
      of Cash of FTHL, above (the foregoing , an "Event of
      Default"), then after the end of the period covered by the
      monthly budget, the cash use order and the Borrowers' and
      FLAG Atlantic's authority to use the cash of FTHL will
      terminate at the end of the period covered by the latest
      budget.

Enforceability: The Creditors' Committee, or the Steering
      Committee if no Creditors' Committee is duly appointed,
      is be entitled to enforce the rights contained herein.
      (Flag Telecom Bankruptcy News, Issue No. 12; Bankruptcy
      Creditors' Service, Inc., 609/392-0900)


FORMICA CORP: Wants to Continue KPMG Engagement as Accountants
--------------------------------------------------------------
Formica Corporation and its debtor-affiliates seek to engage
KPMG LLP, as their accountants and financial consultants, nunc
pro tunc to April 17, 2002.  The Debtors tell the U.S.
Bankruptcy Court for the Southern District of New York that they
need KPMG to perform tax advisory and consulting services
necessary the Debtors' Chapter 11 cases.

KPMG LLP will provide:

     i) assistance in the preparation and review of reports or
        filings as required by the Bankruptcy Court or the
        Office of the United States Trustee, including but not
        limited to schedules of assets and liabilities,
        statements of financial affairs, mailing matrix and
        monthly operating reports;

    ii) assistance with implementation of bankruptcy accounting
        procedures as required by the Bankruptcy Code and
        generally accepted accounting principles;

   iii) assistance in preparing and reviewing documents and
        analyses necessary for confirmation, including, but not
        limited to, financial and other information necessary
        for or contained in the plan of reorganization and
        disclosure statement; and

    iv) other services requested by the Debtors or their
        counsel.

KPMG's Financial Advisory fees are:

          Partners                       $510 - $570 per hour
          Managing Directors/Directors   $420 - $480 per hour
          Senior Managers/Managers       $330 - $390 per hour
          Senior/Staff Consultants       $240 - $300 per hour
          Associates                     $120 per hour
          Paraprofessionals              $100 per hour

Formica, together with its debtor and non-debtor-affiliates is a
preeminent worldwide manufacturer and marketer of decorative
surfacing materials. The company filed for chapter 11 protection
on March 5, 2002.  Alan B. Miller, Esq., and Stephen Karotkin,
Esq., at Weil, Gotshal & Manges LLP represent the Debtors in
their restructuring efforts. As of September 30, 2001, the
Company reported a consolidated assets of $858.8 million and
liabilities of $816.5 million.

Formica Corp.'s 10.875% bonds due 2009 (FORC09USR1), DebtTraders
says, are trading around 22.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FORC09USR1
for real-time bond pricing.


FRIEDE GOLDMAN: Seek Court Approval to Pay $50MM of Secured Debt
----------------------------------------------------------------
Friede Goldman Halter, Inc. (OTCBB:FGHLQ), has filed a motion
with the United States Bankruptcy Court Southern District of
Mississippi to approve the payment of a substantial amount of
the indebtedness owed to Foothill Capital Corporation and Ableco
Finance LLC, the primary secured lenders for FGH. Pursuant to
the motion, FGH is requesting authorization to pay $50 million
to the lenders, conditioned upon closing of the pending Halter
Marine, Inc., sale. The remaining balance owed the secured
lenders would be satisfied under a plan of reorganization.

"This action has been anticipated from the outset of the
bankruptcy", said Jack Stone, Principal, Glass & Associates,
Inc. and Chief Restructuring Advisor to FGH. "The approval of
this motion will set the stage for the completion of the FGH
bankruptcy process."

Friede Goldman Halter is a leader in the design and manufacture
of equipment for the maritime and offshore energy industries.
Its core operating units are Friede Goldman Offshore
(construction, upgrade and repair of drilling units, mobile
production units and offshore construction equipment) and Halter
Marine, Inc., (a significant domestic and international designer
and builder of small and medium sized vessels for the
government, commercial, and energy markets).


HASBRO: Board Declares Quarterly Cash Dividend on Common Shares
---------------------------------------------------------------
Hasbro, Inc., (NYSE:HAS) announced that its Board of Directors
has declared a quarterly cash dividend of $.03 per common share.
The dividend will be payable on November 15, 2002 to
shareholders of record at the close of business on November 1,
2002.

Hasbro is a worldwide leader in children's and family leisure
time and entertainment products and services, including the
design, manufacture and marketing of games and toys ranging from
traditional to high-tech. Both internationally and in the U.S.,
its PLAYSKOOL, TONKA, SUPER SOAKER, MILTON BRADLEY, PARKER
BROTHERS, TIGER and WIZARDS OF THE COAST brands and products
provide the highest quality and most recognizable play
experiences in the world.

                        *   *   *

As previously reported, Fitch Ratings affirmed Hasbro, Inc.'s
'BB' senior unsecured debt rating. In addition, the company's
new $380 million secured bank credit facility is rated 'BB+'.
The new facility, which replaces its previous 'BB+' rated
$650 million facility, continues to be secured by receivables,
inventories and intellectual property. As of December 31, 2001,
Hasbro had total debt outstanding of approximately $1.2 billion.
The Rating Outlook remains Negative.

The ratings reflect the company's strong market presence and its
diverse portfolio of brands balanced against the cyclical and
shifting nature of the toy industry. The ratings also consider
the challenges the company continues to face in refocusing its
strategy on its core brands and its weak financial profile. The
Negative Outlook reflects uncertainty as to the company's
ability to successfully execute its strategy and its ability to
achieve revenue targets for its core brands as well as Star Wars
in 2002.


HAYES LEMMERZ: Appoints Officers to Strengthen Leadership Team
--------------------------------------------------------------
Hayes Lemmerz International, Inc., (OTC Bulletin Board: HLMMQ)  
announced several key appointments to its Global Leadership
Team. The following individuals will report directly to Curtis
J. Clawson, Chairman of the Board and Chief Executive Officer:

     -- James A. Yost has been appointed as Chief Financial
Officer (CFO).  Mr. Yost retired from Ford Motor Company in 2001
after serving as Vice President of Corporate Strategy. He also
held positions as Vice President and Chief Information Officer,
Executive Director of Corporate Finance, General Auditor and
Executive Director of Finance Process and Systems Development,
Finance Director of Ford Europe and Controller of Autolatina
(South America) during his 27-year career.   Mr. Yost graduated
with a bachelor of engineering science degree in computer
science from the Johns Hopkins University in Baltimore,
Maryland. He also received a master in business administration
degree in finance from the University of Chicago.

     -- Kenneth A. Hiltz will continue in his role as Chief
Restructuring Officer (CRO).  Mr. Hiltz, a Principal with
AlixPartners, LLC, joined Hayes Lemmerz in October 2001 as
Interim CFO and CRO.  He will continue to play a key role in the
development and implementation of the Company's restructuring
plan.

     -- Brian O'Loughlin has been appointed as Chief Information
Officer (CIO).  Mr. O'Loughlin joins the Company from Revlon,
Inc., where he served as CIO. In earlier positions at Revlon, he
served as Vice President of Applications Development, Director
of Systems & Programming, and as Project Manager. Prior to
Revlon, Mr. O'Loughlin spent four years in the industry as a
consultant. He has also held information systems management
positions with Congoleum Corporation and A.M. International.  
Mr. O'Loughlin holds a bachelor of science in Business
Administration from Ramapo College in New Jersey.

     -- Edward W. Kopkowski has been appointed to the newly
created position of Vice President of Operational Excellence.
Mr. Kopkowski previously served as Founder and President of
Kopko Associates, Ltd., a consulting firm. Prior to that time,
Mr. Kopkowski was Vice President of Modular Products and
Operating Excellence at Pilkington PLC (formerly Libbey-Owens-
Ford) in Toledo, Ohio. Additionally, he was Plant Manager at
Bosch Braking Systems machining and assembly plant in Ashland,
Ohio. Before that, Mr. Kopkowski served in a variety of
management roles in operations and engineering, at AlliedSignal
Braking Systems and, earlier in his career, Bendix Automotive
Brake Systems, in both South Bend, Indiana and St. Joseph,
Michigan.  Mr. Kopkowski received his bachelor of science degree
in mechanical engineering from Purdue University in West
Lafayette, Indiana, and his master of arts degree in management
from Nazareth College in Kalamazoo, Michigan. He is also a
licensed Professional Engineer in the State of Michigan and an
ASQ Certified Quality Engineer.

"These talented professionals will bring tremendous strength to
our organization and have a major, positive impact on our global
business," said Mr. Clawson.

Hayes Lemmerz International, Inc., is one of the world's leading
global suppliers of automotive and commercial highway wheels,
brakes, powertrain, suspension, structural and other lightweight
components. The Company has 42 plants, 3 joint venture
facilities and approximately 12,000 employees worldwide.

On December 5, 2001, Hayes Lemmerz International, Inc., all of
its U.S. subsidiaries and one Mexican subsidiary filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code, to
reduce their debt and strengthen their competitive position.
These filings include 22 facilities in the United States and one
plant in Mexico.

More information about Hayes Lemmerz International, Inc., along
with a complete list of current and archived press releases, is
available at http://www.hayes-lemmerz.com

Hayes Lemmerz Int'l Inc.'s 11.875% bonds due 2006 (HLMM06USS1)
are trading at 67 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.


HEALTHCARE INTEGRATED: Fails to Meet AMEX Listing Guidelines
------------------------------------------------------------
HealthCare Integrated Services, Inc., (Amex: HII) announced
that, on July 12, 2002, the American Stock Exchange notified the
Company of its intention to file an application to strike the
Company's common stock from listing on the Exchange because of
the Company's failure to file its Annual Report on Form 10-K for
fiscal 2001 and Quarterly Report on Form 10-Q for the first
quarter of fiscal 2002.

Amex has also notified the Company that it has fallen below
certain of Amex's continued listing guidelines because the
aggregate market value of the shares of its publicly held common
stock has been less than $1.0 million for more than 90
consecutive days. Unless this determination is appealed by July
19, 2002, it will become final. The Company has decided not to
appeal this determination and intends to apply to have its
securities listed on the Over The Counter Bulletin Board.

As previously announced, the Company engaged new independent
accountants in March 2002, but due to the Company's financial
condition, such accountants have been unable to complete the
audit of the Company's 2001 financial statements. In order to
raise additional working capital, as previously disclosed, the
Company is engaged in negotiations to sell its 50% interest in
Atlantic Imaging Group LLC, which joint venture operates the
largest network of radiology facilities in New Jersey. Also, as
previously announced, the Company is pursuing the sale of its
50% ownership interest in Helios Ventures, Inc.  The Company
hopes that consummation of one or both of these transactions, as
well as its continued cost cutting measures, to include
executive compensation reductions, will provide it with
sufficient net cash proceeds to satisfy certain obligations and
to finalize its fiscal 2001 financial statements and file the
Form 10-K and Form 10-Q. The Company anticipates that once it is
current with its periodic public reporting requirements, its
common stock will be eligible to commence trading on the OTC
Bulletin Board. However, there can be no assurances as to the
consummation of any of these transactions, the finalization of
the financial statements, the filing of the Form 10-K or Form
10-Q, the resumption of the trading of the common stock or the
listing of the common stock on the OTC Bulletin Board.

As previously announced, the Company also has been exploring the
disposition of its remaining diagnostic imaging operations.
However, given the performance of these operations and the
substantial debt secured by the assets comprising these
operations, the failure of several public diagnostic imaging
companies and the constrained lending environment, the Company
has been unable to consummate any such dispositions.
Accordingly, the Company continues to negotiate with its primary
lender regarding potential restructuring alternatives.

HealthCare Integrated Services, Inc., is a multi-disciplinary
provider of healthcare services, currently specializing in
diagnostic imaging operations and clinical research trials. The
Company presently operates four diagnostic imaging facilities
located in Ocean Township, Bloomfield, Voorhees and Northfield,
New Jersey and provides clinical research services to several
physician practices and hospitals in New Jersey.

The Company also manages, through a joint venture, the largest
network of radiology facilities in New Jersey, presently
consisting of 85 facilities. Through this joint venture, the
Company provides services to 18 of the largest automobile
insurance carriers in New Jersey. The Company is negotiating the
sale of its 50% interest with its joint venture partner and
others.


HORIZON PCS: Will Publish Second Quarter Results on August 13
-------------------------------------------------------------
Horizon PCS, Inc., a Sprint PCS (NYSE:PCS) Network Partner,
reported that during the second quarter ended June 30, 2002, the
company added 12,400 PCS subscribers, bringing its ending PCS
subscriber base to 235,100. Churn, excluding 30-day returns, was
approximately 3.2 percent for the second quarter.

The company announced that it will report its second-quarter
results on Tuesday, August 13, after the close of the Nasdaq
stock market. Horizon also announced that it will provide an
online Web simulcast of its second-quarter earnings conference
call on Wednesday, August 14, 2002. During this call, management
will review Horizon's financial and operational results for the
second quarter ended June 30, 2002.

The live broadcast of Horizon's conference call will begin at
11:00 a.m. Eastern Time on August 14, 2002. An online replay
will be available approximately two hours following the
conclusion of the live broadcast and will continue through
August 16, 2002. Links to these events can be found at the
company's Web site at http://www.horizonpcs.com Those without  
Internet access may listen to the call by dialing 913/981-5509.
The teleconference will be available for telephone replay until
August 16, 2002, by calling 719/457-0820, and entering 186846
when prompted for the access code.

Horizon PCS is one of the largest Sprint PCS Network Partners,
based on its exclusive right to market Sprint wireless mobility
communications network products and services to a total
population of over 10.2 million in portions of 12 contiguous
states. Its markets are located between Sprint's Chicago, New
York and Raleigh/Durham markets and connect or are adjacent to
15 major Sprint markets that have a total population of over 59
million. As a Sprint PCS Network Partner, Horizon markets
wireless mobile communications network products and services
under the Sprint brand name. For more information, visit
http://www.horizonpcs.com

Sprint operates the nation's largest all-digital, all-PCS
wireless network, already serving the majority of the nation's
metropolitan areas including more than 4,000 cities and
communities across the country. Sprint has licensed PCS coverage
of more than 280 million people in all 50 states, Puerto Rico
and the U.S. Virgin Islands. Sprint plans to launch its 3G
network nationwide this summer and expects to deliver faster
speeds and advanced applications on Sprint PCS 3G Phones and
devices. For more information on products and services, visit
www.sprint.com/mr. Sprint PCS is a wholly-owned tracking group
of Sprint Corporation trading on the NYSE under the symbol
"PCS." Sprint is a global communications company with more than
80,000 employees worldwide and $26 billion in annual revenues
and is widely recognized for developing, engineering and
deploying state-of-the art network technologies.

                         *    *    *

As reported in Troubled Company Reporter's July 1, 2002,
edition, Standard & Poor's placed its single-'B'-minus corporate
credit rating on wireless services provider Horizon PCS Inc., on
CreditWatch with negative implications due to Standard & Poor's
concerns over the outcome of Horizon's negotiations with its
bank creditors over covenant amendments.

Chillicothe, Ohio-based Horizon is a Sprint PCS affiliate that
provides wireless services in markets in 12 states with a
combined covered population of about 7.2 million. At the end of
the first quarter of 2002, the company had about 222,700
subscribers and total debt of about $495 million.

In the same edition, Horizon PCS announced that its lending
group has agreed to amend the Company's senior secured credit
facility.

Horizon PCS's secured credit facility includes financial
covenants that must be met each quarter; however, the Company
did not meet the EBITDA requirement for the first quarter of
2002. The Company's lending group agreed to waive this non-
compliance with the covenant through June 28, 2002, while the
amended facility was being negotiated.


HUDSON RESPIRATORY: March 31 Working Capital Deficit Tops $300K
---------------------------------------------------------------
As of March 31, 2002, Hudson Respiratory Care Inc., was not in
compliance with certain financial and reporting covenants under
agreements governing its Credit Facility, Bank Notes Payable and
Subordinated Notes.  On March 31, 2002, the Company did not make
a scheduled amortization payment of the Term Loan Facility to
its senior lenders as required under the Credit Facility. As a
result, in early April 2002, the lenders under the Credit
Facility blocked the Company from making either the April 15,
2002 interest payment required under the Senior Subordinated
Notes or the April 15, 2002 dividend payment required under the
11-1/2% Senior Exchangeable PIK Preferred Stock due 2010.

As of March 31, 2002, the Company's wholly-owned Swedish
subsidiary, Hudson RCI AB, was not in compliance with certain
financial covenants of the Hudson RCI AB bank facility. The
Company and Hudson RCI AB are currently in discussions with the
lender and expect to receive a waiver curing all defaults. There
exists some uncertainty as to receiving this waiver from the
lenders.

On May 14, 2002, the Company reached an agreement with its
senior lenders to amend and restate the Credit Facility to bring
the Company into compliance with all terms and provisions of
this agreement. As part of this amendment, the Company issued
$20 million in new senior term notes with warrants to the
Holding's majority stockholder, $12.0 million of which was
exchanged for bank term loans previously acquired. These notes
bear interest at 12% annually with interest and principal due
upon maturity on December 31, 2004. Proceeds from the senior
notes were used to pay interest due under the Subordinated
Notes, fund expenses associated with the amendment and provide
funds for ongoing working capital purposes.

Under the terms of the amendment to the Credit Facility, the
lenders and the Company agreed to (i) waive all existing events
of default; (ii) extend the final maturity of the Credit
Facility to June 30, 2004; (iii) amend existing amortization to
$3.8 million in 2002, $9.3 million in 2003 and $37.0 million in
2004; and (iv) amend future financial covenants to include only
a limitation on capital expenditures and a minimum EBITDA test.
As a result of the amendment, the Company is currently in
compliance with the terms and provisions of the Credit Facility.
As of June 28, 2002 there is approximately $3.5 million of
availability on the revolving loan facility under the Credit
facility.

                Three Months Ended March 31, 2002
          Compared to Three Months Ended March 31, 2001

Net sales, reported net of accrued rebates, were $43.0 million
in the first quarter of 2002 as compared to $37.8 million in the
first quarter of 2001, representing an increase of $5.2 million
or 13.7%. Domestic hospital sales increased by $2.5 million or
11.3% due to increased demand at the hospital level, primarily
the result of an extremely weak influenza season in 2001.
Alternate site sales increased by $0.4 million or 6.5%,
reflecting continued market growth. International sales
increased by $1.9 million or 22.3%, primarily driven by
continued growth in Europe (up $1.1 million over the first
quarter of 2001) and the Pacific Rim (up $1.2 million over the
first quarter of 2001). OEM sales increased by $0.4 million due
to changes in purchasing patterns from some of its OEM
customers.

The Company's gross profit for the first quarter of 2002 was
$18.1 million, an increase of $8.3 million or 84.8% from the
first quarter of 2001. As a percentage of sales, the gross
profit was 42.0% and 25.8% for the first quarter of 2002 and
2001, respectively. This increase was primarily due to (i) 2001
sales of inventory recorded at a higher net realizable value
rather than manufacturing costs as a result of the SHERIDAN(R)
acquisition, (ii) increased shipping costs in 2001 as a result
of shipping difficulties caused by problems associated with the
new management information system, and (iii) underabsorption in
2001 of manufacturing overhead as a result of an aggressive plan
to reduce inventories by slowing production and an unfavorable
mix variance caused by higher sales of products at lower gross
margins.

The Company's primary sources of liquidity are cash flow from
operations, borrowings under its working capital bank facility
and historically, investments from shareholders. Cash provided
by (used in) operations totaled $2.6 million and $2.8 million in
the first quarter of 2002 and 2001, respectively. The increase
in the first quarter of 2002 as compared to the first quarter of
2001 is primarily attributable to increased operating income and
an increase in accrued liabilities partially offset by a
decrease in payables and an increases in accounts receivable.
The Company had operating working capital deficit of $0.3
million and $0.2 million as of the end of the first quarter of
2002 and 2001, respectively. Inventories were $23.7 million and
$25.2 million as of the end of the first quarter of 2002 and
December 31, 2001, respectively. In order to meet the needs of
its customers, the Company must maintain inventories sufficient
to permit same-day or next-day filling of most orders. Such
inventories are higher than those that would be required for
delayed filling of orders, thus adversely impacting liquidity.
Over time, the Company expects its level of inventories to
increase, as the Company's international sales increase.
Accounts receivable, net of allowances, were $21.4 million and
$19.3 million at March 31, 2002 and December 31, 2001,
respectively. The Company typically offers 30-day credit terms
to its U.S. hospital distributors. Alternate site and
international customers typically receive 60 to 90 day terms
and, as a result, as the Company's alternate site and
international sales have increased, the amount and aging of its
accounts receivable have increased. The Company anticipates that
the amount and aging of its accounts receivable will continue to
increase as the alternate site and international markets become
a larger percentage of the Company's overall sales.


IMPSAT FIBER: U.S. Trustee Names Unsecured Creditors' Committee
---------------------------------------------------------------
The United States Trustee appointed a seven-member Official
Unsecured Creditors' Committee in the chapter 11 case involving
Impsat Fiber Networks, Inc.  The creditors who will serve on the
Committee are:

     1) The Bank of New York, as Indenture Trustee
        6 Pennsylvannia Plaza
        New York, NY 10001
        Attn: Irene Siegel, 13th Floor
        Tel No.: 212 896 7258
        Fax No.: 212 328 7302

     2) Nortel Networks, Ltd.
        c/o Nortel Networks de Argentina, S.A.
        Larrea 1079
        (C1117 ABE) Buenos Aires, Argentina
        Attn: Ramiro Angle, Sr.
        Manager Customer Finance
        Tel No.: 5411 4827 7275
        Fax No.: 5411 4827 7272

                 or
          
        Piper & Rudnick LLP
        1200 19th Street N.W.
        Washington, DC 20036
        Attn: Mitchelle S. Mardner, Esq.
        Eric B. Miller, Esq.
        Tel No.: 202 861 3970
        Fax No.: 202 689 7670

     3) Sirti Argentina SA
        Av. Presidente Hipolito Yrigoyen 4848
        (B1604CMV) Florida
        Provinca de Buenos Aires, Argentina
        Tel No.: 0054 11 8800
        Fax No.: 4730 881707 8818

                 or

        Solomon, Eavderer, Ellenhorn, Frischer & Sharp
        45 Rockefeller Plaza
        New York, NY 10111     
        Attn: Harry Frischer, Esq.
        Tel No.: 212 956 3700
        Fax No.: 212 956 4068

     4) Harris Canada Inc.
        3 Holet de Ville
        Dollard ded Ormeuvx, Quebec
        Canada H913 3G4
        Tel No.: 514 421 8400
        Fax No.: 514 421 2952

                 or

        Marie Wilson, Esq.
        350 Twin Dolphin Drive
        Redwood Shoes, CA 94065
        Tel No.: 650 594 32106
          
     5) UBS Warburg (UBS AG)
        677 Washington Blvd.
        Starnford, CT 06901
        Attn: Michael Gelhard, Exe Director
        Tel No.: 203 719 7444
        Fax No.: 203 719 4836
     
     6) WRH Partners Global Securities, LP
        1776 On the Green
        67 park Place
        Morristown, NJ 07960
        Attn: Joe Thornton, Esq.
        Tel No.: 973 984 1233
        Fax No.: 973 984 1196
     
     7) Vision Advisors
        Isidora Goyemechea 3642, 2nd Floor
        Las Condez, Santiago, Chile
        Attn: Boris Garafulich
        Tel No.: 56 2 290 9999
        Fax No.: 56 2 290 9900

Impsat Fiber, a provider of broadband Internet, data, and voice
services in Latin America, filed for chapter 11 protection on
June 11, 2002.  Anthony D. Boccanfuso, Esq., and Michael J.
Canning, Esq., at Arnold & Porter represent the Debtor in its
restructuring efforts.  When the Company filed for protection
from its creditors, it listed $667,189,368 in total assets and
$1,334,732,793 in total debts.

Impsat Corp.'s 13.75% bonds due 2005 (IMPT05ARR1), DebtTraders
says, are trading at about 2 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=IMPT05ARR01
for real-time bond pricing.


INFU-TECH: UST Appoints Jacobson as Successor Chapter 7 Trustee
---------------------------------------------------------------
Donald F. Walton, the United States Trustee for Region 3, said
that on June 21, 2002, Michael B. Kaplan, Esq., vacated his seat
as Chapter 7 Trustee of Infu-Tech, Inc.  The U.S. Trustee names
Gary S. Jacobson, Esq., of Springfield, New Jersey, as Interim
Trustee to pick-up where Mr. Kaplan left off.

Infu-Tech provides infusion therapy to patients at home, in
nursing homes or subacute care facilities. Its specialty
pharmaceutical unit provides such services as chemotherapy,
enteral and parenteral nutrition, chronic pain management, and
hydration therapy. As of March 2001, the Company's balance sheet
shows $6.6 million in assets and $9.9 million in liabilities.


INTERLINK HOME: Intrepid Win Right to Operate Company's Business
----------------------------------------------------------------
The Phoenix Group Corporation (OTC Bulletin Board: PXGPE), a
Dallas-based company, announced that a ruling was handed down
late Friday afternoon by Judge Mike Lynn of the United States
Bankruptcy Court for the Northern District of Texas located in
Ft. Worth, Texas in connection with a dispute with Intrepid of
Texas, Inc., involving InterLink Home Health Care, Inc., a
wholly-owned subsidiary of Phoenix.  Judge Lynn made several
findings of fact in a preliminary ruling that is subject to
further proceedings at a later date.

In particular, the court ruled that a pledge agreement in
connection with a three-year old loan agreement was "facially
valid." Phoenix is disputing the authenticity of this document.
The effect of this ruling is to vest temporary corporate
governance in Intrepid such that it has the right to operate
InterLink until such time as further hearings in the matter can
take place or the matter can be resolved between the parties.
Although Intrepid has the temporary right to operate the
company, Judge Lynn has appointed an examiner to monitor the
activities of Intrepid while the matter remains within the
jurisdiction of his court. All actions of Intrepid with respect
to the affairs of InterLink will be subject to the review of the
examiner. Specifically, Judge Lynn ruled that no employees of
InterLink would be dismissed during this phase of the dispute,
and that business would proceed as usual.

In a brief meeting after the conclusion of the hearing, Ron
Lusk, CEO of Phoenix, encouraged those employees of InterLink in
attendance to continue to work for the company and to provide
services for the patients currently in their care. He noted that
the first duty of Phoenix and InterLink is to provide the
highest level of care for the patients and doctors who are
relying on InterLink for home health care services. Further
proceedings in this matter have not yet been scheduled. The
Phoenix Group Corporation will continue to vigorously pursue all
its legal remedies.


KMART CORP: US Trustee Amends Institutional Committee Membership
----------------------------------------------------------------
Wachovia Bank National Association, formerly known as First
Union National Bank, and Credit Suisse First Boston have
resigned from the Official Financial Institutions' Committee of
Kmart Corporation.  Ira Bodenstein, the United States Trustee
for the Northern District of Illinois, appoints Comerica Bank as
replacement.  The Financial Institutions' Committee is now
composed of five members:

               JP Morgan Chase
               380 Madison Avenue, Floor 9
               New York, New York 10017
               Attn: Agnes L. Levy

               Bank of New York
               One Wall Street
               New York, New York 10286
               Attn: Harold F. Dietz

               Fleet National Bank
               100 Federal Street
               Boston, Massachusetts 02110
               Attn: James J. O'Brien

               Wilmington Trust Co.
               520 Madison Avenue, 33rd Floor
               New York, New York 10022
               Attn: James Nesci

               Comerica Bank
               PO Box 75000
               Detroit, Michigan 48275-3205
               Attn: Henry J. Hajdas
(Kmart Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   

Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6), DebtTraders says,
are trading at about 30 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for  
real-time bond pricing.


KMART CORP: Equity Committee Taps Saybrook as Investment Bankers
----------------------------------------------------------------
To be able to properly represent the equity security holders of
Kmart Corporation, the Equity Committee needs an investment
banker and a financial advisor.

The Equity Committee contends that Saybrook Capital LLC is well
qualified to provide them with financial advisory and
restructuring services like:

A. General Financial Advisory Services

    (a) perform all services designed to maximize value for
        equity;

    (b) to the extent reasonably necessary to the performance of
        its services, familiarize itself with the business,
        operations, properties, financial condition and
        prospects of the Debtors;

    (c) evaluate the Debtors' capital structure and make
        recommendations with respect to the Debtors' efforts to
        reorganize their business and confirm a plan of
        reorganization alternatives;

    (d) review the assumptions underlying the business plans and
        cash flow projections for the assets involved in any
        potential transaction;

    (e) evaluate the proposed corporate reorganization structure
        for the Debtors to ascertain its impact on the recovery
        available to all shareholders of the Debtors;

    (f) identify contracts and agreements that may be
        disadvantageous to the interests of the Shareholders;

    (g) assist in procuring and assembling any necessary third
        party validations of asset values; and

    (h) provide ongoing assistance to the Equity Committee, as
        required.

B. Restructuring Services

    (a) advise and assist the Equity Committee in developing
        with the Debtors a strategy to effectuate a
        reorganization;

    (b) provide analysis of the Company's financial condition,
        business plans, capital spending budgets, operating
        forecasts, management, and the prospects for its future
        performance;

    (c) in connection with the reorganization, advise and assist
        the Equity Committee in connection with the structuring
        by the Debtors of any new securities to be issued to the
        Creditors and other constituents in full or partial
        satisfaction of the Creditors' or constituents' claims
        or interests;

    (d) assist, if necessary, in the formation of a financing
        team, including third party professionals;

    (e) assist and participate in negotiations on behalf of the
        Equity Committee and other constituents;

    (f) provide analysis of the Company's operations, business
        strategy, and competition in each of the relevant
        markets as well as an analysis of the industry dynamics
        affecting the Company;

    (g) participate in hearings before the bankruptcy court with
        respect to the matters upon which Saybrook has provided
        advice, including, as relevant, providing testimony in
        connection therewith; and

    (h) provide ongoing assistance to the Equity Committee, as
        required.

The Equity Committee and Saybrook inked an engagement letter
dated June 17, 2002 that provides the terms for the firm's
compensation:

  (a) A $150,000 monthly financial advisory fee, which shall be
      due and paid by the Debtors nunc pro tunc to July 1, 2002
      and thereafter on each monthly anniversary thereof;

  (b) A one-time $150,000 due diligence fee due and payable
      after 90 days from the beginning of the engagement;

  (c) In the event Saybrook provides financing or other
      traditional investment banking services (e.g. sale of
      assets, acquisition, disposition, etc.), the Equity
      Committee and Saybrook may agree upon a fee.  In addition,
      Saybrook and the Equity Committee may negotiate additional
      fees;

  (d) In addition to any fees payable to Saybrook under this
      Agreement, Saybrook shall be entitled to be reimbursed on
      a monthly basis for its travel expenses and other
      reasonable out-of-pocket expenses (including, but not
      limited to messenger, delivery charges, telephone,
      facsimile, photocopy and other similar charges)(including
      all fees, disbursements and other charges of counsel to be
      retained by Saybrook, in each case with the prior written
      consent of the Equity Committee and subject to approval of
      the Bankruptcy Court) in connection with, or arising out
      of, Saybrook's activities under or contemplated by this
      engagement, including but not limited to its due diligence
      investigation and review;

  (e) The expenses and other charges include reasonable costs
      and expenses of counsel incurred in connection with any
      claim or cause of action brought against Saybrook arising
      in the cases or from this engagement; provided that the
      reimbursement for Litigation Expenses shall not include
      amounts incurred for a claim asserted by any of the
      Debtors, their estate representatives or the Equity
      Committee, which is determined by final order of a court
      of competent jurisdiction to have arisen out of Saybrook's
      own bad faith, self-dealing, reckless or willful
      misconduct, or negligence; and

  (f) All of the fees and expenses are subject to Court
      approval.

By this application, the Equity Committee seeks the Court's
authority to retain Saybrook, nunc pro tunc to June 19, 2002.

Jonathan Rosenthal, a partner at Saybrook Capital LLC, informs
the Court that he examined and compared a comprehensive list of
the names of the entities identified as potential parties in
interest in these Chapter 11 cases.  "During the course of this
comparison, I did determine that Saybrook had previously advised
certain potential parties in interest in connection with the
Debtors' cases," Mr. Rosenthal admits.  However, Mr. Rosenthal
asserts that these prior representations have now been
terminated.

After diligent inquiry, Mr. Rosenthal reports that Saybrook
holds no interest adverse to the Equity Committee, the Debtors
or their estates, as to the matters for which it is to be
employed.  "I believe that Saybrook is a 'disinterested person'
as defined in Section 101(14) of the Bankruptcy Code," Mr.
Rosenthal maintains. (Kmart Bankruptcy News, Issue No. 28;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


LAIDLAW INC: Court Further Extends Exclusive Periods to Oct. 31
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
extends, for the third time, Laidlaw Inc., and its debtor-
affiliates' exclusive periods to file a Plan of Reorganization
and to solicit acceptances thereof through and including October
31, 2002.


MALDEN MILLS: Maintains Plan Exclusivity Through August 14
----------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Massachusetts, Malden Mills Industries, Inc., and its debtor-
affiliates obtained an extension of their exclusive periods.  
The Court gives the Debtors, until August 14, 2002, the
exclusive right to file their plan of reorganization and until
October 14, 2002 to solicit acceptances of that Plan from
impaired creditors.

Malden Mills Industries, Inc., a worldwide producer of high-
quality branded fabric for apparel, footwear and home
furnishings, filed for chapter 11 protection on November 29,
2001. Richard E. Mikels, Esq., and John T. Morrier, Esq., at
Mintz, Levin, Cohn, Ferris represent the Debtors in their
restructuring efforts.


MICROFORUM: Closes Sale of CALMS Services Unit to White Clarke
--------------------------------------------------------------
Microforum Inc., (TSE: MCF) has completed the sale of
substantially all of the assets of its CALMS Services ("CALMS")
unit to White Clarke North America Inc., a wholly-owned
subsidiary of White Clarke and Partners Limited (U.K.), as
previously disclosed in its press release of July 12, 2002.

The Company obtained the approval of the Ontario Superior Court
of Justice in connection with its CCAA filing to complete this
transaction on July 18, 2002.


MIDLAND COGENERATION: Fitch Places BB+ Rating on Watch Negative
---------------------------------------------------------------
Fitch Ratings has placed its 'BB+' rating on Midland
Cogeneration Venture LP's $567 million subordinate lease
obligation bonds on Rating Watch Negative. The rating action
follows the recent downgrade of the senior unsecured debt of
Consumers Energy Co., MCV's principal offtaker, to 'BB+' from
'BBB'; Consumers remains on Rating Watch Negative. Absent
counterparty credit concerns, Fitch views the credit quality of
the subordinate lease obligations to be of low investment grade
quality once MCV's senior bonds have matured. Fitch rates MCV's
senior secured lease obligation bonds, series C, due July 23,
2002, at 'BBB'.

MCV is a nominal 1,500 MW gas-fired cogeneration facility
located in Midland, MI.  MCV sells electrical energy to
Consumers under a long-term power purchase agreement. Revenues
under the PPA provided approximately 94% of MCV's total revenue
for the year ended December 31, 2001. The remaining revenue was
earned primarily from steam and electric sales under long-term
contracts with nearby Dow Chemical and Dow Corning facilities.
Considering the economic significance of the Consumers PPA,
MCV's credit quality is constrained by the counterparty rating
of Consumers.

On July 15, 2002, Fitch downgraded the senior unsecured debt of
CMS Energy to 'BB-' from 'BB+'. The rating remains on Rating
Watch Negative due to concerns surrounding CMS' weak liquidity
position, high parent debt levels, and limited financial
flexibility. The downgrade of Consumers, a subsidiary of CMS,
reflects Fitch's notching criteria with respect to parent and
subsidiary ratings. While Consumers is fundamentally sound, the
company's financial condition and credit ratings may be
adversely affected by the financial stress of its parent.

The credit quality of MCV is significantly enhanced by the
amount of cash reserved at the project. Due to terms of the
project financing documents, distributions to MCV partners are
severely restricted and all residual cash flow to date has been
retained at the project, with the exception of a $9.5 million
partner tax distribution made in 1991. Fitch expects a
significant portion of future residual cash flow to be retained
and for cash reserves to build and eventually exceed the amount
of outstanding debt. Going forward, withdrawal of cash reserves
may be required to supplement operating cash flow and fulfill
MCV's rental lease payments in the event of unfavorable market
conditions or regulatory actions. Fitch believes the cash
reserve should be adequate to offset reasonably foreseeable
events and, thus, provide timely payment of debt service until
the MCV bonds mature in 2009.

The MCV bonds were issued by Midland Funding Corp. II ($367
million taxable due 2005 and 2006) and Midland County Economic
Development Corp. ($200 million tax-exempt due 2009).


NATIONAL STEEL: Asks Court to Allow Set-Off with Metal Building
---------------------------------------------------------------
National Steel Corporation, and its debtor-affiliates want the
Court to approve their agreement with Metal Building Components
to modify the automatic stay for the limited purpose of entering
a setoff of amounts owed to each other.

David N. Missner, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, relates that prior to the Petition Date, the
Debtors and Metal Building entered into a series of agreements
wherein Metal Building performed processing services for the
Debtors and the Debtors in turn sold steel to Metal Building.  
As of the Petition Date, the Debtors owed Metal Building
$4,590,784 while Metal Building owed the Debtors $4,996,154.

"The Debtors are willing to consent to Metal Building's request
for relief from the automatic stay so that they could have a
setoff and resolve the prepetition balance owed against each
other," Mr. Missner says. (National Steel Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)

DebtTraders reports that National Steel Corp.'s 9.875% bonds due
2009 (NSTL09USR1) are trading at 38 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NSTL09USR1
for real-time bond pricing.


NEWPOWER HOLDINGS: Southern Company Acquires Georgia Business
-------------------------------------------------------------
Southern Company Gas, LLC received certification from the
Georgia Public Service Commission to enter the retail gas
market. The PSC approval cleared the way for Southern Company
(NYSE: SO) to acquire NewPower's Georgia customers.

As a result, Southern Company closed on the purchase Friday,
paying approximately $60 million for NewPower's customer
contract, customer care and billing systems, risk management
system, accounts receivable and Georgia natural gas inventory.
Southern Company Gas will provide natural gas in Georgia to
approximately 215,000 residential and small commercial
customers, which is a 15 percent share of the market.

"This is a logical acquisition for us because it fits our
strategic plan to offer energy-related products and services to
the customers we know best," said Allen Franklin, chairman,
president and CEO of Southern Company. "Our goal now is to
assure our new customers and the Georgia Public Service
Commission that we can execute a seamless transition of the
business -- quickly and efficiently."

Southern Company Gas will honor the contractual terms and
conditions of NewPower with respect to all assigned fixed rate
contracts for current customers. Upon renewal for new customers,
Southern Company Gas will offer a new contract reflective of the
current market conditions.

For customer inquiries, the new Southern Company Gas toll-free
number is 1-866-SOCO-GAS (1-866-762-6427) or customers may visit
the Southern Company Gas Web site at
http://www.southerncompanygas.com

As with other gas marketers in Georgia, Atlanta Gas Light will
continue to read meters and perform reconnect/disconnect work.

On June 11, NewPower filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in
the U.S. Bankruptcy Court for the Northern District of Georgia.
Last week the bankruptcy court gave Southern Company approval to
acquire NewPower's Georgia assets, contingent upon the PSC
certification of Southern Company Gas as a gas marketer.

With 4 million customers and nearly 37,000 megawatts of
generating capacity, Atlanta-based Southern Company (NYSE: SO)
is the premier super- regional energy company in the Southeast
and a leading U.S. producer of electricity. Southern Company
owns electric utilities in four states, a fast-growing
competitive generation company and an energy services business,
a competitive retail natural gas business, as well as fiber
optics and wireless communications. Southern Company brands are
known for excellent customer service, high reliability and
retail electric prices that are 15 percent below the national
average. Southern Company has been named No. 1 on Fortune
magazine's 2002 "America's Most Admired Companies" list in the
Electric and Gas Utility industry. Southern Company has more
than 500,000 shareholders, making its common stock one of the
most widely held in the United States.


NORSKE SKOG: Completes Financial Restructuring with New Facility
----------------------------------------------------------------
Norske Skog Canada Limited has closed a new, more flexible
credit facility. The initial commitment by the underwriters of
$300 million, from lead arrangers TD Securities and RBC Capital
Markets, was oversubscribed in syndication, allowing the
facility to be increased to $350 million.

The new credit facility represents the final step in the
company's balance sheet restructuring. On May 28, 2002 the
company completed the sale of 31,100,000 NorskeCanada common
shares from treasury at a price of $7.00 per share, for gross
proceeds of $217.7 million. The net proceeds of that offering,
combined with cash and existing credit facility drawings, were
used to repay all of NorskeCanada's secured term debt of $380
million. Interest expense has now been reduced by $13 million
annually.

Ralph Leverton, vice president, finance and CFO, said the
company is very pleased with the new credit facility and
stronger capital structure. "By reducing our debt to
capitalization ratio from 54 to 41 per cent, our capital
structure is in our target range," said Leverton. "And with a
stronger balance sheet and new, expanded credit facility, we are
in a solid position to grow our business."

NorskeCanada is the third largest newsprint and groundwood
specialty papers manufacturer based in North America measured by
production capacity.

NorskeCanada is also the largest producer of newsprint,
telephone directory paper, soft-calendered papers and hi-brite
papers, and the only producer of lightweight coated papers on
the west coast of North America. The company also produces
market kraft pulp and containerboard. With four divisions in
British Columbia, annual capacity exceeds 2.3 million tons.


NORTHWEST PHYSICIAN: Liquidity Decline Spurs S&P's Bpi Ratings
--------------------------------------------------------------
Standard & Poor's lowered its counterparty credit and financial
strength ratings on Northwest Physicians Mutual Insurance Co.,
to single-'Bpi' from triple-'Bpi' because of significant
declines in capitalization, profitability, and liquidity
following the removal of noneconomic award caps by the Oregon
Supreme Court in 1999.

Based in Salem, Oregon, Northwest Physicians Mutual writes
mainly medical malpractice on a claims-made basis. Nearly all
(99%) of the company's business lies within its major states of
operations: Oregon, California, and Idaho. The company
distributes primarily through independent general agents; a
wholly owned subsidiary, NPM Agency Inc.; and direct marketing.
Northwest Physicians Mutual, which began business in 1983, is
licensed in Alaska, California, Hawaii, Idaho, Montana, Nevada,
Oregon, and Washington.

The company, which is unaffiliated with any other insurance
company, is rated on a stand-alone basis.


PANACO INC: Hires Neligan Stricklin as Bankruptcy Counsel
---------------------------------------------------------
Panaco, Inc., wants to employ Neligan Stricklin, LLP as its
bankruptcy counsel.  The Debtor tells the U.S. Bankruptcy Court
for the Southern District of Texas that it wants to hire Neligan
Stricklin, under a general retainer, so that it can execute
faithfully its duties as debtor-in-possession and to develop,
propose, and consummate a chapter 11 plan.

Neligan will:

     a) advise the Debtor of its rights, powers, and duties as
        debtor and debtor-in-possession;

     b) take all necessary action to protect and preserve the
        estate of the Debtor, including the prosecution of
        actions on the Debtor's behalf, the defense of actions
        commenced against the Debtor, the negotiation of
        disputes in which the Debtor is involved, and the
        preparation of objections to claims filed against the
        estate;

     c) prepare on behalf of the Debtor, as debtor-in-
        possession, all necessary motions, applications,
        answers, orders, reports, and papers in connection with
        the administration of this estate;

     d) propose on behalf of the Debtor the plan of
        reorganization, related disclosure statement, and any
        revisions, amendments, etc. and all related materials;
        and

     e) perform all other necessary legal services in connection
        with this chapter 11 case and any other bankruptcy
        related representation that the Debtor requires.

The professionals who will be principally assigned in this case
are:

     Patrick J. Neligan, Jr.   Partner          $375 per hour
     Monica Blacker            Associate        $250 per hour
     Cyndee Cole               Associate        $165 per hour
     Andrea Niedermeyer        Associate        $145 per hour
     Carolyn Perkins           Legal Assistant  $100 per hour

Panaco, Inc.'s business is the exploration and production of
crude oil and natural gas. The Company filed for chapter 11
protection on July 16, 2002. When the Debtor seeks protection
from its creditors, it listed $130,189,000 in total assets and
$170,245,000 in total debts.


PAYLESS CASHWAYS: Trustee Hires Glidewell for Expense Recovery
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
gave its stamp of authority to Silverman Consulting, Inc., led
by Steven Nerger and Craig Graff, the Chapter 11 Trustee for
Payless Cashways, Inc., to employ Glidewell, Garrett &
Associates LLC for expense recovery.

The Chapter 11 Trustee relates that Glidewell, Garrett &
Associates LLC approached them for the purpose of pursuing a
potential expense recovery opportunity.  Glidewell, Garrett
identified a particular vendor that was historically engaged in
a scheme of systematic overcharges. Glidewell, Garrett had
knowledge of another retailer who resolved without litigation
for a sizeable settlement. Glidewell, Garrett believes that the
Debtor is a similar victim of these overcharges.

If, after the employment of Glidewell, Garrett, the Trustee
determines that pursuit of the potential overcharge is not of
sufficient value to the estate, the Trustee can reject the
opportunity without any cost. Glidewell, Garrett works on a
contingency fee basis, getting paid only if and when their
efforts result in a recovery.

Payless Cashways, a retail operator of building material stores
filed for chapter 11 on June 4, 2001. Kathryn B. Bussing, Esq.
at Blackwell Sanders Peper Martin represents the Chapter 11
Trustee. When the Company filed for protection from its
creditors, it listed $552,962,000 in assets and $473,305,000 in
debts.


PHAR-MOR INC: Commences GOB Liquidations at 54 Store Locations
--------------------------------------------------------------
Late Thursday, the US Bankruptcy Court in the Northern District
of Ohio approved the liquidation of the inventory and related
assets in Phar-Mor, Inc.'s final 73 stores and distribution
center. A joint venture group comprised of The Ozer Group of
Needham, Massachusetts, and Hilco Merchant Resources of
Northbrook, Illinois, will orchestrate the liquidation sale.

Highlights of the liquidation plan include the following:

     1. As part of the plan, supermarket retailer Giant Eagle
Inc., of Pittsburgh, Pennsylvania, CVS Corporation, and Eckerd
Corporation have purchased the pharmacy prescription files from
54 of the stores.

     2. The pharmacy prescription files in the other 19 stores
are being actively marketed and are expected to be sold in the
near future.

     3. "Going Out of Business" sales are commencing the past
weekend in the 54 stores where the pharmacy prescription files
have been sold.

     4. Sixty-four of the store leases are being actively
marketed and are expected to be sold in the near future.

     5. The Phar-Mor store real estate in Winchester, Virginia,
is being actively marketed and is expected to be sold in the
near future.

In preparation for the Going Out of Business sales that begin
the past weekend in the 54 stores, signs are currently being
hung and steep discounts are being taken on virtually all
merchandise in these stores. In the 19 stores whose prescription
files are still being marketed, comparable discounts are also
being taken. The joint venture group estimates that more than
$100,000,000 of inventory will be sold during this brief
liquidation.

Phar-Mor stores feature health and beauty aids, beer and wine,
cosmetics, film, tobacco, grocery items, greeting cards and
more. Phar-Mor has been an everyday-low-price store that offers
exceptional value under normal circumstances and additional
discounts of 10-30% off Phar-Mor's regular prices will now apply
to virtually everything in all 73 stores.

"These sales will yield a huge short term upside for the bargain
conscious consumer. These stores are loaded with great
merchandise that is rarely discounted at these levels, including
many of the top brand names that people love and want. With top
brands at steeply discounted prices, we don't expect this sale
to last very long," said Cory Lipoff, Executive Vice President
of Hilco Merchant Resources.

"Prescription customers at the 54 stores that are going out of
business can expect a smooth transition of their prescription
files to a nearby Giant Eagle, CVS or Eckerd," commented David
Peress, General Counsel and Managing Director of The Ozer Group.

"Giant Eagle has a long and respected reputation for excellence
in serving the pharmaceutical needs of its communities," said
Giant Eagle Senior Vice President of Marketing, Laura Karet. "We
welcome the opportunity to serve former Phar-Mor pharmacy
customers and have planned a simple and efficient transfer
process that requires no effort on the part of consumers."

Based in Needham, Massachusetts, The Ozer Group is one of the
country's leading retail consulting, business evaluation and
asset disposition firms. Ozer is quick, flexible and creative in
offering solutions to retailers of all sizes throughout North
America and Europe. In addition to helping companies maximize
realization for their assets, Ozer manages human resources
issues, real estate relationships and other critical areas that
are affected when companies undergo change. Ozer's management
and partners are retailers who have managed thousands of stores
and billions of dollars in inventory. To learn more about The
Ozer Group, visit www.ozer.com.

Based in Northbrook, Illinois, Hilco Merchant Resources provides
retail inventory liquidation and store closing services. Over
the years, Hilco principals have disposed of assets valued in
excess of $30 billion. HMR is a division of Hilco Trading Co.,
Inc. The company, which is headquartered in metropolitan
Chicago, provides asset appraisal, conversion and financial
services to an international marketplace through nine
specialized business units. Hilco serves retailers, wholesalers,
distributors and manufacturers, direct and through their
financial institutions and consulting professionals. Services
include: retail store, warehouse and factory closings, and
inventory liquidations, through sales and auctions; asset
appraisals covering retail and industrial inventory, machinery,
equipment, accounts receivables and real estate; disposition of
commercial and industrial real estate and leaseholds; purchase
and liquidation of distressed accounts receivables portfolios;
acquisition and re-marketing of excess wholesale consumer goods
inventories; and secured debt and equity financing.

Giant Eagle Inc., listed as one of Forbes magazine's Top 30
privately held corporations, is one of the nation's largest food
retailers and food distributors with over $4.2 billion in annual
sales. Founded in 1931, Giant Eagle, Inc. has grown to be the
number one supermarket retailer in the region with 124 corporate
and 88 independently owned and operated stores throughout
western Pennsylvania, Ohio, north central West Virginia, and
Maryland. An active community partner, Giant Eagle provides
support for local food banks, community events, the United Way,
The Salvation Army, Race For The Cure, and other non-profit
organizations. The company has also created education
initiatives like Apples For The Students, which has provided
millions of dollars in computer equipment, software, and other
classroom learning tools for local schools, and the Be A Smart
Shopper school nutrition program.


PILLOWTEX CORP: Gets Nod to Assume Lease Pact with Transamerica
---------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates obtained Court's
authority to assume, as modified, an equipment lease agreement
with Transamerica Equipment Financial Services Corporation. In
this lease, Transamerica agrees to lease to the Debtors textile
production equipment used in their manufacturing operations.

The Court further rules that Transamerica will have a $1,539,207
allowed unsecured claim and will waive all its rights to an
administrative claim.

                         *    *    *

As previously reported, the Lease Agreement has a term of 72
months. It has an option at the end of the term to purchase the
Production Equipment for fair market value.  The Lease Agreement
also has an early purchase option that is exercisable after the
first 36 months of the Lease Agreement for a purchase price that
is based on a specified percentage of the original acquisition
cost.  

As part of the Debtors' strategy to restructure their production
equipment leases, the Debtors have negotiated a restructuring of
the Lease Agreement with Transamerica that allows them to
purchase the Production Equipment at an earlier date and at a
more favorable price.  The material terms of the Amendment
include:

    -- The Lease Agreement will be assumed, as modified by the
       Amendment.

    -- Provided that the Debtors have made all required payments
       under the Amendment and are not in default, the Debtors
       must pay, within 15 days after the effective date of any
       plan of reorganization confirmed by the Court, $1,600,000
       plus any applicable sales or property taxes for the
       Production Equipment.  In addition, they must pay all
       other post-petition amounts due and remaining unpaid
       under the Lease Agreement.

    -- After receiving the Post-petition Amounts and the
       Purchase Price for the Production Equipment, Transamerica
       must provide the Debtors with a bill of sale for the
       Production Equipment, and the Lease Agreement terminates.

    -- The Debtors agree to pay Rent to Transamerica until the
       date the Lease Agreement terminates.

    -- Subject to the effectiveness of the Amendment and
       provided that the Debtors are not in default under the
       Lease Agreement and have paid the Post-petition Amounts
       and the Purchase Price, Transamerica agrees to waive all
       rights to an administrative claim for the cure of pre-
       petition defaults under the Lease Agreement.  However, it
       will have an allowed unsecured claim against the Debtors'
       estates for $1,539,207.

    -- With the exception of the allowed unsecured claim,
       the Debtors and Transamerica mutually agree to release
       each other from all claims and obligations existing prior
       to the Court's approval of the Amendment. (Pillowtex
       Bankruptcy News, Issue No. 31; Bankruptcy Creditors'
       Service, Inc., 609/392-0900)    

Pillowtex Corp.'s 10% bonds due 2006 (PTX2), DebtTraders says,
are quoted at 2 cents-on-the-dollar. For real-time bond pricing,
see http://www.debttraders.com/price.cfm?dt_sec_ticker=PTX2


POWERBRIEF: Court Sets Plan Confirmation Hearing for Sept. 23
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
approved the Disclosure Statement filed by Powerbrief, Inc., and
scheduled a hearing to confirm the Plan on September 23, 2002 at
10:30 a.m.  The last day for filing written acceptances or
rejections of the Plan is September 11, 2002.

Powerbrief, Inc., formerly known as Integrated Orthopaedics,
Inc., an ASP that helps lawyers to negotiate the Byzantine world
of their craft by delivering online services to legal
professionals, filed for chapter 11 protection on October 2,
2001. Robert C Stokes, Esq., represents the Debtor in its
restructuring efforts.


PSINET: Court OKs Stipulation with Committee re Fee Applications
----------------------------------------------------------------
Due to the requirements in the Fee Order and Plan Confirmation
Order for the different Fee Applications, PSINet, Inc., its
debtor-affiliates and Committee Members entered into a
Stipulation that provides for incorporating the third interim
fee applications into the Final Applications and enlarging the
period covered in the Final Applications.

The Court has approved the Stipulation.

Absent this, the Debtors' Professionals and the Committee
Members would otherwise have to file on or about July 1, 2002
the third interim applications for the period from February 1,
2002 to May 31, 2002.  This is according to the original Fee
Order. Then, about 30 days later, they would be required to file
the Final Applications covering the period through June 17, 2002
(Plan Effective Date).  This is according to the Confirmation
Order.

The Stipulation, by and among the Debtors and the Committee,
provides that, notwithstanding any provision to the contrary in
the Fee Order, the Confirmation Order or any other Order of the
Bankruptcy Court:

(A) the Professionals and Committee Members

  (1) are not required to file third interim applications for
      the allowance of compensation for services rendered to the
      Debtors and expenses incurred on their behalf between
      February 1, 2002 and May 31, 2002, but

  (2) may include a request for the allowance of compensation
      pertaining to this period in the Final Compensation
      Applications contemplated by the Confirmation Order, and

(B) the Final Compensation Applications will reflect services
    rendered to the Debtors and expenses incurred on their
    behalf in these Bankruptcy Cases through the Effective Date
    (June 17, 2002) as opposed to the Confirmation Date (July 1,
    2002), as well as fees and expenses arising after the
    Effective Date in connection with the preparation of the
    Final Compensation Applications. (PSINet Bankruptcy News,
    Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-
    0900)   


QUINTALINUX LTD: Fails to Meet Nasdaq Continued Listing Criteria
----------------------------------------------------------------
Quintalinux Ltd., (Nasdaq: QLNX) an Intelligent Building
solutions provider, has received a letter from Nasdaq Listing
Qualification Committee, notifying the Company that it may be
delisted.

Hong Kong-based Quintalinux said the July 12 letter stated that
the Company does not currently comply with requirements for
market capitalization, and for a sufficient minimum closing bid.

In reaction, Quintalinux has requested a hearing before the
Nasdaq Listing Qualification Panel to review its status.

"As a foreign registered company, the QLNX securities could be
transferred to The Nasdaq SmallCap Market should we not secure a
positive outcome from the hearing," Said Chu Tat, Chairman of
Quintalinex.

Quintalinux Limited is engaged in the provision of innovative,
high technology solutions for intelligent buildings, interior
construction, systems design and integration, and Linux
development for businesses and enterprises in Hong Kong and the
Peoples Republic of China. By combining contracting experience
in interior design and construction with its expertise in
information technology and state-of-art systems and products,
Quintalinux has become a leader in the intelligent building
industry, providing complete, "end-to-end" solutions to meet
client's needs for intelligent buildings and related features
and capabilities.


RADIO UNICA: Fails to Comply with Nasdaq Listing Requirements
-------------------------------------------------------------
Radio Unica Communications Corp. (Nasdaq: UNCA), the nation's
only Spanish language radio network, commented on recent
developments.

The Company announced today that it has received a Nasdaq Staff
Determination on July 15, 2002 indicating that Radio Unica fails
to comply with the minimum net tangible assets requirement or
the minimum stockholders equity requirements for continued
listing set forth in Marketplace Rule 4450(a)(3) and that its
securities are, therefore, subject to delisting from The Nasdaq
National Market.  Radio Unica has requested a hearing before the
Nasdaq Listing Qualifications Panel to review the Staff
Determination.  There can be no assurance the Panel will grant
Radio Unica's request for continued listing.  The Company's
stock will continue to trade on the Nasdaq National Market
pending a decision from the Nasdaq Listing Qualifications Panel.

Radio Unica expects to report positive EBITDA for the second
quarter ended June 30, 2002, as compared to an EBITDA loss of
$2.4 million in the second quarter of 2001. The significant
improvement in second quarter EBITDA (defined as loss from
operations plus depreciation and amortization and stock option
compensation expense) was driven by an approximate 23% increase
in revenues and continued strict cost controls. The Company's
EBITDA results will exceed expectations.

Radio Unica also announced that certain of its subsidiaries have
secured a senior revolving credit facility with GE Capital for
up to $20 million. The facility, which matures on February 1,
2006, can be used for working capital, capital expenditures,
interest payments and general corporate purposes.

Joaquin F. Blaya, Chairman and Chief Executive Officer of Radio
Unica, commented, "Despite our Nasdaq delisting notification, we
have continued to make notable progress in improving our
financial and operating results. Our anticipated positive EBITDA
for the second quarter validates our business plan and reflects
strong revenue growth at our radio and promotions businesses,
combined with the effects of the cost reduction program that we
initiated in late 2001. Our year to date operating expenses
continue to trend below year 2000 levels. Our subsidiaries'
ability to secure a new credit facility with GE Capital
highlights the strength of our asset base and our improving
fundamentals. The facility will improve our financial
flexibility and enhance our liquidity. We have made progress in
improving upon our capital structure and reducing our debt and
we look forward to reporting our full second quarter results in
mid August."

Radio Unica Communications Corp., based in Miami, Florida, is
the only national Spanish-language radio network in the country
and reaches approximately 80% of Hispanic USA through a group of
owned and/or operated stations and affiliates located
nationwide. The Company's operations include the Radio Unica
Network and an owned and/or operated station group covering the
top U.S. Hispanic markets including Los Angeles, New York,
Miami, San Francisco, Chicago, Houston, San Antonio, McAllen,
Dallas, Fresno, Phoenix, Sacramento, Denver and Tucson.

Radio Unica corners the market in sports with its exclusive U.S.
Spanish-language radio broadcast rights to the 2004 Summer
Olympics; Gold Cup 2003 and 2005; and Copa America 2004. Radio
Unica also owns the exclusive U.S. Spanish-language radio
broadcast rights to Mexican National League soccer matches.

The Network's programming line-up includes contemporary-theme
talk shows hosted by internationally known personalities such as
Dr. Isabel Gomez-Bassols, Paul Bouche, Hugo Cadelago ("El
Gordo"), Ricardo Brown, Guillermo Descalzi, sports-talk hosted
by Jorge Ramos and other top names in sports broadcasting; and
newscasts on the hour, 24 hours a day. Many programs are
interactive, allowing listeners to call in toll-free.


RELIANCE GROUP: Liquidator Sues Saul Steinberg & 17 Ex-Directors
----------------------------------------------------------------
M. Diane Koken, Insurance Commissioner of the Commonwealth of
Pennsylvania and Liquidator of Reliance Insurance Company, files
a seven-count complaint in the Commonwealth Court of
Pennsylvania against 18 former RIC officers and directors:

      * Saul P. Steinberg
      * Robert M. Steinberg
      * George R. Baker
      * George E. Bello
      * Dennis A. Busti
      * Lowell C. Freiberg
      * Kenneth R. Frohlich
      * Thomas P. Gerrity
      * Stewart J. Gerson
      * Linda S. Kaiser
      * Jewell Jackson McCabe
      * Irving Schneider
      * Bernard L. Schwartz
      * Richard E. Snyder
      * Bruce E. Spivey
      * Howard C. Steinberg
      * James E. Yacobucci
      * Paul W. Zeller

While rehashing many arguments commonplace in these proceedings,
the complaint brings greater detail to the events leading to
RIC's Liquidation and RGH and RFS' Bankruptcy Filings.

                         The Old Stuff

The Liquidator accuses the former RIC Officers of "breach of
fiduciary duty, professional negligence, aiding and abetting,
voidable preferences and violations of the Pennsylvania
Insurance Holding Company Act, 40 P.S. Section 991.1412, which
resulted in the largest property and casualty insurance company
ever to be subject to liquidation proceedings in this country."

Ann B. Laupheimer, Esq., at Blank, Rome, Comisky & McCauley, in
Philadelphia, Pennsylvania, argues that the former RIC Officers'
judgment was misplaced.  Instead of protecting the interests of
RIC and its policyholders, Ms. Laupheimer notes, the Defendants
favored those "of Reliance Group Holdings, Reliance Financial
Services Corp. and their shareholders, whose appetite for cash
was insatiable".  Ms. Laupheimer adds that the Defendants
allowed fraudulent upstream transfers.  "The Steinbergs and
their families received over $31,000,000 in dividends from RGH
between 1998 and 2000," Ms. Laupheimer reports.  The Defendants
knew RGH was both insufficiently reserved and capitalized.  The
investment portfolio was weighted too heavily towards volatile
common stocks.  Additionally, the Boards of Directors of RIC,
RFS and RGH were virtually identical, which led to inherent
conflicts of interest between RIC and the parent holding
companies.  Ms. Laupheimer tells the Commonwealth Court that,
the "so-called outside directors were, for the most part,
longtime cronies of the dominant Steinbergs, accustomed to
permitting the Steinbergs to run the [RIC] without
interference".

                          The New Stuff

In 1987, the RIC Board of Directors authorized the creation of a
separate underwriting entity named Reliance National.  RN began
underwriting specialty coverages that met the needs of brokers
with major corporate and sophisticated risks.  RN started with a
staff of four and less than $5,000,000 in premiums.  By 1998, RN
had 1,900 employees who generated more than $3,000,000,000 in
gross written premiums.  RN diversified beyond its original
professional liability writings and into international
reinsurance, substandard personal auto, environmental liability,
petrochemical casualty, boiler and machinery, financial guaranty
for agricultural output and motion pictures, and health care
coverage for nursing homes, community health plans and emergency
room physicians.

Simultaneous with this rapid growth, the property casualty
industry was suffering from severe price competition.  Also, RN
did not have experience in these lines of business.  Ms.
Laupheimer relates that despite knowledge of adverse market
conditions, RN continued to write billions of dollars in under-
priced business that accumulated cash in the short term, but was
sure to produce staggering losses in the long run.

According to Ms. Laupheimer, the Defendants regularly paid the
maximum dividend, which could be paid by RIC to RFS -- and then
to RGH -- without approval from the Pennsylvania Insurance
Department.  RIC's reserves were not carried at its own internal
best estimates and were instead carried at the lowest end of the
range of reasonable values calculated by the outside auditors.

By 1999, as RIC's underwriting losses mounted, Chief Actuarial
Officer Kenneth R. Frohlich and his staff recognized that RIC's
loss reserves were inadequate by perhaps $300,000,000.  On June
17, 1999, RIC retained the actuarial firm Tillinghast-Towers
Perrin to examine the reserves.  After the review was completed,
on July 29, 1999, a meeting of the Board of Directors commenced.
Mr. Frohlich informed the Directors that the loss reserve
inadequacy amounted to $300,000,000, the value expected.
However, a Tillinghast representative stated that, under his
firm's estimations, this figure was short by $80,000,000.  After
this information was disclosed, Mr. Schwartz instructed several
RIC officers leave the meeting.  However, Saul Steinberg
remained.  In a flash of brilliance, the remaining attendees
concluded that the magnitude of the reserve shortfall was the
result of lax management oversight at RIC.  At this same  
meeting, the Board authorized a $70,000,000 dividend to RFS,
payable on August 21, 1999.

At a meeting on October 13, 1999, RIC's Directors authorized
another dividend for $40,000,000.  However, their actions belied
the concerns they held.  While the Directors sanctioned the
dividend, they delayed giving authority to RGH to declare a
dividend to its shareholders and retained the money temporarily
in the holding company.  They discussed the RGH Dividend at a
Board meeting on November 17, 1999, but did not vote.  The
Directors revisited the issue again at a special Board meeting
on November 22, but again withheld authorization.  They finally
acquiesced on November 30, with the dividend payable on January
1, 2000.

According to Ms. Laupheimer, the dividends from RIC to RFS and
RGH coincided with and were motivated in part by Saul
Steinberg's need for cash to repay personal obligations.  As of
July 1999, Saul Steinberg owed over $41,000,000 in personal
loans to various financial institutions, many secured by his
36,000,000 shares of RGH common stock.  From a high of $20 per
share in 1998, RGH's stock price plunged to $5 in 1999.  This
decreased Saul Steinberg's net worth and the value of his
collateral on personal loans, which resulted in a violation of
required limits for a $20,000,000 loan from Chase Manhattan
Bank.  Chase informed Saul Steinberg that he was required by the
loan terms to post additional collateral or be in default.  Saul
Steinberg attempted to pledge personal property as collateral,
including artwork he estimated at a value in excess of
$35,000,000.  This attempt failed when Chase learned that the
offer was worthless, since most of the artwork had been sold.

Chase threatened to accelerate the loan.  Saul Steinberg was
able to procure a one-year loan from Provident Bank for
$10,000,000 by posting RGH stock as collateral, valued at the
time at $25,000,000.  Saul Steinberg used the proceeds to cure
his default and restructure the Chase loan.  Ms. Laupheimer
asserts that Lowell C. Freiberg, a RIC Director, was aware of
Saul Steinberg's painful financial straits because he helped
negotiate the restructured loan with Chase on behalf of Saul
Steinberg.

While Ms. Laupheimer insists that RIC was the cow and RFS was
the milking stool for Saul Steinberg to transfer funds to
satisfy personal obligations, he was not above using his
position to reward himself.  From 1997 to 1999, RIC owned a
corporate jet -- specifically, a Boeing 727-100 outfitted with 5
bedrooms and lavish amenities.  About 55% of the jet's usage was
for Saul and Robert Steinberg's personal trips.  In 1998, Saul
Steinberg used the jet for personal round trips to China, Spain
and Greece. Robert Steinberg used it for golf outings to Miami
and West Palm Beach in Florida, Kona in Hawaii, San Juan in
Puerto Rico and Los Cabos in Mexico.  The Steinbergs also made
personal use of the corporate helicopter, a Sikorsky S76-B
(N800RG).  Ms. Laupheimer points out that the Steinbergs did not
pay RIC for the expenses incurred in their personal use of the
corporate jet and helicopter.  The value of this usage was not
publicly disclosed.

In November 1999, the Board hired Robert Miller as President of
RGH and RFS.  Mr. Miller was recommended as an expert at dealing
with companies experiencing financial difficulties.  With
corporate window-dressing in mind, Saul Steinberg and George R.
Baker appointed Mr. Miller on the eve of a presentation to
insurance rating agency -- A.M. Best Company.

On February 17, 2000, Mr. Miller and another executive made a
presentation to the RIC Board.  They told the Directors that RIC
was in extreme financial difficulty and in need of radical
changes in its organization, business plan and operating
procedures.  "Much work had to be done to preserve RIC as a
going concern or successfully market it to a potential buyer,"
Mr. Miller says.  He was promptly fired.

That same month, the RIC Board declared a $50,000,000 dividend
to RFS and ultimately RGH.  Linda S. Kaiser and Stewart J.
Gerson, both defendants, met with representatives of the
Pennsylvania Insurance Department and forgot to mention the
proposed dividend. Based on RIC's annual financial statements,
the Department concluded that RIC had fallen below its minimum
risk-based capital level and that no further dividends from RIC
would be permitted.

With the dividend mechanism closed by the Department, RGH
somewhat successfully began using a tax allocation agreement to
funnel funds from RIC upstream.  But it was too late, Ms.
Laupheimer notes.  "Saul Steinberg's personal empire had come
crashing down," Ms. Laupheimer says.  Saul Steinberg was forced
to put his home in Park Avenue, New York City on the market.  In
May 2000, the contents of his home, including artworks and
antiques, were sold at auction to pay off personal debt.  At the
same time, Saul Steinberg sold over 11,000,000 shares of RGH
stock.  The rest is well-documented history. (Reliance
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 609/392-0900)    


RESOURCE AMERICA: Moody's Junks Senior Unsecured Rating
-------------------------------------------------------
Resource America Inc., (NASDAQ:REXI) announced that Moody's
Investors Service has upgraded the senior implied rating for
Resource America, Inc., to B2 from B3, and confirmed its senior
unsecured rating at Caa1. The outlook is stable.

Moody's noted, "RAI has made progress in executing a prudent
growth strategy, and has demonstrated an increased degree of
focus in its real estate and energy businesses. Furthermore, the
Company has delivered steady earnings while maintaining
acceptable leverage levels. Moody's expects RAI will continue to
prudently manage its growth, especially in its newly formed
leasing organization. Also, mortgages in RAI's real estate
portfolio carry favorable loan-to-value ratios."

Jonathan Cohen, Executive Vice-President and Chief Operating
Officer, stated, " We are pleased by Moody's decision to raise
their ratings on Resource America, Inc., and their recognition
of the positive effects of our prudent growth strategy. This,
along with the upgrade our Company received from S&P,
demonstrates the strength of our financial condition and the
value of our proprietary asset management business going
forward."

Resource America Inc., is a proprietary asset management company
that uses industry-specific expertise to generate and administer
investment opportunities for our own account and for outside
investors in the energy, real estate and equipment leasing
industries.


RHYTHMS NETCONNECTIONS: Hires Rosen & Slome as Special Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the application of Rhythms Netconnections Inc., and its
debtor-affiliates, to employ Rosen & Slome, LLP as special
counsel.

The Debtors' chapter 11 Plan provides, among other things, that
the Debtors may pursue avoidance actions and claim objections in
order to improve recoveries to unsecured creditors.  The Debtors
believe that it is in the best interests of creditors to employ
Rosen & Slome, LLP as special counsel in order to pursue certain
avoidance actions and claim objections because Rosen & Slome's
hourly rates are comparably lower.

Rosen & Slome's hourly rates are:

          Partners            $300
          Associates          $175 - $225
          Paralegals          $ 75

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


SAFETY-KLEEN: Further Delays Completion of Form 10-Q for Q2
-----------------------------------------------------------
Safety-Kleen Corp., and its subsidiaries filed their Form 10-Q
Report for the quarter ended May 31, 2002, but warn that they
have omitted certain information.

Safety-Kleen, with the assistance of Jefferson Wells
International and Arthur Andersen LLP, has been working to
correct material deficiencies in the company's internal
controls.  Due to uncertainties regarding Arthur Andersen's
continued viability, Safety-Kleen may engage other consultants.

Despite the Safety-Kleen's progress in correcting the
deficiencies, it was not able to prepare its financial
statements for the fiscal quarter ended May 31, 2002, within the
time limitations imposed by federal securities laws and
regulations.  The Company intends to amend their Form 10-Q, file
the financial statements required by Form 10-Q, and provide the
information that has been omitted. (Safety-Kleen Bankruptcy
News, Issue No. 41; Bankruptcy Creditors' Service, Inc.,
609/392-0900)    


SCIENTIFIC LEARNING: Commences Trading on OTC Bulletin Board
------------------------------------------------------------
Scientific Learning Corporation (OTCBB:SCIL) announced that the
Company's common stock will begin trading immediately on the OTC
Bulletin Board(R). The OTC Bulletin Board is a regulated
quotation service that displays real-time quotes, last-sale
prices, and volume information in over-the-counter (OTC)
securities. Scientific Learning stock will no longer trade on
the Nasdaq National Market.

"This change does not reflect the intrinsic value of our Company
or its future prospects. Market acceptance of the Company's Fast
ForWord(R) programs is growing with almost 30,000 students
currently enrolled in the system, nearly double last year's
levels, bringing the total number of students served to nearly
150,000," said Robert C. Bowen, Chairman and Chief Executive
Officer of Scientific Learning. The Board of Directors of
Scientific Learning appointed Mr. Bowen Chairman and CEO on June
4, 2002.

Headquartered in Oakland, CA, Scientific Learning sells the Fast
ForWord patented family of products that develops and enhances
foundational skills critical to language and reading for
learners of all ages. Significant gains are frequently achieved
in as little as 20 to 40 instructional sessions. To learn more
about Scientific Learning's neuroscience-based products, visit
the Company's Web sites at http://www.ScientificLearning.comand  
www.BrainConnection.com, or call toll-free 888-452-7323.

At March 31, 2002, Scientific Learning's balance sheet shows a
total shareholders' equity deficit of about $2.3 million.


SEITEL INC: Noteholders Agree to Further Extend Standstill Pact
---------------------------------------------------------------
Seitel, Inc., (NYSE: SEI) has reached an Agreement with its
Senior Noteholders to extend the previously announced standstill
agreement for an additional 90 days.

Under the terms of the standstill agreement, the Senior
Noteholders have agreed to forebear from exercising any rights
and remedies they have against the Company related to the
previously reported events of technical default under the Senior
Note Agreements, until October 15, 2002 (Seitel has never missed
any payments of interest or principal to its creditors). During
the 90 day standstill period, various existing covenants under
the Senior Note Agreements are being suspended, and replaced
with certain enumerated covenants. These new covenants include
requirements that the Company receive Noteholder approval to
make certain investments or payments out of the ordinary course
of business, incur additional debt, create liens or sell assets.

The standstill agreement will terminate prior to October 15,
2002, among other things, in the event of a default by the
Company under the standstill agreement or any subsequent default
under the existing Senior Note Agreements, a default in the
payment of any non-excluded debt of $5,000,000 or more, in the
event the Company does not provide the Noteholders with an
acceptable business plan by August 31, 2002, or in the event the
closing and funding of the previously announced sale of certain
DDD Energy assets does not occur by August 31, 2002 (currently
scheduled to close July 31, 2002). The Company said that its
negotiations towards a long-term modification of its Senior Note
Agreements continue.

Kevin Fiur, president and chief executive officer of Seitel,
said, "This extension offers us the time necessary to continue
our discussions with the Noteholders regarding our comprehensive
turnaround plan, and is a sign of their willingness to continue
to work with us."

The Company also reported the following updates on its
previously announced internal investigation, regulatory and
financial matters:

As previously announced, Seitel's Board of Directors initiated
an investigation into the possible improper conversion of
corporate funds for personal use by certain members of former
management. In that regard, the Company is seeking immediate
reimbursement from its former chief executive officer, Paul
Frame, of the following:

     - $2,641,038 of "unearned advances" that Mr. Frame drew
from Company funds;

     - $750,000 of Mr. Frame's personal attorneys' fees and
legal settlement costs that he caused the Company to pay;

     - $695,805 in Mr. Frame's personal automobile racing
expenses that he caused the Company to pay; and

     - $148,309 for the installation of a security system at Mr.
Frame's home that he caused the Company to pay.

The Company is also seeking reimbursement from its former chief
financial officer, Debra Valice, of $621,293 of "unearned
advances" that she drew from Company funds.

Seitel said that its outside legal and financial advisors are
continuing their investigation into the Company's business
practices and financial accounting controls to identify
opportunities for their improvement. This investigation is
expected to be completed in the coming weeks.

The Company said that it has reported its findings regarding the
possible improper conversion of funds to the Securities and
Exchange Commission (SEC). The SEC's Fort Worth District Office
has informed the Company that it has initiated an informal
inquiry into these events. The Company is fully cooperating with
the inquiry.

"We are working to address these issues and will continue to
fully cooperate with the regulatory authorities," said Fiur.

On May 6, 2002, the Company filed with the SEC a Form 8-K that
contained a draft Amendment No. 3 to its Annual Report on Form
10-K. This draft amendment contained additional information
regarding the Company's prior restatement of its financial
statements to address comments that the staff of the SEC made
regarding the restatement as well as certain other additional
information. In particular, the draft Amendment No. 3 advised
that the Company's restatement of its financial statements for
the year ended December 31, 2000 and the nine-months ended
September 30, 2001 and its adoption of new revenue recognition
methods for the year ended December 31, 2001 are based upon SEC
Staff Accounting Bulletin 101. As previously announced, the
Company has not yet formally filed this Amendment No. 3.
Seitel's outside auditor, Ernst & Young L.L.P., has advised the
Company that unless it successfully cures the non-compliance
with its loan covenants through amendments to the covenants, E&Y
will include a "going concern" qualification to any future
report that it may be called upon to issue.

The Company does not expect to be able to formally file this
Amendment No. 3 prior to August 14, 2002, until E&Y conducts a
thorough review of the representations that prior management and
prior legal counsel made to it. The Company is not aware of
information that will cause the previously filed financial
statements to materially change as a result of the investigation
into the possible improper conversions of corporate funds by the
Company's former chief executive or chief financial officers.

In connection with the preparation of its second quarter
financial statements, the Company reported that, as a result of
the announced sale of the assets of DDD Energy, the Company
expects to record a pre-tax book loss of approximately $45 to
$50 million in the quarter ended June 30, 2002. This writedown
reflects the difference between the book value of the DDD assets
and the $25 million price for the producing properties being
sold along with the projected value of proven reserves and
unevaluated properties remaining after the sale.

Additionally, the Company is in the early stages of analysis but
anticipates recording a substantial non-cash impairment charge
related to the marine component of the seismic data library in
the quarter ended June 30, 2002. The Company anticipates this
impairment charge due primarily to lower than expected marine
seismic revenues resulting from energy industry conditions and
other factors. As of March 31, 2002, the marine seismic data
library had a net book value of $78 million.

Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, selling data from its library
and creating new seismic surveys under multi-client projects.


SHELBOURNE: Urging Shareholders to Vote for Plan of Liquidation
---------------------------------------------------------------
Shelbourne Properties II, Inc. (Amex: HXE), a diversified real
estate investment trust, announced that it had become aware of a
"mini-tender offer" made to its stockholders by MacKenzie
Patterson, Inc., to purchase up to 41,000 shares, or
approximately 4.58% of the company's outstanding shares, at a
price of $62.00 per share. MacKenzie Patterson is not affiliated
with Shelbourne Properties or its management and Shelbourne
Properties was not informed in advance of the offer.

On July 1, 2002, Shelbourne Properties entered into a Settlement
Agreement and a Stock Purchase Agreement with HX Investors,
L.P., pursuant to which, on July 5, 2002, HX Investors commenced
a tender offer for up to 268,444 shares, or approximately 30% of
the company's outstanding shares, at a price of $62.00 per
share. If HX Investors' tender offer is fully subscribed, HX
Investors will own approximately 42% of the outstanding common
stock of the company. HX Investors' tender offer is scheduled to
expire at 12:00 midnight on August 2, 2002. In connection with
this transaction, the company's board of directors also approved
a plan of liquidation for the company (the terms of which were
negotiated with HX Investors) and agreed to submit such plan to
its stockholders for approval promptly after the closing of HX
Investors' tender offer. HX Investors has agreed to vote all of
its shares in favor of the plan of liquidation.

Shelbourne Properties notes to its stockholders that, with
respect to the tender offer by HX Investors, its board of
directors has unanimously recommended that stockholders desiring
to maximize immediate liquidity of their shares accept HX
Investors' tender offer and tender their shares pursuant to such
tender offer, and stockholders not seeking immediate liquidity,
but desiring to receive their pro rata portion of the
liquidation proceeds contemplated by the company's plan of
liquidation, should not accept HX Investors' tender offer, and
should vote to approve the adoption of the plan of liquidation
at a meeting of the stockholders to be held to consider such
matter.

Although the offer made by HX Investors and the offer made by
MacKenzie Patterson both provide the same cash consideration per
share, Shelbourne Properties cautions its stockholders that, in
contrast to the terms of the HX Investors offer, the MacKenzie
Patterson offer provides that upon tendering your shares (i) you
will not be able to change your mind regardless of the
prevailing market price and regardless of whether you would
subsequently desire to tender into HX Investors' tender offer
instead, and (ii) unlike HX Investors' tender offer, you will
not receive prompt payment for shares (and payment may be
delayed until as late as the end of September 2002 or, if
MacKenzie Patterson exercises its expressly reserved right to
extend its offer for an additional 60 days, the middle of
December 2002).

MacKenzie Patterson's offer refers to significant transaction
costs that stockholders may incur in selling shares. Shelbourne
Properties notes that the transaction costs that stockholders
would incur in an open market sale are normal brokerage
commissions. Shelbourne Properties also notes that HX Investors'
tender offer provides stockholders with an opportunity to
liquidate their investment without the usual securities
brokerage commissions associated with market sales.

The United States Securities and Exchange Commission has issued
an investor alert on so-called "mini-tender offers," such as the
offer made by MacKenzie Patterson, and has warned investors
about the risks of these offers. A mini-tender offer is an offer
for not more than 5% of a company's shares. Such a tender offer
is not subject to the disclosure and procedural protections
mandated by law for a larger tender offer, such as the tender
offer by HX Investors. A copy of the SEC's alert can be found at
the SEC's Web site  
http://www.sec.gov/investor/pubs/minitend.htm  


SPIGADORO: Selling Operating Subsidiary Assets to Carlo Petrini
---------------------------------------------------------------
Spigadoro, Inc. (Amex: SRO), a leading manufacturer of branded
and private label products in the Mediterranean food sector,
today announced it has reached an agreement with Carlo Petrini
to sell to Mr. Petrini 100% of the shares of Petrini S.p.A., the
Company's principal operating subsidiary.  Petrini S.p.A., owns
all of the shares of Gazzola S.p.A. and Spigadoro Food, S.p.A.,
and the sale will therefore result in the transfer of all of the
Company's operating assets.

The Company noted that the sale was necessitated by the failure
of Petrini's banks to provide the company with sufficient
working capital to continue its operations. The resulting lack
of liquidity has strained Petrini's ability to operate in the
ordinary course and increased the possibility of a bankruptcy
filing for Petrini.

In exchange for the sale of all of the stock of Petrini S.p.A.,
Mr. Petrini will (i) pay to the Company Euro 6 million in cash
at the closing and (ii) terminate a $3.6 million promissory note
owed to him by the Company in exchange for the assignment by the
Company to him of a Euro 4.8 million receivable from Petrini
S.p.A.  The Company and Gruppo Spigadoro N.V., the principal
shareholder of the Company, have also agreed to transfer any
rights they may have to the name "Spigadoro" and to change their
corporate names accordingly, and Petrini S.p.A., has agreed to
waive a receivable from Gruppo Spigadoro N.V., of approximately
Euro 279,000.

As a result of the transaction, the Company believes that it
will no longer satisfy the continued listing requirements
established by the American Stock Exchange and, accordingly,
anticipates that its shares of Common Stock will be de-listed
from trading on the AMEX. The Company has not yet determined
whether, following such de-listing, it will continue to make
available periodic reports pursuant to the Securities Exchange
Act of 1934. The Company also noted that it has outstanding debt
in an amount in excess of $8 million, after giving effect to the
termination of Mr. Petrini's note.

The Company also announced the resignations of Carlo Petrini as
Co-Chairman of the Board and Riccardo Carelli as Chief Executive
Officer and a director of the Company. Jacob Agam, the Chairman
of the Company, will return as C.E.O., a position he held from
April 1998 until April 2001.

Jacob Agam, the Chairman of the Company, stated: "We are very
disappointed that our efforts to turn around the Company --
which had been progressing nicely, particularly in the animal
feed division -- have been stalled by the banks' failure to
provide Petrini with necessary working capital. Although we had
been promised additional lines of credit on numerous occasions
during the past ten months, our credit facilities remain
substantially below where they were at this time last year."

"As a result, Petrini finds itself unable to fund its working
capital needs and in danger of being forced to seek protection
under Italian bankruptcy laws. Such a bankruptcy filing would
likely have wiped out any value for the Company. Under the
circumstances, we believe the transaction with Mr. Petrini is
the best available alternative for the Company."

The Company noted that the parties expect the transaction to
close within the next two weeks.

Through its Petrini subsidiary, Spigadoro is a leading
manufacturer of branded and private label products in the
Mediterranean food sector. Its pasta and other Mediterranean
products are internationally recognized as high quality products
and are marketed under the brand name "Spigadoro" in Italy,
Europe, the U.S. and the Far East. The Company's animal feed
products are manufactured at seven plants throughout Italy and
are marketed under the "Petrini" name. The Company also produces
private label pasta through it's Pastificio Gazzola subsidiary.


STARBAND COMMS: Committee Seeks Okay to Tap Bayard as Counsel
-------------------------------------------------------------
The official committee of unsecured creditors, in the chapter 11
case involving Starband Communications Inc., wants the U.S.
Bankruptcy Court for the District of Delaware to approve the
appointment and retention of The Bayard Firm, P.A., as its
counsel, nunc pro tunc to June 14, 2002.

Bayard is required:

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

     b) to assist in the investigation of the Debtor's acts,
        conduct, assets, liabilities, and financial condition,
        the operation of the Debtor's businesses, and any other
        matters relevant to the Case or to the formulation of a
        plan of reorganization or liquidation;

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

     d) to review, analyze and respond to all pleadings
        filed by the Debtor and appearing in court to present
        necessary motions, applications and pleadings and to
        otherwise protect the interests of the Committee; and

     e) to perform all other legal services for the Committee
        that may be necessary and proper in the Case.

The primary attorneys and paralegals expected to represent the
Committee are:

          Jeffrey M. Schlerf (director)    $395 per hour
          Daniel K. Astin (associate)      $325 per hour
          Eric M. Sutty (associate)        $250 per hour
          Anthony M. Saccullo (associate)  $225 per hour
          Tiffany Scott (paralegal)        $130 per hour

StarBand Communications Inc., currently provides two-way,
always-on, high-speed Internet access via satellite to
residential and small office customers nationwide. The Company
filed for chapter 11 protection on May 31, 2002. Thomas G.
Macauley, Esq., at Zuckerman and Spaeder LLP represents the
Debtor in its restructuring efforts. When the Company filed for
protection form its creditors, it listed $58,072,000 in assets
and $229,537,000 in debts.


TIMELINE INC: Auditors Doubt Ability to Continue Operations
-----------------------------------------------------------
Timeline Inc., develops, markets and supports company-wide
financial reporting, budgeting and management software, and
event-based notification, application integration, and process
automation software applications that streamline key business
activities for workplace efficiency. Its software products
enable customers to automatically access and distribute business
and accounting information in a secure environment and with full
accounting controls, integrate software programs developed at
different times, and automate notification messages pertaining
to specific events and business processes. Its marketing and
development strategy is focused on products that report
financial data in meaningful and flexible formats, and on
systems for notification of critical information, integration of
applications and transaction automation. Its reporting products
allow its customers to gather and distribute business
information throughout their companies while maintaining maximum
flexibility in determining the types of transaction processing
systems they will use. Timeline allows the end-user to receive
information through a web browser, distributed Microsoft(R)
Excel workbooks, data marts or actual reports delivered via e-
mail. In addition, its WorkWise products allow customers to
automatically monitor databases, consolidate data entry,
automate tasks and communicate with the appropriate people.

Results of operations for fiscal 2002 and fiscal 2001 are not
directly comparable, because results for fiscal 2001 include
nine months of operations of Analyst Financials Limited (Analyst
Financials), which Timeline acquired as of June 30, 2000, as
well as approximately four months of operations for WorkWise
Software, Inc., acquired December 4, 2000. Both acquisitions
were accounted for under the purchase method of accounting.
Results of operations for fiscal year ended March 31, 2002,
however, include the operations of both Analyst Financials and
WorkWise for the full fiscal year. For the quarter ended June
30, 2000, prior to its acquisition, Analyst Financials paid
royalties to Timeline on license and maintenance revenue under
its then distributor agreement in the amount of $46,830. There
was no financial relationship between WorkWise and Timeline
prior to its acquisition.

For the fiscal year ended March 31, 2002, total operating
revenues were $4,825,000 compared to $4,951,000 for fiscal 2001,
representing a decrease of 3%. The decrease in total revenues in
fiscal 2002 from fiscal 2001 is primarily attributable to a
decrease in patent license revenue more than offsetting
increased software license, maintenance, consulting and other
revenue. Software licensing revenues were slightly higher in
fiscal 2002 over fiscal 2001 (representing a 10% increase),
while patent license revenue decreased to $1,550,000 in fiscal
2002 from $2,025,000 in fiscal 2001 (a 23% decrease). The patent
license revenue in fiscal 2001 consisted of a one-time  
$2,025,000 license fee from Sagent Technology, Inc., whereas the
patent license revenue in fiscal 2002 includes a one-time
$450,000 license fee from Lawson Software and a one-time license
fee of $1,100,000 from Oracle Corporation. None of these patent
license fees provide for recurring license revenue. Without
consideration of the patent license revenues, total operating
revenues for the fiscal year ended March 31, 2002 increased by
12% from operating revenues for he like period ended in 2001.
Timeline will continue to pursue additional patent licenses when
appropriate, and believes that the settlements made to date
regarding its patents will have a positive impact on the
Company's ability to enter into additional patent licenses.
However, it cannot be predicted what will be the outcome of
ongoing and future negotiations and there are no assurances that
Timeline will be successful in entering into additional patent
licenses, or the timing of any such licenses.

Gross profit for fiscal 2002 was $3,968,000, representing a 3%
increase from fiscal 2001. Gross profit for the two fiscal years
is not directly comparable due to the inclusion of WorkWise and
Analyst Financials revenues in all of fiscal 2002 and only part
of fiscal 2001, and because of the relative mix of high-margin
patent license revenue in each period ($1,550,000 in fiscal 2002
compared to $2,025,000 in fiscal 2001). The Company expects to
see continued variations in gross profit dependant on the mix of
high-margin software and patent licenses and lower margin
consulting and maintenance revenue which is labor intensive.
Additionally, because patent licenses to date have tended to be
driven by legal actions and/or negotiated settlements of
threatened legal actions, the costs of securing patent licenses
vary greatly from license to license. As patent licensing is
expected to continue to be both relevant and widely different
between reporting periods, substantial fluctuations in
comparative margins may continue to occur.

Management of the Company believes that current cash, cash
equivalents, marketable securities, and any net cash provided by
operations may be insufficient to meet anticipated cash needs
for working capital and capital expenditures through fiscal
2003. Company revenue is unpredictable, and a revenue shortfall
could deplete its limited financial resources. Accordingly, if
results of operations do not improve, the Company may be
required to reduce operations substantially or to raise
additional funds through equity or debt financing. There is
substantial doubt about Timeline's ability to continue as a
going concern.


TRENWICK GROUP: Re-Sets Release of Q2 Results for August 7, 2002
----------------------------------------------------------------
Trenwick Group Ltd., announced that its loss estimates in
connection with the September 11, 2001, terrorist attacks remain
substantially unchanged from those that were reported as of
March 31, 2002.

Trenwick also announced today that it will advance its
previously scheduled second quarter 2002 earnings release date
from August 14, 2002 to August 7, 2002. A conference call to
discuss Trenwick's second quarter results is now scheduled for
August 8, 2002 at 9:00 a.m., Eastern Time.

Trenwick is a Bermuda-based specialty insurance and reinsurance
underwriting organization with three principal businesses
operating through its subsidiaries located in the United States,
the United Kingdom and Bermuda. Trenwick's reinsurance business
provides treaty reinsurance to insurers of property and casualty
risks from offices in the United States and Bermuda. Trenwick's
international operations underwrite specialty insurance as well
as treaty and facultative reinsurance on a worldwide basis
through its London insurer and at Lloyd's. Trenwick's U.S.
specialty program insurance business underwrites U.S. property
and casualty insurance through specialty program administrators.

Each of Trenwick's operating insurance company subsidiaries is
rated "A-" (Excellent) by A.M. Best Company and is assigned an
A- financial strength rating by Standard & Poor's. All of
Trenwick Managing Agents Limited's syndicates underwrite under
the ratings of Lloyd's, which is rated "A-" (Excellent) by A.M.
Best Company and has an A financial strength rating from
Standard & Poor's.

                         *   *   *

As reported in Troubled Company Reporter's May 22, 2002,
edition, Fitch Ratings is maintaining its Evolving Rating
Outlook on  Trenwick Group, Ltd., and its subsidiaries.

Fitch's action followed Trenwick's May 16 announcement that it
had sold the property catastrophe book of business of its
LaSalle Re, Limited subsidiary, to Specialty Insurance Ltd.
LaSalle Re is a wholly owned subsidiary of Trenwick.

Fitch believed that Trenwick's financial profile and financial
flexibility would improve by paying down its bank debt. Fitch
estimated that after paying down the bank debt, Trenwick's debt-
plus-preferred to capital ratio would decline to 25% from 47%.
Fitch also believed that Trenwick removed a source of earnings
volatility by exiting the property catastrophe market.

                          Rating List:

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

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

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

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

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

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


TYCO INT'L: Sets Special Shareholders' Meeting for September 5
--------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC),
announced that the Company has notified the New York Stock
Exchange that it plans to hold a Special Shareholder Meeting on
September 5, 2002. The Company will ask shareholders to vote to
increase the maximum size of its Board of Directors from 11 to
15 directors and to allow the Board to fill the new
directorships.

The Board anticipates that one of these positions will be filled
by the new Chief Executive Officer when that person is
identified, and the remaining positions will be filled by
independent directors. A preliminary proxy statement detailing
the proposal to be considered is expected to be filed with the
Securities and Exchange Commission today, July 23, 2002.

Investors will be able to obtain the proxy statement free of
charge at the SEC's Web site http://www.sec.gov or by  
contacting Tyco.  The directors and executive officers of Tyco
may be deemed to be participants in the solicitation of proxies.  
The direct or indirect interests of such participants, by
security holdings or otherwise, will be included in the proxy
statement to be filed with the SEC.

Tyco International Ltd., is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services; and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in disposable medical products, plastics
and adhesives. Tyco operates in more than 100 countries and had
fiscal 2001 revenues in excess of $36 billion.

As reported in Troubled Company Reporter's June 12, 2002,
edition, Fitch Ratings downgrades Tyco International's Senior
Unsecured Rating to BB.


USDATA CORP: Second Quarter Revenues Plummet 30% to $2.7 Million
----------------------------------------------------------------
USDATA Corporation, (Nasdaq:USDC) a global provider of
industrial automation software and services, announced operating
results for the second quarter of 2002.

The company reported revenues of $2.7 million for the second
quarter of 2002, a 4% increase when compared to the first
quarter of 2002. Revenues declined 30% from $3.8 million for the
second quarter of 2001 to $2.7 million for the second quarter of
2002. Revenues for the six months ended 2002 were $5.3 million,
a 27% decrease when compared to revenues of $7.3 million in
2001.

Loss from operations was $435,000 for the second quarter of 2002
compared to income from operations of $61,000 in 2001. Loss from
operations for the six months ended 2002 was $1.3 million,
including a restructuring charge of $356,000 related to the
company's amendment of its office lease agreement. The office
lease amendment reduced the company's corporate headquarters
leased office space by approximately 44,400 square feet, which
amounts to a cash savings of approximately $1.0 million in lease
costs during 2002. Net loss applicable to common stockholders
was $1.1 million for the second quarter of 2002, compared to net
loss applicable to common stockholders of $637,000 in 2001. Net
loss applicable to common stockholders for the six months ended
2002 was $2.7 million, compared to net loss applicable to common
stockholders of $9.3 million for the same period in 2001.

Net cash flow provided by operations was $606,000 for the six
months ended June 30, 2002, a significant improvement when
compared to a negative cash flow from operations of $1.4 million
for the same period in 2001.

Bob Merry, President and Chief Executive Officer of USDATA,
commented on Friday's announcement, "We are pleased, in this
difficult environment, with our 4% increase in revenue over the
first quarter of 2002 after experiencing 3 quarters of declining
revenue. USDATA is positioning itself for renewed year-on-year
revenue growth as the market recovers."  Merry continued, "We
have cut expenses, expanded our product line, and recently
optimized our distribution strategy to increase market coverage.
We believe our strategy is the correct one and USDATA will
emerge from this downturn as a more focused company well
positioned to deliver leading solutions to our customers. To
this end, we continue to invest aggressively in the key areas of
R&D and customer service."

Now in its 28th year, USDATA Corporation, headquartered in
Richardson, Texas (Nasdaq:USDC) is a leading global provider of
software and services that give enterprises the knowledge and
control needed to perfect the products they produce and the
processes they manage. Based upon a tradition of flexible
service, innovation and integration, USDATA's software currently
operates in more than 60 countries around the globe, including
seventeen of the top twenty-five manufacturers. USDATA's
software heritage has emerged from manufacturing and process
automation solutions and has grown to encompass the industry's
deepest product knowledge and control solutions. With an eye
towards the future of e-business, USDATA continues to innovate
solutions that will support the integration of enterprise
production and automation information into the supply chain. The
company has offices worldwide and a global network of
distribution and support partners. For more information, visit
USDATA on the Web at http://www.usdata.com  

USDATA Corp.'s March 31, 2002, balance sheet showed a working
capital deficit of about $1.4 million.


VELOCITA CORP: Secures Court Nod to Appoint BSI as Claims Agent
---------------------------------------------------------------
The United States Bankruptcy Court for the District Of New
Jersey gave its stamp of approval to Velocita Corp., and its
debtor-affiliates' application for the appointment of Bankruptcy
Services LLC as Official Claims and Noticing Agent.

BSI will be:

     a) serving and publishing notices of commencement of the
        cases to all creditors;

     b) electronically transferring the creditor database into
        BSI's claims management system;

     c) assisting with the preparation of the Debtors' schedules
        of liabilities and statements of financial affairs as
        required by Rule 1007 of the Federal Rules of Bankruptcy
        Procedure;

     d) mailing a proof of claim form to all potential creditors
        of the Debtors and providing a certificate of mailing;

     e) coordinating receipt of filed claims with the Court and
        providing secure storage for all original proofs of
        claim;

     f) entering filed claims into BSI's database;

     g) working directly with the Debtors to facilitate the
        claims reconciliation process, including

          i) matching scheduled liabilities to filed claims,
         ii) identifying duplicate and amended claims,
        iii) categorizing claims within "plan classes" and
         iv) coding claims and preparing exhibits for omnibus
             claims motions;

     h) maintaining the official claims register, and providing
        the Clerk of the Court with copies thereof as required
        by the Court;

     i) providing exhibits and materials in support of motions
        to allow, reduce, amend, and expunge claims;

     j) updating the Claims Register to reflect Court orders
        affecting claims resolutions and transfers of ownership;

     k) printing creditor and shareholder/class specific ballots
        and coordinating the mailing of ballots, the plan of
        reorganization and related disclosure statement, and
        generating an affidavit of service regarding the same;

     l) establishing a toll free "800" number for the purpose of
        receiving questions regarding voting on the plan;

     m) soliciting votes on the plan of reorganization; and

     n) receiving ballots at a post office box, inspecting, date
        stamping and numbering such ballots consecutively and
        tabulating and certifying results.

BSI's professional fees are:

          Kathy Gerber               $195 per hour
          Senior Consultants         $175 per hour
          Programmer                 $125 - $150 per hour
          Associate                  $125 per hour
          Data Entry/Clerical        $40 - 60 per hour

Velocita Corp., is in the business of building a nationwide
broadband fiber-optic network aimed at serving communications
carriers, internet service providers, data providers, television
and video providers, as well as corporate and government
customers.  The Company filed for chapter 11 protection on May
30, 2002 in the U.S. Bankruptcy Court for the District of New
Jersey. Howard S. Greenberg, Esq., Morris S. Bauer, Esq., at
Ravin Greenberg PC and Gary T. Holtzer, Esq., at Weil, Gotshal &
Manges LLP represent the Debtors in their restructuring efforts.
As of March 31, 2002, the Company listed $482,807,000 in total
assets and $827,000,000 in total debts.


WINSTAR COMM: Holding Asks Court to Enforce Order on Receivables
----------------------------------------------------------------
Winstar Holding LLC asks the Court to declare that a receivable
from Money.net is its property since it was not excluded from
its purchase of substantially all of the Debtors' assets.

William K. Harrington, Esq., at Duane Morris LLP in Wilmington,
Delaware, claims Winstar Holdings is seeking judgment on the
matter because the Chapter 7 Trustee desires to retroactively
exclude the receivable from Money.net from the purchase of the
sale of the Debtors' assets.  This is despite the clear terms of
the Asset Purchase Agreement which provided that only specific
accounts receivables were excluded under the APA.  The Money.net
Receivable is not identified in the APA or its attached exhibits
as an excluded receivable.

According to Mr. Harrington, Money.net had sought a capital
investment of approximately $3,500,000 through the sale of its
Series C Preferred stock.  Winstar Ventures expressed interest
in participating in Money.net's stock offering on the condition
that Money.net enter an agreement to procure its web-hosting
services from Winstar Ventures' affiliate company, Winstar
Wireless, Inc.

Mr. Harrington explains that the mutual obligations between
Money.net and Winstar Ventures were documented in a Memorandum
of Understanding executed by Winstar Communications and
Money.net.  Winstar Ventures has agreed to invest $1,000,000
through a promissory note for 361,011 shares of Money.net Series
C Preferred stock.  The promissory note was to be paid through
eighteen monthly installments of $55,555 each with accrued
interest of 7.5% per annum to be paid at the end of the term.
Money.net agreed to enter an $18,000,000, four-year contract
with Winstar Wireless for web-hosting services.

Mr. Harrington maintains that Winstar Ventures' investment in
Money.net was expressly subject to a right of set-off of the
amounts owed between Winstar Communications and Money.net at the
termination of the web-hosting relationship.  When Money.net and
Winstar Wireless terminated their relationship in April of 2001,
Winstar Ventures had made only three payments of $55,555 or a
total payment of $166,665 on the note.

Mr. Harrington tells the Court the MOU was not disclosed to
Winstar Holdings.  Thus, the Trustee should be barred from
introducing parol evidence that directly contradicts the
unambiguous terms of the APA, which provides for the transfer of
all the accounts receivable of the Debtors except for those
listed as an excluded asset under the APA and its accompanying
exhibits.

Section 2.2 of the APA defines these excluded assets as:

   "(b) any equity interest issued by the Sellers and their
        Subsidiaries and those equity interests set forth on
        Schedule 2.2(b);

    (d) the Sellers' claims, assets, causes of action, choses
        of action and rights of recovery pursuant to Sections
        544 through 550 and Section 553 of the Bankruptcy Code,
        any other avoidance actions under any other applicable
        provision of the Bankruptcy Code and the claims, causes
        of action, choses of action and rights of recovery,
        including claims relating to Lucent Technologies, Inc.,
        set forth on Schedule 2.2(d); and

    (k) all accounts receivable, noted and other amounts
        receivable relating to third parties, together with any
        interest or unpaid finance charges accrued thereon and
        all proceeds thereof, set forth on Schedule 2.2"

Mr. Harrington points out that if the Money.net receivable was
indeed excluded from the assets sale, it would have been listed
in:

          a. Schedule 2.2(b) - Excluded Investments

          b. Schedule 2.2(d) - Excluded Claims and Causes of
             Actions, and

          c. Schedule 2.2(k) - Excluded Receivables Disclosure
            Schedule to the Asset Purchase Agreement.

Mr. Harrington admits that Schedule 2.2(b) - Excluded
Investments does refer to Money.net as an investment but only as
a preferred stock.  The Trustee wants to exclude the accounts
receivable under the promissory notes.  The excluded notes
listed in the APA include those only of CCC Networks, Next
Century Media Inc., and WamNet Inc.

Even if the Debtors had intended to exclude the Money.net
receivable, Mr. Harrington avers that the APA is an integrated
agreement which prevents the Trustee from relying on any
extrinsic evidence, written or oral, to support her claim.
The Debtors had the contractual obligation disclose the supposed
agreement between the Debtors and Money.net.

In conclusion, Mr. Harrington emphasizes that the Money.net
receivable was transferred by the Debtors to Winstar Holdings
under the APA pursuant to the Sale Order.  The Debtors' unknown
intentions or the Trustee's subsequent desire to exclude the
Money.net receivable from the Sale are irrelevant.  Plain and
simply said, the APA did not exclude the Money.net receivable.

                        Money.net Objects

Christopher A. Ward, Esq., at The Bayard Firm in Wilmington,
Delaware, tells the Court that Winstar failed to disclose in its
motion that the excluded investment in Money.net listed on
Schedule 2.2(b) of the APA is, in fact, a note and that the
right of set-off between the excluded investment and the
Money.net Receivable was not part of an agreement created after
the Sale. It has always existed and was even made readily
available to Winstar Holdings prior to the execution of the APA.

Mr. Ward insists that the only support Winstar could point to in
claiming ownership of the Money.net Receivable is that the
Excluded Investment is not listed as a note on Schedule 2.2(b),
but is listed as an investment in preferred stock.  The term did
not correctly categorize the Excluded Investment.  Extrinsic
evidence thus should be admitted to explain the intentions of
the parties to exclude the Money.net Receivable from the Sale.

Mr. Ward states that the Money.net Receivable was never intended
to be part of the Debtors' assets sale.  Representatives of the
Debtors' estate and Money.net had entered into negotiations,
with the approval of the Trustee, as early as July 2001 to set-
off the amounts outstanding between the parties. (Winstar
Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


XO COMMS: Has Until Year-End to Make Lease-Related Decisions
------------------------------------------------------------
XO Communications, Inc., is party to numerous unexpired
nonresidential real property leases.  The Unexpired Leases may
be valuable assets of the Debtor's estate or integral to the
Debtor's continued operations.

The Debtor sought and obtained an extension of time to assume or
reject unexpired leases of nonresidential real property,
including but not limited to 29 of those 30 unexpired leases
identified in the motion.  The extension goes through the
earlier of (i) the effective date of a plan of reorganization
and (ii) December 31, 2002.

Judge Gonzalez makes it clear that the extension is without
prejudice to the Debtor's right to request further extensions of
time within which they may assume or reject each of the leases,
and it is also without prejudice to any Lessor's right to seek
to shorten the Debtors' decision period.

The Debtor believes it will require this extension of time to
evaluate the need for the leases in the context of a long term
business plan, which the Debtor anticipates will be achieved
through a plan of reorganization.  As Tonny K. Ho, Esq., at
Willkie Farr & Gallagher, pointed out at the hearing, absent the
extension, the Debtor would be forced to decide between possibly
losing valuable locations and assuming leases that ultimately
should be rejected. "Where, as here, the locations covered by
the Unexpired Leases may play a significant role in the
reorganization process, courts have recognized the benefits of
extensions of time under Section 365(d)(4) of the Bankruptcy
Code," Mr. Ho represented at the hearing.  "In fact, several
courts within this Circuit have acknowledged that the decision
to assume or reject non-residential real property leases may
best be made in the context of the formulation of a plan of
reorganization."

Mr. Ho reminded Judge Gonzalez that the Debtor has filed a plan
of reorganization, and confirmation is expected to occur within
the next several months. "Extension is warranted under the
circumstances," the Debtor's counsel represented.

                        The KDC Lease

KDC-Sunset, LLC is the lessor for the Debtor's corporate
headquarters, at 1111 Sunset Hills Road, Reston, Virginia 20190.
The Debtor occupies approximately 212,000 square feet,
comprising approximately 98% of the rentable square feet in the
building.

If the KDC-Sunset Lease is rejected, KDC-Sunset will have a
substantial claim for rejection of the lease. If the Lease is
assumed, KDC-Sunset is entitled to adequate assurance of future
performance under Section 365(b)(1)(C). At the very least, KDC
wants to know who will be its tenant for the building at 1111
Sunset Hills Road.

In the view of KDC, because a hearing to approve the Debtor's
Disclosure Statement is now set for July 19, 2002, the Debtor's
requested extension of time is tantamount to an open ended
extension. It is the very speed with which this case appears to
be moving that argues against an extension of time, or at least
against the nearly open-ended extension of time sought by the
Debtor, to assume or reject the Debtor's unexpired leases, KDC
opines.

Under the circumstances of this case, KDC-Sunset suggests that,
should an extension be necessary at all, the Debtor should be
granted an extension to the earlier of: (i) the conclusion of
the Disclosure Statement hearing; or (2) the 60 days under
Section 365(d)(4).

The hearing with respect to the KCD Objection is scheduled for
July 19, 2002 at 10:00 a.m. or a later date that is acceptable
to the Court and the parties. (XO Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


XO COMMS: Court to Consider Two-Pronged Reorg. Plan on August 26
----------------------------------------------------------------
XO Communications, Inc., (OTCBB:XOXOE) announced that the
Official Committee of Unsecured Creditors representing XO's
bondholders has agreed with representatives of XO's banks to
support both branches of XO's two-pronged plan of
reorganization.

As a result, XO is revising the "stand-alone" contingency plan
included in its plan of reorganization so that bondholders and
other creditors would now expect to recover more of their
investment in XO, primarily through their receipt of stock and
warrants in the reorganized Company.

These revisions and the support of these two key creditor groups
set the stage for a successful reorganization and restructuring
of XO's balance sheet.

XO's plan of reorganization includes two alternative
restructuring scenarios, the first of which seeks to implement
the previously-announced investment agreement with Forstmann
Little and Telmex, and the second of which would implement the
stand-alone contingency plan, if required.

The Company has developed this contingency plan in light of the
expressed reluctance of Forstmann Little and Telmex to close the
transactions under the investment agreement and the possibility
that one or more of the conditions to closing will not be met.

The Company expects the stand-alone plan to be available if the
Company's existing deal with Forstmann, Little and Telmex fails
to close as scheduled, although the Company has not entered into
any written agreements with respect to its contingency plan.

At a July 19 hearing, the U.S. Bankruptcy Court for the Southern
District of New York indicated that it would shortly approve
XO's Disclosure Statement, permitting solicitation of its
creditors to obtain the approvals needed to implement the
restructuring. The solicitation process is expected to begin
next week.

At the hearing, the Bankruptcy Court also established August
26th as the date for the hearing at which XO expects to seek
confirmation of the Forstmann Little/Telmex plan.

At the July 19 hearing, XO also confirmed that it would revise
the terms of the stand-alone restructuring plan to include
increased recoveries for XO Bondholders and general unsecured
creditors.

Under the revised stand-alone restructuring plan, so long as the
plan garners sufficient bondholder support, XO's bondholders and
general unsecured creditors would collectively receive, among
other consideration:

     --  Five percent of the initial common equity in
         reorganized XO

     --  Three series of warrants exercisable over a seven year
         period including:

          * warrants to purchase up to ten percent of the common
            equity of the reorganized company at an exercise
            price equal to 125 percent of the reorganized
            company's implied equity value in the stand-alone
            restructuring;

          * warrants to purchase up to 7-1/2 percent of the
            common equity of the reorganized company at an           
            exercise price equal to 150 percent of the implied           
            equity value;

          * warrants to purchase up to 7-1/2 percent of the
            common equity of the reorganized company at an
            exercise price equal to 200 percent of the implied
            equity value;

     --  First rights to participate in the company's offering
         of rights to purchase up to $200 million of the
         reorganized company's common stock.

XO also announced that it has passed two important milestones in
its efforts to satisfy the conditions to the transactions under
the Forstmann Little/Telmex investment agreement. First, at the
July 19 hearing, the Bankruptcy Court approved the "break-up"
fee and expense reimbursement provisions that were a condition
to the investors' obligations to proceed.

Second, in order to satisfy an additional condition to the
Forstmann Little/Telmex investment concerning litigation, XO has
agreed to settle all of the fiduciary duty class action cases
pending against it. To avoid any cost to XO, Forstmann Little or
Telmex if the Forstmann/Telmex investment closes, the revised
plan provides that XO's banks will fund the settlement in that
event.

The settlement is subject to bankruptcy and state court
approvals.

XO Communications is one of the nation's fastest growing
providers of broadband communications services offering a
complete set of communications services, including: local and
long distance voice, Internet access, Virtual Private Networking
(VPN), Ethernet, Wavelength, Web Hosting and Integrated voice
and data services.

XO has assembled an unrivaled set of facilities-based broadband
networks and Tier One Internet peering relationships in the
United States. XO currently offers facilities-based broadband
communications services in 65 markets throughout the United
States.


ZENITH ELECTRONICS: Commences Tender Offer for 8.19% Debentures
---------------------------------------------------------------
Zenith Electronics Corporation commences a cash tender offer for
all of the outstanding $49,999,000 aggregate principal amount of
its 8.19% Senior Debentures due 2009. In connection with the
tender offer, Zenith is also soliciting consents to amendments
to the Debentures and the related indenture to eliminate certain
restrictive covenants and an event of default provision. Holders
who tender their Debentures will be deemed to have consented to
the proposed amendments.

Debentures validly tendered and accepted for purchase will be
purchased at a price of $500 per $1,000 principal amount of
Debentures, plus accrued and unpaid interest up to, but not
including, the settlement date of the offer. This amount
includes a consent payment of $30 per $1,000 principal amount of
the Debentures.

To receive the consent payment of $30 per $1,000 principal
amount of the Debentures, holders must tender their Debentures
and provide their consent to the proposed amendments by the
consent payment deadline, which is 11:59 p.m., New York City
time, on August 1, 2002, unless extended.

The tender offer is scheduled to expire at 11:59 p.m., New York
City time, on August 15, 2002, unless extended.

The closing of the tender offer and consent solicitation by
Zenith is conditioned on, among other things, Zenith receiving
valid tenders, with consents, from holders of at least 66-2/3%
in principal amount of the outstanding Debentures.

Salomon Smith Barney is the dealer manager and Mellon Investor
Services is the depositary and the information agent for the
tender offer and consent solicitation.

At March 31, 2002, Zenith Electronics' balance sheet shows a
total shareholders' equity deficit of about $230 million.

                          *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable.  Those sources may
not, however, be complete or accurate.  The Monday Bond Pricing
table is compiled on the Friday prior to publication.  Prices
reported are not intended to reflect actual trades.  Prices for
actual trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

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

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

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

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

                          *********

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

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

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

This material is copyrighted and any commercial use, resale or
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.

                     *** End of Transmission ***