Bankruptcy News For September 16, 1996

  1. Edison Brothers Stores Reports Reduced Losses For Second Quarter Vs. 1995
  2. Weston Lawyer Convicted of $500,000 Fraud, U.S. Attorney Reports
  3. House Of Fabrics Reports Reduction in Loss for Second Fiscal Quarter, Six Months, Representing Final Quarter of Chapter 11
  4. NeoStar Retail Group to Reorganize Under Chapter 11; Company Seeks Court Protection to Ensure Timely, Adequate Supply of Merchandise During Holiday Selling Season; $70 Million DIP Financing Announced

Edison Brothers Stores Reports Reduced Losses For Second Quarter Vs. 1995

             Restructuring Initiatives Beginning to Have Positive Impact
                                 on Store Performance

            ST. LOUIS, Missouri -- Sept. 16, 1996 -- href="chap11.edison.html">Edison Brothers Stores
(NYSE: EBS) today reported a net loss of $5.8 million, or 26
        cents per share, before special charges, for the second quarter of
        l996, ended Aug. 3.  This represents a $6.5 million or 53 percent
        improvement over last year, when the retailer reported a 1995 second
        quarter net loss of $12.3 million, or 56 cents per share, before
        special after-tax charges of $13.4 million.

            For the second quarter of l996, Edison experienced special
        charges of $7.0 million relating to the company's current
        restructuring and Chapter 11 reorganization, as well as charges of
        $6.1 million for a special markdown accrual to substantially reduce
        inventory in the clothing category (suits, sportcoats and related
        items) at Repp Ltd Big & Tall menswear stores and $6.3 million for
        inventory liquidation at the Zeidler & Zeidler menswear chain.
        Including these charges, the net loss for the second quarter was
        $25.2 million, or $1.14 per share.

            As previously reported, same-store sales for the second quarter
        of l996 declined 2.9 percent to $257.7 million from $265.5 million
        the previous year. Total second quarter sales declined 19.7 percent
        to $268.8 million from $334.7 million in l995.

            Excluding special charges, the company's net loss for the first
        half of l996 was $11.9 million, or 54 cents per share, compared with
        a net loss of $18.7 million, or 85 cents per share, in the first
        half of l995.  Special charges brought the l996 first half net loss
        to $42.9 million, or $1.93 per share.  Sales for the period were
        $526.9 million, a decrease of 19.3 percent.

            Commenting on the second quarter, Alan Miller, Edison president
        and chief executive officer, said the company's performance is "on
        plan" in terms of the retailer's strategy for emerging from Chapter

            "We are encouraged by the initial results of the company-wide
        initiatives, which are beginning to have a positive impact in
        several chains," Miller said. "However, we're still in the middle of
        our restructuring phase, and the full impact of these initiatives
        will take time to be felt."

            Miller said Edison's restructuring involves three phases.  The
        first, following last November's bankruptcy filing, involved the
        closing of unprofitable stores coupled with other expense
        reductions.  Phase two, restructuring, is currently under way and
        includes better targeting of customers, upgraded and refocused
        merchandise assortments, and adoption of "best practices" throughout
        the company. The third and final phase, anticipated to occur in
        spring l997, will be to emerge from Chapter 11.

            Current company-wide initiatives are designed to simplify and
        streamline every facet of operations in order to improve efficiency,
        reduce expenses, enhance customer service and re-energize Edison's
        business.  Specific changes have included new operating standards
        for every store, which reduce the amount of time store employees
        spend in the backroom working on inventory so they can devote more
        time to customers; better leveraging of corporate resources, such as
        collective purchasing and information sharing among chains; improved
        training and more store-level input in decision-making.  Strong, new
        management teams also have been put in place in several chains.

        Other turnaround initiatives include:

            Later this month, Repp Ltd Big & Tall will debut 50 "showcase"
        stores that have been repositioned with new lifestyle merchandise
        departments and other physical improvements.  In addition, Edison is
        opening 53 new stores in the second half of 1996.  This follows the
        closing of  nearly 500 underperforming stores in the fourth quarter
        of last year and approximately 180 stores in the first half of l996.

            Edison Brothers Stores Inc. operates JW/Jeans West, Coda,
        Oaktree, J. Riggings and Repp Ltd Big & Tall menswear stores and
        Phoenix mens big and tall catalog; 5-7-9 Shops junior apparel
        stores; and Bakers, Leeds, Precis and Wild Pair footwear stores.

                     Condensed Consolidated Statements Of Income
                                    13 Weeks Ended        26 Weeks Ended
                                  August 3,   July 29,  August 3,  July 29,
                                    1996        1995      1996       1995
                                     (In millions except per share data)
        Net Sales                      $268.8      $334.7    $526.9    $652.8
        Cost of goods sold, occupancy,
         and buying expenses            207.3       244.2     391.0     463.1
        Store operating and
         administrative expenses         69.1        86.3     138.4     173.5
        Depreciation and amortization    10.1        16.7      20.5      33.7
        Interest expense, net              .5         6.3        .9      11.8
        Restructuring and
         reorganization expenses          7.0        20.9      18.6      20.9
        Total Costs and Expenses        294.0       374.4     569.4     703.0
        Loss before Income Taxes        (25.2)      (39.7)    (42.5)    (50.2)
        Income tax provision (benefit)              (14.0)       .4     (18.1)
        Net Loss                       $(25.2)     $(25.7)   $(42.9)   $(32.1)
        Per Common Share:
         Net Loss                      $(1.14)     $(1.17)   $(1.93)   $(1.46)
          Cash dividends declared          --      $  .11        --    $  .42
        Weighted average common shares
         outstanding (in thousands)    22,202      22,074    22,168    22,051

        Weston Lawyer Convicted of $500,000 Fraud, U.S. Attorney Reports

            BOSTON, Mass. -- Sept. 16, 1996 -- United States
Attorney Donald K.
        Stern announced that attorney JEROME ROSEN, 77, of 36 Bullard Road,
        Weston, Massachusetts, was found guilty late Friday by a federal
        jury of having engaged in four counts of a mail fraud scheme to
        defraud a bankruptcy trustee of $500,000.

            ROSEN previously had a law office at 60 State Street in Boston.
        Judge Keeton scheduled sentencing for December 4, 1996.

            The evidence presented during the three day trial before United
        States District Judge Robert J. Keeton showed that ROSEN engaged in
        a scheme to defraud the bankruptcy trustee of bankruptcy debtor N.E.
        Tri-State Development Corp., a company which ROSEN represented.

            ROSEN negotiated the sale of N.E. Tri-State's land in Maine for
        $500,000 to be paid to the bankruptcy trustee, but with an
        undisclosed side agreement involving the payment of $25,000 to
        ROSEN, and payments over several years totalling nearly $500,000 to
        the company's former owners, who were ROSEN's clients.

            The evidence showed that ROSEN made material misrepresentations
        to the bankruptcy trustee and failed to disclose the side agreement.
        When the trustee later learned about the side agreement from another
        source, he had the sale cancelled and re-negotiated the price with
        the buyer, ultimately receiving an additional $230,000.

            ROSEN faces five years in prison, a $250,000 fine, a $100
        special assessment and three years of supervised release on each

            This case is the last of four bankruptcy fraud related cases
        charged in Massachusetts in February as part of a national
        Bankruptcy Fraud Initiative, known as Operation Full Disclosure.
        The defendants in the other cases pled guilty.

            The case was investigated by the Federal Bureau of
        Investigation, referred by the U.S. Trustee's Office in Boston, and
        is being prosecuted by Assistant U.S. Attorney Mark J. Balthazard of
        Stern's Economic Crimes Unit.

        /CONTACT: Joy Fallon or Amy Rindskopf of U.S. Attorney's Office,


        House Of Fabrics Reports Reduction in Loss for Second Fiscal
        Quarter, Six Months, Representing Final Quarter of Chapter 11

            SHERMAN OAKS, Calif. -- Sept. 16, 1996 -- href="chap11.hf.html">House of Fabrics,
(Nasdaq: HFAB), which recently emerged from Chapter 11,
        reported a sharp reduction in net loss for the second fiscal quarter
        and six months ended July 31, 1996.

            For the three-month period, which was the last quarter of
        Chapter 11 prior to emergence, the company reported a net loss of
        $5.0 million, equal to $.37 per share, compared with a net loss of
        $11.0 million, or $.81 per share, for the second quarter last year.
        Sales amounted to $54.8 million, compared with $71.9 million a year
        ago, reflecting 86 fewer stores in operation.

            The net loss for the first half of the current fiscal year was
        reduced to $11.0 million, equal to $.80 per share, from a net loss
        of $19.0 million, or $1.39 per share, a year ago.  Also reflecting
        the closure of 86 stores, sales totaled $111.4 million versus $145.7

            Gary L. Larkins, president and chief executive officer, said the
        improved performance reflected the closure of unprofitable and under
        performing stores, along with cost savings that were effected during
        the company's reorganization period.  He said same-store sales were
        essentially flat as compared with the prior year.  Larkins noted
        that results for the second quarter still included reorganization
        costs and non-cash lease cancellation charges which will be
        eliminated going forward, along with higher interest expenses than
        will be incurred in future periods.  The quarter also included a
        $3.4 million gain from the sale of the company's office building.

            "We are pleased with the progress that has been made getting
        House of Fabrics back on track and look forward to a much brighter
        future," said Larkins.  "Management will now be able to concentrate
        its full energies on operations and meeting our ultimate objective
        of enhancing shareholder value.

            "In connection with the emergence from Chapter 11, the company
        has secured a new $65 million credit facility with the CIT Group,
        which allowed us to reduce our bank debt to $47.3 million from $126
        million at the time of the filing," Larkins added.  "Moreover, we
        are receiving excellent cooperation from our vendors, and I am happy
        to report that goods have arrived for our critical Fall season."

            House of Fabrics currently operates 269 company-owned House of
        Fabrics, Sofro Fabrics, Fabricland and Fabric King retail fabric and
        craft stores in 34 states and employs approximately 7,000 people.

                             Three Months Ended           Six Months Ended
                           July 31,       July 31,      July 31,      July 31,
                             1996           1995          1996           1995
            Sales            $54,840,000   $71,909,000    $111,355,000
        Loss Before
             Income Taxes     (5,001,000)  (10,989,000)    (10,948,000)
            Income Taxes          24,000        50,000          48,000
            Net Loss         $(5,025,000) $(11,039,000)   $(10,996,000)
            Loss Per Share        $(0.37)       $(0.81)         $(0.80)
        Weighted Average
         Number of Shares
             Outstanding..     13,697,107    13,697,107      13,697,107
            ..  Reflects the weighted average number of shares outstanding
        prior to emergence from Chapter 11.  Subsequent to emergence, the
        number of shares outstanding will be reduced to approximately
                            SELECTED BALANCE SHEET DATA....
                                  July 31, 1996                January 31, 1996
        Inventories                 $94,853,000                   $107,140,000
        Accounts Payable            $12,370,000                     $9,754,000
        Bank Debt                   $47,300,000                   $102,823,000
            .... Pro Forma equity at August 1, 1996, after settlement of
        claims and application of fresh start accounting amounted to

        /CONTACT:  Gary L. Larkins of House of Fabrics, 818-995-7000; or
        Roger S. Pondel of Pondel Parsons & Wilkinson, 310-207-9300/

NeoStar Retail Group to Reorganize Under Chapter 11; Company Seeks Court
Protection to Ensure Timely, Adequate Supply of Merchandise During Holiday
Selling Season; $70 Million DIP Financing Announced

            DALLAS, Texas -- Sept. 16, 1996 -- href="chap11.neostar.html">NeoStar Retail Group,
(NASDAQ: NEOS), parent company of Babbage's and Software
        announced today that it has filed a voluntary petition to reorganize
        under Chapter 11 of the U.S. Bankruptcy Code in Federal Bankruptcy
        Court in Dallas.  The company said that it, along with its
        subsidiaries, elected to seek court protection in order to
        strengthen vendor confidence to ensure adequate inventory for the
        upcoming holiday selling season.  

            The company said that it will continue to operate in the normal
        course of business during the proceeding and that it has received a
        commitment for $70 million in debtor-in-possession ("DIP") financing
        from Foothill Capital Corporation and a group of lenders.  

            NeoStar also announced that outside director Thomas G. Plaskett
        has been named chairman of the board of the company and will lead
        its efforts to develop and implement a plan of reorganization.
        James B. McCurry will continue as NeoStar's president and chief
        executive officer.  

            Plaskett said that the board of directors, with the assistance
        of its financial advisors, had reviewed available strategic options
        and had determined that a restructuring of the company in the
        context of a Chapter 11 reorganization afforded the company the best
        opportunity to return it to profitability and provide maximum value
        for NeoStar's stockholders and creditors.  

            "Our near-term plans are to do everything possible to ensure
        that our stores receive the necessary shipments of new inventory to
        fully stock our stores in advance of the holiday selling season,"
        McCurry said.  "Reorganizing under Chapter 11 allows NeoStar to
        build upon its dominant position in the market for leading-edge
        video game products just as that market is about to take off on a
        new cycle of rapid growth."  

            In connection with the filing, the company expects to establish
        a valuation allowance pursuant to SFAS No. 109 against all of the
        deferred income taxes carried as an asset on the company's balance

            Plaskett is an executive with 25 years of general management and
        senior policy level experience in both service and manufacturing
        businesses.  Since 1991, Plaskett has served as managing director of
        Fox Run Capital Associates, a private financial consulting concern.
        Previously, he held the position of chairman, president and chief
        executive officer of Pan Am Corporation from 1988 to 1991; and as
        president and chief executive officer of Continental Airlines from
        1986 to 1987.  

            He also served as senior vice president of marketing and senior
        vice president of finance at American Airlines, Inc.  Plaskett was
        elected to the board of directors of Greyhound Lines, Inc., and
        served as interim president and chief executive officer of the
        company during the later part of 1994.  He was elected chairman of
        the board of Greyhound in February 1995.  Plaskett is also a member
        of the board of directors of Tandy Corporation, Fort Worth, Texas,
        and Smart & Final, Inc., Los Angeles, Calif., and is a trustee of
        the GMI Engineering and Management Institute in Flint, Mich.  

            NeoStar Retail Group is the nation's leading chain of consumer
        software specialty stores.  The company employs over 5,000 people
        and operates 707 stores in 49 states, the District of Columbia,
        Puerto Rico, and Canada primarily under the names of Software Etc.
        and Babbage's.  Virtually all of the company's stores are located in
        major regional shopping malls.  

        LITIGATION ACT OF 1995.  This press release contains forward-looking
        statements that involve risks and uncertainties, including but not
        limited to, projections of future operating results, the financial
        condition of the company, bankruptcy court approval of those actions
        requiring such approval, and other risks detailed from time to time
        in the company's Securities and Exchange Commission filings.  

        CONTACT:  NeoStar Retail Group, Inc.,
                  Paul Streiber, 817/424-2186