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InterNet Bankruptcy Library - News for April 21, 1997

Bankruptcy News For April 21, 1997

  1. Leslie Fay to Emerge From Chapter 11 in

  3. Physicians Clinical Laboratory Inc.
            announces Chapter 11 reorganization

  5. Nu-Tech Bio-Med Acquires
            Physicians Clinical Laboratory

  7. Barry's reports fiscal 1997 third
            quarter results; change in nature of restructuring

  9. Chief Judge Tauro Orders Nationwide Halt
            to Sears' Fraudulent Collection Practices, Reports U.S.
            Attorney's Office

  11. Class action lawsuit filed against
            Sears, Roebuck & Co.

Leslie Fay to Emerge From Chapter 11 in

NEW YORK, NY --April 21, 1997-- Court Confirms Company's Plan
of Reorganization; Sassco Fashions Will Be Separate Company As
Planned --

The Leslie Fay Companies, Inc.
today announced that it expects to emerge from bankruptcy in May
following a successful reorganization of its businesses.

Chief Judge Tina L. Brozman of the U.S. Bankruptcy Court for
the Southern District of New York today confirmed Leslie Fay's
Third Amended and Restated Joint Plan of Reorganization.

The confirmed plan, submitted jointly by Leslie Fay and its
Official Committee of Unsecured Creditors, provides for the
company to emerge from chapter 11 by separating its Sassco
Fashions business from it core Leslie Fay businesses and through
the issuance of equity and notes of the new entities to
creditors. Upon consummation of the plan, Leslie Fay's current
equity will be extinguished.

"We are very pleased to reach this important and final
milestone in the reorganization of Leslie Fay," said John J.
Pomerantz, chairman and chief executive officer of Leslie Fay.
"Now that the distractions of chapter 11 are nearly behind
us, we look forward to continuing to rebuild our core dress and
sportswear businesses," Mr. Pomerantz said. "We are
grateful to all of our employees and those customers and
suppliers who have stood by the company during this difficult
period. We are eager to demonstrate that their support was
deserved and that Leslie Fay is back, in fighting shape, and
ready to resume its leadership position in the women's apparel
business. We also extend our best wishes to our colleagues at
Sassco as they prepare to launch their new company."

Founded in 1947, The Leslie Fay Companies, Inc. is one of the
nation's leading manufacturers of women's apparel, including
dresses, suits and sportswear. After it emerges from chapter 11,
its brand names will include Leslie Fay, Castleberry, Outlander
and HUE. Sassco Fashions will feature women's suits under the
Kasper for A.S.L. and Albert Nipon brand names.

CONTACT: James Fingeroth Michael Freitag Kekst and Company
(212) 593-2655

Physicians Clinical Laboratory Inc.
announces Chapter 11 reorganization

SACRAMENTO, Calif.--April 21, 1997--href="chap11.physicians.html">Physicians Clinical Laboratory Inc.
Monday announced that its Chapter 11 reorganization plan was
approved by the United States Bankruptcy Court for the Central
District of California on Friday, April 18, 1997.

"We are very pleased that our restructuring plan has been
approved by the Court," a company spokesperson stated.
"Our creditors and shareholders have also overwhelming
approved the Plan, and the Company will emerge from Chapter 11 in
the next few weeks."

The restructuring plan results in a significant reduction of
debt and an infusion of new capital into the business. "Our
employees and creditors have worked extremely hard and
cooperatively to allow us to restructure our business. We are now
poised to compete successfully throughout the State of California
and we look forward to a bright future," the Company

CONTACT: Physicians Clinical Laboratory Inc. J. Marvin
Feigenbaum, 916/444-3500

Nu-Tech Bio-Med Acquires Physicians
Clinical Laboratory

WARWICK, R.I., April 21, 1997 - Nu-Tech Bio-Med, Inc. (Nasdaq:
NTBM) announced that the plan of reorganization under Chapter 11
of the United States Bankruptcy Code filed by href="chap11.physicians.html">Physicians Clinical Laboratory
was approved by the United States Bankruptcy Court for the
Central District of California on April 18, 1997. The
reorganization of Physicians Clinical Laboratory was pursuant to
an agreement which Nu-Tech Bio-Med reached with the holders of
the senior debt, subordinated debt, and the management of
Physicians Clinical Laboratory whereby Nu-Tech Bio-Med will
acquire a 52.6% interest in Physicians Clinical Laboratory in
consideration for $13.3 million of senior debt of Physicians
Clinical Laboratory held by Nu-Tech Bio-Med and the cancellation
and satisfaction of a $5 million promisory note of Physicians
Clinical Laboratory owing to Nu- Tech Bio-Med and issued in
connection with the sale and transfer of Medical Science
Institute by Nu-Tech to Physicians Clinical Laboratory. The
confirmed Physicians Clinical Laboratory plan will be effective
on or about April 28, 1997. Final documentation relating to the
issuance of $55 million of secured notes by Physicians Clinical
Laboratory to the former holders of its senior debt and
subordinated debt is presently pending and due to be completed on
or before the effective date.

SOURCE Nu-Tech Bio-Med, Inc. -0 4/21/97 /CONTACT: Chris
Zafiroff, Corporate Relations Group, 800-333-5697/

Barry's reports fiscal 1997 third quarter
results; change in nature of restructuring program

MONROVIA, Calif.--April 21, 1997--Barry's Jewelers Inc.
(NASDAQ/NM:BARY) Monday reported operating results for its fiscal
1997 third quarter and nine months ended Feb. 28, 1997.

For the quarter ended Feb. 28, 1997, net sales decreased
$1,632,000, or 3.2 percent to $49,236,000, vs. net sales of
$50,868,000 for the fiscal 1996 third quarter, due toa 7.3
percent fall in comparable store sales from the comparable period
a year ago.

According to the company, the net sales decrease in comparable
stores was due, in part, to a more restrictive credit policy
implemented in November 1995, which has reduced sales in the
short term, but is expected to result in higher quality

Additionally, net sales were adversely impacted by late
receipt of merchandise in the stores for the Christmas selling
season which resulted in excessive stock outs, as well as the
sales mix of promotionally priced merchandise, and a competitive
discounting environment.

Costs of goods sold, buying and occupancy expenses were 65.0
percent and 54.8 percent of net sales for the third quarter of
fiscal years 1997 and 1996, respectively. Included in cost of
goods sold, buying and occupancy expenses for the quarter ended
Feb. 28, 1997, was a $1,095,000 non-cash charge in connection
with the company's cost savings initiatives to hasten the
liquidation of aged inventory in an effort to improve cash flow.

The remaining increase was primarily due to a combination of
the company's continued value-pricing strategy, rent and a higher
shrinkage reserve in fiscal 1997 than in fiscal 1996. Cost of
goods sold was also impacted by the sales mix of promotionally
priced merchandise and a competitive discounting environment.

Selling, general and administrative expenses were 38.8 percent
and 28.9 percent of net sales for the three months ended Feb. 28,
1997, and Feb. 29, 1996, respectively. In the current quarter,
$1,970,000 of expense was included in selling, general and
administrative expense related principally to the impairment of
leasehold improvements, property and equipment related to 26
under- performing stores.

Excluding such charge, selling, general and administrative
expense as a percentage of net sales for the current quarter
would have been 34.8 percent. The increase as a percentage of net
sales was attributable to a combination of the decline in net
sales and the increase in total expenses. The dollar increase was
primarily the result of increases in the cost of advertising and
display, professional services and shipping.

The company's new management team announced that it is
carefully reviewing restructuring initiatives that the former
management began earlier this year. As previously announced,
those initiatives were expected to require various charges to
third quarter operations of between $10 million to $14 million.
The company's new management has not yet determined if all
initiatives will be adopted, or whether certain initiatives may
be added due to new operating strategies being developed.

As a result, the composition of the charges will change and
such charges will occur in both the third and fourth quarters as
the initiatives are finalized. Although management does not
anticipate that the magnitude of the various charges will
significantly increase as compared to what was previously
announced, due to uncertainties regarding the components of the
various initiatives, an estimate of these charges cannot be
reasonably determined until management's reevaluation is

During the current quarter, $1,336,000 was charged to
restructuring expense. This charge consisted of $949,000 for
severance items; $93,000 and $241,000 for costs associated with
terminating leases and abandoning, or selling the leasehold
improvements, fixtures and equipment, respectively for 11 closed
stores; and $53,000 for other items related to the restructuring.

In addition, the company changed its customer receivable
write- off policy. Previously, the company would fully reserve
for accounts that fell within certain aged parameters but would
continue internal collection efforts until such time as a
determination was made that the accounts should be written off
against the allowance for doubtful accounts.

With this change in policy, the internal collection efforts
for these fully reserved accounts will be discontinued and the
accounts will be sent to outside collection agencies, at which
time the account balances will be written off against the
allowance for doubtful accounts. As a result, the company
accelerated the write- off of approximately $6,780,000 of
customer receivables against the allowance for doubtful accounts.
Such charge was fully reserved for and had no material impact on
current operations.

In the quarter ended Feb. 28, 1997, net interest expense
increased $696,000 vs. the comparable quarter last year. Such
increase was primarily due to a combination of an increase in the
amortization of deferred financing fees associated with the
Amended Revolving Credit Agreement, an amendment fee in
connection with an amendment to the Amended Revolving Credit
Agreement and an increase in average revolving debt.

The average total revolving debt for the third quarter of
fiscal 1997 was approximately $4.9 million higher than the
comparable period of the prior year.

As a result of the foregoing, the net loss for the quarter was
$6,818,000, or $1.70 per share, vs. net income of $3,159,000, or
79 cents per share, in the comparable period of fiscal 1996.

For the first nine months of fiscal 1997, net sales decreased
5.5 percent to $104,685,000 from $110,732,000 in the same period
a year ago. Comparable store sales for such nine month period
declined 9.6 percent from the comparable period for fiscal 1996.
The net loss for the first nine months of fiscal 1997 was a loss
of $19,220,000, or $4.81 per share, vs. net income of $1,706,000,
or 43 cents per share, for the nine month period a year ago.

Commenting on the company's results, recently appointed
Barry's Jewelers President and CEO Sam Merksamer said: "This
is a new management team and restructuring Barry's operations has
been our goal since day one. We're still in mid-stream at this
point. We are in the process of carefully and quickly reviewing
all areas of our business, looking at ways of achieving greater
efficiencies -- both long and short term.

"It's a difficult task, but we are making progress. We
have an experienced, hands on management team in place, we've
reduced corporate staff size, closed certain unprofitable stores
and made substantial improvements to our credit policies."

The company failed to meet certain financial covenants
contained in the Amended Revolving Credit Agreement as of the
Feb. 28, 1997, testing date. The failure to meet such covenants
constitutes an Event of Default under the Amended Revolving
Credit Agreement.

While the company is continuing negotiations with the bank
group to obtain a forbearance or waiver of the Event of Default,
or a modification of the covenants, there can be no assurance
that the company will be able to obtain such forbearance or
waiver, or that such forbearance or waiver can be obtained on
acceptable terms.

Under the terms of the Amended Revolving Credit Agreement, the
company may not make the interest payment due April 30, 1997, or
any subsequent payment due under its 11 percent Senior Secured
Notes due Dec. 22, 2000, after an Event of Default under the
Amended Revolving Credit Agreement has occurred and is continuing
unless such Event of Default has been waived.

Except for the historical information contained herein,
certain of the matters in this release are forward-looking
statements which involve certain risks and uncertainties which
could cause actual financial results to differ materially from
those discussed herein, including, without limitation, risks
related to the company's pricing policies,the company's need for
additional financing or liquidity, collection of accounts
receivable and competition.

For a further discussion of these and other risks and
uncertainties applicable to the company's business, see the
relevant discussion in the company's periodic reports and other
documents filed with the Securities and Exchange Commission,
including the company's annual report on Form 10-K for the fiscal
year ended May 31, 1996 and the company's Form 10-Q for the
quarter ended Feb. 28, 1997.

Barry's Jewelers, the nation's fourth largest independent
retailer of fine jewelry, operates 163 retail jewelry stores in
17 states throughout the country, primarily in California, Texas,
Arizona, North and South Carolina, Utah, Montana, Colorado and

                               BARRY'S JEWELERS
                               INC. FINANCIAL
               (unaudited, in 000s, except per
               share data and number
                           of common shares

                            Three Months Ended   
                                Nine Months Ended
                           Feb. 28,     Feb. 29 ,
                              Feb. 28,   Feb. 29,
                             1997         1996   
                                 1997        1996

        Net sales             $49,236     
        $50,868    $104,685    $110,732

        Operating (loss)
         income before
         restructuring items   (1,865)      
         8,168      (7,520)     11,142

         expenses              (1,336)         
         --      (1,336)         --

        Operating (loss)
         income                (3,201)      
         8,186      (8,856)     11,142

        (Loss) income before
         income taxes and
         extraordinary item    (6,818)      
         5,265     (18,344)      2,844

        Income taxes               --       
        2,106          --       1,138

        (Loss) income before
         extraordinary item    (6,818)      
         3,159     (18,344)      1,706

        Extraordinary item         --          
        --        (876)         --

        Net (loss) income     $(6,818)     
        $3,159    $(19,220)     $1,706

        Net (loss) income
         per share             $(1.70)      
         $0.79      $(4.81)      $0.43

        Weighted average
         common shares
         outstanding        4,000,747   
         3,973,658   3,999,855   3,970,530

CONTACT: Barry's Jewelers Inc., Monrovia E. Peter Healey,
818/303-4741 or Silverman Heller Associates Eugene Heller,

Chief Judge Tauro Orders Nationwide Halt to Sears'
Fraudulent Collection Practices, Reports U.S. Attorney's Office

BOSTON, MA - April 21, 1997 - United States Attorney Donald K.
Stern announced today that Chief U.S. District Judge Joseph L.
Tauro ordered SEARS, ROEBUCK and CO. (NYSE: S) to halt fraudulent
collection activities it had been taking against once bankrupt
debtors. The order signed by Chief Judge Tauro today was
requested in a Complaint filed by the United States on April 17,
1997, and was agreed to by SEARS. The order requires that SEARS
halt its nationwide unlawful practice of collecting debt from
these debtors. In addition, SEARS is now required to conduct a
nationwide review of its collection records and identify all
debtors who have been victimized by the process, and conduct an
accounting to determine how much was wrongfully collected.

The allegations in the Complaint state that SEARS had
maintained a practice in Massachusetts and in other areas
throughout the country, where it led debtors into believing that
reaffirmation agreements they had signed with SEARS were valid,
when in fact they were not, unless the agreements were filed with
the Bankruptcy Court (which SEARS did not do). As a result, these
debtors - all of whom were fresh out of bankruptcy - continued to
pay SEARS for past debts which SEARS had no right to collect. On
April 16, 1997, the U.S. Bankruptcy Court in Boston required
SEARS to stop billing Massachusetts debtors; today's order has a
nationwide reach.

In addition to an order to stopping the practice, the
Complaint filed by the United States also seeks restitution and
penalties. The action is being handled by Assistant U.S. Attorney
Susan M. Poswistilo of Stern's Civil Division in conjunction with
the Office of the U.S. Trustee.

The investigation is continuing.

SOURCE U.S. Attorney's Office -0- 04/21/97 /CONTACT: Joy
Fallon or Amy Rindskopf of U.S. Attorney's Office, 617-223-9445/

Class action lawsuit filed against Sears,
Roebuck & Co.

PHILADELPHIA, PA -april 21, 1997--A class action lawsuit
captioned "Jean Mullin v. Sears, Roebuck & Co., et
al.," Civil Action No. C 97 2717 was filed in Chicago in the
United States District Court for the Northern District of
Illinois, Eastern Division (the "Court") on behalf of a
Class (the "Class"), consisting of purchasers of the
common stock of Sears, Roebuck & Co. ("Sears")
during the period Jan. 30, 1997 through April 10, 1997 inclusive
(the "Class Period").

We anticipate that the Class Period will be expanded to
include such purchasers from April 16, 1994 through April 10,

The complaint alleges that Sears and three of its senior
officers, James A. Blanda, Alan J. Lacy and Arthur Martinez, in
violation of the federal securities laws, materially misled
investors throughout the Class Period by failing to disclose a
business practice which violated the federal bankruptcy laws.

At the close of the Class Period, it was announced that Sears
was going to repay upwards of $412 million to Chapter 7
bankruptcy debtors nationwide whose "debt
reaffirmations" were obtained illegally by Sears.

If you are a member of the Class described above, you may, no
later than 60 days from today, move the court to serve as lead
plaintiff of the Class, if you so choose. In order to serve as
lead plaintiff, however, you must meet certain legal

Plaintiffs are represented by Savett Frutkin Podell &
Ryan, P.C. which has significant experience and expertise in
prosecuting class actions on behalf of investors and

If you wish to discuss this action or have any questions
concerning this notice or your rights or interests with respect
to these matters, please contact Stuart H. Savett, Robert P.
Frutkin or Katharine M. Ryan of Savett Frutkin Podell & Ryan,
P.C., 320 Walnut St., Suite 508, Philadelphia, PA 19106,

CONTACT: Savett Frutkin Podell & Ryan, P.C. Stuart H.
Savett, Robert P. Frutkin or Katharine M. Ryan,