TCR_Public/970714.MBX



content="text/html; charset=iso-8859-1">

Bankruptcy News For July 14, 1997







Bankruptcy News For July 14, 1997




        
  1. Alliance Entertainment Corp. To
            Restructure Debt Under Chapter 11

  2.     
  3. Dart Group Corp. Announces
            Willingness to Settle with Haft Family

  4.     
  5. S&P Affirms First Merchants Auto
            Trust AAA Rtgs

  6.     
  7. DCR Downgrades First Merchants
            Acceptance Corp.'s Subordinated Debt to 'DD'

  8.     
  9. Flagstar Ratings to 'D' by S&P
            Following Chapter 11 Filing

  10.     
  11. FLAGSTAR BANKRUPTCY NEWS: First Issue
            Free

  12.     
  13. NCS HealthCare Acquires Vangard Labs,
            Inc.

  14.     
  15. United Tri-Star Resources Ltd. - Joint
            Venture Partner Solv-Ex Corporation Announces
            Restructuring

  16.     
  17. Telecomm Industries Corp. and Unitel
            Inc. Authorize Definitive Agreement to Combine the Two
            Organizations






Alliance Entertainment Corp. To
Restructure Debt Under Chapter 11



NEW YORK, NY - July 14, 1997 - Alliance Entertainment Corp.
(NYSE: CDS), one of the largest full-service distributors of
prerecorded music and related products and a developer and
marketer of new artist and catalog proprietary content in several
genres, today filed voluntarily to reorganize under Chapter 11 of
the Bankruptcy Code in order to facilitate the reorganization of
the Company's core businesses and the restructuring of the
Company's approximately $322 million of long-term debt and
revolving credit and $204.1 million in trade and similar
obligations at May 31, 1997.



Excluded from today's filing were certain businesses in the
Company's Proprietary Products Group: Castle Communications, the
Company's U.K.-based catalog and re-issue label; St. Clair
Entertainment Group, its Canadian subsidiary; and Red Ant, the
Company's Los Angeles-based new release product label
specializing in alternative rock and urban music. The Company
said that the exclusion of Castle and St. Clair was related to
their status as non- domestic entities, and that the exclusion of
Red Ant related to the fact that the Company is in discussions
with potential buyers regarding its sale.



In addition to considering possible sale transactions with
respect to Red Ant, the Company said it anticipates that it will
continue its pre-filing discussions as to certain financing
transactions related to Alliance and, in that regard, announced
that it has received a preliminary proposal for consideration
from a third party with respect to a $50 million equity
investment to be made in connection with a plan of reorganization
for the Company.



Alliance confirmed that it has entered into a loan agreement
with a syndicate of banks led by Chase Manhattan that provides
for approximately $50 million of debtor-in-possession (DIP)
financing for the filing entities. Pending interim and final
Court approval, the $50 million financing will enable the filing
entities to continue operations uninterrupted, purchase new
goods, improve customer service and fill rates at the
distribution businesses, work its catalog companies, develop and
manufacture records in the content businesses and improve
operating margins in all businesses. Additionally the Company
said that it anticipates a return to normalized trade credit in
the near future with the major suppliers that produce and supply
the majority of the industry's prerecorded music.



The Company today requested Court approval for the use of $3
million in cash collateral pending interim approval of the DIP
financing, which is expected to be approved by the Court as early
as Wednesday.



"Alliance's growth through acquisition resulted in the
accumulation of burdensome levels of debt and interest expense at
a time of little or no growth in the domestic music
industry," said Al Teller, chairman, chief executive officer
and president. "Operationally, our previously announced
consolidation plan for the distribution-related businesses has
been achieving the anticipated efficiencies. However, principal
and interest payments, as well as the Company's current operating
losses, continue to drain cash that is needed to operate our
business on a competitive basis.



"The filing will not only enable us to achieve an orderly
reorganization of the debt and interest to serviceable levels,
but it will also allow us to eliminate certain operating costs
and significantly strengthen our balance sheet. The new financing
is a vote of confidence by the financial community that will
permit us to resume competitive purchasing of goods for the
benefit of the thousands of retail customers in our distribution
business and result in a positive effect on all filed
entities."



Eric Weisman, the Company's chief operating officer said,
"Alliance has many strong, well-established businesses that
are profitable at the operating level. Our focus in the coming
weeks will be to continue building value in these businesses, to
reinforce our ongoing relationships with music suppliers, and to
strengthen our customer relationships by enhancing service
levels. We have top-level industry professionals operating our
businesses, and I am looking forward to working closely with the
unit presidents to build a cohesive, unified management team
throughout the Alliance enterprise."



Mr. Teller said that he anticipates that daily operations of
the filing entities will continue uninterrupted, and that those
businesses will proceed with substantially more liquidity than
has been available in recent months. "I anticipate that
employees of the filing entities will continue to be paid, and
customer orders will be filled promptly. Insofar as our suppliers
are concerned, we have been in constant contact with the major
suppliers, and we are confident that they will continue to work
with us going forward.



"Alliance's distribution capabilities are virtually
unmatched in the industry. As a result of the segmentation of the
marketplace, there are new business opportunities in distribution
that show far greater growth potential than we have realized to
date," Mr. Teller stated. "We have a responsibility to
our customers, employees, vendors and shareholders to maximize
assets and to create an appropriate financial structure that will
permit us to take greater advantage of high-growth, high-return
opportunities."



As of May 31, 1997, the Company's total assets were $512.4
million, including $93.6 million of related costs in excess of
assets acquired. The Company's total obligations as of May 31,
1997, were approximately $536.3 million, which consisted of: (i)
$137.2 million under a revolving credit agreement; (ii) $39.5
million in term debt; (iii) $204.1 million in trade and similar
obligations; (iv) $125.0 million in 11.25% Senior Subordinated
Notes due 2005; (v) $10 million in 6% Exchangeable Notes; and
(vi) $6.7 million in a mortgage bond in conjunction with the
purchase of the Company's distribution facility in Coral Springs,
Florida. The Company's interest payments were estimated to total
$35 million annually.



Alliance Entertainment Corp. is a fully integrated,
independent music company with more than 1,300 employees in the
United States, Canada and the United Kingdom. The Company
maintains corporate headquarters in New York and operations
headquarters at its facility in Coral Springs, Florida.



SOURCE Alliance Entertainment Corp. -0- 07/14/97 /CONTACT:
Sandra Sternberg, 212-935-6662, ext. 234, or Rivian Bell,
800-329-7664, ext. 4086, or Patrick Lee, 800-329-7664, ext. 4091,
or 310-788-2850, all of Sitrick And Company/






Dart Group Corp. Announces Willingness to
Settle with Haft Family



LANDOVER, Md.-July 14, 1997--Dart Group Corp. (Nasdaq:DARTA)
announced Monday that the Executive Committee of its Board of
Directors has conditionally authorized possible settlements with
members of the Haft family, including Herbert H. Haft and Robert,
Gloria and Linda Haft, on terms that have been negotiated in
recent months.



These possible settlements would also require supplemental
settlement arrangements between Dart and Ronald S. Haft. The
members of the Haft family have not, at this time, committed to
these possible settlements.



If the members of the Haft family agree to the possible
settlements, the effectiveness of the settlements would be
conditioned upon the satisfaction of several requirements,
including compliance with a 7-day notice requirement under a
Standstill Order of the Delaware Court of Chancery applicable to
Dart.



The effectiveness of the possible settlements also would be
subject to consideration and approval by the Executive Committee
and the Special Litigation Committee of Dart's Board of Directors
and by the Boards of Directors of Dart and its subsidiaries that
would be parties to the settlements.



This process would involve further evaluation by the
companies' directors, which will include the receipt of a signed
fairness opinion from the Dart's financial advisor, Wasserstein
Perella & Co. and further due diligence with respect to
information recently provided by the Haft parties.



The effectiveness of the possible settlements also would be
subject to approval by Richard B. Stone in his capacity as Voting
Trustee.



If all of these possible settlements are entered into, become
effective and are consummated, they would result in the
termination of all claims by members of the Haft family to
control of Dart and the settlement of all litigation pending
between members of the Haft family and Dart and its subsidiaries.



Herbert H. Haft, Dart's founder and its present chairman and
chief executive officer, would retire, and no member of the Haft
family would continue to be involved as officers, directors or
shareholders of Dart or its principal operating subsidiaries,
Shoppers Food Warehouse Corp., Trak Auto Corp. and Crown Books
Corp.



The aggregate payments estimated to be paid by Dart and its
subsidiaries in connection with these possible settlements would
be approximately $90 million (including a loan of $10 million),
part of which would be deferred. It is anticipated that Dart
would pay substantially all of this amount, though a portion (yet
to be determined) could be allocated to Trak Auto and Crown
Books.



A previously announced conditional settlement agreement in
principal reached on April 21, 1997, between Dart and Herbert H.
Haft terminated on July 11, 1997, without the parties entering
into a definitive settlement agreement.



There can be no assurance that these possible settlements will
be entered into or will become effective, or that the
transactions contemplated by these possible settlements will be
consummated.



The transactions contemplated by the possible settlement with
Herbert H. Haft would be subject to (1) final and non-appealable
action by the Delaware Court of Chancery or the Delaware Supreme
Court approving all of the terms of the settlement, terminating
certain putative derivative actions pending with respect to Dart
in the Delaware Court of Chancery, and approving the October 1995
settlement between Dart and Ronald Haft and a supplemental
settlement between Dart and Ronald Haft, and (2) final and non-
appealable action by the U.S. Bankruptcy Court approving the
effectiveness of Chapter 11 plans of reorganization for [Combined
Properties, Inc., and other] certain real estate entities owned
by Mr. Haft and members of his family.



In its negotiation with members of the Haft family, Dart has
been represented by the Executive Committee of its Board of
Directors, comprised of Larry G. Schafran, chairman, Douglas M.
Bregman, Esq. and Bonita A. Wilson. CONTACT: Dart Group Corp.,
Landover Larry G. Schafran, 301/731-1502






S&P Affirms First Merchants Auto Trust
AAA Rtgs



NEW YORK, NY--Standard & Poor's CreditWire 7/14/97
--Standard & Poor's today has affirmed its triple-'A' ratings
on First Merchants Auto Trust's three publicly rated auto
receivable- backed transactions following the company's Chapter
XI bankruptcy filing on Friday (see list below). The aggregate
amount of rated debt totals approximately $360 million as of May
31, 1997. Standard & Poor's does not expect any interruption
in bond payments as the transactions are insured by
unconditional, irrevocable bond insurance policies provided by
Financial Security Assurance Inc. (FSA; triple-'A' claims-paying
ability). These policies guarantee the timely payment of interest
and principal and losses, if any, will not be material to FSA's
financial condition.



On April 16, First
Merchants Acceptance Corp.
announced that it had discovered
unauthorized accounting entries. The accounting irregularities
caused the company to be in violation of certain covenants under
its bank line of credit and its securitizations. On July 8, the
company announced that it had defaulted under its secured senior
loan agreement with its bank group (which expired by its terms on
June 30) and that its bank group had ceased honoring checks.
First Merchants Acceptance Corp. also reported that it was in
default on its subordinated reset notes, which are not rated by
Standard & Poor's.



Deerfield, Ill.-based First Merchants Acceptance Corp. is a
sub-prime auto finance company. Founded in 1991, its portfolio of
retail auto installment sales contracts had grown to
approximately $710 million at April 30, 1997 from $94 million at
Dec. 31, 1994, Standard & Poor's said. -- CreditWire



PUBLIC RATINGS AFFIRMED Rating First Merchants Auto Trust
1996-B* $82.27 million pass-thru series 1996-B due 2000 class A-1
AAA $30.56 million pass-thru series 1996-B due 2001 class A-2 AAA
$4.7 million class certificates due 2002 AAA First Merchants Auto
Trust 1996-C* $101 million pass-thru series 1996-C due 2000 class
A-1 AAA $37.89 million pass-thru series 1996-C due 2001 class A-2
AAA $5.79 million class certificates due 2003 AAA First Merchants
Auto Trust 1997-1* $68 million pass-thru series 1997-1 due 2000
class A-1 AAA $29.6 million pass-thru series 1997-1 due 2001
class A-2 AAA *These transactions are insured by Financial
Security Assurance Inc.



CONTACT: Amy S Martin, New York (1) 212-208-1128 Michael Binz,
New York (1) 212-208-5314 Mark Golombeck, New York (1)
212-208-8517 Robert E Green, New York (1) 212-208-1153






DCR Downgrades First Merchants Acceptance
Corp.'s Subordinated Debt to 'DD'



CHICAGO, iL - July 14, 1997 - Duff & Phelps Credit Rating
Co. (DCR) has lowered the rating for href="chap11.firstmerchants.html">First Merchants Acceptance
Corporation's (Nasdaq: FMAC) $51.75 million of subordinated
debt due 2006 to 'DD' (Double-D) from 'B' (Single-B). The
subordinated notes rating has been removed from Rating Watch -
Down. The downgrade follows the filing of a petition in the
United States Bankruptcy Court for protection under Chapter 11 of
the Bankruptcy Code.



SOURCE Duff & Phelps Credit Rating Co. /CONTACT: Daryl R.
Leehaug, CPA, CFA, 312-368-3124, leehaugdcrco.com, or Peter J.
Shimkus, 312-368-2063, shimkusdcrco.com, both of Duff &
Phelps/ (FMAC)



 






Flagstar Ratings to 'D' by S&P
Following Chapter 11 Filing



NEW YORK, NY --Standard & Poor's CreditWire
7/14/97--Standard & Poor's Monday has lowered all ratings for
Flagstar Companies, Inc. and
its Flagstar Corp. subsidiary to `D' following the company's
voluntary filing of a Chapter 11 bankruptcy petition (see list
below).



The company previously had developed a
"pre-packaged" plan that had met with approval by its
creditors. Flagstar said that it has arranged a $200 million
debtor-in-possession revolving credit facility. -- CreditWire -0-
*T



RATINGS REVISED Rating To From Flagstar Companies Inc. Corp
credit rtg N.M. CC/Watch Neg Pfd stk D C Flagstar Corp. Corp
credit rtg N.M. CC/Watch Neg Sr unsecd debt D CC/Watch Neg Sub
debt D CC/Watch Neg N.M. not meaningful.






FLAGSTAR BANKRUPTCY NEWS: First Issue
Free



PRINCETON, N.J., July 14, 1997 - Bankruptcy Creditors'
Service, Inc., today announced publication of FLAGSTAR BANKRUPTCY
NEWS. This new case- specific bankruptcy newsletter follows
Friday's announcement by Flagstar
Companies, Inc.
(OTC Bulletin Board: FLST) and Flagstar
Corporation that they have commenced a reorganization proceeding
under chapter 11 of the United States Bankruptcy Code.



"The holders of the 10% Convertible Junior Subordinated
Debentures due 2014 are clearly outraged by the plan's offer to
pay them 13 cents on the dollar while leaving KKR with an
interest in the reorganized company," said Peter A. Chapman,
President of Bankruptcy Creditors' Service, Inc., and Editor of
FLAGSTAR BANKRUPTCY NEWS. "Flagstar's announcement last week
about the overwhelming acceptance of the plan is not surprising;
all of the company's other creditors were delighted to squeeze
the 10% Noteholders out of Flagstar's capital structure.
Regardless of who gets what in this case, however, FLAGSTAR
BANKRUPTCY NEWS - like our other case-specific bankruptcy
newsletters - will provide on- going, in-depth news and reporting
about these billion-dollar chapter 11 cases."



Chapman explains that attorneys, large creditors, competitors
and investors monitoring bankruptcy cases as large and complex as
Flagstar's find BCSI's case-specific newsletters to be a valuable
resource. "We condense thousands of pages of court documents
and hundreds of hours of court hearings into a handy fact-packed
newsletter format," Chapman says.



Today's first issue of FLAGSTAR BANKRUPTCY NEWS includes,
among other things:



(i) background information about Flagstar and its position in
the food service sector;



(ii) a summary of the proceedings taken by the 10% Noteholders
to date to



blow-up Flagstar's pre-packaged plan;



(iii) key case data extracted from Flagstar's three separate
petitions filed in South Carolina;



(iv) a listing of Flagstar's 20 largest unsecured creditors;
and



(v) a calendar of key dates and deadlines related to
Flagstar's chapter 11 cases.



Chapman said that the second issue of FLAGSTAR BANKRUPTCY NEWS
(to be released later this week) will provide subscribers with a
detailed look at:



(a) Flagstar's $200,000,000 DIP financing facility with The
Chase Manhattan Bank,



(b) the handfuls of emergency motions brought before Judge
Bishop last Friday (which will be heard tomorrow at 2 p.m. in
Spartanburg) to keep Flagstar's businesses operating in the
ordinary course,



(c) the entourage of financial, legal and other professionals
who will push and pull Flagstar through the chapter 11 process,
and



(d) insight into whether the Debtors will be able to continue
their fast-



tracked reorganization or if the Debtors' efforts will be
delayed.



FLAGSTAR BANKRUPTCY NEWS is distributed on a subscription
basis by e-mail or fax for $45 per issue. Delivery is free by
e-mail; nominal fax charges apply. New issues are published as
significant activity occurs (generally every 10 to 20 days) in
the Flagstar cases.



Chapman stated that one copy of the first issue of FLAGSTAR
BANKRUPTCY NEWS is available at no charge upon request. Chapman
further advised that individuals with access to the Internet can
obtain copies of the first issue of FLAGSTAR BANKRUPTCY NEWS at
http://bankrupt.com/chap11.flagstar.htmlor
ftp://bankrupt.com/Bankruptcy News/Flagstar.txt from
the InterNet Bankruptcy Library.



SOURCE Bankruptcy Creditors' Service, Inc. /CONTACT: Peter A.
Chapman of Bankruptcy Creditors' Service, 609-392-0900, fax:
609-392-0040, or peterbankrupt.com/






NCS HealthCare Acquires Vangard Labs, Inc.



CLEVELAND, OH - July 14, 1997 - NCS HealthCare, Inc., (Nasdaq:
NCSS) today announced that it has acquired Vangard Labs, Inc., a
pharmaceutical repackager located in Glasgow, Kentucky. Vangard,
founded in 1966, was most recently owned by Medical Technology
Systems, Inc. which filed for Chapter 11 bankruptcy in February
1996. Terms of the transaction were not disclosed.



NCS HealthCare's President Kevin B. Shaw commented, "As
NCS grows in size, it becomes increasingly advantageous for us to
integrate our operations. The purchase of Vangard will enable us
to consolidate the majority of NCS' repackaging needs. We expect
that the benefits of this acquisition will begin to be realized
within six months to nine months."



NCS HealthCare, Inc. is a leading independent provider of
pharmacy and related services to long-term care facilities,
including skilled nursing centers and assisted living facilities.
NCS serves over 152,000 residents of long-term care facilities in
twenty-three states.



Except for historical information contained herein, this press
release contains forward looking information that is subject to
certain risks and uncertainties that could cause actual results
to differ materially from those projected. The most significant
of such uncertainties are described in the Company's SEC reports.



SOURCE NCS HealthCare, Inc. /CONTACT: Jeffrey R. Steinhilber,
Senior Vice President and Chief Financial Officer, of NCS
HealthCare, 216-514-3350/






United Tri-Star Resources Ltd. - Joint Venture Partner name="Solv-Ex">Solv-Ex Corporation Announces Restructuring



TORONTO, Canada --July 14, 1997--United Tri-Star Resources
Ltd. (TSE-UTS) joint venture partner Solv-Ex Corporation has
today made the under noted news release.



UTS continues to hold its 10% limited partnership in the joint
venture with Solv-Ex and is current in all its financial
obligations under the Partnership Agreement. UTS also continues
its 10% right and ownership of lease 52 and its associated rights
in the Solv-Ex technology outside of the partnership.



SOLV-EX CORPORATION ANNOUNCES RESTRUCTURING



ALBUQUERQUE, N.M., July 14, 1997--Solv-Ex Corporation (NASDAQ
- SOLV) announced that it has filed a petition under the
Companies' Creditors Arrangement Act ("CCAA", Canada)
in order to stay actions by creditors against the Company's oil
sands project in Northern Alberta.



Solv-Ex announced in May that it intended to seek an industry
partner to complete the oil sands plant, which has been
successfully demonstrated to several prospective partners. The
Company said that it hoped the CCAA proceedings (including a stay
of actions by creditors) would provide sufficient time to
accomplish this objective.



In the meantime, plant operations are being sufficiently
reduced and security guards are on site until financing can be
completed.



Solv-Ex said that the current situation arose because of a
number of factors, including having proceeded with plant
modifications and limited operations with the expectation that
additional financing would be in place. As a result of this and
other factors, liens totalling approximately $3.5 million have
been filed against the property and there are additional
unsecured claims of approximately $7.3 million in Canada and $ 1
million in the United States.



Solv-Ex acknowledged that it might also seek protection under
Chapter 11 of the United States Bankruptcy Code if necessary
while an overall plan of action was being put in place to develop
sufficient strength to proceed with development of a plant to
produce 80,000 barrels per calendar day of pipelineable crude oil
from its Athabasca oil sands lease, including co-production of
metals and minerals.



The application under the CCAA also stays any proceeding
against the Partnership.



For further information please contact D. Campbell Deacon,
president & CEO, or Robert K. Hanson, senior vice-president
at 416/350-2121.



CONTACT: D. Campbell Deacon, president & CEO Robert K.
Hanson, senior vice-president 416/350-2121






Telecomm Industries Corp. and Unitel Inc.
Authorize Definitive Agreement to Combine the Two Organizations



CLEVELAND, OH --July 14, 1997--Telecomm Industries Corp.
(OTC:TCMM) entered into a definitive agreement with Unitel Inc.,
a privately held Indiana corporation, and its controlling
shareholders to acquire substantially all of Unitel's assets and
certain liabilities in a transaction valued at $4.7 million.



Upon closing, which is subject to the satisfaction of various
conditions including the completion of due diligence, Telecomm
will transfer to Unitel 2 million shares of Telecomm common
stock, a $1 million convertible promissory note and will assume
up to $1.2 million in certain Unitel liabilities. Telecomm
expects that the transaction will close in the third quarter of
1997.



Combined, the companies will have 23 offices in five
Midwestern states and over 250 employees. Unitel will begin
operations as a wholly owned subsidiary of Telecomm Industries
upon the closure of the transaction.



Paul Satterthwaite, president/CEO of Unitel said, "We are
very excited about the benefits this brings to our customers,
employees and stockholders. Unitel has been growing an average of
43 percent per year. Teaming up with Telecomm, a public company,
will provide the access to capital required to continue that pace
into the future."



James Lowery, chairman/CEO of Telecomm stated, "Unitel's
business plan fits our model. This combination allows us to reach
some of our strategic goals two years ahead of schedule. Unitel's
management, customer base and highly skilled employees are assets
that will significantly enhance the value proposition Telecomm
brings to its customers."



Unitel which operates as a telephone and computer systems
integrator and a distributor of Ameritech (NYSE:AIT) and
BellSouth (NYSE:BLS) products and services, is currently the
subject of an involuntary bankruptcy petition filed against it by
three of its unsecured creditors. The Chapter 7 petition was
filed in the Bankruptcy Court for the Southern District of
Indiana. Telecomm management believes that a settlement can be
reached with Unitel's creditors that will allow the transaction
to proceed.



This press release contains forward looking statements. There
can be no assurance that the bankruptcy petition will be resolved
to the satisfaction of Telecomm, that the conditions contained in
the agreement will be otherwise satisfied, that the acquisition
will be consummated or that Unitel will be successfully
integrated into the operations of Telecomm.



Telecomm Industries Corp. is Ameritech's largest voice and
data distributor, selling voice, data, cellular, video, and
telephone information solutions in Illinois, Indiana, Ohio,
Michigan and Wisconsin. In addition to Ameritech services, the
company also represents numerous voice and data
telecommunications manufacturers and service suppliers including
LCI, Nortel, Toshiba, Ascend and Cisco.



CONTACT: Telecomm Industries Corp. David Gruber, 216/963-0566
216/963-0565 (fax) or Unitel Inc. Paul Satterthwaite,
317/574-1000 317/574-102 0 (fax)