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InterNet Bankruptcy Library - News for August 18, 1997







Bankruptcy News For August 18, 1997




        
  1. Dow Chemical to Stay in Breast Implant
            Case; Phase II Will Examine Women's Health Claims

  2.     
  3. Woolworth to Acquire 27 Koenig Sporting
            Goods Stores for Its Champs Sports Athletic Division

  4.     
  5. Pudgie's Chicken, Inc. Signs Deal
            with ReCap Partners, LLC

  6.     
  7. Allis-Chalmers Reports Second Quarter
            Results

  8.     
  9. Dow Chemical Breast Implant Trial:
            Louisiana Women Win, Reports Command Trust Network

  10.     
  11. DIRECTV(R) and Skylink America Team to
            Provide Hotels with Satellite TV in Wake of AlphaStar
            Bankruptcy






Dow Chemical to Stay in Breast Implant Case;
Phase II Will Examine Women's Health Claims



NEW ORLEANS, LA - Aug. 18, 1997 - After approximately 17 hours
of deliberation over three days, the jury in the nation's first
class action silicone breast implant trial today found that the
conduct of The Dow Chemical Company
warrants its being tried for the specific injuries claimed by the
women who brought the suit. Attorneys for the Midland,
Mich.-based company - which owns half the stock in former implant
manufacturer Dow Corning Corporation - characterized the decision
as merely the first step in a long, four-phased process, and not
an indictment of either Dow Chemical or the large body of medical
research supporting the safety of silicone breast implants.



"All this decision really means is that the jurors
believe Dow Chemical's conduct warranted moving to Phase II of
the litigation," said John Scriven, Dow Chemical general
counsel. "Nothing in this finding speaks to whether Dow
Chemical or silicone breast implants caused the illnesses claimed
by the women," he said, adding that the company expects to
prevail in Phase II of the trial, when the eight class
representatives must demonstrate and prove each element of their
claim, including that they relied on information from Dow
Chemical in deciding to get breast implants and that the injuries
she claims are a direct result of the device.



Scriven went on to assert that the decision is not supported
by either the facts or the evidence in the case, and will be
reversed on appeal. "This case should never have been
allowed to come before a jury as a class action," he stated.
"Further, the jury was unduly influenced by the improper
courtroom tactics of plaintiffs counsel, such as
mischaracterization of the evidence and improper emotional
arguments." On July 16, Louisiana District Court Judge Yada
T. Magee ordered a mistrial in the case on the grounds that
counsel for the plaintiffs had irreversibly prejudiced the jury
against Dow Chemical by repeated and intentional misconduct in
the courtroom, but reversed her decision the following day.



Scriven also noted that the decision against Dow Chemical in
the Spitzfaden case stands in stark contrast with current trends
in silicone breast implant litigation. Dow Chemical has been
dismissed from some 4,000 other silicone breast implant cases on
the grounds that it did not develop, test, manufacture or offer
any opinions as to the safety of the device.



The case management order issued March 13 by Louisiana Civil
District Court Judge Yada T. Magee called for four-phased trial.
Phase I, just concluded, sought to answer a series of questions
about Dow Chemical's conduct only, including whether the company
was negligent or misleading with respect to testing and research
of silicones. Other courts in New York , California and Michigan
previously have affirmed that none of the tests Dow Chemical
performed or consulted on under contract to Dow Corning was
intended to assess the suitably of silicones for medical
implantation of any kind.



Phase II, slated to begin before the same jury after a brief
break, will address the question of whether silicone breast
implants cause the health effects claimed by the eight
representative plaintiffs. Phases III and IV, involving the
approximately 1,800 other Louisiana women, were transferred to a
federal judge in Detroit in May, when all other silicone breast
implant cases involving Dow Chemical were consolidated with Dow
Corning's bankruptcy reorganization proceedings.



The overwhelming weight of the medical evidence - including
more than 20 studies by such institutions as Harvard and Johns
Hopkins Universities and the Mayo Clinic - demonstrates that
there is no association between silicone breast implants and
disease. Only one study has raised even the possibility of a
small risk. Based on that evidence, defendants in silicone breast
implant cases have been increasingly successful.



Overall, more than 65 percent of the verdicts in these cases
have been in favor of the defendants, and judges in New York and
Oregon have found that plaintiffs' evidence does not meet
scientific standards - much of the same evidence presented in the
Spitzfaden case.



"This decision is not a judgment on the medical science -
that judgment is already in," commented Dow Chemical's
Scriven. "Which makes you wonder, what's there to
misrepresent if the product isn't hazardous?"



Since the early uses of silicones were industrial, Dow
Chemical's knowledge and involvement in the silicones business
was limited to conducting or consulting on some basic toxicology
tests to determine the compounds' safety for handling by workers
in manufacturing and end-use settings. Furthermore, none of Dow
Chemical's tests was designed to assess the suitability of
silicones for use in breast implants or medical implantation of
any kind.



The Spitzfaden trial began with jury selection March 17.



SOURCE Dow Chemical Company /CONTACT: John C. Musser of the
Dow Chemical Company, pager, 800-946-4646, PIN: 713-4181/






Woolworth to Acquire 27 Koenig Sporting
Goods Stores for Its Champs Sports Athletic Division



NEW YORK, NY - Aug. 18, 1997 - Woolworth Corporation (NYSE:
Z), the New York-based retailer today announced that it has
agreed to purchase 27 Koenig Sporting Goods stores from Koenig
Sporting Goods, Inc. for approximately $10 million in cash.
Koenig, a Cleveland-based privately held company, is a mall-based
sporting goods retailer currently operating 40 stores in 6 states
primarily in the mid-west.



The agreement provides for Woolworth to acquire 27 Koenig
Sporting Goods stores in key metropolitan markets where
Woolworth's Champs Sports division currently does not have a
presence or is operating a limited number of stores. These
markets include the Cleveland/Akron area, Pittsburgh and Buffalo.



Woolworth plans to convert the acquired stores to the Champs
Sports format and anticipates that the acquisition will be
accretive to earnings. "The Koenig acquisition is consistent
with Woolworth's initiative to increase the presence of Champ
Sports in several key markets," said Roger Farah, Chairman
and Chief Executive Officer of Woolworth. "There are
currently 540 Champs Sports stores located throughout North
America, and this acquisition, together with the additional store
openings planned, will accelerate the growth of the
Company."



"The Woolworth transaction represents the best
alternative available to Koenig's creditors, employees and
customers," stated Craig Koenig, Koenig's Chairman and Chief
Executive Officer. "In particular, we anticipate Woolworth
will offer the opportunity for employment to the majority of
Koenig employees." Koenig intends to exit the sporting goods
business and resolve its financial obligations through a Chapter
11 bankruptcy proceeding. The transaction is subject to
Bankruptcy Court approval and other customary conditions.



Woolworth Corporation is a diversified global retailer that
operates over 7,100 retail stores in 12 countries in North
America, Europe and Australia. Through its athletic group of
specialty retail formats, including Foot Locker, Lady Foot
Locker, Kids Foot Locker and Champs Sports stores, the Company is
a leading provider of athletic footwear and apparel. Other
specialty retail chains include the Northern Group of apparel
stores, After Thoughts jewelry stores and Kinney family shoe
stores.



Disclosure Regarding Forward-Looking Statements This press
release contains forward-looking statements which reflect
management's current views of future events and financial
performance. These forward-looking statements are based on many
assumptions and factors including the effects of currency
fluctuations, consumer preferences and economic conditions world-
wide. Any changes in such assumptions or factors could produce
significantly different results.



SOURCE Woolworth Corporation /CONTACT: Juris Pagrabs, Vice
President, Investor Relations of Woolworth, 212-553-7017/






NOXSO Executes Letter of Intent to Sell
Liquid Sulfur Dioxide Facility



BETHEL PARK, Pa., Aug. 18, 1997 -NOXSO Corporation (Nasdaq:
NOXOQ) announced today it has entered into a letter of intent
with Republic Financial Corporation for the sale of its liquid
sulfur dioxide (SO2) facility, with a purchase price of $11
million. NOXSO constructed the S02 plant in Charleston,
Tennessee, on property owned by Olin Corporation under a supply
agreement with Olin. The facility converts elemental sulfur into
liquid sulfur dioxide (SO2). Republic, a merchant banking firm
which specializes in acquisition and financing of assets, has
proposed to purchase the facility, subject to a number of
conditions.



Among the conditions that must be satisfied prior to execution
of a definitive sales agreement are negotiations with third
parties of various associated agreements (including a contract
for the sale of liquid S02). Completion of a contract for the
sale of liquid SO2, as well as compliance with certain other
conditions, requires the cooperation of Olin, which has been
involved in a dispute with NOXSO concerning the facility. In
addition, NOXSO is currently reorganizing under Chapter 11, and
completion of a sale of the facility must be approved by the
bankruptcy court. The sale of this facility is also a key element
of NOXSO's overall reorganization plan to emerge from Chapter 11.



Subject to satisfaction of all conditions, the letter of
intent targets September 1997 for the execution of a definitive
agreement and November 1997 for the closing of the sale.



SOURCE NOXSO Corporation /CONTACT: Rita E. Bolli of NOXSO,
412-854-1200, or E-mail, NOXSOcity-net.com/






Pudgie's Chicken, Inc. Signs Deal with
ReCap Partners, LLC



UNIONDALE, N.Y., Aug. 18, 1997 - Pudgie's
Chicken, Inc.
, (OTC Bulletin Board: PUDGQ) an
operator/franchiser of quick service takeout and delivery
Pudgie's restaurants, announced today that it has executed a DIP
Financing Agreement with ReCap Partners, LLC, a New York based
investment banking firm. The Agreement calls for ReCap to be
engaged to promote the sale of debtors certificates which will
provide for immediate working capital and funding for Pudgie's
reorganization plan of up to $5 million dollars.



The principals of ReCap have raised over $40 million dollars
previously for such companies in Chapter 11 as American
Resources, Inc. (Nasdaq: ARI), Packaging Plus Services, Inc. (OTC
Bulletin Board: PPSI), and Burlington Motor Holdings, Inc.



Pudgie's Chicken announced on September 18, 1996 that it had
filed a voluntary petition for reorganization under Chapter 11 of
the Bankruptcy Code.



Pudgie's Chicken operates and franchises quick service
Pudgie's Famous Chicken restaurants with an emphasis on home
delivery that offer tasty, reasonably priced meals featuring
fresh skinless fried chicken. Pudgie's also offers a
"spicy" chicken menu, barbecued ribs, shrimp, corn on
the cob, mashed potatoes, rice, salads, and other side dishes.



This release contains certain forward-looking statements which
involve known and unknown risks, uncertainties or other factors
not under the Company's control which may cause actual results,
performance or achievements of the Company to be materially
different from the results, performance, or other expectations
implied by these forward-looking statements. These factors
include, but are not limited to, those detailed in the Company's
periodic filings with the Securities and Exchange Commission.



You can also contact Pudgie's on their Web Site at
http://ison.com/pudgies



SOURCE Pudgie's Chicken, Inc. /CONTACT: Steven Wasserman,
President and CEO of Pudgie's Chicken, 516-222-8833; or Joe
Calabrese or Kerry Thalheim, 212-661-8030, both of the Financial
Relations Board/






Allis-Chalmers Reports Second Quarter
Results



MILWAUKEE, WI - Aug. 18, 1997 - Allis-Chalmers Corporation
today reported a net loss of $554,000, or $.55 per common share,
in the second quarter of 1997 compared with a net loss of
$378,000, or $.38 per common share, in the same quarter of 1996.



The 1997 second quarter loss included a non-cash expense of
$466,000 for pension expense on the unfunded liability of
approximately $15.1 million associated with the Allis-Chalmers
Consolidated Pension Plan (Consolidated Plan). This expense was
$338,000 in the second quarter of 1996.



Sales in the second quarter of 1997 were $985,000 compared
with $1,156,000 in the 1996 period. Second quarter gross margin,
as a percentage of sales, was 27.2% in 1997, a decrease from
29.6% in the second quarter of 1996.



Regarding the underfunding of the Consolidated Plan, the
Company made a $205,000 cash contribution tothe plan in the first
quarter of 1996. Additional cash contributions required to
eliminate this underfunding were estimated tobe $2.3 million in
1996, $3.6 million in 1997 and $12.2 million between 1998 and
2002. No additional cash contributions have been made. Given the
inability of the Company to fund the entire underfunding
obligation with its current financial resources, a Notice of
Intent to Terminate the Consolidated Plan was filed with the
Pension Benefit Guaranty Corporation (PBGC) on February 12, 1997
to become effective April 14, 1997. The consequence of the
Consolidated Plan termination is a liability to the PBGC in
excess of the current net worth of the Company. While discussions
with the PBGC have not reached a conclusion, the Company intends
to continue such discussions concerning its obligations under the
Consolidated Plan. Although it is not possible to predict the
outcome of such discussions, if the Company is unable to
negotiate a settlement with the PBGC on terms that are acceptable
to the Company, Allis- Chalmers will be required to evaluate its
options, which include attempting to raise additional capital to
eliminate the underfunding or seeking protection from its
creditors by commencing another voluntary bankruptcy proceeding
under the federal bankruptcy laws. The Company is not optimistic
that in its current condition it will be able to raise additional
capital to meet its obligations under the Consolidated Plan. In
the meantime, the Company continues to administer the
Consolidated Plan.



        Financial results for the six month
        periods ended June 30 follow:
                                    Three Months
                                                 


                                     Six
  Months
                                 1997         
                                 1996         
                                 1997
  1996


                                          (thousa
                                          nds,
                                          except
                                          per
                                          share)
      Sales                     $985       
      $1,156       $2,013
  $2,141
      Net Loss                 (554)        
      (378)      (1,158)
  (717)
        Average common
       shares outstanding      1,003        
       1,003        1,003
  1,003
      Loss per common share   $(.55)       
      $(.38)      $(1.15)
  $(.71)


SOURCE Allis-Chalmers Corporation/CONTACT: Jeffrey I. Lehman
of Allis-Chalmers, 610-565-2343/






Dow Chemical Breast Implant Trial:
Louisiana Women Win, Reports Command Trust Network



NEW ORLEANS, LA -- Aug. 18, 1997 -- The following was released
by Command Trust Network, a national silicone implant information
clearinghouse:



In the largest silicone breast implant trial ever, the jury
has found Dow Chemical guilty of
fraud and conspiracy for inadequately testing and researching
silicone breast implants, intentionally misleading women and
doctors about their dangers, and conspiring with subsidiary Dow
Corning to market an unsafe product.



This is a victory for over 1,800 women in Louisiana, and opens
the door for compensation for potentially hundreds of thousands
more women since almost all breast implants were made with
silicone gel tested by Dow Chemical. This first phase of the
trial established the parent company's culpability. The second
phase of the trial will determine actual health damages caused
the eight women representing the class of more than 1,800.



"This shows an American jury can't be fooled. Three out
of three times juries have evaluated all the evidence and found
the giant chemical company guilty," said John O'Quinn, lead
counsel for the women.



Juries in Nevada and Texas have awarded individual plaintiffs
millions of dollars against Dow Chemical. Dow has been named as a
defendant in thousands of cases nationwide and U.S. Judge Sam C.
Pointer has reinstated Dow Chemical as a defendant in the
national multi-district litigation.



The trial went on for over five months as Dow tried repeatedly
to prevent a jury from hearing the evidence by filing more than
30 appeals to halt the proceedings. "Dow has no
excuses," says O'Quinn. "They used their best lawyers,
they were able to present all their best evidence, but the jury
still decided Dow was responsible."



In the first phase, lawyers for the women presented internal
confidential company documents, test results, correspondence, and
actual testimony of former Dow Chemical employees. The case
rested on a few key points:



- Dow Chemical controlled the quality of silicone breast
implants manufactured by Dow Corning. -- Lead Dow Chemical
toxicologist V.C. Rowe oversaw the critical safety testing of the
raw materials and component parts used to produce implants. (Dow
Corning had no toxicology lab until 1967 -- five years after the
implants had been on the market.) -- The testing overseen by Dow
Chemical ignored indications of serious problems, yet the
implants continued to be marketed as "lasting a
lifetime." -- At the same time Dow Corning and Dow Chemical
maintained publicly that silicone did not react with the body,
the companies were discussing the development of products which
relied on the silicone's physiologically active properties.



The second phase of this trial is scheduled to begin after a
short break. This phase will determine the damage suffered by the
eight women representing the class of 1,800. Today's verdict will
also be a guide for determining the damages of the remaining
1,800 Louisiana women.



Dawn Barrios, lead Louisiana counsel on the O'Quinn trial team
says, "Louisiana women will finally see justice."



Plaintiff Marilyn Spitzfaden (whose name is on the Louisiana
class action suit against all the manufacturers) adds, "My
life has been devastated by a product that was promised to last a
lifetime. I praise the good Lord that this company will not be
allowed to get away with what it did to me and thousands of other
women."



Four individual trials against other manufacturers as part of
the state-wide class action will begin in coming months. These
trials will determine whether women were harmed by Bristol Meyers
Squibb, 3M, Baxter, and a fourth group of smaller manufacturers.



SOURCE Command Trust Network -0- 08/18/97 /CONTACT: Suzanne
Turner, pager, 888-914-4250, or Karin Wallestad of Fenton
Communications, 202-822-5200, for Command Trust Network/






DIRECTV(R) and Skylink America Team to
Provide Hotels with Satellite TV in Wake of AlphaStar Bankruptcy



LOS ANGELES, CA - Aug. 18, 1997 - DIRECTV(R), the nation's
leading direct broadcast satellite (DBS) service, announced today
an agreement with Skylink America, Inc. to provide free-to-guest
programming to more than 200 hotel properties in the United
States that previously received satellite television programming
from AlphaStar. The AlphaStar television service ceased
transmissions on August 8, 1997, as a result of the ongoing
bankruptcy proceedings of AlphaStar parent Tee-Comm Electronics.



DIRECTV will work with Skylink to expedite the shipment and
installation of DSS(R) equipment to Skylink hotel properties
currently outfitted with AlphaStar systems.



"Skylink's decision to choose DIRECTV for all of its
AlphaStar hotel accounts reaffirms our position as the leading
DBS provider for hotels and other commercial markets," said
John McKee, vice president, Special Markets and Distribution for
DIRECTV. "To date, DIRECTV is viewed in more than 10,000
bars, nightclubs and restaurants, more than 300,000 hotel rooms
and by more than 2.7 million residential customers
nationwide."



DIRECTV, in conjunction with Skylink, will offer a selection
of popular news, information and entertainment channels in
guestrooms at no additional cost to hotel guests. DIRECTV
free-to-guest programming includes such popular networks as ESPN,
Headline News, Cable News Network (CNN), Turner Network
Television (TNT), Turner Broadcasting System (TBS) and The
Weather Channel.



Skylink America, Inc. has concentrated on marketing its video
programming services to hotels with fewer than 150 rooms, the
fastest-growing segment in the lodging industry. Skylink is the
third largest provider of video programming to hotels in the
United States.



As the nation's leading direct broadcast satellite service in
both residential and commercial markets, DIRECTV offers a wide
variety of programming for hotels, commercial public viewing
establishments and offices, as well as programming for the
recreational vehicle and marine markets. DIRECTV also delivers
live in-flight broadcasts on a Delta Air Lines jetliner.



DIRECTV and DSS are trademarks of DIRECTV, Inc., a unit of
Hughes Electronics Corporation. The earnings of Hughes
Electronics are used to calculate the earnings per share
attributable to GMH (NYSE symbol) common stock. Visit DIRECTV on
the World Wide Web at www.directv.com.



SOURCE DIRECTV /CONTACT: Gina Scalise, Manager, Public
Relations, 310-726-4654/