TCR_Public/970915.MBX       T R O U B L E D   C O M P A N Y   R E P O R T E R

          Monday, September 15, 1997, Vol. 1, No. 16

                        In This Issue

ALLIANCE ENTERTAINMENT: Financial Adviser for Committee
AMERICAN WHITE CROSS: NutraMax Completes Acquisition
BARNEY'S: Barney's & Dickson Execute Purchase Agreement
DOW CORNING: Objection to Court Switch
KEYCOM: Contemplates Merger with Harbor and Commonwealth

LEVITZ: Dates, Appointments, and Financing
LEVITZ: Will Honor all Prepetition Employee Obligations
MONTGOMERY WARD: Deposit for Future Services Unnecessary
MONTGOMERY WARD: Settles with Sears, Roebuck & Co.
PARTY WORLD: Committee Hires General Counsel

SILAS CREEK: To Auction Substantially All Assets
U.S. ONE: Objects to Committee Retention of Price Waterhouse
VPTI: Second Quarter Results, Product Delays, Lawsuit


ALLIANCE ENTERTAINMENT: Financial Adviser for Committee
Alliance Entertainment Corp.'s Official Committee of Unsecured Creditors
seeks to retain the investment banking firm of Chanin and Co. as its
financial advisor to advance the interests of the unsecured creditors and
promote the orderly administration of the case.

AMERICAN WHITE CROSS: NutraMax Completes Acquisition
American White Cross, Inc., has sold substantially all its assets to
Nutramax Products, Inc., a private label health and personal care products
company. The acquisition was approved by the United States Bankruptcy
Court for the District of Delaware, in which the bankruptcy case of
American White Cross has been pending.

Nutramax purchased the first aid business for $37.5 million and assumed
approximately $3.5 million in post-petition liabilities, subject to
post-closing adjustments of inventory, accounts receivables, and assumed
liabilities as of the closing date.

BARNEY'S: Barney's & Dickson Execute Purchase Agreement
Barney's Inc. and the Official Committee of Unsecured Creditors
announced Sunday that a Purchase Agreement has been signed with
Dickson Concepts (International) Limited to move forward with
the plan for the Hong Kong-based company to invest in the New
York retailer as part of the recapitalization of Barney's Inc.
Under the terms of the Agreement, Dickson will (1) pay $205,000,000
in cash; (2) issue a $42,000,000 note to be funded by royalty
payments; and (3) provide for the distribution of 49% of the equity
in the reorganized Barneys to the Company's constituents (subject to
certain dilution rights).
Barney's indicated that it intends to file a motion today to obtain
the approval of the Bankruptcy Court to provide certain bidder
protections to Dickson in accordance with the terms of the Agreement.

DOW CORNING: Objection to Court Switch
Dow Corning Corp.'s co-defendant Minnesota Mining and Manufacturing Co.
(3M) objects to the Official Committee of Tort Claimant's suggestion to
move the case from bankruptcy to district court.  3M says the bankruptcy
court has special expertise in confirming a plan of reorganization and it
has already invested a significant amount of time and effort in the
administration of the case. "Withdrawing the reference would be directly
contrary to the policy goals of promoting judicial economy and promoting
the ef ficient use of the parties' resources," says 3M.

KEYCOM: Contemplates Merger with Harbor and Commonwealth
Key Communication Management, Inc., (KeyCom), debtor-in-possession of a
long distance telephone rate reseller, has entered into a Letter of Intent
with Commonwealth Network Corp. and Harbor Town Holding Group II, Inc., a
spin-off shell company of Net Lnnx Inc. Prior to the implementation of any
KeyCom business plan it must be approved by the bankruptcy court.  KeyCom
has submitted two proposed business plans to the court and anticipates
approval of one or the other in late November of this year.

The contemplated transaction involves a reverse merger between Harbor and
Commonwealth and the subsequent merger of KeyCom. The KeyCom aspect of the
transaction is subject to bankruptcy court approval. If the contemplated
transaction occurs and other cond itions warrant it, Net Lnnx or its
affiliates hope to file a registration statement with the SEC in
connection with this transaction and assist the resulting entity with
creating a trading market for its common shares; although no assurances
can be made t hat this will occur.

LEVITZ: Dates, Appointments, and Financing
Levitz Furniture Corp. has obtained an extension, through and including
November 4, 1997, to file its Schedules of Assets and Liabilities and
Statements of Financial Affairs.  According to Bankruptcy Creditors'
Service, the company says it has already begun the process of assembling
the schedules and statements, but there is no way that task can be
completed in only 15 days following the petition date. It says there are
over 2,500 creditors in the cases and the preparation of schedules and
statements will require gathering information from 129 different locations
in 26 states.

The United States trustee for Region III has scheduled an organizational
meeting for Friday, September 19, 1997, in Wilmington to appoint one or
more official committees in these cases.

Levitz has obtained the court's authority to employ the national law firm
of Skadden, Arps, Slate, Meagher & Flom LLP as counsel and seeks authority
to hire The Blackstone Group L.P. as its financial advisor and Policano &
Manzo, L.L.C., as bankruptcy con sultants in these chapter 11 cases.

Levitz has obtained Judge Farnan's authority to enter into a post-petition
DIP financing agreement with BT Commercial Corp. on an interim basis
pending a final hearing scheduled for October 7, 1997. The DIP Facility
converts $152,912,920 of prepetition se cured borrowings from BT into
postpetition superpriority loans. Interim financing includes up to
$192,912,920, with a $25 million sublimit for issuance of Letters of
Credit and final financing includes up to $260 million, with a $25 million
sublimit for i ssuance of Letters of Credit.

LEVITZ: Will Honor all Prepetition Employee Obligations
According to Bankruptcy Creditors' Service, Inc., Levitz Furniture Corp.
said that as of March 31, 1997, its workforce consisted of approximately
5,018 employees and estimated that approximately $5,916,000 of uncashed
payroll checks and accrued prepetition wages and $5,530,000 of vacation
pay and sick leave pay will be owed to employees at the petition date.
Levitz says it intends to honor all of their pre-petition wage, salary,
fee, commission, bonus, severance pay, holiday and vacation pay, sick
leave, expense reimbursement, medical, dental, life, short-term
disability, long-term disability, accidental death and dismemberment,
disability, 401K plans, and personal spending account programs on the
first postpetition payroll date. It will also continue its premium-based
and self-insured workers' compensation coverage.

MONTGOMERY WARD: Deposit for Future Services Unnecessary
Montgomery Ward Holding Corp. objects to a request by 14 utility companies
for a deposit of approximately $2.6 million and a deposit of about $2.5
million requested by an additional 10 utilities for postpetition services.
Ward has offered each company a security deposit equal to one month's
average utility services plus interest, and says this proposed adequate
assurance is ample security for postpetition services. The company notes
its record of paying utility bills on time and says because it has secured
$1 billion in DIP financing it has the liquidity and financial resources
to pay postpetition expenses on a current basis.

A hearing is set for October 1, 1997, in the District of Delaware.

MONTGOMERY WARD: Settles with Sears, Roebuck & Co.
Montgomery Ward & Co. Incorporated and Sears, Roebuck & Co. agreed to
settle their dispute relating to the Ward's claim that Sears was
wrongfully seeking to employ the its key employees. The agreement, as
reported by Bankruptcy Creditors' Service, states:

* There is no admission of wrongdoing by either party;

* Sears agrees to withdraw its Motion for Sanctions;

* Sears will not solicit any salaried management employee of Ward,
          but may solicit any employee of any kind of Lechmere or Electric
          Avenue & More Stores;

* Sears is not prohibited from advertising job opportunities,      
          conducting job fairs, and posting job offerings, provided these
          are not specifically directed at Ward's employees;

* Ward's employees may seek employment with Sears on their own

* The agreement covers only salaried management employees;      

* Within two weeks after the Court approves the Agreement, each
          party shall destroy all documents produced by it or its
          attorneys; and

* Sears will pay Ward's attorneys' fees and legal costs incurred in
          connection with the suit in an amount not to exceed $100,000,
          within ten days after Sears receives an invoice for such fees
          and costs.

PARTY WORLD: Committee Hires General Counsel
Party World, Inc.'s Unsecured Creditor's Committee has employed Latham &
Watkins as general counsel as of July 21, 1997.

SILAS CREEK: To Auction Substantially All Assets
Silas Creek Retail, Inc., has decided to sell substantially all its assets
free and clear as this will best resolve the Chapter 11 cases quickly and
maximize the value of the business, it says.

ABC Fabrics, Inc., has submitted a bid of $39 million for all assets and
the leases on 123 Silas Creek operating businesses. Silas Creek says this
is the best offer it has received because there are no antitrust issues,
it will get going-concern values for the businesses, the sale will
preserve jobs for thousands of employees, and the sale will minimize
further dilution of unsecured claims.

Silas Creek has offered a breakup fee of $500,000 to ABC if the sale
doesn't occur, barring prevention by the court.  Overbids will have to
exceed the value of the ABC bid by $750,000, not be subject to any
financing conditions, and be accompanied by a $500,000 good faith deposit
in cash or immediately available funds. The auction date is scheduled for
October 14, 1997.

Silas Creek requests an expedited hearing to approve the bidding
procedures on September 17, 1997. The company says this is necessary
because the sale of assets to ABC is dependent on a closing of November 2,
1997, to be finalized no later than November 4.

U.S. ONE: Objects to Committee Retention of Price Waterhouse
U.S. One Communications Corp. objects to the application of its Official
Unsecured Creditors' Committee to retain Price Waterhouse LLP because, it
says, the case is on a prompt and direct path toward the sale of
substantially all of its assets.  Furthermore, if the contract includes
sufficient cash considerations, it intends to make cash distributions to
creditors by October 31, 1997.  Hiring accountants at this point, U.S. One
says, is an unnecessary expense.

VPTI: Second Quarter Results, Product Delays, Lawsuit
Voice Powered Technology International, Inc., which designs, develops, and
markets voice recognition consumer electronics products, reported for the
quarter ended June 30, 1997, net income of $313,000, or $0.02 per share on
sales of $527,000.

The company reported a net loss of $1.07 million or $0.07 per share, on
sales of $1,868,000. Comparable figures for the second quarter and six
months ended June 30, 1996 were a net loss of $903,000 or $0.06 per share,
on sales of $2,258,000 and a net loss of $1,684,000, or $0.12 per share of
sales of $4,458,000, respectively.

The net income reported included one-time gains aggregating $2,067,000
related to the Company's transaction with Franklin Electronic Publishers,
Inc. (Franklin), including $679,000 from the sale and license of certain
assets to Franklin and $1.38 million of debt forgiveness resulting from
various settlement agreements with its major trade creditors.

Mitchell B. Rubin, president and CEO, stated that "second quarter sales
were negatively impacted by the sale to Franklin Electronic Publishers,
Inc. of the IQ.VOICE Organizer Pocket Organizer product line, and the
discontinuance of other lower priced IQ.VOICE Organizer models."

Everen Securities, Inc., has filed a suit in the U.S. District Court for
the Northern District of Illinois, Eastern Division, against VPTI,
claiming it is owed $435,000 from the transaction with Franklin. Everen
was terminated as financial advisor and agent in February 1997.

Rubin said, "The delays in launching PC-Link products combined with the
operating losses sustained in the second quarter have weakened the
Company's cash and working capital positions. The costs associated with
defending the suit filed by Everen will furt her strain these resources.
The Company must carefully consider all options available to preserve its
remaining working capital and continue its operations, including the
filing of a voluntary petition for reorganization under the bankruptcy

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
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