TCR_Public/970918.MBX       T R O U B L E D   C O M P A N Y   R E P O R T E R

        Thursday, September 18, 1997, Vol. 1, No. 19

                        In This Issue

AIR SOUTH: Airline Grounded
BRADLEES: Releases 2nd Quarter Plan Performance
BRAUN’S FASHIONS: 2nd Quarter Earnings Solid
CALDOR: 4th Exclusivity Period Extension Granted
CALDOR: Representation of Term Lenders

CARABETTA: Reorganization Plans Confirmed
CONSOLIDATED HYDRO: Support For Restructuring Plan
GRANT GEOPHYSICAL: Reorganization Plan Confirmed
GROSSMANS: Agrees with Committee on Reorganization
INTERNATIONAL IMAGING: Out of Bankruptcy

LOT&OFF CORPORATION: Issues Dividend, Plans Stores
MARVEL: Reaches Agreement with Creditors
SOLV-EX: Delisted by NASDAQ
WHITE MARLIN: Declares Bankruptcy

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AIR SOUTH: Airline Grounded
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Discount airline Air South went out of business Tuesday after it was unable to find a buyer and keep its license.

After a three-year financial roller coaster, Air South stopped flying last month as it filed for bankruptcy-court protection from its creditors.

"What killed us this last year was we just couldn't get the airplanes to the gates on time," said Tom Volz, Air South's marketing vice president.  "We just kept shooting ourselves in the foot."

While the airline's planes were leased from GE Capital Aviation Services, Air South can sell off its computers, trucks and reservation center. Liquidation, which could take up to six months according to Volz, will help pay off a $12 million federal loan g
uaranteed by South Carolina when Air South was launched.

When Air South suspended operations Aug. 28, it reported $67.4 million in liabilities against $11.5 million in assets.  The airline lost $7.8 million in the first quarter this year and a combined $41 million in 1995 and 1996.

The company has requested the court extend until September 29, 1997, the time to file its statement of financial affairs, schedules, and lists because it does not have enough personnel to compile the information necessary to complete the documents before
then.


BRADLEES: Releases 2nd Quarter Plan Performance I
-----------------------------------------------
Bradlees, Inc., is distributing to its banks and other credit providers summaries of its unaudited financial results for the second quarter and year-to-date (twenty-six weeks) ended August 2, 1997, according to Bankruptcy Creditors’ Service.  This include
s a comparison to the company's summary financial plan for the fiscal year ending January 31, 1998.

Total sales for the second quarter ended August 2, 1997 were $23.6 million below plan.  EBITDA before restructuring was $5.1 million below plan, primarily due to the unfavorable sales variance, partially offset by favorable selling, store operating, admin
istrative and distribution (SG&A) expenses.

Year-to-date total sales were $43.8 million below plan. Year-to-date EBITDA before restructuring was only $3.4 million below plan, however, an above-plan gross margin rate (30.7 percent vs. 30.0 percent) and below-Plan SG&A expenses ($5.4 million) partial
ly offset the impact from the lower sales.

Unrestricted cash was $9.9 million above plan as of August 2.  Inventories were $4.7 million above plan, primarily in toys because of advance purchase programs.  Accounts payable was $10.2 million below plan and outstanding borrowings under the company's
DIP facility were $22.4 million above plan.

Information is being reported publicly solely because it is being distributed to a large number of the company's vendors for purposes of their credit analyses.


BRAUN’S FASHIONS: 2nd Quarter Earnings Solid
--------------------------------------------
Braun's Fashions Corporation recorded its fourth consecutive quarter of significant improvement, after closing 35 stores and emerging from Chapter 11 reorganization in December 1996.  Stronger profit margins and 14 percent higher same-store sales led to i
mproved second quarter earnings, said company chairman and CEO Nicholas H. Cook.

For the second quarter ended August 30, 1997, Braun's net income improved to $308,000 or $0.06 per share, compared with a net loss of $9.5 million or $2.51 per share in the year-ago quarter, which included reorganization expenses of $9.1 million.

Second quarter sales decreased 8 percent to $20.9 million, due to fewer operating stores -- down to 186 after closing 35.  In this year's second quarter, Braun opened 8 new stores and finished the period with 178 stores in 20 states

Same-store sales increased 14 percent to $20.1 million in this year's second quarter on 165 stores operating during the comparable second quarters.  Operating income on those stores increased to $704,000 from a loss of $279,000 in the year-ago quarter.  B
raun's has now achieved four consecutive quarters of double-digit growth in same-store sales.

Gross margin improved to 32.3 percent from 24.1 percent in the year-ago second quarter.  Last year's second quarter gross margin was unusually low due to the liquidation of inventory from stores closed during the reorganization.  On a same-store basis, gr
oss margin rose to 32.4 percent from 28.8 percent.

According to Cook, Braun's financial condition continues to be solid.  Cash and equivalents were $7.3 million at the end of the quarter, more than sufficient to fund the company's present expansion and operating requirements.  Working capital was $15.5 mi
llion and long-term debt was $10.2 million or 37 percent of total capitalization.  Shareholders' .equity increased to $17.1 million, or $3.80 per share.


CALDOR: 4th Exclusivity Period Extension Granted
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The Caldor Corporation announced that the U.S. Bankruptcy Court for the Southern District of New York has granted it an extension of the period under which it has the exclusive right to file a plan of reorganization.

With the full support of its creditor, bank and equity committees, Caldor received an extension of the exclusivity period through February 28, 1998.  Likewise, the period in which the company can solicit acceptances for the reorganization plan has been ex
tended through April 30, 1998.  This represents a six-month extension of the exclusivity period, which had run through September 1, 1997.

Warren D. Feldberg, chairman and CEO, commented, "Caldor has been making solid progress under its five- year business plan, and we are seeing positive results from the actions we are taking.  We are pleased to have the continued support of the creditor, b
ank and equity committees, and this extension will enable us to implement our strategies through the back-to-school and fourth quarter periods and to make refinements as appropriate.  Ultimately, this plan will serve as the foundation for Caldor's plan of
reorganization.”

"In addition,” he said, “our new bank agreement, approved by the court on June 4, 1997, has extended Caldor's $450 million DIP facility through June 15,1998 and will provide us with substantial excess availability as we carry out our plans.  Overall, we a
re very encouraged by our progress and believe our marketing, merchandising and financial strategies will position us for a return to profitability and growth."


CALDOR: Representation of Term Lenders
---------------------------------------
Edward A.C. Sutherland of Weil, Gotshal & Manges told Judge Garrity that the current holders of Caldor’s' obligations under the $180 million Prepetition Credit Agreement with Chase Manhattan Bank dated October 21, 1993.  According to Bankruptcy Creditors'
Service, the holders are Baker Nye Greenblatt for $11,014,359, Citibank, N.A. for $26,537,297, Farrallon Caldebt LLC for $19,965,139, Lehman Brothers for $6,108,423, Merrill Lynch, et al. for $16,055,043, Perry International for $12,890,783, and Perry Pa
rtners LP for $14,202,062.


CARABETTA: Reorganization Plans Confirmed
-----------------------------------------
Carabetta Enterprises, Inc., one of the largest operators of multifamily housing in the Northeast, has confirmed its plans of reorganization in U.S. Bankruptcy Court, District of Connecticut, before Judge Alan H.W. Shiff.  

The chapter 11 case was filed in June 1992, with unsecured claims aggregating over $450 million. It has been stayed for mediation since December 1994. The plan, supported by the Official Committee of Unsecured Creditors, provides a dividend of approximate
ly 40 percent to Carabetta creditors and a distribution of at least 21 percent to unsecured creditors of Joseph Carabetta, the sole shareholder. Unsecured creditors will share pro rata approximately $21.5 million payable at various intervals over the ten-
year life of the plan, while Mr. Carabetta’s creditors will share approximately $7.5 million over four years.

                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                               
                                                                                                                                                                              
CONSOLIDATED HYDRO: Support For Restructuring Plan
-------------------------------------------------- Consolidated Hydro, Inc., announced that 100 percent of its bondholders annd over 95 percent of its preferred stockholders have voted in favor of the company's restructuring plan.  Consolidated commenced
a Chapter 11 case Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

The plan provides for the company, a non-utility owner and operator of hydroelectric power plants with a portfolio of approximately 340 MW in the United States and Canada, to be restructured and reorganized through a voluntary pre-packaged Chapter 11 plan
of reorganization.  The Chapter 11 case concerns only the company and none of its subsidiaries or projects.  Similarly, it will not affect vendors or employees.

The company said it expected an expeditious confirmation of the Chapter 11 plan so that implementation can occur by November 1997.  A confirmation hearing has been scheduled for October 23, 1997.

James T. Stewart, chairman and CEO, said, "The vote for our restructuring plan and the filing of our plan with the court are important milestones in the creation of a new capital structure that will support our long-term growth and profitability.  We cons
ider the vote to be an expression of support for our business plan, which calls for continued leadership in independent hydropower as well as diversification into the ownership and operation of industrial infrastructure assets."


GRANT GEOPHYSICAL: Reorganization Plan Confirmed
-------------------------------------------------
Grant Geophysical announced that the Bankruptcy Court has confirmed its plan of reorganization.  Grant said that all classes of creditors and shareholders eligible to vote were heavily in favor of the plan with the approval running from 94 percent to 98 p
ercent.  Larry Lenig, president, said, "Renewed financial strength coupled with Grant's experience base and expanded, focused technical and business initiatives will enable the new company to offer a broader array of products and services to its clients."


The plan, which is scheduled to become effective on September 30, 1997, provides that Elliott Associates L.P. of New York will acquire, through a subsidiary, substantially all the assets of Grant for $47.5 million in cash plus the assumption of certain of
Grant's liabilities. Elliott's ownership could be reduced to approximately 65 percent following completion of a rights offering called for in the plan.  From the cash proceeds, secured creditors will be paid in full and unsecured creditors will receive a
n estimated 50 percent recovery of their allowed claims.

On the effective date of the plan, Grant's existing common stock and all series of its existing preferred stock will be canceled.  Grant will deregister as a publicly traded company, and trading in any of the existing Grant securities will cease as of the
close of business on September 29, 1997.

Holders of Grant's convertible, exchangeable preferred stock and its junior preferred stock, as well as certain unsecured creditors, will have the right, subject to the effectiveness of a registration statement to be filed with the Securities and Exchange
Commission, to participate in a rights offering.  Pricing of shares available in the rights offering will be determined prior to the issuance of the rights.  The rights offering period is not expected to commence until sometime in 1998.



GROSSMANS: Agrees with Committee on Reorganization
--------------------------------------------------
Grossman's Inc., which is operating as a debtor-in-possession following its April 7, 1997 filing for Chapter 11 protection, has reached an agreement in principle with its Official Unsecured Creditors Committee on the terms of a plan of reorganization.  Th
e company currently expects to emerge from bankruptcy during November of this year as a privately held company owned 50 percent by certain creditors and 50 percent by JELD-WEN, inc., Grossman’s DIP lender

Although the plan is subject to final documentation and bankruptcy court approval, the basic terms provide for $.23 on the dollar to all unsecured creditors holding valid claims of $25,000 or less; $.17 on the dollar, plus 50 percent of the common stock o
f the reorganized Grossman's, to all qualified unsecured creditors (original holders of trade debt) holding valid claims above $25,000.  The remaining 50 percent of Grossman's stock will be purchased by JELD-WEN, inc. for $8.25 million.

Under the plan, JELD-WEN will lend (directly or through support of a third-party loan) sufficient funds to make the distributions contemplated in the plan and to provide working capital for the reorganized Grossman's.  Until plan confirmation, JELD-WEN ha
s agreed to guarantee up to $5 million of trade credit provided by vendors to Grossman's.

Under certain circumstances after the first anniversary of the effective date of the plan, the creditor/shareholders have the right to offer their shares for sale to the reorganized Grossman's for a pro rata share (depending on the number of shares) of $8
.25 million plus $577,500 per annum.  The company is not obligated to accept the offer, and if the offer is rejected, the creditor/shareholders have the right to require the company to register their shares for sale.
Under the proposed plan, existing Grossman's shareholders will receive no interest in the reorganized Grossman's and their shares will be canceled.


INTERNATIONAL IMAGING: Out of Bankruptcy
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International Imaging, Inc., announced that it has completed its reorganization under Cahpter 11.


LOT&OFF CORPORATION: Issues Dividend, Plans Stores
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LOT$OFF Corporation, formerly 50-OFF Stores, Inc., announced a $0.06875 per share quarterly dividend on its 856,080 shares of Series A Preferred Stock, payable October 15, 1997, to stockholders of record September 30, 1997.

LOT$0FF reported a loss of $4.5 million (including $500,000 of reorganization expenses) and net sales of $22.3 million for the first half of fiscal 1998 while reorganizing in a Chapter 11 bankruptcy (as compared to a net loss of $9.9 million and net sales
of $64.1 million for the comparable prior fiscal year period).  It emerged from bankruptcy on June 16, 1997.

LOT$OFF emerged from bankruptcy on June 16, 1997, and has just announced it will open three new stores in San Antonio and one in Fort Worth in October.  The company also announced it would be completing its store conversion program, from an off-price to a
close-out retailing concept, at eleven store locations in seven markets the week of September 28 with "Grand Re-Openings" planned for Saturday, October 4.  After the conversions and new store openings, the company will have 45 stores in Texas, Louisiana,
Oklahoma, New Mexico, and Tennessee operating under the company's new LOT$OFF store name and retailing concept.  Management says it expects a substantial increase in sales and a return to profitability in its fiscal second half ending January 30, 1998.


MARVEL: Reaches Agreement with Creditors
-----------------------------------------
Marvel Entertainment Group has agreed to pay creditors $385 million in cash plus proceeds from the sale of Panini S.p.A. to settle its bankruptcy case, a lawyer for Chase Manhattan Bank, a secured lender, says.  The banks, led by Chase, are owed a total o
f $816 million and will get the proceeds from the sale of Panini; an oral agreement on the repayment of loans is to be issued in writing and formally completed by next week, as ordered by Judge Helen Balick.

Chaim Fortgang, a lawyer for Chase said the bank had agreed to let Marvel continue drawing on cash collateral for its operations until the hearing.

Edward Weisfelner, a lawyer for the Icahn Group that controls Marvel said the agreement “will resolve all controversies” for lenders, stockholders, and other parties in the case.  

A hearing is set for October 9, 1997, before Judge Balick to approve the agreement.  If it is approved, Marvel would be able to draft a reorganization plan enabling it to emerge from bankruptcy protection.

Still pending is a final deal that would allow Marvel to merge with Toy Biz Inc., a New York-based company that makes toys based on Marvel characters.


SOLV-EX: Delisted by NASDAQ
---------------------------
Solv-Ex Corporation was delisted by the Nasdaq Stock Market at the close of business Tuesday.

Solv-Ex shares were first placed in a trading halt on July 14, 1997, after the company announced it had filed a petition to stay actions by creditors under the Canadian Companies' Creditors Arrangement Act in Calgary, Alberta.  On initiation of the tradin
g halt, Nasdaq requested that the company provide evidence that it continued to meet the maintenance criteria necessary for listing on The Nasdaq SmallCap Market.  On August 1, 1997, Solv-Ex filed for protection under Chapter 11 of the United States Bankr
uptcy Code.

On September 10, 1997, the Nasdaq Listing Qualifications Panel issued a decision requiring the company to file its June 30, 1997, Form 10-K on or before September 30, 1997, to demonstrate compliance with Nasdaq's continued listing criteria.  Additionally,
the Form 10-K was required to contain financial statements with an unqualified independent auditor's opinion. Finally, the decision mandated that the trading halt remain in effect pending the filing of the Form 10-K.  The company indicated that it does n
ot believe it can meet the terms of this requirement.  Accordingly, the Listing Qualifications Panel determined to delist the company's securities.


WHITE MARLIN: Declares Bankruptcy
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White Marlin Marine Inc., of Ocean City, Maryland, which sells new and used pleasure boats, filed for protection under Chapter 11.  According to the Baltimore Sun, the company lists assets of $4.18 million and liabilities of $6.64 million.


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 Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington DC.  Debra Brennan and Rebecca A. Porter, Editors.

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