TCR_Public/970923.MBX T R O U B L E D   C O M P A N Y   R E P O R T E R

   Tuesday, September 23, 1997, Vol. 1, No. 22

                  In This Issue

ARROW TRANSPORTATION: Agreement With Matlack
BIG RIVERS: Replies to Pacificorp
BIG RIVERS: Seeks Emergency L/C Extension
BRUNO’S: CEO Out, Restructuring Specialist In
COUNTY SEAT: Counsel for Potential Suit

DOW CORNING: Dates Ahead
DOW CORNING: Objections to Judge’s Report
KIA MOTORS: Seeks Protection from Creditors
LEVITZ: Arthur Andersen Employed
LEVITZ: Employee Retention Program

LEVITZ: Rejection of Leases and Property Sales
LEVITZ: Seeks Approval of $260 Million DIP
RDM SPORTS: Hearing Set for Future Utility Sevice
RDM SPORTS: Committee Objects to Financing Pact
SP HOLDINGS: Deadline to File Proofs of Claim

                      ------

ARROW TRANSPORTATION: Agreement With Matlack
--------------------------------------------
Matlack Systems, Inc. announced that its principal
subsidiary, Matlack, Inc. has entered into an
agreement with Arrow Transportation Co. to
purchase certain assets of its operations. The
transaction includes the purchase of approximately
180 tank trailers and certain tank cleaning
equipment in the Portland, Oregon and Seattle,
Washington areas.

Matlack will also lease approximately 100 tractors
previously leased by Arrow and enter into a new
lease for the facility in Portland previously
leased by Arrow.  This agreement is subject to
Bankruptcy Court approval.  The closing is
expected within 30 days.


BIG RIVERS: Replies to Pacificorp
---------------------------------
Pacificorp Kentucky Energy Company (PKEC)filed a
proof of claim in the amount of $25 million.  PKEC
now argues that it has been deprived of the
benefit of its bargain under the Omnibus
Agreement. Big Rivers has replied by saying that
the Omnibus Agreement required Bankruptcy Court
approval as a condition precedent to any
obligation of Big Rivers to close the PKEC
transaction. That approval can not be obtained
because the LG&E transaction, an offer that was
made after that of PKEC, provides more value to
the estate and has the support of Big Rivers’
constituencies.

Big Rivers also alleges that it only negotiated
with LG&E Energy after being directed to do so by
the Court. Big Rivers blames the failure of the
agreement with PKEC squarely on the shoulders the
Court, by saying that the court simply did not
believe that the PKEC Transaction maximized value
for the Big Rivers estate.

Big Rivers states that it a duty under Kentucky
law to use reasonable efforts to fulfill its
contract with PKEC.  And Big Rivers admits that it
had a duty to use reasonable efforts to fulfill
certain conditions precedent as provided in the
agreement. However, Big Rivers attempts to draw a
line between reasonable efforts and every
conceivable effort   of a party to a contract.  
And finally, Big Rivers contends that the Omnibus
Agreement was subject to the risk of a better
proposal.


BIG RIVERS: Seeks Emergency L/C  Extension
------------------------------------------
Big Rivers Electric Corporation and The Chase
Manhattan Bank are jointly seeking authorization
from the Bankruptcy Court to extend the Chase
Letter of Credit.  

The Chase Letter of Credit expires on October 15,
1997.  Nevertheless the Bond Documents suggest
that, to avoid a possible draw under the existing
Chase Letter of Credit, Chase just grant the
extension of the expiration date by September 19,
1997.


BRUNO’S: CEO Out, Restructuring Specialist In
----------------------------------------------
Bruno’s, the Birmingham-based grocery chain,
announced the resignation of William Bolton as
chairman and chief executive.  His replacement is
James A. Demme, who led the Oklahoma-based
Homeland Stores chain through a three-year
restructuring that included Chapter 11 bankruptcy
protection.

Kohlberg Kravis Roberts, the New York firm that
purchased the 220-store grocery chain for $1.2
billion from the Bruno family in 1995, fully
supported the change.

Demme denied he was being hired to revamp Bruno's,
which has reported a nearly $122 million loss in
sales since early spring.  Bruno's share prices
have fallen about 60 percent in the last year.

"I'm coming to Bruno's to hopefully establish a
long-range plan that would grow the company and
significantly increase profits," said Demme.


COUNTY SEAT: Counsel for Potential Suit
---------------------------------------
County Seat, Inc., has requested the authority to
hire Caplan, Buckner, Rohrbaugh & Albert as
special litigation counsel to investigate Global
Sourcing and potentially file a lawsuit.  Global
Sourcing agreed to purchase branded merchandise
for approximately $12 million, but refused full
payment on the invoices, saying the merchandise
was defective.  It currently owes County Seat
approximately $1.5 million.


DOW CORNING: Dates Ahead
-------------------------
Upcoming dates in the Dow Corning Corp. bankruptcy
proceedings include October 20, 1997, the deadline
to file disclosure statement objections, and
November 3, 1997, the scheduled hearing before
Judge Spector in Bay City, Michigan, on debtor's
disclosure statement in support of the amended
plan of reorganization.


DOW CORNING: Objections to Judge’s Report
-----------------------------------------
Dow Corning Corp’s Official Committee of Tort
Claimants has told the District Court it does not
like Judge Spector's suggestions for estimation
and valuation of tort claims, according to
Bankruptcy Creditors' Service, Inc. Judge
Spector’s has submitted his July 29 opinion to the
District Court as an official report and
recommendations.

The TCC says it objects to the recommendation that
the District Court conduct one or more
consolidated causation trials because that would
(a) overwhelm the capacities of any single court
and jury;(b)improperly nullify the five jury
verdicts already entered against Dow Corning that
have found breast implants are capable of causing
disease; and (c) violate the Seventh Amendment
rights of tort claimants by fairly giving Dow
Corning two chances to disprove causation.

The TCC supports Judge Spector's idea about sample
trials but says there is an insufficient record
before the court to determine workable and
appropriate sample trial procedures.

The Unsecured Creditors' Committee similarly
believes that the best way to resolve this chapter
11 case is through a plan of reorganization and
asks the District Court to not review Judge
Spector's report.

The UCC says Judge Spector has prejudged issues
that were not before the bankruptcy court in the
context of the Estimation Motions.  Although Judge
Spector said that the alternative estimation
procedures he proposed were made "in the event no
consensual plan emerges and the treatment of the
tort claims remains to be litigated," the UCC
asserts a Debtors' Amended Plan has emerged since
this opinion.

Also, the UCC says, Judge Spector's comments about
liquidation of tort claims are dicta or constitute
an advisory opinion.  Hence, any findings and
conclusions related to non-core matters are not
binding and should not be reviewed by the District
Court.

The UCC believes Judge Spector's claims valuation
suggestions would be too time consuming, and it
says he wrongly concludes that liquidation of tort
claims through the use of Rule 42 consolidated
trials is superior to estimation of aggregate
liability for confirmation purposes.

Minnesota Mining and Manufacturing Company added
two comments for the District Court to consider in
connection with Judge Spector's report:

First, tort claims should be resolved based on
existing science.  3M objects to Judge Spector's
suggestions that would allow tort claims to linger
into the future.  3M wants to see tort claims
filed today proven today based on today's
scientific evidence.

Second, the trust fund Judge Spector proposes
should be required to liquidate nondebtors'
contribution claims.  Judge Spector appears to
have overlooked contribution claims.

The Dow Chemical Company also asks the District
Court to decline to review the report.  Dow
Chemical suggests that the District Court should
remand the report back to the bankruptcy court
with instructions to await further developments in
the bankruptcy case as a result of the debtor's
filing of the amended plan.


KIA MOTORS: Seeks Protection from Creditors
-------------------------------------------
Kia Motors Corp. of Seoul, South Korea, the
country's third-largest car-maker, announced it
and three affiliates will seek court protection
from creditors in a bid to turn around the
troubled company, according to The Wall Street
Journal.

According to the South China Morning Post, the 15-
member Kia Group, of which Kia Motors is a part,
owes $10.8 billion, including $6.8 billion to
banks, and 15 affiliates are under the protection
of an anti-bankruptcy accord among its creditors
that expires on September 29.

Kia Motors, in which Ford Motor Co. holds a 9.4%
stake, is requesting a special form of court
protection that will freeze the company’s debts
while allowing existing management to keep control
of the company.  Usually management would lose
full control of a company once it filed for court
protection.

South Korea's banks are under pressure from the
government to take control of Kia Motors, and
government officials have suggested that the
company's creditor banks swap their debts for
equity, according to a source at the Ministry of
Finance and Economy.

The banks are strongly against bank management for
Kia Motors, which would involve additional
operational funds, but have said they might agree
to an extension of the anti-bankruptcy accord or
court receivership

The final decision is to be made after submission
of reports from credit assessment agencies on
September 25, 1997.

Another option is a takeover of Kia Motors by the
Samsung Group.  The idea is politically unpopular
because Samsung is suspected of conspiring with
the government to bring down Kia, which is known
as a "people's" conglomerate.

Ken Lee, head of research for Barings Securities
in Seoul, said Samsung would probably take over
Kia Motors eventually.  "Samsung will wait for the
dust to settle, maybe seven or eight months," he
said.  "The public should come round to the idea
when it sees there's no alternative."


LEVITZ: Arthur Andersen Employed
--------------------------------
The Court has approved of the debtors’ employment
of the accounting firm of Arthur Andersen as their
accountants, auditors and special bankruptcy
consultants.


LEVITZ: Employee Retention Program
----------------------------------
The Debtors are seeking the implementation of an
employee retention or stay, bonus program.  The
estimated cost of the program will be $1,103,401.


LEVITZ: Rejection of Leases and Property Sales
----------------------------------------------
Levitz Furniture, Inc. is requesting a Court Order
authorizing their rejection of certain real
property leases.  The debtors no longer operate
stores at these locations and their present annual
rental obligations under the leases exceed
$796,252.

The debtor is seeking Bankruptcy Court approval to
sell  to Clare Group, Ltd. for $11.5 million its
Chicago, Illinois property.  A closing is set for
September 30, 1997.  Certain provisions of the
Purchase and Sale Agreement are of particular
interest:
(a) The Trustee, American National Bank and Trust
Company of Chicago, is the legal owner of the
Chicago property; John M. Smyth Company, an
Illinois corporation and one of the debtors, is
the sole beneficiary of the Trustee/Seller.
(b) the Purchaser is acquiring under the Agreement
all of Seller’s and Beneficiary’s rights, title
and interest as landlord under a Lease of a
portion of a Building on the Chicago Property,
wherein Beneficiary is the Lessor and Montgomery
Ward is the lessee.

The company is also seeking Court authority for
sale of the Levitz headquarters property in Boca
Raton, Florida.  Under the agreement, Rexall
Sundown, Inc. will pay the debtors $8.1 million.


LEVITZ: Seeks Approval of $260 Million DIP
------------------------------------------
The company publicly filed the DIP Credit
Agreement on September 5, 1997.  The terms are
summarized as follows:

Revolving Lenders:  BT Commercial Corporation
                    Sanwa Business Credit Corp.
                    Finova Capital Corporation
                    Heller Financial, Inc.
                    LaSalle National Bank
                    Congress Financial Corp.
                    TransAmerica Business Credit
                    Silver Oak Capital, LLC

Term Lender:        Silver Oak, Capital LLC

Default
Interest Rate:      Interest Rate plus 2.0%

Affirmative
Covenants:          At least 20 stores will be  
                    closed no later than
                    January 31, 1998.

Negative
Covenants:          Minimum EBITDA has been
                    established through
                    March 31, 1998.

Capital
Expenditures:       Borrowers shall not make
                    payments for Capital
                    Expenditures in the aggregate
                    for all Borrowers in excess of
                    $5 million during the period
                    from the Petition date to and
                    including March 31, 1998.

It was reported by Patrick J. Nolan, the debtors’
CFO that inventory levels heading into the
company’s busiest season are 2/3 of what they
should be.  Merchandise is flowing into the
warehouses, but the debtors currently have $40
million of customer backorders, when a $20 million
level would be considered normal.  He added that
the debtors’ availability under the DIP Facility
has increased to roughly $58.5 million.


RDM SPORTS: Hearing Set for Future Utility Sevice
-------------------------------------------------
A hearing will be held on September 29, 1997 on
the motion of RDM Sports Group, Inc et. al. for an
order determining adequqate assurance of payment
for future utility sevices.


RDM SPORTS: Committee Objects to Financing Pact
-----------------------------------------------
The Official Committee of Unsecured Creditors of
RDM Sports Group, Inc. et. al., is objecting to
the debtors’ emergency motion for authorization
for post-petition financing on a secured and
super-priority basis.

The Committee claims that it is in the early
stages of scrutininzing all of the matters related
to the debtors’ pre-petition financing documents
and post-petition financing.  The Committee has
also been informed that the debtors intend to pay
off their pre-petition indebtedness to a group of
lenders.  

The Committee states that there is almost a
complete overlap between the lenders providing the
post-petition facility and the Lenders.  Thus it
appears that, the indebtedness under the post-
petition facility represents a mere substitution
of post-petition debt for pre-petition debt.


SP HOLDINGS: Deadline to File Proofs of Claim
---------------------------------------------
The Bankruptcy Court has set November 21, 1997,
as the date on which proofs of claim and interest
must be filed against SP Holdings Corp. in the
District of Delaware


  
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,
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