TCR_Public/971015.MBX T R O U B L E D   C O M P A N Y   R E P O R T E R

     Wednesday, October 15, 1997, Vol. 1, No. 38

                     Headlines

AMG INDUSTRIES: Reorganization Becomes Liquidation
COUNTY SEAT: Amended Plan of Reorganization Approved
FRETTER: Wants More Time to File Plan
HARRAH’S JAZZ: Final Settlement of Flood Insurance Claims
INTERLINE RESOURCES: Refiner Files Chapter 11

JAYHAWK ACCEPTANCE: Judge Confirms Reorganization Plan
KIA GROUP: Subcontractors File for Court Protection
MARVEL ENTERTAINMENT: Committee Opposes Schreff’s Claim
PAYLESS CASHWAYS: No Decision on Retiree Claims

SELECT MEDIA: Emerges From Chapter 11
TOTAL HOMECARE: Sells Its Assets
WESTERN PACIFIC: Creditors Hang In, But Airport May Bow Out
WESTERN PACIFIC: Stocks Jump in Speculation, Still No DIP

                       -----

AMG INDUSTRIES: Reorganization Becomes Liquidation
---------------------------------------------------
AMG Industries Inc. of Queensbury, New York, a commercial
heating and ventilating equipment manufacturer, has
converted its bankruptcy reorganization into a bankruptcy
liquidation case after two years of efforts to pay off
debts, according to the Times Union

AMG reported assets of $4.6 million and debts of $5 million
and filed for Chapter 11 bankruptcy protection in 1995 after
it failed to collect payment for two construction projects.

Albany attorney Robert Biggerstaff, representing Glens Falls
National Bank, a major creditor in AMG's bankruptcy case,
said the bank is negotiating with three potential buyers for
the company's assets. At one time the bank's collateral was
worth $3.5 million. Now it is worth less than $1.5 million,
Biggerstaff said.


COUNTY SEAT: Amended Plan of Reorganization Approved
-----------------------------------------------------
County Seat, Inc.’s first amended plan of reorganization
dated August 22, 1997, was approved on October 1 by judge
Helen S. Balick of the U.S. Bankruptcy Court of the District
of Delaware.


FRETTER: Wants More Time to File Plan
--------------------------------------
A hearing has been set for Fretter, Inc., on October 30,
1997, before judge Pat Morgenstern-Clarren in the Northern
District of Ohio, Eastern Division, to consider its motion
to extend its exclusive period to file its Chapter 11 plan
of reorganization


HARRAH’S JAZZ: Final Settlement of Flood Insurance Claims
---------------------------------------------------------
Harrah’s Jazz Company wants bankruptcy court approval of a
compromise on business interruption insurance claims from
the May 1995 flood in New Orleans, when Harrah’s Basin
Street Casino suffered substantial damage and had to be
closed for several days.

Harrah’s filed separate insurance claims for property
damages and business interruption losses under a master
policy, and the insurers have paid $1,213,929 to settle the
property damage claims.

Under an initial, undisputed agreement, Harrah’s received
$1,571,832, with court approval, toward business
interruption claims.

Harrah’s says it has now agreed to a settlement of $1.6
million from the insurers in full satisfaction of the claim,
as this amount falls within the range of the balance of the
actual damages, an exact number would be difficult to
quantify, and further litigation would be costly and time-
consuming.


INTERLINE RESOURCES: Refiner Files Chapter 11
----------------------------------------------
Interline Resources, a used-oil-to-distillate refiner, filed
Chapter 11 in U.S. Bankruptcy Court in Utah. In the fiscal
year ended March 31, 1997, Interline reported a net loss of
$4.6 million, as the company said the cost of
commercializing its technology was higher than originally
projected. Last year, Interline reported it couldn't repay a
$2.5 million loan from an unnamed "individual lender."

According to Octane Week, Interline was battling over $2.3
million it failed to pay Genesis Petroleum (a Quaker State
subsidiary) for its 74 percent interest in a Salt Lake City
refinery. Another creditor, Petroleum Systems, Inc., (PSI)
had a dispute with Interline over royalties from sales of
products from the refineries. Genesis and PSI had filed a
Chapter 7 involuntary bankruptcy petition against Interline.

The company’s Chapter 11 filing circumnavigates the Chapter
7 involuntary bankruptcy. While in bankruptcy proceedings,
Interline hopes to work out a settlement of debts with
creditors as it continues to operate the company, according
to president Mark Williams. But “significant operating
losses, and the deficit in working capital raise substantial
doubt about its ability to continue as a going concern," the
company warns.


JAYHAWK ACCEPTANCE: Judge Confirms Reorganization Plan
---------------------------------------------
Jayhawk Acceptance Corp.'s reorganization plan has been
confirmed by a federal bankruptcy judge in Dallas, clearing
the way for the consumer finance company to soon emerge from
court protection. According to the Dallas Morning News, once
reorganized, the company will exit the high-risk subprime
auto lending business that had caused its financial problems
and concentrate on developing a subsidiary to lend money to
consumers for elective surgery.


KIA GROUP: Subcontractors File for Court Protection
----------------------------------------------------
So far, 28 of Kia Group's most important subcontractors have
gone bankrupt since the company’s insolvency crisis started,
according to The Korea Herald. A number of small- and
medium-sized companies associated with the group have filed
for court protection to reschedule their debts.

Sangjin Corp., parts supplier to Kia Motors Corp., went
bankrupt October 1 after failing to pay an insolvent bill
worth 5.6 billion won ($6.1 million). Kumkang Industries,
another supplier, and Sungdong Machinery, which supplied
parts to Kia Heavy Industries, have also collapsed.

Seven of Kia subcontractors have so far applied for court
protection to undergo restructuring.

Changwon Industries, based in South Kyongsang Province,
applied for court protection Monday. The company, which
supplies 90 percent of its products to Kia Motors and Kia
Heavy Industries, had been a solid business with 280
employees and sales of 49.4 billion won last year.

Ahju Metal in Changwon and AP in Iksan, North Cholla
Province, also applied for court protection early this
month.

Though many subcontractors have gone belly up, the group is
paying them cash to help them continue production so that
parts supplies to the carmaker won't be suspended, a Kia
official said.


MARVEL ENTERTAINMENT: Committee Opposes Schreff’s Claim
-------------------------------------------------------
The Official Committee of Equity Security Holders supports
Marvel Entertainment Group, Inc.’s rejection of the
employment agreement with president and CEO David Schreff,
hired August 13, 1996.

On August 21, 1997, Marvel sought to reject the agreement.  
However, Mr. Schreff filed an objection contending that when
Marvel moved to reject the agreement it had already been
terminated; therefore, it was no longer considered executory
under the Bankruptcy Code and could not be rejected.  He
also asserted he should get an administrative priority claim
for the full amount of his base salary, fringe benefits, and
additional benefits for the full term of the agreement.

The committee holds that the agreement was subject to
rejection at the time of Marvel’s motion and feels Mr.
Schreff is not entitled to an administrative priority claim.
It suggests Mr. Schreff should be allowed a general
unsecured claim in an amount equal to the amount of
compensation provided by the agreement for one year
following December 27, 1996.


PAYLESS CASHWAYS: No Decision on Retiree Claims
------------------------------------------------
At a hearing on the classification of retiree claims,
Payless Cashways, Inc., said the retirees' claims of
approximately $9.5 million are properly classified in the
Amended Plan and are not senior to the noteholders' claims
as the retirees assert.

According Bankruptcy Creditors' Service, Payless argued that
the retirees misconstrued the language in the indenture;
"deferred compensation" is not the equivalent of the
"deferred purchase price of property or services," said the
company. Payless notes that the law draws a clear
distinction between these concepts, as does common parlance:
a company purchases goods and services but compensates its
employees.

Payless argued that the noteholders and the retirees hold
“substantially similar” claims, having precisely the sale
rights against and priority of distribution vis-à-vis the
debtor, notwithstanding any redistribution rights that might
be required under a separate intercreditor agreement.

Daniel Glosband, representing the retirees, argued that they
stand on the literal language of the indenture--deferred
compensation constitutes the deferred purchase price for
services.

Payless said the retirees' arguments are nothing more than
an attempt to improperly elevate their claims over the
claims of the noteholders.

D. Bruce Kratz, representing U.S. Trust, pointed out that
the retirees’ recovery does not come at the expense of the
noteholders.  Any excess recovery by the retirees, under the
terms of the indenture, would be paid directly by Payless
rather than taken away from the noteholders.

Judge Federman indicated that he would like more information
in this matter.  He observed that it is more properly an
objection to the confirmation of the plan, and will be
addressed at that time.  The judge further suggested that
the disclosure statement be modified to explain what would
happen in the event of a ruling in the retirees' favor.


SELECT MEDIA: Emerges From Chapter 11
--------------------------------------
Select Media Communications (SMTV), a publicly held company
that provides vignettes, movie packages, and special events
programming for Fortune 500 clients, has emerged from
Chapter 11. The bankruptcy court approved a reorganization
plan, effective September 29, 1997, that will enable it to
provide additional programming and advertising content and
Internet services to the business community, according to
the company.

SMTV has entered into a joint venture with Edu-Active, which
delivers sales, educational, and information gathering
software packages via the Internet.

Select Communications president Mitch Gutkowski said "Edu-
Active will provide the technology required to enhance our
video delivery capability."

"The joint venture will allow Edu-Active to open up its
industrial training products and other patented technologies
used domestically and internationally," said Laszlo Rakoczi,
director of Edu-Active.


TOTAL HOMECARE: Sells Its Assets
---------------------------------
Total HomeCare, Inc., and its subsidiaries announced that on
August 29, 1997, it sold, free and clear of all liens,
substantially all of the company's assets for $3.2 million
in cash and the assumption of certain leases and contracts,
personal property taxes, current payroll, and other post-
petition obligations up to $35,000, pursuant to an Asset
Purchase Agreement with Sierra Health Services, Inc.  The
sale was approved by the United States Bankruptcy Court for
the District of Nevada.

Pursuant to the bankruptcy court's Order, approximately $1.8
million of the purchase price was applied against the
company's secured debt in principal and interest owed to
Heller Financial, Inc., under prepetition and postpetition
loan documents.

The remainder of the sale proceeds, approximately $1.4
million, will be distributed to the company's creditors in
accordance with bankruptcy court orders.

Total HomeCare will determine whether to assume or reject
the contracts and leases that were not assumed and sold to
Sierra.


WESTERN PACIFIC: Creditors Hang In, But Airport May Bow Out
-----------------------------------------------------------
Western Pacific Airline’s maintenance contractor B.F.
Goodrich Aerospace, the airline's largest unsecured creditor
owed about $8 million has agreed to continue working for the
airline, according to the Denver Post.

Goodrich attorney Dennis O'Dea told U.S. District Bankruptcy
Court Judge Donald Cordova that the company agreed to
operate under the terms of its old contract after reaching a
settlement with the airline, according to the Rocky Mountain
News. The agreement obviates WestPac’s attempt to obtain a
temporary restraining order and preliminary injunction to
ensure that Goodrich would continue providing maintenance
services.

Mercury Air Group, owed $7 million, has also agreed to keep
fueling planes as long as cash payments are made in advance.
However, Western Pacific lost its discount with the company
and now must pay 3 cents per gallon more for jet fuel.

Meanwhile, the Denver Post reports WestPac will shut down
operations in Colorado Springs beginning October 20 and move
all jet flights to Denver International Airport. Also on
October 20, the airline is eliminating its service to
Houston and on November 16, service to Indianapolis will be
stopped.

The city of Denver may, however, deny WestPac the use of DIA
if the carrier does not start paying landing fees, rents,
and other charges accrued since filing bankruptcy.

Douglas Jessop, an attorney for Denver, said WestPac owes
DIA $129,000 in fees and is accruing DIA debt at a rate of
nearly $26,000 a day, in addition to its $7 million in
prepetition debt.

A hearing on Denver's motion to deny use is scheduled for
November 4.


WESTERN PACIFIC: Stocks Jump in Speculation, Still No DIP
---------------------------------------------------------
Western Pacific Airlines shares doubled in value Friday
after a frenzied day of trading, according to The Gazette,

The stock, which was trading at 81 cents on Wednesday,
jumped as high as $1.75 per share on the Nasdaq Friday with
more than 1 million shares traded. When the company went
public in December 1995, its stock debuted at $24 a share.

Speculators gambling on the future of the airline, smaller
and individual investors taking advantage of low share
prices and common shareholders hoping WestPac will be
absorbed by a larger company seemed to be fueling the high
trading, said Eric Dutton, a broker at James Wheeler and Co.
Investments of Denver.

"They're betting that the company will repair the damage,"
said Tom Zwirlein, associate professor of finance at the
University of Colorado at Colorado Springs. "If they're
right on the bet, they will get something back. If it goes
down the tubes, the shareholders won't get a dime."

Although WestPac currently has no DIP financing, Christian
Onsager, the company's lawyer, told Judge Sidney Brooks at a
hearing last week that the carrier is not in need of
emergency financing because the amount of cash it has on
hand is higher than anticipated.

Mark Coleman, WestPac's senior vice president for marketing,
said the airline's failure to secure emergency financing was
not a sign of impending doom for the carrier. He said the
company's better-than-expected cash position will allow
WestPac to "broaden the net" in its search for potential
investors and it gives the carrier more time to evaluate
offers.

                           ------

Meetings, conferences and seminars appear every Tuesday.  

Bond pricing supplied by DLS Capital Partners, Dallas, Texas.  


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
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