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  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 22, 1997, Vol. 1, No. 44

                   Headlines

AMG INDUSTRIES: Bankruptcy Converted to Chapter 7
BARRY'S JEWELERS: Needs More Time to Assume/Reject HQ Lease
CRYSTAL APPAREL: Postconfirmation Report
FLAGSTAR: Is CKE Restaurants Looking for Control?
FLOWIND CORP.: Extension of Time to File Plan

MARVEL ENTERTAINMENT: Head of Marvel Studios Terminated
MONTGOMERY WARD: Amended Global Reclamation Program Approved
MONTGOMERY WARD: Lechmere Seeks to Sell Stores
PAYLESS CASHWAYS: Monthly Operating Sales Results
STRAWBERRIES: Change in Chapter 11 Case Name

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AMG INDUSTRIES: Bankruptcy Converted to Chapter 7
--------------------------------------------------
AMG Industries, Inc., has converted its Chapter 11
bankruptcy reorganization to Chapter 7 liquidation, as
ordered by Judge Robert Littlefield Jr. A trustee will take
inventory of AMG's assets, after creditors' lawyers cited
concerns about how money or materials may have been handled
by the Queensbury company, as reported by Capital District
Business Albany.

AMG filed for Chapter 11 bankruptcy protection in 1995,
listing assets of $4.6 million and liabilities of $5
million; the court had confirmed a reorganization plan in
June 1996.

Margaret Cangilos-Ruiz, an attorney representing the
committee of unsecured creditors, said there may have been
actions that were not closely monitored in the Chapter 11
plan, including AMG's dealings with related companies or
Charles H. Barber, president of AMG, and his father, Charles
M. Barber, the company's chairman.

In addition to some $800,000 in debts to more about 200
unsecured creditors, AMG also owes more than $2.5 million to
its largest creditor, Glens Falls National Bank and Trust
Co. Most of that debt is in the form of a $1.75 million
line of credit secured by AMG's machinery, equipment,
accounts receivable, and other collateral.

Robert Biggerstaff, an attorney representing the bank, said
the bank has instituted an action to seize all its
collateral. He also said that unnamed buyers who had
expressed interest in AMG's assets prior to the change to
Chapter 7 remain interested.


BARRY’S JEWELERS: Needs More Time to Assume/Reject HQ Lease
-----------------------------------------------------------
Barry’s Jewelers, Inc., seeks more time -- until February
27, 1998, or later -- to assume, assume and assign, or
reject the lease on its 38,000-square-foot headquarters
building in Monrovia, California.

Barry’s says its estate and its creditors would suffer
serious harm if it is forced to close the “nerve center” of
its operations during the critical Christmas/Hanukkah
selling season. But compelling assumption of the lease at
this stage of the reorganization effort would subject the
estate to large administrative liabilities and is premature.

A hearing is set for November 5, 1997, before judge Vincent
P. Zurzolo in Los Angeles.


CRYSTAL APPAREL: Postconfirmation Report
----------------------------------------
Crystal Apparel, Inc., has issued its tenth postconfirmation
report. The reorganized debtor says on August 15 and August
19, 1997, $68.25 and $177,076 in cash was distributed to
holders of allowed nonlender general unsecured claims. On
October 8, 1997, $31,760.57 win cash was distributed to the
credit agreement agent on account of allowed unsecured
instituutional lender claims.


FLAGSTAR: Is CKE Restaurants Looking for Control?
--------------------------------------------------------
"CKE would like to control the Flagstar stores," says Steve
Rockwell, a restaurant analyst for BT Alex Brown.

Flagstar Companies, Inc., which owns 580 Hardee’s
restaurants and is the chains biggest franchisee, is being
eyed by CKE Restaurants, Inc., which bought the 3,000-unit
Hardee's chain in July for $327 million but only has direct
control of about 780 of the restaurants.

According to the Orange County Register, Flagstar might be
eager to unload the Hardee's stores to help pay off more
than $1 billion in debt that will remain on its books after
it emerges from Chapter 11 bankruptcy protection this month.
For CKE, parent company of Carl's Jr., gaining direct
control over more Hardee's outlets would make it easier for
the company to revamp Hardee’s stale image.

Nation's Restaurant News said the acquisition price could
range from $260 to $390 million.

Flagstar lost $32.3 million in the second quarter ended July
2, on revenue of $659 million. Cash flow improved slightly
over the year, to $79.7 million.


FLOWIND CORP.: Extension of Time to File Plan
----------------------------------------------
Flowind Corporation has been granted an extension of the
exclusive time to file and obtain acceptances of its plan of
reorganization by judge Alan Jaroslovsky of the U.S.
Bankruptcy Court, Northern District of California. The
original 120-day period has been extended for another 48
days, through and including December 1, 1997, and the date
to obtain acceptances is extended through and including
January 10, 1997.


MARVEL ENTERTAINMENT: Head of Marvel Studios Terminated
-------------------------------------------------------
Marvel Entertainment Group announced that Avi Arad has been
terminated as president and CEO of Marvel Studios, a
division of Marvel. Arad is also a principal stockholder of
Toy Biz, Inc. Marvel says its decision to terminate its
relationship with Arad involved, among other issues, Arad's
conflicting interests in connection with production
contracts to which Marvel Studios is a party.

Under those contracts, Marvel typically is required to pay
"deemed royalties" to movie and television production
companies measured by the volume of toys based on its
characters sold. However, Toy Biz pays no toy-related
royalties to Marvel.

Marvel's recently installed president, Joseph Calamari,
stated, "These contracts make no business sense. We would
be obligated to pay out moneys - that we are otherwise in
short supply of -- to production companies while Toy Biz can
continue to sell toys royalty-free. Management is currently
in the process of reviewing each of these contracts in an
effort to reduce the costs that Marvel must incur, and we
just felt that Avi could not continue to attempt to serve
two masters in helping us sort these matters out."

The recently installed new board of Marvel has asserted the
right to nominate a majority of the members of Toy Biz's
board. Marvel's holds that Toy Biz’s plan to merge Marvel
and Toy Biz was not approved by Toy Biz's rightful board and
is, therefore, null and void. Marvel also believes that Toy
Biz improperly obtained its worldwide, exclusive, perpetual,
royalty-free license to manufacture and sell a wide variety
of toys based on Marvel's characters from Marvel's former
management. In addition, Marvel feels that Toy Biz may have
substantial liability to the company for a variety of unpaid
obligations, including unsatisfied obligations to contribute
up to $50 million toward the intended equity capitalization
of Marvel Studios.


MONTGOMERY WARD: Amended Global Reclamation Program Approved
------------------------------------------------------------
At its hearing on a global reclamation program reported by
Bankruptcy Creditor’s Service, Montgomery Ward attorney
Jeffrey Lindstrom said Ward has received approximately 500
reclamation demands from sellers, with aggregate reclamation
claims of about $150 million. He added that allowed
reclamation claims should approximate $70 million.

On the strengths of filed objections from the bank group and
other creditor, amendments to the program were set forth as
follows. (1) If the aggregate amount of the demands ever
equals or exceeds $100 million, Ward will not settle any
additional demands without prior notice to the Creditor’s
Committee and an opportunity for it to object; (2) Ward will
provide the committee with notice and an opportunity to
object if total allowed reclamation claims exceed $150
million; (3) “reasonable and customary” trade terms are
terms of 2% 30-days with a credit limit of twice Ward’s
average monthly purchases during the year prior to the
petition date, and no less favorable than at October 1,
1996; (4) goods returned by Ward will reduce reclamation
claims only if the merchandise constitutes reclamation
goods; (5) if Wards doesn’t pay postpetition invoices when
due and after 15-day’s notice, a reclamation creditor may
withdraw or modify postpetition trade terms; and (6) if the
DIP facility is terminated or Ward seeks to liquidate all
its assets, all obligations of reclamation creditors to
continue extending trade credit end.

Maytag Corporation and The Hoover Company, holding $1.6
million in reclamation claims, objected that the program
provides disparate treatment to reclamation creditors.

Judge Peter J. Walsh ruled that Montgomery Ward’s amended
reclamation program is approved as modified. Maytag and
Hoover will be carved out from the program and will have the
opportunity to present their legal argument. In the event
that they prevail, their claims will be paid in full in cash
without the requirement that they extend trade credit to
Ward.


MONTGOMERY WARD: Lechmere Seeks to Sell Stores
-----------------------------------------------
Montgomery Ward Holding Corp. has completed the sale of
substantially all of Lechmere, Inc.’s, assets to
Schottenstein Bernstein Capital Group, and now wants to sell
the stores’ real property.

Lechmere, Inc., a wholly owned subsidiary of Montgomery
Ward, has signed a purchase agreement with Klaff Realty L.P.
for $19.5 million cash. Under the terms of the agreement,
Klaff has deposited $1 million into an interest-bearing
account with the balance to be paid on a closing date of no
later than five business days after a court order approving
the sale. Competitive cash bids must exceed the purchase
price by not less than $100,000 and there is a breakup fee
of $88,000 slated for Klaff in the event of a higher or
better offer.

A provision of the asset sale agreement with Schottenstein
allowed Lechmere the right to control sale of the real
property under certain circumstances, but Ward says its
process will yield the maximum value for the benefit of all.
Lechmere will receive 90 percent and Schottenstein 10
percent of all sale proceeds exceeding 15 million.

A hearing on the sale terms is set for November 7, 1997, in
the District of Delaware.



PAYLESS CASHWAYS: Monthly Operating Sales Results
-------------------------------------------------
Payless Cashways, Inc., has reported its postpetition
operating sales results for the month ended October 4, 1997.
Net sales were $207.1 million, a decrease of 21.6 percent in
total from the same period in 1996, and a 10.9 percent
decrease on a same-store basis. (Same-store sales excludes
sales for the 29 stores recently announced to be closed.)
EBITDA decreased to $6 million compared to $12 million for
the same period last year.

The company reported a net loss of $3.5 million compared to
net income of $0.4 million the previous year. Excluding
reorganization items, net loss would have been $2.1 million.

Chairman and CEO David Stanley said, “Our sales results
clearly have been influenced by the effects of the
restructuring, but we are encouraged by much-improved fill-
rates from our distribution center. With the return to
normal conditions in our product pipeline, we expect
improvements in our sales numbers.” He added, “The court’s
approval of our disclosure statement’s adequacy clears the
way for the balloting process, the November 19th
confirmation hearing, and emergency from chapter 11
restructuring in early December. We are preparing to operate
the new Payless Cashways -- leaner, stronger, less burdened
by debt -- filling an important niche for our customers who
prefer a format like we offer and for professional customers
who now do more than one billion dollars of business with us
each year.”


STRAWBERRIES: Change in Chapter 11 Case Name
--------------------------------------------
Strawberries, Inc., has moved the court to change the name
and caption of its chapter 11 cases to reflect the official
change of the Strawberries’ name. The new case name will
read “In re: Milford Resolution, Inc. (f/k/a Strawberries
,Inc.), and Strawberries Holding, Inc., Debtors.” Barring
written objections, due by October 27, 1997, the U.S.
Bankruptcy Court in the District of Delaware will enter the
order without further notice.
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