TCR_Public/971105.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, November 5, 1997 Vol. 1, No. 52

COLOR TILE: Counsel Seeks Withdrawal
ERD: Seeks to Extend Time to Assume or Reject Leases
LEVITZ: Chief Financial Officer Leaves
LEVITZ: First Meeting of Creditors

MARVEL: Seeks District Court
MONTGOMERY WARD: Committee of Creditors
MONTGOMERY WARD: Court Approves Employee Bonus Plan
MONTGOMERY WARD: Rejection of 11 Unexpired Leases
ORANGE COUNTY: Insurance Firms Sued

PAYLESS CASHWAYS: Looking at New Lease Options
POCKET: U.S. Objects to Nat Tel’s Motion
RDM SPORTS: Objection to Retention of Pacholder
SANYO SECURITIES: Seeks Court Protection
WELCOME HOME: Seeks Extension of Exclusivity

COLOR TILE: Counsel Seeks Withdrawal
Munsch Hardt Kopf Harr & Dinan, P.C. and Saul, Ewing, Remick
& Saul LLP filed a motion for an order approving their
withdrawal as counsel for the Official Committee of
Franchisees of Color Tile Inc., et al.  If an objection is
filed by November 12, 1997, a hearing date will be set.

In light of the approval and closing of the Global
Settlement in the case, the firms claim that there is no
longer a need for an Official Committee of Franchisees.  
Termination of the Committee will result in a savings to the
estates, and as a result, there will be no need for counsel
to the Committee.

The U.S. Trustee does not oppose the withdrawal of counsel
provided that the Committee and its counsel consent to
reinstatement if necessary at a later date.

ERD: Seeks to Extend Time to Assume or Reject Leases
ERD Waste Corp. and its sixteen affiliated debtor companies
seek the entry of an order extending the debtors’ time to
assume or reject their leases of non-residential real

The debtors state that most, if not all of the leases may
prove to be vital to the continuing operations of their
businesses.  Until the debtors are given an opportunity to
develop an overall business plan and structure their plan of
reorganization, they cannot determine exactly which leases
should be assumed or rejected.  The debtors have operated
under the protection of Chapter 11 for only a month, and
have just begun to contemplate the alternatives available to
them in order to effectively reorganize.

The debtors seek an extension until February 1, 1998 because
their presently approved financing and budget runs until
January 31, 1998.

LEVITZ: Chief Financial Officer Leaves
On October 31, Patrick J. Nolan, Chief Financial Officer of
Levitz Furniture, Inc., left the company to pursue other
business interests.  

Mr. Eliot Green is serving on an interim basis in the
Finance Department.  The company noted that Mr. Green has
considerable experience in handling financial matters in
Chapter 11 situations having worked most recently at Edison
Brothers as an interim manager during the development of the
company's business plan.  

LEVITZ: First Meeting of Creditors
Present for this initial examination of the Debtors by
Creditors, and representing the Debtors, was Edward Zimmer,
Vice-President, Secretary and General Counsel for each of
the Levitz Companies.  Accompanying Mr. Zimmer was Sally
McDonald Henry, Esq., of Skadden Arps Slate Meagher & Flom,
Counsel for the Debtors.  Present as co-Counsel  for the
Creditors' Committee were Kevin Gross, Esq., of Rosenthal
Monhait Gross & Gooddess, and Robin Keller, Esq., of Stroock
& Stroock & Lavan.

Mr. Zimmer told Creditors that the Debtors had sold their
headquarters office in Boca Raton for $8,100,000, as well as
property in Chicago for $12,500,00.  Also, continued Mr.
Zimmer the Debtors, to date, have rejected certain contracts
in Fort Lauderdale having a total value of $1,325,000.
Asked how many stores the Debtors had on filing date and how
many are still open, Mr. Zimmer replied that on filing date
the Debtor had 120 stores open; since filing date they have
announced that 18 stores will be closed.

Mr. Zimmer responded to a question about DIP financing with
the information that the total DIP financing is in the
amount of $260,000,000. Mr. Zimmer said that he expects the
business plan to be complete in probably another 60 days.

Ms. Henry told creditors "that the Bar Date for filing
claims will be set for some time in early 1998."  She said
that a  Creditors' Committee has been appointed, which
represents diverse kinds of creditors; and that two
financial advisors have been retained, Houlihan Lokey and
Coopers & Lybrand, who are currently working on operational

Additionally, she said that a settlement had been reached
with the Debtors' vendors in relation to the chargebacks for
defective merchandise delivered and complained about by
customers; this matter may be heard on the December 3rd
emergency hearing date, said Ms Henry.

Creditors present at the meeting voiced their frustration
that no one was present at the meeting to answer many of
their specific questions relating to the debtor’s financial
status and future plans.

The United States Bankruptcy Court for the Northern District
of Texas, Dallas Division has entered its order setting
December 12, 1997 as the last date (“Bar Date”) for the
filing of proofs of claim in the above-captioned Chapter 11
proceeding against LiL’ Things, Inc.

MARVEL: Seeks District Court For Case
The debtors, Marvel Entertainment Group, Inc, et al. filed
an action against various individuals and entities in the
District Court for the District of Delaware seeking money
damages, declaratory relief and injunctive relief for, among
other things, fraudulent transfer and breach of fiduciary

The debtor claims that the causes of action asserted in the
District Court case are integrally intertwined with all of
the material matters currently pending in the Chapter 11
case, and the debtors seek to withdraw the reference of the
Chapter 11 cases, and consolidate all matters with the
District Court Case.

The debtors seek authority to retain both Losco & Marconi,
P.A. and Friedman Kaplan & Selier LLP on an expedited basis
as special litigation counsel to the debtors for the
prosecution of the complaint alleging significant misconduct
by Ronald O. Perelman and his affiliates, Chase Manhattan
Bank and other lenders, and Toy Biz, Inc. and its
controlling shareholders, stating that they substantially
contributed to the financial collapse of the debtors.

MONTGOMERY WARD: Committee of Creditors
The United States Trustee filed notice with the Court of the
first amended appointments to the Official Committee of
Creditors appointed in these chapter 11 cases.  The current
members of the Committee are:

                    Bank of Nova Scotia
                    BNY Financial Corp.
                    Credit Lyonnais
                    John Hancock Mutual Life Insurance Co.
                    MTD Productions
                    NationsBank, N.A.
                    Simon DeBartolo Group
                    Union Bank of Switzerland
                    Whirlpool Corp.
                    White Consolidated Industries

*** New York Life Insurance Co. resigned from the Committee
*** John Hancock Mutual Life Insurance Company joins the

MONTGOMERY WARD: Court Approves Employee Bonus Plan
Montgomery Ward Holding Corp. won approval in U.S.
Bankruptcy Court for lucrative severance and bonus packages
to keep top
managers with the retailer during its bankruptcy
reorganization. Under the plan, Ward's top 14 executives can
get bonuses of as much as 125 percent of their salary and
bonus if the company leaves Chapter 11 by April 1, 1999.

MONTGOMERY WARD: Rejection of 11 Unexpired Leases
Mr. DeFranceschi, representing the Debtors, stated that the
Debtors have determined that each of the eleven stores have
no value, are vacant, and all efforts at marketing the
properties have been unsuccessful.  

David G. Shay, Esq., representing James W. Miller, the
landlord for the Debtors' Store located in St. Cloud,
Minnesota, argued before Judge Walsh that the Debtors'
rejection of the St. Cloud Lease should be conditioned
on the Debtors' full payment of all administrative claims
owed to Mr. Miller.  

Mr. Shay explained that the Mr. Miller built the St. Cloud
Strip Center around Montgomery Ward's agreement to open and
operate a department store. Mr. Miller advanced $4,000,000
to the Debtors for construction of a new department store,
has invested millions in the development of the strip
center, and is party to numerous agreements with other
tenants predicated on the opening of a Montgomery Ward
department store.  Mr. Miller calculates that the Debtors'
owe close to $1,000,000 on account of post-petition lease
obligations, and should be required to pay those amounts
prior to rejection.

Mr. DeFranceschi told Judge Walsh that the Debtors have
reviewed Mr. Miller's purported claims and disagree with his
computations and liability theories.

Judge Walsh noted that he has never conditioned the
rejection of a lease upon payment of post-petition claims.  
Judge Walsh suggested that Mr. Miller calculate his
administrative priority claims and then file a motion to
compel payment of those claims. If Mr. Miller can prevail on
that motion, the Court will direct immediate payment of all
administrative claim amounts owed.  

Judge Walsh overruled Mr. Miller's objection and granted the
Debtors' Motion in all respects.  Judge Walsh agreed that
the rejection of each lease would be effective upon the
later of (a) entry of the order and (b) surrender of the
property to the Landlord.  

ORANGE COUNTY: Insurance Firms Sued
Orange County is demanding $1.8 million from Hartford Fire
Insurance Co. and Robert F. Driver Co. alleging breach of
insurance contract, breach of good faith and negligence.  

While the city lost $5.8 million, it is demanding only the
portion lost  because of  what it alleges was employee
negligence - which the suit claims is covered by the

PAYLESS CASHWAYS: Looking at New Lease Options
On November 3, 1997, the Kansas City Business Journal
reported that Payless Cashways may be looking for a new
home.  A source said Payless officials will decide this week
whether to keep the company's headquarters at Two Pershing
Square, an 11-story building just north of Union Station, or
move its corporate offices.

Payless representatives have been in "serious" talks in the
past three weeks with officials from TrizecHahn Office
Properties Inc., the Toronto-based owner of Two Pershing
Square. Payless wants to renegotiate the terms of its lease,
according to a source who is familiar with the negotiations.
Payless' lease expires in 2002.

Payless reportedly is also looking at a few other downtown
properties, including the Power & Light Building, Town
Pavilion and the former Board of  Trade building on 10th

Payless had until Oct. 31 to reject its current lease or
accept a renegotiated lease from TrizecHahn. The company's
final decision was not known as of the Business Journal's

POCKET: U.S. Objects to Nat Tel’s Motion
The United States, on behalf of the Federal Communication
Commission objects to the Motion of National Telecom PCS,
Inc. for Substantive Consolidation of the Debtors’ Estates
for Purposes of Plan confirmation.

The U.S. claims that Nat Tel failed to show facts meriting
substantive consolidation, and specifically that the
consolidation would be unfair to various creditors,
including the U.S., and that the FCC’s interests in the
licenses should be preserved in any substantive

RDM SPORTS: Objection to Retention of Pacholder
Foothill Capital Corporation, as agent for a group of
lenders, creditors of the debtors, RDM Sports Group, Inc.,
et al., filed an Objection to the Application of the
Official Committee of Bondholders of RDM Sports Group, Inc.,
et al. to retain and employ Pacholder Associates, Inc. as
Financial Advisor.  

Specifically, Foothill claims that while the  Bondholders’
Committee wants Pacholder to assist the Bondholders’
Committee in its analysis of the debtors’ business
operations, review the debtors’ financial condition, advise
the Committee regarding the plan of reorganization, and
provide other financial advice, the court previously
approved the application of the Official Committee of
Unsecured Creditors to employ Altschuler, Melvoin & Glasser
(AMG) as financial advisors.  

The Committee of Unsecured Creditors retained AMG to perform
essentially the same functions that the Bondholders’
Committee now seeks to have performed by Pacholder, and
Foothill objects to the retention of yet another

SANYO SECURITIES: Seeks Court Protection
Sanyo Securities Co., a second-tier brokerage house, filed
for court protection from its creditors today. Sanyo said
the Tokyo District Court has issued an order to protect the
assets of the brokerage, which has become the first in Japan
to fail since the end of World War II. As of the end of
September, Sanyo said in a statement that it has current
assets of 297.6 billion yen ($2.48 billion) and 373.6
billion yen ($3.11 billion) in outstanding debts.

WELCOME HOME: Seeks Extension of Exclusivity
Welcome Home Inc., a/k/a The Glorious Nest, Home Again,
f/k/a Cape Craftsmen, Inc. seeks an order extending the
debtor’s exclusive right to file a plan from November 17,
1997 to and including January 16, 1998 and to obtain
acceptance thereof from January 16, 1998 to and including
March 17, 1998.

A hearing will be held on November 13, 1997.

The debtor claims that it needs additional time to formulate
a plan of reorganization and to discuss it with the
Committee. The debtor believes that if granted the
additional 60 days, the debtor will be able to formulate a
plan and thereafter to secure the requisite number of

A listing of meetings, conferences and seminars appears
every Tuesday.

Bond pricing, appearing each Friday, is 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 co-
published by Bankruptcy Creditors' Service, Inc.,
Princeton, NJ,  and Beard Group, Inc., Washington DC.  Debra
Brennan and Rebecca A. Porter, Editors.

Copyright 1997.  All rights reserved.  This material is
copyrighted and any commercial use, resale or publication
in any form (including e-mail forwarding, electronic re-
mailing and photocopying) is strictly prohibited without
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Information contained herein is obtained from sources
believed to be reliable, but is not guaranteed.

The TCR subscription rate is $575 for six months delivered
via e-mail.  Additional e-mail subscriptions for members
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