TCR_Public/971124.MBX   T R O U B L E D   C O M P A N Y   R E P O R T E R        
      Monday, November 24, 1997, Vol. 1, No. 65  

AUTO WORKS: Committee Seeks Accountants
BARNEY'S: Seeks Seventh Extension of Exclusivity
BARRY'S JEWELERS: Court OK's BDO Seidman for Bondholders
BIG RIVERS: U.S. Trustee on Examiner's Fee
DOW CORNING: Judge Bars Dow Corning Plan

DOW CORNING: Seeks authority to buy stock
ELDER BEERMAN: Reports Third Quarter Operating Gains
FLAGSTAR: Court Confirms Plan and Extends Exclusivity
KOENIG SPORTING: Court OK's Store Closings and Ozer Group
LOT$OFF: Corporation Announces $151,000,000 Verdict

MARVEL: Supplements Request for Losco & Marconi       
PARTY WORLD: Hearing on Motion to Reject Seven Leases
STANDARD BRANDS: Joint Plan of Liquidation
WESTERN PACIFIC: Why Does Smith Want To Bail Out WestPac?


AUTO WORKS: Committee Seeks Accountants
The Official Unsecured Creditors' Committee for Auto Works,
Inc. filed an application for an order authorizing the
employment of Freed Maxick Sachs & Murphy PC as accountants
for the Official Unsecured Creditors' Committee.  

The Committee believes it is necessary to engage
accountants as there are voluminous financial records and
documents, and the Committee needs substantial analysis of
these documents in a limited period of time.  Moreover,
there were voluminous financial transactions in the
millions of dollars in transfers between the debtor and its

The current hourly rates for professionals at the firm of
Freed Maxick Sachs & Murphy are:
$185-$195 for directors
$135-$150 per hour for principals
$125-$135 per hour for managers
$70 - $100 per hour for senior accountants
$45-$65 per hour for staff accountants
$46-$50 per hour for paraprofessionals.

BARNEY'S: Seeks Seventh Extension of Exclusivity
On December 2, 1997, a hearing will be held with respect to
the motion filed by the debtors, Barney's, Inc., et al.,
seeking a seventh extension of their exclusive periods to
file and/or advance their plan or plans of reorganization
and solicit acceptances thereto.

The debtors believe that a 120-day extension without
prejudice to seek further extensions is reasonable at this
time.  The debtors continue in their investor process and
it would be disruptive to the debtors' reorganization
efforts if there were competing plans.  The debtors claim
that the size and complexity of these cases alone justify
the extension of the exclusive period.  The debtors hope
that an agreement with Dickson Concepts (International)
Limited will be the basis of a consensual plan, and if that
agreement does no lead to a confirmed plan, the debtors
will need the extension of exclusivity to formulate a new

The current exclusive period expires on December 2, 1997
and the period to solicit acceptances expires on February
2, 1997.

BARRY'S JEWELERS: Court OK's BDO Seidman for Bondholders
The court has entered an order in the case of Barry's
Jewelers, Inc., et al., granting the Official Bondholder
Committee's Application to employ BDO Seidman, LLP as
financial advisor.

BIG RIVERS: US Trustee on Examiner's Fee
The U.S. Trustee in the case of Big Rivers Electric
Corporation, Inc. is asking the court to reconsider its
Memorandum Opinion and Order relative to its conclusions of
law in determining that the Examiner's fee issue in this
case is limited in scope to a "lodestar" analysis.

The U.S. Trustee complains that the court's order seems to
limit, dilute or entirely remove issues already raised by
certain of the parties, which the U.S. Trustee wants to be

The U.S. Trustee states that the court is already likening
the examiner's actions to Henry Kissinger's conduct during
the war in Vietnam, showing how favorably impressed the
court is with the examiner.  However, the U.S. Trustee
points out that if the examiner had negotiated a fee
arrangement with certain parties and this was not disclosed
pursuant to the rules of court, plus exceeded the ambit of
his authority, the court would have to consider existing
law of the circuit, and possibly order a disgorgement of
all fees.  Such determination might not involve a lodestar

DOW CORNING: Judge Bars Dow Corning Plan
A U.S. Bankruptcy Court judge has barred Dow Corning
Corp. from sending creditors its plan to get out of
bankruptcy because of legal flaws.

Lawyers for the former maker of breast implants had been
seeking approval from the court to release its plan to get
out of Chapter 11 bankruptcy, which creditors must approve.
But lawyers for some of the women with claims against
Dow Corning argued the plan would be unfair.

Judge Arthur Spector said Thursday that he could not allow
the package to go out, agreeing that the plan was legally
flawed and would likely be considered unacceptable to
creditors and the court. Sending the plan out to claimants
would be a "monumental waste of time," he said.

"Judge Spector's decision is a strong signal that both
parties need to go back to the bargaining table and craft a
fair and consensual plan of reorganization, " said Kenneth
Eckstein, who is handling the bankruptcy case for the
thousands of women who believe Dow Corning breast implants
made them ill.

Dow Corning says its plan would offer $2.3 billion to be
given to women with implants, but women with implants say
the way the company established the formula would end up
giving women a fraction of that amount. The plan would
give women between $600 and $250,000 if they decided for
the plan, and the amount would increase depending on how
many women voted in favor of Dow Corning's plan.

DOW CORNING: Seeks Authority to Buy Stock
Dow Corning Corporation seeks the authority of the court
purchase minority shareholder interests in DC-STI S.A., a
French corporation of which Dow Corning Corporation is a
joint venturer.

Dow Corning now seeks authority to exercise an option to
purchase certain shares of stock for $1.3 million. Dow
Corning will provide additional information about this
proposed sale to the financial advisors for the Official
Committee of Tort Claimants and the Official Committee of
Unsecured Creditors, and to the Court upon request.

If there are objections to the purchase, a hearing will be
held on December 4, 1997.

ELDER BEERMAN: Reports Third Quarter Operating Gains
The Elder-Beerman Stores Corp. reported a 30.5% increase in
third quarter EBITDA earnings before interest, taxes,
depreciation, amortization and restructuring costs. EBITDA
for the third quarter ending November 1, was $10.7 million,
versus $8.2 million from the previous year.  EBITDA for the
first nine months was $21.6 million, up 32.5% from $16.3
million for the first nine months of 1996.

Elder-Beerman attributed the increases in third quarter
operating results to gross margin improvements; ongoing
cost reduction programs and increases in comparable store

Total sales for the entire corporation were $144.2 million,
a 3.9% increase from the previous year third quarter sales
of $138.8 million. Department Store division sales for the
quarter on a comparable basis were $135.6 million, a
5.8% increase from the previous year third quarter sales of
$128.2 million.  Entire corporation comparable store sales
for the 1997 third quarter were $143.7 million, a 5.1%
increase from the prior year.

For the first nine months, Elder-Beerman reported total
sales for the entire corporation of $386.2 million, a 2.0%
increase from the previous year nine-month period of $378.7
million.  Department Store division sales for the first
nine months on a comparable basis were $361.1 million, a
3.9% increase from the previous year nine-month period of
$347.5 million.  Entire corporation comparable store sales
for the first nine months of 1997 were $383.6 million, a
3.5% increase from the prior year nine-month period.

Elder-Beerman reported an $8.5 million net loss for the
quarter, compared to a $2.2 million net loss in the same
period of 1996.  The increase in net loss from 1996 is the
result of an increase in restructuring charges due to
costs associated with the company's bankruptcy proceedings
and the closing of two department stores.  For the first
nine months, Elder-Beerman reported a net loss of $12.3
million, compared to a net loss of $11.3 million for the
first nine months of 1996.

FLAGSTAR: Court Confirms Plan and Extends Exclusivity
On November 12, 1997, the court approved Flagstar
Companies, Inc. and Flagstar Corporation's joint disclosure
statement and confirmed FCI and Flagstar's amended joint
plan of reorganization.

The court also granted a supplemental motion authorizing
the debtors to employ and compensate additional
professionals to represent the debtor in the ordinary
course of business, and the court entered an order
extending the exclusivity period for an additional 90 days.

KOENIG: Court OK's Closings, Ozer Group & New Office
The court entered an order on November 10, 1997 authorizing
the debtor Koenig Sporting Goods, Inc. to close two retail
locations known as "Walden Galleria" and "Great Northern
Mall" and to retain and employ The Ozer Group, LLC and
Buxbaum, Ginsberg & Associates, Inc., as Consultant and
Liquidator for such sales and to sell residual inventory to

The Court also approved the debtor's motion for authority
to enter into a nonresidential real property lease for a
new smaller corporate office, located at 40 Alpha Park, in
Highland Heights, Ohio, with a monthly rent of $2,150.

LOT$OFF: Corporation Announces $151,000,000 Verdict
San Antonio based LOT$OFF Corporation announced today a
jury verdict in its favor aggregating $151 million obtained
in a stock conversion lawsuit against Chase Manhattan Bank
and other defendants in the United States District
Court in San Antonio.

The jury awarded actual damages of $12,975,000 and punitive
damages of $138,000,000.

Charles "Hop" Fuhrmann, President of the Company,
commented, "We are of course elated that the jury's verdict
vindicated our commitment to pursue this matter on behalf
of our stockholders.  I believe the jury diligently
listened to the evidence and recognized the damages done to
LOT$OFF Corporation and its stockholders, employees,
vendors and creditors."

Barry Chasnoff, lead counsel for LOT$OFF and senior partner
at San Antonio's Akin, Gump, Strauss, Hauer & Feld stated,
"A jury of eight citizens listened carefully to the
evidence for five weeks and decided to send a message
to banks around the world that the behavior engaged in by
Chase would not be tolerated."

LOT$OFF Corporation (formerly 50-OFF Stores, Inc.)
reorganized in a Chapter 11 bankruptcy, filed October 9,
1996, and emerged from bankruptcy on June 16, 1997.

MARVEL: Supplements Request for Losco & Marconi
Marvel Entertainment Group, Inc., et al. previously
requested a court order authorizing the retention and
employment of Losco & Marconi, P.A. as special litigation
counsel for the debtors.

The application failed to contain financial information.  
Specifically, L&M will receive a retainer in the amount of
$25,000 for professional fees and expenses to be incurred
in connection with the firm's representation of the
debtors, and the retainer will be paid by High River
Limited Partnership and Westgate International L.P., two
separate non-debtor entities.  Carl Icahn controls High
River and Vincent Intrieri serves as a director on Marvel's

PARTY WORLD: Hearing on Motion to Reject Seven Leases
A hearing date has been set for November 25, 1997 on the
motion of Party World Inc. and Party America Inc. to reject
seven nonresidential real property leases in California, as
previously reported.

The American Banker reported the following history of the
Regional Healthcare bankruptcy.  In February 1990, Hernando
County, Fla., issued $57 million of bonds on behalf of
Lykes Health Systems Inc., which later changed its name to
Regional Healthcare Inc.

The hospital system borrowed $3.7 million for working
capital from CNA Insurance Cos., which owns the $50.6  
million of term bonds used to build Spring Hill Regional
Hospital. The hospital system failed to pay off the working
capital loans on time, thereby defaulting on the revenue
bonds, and in 1993, RHI and its three individual hospitals
filed for Chapter 11 bankruptcy in Tampa, Fla.

The U.S. Bankruptcy Judge in the case ruled that the
debtors must pay their debts because RHI's assets exceed
liabilities. RHI's board of directors voted to merge with
Adventist Health System/Sunbelt, a not-for-profit hospital
chain. That merger failed, and in October of 1997, CNA and
RHI filed competing reorganization plans. On November 24,
1997 revised versions of both plans are due at the court
and will be mailed to creditors for their votes. On January
5, 1998 ballots must be returned to the court, and January
15-20 is the confirmation period during which votes are
tabulated and a plan is chosen.

The St. Petersburg Times reported on November 20, 1997 that
Regional Healthcare may look to Morton Plant Mease, a
suitor it had recently rejected. Morton Plant Mease Health
Care of Dunedin announced that it has been invited to
resume merger discussions with Regional Healthcare. Morton
Plant CEO Phillip Beauchamp did not say whether the company
was still interested. However, he made it clear that if
Morton Plant does resume the courtship, the two will begin
from scratch. "Should we return to negotiations, we will
begin fresh discussions and hope we can reasonably come to
terms with  (Regional Healthcare's) board," Beauchamp said.

Regional Healthcare CEO Tom Barb acknowledged that the
invitation was extended to Morton Plant, but would not
comment on whether any other hospital systems also received
invitations.  The announcement came after Regional
Healthcare's board ended its exclusive talks with Adventist
Health System/Sunbelt of Winter Park and University
Community Hospital of Tampa.

The American Banker reported on November 20, 1997 that RHI
wants to merge with two nonprofit health care groups, while
CNA wants overriding control over who operates RHI's
facilities. To date, CNA's attempt to link RHI's operations
with a for-profit corporation has failed. Both CNA's and
RHI's plans provide that creditors get paid in full with
interest. The plans differ on how much debt RHI repays as
well as the interest rates that restructuring will carry.  
Creditors and debtors also are debating how much influence
CNA will have in running a public asset.

Ambac Assurance Corp. is the insurer and registered owner
of the $6.4 million of serial bonds contained in that deal.
CNA purchased the $50.6 million of term bonds a part of a
private placement. Commissioners in the county north of
Tampa are worried about how the reorganization vote will
affect their lease of Brooksville Regional Hospital,
which was renovated with a portion of the bond issue.

County attorney Robert Bruce Snow says provision of CNA's
plan may jeopardize the bonds' tax-exempt status because a
private company would be running the facility. CNA
spokesman Clark Walter said his company only wants to
ensure "first-class health care" is available to the public
and that small creditors and bondholders get paid.

Chicago-based CNA holds term bonds due to mature in 2010 at
9.75% and in 2019 at 10%. CNA also loaned $3.7 million to
RHI in 1991 and 1992 so it could cover a significant
shortage in working capital. When RHI defaulted on the
capital loans in January 1993, triggering a technical
default, CNA and the bond's trustee, NCNB National Bank of
Florida, began foreclosure. RHI in turn filed for Chapter
11 bankruptcy.

RHI attorney Robert Soriano outlined both plans as they are
set forth in court documents.  Under RHI's plan, it would
be required to amortize $48 million over 22 years. CNA
proposes to spread about $80 million of debt over an
undisclosed period of time, Soriano said.  RHI also
proposes to pay all creditors including bondholders at an
interest rate of 5.6% while in bankruptcy. Once the
bankruptcy is over, creditors would earn 7.5% interest on
what they are owed.

If RHI merges with other nonprofit corporations, as it
hopes to do, then the interest rates on the debt could be
lowered to match its improved credit strength.  Under CNA's
plan, throughout bankruptcy and recovery bondholders would  
receive the same rates the bonds carry now, which include
coupon payments of up to 10%, Soriano said. Both plans will
draw from $30 million of cash reserves that RHI now has

STANDARD BRANDS: Joint Plan of Liquidation
Standard Brands Paint Co., a California corporation,
Standard Brands Paint Company, a Delaware corporation, and
Major Paint Company, a California corporation, as debtors,
submitted to the court an order confirming the revised
joint and consolidated plan of liquidation of the debtors
and the Official Committee of Unsecured Creditors dated
July 23, 1997, as modified.

The plan provides:

Class   Description                Treatment

N/A     Administrative Expenses    Paid in Full

N/A     Priority Tax Claims        Paid in Full

1     Non-Tax Priority             Paid in Full
    (wages, employee benefits)

2     Claims of Former Fidelity    Paid in Full
                                   from reserved cash

3    Secured Claims of             Collateral sold and
      Transamerica                 proceeds distributed
                                   in cash or collateral

4  All other secured claims        Debt cured and
                                   reinstated, Collateral
                                   surrendered or paid in      
                                   full in cash

5 General Unsecured Allowed        Paid pro rata       
   Claims                          according to the
                                   terms of the Corimon

6  All Claims of Corimon           Paid according to the
                                   terms of the Corimon

7  All Intercompany Claims of         0
   any Debtor or Realty Against
   any other Debtor orl Realty

8  All interests in SBD              No distribution likely

9  All interests in SBC              Retain and receive no
                                     money or property
10 All interests in MPC              Retain and receive no
                                     money or property

WESTERN PACIFIC: Why Does Smith Want To Bail Out WestPac?
The Denver Gazette reported on November 20, 1997, that
Smith Management Co.'s seemingly nick-of-time arrival to
sweep Western Pacific Airlines out of bankruptcy raises
more questions than answers: Just who are these guys? And
why do they want to bail out a relatively small airline
based 2,000 miles from their New York offices?

One answer to both questions could rest in the apparent
personal-professional relationship between WestPac Chief
Executive Officer Robert Peiser and Smith Management, which
came in as a creditor to TWA when Peiser was with
that airline.  Clearly, Peiser was negotiating with Smith
during WestPac's trials and tribulations in U.S. Bankruptcy
Court.  But it's hard to stop asking questions about this
relatively unknown group that is willing to throw up to $50
million at an airline that has lost $77 million in the past

"We are a private investment firm that manages its own
capital," said Smith President John Adams from New York.
"We generally keep a low profile but invest in
opportunities that present themselves - opportunities such
as Western Pacific Airlines."  The key word here is
"private."  Adams wouldn't comment on the relative size of
Smith's $50 million WestPac commitment, calling it simply
"large." Because we are private, I'd rather not discuss the
level of our investments," Adams said.

The firm has invested in a range of struggling companies,
mostly in the health-care, hotel management and development
industries. In most cases, the companies are in bankruptcy
or struggling start-ups. "We generally invest in companies
we believe are undervalued or that have significant
potential that could be realized with additional capital
and financial guidance," Adams said.

Smith Management's highest-profile investment came in
January 1996, when it invested $20 million in Hawaiian
Airlines. Hawaiian spent a year in bankruptcy,
emerging in September 1994. But the airline struggled to
raise enough cash to keep it healthy. Today, Hawaiian is
about 50 percent larger than WestPac, with 2,400
employees and 23 jets, and teeters on the edge of

It is unknown whether Smith's investment in WestPac would
affect WestPac's 53 percent-owned bankrupt subsidiary,
commuter airline Mountain Air Express.  WestPac has said
the subsidiary will be sold, and there's no indication
those plans will change. "Smith Management has an interest
in Western Pacific, they do not have an interest in
Mountain Air Express," said WestPac spokeswoman Elise

WestPac owes hundreds of unsecured creditors about $50
million. Analysts say the most likely scenario is WestPac
offering the creditors a fraction of what they are owed.


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Debra Brennan and Rebecca A. Porter, Editors.   
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