TCR_Public/971126.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 26, 1997, Vol. 1, No. 67

BIG RIVERS: PacifiCorp Replies to Examiner's Brief
L.A. GEAR: Possible Bankruptcy
LTV: Suspension in Trading Expected
MOLTEN METAL: Announces Third Quarter Results
MONTGOMERY WARD: Court Approves Store Closings

NATIONAL RECORD: Exemplifies Healthy Industry Turnaround
SEARCH-FINANCIAL: Settlement in Noteholders' Litigation
WESTERN PACIFIC: Frontier Puts the Squeeze On
WESTERN PACIFIC: MAX Offered $3 Million
YAMAICHI SECURITIES: Hashimoto Promises Funds


BIG RIVERS: PacifiCorp Replies to Examiner's Brief
The Appellants, PacifiCorp Kentucky Energy Company and
PacifiCorp Power Marketing, Inc. have replied to the
Examiner's Brief in response to the Appellants' opening
brief on their appeal from the order of May 30, 1997,the
Disqualification Motion Appeal.)

The bankruptcy court's order of May 30, 1997 denied the
PacifiCorp Entities' motion to disqualify the bankruptcy
judge and remove the examiner.  On November 7, 1997 the
examiner filed a brief in response to the PacifiCorp
Entities' Opening Brief.

This brief is a reply to the examiner's brief.

In the Examiner's Brief, the Examiner stated that the ex
parte communications with Judge Roberts were "expressly
authorized" by the bankruptcy's court's orders.  PacifiCorp
states that this contention is simply wrong.  A bankruptcy
judge may not "authorize" ex parte communications that
violate the prohibition on such communications in the
Federal Rules.  PacifiCorp states that there is no order
permitting such communications.

PacifiCorp goes on to argue that the ex parte contacts are
impermissible, that Judge Roberts had no authority to
permit the ex parte communications, and that such
communications require disqualification.

The PacifiCorp entities state that they do have standing to
seek disqualification and an adequate remedy plainly
exists: The Auction Order could be vacated along with all
orders since the entry of the Auction Order.

L.A. GEAR: Possible Bankruptcy
On November 24,1997, L.A. Gear, Inc. (NYSE:LA) announced
that it has determined it has insufficient resources
to make the interest payment due Nov. 30, 1997 on the
Company's 7 3/4% Convertible Subordinated Debentures due

The failure by the Company to make this interest payment
will constitute an Event of Default under the Debentures.  
The Company's inability to make the scheduled interest
payment is attributable to losses accumulated over the past
several years and the resulting shortage of liquidity.  In
addition, the Company has not paid any cash dividends on
its Series B Cumulative Preferred Stock since it has been

The announcement was made by David Gatto, company chairman
and CEO.  LA Gear, Inc. conducts substantially all of its
business operations through wholly owned subsidiaries,
principally L.A. Gear California, Inc.  None of L.A.
Gear, Inc.'s subsidiaries are obligors under the
Debentures.  The default of interest on the Debentures is
not expected to impact the business and operations of these
operating subsidiaries.  

The Company also announced that, in light of the Company's
inability to service the Debentures or make preferred
dividend payments on its Series B Cumulative Preferred
Stock, it has commenced a study of financial restructuring
alternatives.  One or more of these alternatives may
include the commencement of formal reorganization
proceedings under Chapter 11 of the United States
Bankruptcy Code.  An outcome of such proceedings is likely
to be the elimination of all common stock interests in L.A.
Gear, Inc. issued and outstanding at the time such
proceedings are commenced.

LTV: Suspension in Trading Expected
The Trustees of the Aerospace Creditors Liquidating Trust
(PCX:ARO.TT) announced yesterday that the Pacific
Exchange has informed the Trust that it anticipates that it
will suspend trading of the Units of the Trust on the
Pacific Exchange before the opening of business on December
16, 1997.  This is the day after the previously announced
record date of December 15, 1997, the date for determining
which holders of the Units will be entitled to receive the
final cash distribution from the Trust.  

The amount of the final cash distribution is subject to the
approval of the United States Bankruptcy Court for the
Southern District of New York and will be announced by the
Trust as soon as the Trust receives such approval.  The
Trustees of the Trust are requesting the Bankruptcy Court
to approve a final distribution date of Dec. 29, 1997.

MOLTEN METAL: Announces Third Quarter Results
On November 20, 1997, Molten Metal Technology, Inc.
(Nasdaq: MLTN) reported final results for the third quarter
of 1997. For the quarter ended September 30, 1997, the
company reported net revenues of $5.4 million, compared to
net revenues of $15.1 million for the third quarter ended
September 30, 1996.  Net losses for the third quarter were
$63.1 million or $2.78 per share, compared to net losses of
$5.3 million or $0.22 per share for the third quarter of

As a result of Molten Metal Technology's current financial
position and pursuant to SFAS 121, the company reviewed the
carrying value of its investment in its Bay City facility
and realized an impairment charge for long-lived assets of  
$38.4 million.  The third quarter of 1997 was also impacted
by unusual charges for severance expenses as well as legal
and other professional services, which added approximately
$2.5 million to the third quarter loss. Also, during the
third quarter, the company did not recognize revenue
related to its Nichimen and Hanford projects, which
resulted in an increase in losses of $155,000 from the
preliminary results reported October 29, 1997.  Due to
recent liquidity developments, the company also classified
convertible redeemable preferred stock from a component of
equity, as reported in the preliminary results, to
mezzanine financing.

For the nine months ended September 30, 1997, Molten Metal
Technology's net revenues were $16.9 million, compared to
net revenues of $55.3 million for the nine months ended
September 30, 1996.  Net losses were $112.5 million or
$4.87 per share, compared to net losses of $5.6 million or
$0.24 per share reported for the nine months ended
September 30, 1996.

In order to address both its short-term and long-term
liquidity needs, Molten Metal Technology is pursuing
various financing opportunities, including equity and debt
financing from private investors, and also is seeking a
strategic partner to support one or more of its business
segments.  Without the completion of substantial financing,
the company will not have sufficient funds to continue
normal operations after November 1997 and may be required
to file a petition for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. Molten Metal Technology announced
earlier this week that it has retained the Blackstone
Group, an investment banking firm, to review strategic
alternatives, including the possible sale of some or all of
its assets.

MONTGOMERY WARD: Court Approves Store Closings
Bankruptcy court Judge Peter Walsh approved Montgomery
Ward's plan to close 47 stores, providing the retailer with
a minimum of $75 million in liquidation proceeds.
Closeout sales at stores started earlier this month. In a
hearing before the court Montgomery Ward  said it realized
$7 million in $22.8-million sale of Lechmere stores, with
the remainder going to the liquidators. The Court also
extended to May 1 Montgomery Ward's exclusive  right to
develop a reorganization plan to emerge from bankruptcy.

NATIONAL RECORD: Exemplifies Healthy Industry Turnaround
The Pittsburgh Post Gazette reported on November 23, 1997
that National Record Mart Inc. is starting the critical
holiday shopping season on a high note. The Carnegie-based
music store chain has generated sales gains in the double
digits for five straight months, trimmed its losses and
seen its stock price rebound to nearly $4 a share from a
52-week low of around $1.

NRM's same-store sales - sales at stores open at least a
year - have been "the best in the industry" recently,
analyst Wayne Teetsel said.  At least one large music
retailer has seriously looked at NRM as a possible
purchase, Teetsel said, though he would not disclose the

He expects a handful of potential bidders to emerge by the
middle of next year. Among those that might be in the
position to make a play for NRM, he said, is Trans World
Entertainment of Albany, N.Y., which recently purchased
the Strawberries chain based in Massachusetts. From June
through October, same-store sales at NRM increased an
average 14.5 percent each month. Sales for the quarter
totaled $23.7 million, compared with $21 million a year

A shakeout in the retail record sector over the last couple
of years resulted in a handful of large chains filing for
bankruptcy, including NRM's biggest local competitor,
Camelot Music. Camelot closed several stores, sending more
customers NRM's way. NRM also shut down a handful of stores
in the last year.

While NRM claims it isn't seeking a buyer, the chain is
shopping for investment capital.  Specifically, NRM hopes
to raise about $20 million through a debt offering.  NRM
would use the money to expand the chain of Waves Music
stores that it operates.

SEARCH FINANCIAL: Settlement in Noteholders' Litigation
Search Financial Services Inc. today announced that it has
entered into a Stipulation of Settlement to settle the
noteholder class action litigation filed against it in
Federal Court in Mississippi in December 1995 and all
claims held by the Litigation Trust established under the
plan of reorganization of Search's fund subsidiaries.  

Under the terms of the Settlement, Search will be required
to pay $362,500 in cash and to issue Search common stock
having a value of $1,787,500.  The Settlement is subject to
various conditions, including approval by the Federal
Court in Mississippi and the Bankruptcy Court.  If all
conditions are satisfied, the settlement is expected to be
completed by year end.  

The Litigation Trust was established to pursue causes of
action of Search's fund subsidiaries and of the former
holders of notes issued by the fund subsidiaries who
assigned their claims to the Litigation Trust.  The
noteholder class action litigation arose during the
reorganization of Search's fund subsidiaries and sought
establishment of a class and damages for claims related
to the offering of notes by three of the fund subsidiaries.  
This Stipulation of Settlement would settle all claims of
the Litigation Trust as well as all claims of all potential
class members in the noteholder class action litigation.  

George C. Evans, Search's chairman, president and CEO,
said, "Since joining Search in January 1995, we have had to
deal with many challenges in effecting our turnaround.  
This Settlement signals an important milestone for Search
in that it will end the final chapter in the history of
pre-reorganization Search and allow us to devote our full
attention and resources to building the new Search."  

WESTERN PACIFIC: Frontier Puts the Squeeze On
It was reported in the  Denver Post that Friday's court
hearing began with WestPac attorney Christian Onsager
asking U.S. Bankruptcy Judge Sidney Brooks to approve
WestPac's payment of $350,000 in initial fees to Smith
Management Co., a New York investment company that has
pledged to invest as much as $50 million in the airline.

Onsager said WestPac has been "shopped extensively" by its
management to prospective investors since last month's
bankruptcy filing and Smith Management was "the only party
with a realistic offer to get this airline on a solid
footing."  After Onsager spoke to the court, Arthur Amron,
senior vice president of Wexford Management LLC, the
Greenwich, Conn. firm that is teamed with Frontier,
opposed WestPac's request to pay preliminary fees to Smith
Management.  Amron said the payment of initial fees to
Smith would "chill the bidding process" for WestPac and
"create an unlevel playing field" for other potential
investors in the bankrupt airline.

At that point, Amron revealed that his investment firm and
Frontier were teamed in an effort to derail the Smith offer
and take over WestPac themselves.  He handed out a document
detailing terms of the proposed deal. Onsager objected to
Amron's oral pitch to the judge. Judge Sidney Brooks
allowed Amron to finish but after hearing all the arguments
sided with WestPac on the narrow question of fees.  He
approved the payment of $350,000 in initial fees to Smith,
plus another $150,000 "termination fee" that is payable to
Smith at a later date if another investor comes up with a
better financing package for WestPac.

The Denver Gazette reported that Frontier Airlines marched
uninvited into Western Pacific Airlines' bankruptcy
proceedings, offering a plan that could force the airline
into extinction. Perhaps even more surprising was the
realization that it could be Frontier Airlines that takes
down WestPac, since WestPac tried to acquire Denver-based
Frontier until the proposed merger was called off two
months ago.

The investment firm Wexford Management LLC of Greenwich,
Conn., contacted WestPac Chief Executive Robert Peiser on
Wednesday night, saying it was a possible suitor to help
pull the airline through bankruptcy.  The offer came late
Thursday: $10 million to allow WestPac to pay $9 million in
aircraft lease payments that come due Dec. 4.

What WestPac didn't know, Peiser said, is that Wexford
already had aligned itself with Frontier - now a rival of
WestPac's in the Denver market. Indeed, Wexford and
Frontier said Friday afternoon, after the hearing had
begun, that Wexford would supply Frontier a $15 million
loan that could be converted into a 20 percent stake in
Frontier. For WestPac, the relationship wasn't apparent
until Frontier executives entered the Denver courtroom.

Wexford told Judge Sidney Brooks its plan would allow
WestPac to retain its fleet of 18 Boeing 737s, but wouldn't
supply the money to pay day-to-day bills and keep the
airline aloft. Wexford - and Frontier - then would take
possession of at least part of the fleet, selling the rest
of WestPac's assets to satisfy creditors lined up in
bankruptcy court, awaiting payment. Wexford didn't say
whether WestPac creditors would recoup every dollar owed to

The move left Peiser seething.  "Everything about the
Wexford proposal was underhanded," Peiser said. "I had two
conversations with these guys and they never said anything
about Frontier. I have real questions about their

John Young, lawyer for a committee representing WestPac's
largest creditors, asked Judge Brooks to consider all
offers to finance the airline, and not only the offer
supported by the carrier's management. Judge Brooks has
scheduled a Nov. 28 hearing to hear more about both offers,
but a final decision is not expected until December 3, the
day before the aircraft lease payments are due.

While the court did not dismiss Wexford's offer Friday,
Judge Brooks did not offer any encouragement he would
consider it. He said the carrier's bankruptcy "is off to
a good start" and that Smith's financing offer "looks
promising." Peiser said he sees no reason why the judge
should entertain Wexford's offer. "The Wexford plan is
totally inadequate, and benefits nobody but Frontier,"
he said.

In an unrelated bankruptcy matter, Judge Brooks ruled
WestPac can not take delivery of a nineteenth jet it had
agreed to lease from KG Aircraft Leasing Co. WestPac had
planned to sublease the jet to another company for six
months before bringing it back into the WestPac stable.
Brooks said WestPac has yet to prove it can pay to operate
the 18 jets it does have - let alone another one.

Mark Coleman, WestPac's senior vice president, said he was
disappointed with the court's ruling but was somewhat
encouraged by the judge's comments about the Smith
financing offer. After Friday's bankruptcy hearing, WestPac
President Robert Peiser said Frontier and Wexford, with
their "bogus offer," are "either trying to take six or
seven of our planes and throw 1,500 people out of work or
they're trying to scare off Smith."  Peiser said Smith was
"not cowed" by the Frontier-Wexford bid and the New York
firm and WestPac are working hard to complete the financing

WESTERN PACIFIC: MAX Offered $3 Million
The Denver Post reported on November 21, 1997 that  
Mountain Air Express, a subsidiary of Western Pacific, said
an investment partnership in Phoenix has agreed to provide
as much as $3 million in DIP financing to help the carrier
through its current cash shortage.

MAX, as the airline is called, filed for Chapter 11
bankruptcy protection on November 6, 1997. At that time,
the carrier said it could not pay its bills because it
faced a delay of up to two months in receiving ticket
revenues through the Airline Clearing House Inc.
The company estimates that the clearing house, which
settles the accounting of ticket revenues between carriers,
will forward about $1 million in proceeds to MAX by the end
of December for tickets already sold.

The investment was offered by SunChase Holdings. MAX
Chairman Ed Beauvais is part of the investment group. But
in the filing made with the U.S. Bankruptcy Court in Denver
on Thursday, MAX said Beauvais will not participate on
behalf of the airline in loan negotiations with SunChase.
The airline also said that SunChase can contribute any
portion of its loan as consideration for the acquisition of

MAX flies Dornier 328 turboprops and WestPac flies 737
jets. Currently, MAX has a fleet of five 32-seat Dornier
planes and flies from DIA to Colorado Springs, Kansas City,
Tulsa, Oklahoma City and Aspen.  MAX owes its 300 employees
about $250,000 in wages accrued before its bankruptcy

Company attorney Harvey Sender is expected, at a Monday
hearing, to ask U.S. Bankruptcy Court Judge Sidney Brooks
to approve the entire SunChase financing package,
SunChase's expedited initial loan of $600,000 to MAX and
the airline's request to pay so-called "pre-petition" wages
to employees.

YAMAICHI SECURITIES: Hashimoto Promises Funds
Japanese Prime Minister Ryutaro Hashimoto has promised
special funds from the nation's central bank to protect
customers of the failed brokerage giant Yamaichi Securities
Co., a Japanese official said Monday.

Hashimoto, who is in Vancouver, British Columbia, for the
Asia-Pacific Economic Cooperation summit, was quoted as
telling Canadian Prime Minister Jean Chretien that Japan is
"doing everything that can be done," to deal with the
Yamaichi closure.

The fall of a major company like Yamaichi was previously
unthinkable in Japan, where government protection of top
corporations has been a key to bringing about economic
growth. In Tokyo, the finance minister and the Bank of
Japan Gov. Yasuo Matsushita have said Yamaichi Securities
will be able to make good on all of its debts because the
company's assets exceed its liabilities. Matsushita said
the central bank would provide special loans to fund
account cancellations via Yamaichi's parent bank, Fuji Bank

Rather than save Yamaichi and avoid job losses, the
government said financial institutions are largely on their
own. The result may be a more competitive economy. Finance
Minister Hiroshi Mitsuzuka said the stability of Japan's
financial institutions depends on having companies like
Yamaichi Securities Co. resolve their own problems.

"Supporting long-term invalids is really not feasible.
(Japanese officials) are beginning to face up to that,"
said Arthur Alexander, president of the Japan Economic
Institute in Washington.

When Japanese markets reopened Tuesday, stock prices slid
sharply in early trading. After the first hour, the
benchmark Nikkei Stock Average had tumbled 4.53 percent, or
757.24 points, to 15,964.34.

Press reports have said it was overly close ties with
favored clients that helped land Yamaichi in trouble.
"They just don't have the cash," Alexander said, adding
that allowing failures could get Japan's financial system
moving in the right direction.


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