TCR_Public/980108.MBX     T R O U B L E D   C O M P A N Y   R E P O R T E R

        Thursday, January 8, 1998, Vol. 2, No. 5
                      
                       Headlines

AUTOMOBILE CREDIT: Closing of Litigation Trust
CAMPO ELECTRONICS: Agreed Order for Cash Collateral
EVANSVILLE BREWERY: Delay in Sale Makes Some Nervous
EXCALIBUR FINANCIAL: Objection to Extension for Leases
FARM FRESH: Financial Status & 20 Largest Creditors

FARM FRESH: Debtors' Professionals Named
GAYLORD: Requests Extension to Assume or Reject Leases
GUY F. ATKINSON: Hearing on Cash Collateral and DIP
HARRAH'S JAZZ: Jan. 16 - Last Date to Accept or Reject Plan
HOMEPLACE STORES: Financial Status & 20 Largest Creditors

HOMEPLACE STORES: Debtors' Professionals Named
LOUISE'S TRATTORIA: Order Approving Sale of Assets
MIDCOM COMMUNICATIONS: Foothill Capital Responds
OLYMPIA & YORK: Noteholders Committee Announces Agreements
PARAGON TRADE: Announces Chapter 11 Filing

PARAGON TRADE: Proctor & Gamble Surprised at Filing
SA TELECOMMUNICATIONS: Committee Taps Cornwell Consulting
SA TELECOMMUNICATIONS: WorldCom Objects to Stay
SEARCH FINANCIAL: Restructures Agreement With Lenders
THE WIZ: Order to Show Cause for Stay Bonuses

                       ---------

AUTOMOBILE CREDIT: Closing of Litigation Trust
----------------------------------------------
The Litigation Trust created under the plan of
reorganization in the case of Automobile Credit Fund 1991-
III, Inc., et al., consummated the settlement agreement
with Search Financial Services, Inc., f/k/a Search Capital
Group Inc., and the settlement proceeds have been
distributed.  The Litigation Trust is closed and the
Litigation Trustee is discharged from further obligation.


CAMPO ELECTRONICS: Agreed Order for Cash Collateral
---------------------------------------------------
Judge T.M. Brahney, III entered an order authorizing use of
cash collateral of Transamerica Commercial Finance
Corporation (TCFC) and a final order authorizing post-
petition financing by Transamerica Commercial Finance
Corporation (TCFC).

As of the petition date, the debtor was indebted to TCFC in
the principal amount of approximately $3.8 million.  The
debtor is authorized by this Order to use cash collateral
and incur post-petition indebtedness in accordance with the
provisions of the court Order.  

The debtor must pay TCFC on a daily basis, in advance, and
the debtor must prepare and maintain daily and weekly
reports.  

The court states that the entry of this order will minimize
the disruption of the debtor's existing business and will
increase the possibility for a successful reorganization of
the debtor as a going concern.  The court notes that the
debtor is unable in the ordinary course of business or
otherwise, to obtain unsecured credit allowable under the
bankruptcy code as an administrative expense in an amount
necessary for the maintenance and preservation of its
assets and operation of its business.


EVANSVILLE BREWERY: Delay in Sale Makes Some Nervous
----------------------------------------------------         
The Evansville Courier reported on December 31, 1997 that
the chief of the company scheduled to close a $3 million
buyout of Evansville Brewing Co. on Tuesday says
"paperwork" and lack of a brewer's license forced a delay.
But both Michael Lynch, president of Michigan Avenue
Partners of Chicago, and a brewery attorney insisted the
deal is still alive.

Lynch's investment group, ruled best bidder for the brewery
during a Dec. 16 U.S. Bankruptcy Court hearing, was the
only bidder pledged to keeping the 147-year-old brewery in
operation.  "We feel, we believe there is a cooperative
spirit on the part of both sides to conclude the
transaction," said Stanley Talesnick, Evansville Brewing's
bankruptcy attorney.

Lynch, who met a court requirement to put up $250,000
earnest money, orally agreed with Talesnick on Tuesday
afternoon to put up $100,000 more to pay brewery operating
expenses until the deal is closed.  "Attorneys are working
arduously on a written agreement," Lynch said. The
agreement and the money are due at noon today, Talesnick
said.

Lynch said the agreement will allow a callback of some
brewery workers before the closing. "We want to start
brewing late next week."  No beer has been brewed since
Oct. 1, when the brewery's bank froze its accounts.
Talesnick said he now expects the closing "within a week to
10 days." Lynch said it would come "in the next day or two,
or no later than early next week."

Asked what would happen if Lynch should miss today's
deadline, Talesnick said: "We just have to take it a day at
a time. Anything that could be said might be taken as
pessimism or threat. We don't want to give any impression
that such things exist."  Talesnick had criticized Lynch in
October after Lynch made a $3 million offer to buy the
brewery, but missed a deadline for earnest money.
Evansville Brewing promptly filed for bankruptcy, leaving
Lynch to vie with other bidders in bankruptcy court.

That soured the relationship between Lynch and brewery
President Stephen W. Cook, as well as with Talesnick. But
Lynch made a point Tuesday of lauding Cook for his
"cooperation in this transition phase. I thank him for his
support."  Historically, bidders who have failed to
complete a court-approved bankruptcy purchase have
sometimes lost their earnest money, or have been sued
for damages, or have come back to court to renegotiate
terms.

"But I want to be clear that we feel it's going to go
forward," Talesnick said of the purchase.  "We feel we're
going to save the whole deal. The ultimate goal for
everyone is to preserve the brewery and provide the jobs
and enterprise for Evansville, as well as some return for
the stockholders."


EXCALIBUR FINANCIAL: Sublessor Stuck with Rental Payment
--------------------------------------------------------
PMT Services, Inc. objects to Excalibur Finacial Services,
L.P.'s motion for an order extending the time within which
the debtor must assume or reject unexpired leases of non-
residential property.  

Excalibur subleases from PMT certain non-residential
property located at 215 Centerview Drive, Suite 300,
Brentwood, Tennessee.  The term of the sublease extends to
December 31, 2000.  The monthly rental obligation is
currently $25,776.48, and adjusts up each year.

PMT has rental obligations to the underlying Landlord of
$24,056, which sum also adjusts up each year.  Excalibur is
currently in default under the sublease.  According to PMT,
the extension sought by the debtor would force PMT alone to
bear the risk that rent will not be paid under the sublease
so that Excalibur can continue to preserve an asset which
may not even be part of the debtor's estate.  In fact, PMT
argues that regardless how the adversary action with Credit
Suisse First Boston Mortgage LLC is determined, there is
substantial risk that debtor will continue to default on
its obligations to PMT.  

PMT also argues that Excalibur does not need more time to
consider whether to assume or reject this last remaining
sublease - PMT states that it has already decided to reject
it, since the debtor is not using additional space that it
was required to sublease.


FARM FRESH: Financial Status & 20 Largest Creditors
---------------------------------------------------
FF Holdings Corporation, together with its wholly-owned
Farm Fresh, Inc., subsidiary filed chapter 11 petitions on
January 7, 1997, in Delaware.  The chapter 11 cases are
being jointly administered under Bankruptcy Case No. 98-37.  
District Court Judge Joseph Farnan will preside over Farm
Fresh's chapter 11 proceedings.

FF Holdings Corp., on a consolidated basis with its
subsidiaries,as of December 28, 1996, reports total assets
of $200,789,300 and total liabilities of $431,441,000, with
$63,049,000 of that debt being secured.  On a
deconsolidated basis, Farm Fresh, Inc., reports, as of
December 28, 1996, total assets of $199,000,000 and total
liabilities of $342,836,000, of which $63,010,000 is
secured.  

FF Holdings Corporation provides the Court with the
following list of its 20 largest unsecured creditors
(excluding any insider or undersecured claims):

        Creditor                              Claim
        --------                              -----
      Fleet Trust Bank                    $99,218,500
        (14.25% Senior Notes)
      
Farm Fresh, Inc., provides the Court with the following
list of its 20 largest unsecured creditors (excluding any
insider or undersecured claims):

        Creditor                              Claim
        --------                              -----
      First Trust Bank                   $165,000,000
         (12.25% Senior Notes)
      First Trust Bank                     36,000,000
         (12.25% Series A Senior Notes)
      Crestar Bank                          7,203,000
         (7.5% Conv. Subord. Notes)     
      Richfood, Inc.                        5,513,676
      Pepsi-Cola Company                      945,589
      Amerisource Corp.                       694,191
      Mid-Atlantic Coca-Cola Co.              492,307
      Crestar Bank                            319,551
      Frito Lay, Inc.                         247,645
      Kotarides Deli                          231,457
      Flowers Baking Company                  196,157
      Nabisco Brands, Inc.                    178,692
      Aramark - Washington                    170,864
      Kotarides Private Label                 151,765
      JWL Produce, Inc.                       143,391
      Nabisco                                 138,522
      Edy's Grand Ice Cream                   138,329
      Crestar Bank                            101,074
      Tony's Pizza Service                     99,081
      United States Postal Service             95,048


FARM FRESH: Debtors' Professionals Named
----------------------------------------
To prosecute their chapter 11 cases before the Delaware
Bankruptcy Court, Farm Fresh Holdings Corporation and Farm
Fresh, Inc., have retained the New York law firm of
DECHERT, PRICE & RHODES as lead bankruptcy counsel and the
law firm of KLEHR, HARRISON, et al., as local counsel.

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION serves
as the Debtors' financial advisor.

The Debtors have arranged for a DIP Financing Facility led
by FLEET CAPITAL CORPORATION.


GAYLORD: Requests Extension to Assume or Reject Leases
------------------------------------------------------
Gaylord Companies, Inc. et al., debtors, are seeking an
Order extending the time to assume or reject 13 unexpired
leases covering retail space in Ohio, Kentucky, and Indiana
until March 13, 1998.  The debtors claim that the leases
are a primary asset of their respective bankruptcy estates
and the decision to assume or reject the leases is central
toward their reorganization.  The debtors need additional
time to analyze and gauge the performance of their stores
and determine the number and location of stores which will
maximize profits.


GUY F. ATKINSON: Hearing on Cash Collateral and DIP
---------------------------------------------------
A hearing will be held on January 23, 1998 at which time
the debtors, Guy F. Atkinson Company of California, Guy F.
Atkinson Company, and Guy F. Atkinson Holdings, Ltd. will
seek authority of the court to continue to use collateral
and cash collateral and to continue to borrow under DIP
financing agreements as provided in the supplement to the
motions for authority to use collateral and cash
collateral.

The debtors request that the court extend until April 30,
1998 the debtors' authority to use collateral and cash
collateral and to provide adequate protection to the the
Banks, the Bonding companies, and Yale University on
substantially the terms described in the proposed order
authorizing use of the cash collateral.

The debtors also request authority to enter into and
perform the DIP Credit Agreement between debtors and the
Bonding companies, as amended.  The balance outstanding on
the Bonding Company loans as of December 23, 1997 was
approximately $48.7 million.  As of the same date, the
debtors held approximately $6.2 million in cash in the
Bonding Companies' disbursement accout.  

The Banks' collateral and cash collateral far exceeds the
Banks' $55 million debt. (By over $30 million)


HARRAH'S JAZZ: Jan. 16 - Last Date to Accept or Reject Plan
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of
Louisiana entered an order approving the adequacy of the
debtors' fifth amended disclosure statement.  January 16,
1998 is fixed as the last date for filing written
acceptances or rejections of the plan.  The hearing on
confirmation of the plan shall commence on January 21,
1998.


HOMEPLACE STORES: Financial Status & 20 Largest Creditors
---------------------------------------------------------
As previously reported HomePlace Stores, Inc., filed for
chapter 11 protection in Delaware on January 5, 1998.  
HomePlace Stores of Two, Inc., HomePlace Management, Inc.,
and HomePlace Holdings, Inc., filed simultaneous separate
petitions.  

Homeplace Holdings is principally owned by Robert Hurwitz
and James A. Monro, Jr.  Holdings, in turn, owns the other
three HomePlace Debtors.

The Clerk has assigned case numbers 98-8 and 98-10 through
98-12 to the Debtors' chapter 11 proceedings, which will be
jointly administered under Case No. 98-8.

On a consolidated basis, the HomePlace Entities report
total assets of $314,308,000 and total liabilities of
$307,214,000, with $138,854,000 of that debt being secured.  

The HomePlace Debtors provide the Court with the following
list of their 20 largest unsecured creditors (excluding
any insider or undesecured claims):

        Creditor                              Claim
        --------                              -----
      Stern Advertising                    $7,471,000
      Calphalon Corporation                 3,772,900
      Spectrum (Div. ABC Industries)        2,829,300
      Braun, Inc.                           2,206,200
      Salton/Maxim Housewares, Inc.         2,091,300
      Fieldcrest Cannon                     2,028,700
      Hardline Services Co.                 1,793,300
      Burnes of Boston (Newell Cos.)        1,784,000
      Colonial Candle                       1,724,600
      Professional Business Systems         1,625,200
      Kitchenaid, Inc.                      1,616,500
      Lifetime/Hoan Corporation             1,341,700
      Creative Bath Products, Inc.          1,312,800
      J.C. Moag Corporation                 1,277,700
      National Paper and Packaging Co.      1,230,700
      Krups North America, Inc.             1,151,100
      Carlton Cards                         1,143,700
      J.A. Henckels                         1,142,100
      Winsome Trading Co.                   1,124,200
      Michael Alen Designs                  1,044,000


HOMEPLACE STORES: Debtors' Professionals Named
----------------------------------------------
To prosecute their chapter 11 cases before the Delaware
Bankruptcy Court, HomePlace Stores, Inc., and its debtor
affiliates have retained the New York law firm of
KIRKLAND & ELLIS as lead bankruptcy counsel, the law firm
of YOUNG, CONAWAY, STARGATT & TAYLOR, LLP, as local counsel
and the law firm of KAHN, KLEINMAN, YANOWITZ & ARNSON CO.,
L.P.A., as special counsel.  

HomePlace has retained PRICE WATERHOUSE, LLP, as its
accountants and PETER J. SOLOMON COMPANY LIMITED as
its financial advisor.


LOUISE'S TRATTORIA: Order Approving Sale of Assets
--------------------------------------------------
A valuation trial and auction sale was held on December 11,
1997.  The debtor has submitted an order for signature by
the court representing the determinations at the sale.

In order to bid at the auction sale, bidders were required
to submit a deposit of $500,000.  Three different bidders
submitted the required $500,000 deposit. LT Acquisition
Corp. was deemed by the court to be the winning bidder with
a purchase price of $7 million based upon its bid
consisting of cash and the Senior Note and Junior Note as
valued by the court.  LT must increase the bid to $1
million.  After a demonstration of adequate assurance of
future performance LT must deliver an additional $6
million. LT has four options, in combinations of notes and
cash to deliver the additional $6 million.  

In addition, as part of the closing of its purchase of the
assets, LT shall assume all of the debtor's postpetition
trade payables.  LT must assume certain of debtor's real
property and personal property leases, executory contracts
and the debt to General Electric Capital in the sum of over
$400,000.


MIDCOM COMMUNICATIONS: Foothill Capital Responds
------------------------------------------------
Foothill Capital Corporation responded to the objection of
the Unsecured Creditors' Committee of Midcom Communications
Inc., to the postpetition financing arrangement.

After admonishing the Committee of Unsecured Creditors for
branding Foothill Capital Corporations as an "overreaching"
and "arm twisting" lender "conjuring up visions of a
Shylock or loan shark," Foothill states that concessions
will not be made with respect to interest rates and other
charges for borrowed funds or a separate "carve out" for
the Committees' expenses.

Foothill states that the rollover issue is "the tempest in
the teapot."  Foothill states that these cases were
intended from the outset to be liquidating Chapter 11
cases.  Substantially all of the assets of Midcom are to
sold in early 1998.  Foothill states that it would have to
be paid the proceeds of sale because there is not other
property that could serve as adequate protection
replacement liens permitting Midcom to use Foothill's share
of the proceeds.  

Foothill says that the fact that the payment to Foothill
may include both prepetition and postpetition debt is, in
the context of a liquidating Chapter 11 case, a distinction
with out a difference.  Foothill states that the sale of
Midcom's assets for $97 million will more than cover its
proposed $24 million claim, although it is amenable to
continued time for the Committee to  object to the
postpetition financing.


OLYMPIA & YORK: Noteholders Committee Announces Agreements
----------------------------------------------------------   
The Ad Hoc Committee of the Olympia & York Maiden Lane
Noteholders (the "Committee") announced today the
following:

1. Settlement with The Home Insurance Company. On December
11, 1997, Marine Midland Bank, as Indenture Trustee (the
"Indenture Trustee") for the holders of the 10-3/8% Secured
Notes Due 1995 of Olympia & York Maiden Lane Finance Corp.
(the "Issuer"), notified the Noteholders that the Indenture
Trustee anticipated that final documents evidencing the
settlement among The Home Insurance Company ("Home") and
its affiliate, Risk Enterprise Management Ltd. ("REM"),
Mitchell E. Rudin, as Receiver of Olympia & York Maiden
Lane Company, LLC (the "Receiver"), and the Indenture
Trustee, would be executed by year-end.

We are pleased to announce that the Settlement Agreement
and related documents were executed as of December 22,
1997.  The Commissioner of Insurance of the State of New
Hampshire issued an order approving of the execution,
delivery and performance by Home of the Settlement
Agreement. Closing of the settlement is subject to certain
conditions.

The basic terms of the settlement with Home are summarized
below:

-- Home agreed to the immediate release to the Indenture
Trustee, for the benefit of the Noteholders, of $10.7
million in funds held by Mr. Albert Sontag, a temporary
receiver appointed by the Hon. Justice Norman Ryp of the
New York State Supreme Court.  The release of the funds to
the Indenture Trustee, which took place in August, shortly
after the execution of the original Term Sheet, is
irrevocable and is not conditioned on the closing of the
settlement.

-- Home paid $49,850,000 to Stroock & Stroock & Lavan LLP,
counsel to the Committee and special counsel to the
Indenture Trustee, to be held in escrow until the closing
of the Settlement, at which point the funds will be
released to the Indenture Trustee, for the benefit of the
Noteholders.

-- Home and the Indenture Trustee agreed to the terms of a
new lease, pursuant to which Home will pay current rent for
less space at a reduced rate.  Specifically, under the new
lease, Home will occupy approximately 272,000 square feet
through December 31, 1997; 195,000 square feet from January
1, 1998 through June 30, 1999; and 147,000 square feet from
July 1, 1999 through December 31, 2000.  Home will pay
rent at the rate of $27.00 per square foot (including
electricity charges) through June 30, 1999; $28.00 per
square foot (including electricity) from July 1, 1999
through December 31, 1999; and $29.00 per square foot
(including electricity) from January 1, 2000 to       
December 3l, 2000.  The term of the lease ends on December
3l, 2000.

-- The settlement preserves the right of the Indenture
Trustee to pursue the action (the "Fraudulent Conveyance
Action") commenced by it against Zurich Insurance Company
("Zurich"), Home, and certain Zurich affiliates.

-- Home has assigned to the Indenture Trustee, for the
benefit of the Noteholders, all sublet income received by
it for the period June 1, 1997 through December 31, 2000.

2. Anticipated Bankruptcy Filings by Olympia & York
Entities.

As reported by the Indenture Trustee on December 11, 1997,
both the Indenture Trustee and members of the Committee met
with officers of World Financial Properties ("World"), the
ultimate corporate parent of Olympia & York Maiden Lane
Company, LLC, the owner of 59 Maiden Lane, and Olympia &
York Maiden Lane Finance Corp. (together, the "O&Y
Entities"), the issuer of the Notes.  After discussions,
World agreed to cause the O&Y Entities to file Chapter 11
petitions for a facilitation fee of $650,000 (plus legal
fees in an amount still being negotiated).  

In order to assure World that the Home Settlement and the
proposed action to be taken with respect to the 59 Maiden
Lane premises are supported by the Noteholders, the
Indenture Trustee, together with the Committee, have
scheduled an informal meeting of all Noteholders to be
held at 10:00 a.m. on January 7, 1998, at the offices of
the Indenture Trustee's counsel, Kelley Drye & Warren LLP,
101 Park Avenue, 29th Floor, Cook Conference Room, in New
York City.

Additionally, the Indenture Trustee and the Committee have
preliminarily determined to file a "prepackaged bankruptcy
plan," i.e., to prepare and negotiate the terms of the plan
of reorganization (the "Plan") and accompanying
disclosure statement and to solicit the votes of all
creditors of the O&Y Entities, prior to the filing by the
O&Y Entities of the bankruptcy petitions.

It is expected that the Plan will provide, among other
things, for the following:

i.   Approval of the terms of the Home settlement by the
Noteholders and the Bankruptcy Court.

ii.  Transfer of 59 Maiden Lane to a newly-formed
corporation ("Newco"), the shares of which will be owned by
the Noteholders.

iii. Distribution to the Noteholders, in exchange for their
Notes, of (a) cash in an amount to be decided, but in an
expected amount of $60,000,000, in the aggregate, (b)
shares of stock in Newco and (c) interests in a liquidation
trust formed to continue the prosecution of the Fraudulent
Conveyance Action.

3. Status of Fraudulent Conveyance Action.

As noted above, the Indenture Trustee has commenced the
Fraudulent Conveyance Action against Zurich, Home, REM and
certain Zurich affiliates in the Supreme Court of the State
of New York.  In response to the Complaint filed by the
Indenture Trustee, each of the defendants filed motions to
dismiss the Complaint.  In an Opinion and Order entered on
December 12, 1997, the Hon. Justice Beatrice Shainswit
denied the motions of Zurich and the other defendants,
except for the motion of REM to dismiss the fifth cause of
action, which was granted.  It is expected that the
discovery process will begin shortly.

As noted above, it is anticipated that a liquidation trust
will be formed pursuant to the Plan which will continue to
prosecute the Fraudulent Conveyance Action against Zurich
and the other defendants.

4. Arbitration with The Federal Reserve Bank.
    
The second largest tenant at 59 Maiden Lane is the Federal
Reserve Bank. The lease with the Federal Reserve provides
that the amount of rent payable thereunder will be adjusted
by the landlord and tenant for the last five years
of the lease, beginning January 1, 1998.  In the event that
the landlord and tenant are not able to agree on new rent
terms, the lease requires that the issue be decided through
binding arbitration.  The landlord, currently Mr. Mitchell
Rudin, court-appointed receiver for 59 Maiden Lane, and the
Federal Reserve Bank were not able to agree on new rent
terms and have submitted the dispute to the American
Arbitration Association.  A decision is expected in
March 1998.

5. Cash Collateral.
    
The Trustee held approximately $21.6 million as of December
31, 1997 (which includes the $10.7 million received from
Mr. Sontag described above). That amount fluctuates
regularly as additional rental income is received and
operating expenses are paid.

In addition, Stroock & Stroock & Lavan LLP, the escrow
agent, held approximately $56.5 million as of December 31,
1997.  That figure includes the $49,850,000 payment
described above, monthly rental income from Home and its
subleases and accrual of earnings on the escrowed funds.

It is anticipated that a large percentage of the funds,
approximately $60 million, will be distributed under the
Plan, as described above. Additional funds will be held in
reserve accounts to operate and maintain the building and
to pay for fees and expenses related to the bankruptcy
filing, the Fraudulent Conveyance Action and related
matters.


PARAGON TRADE: Announces Chapter 11 Filing                
------------------------------------------
Paragon Trade Brands, Inc. (NYSE: PTB), today announced
that it has filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code.  The
petition was filed with the federal court in the Northern
District of Georgia.

The goal of the Chapter 11 petition is to enable the
Company to conduct its business in the ordinary course and
propose a plan of reorganization to restructure its
financial obligations.  The filing will also enable Paragon
to pursue an appeal of a recent adverse judgment in a
patent infringement lawsuit with The Procter & Gamble
Company (P&G) as well as an antitrust counterclaim
which was previously dismissed by the Court.  

At the time the judgment was rendered, Paragon also
announced that it had previously entered into an agreement
with P&G which is designed to ensure that this patent
dispute will not inhibit Paragon's ability to provide its
customers a continuous supply of products for six months
while pursuing the appeal.  In late December, Paragon
announced that the federal district court in Delaware had
rendered an unfavorable judgment against the Company in its
lawsuit with P&G regarding whether either company had
infringed a valid patent of the other.  

The judgment entitled P&G to damages based on sales of
Paragon diapers containing an "inner leg gather" feature.  
While a final number has not been entered by the Court,
Paragon has estimated the liability to be approximately
$160 million to $200 million.  At the time the decision was
rendered, Paragon announced its intent to appeal this
decision as well as the dismissal of its antitrust
counterclaim against P&G.

"The decision to file under Chapter 11 was a difficult and
painful one," stated Bobby Abraham, Chief Executive Officer
of Paragon.  "After attempts to engage in discussions to
resolve the patent issues with P&G proved fruitless,
it became apparent that it was necessary to file in order
to allow for an orderly appeal of the Court's recent
decision, to enable us to restructure our financial
obligations, including the judgment, and to continue to
meet our obligations to our customers.  We continue to
believe that the patents asserted by P&G are invalid and
not infringed by our products.

Paragon Trade Brands is the leading manufacturer of store
brand infant disposable diapers in the United States and
Canada. Paragon has also established international joint
ventures in Mexico, Argentina and Brazil for the sale of
infant disposable diapers and other absorbent personal
care products.


PARAGON TRADE: Proctor & Gamble Surprised at Filing
---------------------------------------------------
Proctor & Gamble (P & G) said it was very surprised by
Paragon's decision to file Chapter 11 bankruptcy.  P&G had
agreed to Paragon's request to meet today and attempt to
work out payment of a recently awarded patent infringement
judgment.  Paragon canceled the meeting late Tuesday night.

P&G has repeatedly offered to license Paragon to practice
the patents which the courts recently upheld.  These same
patents have been respected and licensed by other
competitors.  The opportunity to license was first offered
Paragon in March, 1992, and that offer was still on the
table as part of our anticipated payment settlement
discussions.

After trying to get Paragon to respect its diaper barrier
leg-cuff patents out of court, P&G finally took legal
action in January, 1994.  Importantly, following the filing
of the lawsuit and again before the final judgment was
handed down, P&G once more offered to settle this matter
out of court.  The Delaware federal court ultimately upheld
the validity of these patents and awarded P&G past damages.  
P&G is absolutely convinced that the court's patent
infringement decision will be upheld on appeal.


SA TELECOMMUNICATIONS: Committee Taps Cornwell Consulting
---------------------------------------------------------
The Official Committee of Unsecured Creditors filed an
application to approve retention of Cornwell Consulting
services, Inc. as financial and telecommunications
consultants to the Official Committee of Unsecured
Creditors.  The Committee states that the retention of a
firm such as Cornwell is essential if the Committee is to
receive an independent analysis of the debtors' operations.
the hourly rate of Cornwell's personnel ranges from $110 to
$250 per hour, and the Committee requests that Cornwell
submit monthly invoices not to exceed $20,000 per month.


SA TELECOMMUNICATIONS: WorldCom Objects to Stay
-----------------------------------------------
WorldCom, Inc. f/k/a LDDS Communications, Inc. and WorldCom
Network Services, Inc., f/k/a WilTel, Inc. and the debtors,
SA Telecommunications, Inc. et al. were parties to certain
executory contracts.  The debtors agreed to pay for
telecommunications services provided by World Com to the
debtors.  The debtors' average daily usage of WorldCom's
network and services is approximately $25,000 a day.

WorldCom sent the debtors a notice of termination in
November of 1997.  The debtors had previous defaults and
adverse changes in their creditworthiness.  By the petition
date the debtors owed WorldCom more than $3.8 million.

In December the court instructed the debtors to wire
transfer to WorldCom on a weekly basis, sufficient funds to
cover the debtors' anticipated weekly usage of WorldCom's
services and the court refused to allow WorldCom to stop
servicing the debtors.  WorldCom now objects to the
debtors' adequate assurance motion as it states that the
debtors do not address several issues of payment for the
money due prior to the weekly payments, that WorldCom deems
necessary.

WorldCom also argues that because it is a utility, the
automatic stay provisions of the Bankruptcy Code do not
prevent WorldCom from terminating the services it provides
the debtors.  And finally WorldCom states that given the
debtors' precarious condition, WorldCom is being forced to
involuntarily extend credit to the debtors and subject
itself to unreasonable risk of non-payment.  WorldCom is
seeking a 3 month deposit for usage as adequate assurance
or it is asking that the court compel the debtor to reject
its agreement with WorldCom.


SEARCH FINANCIAL: Restructures Agreement With Lenders
-----------------------------------------------------
Search Financial Services Inc. announced that it and its
subsidiary, MS Financial, Inc. ("MSF"), have
reached agreement in principle with Fleet Bank, N.  A., and
the other members of the MSF bank group to restructure
MSF's loan agreement.  Search had guaranteed the loan
agreement as part of its acquisition of MSF in July 1997.  

Under the restructured agreement, the banks would waive the
original requirement that the outstanding balance of the
$70 million line of credit be reduced to $50 million at
December 31, 1997.  In exchange for this waiver,
Search would agree to move the maturity date of the loan to
March 31, 1998 from the original date of July 31, 1998 and
the requirement to reduce the outstanding balance of the
line prior to maturity would be eliminated.  

Full implementation of the loan restructuring is subject to
various conditions, including approval by each bank's
internal credit committee and execution of definitive
documentation.  Pending such implementation, the banks have
extended the date for the required reduction to January 15,
1998.  

George C.  Evans, Chairman and Chief Executive Officer of
Search, said, "We are extremely pleased that Fleet and the
other banks are willing to work with us to restructure this
loan and we will aggressively pursue transactions that
will enable us to meet the new March 31 maturity date."  
Evans noted that prior to reaching this agreement in
principle on restructuring the loan, Search was prepared to
sell a portion of the bank-pledged receivable portfolio in
order to meet the year-end payment requirement.  However,
the restructured bank arrangement allows Search to retain
that revenue producing portion of the portfolio.  

Search also announced that it is continuing to negotiate
with Hall Phoenix/Inwood, Ltd. ("HPIL") to restructure its
$5 million subordinated indebtedness to HPIL and resolve
the event of default that HPIL has notified Search exists
under the terms of the note.  HPIL has sent Search notice
of acceleration of the note based on an alleged technical,
non-monetary default arising from Search's not paying
dividends on its preferred stock for the quarter ended
September 30, 1997 and has filed suit in state court in
Dallas seeking payment of the note and appointment of a
receiver for Search.

Search believes appointment of a receiver is unwarranted
and intends to defend itself vigorously if a mutually
satisfactory restructuring of the subordinated debt is
not agreed upon.  Resolution of this matter with HPIL is
also a condition to implementation of the MSF loan
restructuring.  

Search Financial Services Inc. is a specialized financial
services company engaged in the purchasing, financing, and
servicing of nonprime automobile installment loans
originated by franchised and independent automobile
dealers.  Search also engages in direct lending consumer
finance operations through its 21 branch offices in six
states and Puerto Rico.  Search common shares and its
9%/7% convertible preferred shares are traded on the NASDAQ
National Market under the symbols "SFSI"  and "SFSIP",
respectively.    


THE WIZ: Order to Show Cause for Stay Bonuses
---------------------------------------------
Judge Cornelius Blackshear has entered an order to show
cause scheduling a hearing with respect to the motion of
the debtors seeking authorization for the debtors to pay
stay bonuses to key employees.  The hearing will be held on
January 15, 1997.

                       ---------

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 1998.  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 prior written permission of the
publishers.   
  
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 of the same firm for the term of the initial   
subscription or balance thereof are $25 each.  For   
subscription information, contact Christopher Beard
at 301/951-6400.  
       
       * * *  End of Transmission * * *