TCR_Public/980210.MBX     T R O U B L E D   C O M P A N Y   R E P O R T E R
        Tuesday, February 10, 1998, Vol. 2, No. 28                      

APS: DIP Financing Detailed
APS: Organizational Meeting to Form Official Committees
APS: Professionals Hired
APS: Seeks Approval to Reject 58 Leases of Unused Locations
AL TECH: Wins Approval to Keep Operating

AVATEX CORP: Settlements Cause Net Loss
BN1 TELECOMMUNICATIONS: Objects to Committee's Consultant
BARNEYS: DFS Group Decides Not to Pursue Acquisition
BARRY'S JEWELERS: Deadline Assigned for Tax Claim Responses
BARRY'S JEWELERS: Needs Continuation of Cash Collateral

BARRY'S JEWELERS: Seek Extension to File Plan
BRUNO'S: Interim DIP Financing Approved
BRUNO'S: Motion to Sell Atlanta Stores to Ingles
BRUNO'S: Organizational Meeting to Form Committees
BRUNO'S: Professionals Hired

BRUNO'S: To Purchase Four Delchamps Stores
CAMPO ELECTRONICS: Seeks to Amend Bank Group Approval
COUNTRY HARVEST BUFFET: Restaurant chain is in Chapter 11
DOW CORNING: Employs Professionals
DYNASTY: Goldrush Casino's Sub Completes Loan

ERD WASTE: Employs Professionals
ELEK-TEK: Exclusive Period Extended
ERNST HOME CENTER: Asking for 60-day Extension
HEART INTERNATIONAL: Iowa Adoption Agency Seeks Bankruptcy

MAX: United Cannot Fly MAX Passengers
NIAGRA MOHAWK: Panel Delays Action, But May Approve Plan
PARAGON TRADE: Rescheduled Meeting of Creditors
PARAGON TRADE: Files Supplement to Credit Agreement

PARAGON TRADE: Obtains Post-Petition Financing
PHELPS TECHNOLOGIES: Files Voluntary Petition
PIE MUTUAL: Ohio's #1 Malpractice Insurer Faces Liquidation
POWER DESIGNS: Files Voluntary Petition in Chapter 11
RUSSELL CORP: Lay-Offs Blamed on Tight Profits

SEARCH FINANCIAL: Exiting Auto Loan Business
THOUSAND ADVENTURES: Trustee Will Be Appointed
VCS SAMOA: Cross-Complaint Should Proceed
WESTERN PACIFIC: Nose Dive in Stock Prices
WESTERN PACIFIC: Southwest Airlines May Want the 737's
WESTERN PACIFIC: Willis Lease Finance Received Rent

Meetings, Conferences and Seminars

APS: DIP Financing Detailed
Prior to the Petition Date, A.P.S., Inc., borrowed
approximately $227,000,000 from a Prepetition Bank Group
led by The Chase Manhattan Bank, with each of Inc.'s debtor
affiliates guaranteeing Inc.'s obligations.  Those
borrowings were oversecured by a lien on virtually all of
the Debtors' personal property and by mortgages on several
parcels of the Debtors' real estate and distribution

In contemplation of their chapter 11 filings, the Debtors
entered into negotiations with Chase for the refinancing of
the Prepetition Bank Debt and the extension of an
additional $100,000,000 of debtor-in-possession
financing.  Those negotiations culminated in Chase's
agreement to act as Agent under a new $327,000,000 DIP
Financing Facility for which the Debtors seek the Court's

The salient terms of the $327,000,000 DIP Credit Facility

Borrower:          A.P.S., Inc.

Guarantors:        APS Holding Corporation and each of          
                   APS' debtor affiliates                                

Agent:             The Chase Manhattan Bank

Commitment:        $327,000,000 total, allocated as
                        (a) Tranche A Facility, providing
                           $100,000,000 of
                            New Debtor-in-Possession
                            Financing in the form
                            of Revolving Credit Loans, with
                            a sub-limit of
                            $20,000,000 for the issuance of   
                            letters of
                            credit; and

                        (b) Tranche B Facility, providing
                            $227,000,000 in the form of
                            Term Loans to refinance all of              
                            the Prepetition Bank Debt.

At the First Day Hearing, John L. Hendrix, the Debtors'
Senior Vice President - Finance and CFO, told Judge Walsh
that the Debtors need DIP financing and credit to purchase
inventory and continue their business operations.  Mr.
Hendrix estimated that the Debtors will need $44 million
over the next 15 days in order to pay vendors and operate
in the ordinary course of business.

In support of the Debtors' belief that the Prepetition
Lenders are oversecured, Mr. Hendrix told Judge Walsh that,
as of January 31, 1998, the Debtors value the Prepetition
Lenders' Collateral on a liquidation basis at $270 million.

Judge Walsh entered an Interim Order authorizing the Debtor
to execute and deliver the DIP Credit Agreement and borrow
up to $40,000,000 under the Tranche A Facility on an
Interim Basis.  The Court will hold a Final Hearing on
February 20, 1998.

APS: Organizational Meeting to Form Official Committees
The United States Trustee for Region III has scheduled an
organizational meeting for the purpose of forming one or
more official committees of the Debtors' creditors to be
held in Philadelphia at the Office of the U.S.
Trustee on Friday, February 13, 1998.  

APS: Professionals Hired
The Debtors have sought and obtained the Court's authority
to employ the New York--based law firm of Willkie Farr &
Gallagher as their lead bankruptcy counsel in these chapter
11 cases.  Willkie Farr discloses that the Debtors' paid a
$275,000 retainer in contemplation of these cases to the
Firm in January 1998.  Willkie Farr will charge for its
legal services on an hourly basis in accordance with
its ordinary and customary hourly rates in effect on the
date services are rendered.

The Debtors have sought and obtained the Court's authority
to employ the Wilmington-based law firm of Morris Nichols
Arsht & Tunnell as their local bankruptcy counsel in these

The Debtors are seeking the Court's authority to employ the
firm of Alvarez & Marsal as special financial advisors on
an interim basis to assist the Debtors in making a smooth
transition to Jay Alix and Price Waterhouse from A&M, which
has been working with the Debtors since October 1997 to
assist them to implement an out-of-court restructuring.

Judge Walsh Approved the Debtors' Application in all
respects with the proviso that if A&M remains employed for
more than four weeks, it will be required to file a formal
fee application with the Court.

The Debtors have sought and obtained the Court's authority
to employ Price Waterhouse as their special financial
advisors and reorganization accountants.

The Debtors have sought and obtained the Court's authority
to employ Coopers & Lybrand as their tax accountant and
auditors in these chapter 11 cases.

The Debtors want to employ Jay Alix & Assocates as Crisis
Managers and Bankruptcy Consultants during these chapter 11
cases.  Incidental to this employment, the Debtors have
requested that Bettina M. Whyte, a principal of Jay Alix
assume the role of Chief Executive Office of APS.
Jay Alix discloses that it received a $175,000 retainer
from the Debtors, against which it will charge the standard
hourly billing rates of its professionals, which include
for Bettina M. Whyte (principal) - $430 per hour.

APS: Seeks Approval to Reject 58 Leases of Unused Locations
Prior to the Petition Date, the Debtors began to implement
a restructuring program designed to reduce costs, improve
cash flow and achieve profitability.  In connection with
that program, the Debtors closed 58 underperforming
locations and vacated those 58 leaded premises.  By this
Motion, the Debtors seek the Court's authority to reject
the 58 Leases for these closed facilities, which call for
monthly rental payment in excess of $100,000 in the

AL TECH: Wins Approval to Keep Operating
The Buffalo News reported on 2/04/98 that two actions by a                             
U.S. Bankruptcy Court judge will allow AL Tech Specialty
Steel Corp. to keep operating, and its 600 local employees
to keep working.

"Steel's coming in and steel's going out," of the Dunkirk
plant, spokesman Kevin Sanvidge said Tuesday.  Bankruptcy
Judge Carl L. Bucki has approved two motions that will
allow the company, which filed a Chapter 11 bankruptcy
petition on Dec. 31, to continue operations.

The first permits the company to use cash and inventory to
do business as usual. The second allows the company to pay
life and health insurance benefits to present employees and
retirees at the current levels, Sanvidge said.

The bankruptcy creditors' committee also approved of the
moves, he added. AL Tech's parent company, Sammi of South
Korea, has been under the protection of that country's
courts since last March. Officials at the AL Tech
plants in Dunkirk and Watervliet were told that no capital
would be coming to them because of the South Korean court
action, Sanvidge explained.

The company employs 600 workers at the local plant and an
additional 200 at the Watervliet plant near Albany.

AVATEX CORP: Settlements Cause Net Loss
The Dallas Morning News reported on February 6, 1998 that
Avatex Corp. of Dallas reported a net loss of $94 million
($8.18) on revenue of $9.8 million for the first nine
months ended Dec. 31, compared with a net loss of $263.7
million ($18.09) on revenue of $11 million during the same
period a year ago. The company attributed its net loss to
$92.5 million in charges related to settlements with
Manila-based National Steel Corp. and its FoxMeyer
subsidiary's bankruptcy trustee. In addition, the company
reported an $11.2 million charge to write down the value of
an investment in Imagyn Medical Technologies Inc. of
Newport Beach, Calif.

BN1 TELECOMMUNICATIONS: Objects to Committee's Consultant
The Official Committee of Unsecured Creditors seeks to
retain Cornwell Consulting Services, Inc. as financial and
telecommunications consultants in the Chapter 11 case of
BN1 Telecommunications, Inc. BN1 objects to Cornwell's
proposed retention with respect to "providing financial and
accounting advice to the Debtor and the Committee in
connection with the preparation of a plan of reorganization
or liquidation." BN1 requests a hearing on the matter.

BN1 objects to the application on several grounds, as
follows:  (1) The Debtor asserts that it has already
retained an accountant, Hausser & Taylor, for financial and
accounting advice; (2) BN1 objects to the portion of the
application described as "all necessary telecommunications
services and advice" as being too vague and possibly not
under the scope of the Committee's authority in this
matter; (3) BN1 is concerned because the Committee fails to
provide adequate information about Cornwell's connection to
other telecommunications service providers of BN1; (4) BN1
is not convinced Cornwell has the necessary skills that
justify their retention in this matter, as no specific
employee experience is listed in the application; and
finally (5) BN1 insists that Cornwell disclose which
telecommunications bankruptcy cases it has previously been
involved in, and their outcomes, as well as any clients who
may be creditors in the present case.

BN1 also objects to the $15,000 guarantee of payment of
Cornwell made by Worldcom Network Services, Inc. Worldcom
is a member of the Committee and in fact, its
representative, Mr. Robert Vetera, is the chairman of the
Committee. Cornwell's impartiality is therefore in

Finally, the Debtor objects to the request that Cornwell be
paid on a monthly basis, as currently it is unknown whether
BN1 can pay professionals already retained in this case.

BARNEYS: DFS Group Decides Not to Pursue Acquisition
DFS Group Limited announced that it has decided not to
pursue an acquisition of the specialty retailer Barneys New
York. The Chairman and Chief Executive Officer of DFS Group
said, "After conducting through due diligence and extensive
discussions with the various creditor groups and Barneys'
management, we have concluded that certain of the
constituencies have an unrealistic view of the value of the
company.  Accordingly, while we continue to admire Barneys
for its unique relationships with customer and vendors, we
have decided not to pursue this acquisition."

BARRY'S JEWELERS: Deadline Assigned for Tax Claim Responses
The Debtors have clarified a deadline for filing responses
prior to a hearing date set for March 4, 1998 in Los
Angeles. Any party interested in responding to the motion
setting the hearing must file with the Clerk of the Court
not later than 11 days prior to the hearing date. The
hearing concerns an Omnibus Motion Seeking Disallowance of
Certain Claims of Taxing Authorities.

BARRY'S JEWELERS: Needs Continuation of Cash Collateral
Barry's Jewelers, their Bank Group, the Official Committee
of Unsecured Creditors and the Official Committee of
Bondholders have entered into the "Second Amended
Stipulation Authorizing Debtor's Use of Cash Collateral and
Granting Adequate Protection to Collateral Agent, Lenders,
and Bondholders." The Second Amended Stipulation provides
for Barry's continued use of cash collateral through and
including May 31, 1998, based upon Barry's cash collateral

Barry's is seeking the use of cash collateral as the only
means available to fund operations and continue as a going

BARRY'S JEWELERS: Seek Extension to File Plan
The Debtors are seeking a 60-day extension to file their
reorganization plan. A hearing date of February 25, 1998
has been set to consider the motion. They propose to extend
the time periods within which only Barry's may file a plan
of reorganization and secure acceptances of such plan for
60 days to April 30, 1998 and June 30, 1998. Interested
parties have until 11 days prior to the hearing date to

Barry's financial statements reflect approximately $127
million in liabilities subject to Chapter 11 consideration.
Of those claims, about $8.1 million consist of trade
accounts payable, and another approximately $8.5 million
consist of other accrued liabilities, including certain
employee-related liabilities satisfied during this case.
The lenders group assert secured claims against Barry's
totaling approximately $58 million. Holders of 11% senior
accrued notes, asserting secured claims of $53 million,
constitute the second major secured creditor group.

Since their first extension of time to file, Barry's
asserts that they have made significant progress in
restoring inventory, reforming business practices,
converting to a primarily cash business, evaluating claims
and developing projections based on holiday sales. In
particular, Barry's managers need more time to evaluate
holiday results, wherein the Debtors make almost all of
their profits. Any long-term projections based on these
results will be crucial to forming their reorganization

During January, Barry's provided cash collateral
projections, which Barry's hopes will result in a further
amended cash collateral stipulation extending beyond the
scheduled expiration of February 28, 1998. Barry's has also
provided the parties with capital needs projections.
Barry's hopes that these discussions (as well as plan
discussions with the Creditors' Committee and the
unofficial equity committee) will result in a plan
agreement that will form the basis of a reorganization
plan. Failure to reach consensus may result in Barry's
filing a partially consensual plan, which Barry's would
like to avoid. Ensuing possible litigation may include:

(1) The Bank Group versus the Bondholders regarding the
Intercreditor Agreement and the allocation of value as
between those two groups;

(2) The Bank Group and/or the Bondholders versus junior
creditors and/or equity holders regarding the allocation of
value as among those groups;

(3) Certain creditors versus creditors regarding the amount
and manner (i.e., stock, cash debt) of the consideration to
be distributed among them; and

(4) The estate (or its designated representatives) versus
certain creditors regarding the validity and enforceability
of security interests in and liens against property of the
estate, as set forth in the Perfection Adversary

However, Barry's hopes that their highly successful holiday
sales will promote an agreement that will satisfy all

BRUNO'S: Interim DIP Financing Approved
Prior to the Petition Date, Bruno's, Inc., as Borrower and
its affiliated Debtors (except FoodMax, Inc.), as
Guarantors, were parties to a $350,000,000 Senior Term Loan
Agreement and a $225,000,000 Revolving Credit
Loan Agreement led by The Chase Manhattan Bank.  

At the Petition Date, the Debtors owed Chase approximately
$294,000,000 under the Senior Term Loan Agreement and
approximately $168,000,000 under the Revolving Credit Loan
Agreement.  Chase and the Debtors dispute the
extent and validity of Chase's pre-petition security
interests.  Notwithstanding that dispute, to be resolved by
the Court at a future date, Chase has agreed to lead a new
$200,000,00 Debtor-in-Possession Financing Facility to
provide the Debtors' with on-going financing to fund their
day-to-day working capital needs.

The salient terms of the $200,000,000 DIP Credit Facility

Borrower:          Bruno's, Inc.

Guarantors:        Each Debtor affiliate, including
                   FoodMax, Inc.

Agent:             The Chase Manhattan Bank

Lenders:           The Chase Manhattan Bank (100%)

Commitment:        $200,000,000 total

At the First Day Hearing, James J. Hagan, the Debtors'
Executive VP and CFO, told Judge Robinson that the Debtors
need DIP financing and credit to purchase inventory and
continue their business operations. Mr. Hagan estimated
that the Debtors need $75 million over the next 15 to 20
days in order to pay vendors and operate in the ordinary
course of business.

Judge Robinson entered an Interim Order authorizing the
Debtor to execute and deliver the DIP Credit Agreement and
borrow up to $75,000,000 from Chase on an Interim Basis.  
Judge Robinson ordered that the Court will hold a Final
Hearing on February 19, 1998.

BRUNO'S: Motion to Sell Atlanta Stores to Ingles
Prior to the Petition Date, the Debtors retained the
investment banking firm of Furman Selz LLC to market and
sell 13 stores in the Atlanta, Georgia area.  In late
November 1997, Furman Selz and Bruno's received an
$18,000,000 offer from Ingles Markets Incorporated for the
purchase of the the Debtors' real estate interests in the
13 Atlanta Stores.

The Debtors state that continued operation of the Atlanta
Stores is not economically feasible. The Debtors indicate
that the money used to support these losing stores would be
better deployed elsewhere in the Debtors' operations.

BRUNO'S: Organizational Meeting to Form Committees
The United States Trustee for Region III has scheduled an
organizational meeting for the purpose of forming one or
more official committees of the Debtors' creditors to be
held in Wilmington at the Hotel Dupont Conference Center at
2:00 p.m. on Friday, February 13, 1998.  

BRUNO'S: Professionals Hired
Judge Robinson Granted the Debtors' Application to employ
the New York-based law firm of Weil Gotshal & Manges LLP as
their lead counsel in these chapter 11 cases.

The Debtors advanced to Weil Gotshal the sum of $75,000 for
reimbursement of expenses related to services performed;
expenses approximating $20,000 have been reimbursed from
this expense advance. Weil Gotshal also received from the
Debtors a retainer fee of $300,000 for services to be
performed in the prosecution of these chapter
11 cases.  Weil Gotshal will be paid on an hourly basis for
work performed.

Judge Robinson Granted the Debtors' Application to employ
the Wilmington-based law firm of Richards Layton & Finger
as local counsel in these chapter 11 cases.

The Debtors desire to employ the firm of Wasserstein
Perella & Co., Inc. as their financial advisors in these
chapter 11 cases, pursuant to the terms of an Engagement
Letter which they entered into on January 23, 1998. The
Debtors tell the Court that they paid Wasserstein a fee of
$104,838.71 for services rendered during January 1998 and
$3,000 for reasonable out-of-pocket expenses. Additionally,
the Debtors paid Wasserstein a retainer of $125,000 for
postpetition services to be rendered in relation to the
Chapter 11 cases.  The Engagement Letter provides for a
flat fee of $125,000 per month for a minimum of six months
for Wasserstein's performance of the financial services
detailed in the Engagement Letter.

Judge Robinson Granted the Debtors' Application requesting
the Court to approve their employment of Deloitte & Touche
LLP as accountants and consultants to perform the
accounting, auditing, tax and related business advisory
services, with its affiliate Deloitte & Touche Consulting
Group LLC, necessary to the administration of the Debtors'
chapter 11 cases.

BRUNO'S: To Purchase Four Delchamps Stores
On January 28, 1998, the debtor entered into an
Agreement with Delchamps Stores for the purchase of
Delchamps' real estate interests in four stores for
$1,500,000 in cash plus the cost of Delchamps'
inventory located at the stores.  Three of the Delchamps
Stores are located near three of the Debtors' stores, are
in superior condition and locations, and will be used to
relocate three existing stores.  The fourth store is
located in Montgomery, Alabama, and the Debtors believe
Montgomery is a market in which one new store will
strengthen its market presence.

The Debtors caution the Court that Delchamps will begin
closing its stores on February 9, 1998.  If court approval
is delayed and Delchamps' stores go dark, Bruno's will face
greater difficulties retaining employees and customers.  

CAMPO ELECTRONICS: Seeks to Amend Bank Group Approval
The Debtors seek to amend their Bank Group Forebearance
Agreement and a prior Amendment to this same Agreement, set
for a hearing in the Eastern District of Louisiana
Bankruptcy Court on February 10, 1998. The proposed
amendments affect paragraphs 6, 7, and 10.

COUNTRY HARVEST BUFFET: Restaurant chain is in Chapter 11
The Puget Sound Business Journal reported on 2/06/98 that
the Country Harvest Buffet Restaurants Inc., a Bellevue-
based chain of 20 restaurants, has filed for Chapter 11
bankruptcy protection in an effort to restructure its

Chairman and CEO Greg Dollarhyde said he's confident the
900-employee company will emerge from reorganization
quickly, without closing any restaurants.  "This not an
Ernst or a Lamonts, where the bankruptcy takes three
years," said Dollarhyde.  "We have one secured creditor who
essentially controls all the assets and we've already
reached an agreement on how to accommodate them and how to
move forward.

"Now we just have to get everyone else on board and
convince them this is the best way to go."
Country Harvest has assets of $19.5 million and debts of
$23 million, according to the filing in U.S. Bankruptcy
Court in Seattle. Dollarhyde said the largest creditor is
Heller Financial, owed more than $10 million.

Heller Financial was the senior lender on the transition
from King's Table to Country Harvest, and GE Capital bought
preferred stock as part of a financing deal.  Once the
company's creditors sign off on the reorganization plan,
Dollarhyde plans a marketing push for the company's off-
premise banquet business, launched last year.  "There's a
lot of high-end catering, but we can do a $6 plate of
mashed potatoes and roast beef that most people just don't
do," he said.

DOW CORNING: Employs Professionals
The Debtors are seeking to employ Brian Cave LLP for
environmental and safety law services, effective as of
January 1, 1998. The quarterly budget for services to be
rendered on an hourly fee basis and expenses is estimated
at $10,000 per quarter.

DYNASTY: Goldrush Casino's Sub Completes Loan
Goldrush Casino & Mining Corporation is pleased to announce
that its wholly owned subsidiary, Dynasty, Inc., a Nevada
Corporation, has completed the first tranche of the Jockey
Games, LLC loan.  

The US $12,000,000 loan completed on Friday, Feb. 7th is a
12-month loan bearing an interest rate of 12% with no
points or additional fees charged.  The Jockey Games
$12,000,000 loan is the first tranche of a $16,000,000 loan
that will be used to remove Dynasty, Inc. from Chapter 11.  
Jockey Games has a five-month option to purchase the
Dynasty Las Vegas property for a previously negotiated and
Bankruptcy Court approved purchase price of US $46,500,000.  

The funds were used to fully retire the Shaco, Inc. first
and second mortgages on the Dynasty, Las Vegas property.  
The payoff made on Feb. 7, 1998 to Shaco Inc. removed the
possibility of Dynasty being placed into foreclosure
on March 3, 1998.  

Dynasty also announces that it has reached a settlement
agreement with William Murdock in regard to Murdock's
claims as a creditor in the Dynasty bankruptcy matter as
well as for other claims that Murdock had, or may have
had, against Dynasty Inc. and Goldrush Corp.  Management
views the Shaco payoff and Murdock Settlement as the last
impediment to approval of its plan of organization
scheduled to be heard by the Bankruptcy Court on Feb. 12,

ERD WASTE: Employs Professionals
ERD Waste Corporation seeks to employ E. Lawrence Oldfield,
& Associates as Special Illinois Labor Counsel nunc pro
tunc as of September 30, 1997.  Prior to the filing of the
Chapter 11 petition and as of 1993, the Debtors retained
the Oldfield firm as their counsel to defend the Pacheco
Action.  ERD Environmental was party to an employment
discrimination litigation originally commenced in or about
1993 by Jess Pacheco. Services shall be provided at rates
of about $225 per hour for partners, $175 per hour for
associates and $75 per hour for paralegals, plus
reimbursement for expenses.

ELEK-TEK: Exclusive Period Extended
Federal Filings, Inc. reported on February 6, 1998 that the
court has extended Elek-Tek's exclusive period to file a
liquidating reorganization plan to Feb. 27.  Noting that
significant progress has been made since selling
substantially all of its assets to Creative Computers Inc.
in October, the company said it needed the extension
because the creditors' committee is still evaluating Elek-
Tek's proposal to sell its corporate shell.

ERNST HOME CENTER: Asking for 60-day Extension
Federal Filings, Inc. reported on February 6, 1998 that
Ernst has asked the court for a 60-day extension of the
deadline to assume or reject the three remaining leases
covered under an agreement with AOS Investments L.L.C.  
Pursuant to the agreement with AOS, there are pending
transactions for the leases in Reno, Nev., and Puyallup,
Wash.  In addition, Ernst anticipates an agreement for a
further extension of the Boise, Idaho, lease.  The former
retailer sold many of its rights to benefit from the "bonus
value" in 24 store leases to AOS in September 1996 for $2.5
million and the right to share in future revenues generated
by AOS from the assumption and assignment of the leases.

HEART INTERNATIONAL: Iowa Adoption Agency Seeks Bankruptcy
The Omaha World Herald reported on 2/06/98 that the
bankruptcy of an adoption agency leaves 131 creditors,
including many couples from Iowa and around the nation who
had spent $15,000 or more in an effort to adopt a child.

Heart International Adoption Services Inc. listed more than
$1 million in liabilities and no assets when it recently
declared bankruptcy. That is despite Margaret Hart's
nonprofit organization taking in more than $1.8 million
over the past four years.

The filing in U.S. Bankruptcy Court temporarily stops all
other legal moves. The Iowa Attorney General's Office has
not decided whether to investigate financial dealings after
the bankruptcy is settled.  

Court records show Heart International had gross income of
$440,808 in 1994, $364,746 in 1995, $654,549 in 1996 and
$402,667 in 1997 before filing for bankruptcy.

The Baltimore Sun reported on 2/05/98 that at its peak, in
the early 1990s, Baltimore-based Inphomation had estimated
revenue of $100 million to $125 million. But spiraling
competition -- which included price-cutting and free phone
minutes offered by rivals -- some bad luck and management
missteps combined to put the marketing company deep into
the red.

Indeed, founded in 1990, Inphomation pioneered the use of
"900" phone lines and backed them with the infomercials and
a network of about 2,000 psychics.  People could call for
advice on their love lives, careers and financial
prospects -- all at $3.99 a minute.  The early success of
the business shows that Lasky is a brilliant direct
marketer, says the Infomercial Marketing Report's Dworman.

"900 lines were new then," he said. "Remember, this was
1991 and the country was headed into the Gulf War and
toward a presidential election. The rise of this paralleled
a lot of uncertainty. People were calling to get some

Documents filed in the federal bankruptcy case this week
list about 200 creditors and state that Inphomation is
disputing about $8 million of its estimated $26 million in
liabilities.  The attorney said it's too early to say how
much money creditors will recover. But he said there's
reason for optimism. In its heyday, it employed 2,000
psychics and logged 10,000 calls a day, or 2.5 million
phone minutes per month at $3.99 minute. Singer Dionne
Warwick still serves as the main TV pitchwoman.

MAX: United Cannot Fly MAX Passengers
The Denver Gazette reported on February 6, 1998 that an
amendment to a deal between Western Pacific and United
Airlines Thursday breathed new life into the troubled
Mountain Air Express.

The agreement struck Thursday says simply that United
cannot fly MAX passengers and that United will reimburse
MAX for any passengers it flew Wednesday night and Thursday
during the confusion of WestPac's shutdown.

MAX, trying to work its way out of Chapter 11 bankruptcy,
had feared it would lose to United the right to fly - and
receive payment for flying - more than 15,000 ticketed
customers. That could have been a crucial blow to MAX's
future.  "Now we're getting the money for all the people we
would have carried," MAX President Tom McClain said.
"Whether they fly on us or on United, we get the
money either way."

The fear stemmed from a deal United and WestPac struck
Wednesday. Following WestPac's announcement that it was
going out of business, United agreed to accommodate most of
WestPac's stranded passengers.  But MAX - long a feeder for
WestPac's Denver-based flights - still had outstanding
reservations from passengers with WestPac itineraries.
MAX's fear was that those passengers would now fly their
entire journeys on United.

But under Thursday's deal, if a passenger was scheduled to
fly WestPac from Colorado Springs to Seattle, using MAX as
the WestPac feeder to Denver, the traveler will still use
MAX. Once in Denver, the passenger will board a United
flight to Seattle.  Also, if United makes a special
accommodation and flies a MAX passenger, MAX
will still receive its share of the money.

In court Thursday, Judge Sidney Brooks agreed that the deal
was essential for MAX's future. Denying MAX the ability to
keep up the feeder flights "seems to guarantee the total,
immediate collapse of MAX," Brooks said.

MAX officials return to court today, pleading that the
airline needs, and deserves, $508,000 it is owed by
WestPac.  MAX is owed $358,000 of that tab because it
generously allowed the dying WestPac last week to postpone
half of the $719,000 in payments due for MAX flights. Now,
MAX's move to aid WestPac - which went out of business
before paying the sum - threatens to dismantle MAX's hopes.

The other $150,000 WestPac owes is for MAX's eight daily
shuttle flights between Colorado Springs and Denver. MAX
will continue those flights under a new deal with Frontier
Airlines - but Frontier will pay MAX on a per-passenger
basis. That deal, McClain acknowledged, is not quite as
good as a $100,000 lump sum payment WestPac paid each week.

The Securities and Exchange Commission has settled its
lawsuit against the founder of the collapsed Foundation for
New Era Philanthropy without seeking civil penalties.
The SEC said the $1.5 million John G. Bennett Jr.'s paid a
federal bankruptcy trustee represented nearly all his
assets, according to court documents signed this week.

The agency agreed not to seek further penalties because he
would have been unable to pay them. Bennett is serving a
12-year prison term for fraud, tax violations and money
laundering. Promising that a wealthy pool of anonymous
donors would double investments intended for nonprofit
organizations, New Era took in more than $354 million
from hundreds of charities, churches, colleges and other
institutions from 1989 to 1995.

The anonymous donors did not exist. New Era collapsed in
1995, leaving hundreds of investors without their money.
The federal bankruptcy trustee now is trying to recoup some
of their losses. The settlement, signed by U.S. District
Court Judge Anita Brody, reserves the SEC's right to
petition for civil penalties later if the agency finds that
Bennett has hidden assets somewhere. It also bars Bennett
from violating securities laws again, on pain of further

NIAGRA MOHAWK: Panel Delays Action, But May Approve Plan
The Buffalo News reported on 2/05/98 that the state
Public Service Commission stands poised to give Niagara
Mohawk's residential customers a much smaller rate cut than
big industrial users in the coming years.

Though a final decision on a comprehensive restructuring of
the Syracuse-based utility was delayed Wednesday, the three
members of the commission clearly indicated they won't make
any major revisions to an earlier deal that proposes to
give residential and small commercial utility customers a
3.2 percent rate cut -- worth about a couple dollars a
month. Bill for big manufacturers, meanwhile, would drop 25
percent under the plan.

Pointing to claims that Niagara Mohawk could declare
bankruptcy if the restructuring and rate plan isn't
approved, commission members said the proposal has little
room to would allow the financially ailing utility to give
much more of a break to residential and small commercial
energy users.

Niagara Mohawk is the last major energy utility in the
state with a pending application to restructure its
operations. Critics, who want the Legislature to step in
and take over the restructuring, insist consumers aren't
being considered. But John O'Mara, commission chairman,
said the 25 percent cut for big industrial users "is
something the economy of upstate badly needs."

On paper, residential users and small commercial customers
would get a 3.2 percent rate cut under the Niagara Mohawk
plan. But 1 percent of that would have been coming anyway
because of a tax cut approved last year. The plan calls for
nearly doubling the monthly flat rate charged residential
users to $17; that means rates actually will rise 41
percent for the utility's residential and small commercial

For $4 billion, 16 independent power producers who sell
energy to Niagara Mohawk cut a deal to let the utility out
of its expensive contracts, which can cost the utility six
times the market rate. The independent power producers also
sell surplus steam from their co-generation plants to
nearby producers.

PARAGON TRADE: Rescheduled Meeting of Creditors
A meeting of the creditors of Paragon Trade Brands, Inc.,
Debtor, has been rescheduled for March 11, 1998 at 9 a.m.
in the Strom Auditorium of the Russell Federal Bldg. in
Atlanta, GA, Hon. Margaret H. Murphy, presiding.

PARAGON TRADE: Files Supplement to Credit Agreement
Paragon Trade Brands, Inc. has provided the Court with a
final Revolving Credit and Guaranty Agreement and a Pledge
and Security Agreement in reference to their January 9,
1998 motion for Post-Petition Financing, The Chase
Manhattan Bank, agent.

The Debtor has applied to its creditors for a revolving
credit and letter of credit facility in an aggregate
principal amount not to exceed $75,000,000, all of the
Borrowers obligations under which are to be guaranteed by
the Guarantors.  The proceeds of the loans will be used to
provide working capital for the Borrower.

PARAGON TRADE: Obtains Post-Petition Financing
On January 30, 1998, Judge Margaret H. Murphy granted
authority to Paragon Trade Brands, Inc. to obtain Post-
Petition Financing. The Court finds Paragon has exercised
prudent business judgement consistent with their fiduciary
duty and are supported by reasonably equivalent value and
fair consideration. The financing has been negotiated in
good faith and at arm's-length between the Debtor and the
Agent, The Chase Manhattan Bank.

The Borrower is immediately authorized to borrow or obtain
letters of credit pursuant to the Credit Agreement, and the
Guarantors may guaranty such borrowings, up to an aggregate
of $75,000,000. The Borrower is also authorized to incur
overdrafts and related liabilities arising from treasury,
depository and cash management services or automated
clearing house funds transfers.

PHELPS TECHNOLOGIES: Files Voluntary Petition
Phelps Technologies, Inc. filed a voluntary petition in
Chapter 11 in the United States Bankruptcy Court, Western
District of Missouri, Western Division on February 2, 1998.

The company reported total assets as of November 30, 1997
of $31,304,142.06 and total liabilities of $38,745,656.

The debtor provided a list of the twenty largest creditors
as follows:

NAME                         NATURE           AMOUNT
----                         ------           ------

Quantum, Inc.                trade            $2,683,750.72

NMB Technologies             trade            $2,107,407.81

Hamilton Hallmark Tech       trade            $1,610,538.54

Rockwell International Co.   trade            $1,215,742.54

Mitsumi Electronics Corp     trade            $1,165,506.50

IEC Electronics Corp.        trade            $789,161.01  

Cresco Steel Service         trade            $685,524.80
Center Inc.

Sharp Electronics            trade            $492,327.83

Central Industrial Supply    trade            $256,374.31

Metal Goods Service Center   trade            $242,415.06

Complex Tooling & Molding    trade            $235,070.54

Manager of Finance,          personal prop.   $229,378.23
Jackson Co.                  tax

Kelly Temporary Services     trade            $474,349.55

Excel Personnel Service      trade            $466,419.15

Cherokee Staffing            trade            $443,111.15

Schifano Co.                 trade            $372,952.67

Interim Personnel            trade            $336,535.17

Colorado Electronic
Hardware                     trade           $295,318.16

Heritage Tool
& Mfg. Inc.                  trade           $289,198.09

Progressive Die & Auto       trade           $267,684.12

PIE MUTUAL: Ohio's #1 Malpractice Insurer Faces Liquidation
The Dayton Daily News reported on 2/06/98 that Ohio's
largest medical malpractice insurer should be liquidated
because liabilities exceed assets by $246 million,
according to the Ohio Insurance Department.

The department on Wednesday asked Franklin County Common
Pleas Judge Michael Watson to order the liquidation of PIE
Mutual Insurance Co. of Cleveland. A hearing is scheduled
for February 17, 1998.

A liquidation order would allow the state-backed Ohio
Guarantee Association and similar agencies in other states
to defend policyholders against 4,250 pending claims, the
insurance department said. Claims paid by the Ohio fund
would be limited to $300,000.

Liquidation also would mean selling PIE assets to pay
policyholder claims and employees of the insurer and then
to pay creditors.  The state took control of PIE on Dec. 15
after three top executives received $12 million in payments
that the state said were not authorized by board members.
The state said PIE, which claimed a surplus of $33.6
million in 1996, misrepresented its financial books and had
a deficit of $11.5 million.
The company insures more than 18,000 doctors against
malpractice, including nearly a third of Ohio's 34,000
licensed physicians. PIE wrote premiums worth
$80 million in 1996 in Ohio - almost twice the amount of
its nearest competitor, Medical Protective Co.

POWER DESIGNS: Files Voluntary Petition in Chapter 11
The debtor, Power Designs, Inc. filed a petition in Chapter
11 in the United States Bankruptcy Court, District of
Connecticut, Bridgeport Division.

Total assets reported by the company as of September 30,
1997 were $230,077 and total liabilities were $1,904,644.

Creditors holding the twenty largest unsecured claims were
as follows:

NAME                                         AMOUNT
----                                         ------
Equitas, LP                                  $750,000

Dr. Edward Benjamin                          $246,500

Bruce MacDoanld                              $212,984.62

Howard and Phyllis Silverman                 $200,000

MacDonald Moving Services, Inc.              $200,000

Antoinette Rosa                              $160,000

Lois Horn                                    $140,000

Curran Partners, LP                          $100,000

John D. Sheperd                              $100,000

Steven Grapstein                             $100,000

Ray Ingleby                                  $100,000

Marshall Manley                              $100,000

David H. Smith                               $79,215.38

Money Purchase Pension Plan                  $67,000.
c/o Dr. Edward Benjamin

Crescent Capital Company LLC                 $50,000            

Alan Napack                                  $50,000

Michael Zuckerman                            $50,000
& Hillary Davis

Tri Ventures                                 $50,000

Alan N. Parnes                               $50,000

Charitable Remainder Trust                   $50,000
c/o David H. Smith

RUSSELL CORP: Lay-Offs Blamed on Tight Profits
The Atlanta Journal/Constitution reported on 2/05/98 that
athletic wear manufacturer Russell Corp. told 200 workers
in Milton, Fla., along with those at its 69 other plants,
that they would be getting raises. Shortly afterward, the
apparel maker announced the Milton plant would be closed
and the workers laid off.

Company officials said the factory would close mainly
because of soft sales and tight profits blamed on
price cuts by competitors.  Russell has shut four other
factories in recent years.

The Pensacola News Journal, quoting workers at the plant,
reported that Russell managers said the plant would be shut
down by April 30. Poor sales and high insurance costs
contributed to the decision to shut the plant, which
produces mostly lightweight T-shirts. The 102-year-old
company, which employs 18,000 workers in five Southeastern
states, had sales of $1.23 billion last year.

SEARCH FINANCIAL: Exiting Auto Loan Business
Search financial Services Inc. announced on February 3,
1998, Registrant announced that it is exiting the
non-prime auto finance business and will cease auto loan
originations immediately.  The company also announced that
it has deferred consideration of its previously announced
exchange offer of common stock for preferred stock and
that it has received notice from The Nasdaq National
Market, Inc. that its common stock will be delisted from
The Nasdaq National Market on March 30, 1998 if prior to
that date Registrant does not regain compliance with the
conditions for continued listing set forth in The Nasdaq
Stock Market's Marketplace Rules.

To regain compliance, the common stock must have a reported
closing bid price of $1.00 or more for 10 consecutive
trading days or, alternatively, Search must maintain net
tangible assets of at least $4 million and the market value
of Search's common stock held by persons other
than officers, directors and persons owning of record or
beneficially 10 percent or more of the outstanding shares
must be at least $3 million for 10 consecutive trading
days.  If necessary, Search may request a hearing to review
this action.

In making the announcement, George C. Evans, Chairman,
President and Chief Executive Officer, said the decision
was based on two principal factors:  Search's inability to
renegotiate the terms of the MSF Financial, Inc. ("MSF")
loan agreement with Fleet Bank, N.A. and the other members
of the MSF bank group to permit continued loan funding and
higher than anticipated losses from Search's "C" paper

The move is expected to result in immediate staff
reductions with an annualized cost saving of approximately
$3.2 million.

THOUSAND ADVENTURES: Trustee Will Be Appointed
The Omaha World Herald reported on 2/06/98 that
a trustee will be appointed to take control of holdings of
a membership campground company accused of defrauding
customers.   U.S. Bankruptcy Judge Lee Jackwig also agreed
Wednesday to consolidate bankruptcy proceedings involving
Thousand Adventures Inc., formerly of Blair, Neb.

The company filed for protection under bankruptcy laws in
Texas, showing $57 million in debt and just $1,600 in
assets, mostly in office equipment.  However, attorney Doug
Napier of Fort Madison, Iowa, said the company is
hiding assets. He said the company's tax return for the
fiscal year ending Oct. 31, 1996, showed it had $73 million
in assets and another $36 million in revenue.

VCS SAMOA: Cross-Complaint Should Proceed
VCS Samoa Packing Company and Van Camp Seafood Company,
Inc., debtors, are seeking relief from the automatic stay
in their complaint against Excelpro, Inc. and Wescotek in
the Superior Court of California, County of San Diego. In
its suit filed October 9, 1997, VCS Samoa alleges that a
product that it purchased from Excelpro for canning tuna
that it subsequently sold to the general public contained
sulfites and therefore, VCS incurred expenses in labeling
the cans for potential sulfite content. VCS seeks to
recover its expenses for re-labeling.

Excelpro filed a cross-complaint alleging breach of
contract. Because at least part of the conduct occurred
before April 15, 1997, the date this case was filed. The
Debtors stipulate to relief from the Automatic Stay to
allow the cross-complaint to go forward in the State Court
Action, subject to the terms set forth herein, and further
stipulate that the filing and prosecution of the subject
cross-complaint do not constitute a violation of the
automatic stay.

Furthermore, all the parties stipulate that proceeding with
the cross-complaint is for the sole purpose of adjudicating
the extent of the defendants' claims against the Debtors.
Any judgement in favor of the Defendants should be
classified under a Chapter 11 plan of reorganization or a
Chapter 7 dividend distribution.

WESTERN PACIFIC: Nosedive in Stock Prices
The Rocky Mountain News reported on 2/06/98 that
Western Pacific Airlines Inc.'s stock fell from 22 to 2.5
pennies per share.  More than 7.2 million shares of the
failed airline's stock have traded hands this week, or more
than half its 13.6 million outstanding shares. Wednesday,
Western Pacific officials announced that all future flights
were canceled.

At 2.5 cents per share, all of Western Pacific's stock
could be had for about $340,000.  Investors may believe the
stock will become valuable if another company buys Western
Pacific as a shell company and backs the stock with a
different set of assets. Short sellers could have profited
from Western Pacific's stock in all but four months of the
airline's existence.

The stock was de-listed from the Over-the-Counter Bulletin
Board on Dec. 2 and now trades as a pink-sheet stock
through brokers.


   Day........Shares traded..Price

   Monday.....400,100.......22 cents

   Tuesday....1.3 million...17 cents

   Wednesday..1.1 million...12 cents

   Thursday...4.4 million...2.5 cents

WESTERN PACIFIC: Southwest Airlines May Buy the 737's
The Springfield Journal-Register reported on 2/06/98 that
Southwest Airlines Co. said it may try to buy or lease
Western Pacific Airlines Inc.'s grounded fleet of 18 Boeing
737 jetliners in order to meet its growth plans.

The U.S. Bankruptcy Court in Denver will either return the
planes to the leasing companies that own them, including GE
Capital Corp. and KG Aircraft Leasing, or allow Smith to
sublease them.

WESTERN PACIFIC: Willis Lease Finance Received Rent
Willis Lease Finance Corporation and an affiliate today
reported they have received the February rent payment on
their lease contracts with Western Pacific Airlines.  As
earlier reported, Willis Lease Finance Corporation and its
affiliate have three engines with a net book value of $8.7
million on lease to Western Pacific.

"At this time, we believe our interests are well documented
and that our legal position is strong," said Charles F.
Willis, President.  "We continue to retain security
deposits and prepaid rents totaling 2.8 times the combined
monthly payment amounts for the three engines.  In
addition, we have opportunities to lease these engines to
other users, and I do not anticipate any adverse impact to
our operations or financial results at this time.  Of
course, as with any complex legal situation, there can be
no assurances that everything will proceed smoothly."

Meetings, Conferences and Seminars

February 19-22, 1998
      Annual Western District Meeting
         Universal City Hilton Hotel
         Los Angeles, California
            Contact 1-310-470-8487

February 22-25, 1998
      12th Annual Norton Bankruptcy Litigation Institute I
         Olympia Park Hotel, Park City, Utah
            Contact 1-770-535-7722

March 19-20, 1998
      Spring Leadership Meeting
         Hotel del Coronado, San Diego, California
            Contact 1-312-857-7734

March 20, 1998
      Bankruptcy Battleground West
         Century Plaza Hotel, Los Angeles, California
            Contact: 1-703-739-0800   

March 26-29, 1998
      10th Annual Norton Bankruptcy Litigation Institute II
         Flamingo Hilton, Las Vegas, Nevada
            Contact 1-770-535-7722

April 2-5, 1998
      68th Annual Midwest District Meeting
         The Westin Hotel, Chicago, Illinois
            Contact: 1-312-781-2000

April 23-24, 1998
      1998 Spring Education Seminar
         Hawthorne Suites Hotel, Charleston, South Carolina
            Contact: 1-803-252-5646

April 30-May 3, 1998
      Annual Spring Meeting
         Grand Hyatt, Washington, D.C.
            Contact: 1-703-739-0800

May 1-3, 1998
      6th Annual Convention
         Fountainbleau Hilton Resort, Miami, Florida
            Contact: 1-703-803-7040

May 22-25, 1998
      50th New England District Annual Meeting
         Ocean Edge Resort & Golf Club
         Cape Cod, Massachusetts
            Contact 1-617-720-1355

May 31-June 5, 1998
      CLLA Credit Institute
         Marquette University, Milwaukee, Wisconsin
            Contact 1-312-781-2000

June 3-6, 1998
         San Francisco, California
            Contact 1-541-858-1665

June 8-9, 1998
      Advanced Education Workshop & Legislative Conference
         Radisson Plaza, Charlotte, North Carolina
            Contact 1-312-857-7734

June 11-12, 1998
      1st Annual Conference on Corporate Reorganizations
         The Palmer House, Chicgo, Illinois
            Contact 1-903-592-5169 or

June 11-14, 1998
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Michigan
            Contact: 1-703-739-0800

July 2-5, 1998
      Western Mountains Bankruptcy Law Institute
         Jackson Lake Lodge, Jackson Hole, Wyoming
            Contact 1-770-535-7722

July 16-19, 1998
      Northeast Bankruptcy Conference
         Sea Crest Resort, Falmouth, Massachusetts
            Contact: 1-703-739-0800

July 24-29, 1998
      104th Annual Convention
         Ritz Carlton, Amelia Island, Florida
            Contact: 1-312-781-2000

August 6-9-1998
      Southeast Bankruptcy Workshop
         Daufuskie Island Club & Resort,
         Hilton Head, South Carolina
            Contact: 1-703-739-0800

September 9-13, 1998
      Annual Convention
         Sheraton El Conquistador, Tuscon, Arizona
            Contact: 1-803-252-5646

September 17-20, 1998
      Southwest Bankruptcy Conference
         The Inn at Loretta, Santa Fe, New Mexico
            Contact: 1-703-739-0800
October 16-20, 1998
      1998 Annual Conference
         The Westin Hotel, Chicago, Illinois
            Contact 1-312-857-7734

November 30-December 1, 1998
      5th Annual Conference on Distressed Debt
         Plaza Hotel, New York, New York
            Contact 1-903-592-5169 or   

December 3-5, 1998
      Winter Leadership Conference
         Westin La Paloma, Tucson, Arizona
            Contact: 1-703-739-0800

The Meetings, Conferences and Seminars column appears
in the TCR each Tuesday.  Submissions via e-mail to are encouraged.  


A listing of meetings, conferences and seminars appears
each 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 Lexy Mueller, 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
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  * * *