TCR_Public/980223.MBX    T R O U B L E D   C O M P A N Y   R E P O R T E R
       Monday, February 23, 1998, Vol. 2, No. 36                    

ALPHASTAR: Lenders Seek Case Dismissal
2CONNECT EXPRESS: Interim Cash Collateral Approved
FARM FRESH: Disclosure Statement Confirmed
GAYLORD COMPANIES: Seeks Time to Assume or Reject Leases
GREAT LAKES PULP: Consummates Plan of Reorganization

HOMEPLACE STORES: Seeks Extension to Assume or Reject
HOMEPLACE STORES: To Implement Employee Retention Program
HURST CAPITAL CORP: SEC'S Fraud Complaint Shuts Firm
INPHOMATION: Bankruptcy Judge Asked to Appoint Trustee
LIMITED: To Close 200 Stores, Spin Off Abercrombie & Fitch

MOBILEMEDIA: Spencer Stuart to Search for Directors
MONTGOMERY WARD: To Reject Several Leases
RDM SPORTS: Court Orders Hearing for DIP Amendment
RDM SPORTS: Emergency Joint Motion to Amend DIP Loan

SEARCH-FINANCIAL: Reports Third Quarter Loss
SMITH TECHNOLOGY: Committee Demands Separate Records
SUN JET AIRLINES: Aviation Industries to Raise $5 Million
VAN CAMP: Committee Replies to Trustee's Nix on Plan
WESTERN PACIFIC: Executives Allegedly Double Salaries
WESTERN PACIFIC: Trustee Objects to Conversion of Case

ALPHASTAR: Lenders Seek Case Dismissal
Alphastar Television Network Inc. and Tee-Comm Distribution
Inc.'s lenders asked the court to dismiss the defunct
companies' Chapter 11 cases.  The lenders, Harris Trust &
Savings Bank and Bank of Montreal, contended that the
assets have been liquidated, the cash proceeds are
encumbered by the lenders' liens, and there is nothing to
distribute to future administrative claimants,
unsecured creditors or equity holders. (Federal Filings,
Inc. 19-Feb-98)

2CONNECT EXPRESS: Interim Cash Collateral Approved
Judge Raymond B. Ray entered an order setting a final
hearing for February 27, 1998 and authorizing the debtor to
incur post-petition secured indebtedness secured by a
"superpriority" first lien in favor of Bay Tech
Investments, Inc.

FARM FRESH: Disclosure Statement Confirmed
After a Feb. 10 hearing, the court approved Farm Fresh's
disclosure statement and confirmed the supermarket chain's
reorganization plan in an opinion released Tuesday.  The
court is expected to sign the confirmation order today
after the parties incorporate two minor changes mentioned
in the opinion. (Federal Filings, Inc. 19-Feb-98)

GAYLORD COMPANIES: Seeks Time to Assume or Reject Leases
Gaylord Companies, Inc. and its affiliates, as debtors, are
seeking an extension of time to assume ore reject 13
unexpired leases of non-residential real property until May
12, 1998.  The debtors state that the leases are a primary
asset of their respective bankruptcy estates and the
decision to assume or reject the leases is central to the
debtors' reorganization.  

The debtors have not yet finalized the terms of their plan
of reorganization, and at this time the debtors are unable
to determine whether to assume or reject the leases.  
The debtors state that they need additional time to analyze
and gauge the performance of the stores and determine the
number and location of stores which will maximize profits.

GREAT LAKES PULP: Consummates Plan of Reorganization
Great Lakes Pulp Company has consummated its plan of
reorganization and is emerging from its Chapter 11
proceedings with substantial new equity capital and new
debt facilities.

Under the court approved plan Great Lakes trade creditors
are being paid in full in cash and other creditor groups
will have their debt reduced or, in some cases, converted
into the common stock of the reorganized company.
Great Lakes had been operating under Chapter 11 protection
since November 6, 1997 while the court evaluated and
ultimately approved the pre-negotiated reorganization plan.
The reorganized company will be led by the existing senior
management team. Full operations, which were maintained
throughout the proceedings, will continue.

Great Lakes Pulp Company operates the only fully
commissioned air dried deinked market pulp mill in the
world. Its annual production of 144,000 metric
tons of pulp is used around the world in both recycled
fiber applications as well as a virgin pulp substitute.

HOMEPLACE STORES: Seeks Extension to Assume or Reject
HomePlace Stores, Inc. seeks an order allowing the Debtor
to delay until the earlier of a confirmation of a
reorganization plan or September 5, 1998 to assume or
reject real property leases. The members of the HomePlace
Group are tenants under 99 unexpired nonresidential real
property leases and parties to approximately 10 additional
unexpired leases for stores that the HomePlace Group has
not yet occupied.

HOMEPLACE STORES: To Implement Employee Retention Program
HomePlace Stores, Inc. and its corporate affiliates,
debtors, move the court for entry of an order authorizing
the HomePlace Group to implement an employee retention
program and an employee severance program.

The debtors claim that the continued loss of experienced
employees would prove disastrous to the company's
reorganization efforts.  The purpose of the Retention and
Severance Programs is to offer concrete incentives to
critical employees by compensating them for the actual and
perceived risks of remaining with the company.

The debtors estimate that, if all covered employees receive
Retention Awards, the total cost to the estates would be
approximately $2.2 million.  And the cost of establishing a
noncontributory 401K plan will be approximately $105,000.
The cost of the Potential Severance awards under the
severance program is $5,845,582.

HURST CAPITAL CORP: SEC'S Fraud Complaint Shuts Firm
A federal judge has frozen the assets of a company whose  
owners have been accused by the SEC of defrauding investors
out of  $49 million.  Hurst Capital Corp., based in West
Palm Beach, claimed it raised money from investors to
purchase accounts receivable from health care providers and
commercial companies at a discount,  according to the
complaint filed by the Securities and Exchange  Commission.

The corporation told investors their funds would be  
reinvested four times a year, for a guaranteed 20 percent
annual  return, the SEC said.  The company raised $49
million from 1,300 investors nationwide since 1993 _
including $36.5 million just in 1997, said  Randall J.
Fons, regional director for the SEC in Miami.

However, though the corporation had tens of millions of  
dollars in investments, it had only purchased $625,000 in
accounts  receivable, Fons said.  Some of the investor
money was being used to pay off prior investors, the
SEC said in its complaint alleging sale of unregistered
securities and fraud by the company's president, James F.
Hurst, and its vice president, E. William Clifton.

U.S. District Court Judge Daniel T.K. Hurley issued an  
emergency order freezing the assets of the company, Hurst
and  Clifton and the judge appointed a receiver to handle
the assets.(Sun Sentinel Ft Lauderdale 20-Feb-98)

INPHOMATION: Bankruptcy Judge Asked to Appoint Trustee
Creditors of the company that owns the Psychic Friends
Network, claiming that owner Michael W. Lasky and other
executives of the insolvent firm have tried to siphon
revenues and assets into a clandestine company, have asked
a federal bankruptcy judge to appoint an emergency trustee.

"This is imperative; the assets are wasting away," said the
creditors' attorney, Richard L. Wasserman, during a daylong
hearing yesterday in U.S. Bankruptcy Court downtown.
The hearing on the creditors' request resumes this morning
before Judge James F. Schneider.

Inphomation's creditors, wanting to recover some of the
money they say they are owed -- and convinced that company
leaders are trying to strip the firm of its few remaining
assets -- asked Schneider to strip those officials
instead of their oversight power, and to install
immediately an outsider who would try to salvage whatever
might be left.

Baltimore attorney James C. Olson, representing Lasky and
Inphomation, assured the judge that "there is no nefarious
plot to divert assets." The creditors are "painting a very
dramatic, very dark picture of what's going on here," Olson

Wasserman and some creditors alleged that on Jan. 16, less
than three weeks before the bankruptcy filing, Lasky and
Inphomation set up a separate company, a Maryland
corporation known as Friends to Friends Ltd.   Wasserman
alleged that Inphomation has been diverting business away
from the Psychic Friends Network and into the Friends to
Friends Network, whose existence creditors say they became
aware of belatedly. Their implication: Lasky and
Inphomation hoped to hide some of their business in the new

However, Inphomation's Olson said the purpose of Friends to
Friends was much less insidious. Since Inphomation has left
a trail of unpaid bills and angry vendors, executives of
the cash-strapped company saw Friends to Friends
as a chance for a fresh start, using the coterie of
telephone psychics it has amassed during its more-
successful days as the Psychic Friends Network, Olson
said.   The executives also thought that the new company
would have a chance of getting needed working capital from
lenders who are now spurning similar requests from the
insolvent Inphomation.   Olson said Friends to Friends has,
until now, existed as a shell company with no assets and no
business to speak of. (Baltimore Sun 2/18/98)

LIMITED: To Close 200 Stores, Spin Off Abercrombie & Fitch
The Limited Inc., struggling to boost sales and profits,
will close at least 200 of its underperforming stores,
including most of its posh Henri Bendel division, and spin
off its Abercrombie & Fitch chain.

The nation's largest specialty merchant, once the darling
of Wall Street and the retail world, will take a $289
million charge in the fourth quarter to finance the
restructuring. Tuesday's announcement is the second time in
a month that the company announced plans to restructure its
business. In January, it said it would close
its money-losing Cacique lingerie chain and add 265 stores
to its profitable Victoria's Secret and Bath & Body Works
divisions this year.

Under the latest plan, the Limited will close at least 200
stores in its Limited, Lerner, Lane Bryant and Express
chains by the end of this year. It will also close 80
oversized stores, moving about 50 into smaller spaces and
shutting down the rest.

The Limited also reported it earned $252.4 million, or 91
cents a share, in the fourth-quarter, excluding the $289
million restructuring charge. In the fourth-quarter a year
ago, the Limited earned $220.1 million, or 81 cents a
share. Net sales increased 10.2 percent to $3.2 billion
compared with $2.9 billion a year ago.(Buffalo News;

MOBILEMEDIA: Spencer Stuart to Search for Directors
Mobilemedia Communications, Inc. et al., debtors, seek
authorization to employ Spencer Stuart to conduct a search
for individuals to serve as directors of reorganized

Pursuant to the terms of the plan, the initial Board of
Directors of reorganized MobileMedia is to be selected by
the agent for the debtors' pre-and post-petition secured
lenders.  The debtors must provide the court with the names
and affiliations of, and the compensation proposed to be
paid to the seven individuals who will comprise the initial

Spencer Stuart is a search firm that the debtors believe
will save time and money by finding individuals for the
Board quickly and efficiently.  The five searches will be
provided for a fee of $250,000.

MONTGOMERY WARD: To Reject Several Leases
Montgomery Ward Holding Corp. is seeking court authority to
reject nonresidential real property leases covering two
stores, and two facilities.  All of the stores and
facilities are vacated/or about to be vacated.  The stores
are located in Englewood, Colorado and Sterling Virginia
and the facilities are located in Albany, New York and
Rosemont, Illinois.

RDM SPORTS: Court Orders Hearing for DIP Amendment
Judge W. Homer Drake, Jr. entered an order setting a
hearing for February 19, 1998 to hear the joint emergency
motion of the debtors and Foothill Capital Corporation to
provide for the extension of the commitment to fund until
the earlier of March 1, 1998 or the date of certain events
in the existing DIP loan agreement, and to supplement the
current budget.

RDM SPORTS: Emergency Joint Motion to Amend DIP Loan
RDM Sports Group, Inc. and Foothill Capital Corp., agent
for a group of lenders, seek approval of a third Amendment
to Senior Secured Super-Priority Debtor-in-Possession Loan
and Security Agreement. They request this continued funding
based on a New Budget or the earlier of March 1, 1998.

Reliance Acceptance Group, Inc. has preliminary interim
approval to borrow $1 million under an $8 million debtor-
in-possession credit facility from BankAmerica Business
Credit Inc. as agent for itself and the company's senior
lenders.  The U.S. Bankruptcy Court in Wilmington, Del.,
will hold a second interim hearing on the DIP facility
today. (Federal Filings, Inc. 19-Feb-98)

SEARCH-FINANCIAL: Reports Third Quarter Loss
Search Financial Services Inc. (Nasdaq:SFSI) (Nasdaq:SFSIP)
announced a third quarter fiscal 1998 net loss of
$10,388,000, $1.51 per share, for the three months ended
December 31, 1997, compared to a net loss of $1,749,000,
$0.51 per share, for the third quarter of 1996.  For the
nine months ended December 31, 1997, the net loss was
$16,619,000, or $3.19 per share, compared to a loss of
$3,740,000, or $1.09 per share, for the year-earlier

Search has announced that it is exiting the non-prime
automobile finance business.  In addition, events of
default have occurred with respect to Search's line of
credit, notes payable, subordinated notes payable and the
1995 securitization transaction of MSF.  The notes payable
and the subordinated notes payable have been accelerated,
and actions for the amounts due on them have been
commenced.  Search is considering a number of third-party
transactions that could enable it to repay all or a
substantial portion of the line of credit and notes
payable, as well as other strategic alternatives that
could involve filing for protection under federal
bankruptcy laws.  

SMITH TECHNOLOGY: Committee Demands Separate Records
The Official Committee of Unsecured Creditors is seeking an
order compelling the 7 separate debtors in the case of
Smith Technology Corporation et al., to file complete
statements of affairs and schedules, to file complete
inventories, monthly operating reports and separate records
of receipts and to furnish information requested to the

The Committee claims that since the debtors agreed in the
DIP Financing Order not to contest the validity of the
Lenders' alleged secured claims and liens in the various
debtors' assets, it is incumbent upon the Committee to
investigate and if appropriate, challenge the Lenders'
alleged secured claims and liens for the benefit of
unseemed creditors.

The Committee states that the failure to provide separate
statements of affairs for each of the debtors has hindered
the ability of the Committee to adequately and effectively
investigate the alleged pre-petition liens of the lenders
against the assets of the debtors.

SUN JET AIRLINES: Aviation Industries to Raise $5 Million
Aviation Industries Corp. announced it has entered into an
agreement with AIBC Investment Services Corporation to
raise $5 million for the purpose of expanding Sun Jet
International Airlines.  Last week, U.S. Bankruptcy Court
in Tampa approved Aviation Industries' debtor-in-possession
(DIP) financing plan for Sun Jet, which is expected to
restart charter operations in approximately 90 days.

"We have the DIP financing in place to get the airline
restarted and expect AIBC will raise the funds for working
capital to allow Sun Jet to add aircraft and employees once
the reorganization plan is approved," said Diran Kalustian,
chairman of Aviation Industries.  Kalustian is the former
president and director of Depository Trust Company of New
York, and a former director of the New York Stock Exchange.

Under the Court-approved DIP plan, Aviation Industries must
file a plan of reorganization by March 20, 1998.  Once the
plan is approved, Aviation Industries will own the assets
of Sun Jet, which includes the Operating Certificate,
leases, parts and equipment, employees, charter contracts,
and the Sun Jet International Airlines' name.

Aviation Industries had retained AIBC Investment Services
Corporation to advise it on the reorganization plan.

VAN CAMP: Committee Replies to Trustee's Nix on Plan
The Committee of Creditors holding unsecured claims in the
case of Van Camp Seafoods, Inc. filed its reply to the
United States Trustee's Objection to the joint disclosure
statement and accompanying plan of liquidation.

The Committee states that the amendments to the plan remedy
the earlier deficiencies raised by the United States
Trustee and Protein Technologies International, Inc.

The Committee states that the plan now provides that the
debtors will not receive a discharge in the event that the
plan is confirmed, the disclosure statement will provide
estimates of the amounts and classification of claims that
have been asserted against the debtors' estates, and there
will be more information provided to constitute adequate

WESTERN PACIFIC: Executives Allegedly Double Salaries
The official creditors committee complained to a federal
bankruptcy judge Thursday that the airline's top
executives have had their salaries doubled following the
carrier's Feb. 4 shutdown at a time when there is little or
no money to pay creditors for accrued debt.

Smith Management Co., WestPac's lender, "bought" the
airline's top management with the salary increases,
creditors' lawyer James Markus argued in court. He asked
that the case be dismissed to avoid further losses by
creditors.  "There is no benefit to any party other than
Smith Management" in continuing the case, Markus said.

U.S. Bankruptcy Court Judge Sidney Brooks bored into
Christian Onsager, chief lawyer for WestPac's bankruptcy
estate. How many WestPac executives had their salaries
doubled? Brooks asked Onsager. As Onsager consulted with
WestPac operations chief Don Monteath, he simultaneously
explained to Brooks that the salary increases were
incentives paid to keep the executives working for the
airline through its liquidation.

"These people are essential," said Onsager, adding that
nonessential employees have been let go by the airline.
Brooks again asked how many officials got salary increases.
When Onsager offered more justification for the bonuses,
the judge said sharply, "Just give me the numbers; you've
already given me a defense."  Monteath said six executives
got "stay bonuses" to continue working for the airline.

He said he would not have stayed with WestPac following the
shutdown without the bonus. Onsager said other top
executives - all critical to an orderly liquidation of the
carrier - also might have left if they did not receive the
bonuses.  WestPac President Robert Peiser did not get a
bonus. Peiser makes about $25,000 a month, according to
documents filed with the bankruptcy court in January. He is
expected to stay on the WestPac payroll through the end of
this month.

Smith Management is paying the salaries and bonuses. Smith
forced the shutdown and pending liquidation of WestPac when
it stopped funding the airline's recovery late last month.
Onsager told Brooks that a dismissal of the WestPac case by
the court would cause a chaotic "free-for-all" among
creditors as each might try to take possession of their
property or otherwise seek payment for goods and services
they provided.  Brooks continued the creditors' request for
a dismissal of the case until early next month.

The judge also sternly told lawyers for Smith Management
that he expects the company to fulfill its obligation to
pay claims accrued since WestPac's shutdown, as promised by
the lender. (DenverPost- 02/20/98)

WESTERN PACIFIC: Trustee Objects to Conversion of Case
U.S. Trustee Barbara A. Shangraw objects to the motion of
the Unsecured Creditors' Committee to convert the case of
Western Pacific Airlines. The Trustee opposes conversion
because the agreement governing the Smith loan (Debtor's
primary lender) grants Smith a super priority over the
administrative costs of any Chapter 7 liquidation. Any
further litigation, therefore, would be futile,
unnecessarily costly and time-consuming. She therefore
recommends the case be dismissed.


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