TCR_Public/980319.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, March 19, 1998, Vol. 2, No. 54              
                    
                   Headlines

2CONNECT EXPRESS: Order Grants Employ of Counsel
BN1 TELECOMMUNICATIONS: Order Authorizing Special Counsel
BARNEY'S: Vornado Bid Unlikely
BENNETT FUNDING: Founders Have Until the End of the Month
BIG RIVERS: PacifiCorp Gives Notice of Appeal

CONSOLIDATED STAINLESS: Supplement to Hire Special Counsel
COUNTY SEAT: Registering New Exchange Notes
FRUEHAUF TRAILER: Exclusivity Extended to April 20
HARRAH'S JAZZ: Final Ok for Additional $1M DIP Loan
HOMEPLACE STORES: Banc One Leasing Seeks Payment

MIDCOM COMMUNICATIONS: Hearing on Disclosure Statement
MIDCOM COMMUNICATIONS: Panel Sees $17M to $65M Distribution
MONTGOMERY WARD: Southwest Properties Backs Debtor
NATURE'S ELEMENTS: Order Confirms Joint Liquidating Plan
NIKE: Increases US Layoffs in Reorganizing Effort

PAN AM: Creditor Objects to Uncapitalized Operations
PARAGON TRADE: Hearing on Motion to Fix Bar Date
PARAGON TRADE: P&G Insists on Relief from Stay
PARAGON TRADE: P&G Wants Assumption or Rejection  
PAYLESS: Posts Loss in Quarter

PHELPS TECHNOLOGIES: Order Approves Counsel for Committee
RELIANCE ACCEPTANCE: Bar Date for Creditors Fixed
RELIANCE ACCEPTANCE: Petition for Equity Committee
SUN CITY: Seeks Court Approval of Merger
WESTERN PACIFIC: Hearing Scheduled for Aircraft Leases

                ***********


2CONNECT EXPRESS: Order Grants Employ of Counsel
------------------------------------------------
Judge Raymond B. Ray entered an order on March 4, 1998 to
employ Andrew Hulsh, Esq. and Baker & McKenzie as Special
Securities and Corporate Counsel.


BN1 TELECOMMUNICATIONS: Order Authorizing Special Counsel
---------------------------------------------------------
The debtor, BN1 Telecommunications, Inc. is authorized by
the court to employ Muldoon & Ferris as its special Ohio
regulatory counsel, the court finding that the debtor
requires adequate Ohio regulatory counsel to represent it
in this bankruptcy case.


BARNEY'S: Vornado Bid Unlikely
------------------------------
According to an article in The Wall Street Journal on
Wednesday March 18, 1998, although Barney's Inc. held
preliminary talks in recent months with Vornado Realty
Trust, Vornado has no plans to make a bid to buy the New
York retailer.

It was reported however that some vulture funds that
invested in Barney's debt are considering offering a
reorganization plan.  The names associated with that
"creditor-assisted" plan are Bay Harbour Management and
Whippoorwill Associates, Inc.

According to an article in the New York Times, Dickson
Concepts International Ltd, of Hong Kong, had its bid
rejected by Barney's creditors last year, and DFS Group,
the duty free chain, opted not to bid when it could not
come to agreement over Barney's value.

While still a partner at Goldman Sachs & Co, Vornado
president Michael Fascitelli represented Barney's when it
bought its Madison Avenue store in New York in 1991, the
Times said. (Reuters:Financial- 03/18/98)


BENNETT FUNDING: Founders Have Until the End of the Month
---------------------------------------------------------
A federal judge gave the founders of the Bennett Funding
Group until the end of the month to answer questions about
a massive pyramid scheme their companies are accused of
running.

For almost two years, Edmund T. and Kathleen Bennett have
said they were too ill, mentally and physically, to be
questioned by lawyers for the bankruptcy trustee now
running their companies. The elderly couple moved from
Syracuse to Florida in 1996, shortly after their companies
filed for bankruptcy.

Bennett Funding, a Syracuse-based lease financing business,
has been accused by the U.S. Securities and Exchange
Commission of selling more than $570 million in fraudulent
securities.

Chief U.S. Bankruptcy Court Judge Stephen Gerling ordered
both Bennetts to appear for questioning before the end of
the month.


BIG RIVERS: PacifiCorp Gives Notice of Appeal
---------------------------------------------
In the case of Big Rivers Electric Corporation, debtor,
PacifiCorp Power Marketing, Inc. gives notice of appeal to
the United States District Court for the Western District
of Kentucky from 4the order signed by Judge Wendell
Roberts regarding objections to PacifiCorp's proof of
claim in the bankruptcy case of Big Rivers Electric
Corporation, debtor.


CONSOLIDATED STAINLESS: Supplement to Hire Special Counsel
----------------------------------------------------------
Consolidated Stainless, Inc. filed a supplemental
application for an order authorizing the employment and
retention of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, PA as special counsel for the debtor.

The debtor seeks to expand the employment of the law firm
to include performance and assistance in general
collection matters and local real estate matters relating
to the debtor that will be necessary during this Chapter
11 case.

The standard hourly rates of the firm to represent the
debtors with respect to collection and local real estate
matters are $150-$165.


COUNTY SEAT: Registering New Exchange Notes
-------------------------------------------
Implementing the Registration Rights Agreement embodied in
the Plan of Reorganization confirmed on October 1, 1997 and
consummated on November 1, 1997, County Seat Stores, Inc.,
and CSS Trade Names, Inc., filed a Form S-4 with the
Securities and Exchange Commission to register $85,000,000
of 12% Senior Notes due November 1, 2004.

The New Exchange Notes will be senior unsecured
indebtedness of the Company, except to the extent
collateralized by a first priority security
interest in a security account.  The Notes will rank senior
in right of payment to all subordinated indebtedness of the
Company and pari-passu in right of payment with all senior
indebtedness of the Company. The Notes will be effectively
subordinated to secured indebtedness of the Company,
including any indebtedness outstanding under the Senior
Credit Facility, in each case, to the extent of the assets
securing such indebtedness.

County Seat is represented by Robert M. McLaughlin, Esq.,
of New Eaton & Van Winkle in New York in connection with
this financing transaction.


FRUEHAUF TRAILER: Exclusivity Extended to April 20
--------------------------------------------------
Fruehauf Trailer Corp. won an extension of its exclusive
period to file a reorganization plan to April 20.  Although
Fruehauf sought a 90-day extension to May 20, the U.S.
Bankruptcy Court in Wilmington, Del., granted only a 60-day
extension, according to the March 5 order. (Federal
Filings, Inc. 17-Mar-1998)


HARRAH'S JAZZ: Final Ok for Additional $1M DIP Loan
---------------------------------------------------
Harrah's Jazz Co.has final approval to borrow $1 million
from lead partner Harrah's Entertainment Inc. in order to
make monthly rental payments under its lease agreement with
the City of New Orleans, pending legislative consideration
of the amended casino operating contract.  In a related
matter, the court approved a stipulation between Harrah's
Jazz, the bondholders' committee, and indenture trustee
Norwest Bank Minnesota, N.A. to further extend the
partnership's use of cash collateral and debtor-in-
possession loan proceeds through March 31.  The final order
notes that the $1 million loan is exclusive of the $39
million existing DIP loan and is subject to the occurrence
of several financing milestones. (Federal Filings, Inc. 17-
Mar-1998)


HOMEPLACE STORES: Banc One Leasing Seeks Payment
------------------------------------------------
A hearing has been scheduled for April 2, 1998 on the
motion of Banc One leasing corporation for adequate
protection and to compel payment of post-petition lease
obligations.

Banc One and the debtor, Homplace Stores, Inc. et al. are
parties to a master lease agreement.  Under the agreement,
Banc One agreed to lease certain furniture, fixtures, and
equipment for use in the debtor's stores.  The debtors
have not made any payment since December 1997, and they
are currently in default.  To date, almost $700,000 is
due, and this amount increases over $200,000 each month.

Banc One suggests that the failure of the debtors to pay
its obligations will cause significant harm to Banc One.  
Banc One is asking that the court compel the debtor to
make the payments due.


MIDCOM COMMUNICATIONS: Hearing on Disclosure Statement
------------------------------------------------------
On the motion of the Official Unsecured Creditor's
Committee of Midcom Communications, Inc., et al, debtors,
the court ordered that a hearing on the motion be held on
March 24, 1998.  The motion seeks to combine a hearing on
the Disclosure Statement and confirmation of the plan, to
schedule a hearing, to establish a deadline for objections
to the adequacy of the disclosure statement and
confirmation of the plan, to approve the form of ballots,
and to expedite the hearing.

According to the Committee, the debtors have sold
substantially all of their assets.  The principal assets
remaining in the estates are cash, causes of action,
Midcom's Conference Plus division and certain microwave
equipment.  A combined hearing will minimize
administrative costs to the estate without prejudice to
the estate's creditors.

MIDCOM COMMUNICATIONS: Panel Sees $17M to $65M Distribution
-----------------------------------------------------------
The Midcom Communications Inc. creditors' committee filed a
reorganization plan for the company on March 13 and
estimated that assets available for distribution would
range from $17 million to $65 million.  The panel said it
could not estimate recovery for creditors because the vast
majority of funds potentially available to pay allowed
claims is subject to contingencies, the outcome of which
cannot be predicted and will not likely be known for some
time. (Federal Filings, Inc. 17-Mar-1998)


MONTGOMERY WARD: Southwest Properties Backs Debtor
--------------------------------------------------
Southwest Properties Venture makes a motion for an order
approving the decision of the debtors, Montgomery Ward
Holding Corp., not to exercise a right of first refusal.

Southwest is the developer and operator of the Southwest
Plaza Mall located in Jefferson County, Colorado.  MW
Development (affiliated debtor) is the owner of the parcel
upon which the debtors operate a store. Southwest intends
to convey its title and interest in the Developer Parcel to
GGP Limited Partnership for a purchase price of
approximately $113 million.

Pursuant to an REA covering the Developer Parcel, each
party to the REA (including the debtor) had the option to
purchase or acquire the Developer Parcel for the same
price and under the same terms as those which Southwest
received from GGPLP.

Southwest is now seeking entry of an order of the
bankruptcy court approving and authorizing the debtor's
decision not to exercise the option to purchase or
otherwise acquire the Developer Parcel, as GGPLP does not
wish to consummate its purchase of the Developer Parcel
absent the entry of an order of the bankruptcy court
approving and authorizing the debtor's decision.

Southwest argues that the debtors' decision not to
exercise the option to purchase the Developer Parcel is in
the ordinary course of business, and Southwest states that
if it is outside the ordinary course of business, is
satisfies the standard for transactions outside the
ordinary course of business, as it represents the debtors'
sound business judgment.


NATURE'S ELEMENTS: Order Confirms Joint Liquidating Plan
--------------------------------------------------------
Nature's Elements International Ltd., and Nature's
Elements Holding Corporation, debtors, proposed a joint
liquidating plan of reorganization.  The hearing on
confirmation of the plan was held on March 4, 1998, at
which time the plan was confirmed in all respects.
M.R. Weiser & Co. is designated as Disbursing Agent.


NIKE: Increases US Layoffs in Reorganizing Effort
-------------------------------------------------
Over the weekend, Nike Inc. increased the number of
employees it will lay off from its U.S. work
force.  The company will eliminate 450 jobs, or 3.5 percent
of its U.S. work force, to reduce costs as the maker of
athletic clothes and shoes faces declining demand in Asia
and the United States.

About 250 jobs will be cut at Nike's headquarters in
Beaverton, and the remaining 200 will be removed from other
U.S. locations, the company said.  More jobs will be
eliminated outside the U.S. and will be disclosed
Wednesday, the company said.

This is the start of what analysts expect to be a major
restructuring at the world's largest seller of athletic
shoes and apparel.
(News Tribune Tacoma WA 03/17/98)                       


PAN AM: Creditor Objects to Uncapitalized Operations
----------------------------------------------------
Pan Am Air Bridge, Inc. files an objection to a
re-commencement of operations by the debtor in possession
on any undercapitalized basis and says that as a creditor
and a licensee of the parent company of the debtor, Pan Am
Air Bridge was seriously affected by the negative
publicity attendant with the filing of bankruptcy in this
case.  Pan Am Air Bridge states that in the event Pan Am
recommences operations on an undercapitalized basis it
would be doomed to a second failure and would likely result
in a liquidation and probably would result in irreparable
harm to Pan Am Air Bridge.

In support of this objection Pan Am Air Bridge files an
affidavit stating that in order for the re-commencement of
operations of Pan American to be assured of success, $100
million in additional capital should be injected into the
company but under no circumstances should operations be
re-commenced with additional capital of less than $50
million.


PARAGON TRADE: Hearing on Motion to Fix Bar Date
------------------------------------------------
On March 20, 1998 a hearing will be held on the motion to
fix time for filing proofs of claim and approving notice
procedures filed by Paragon Trade Brands, Inc.
Paragon is asking that May 15, 1998 be fixed as the last
date by which Proofs of Claim must be filed.


PARAGON TRADE: P&G Insists on Relief from Stay
----------------------------------------------
Procter & Gamble Company (P&G) replies to the response in
opposition to the Procter & Gamble Company's motion for
relief from the automatic stay filed by Paragon Trade
Brands, Inc., debtor.  P&G requested relief from the
automatic stay to finalize the judgment obtained against
Paragon in the infringement lawsuit including finalizing
the calculation of damages and to proceed in the District
Court on injunctive relief from further infringement.

Paragon claimed in its response that there is no need to
grant P&G relief from the automatic stay because the
bankruptcy court is better suited to calculate the
damages.  However P&G states that this is "simply
erroneous."  P&G argues that the District Court is
immensely better prepared to apply the formula for
damages.  P& G states that the District Court is prepared
to calculate the damages using the appropriate sales
information, but has been prevented from doing so solely
because of Paragon's bankruptcy filing.  P&G states that
it is hard to imagine a clearer case where the Bankruptcy
court should defer to another forum.

As to the injunctive relief, Paragon argues that such
relief would be premature and wholly unnecessary. Paragon
states that the injunctive relief would be premature
because the Conversion Agreement prohibits the enforcement
of an injunction until July 1998.  Procter & Gamble argues
that an injunction should be in place prior to the
expiration of the Conversion Period so that the injunction
can be enforced immediately upon such expiration.
The court will now determine whether P&G obtains relief
from the automatic stay.


PARAGON TRADE: P&G Wants Assumption or Rejection  
--------------------------------------------------
Procter & Gamble (P&G) responds to the response of the
debtor, Paragon Trade Brands, Inc. to the motion of the
Procter & Gamble Company to compel the debtor to assume or
reject the executory contract.

In its response to the motion, Paragon Trade Brands, Inc.,
debtor, states that it is currently complying with the
terms of the Conversion Agreement.  Paragon stipulated
that it intends to honor its design-around obligation
under the Conversion Agreement.  According to Procter &
Gamble, Paragon also does not dispute that, without the
Conversion Agreement, it would lose a substantial portion
of its business and profits.

So Procter & Gamble asks why Paragon is refusing to decide
whether to assume the Conversion Agreement?  And Procter &
Gamble answers its own question by saying that Paragon
seeks to avoid paying P&G royalties due under the
Conversion Agreement as an administrative expense.

P&G says "This would not be the first time that Paragon
took another's intellectual property without paying for
it; in fact, this is exactly the type of conduct that led
to the judgment and precipitated Paragon's bankruptcy
filing.  Such conduct is not permissible under the
Bankruptcy Code and should not be condoned by this court."
P & G says that the royalties accruing under the
Conversion Agreement postpetition clearly are entitled to
administrative expense priority because Paragon's use of
the P&G patents provides a substantial benefit to
Paragon's estate.

Paragon's assertion that it needs additional time to
evaluate the benefits and burdens of the Conversion
Agreement is just a stalling tactic according to P&G. P&G
states that Paragon knows that the only way to fund the
operations of the estate is to continue to sell the
infringing product while it attempts to design a
competitive alternative.

Paragon also argued that the Conversion Agreement is not
an executory contract.  However, P&G argues that a
contract may be executory for purposes of the code
notwithstanding the fact that the debtor or non-debtor
party's "continuing obligation is only one of
forbearance."


PAYLESS: Posts Loss in Quarter
------------------------------
Newly restructured Payless Cashways Inc. lost $25 million
in its first quarter out of Chapter 11 bankruptcy
reorganization.  The company said the disappointing loss of
$1.25 a share could be traced to the time spent in Chapter
11 and to intense competition. Part of the loss, $5.6
million, involved charges incurred in reducing the
company's headquarters staff.

Sales at stores open at least one year declined 7.5 percent
in the 1998 first quarter, ended Feb. 28, while overall
sales plunged 19.1 percent, to $394.3 million.
The home-improvement retailer seemed to take some comfort,
however, in a slowing of same-store sales declines. Such
sales are considered the most accurate measure of
performance. In December, same-store sales fell 11.9
percent, slowing to a drop of 4.9 percent in January and
narrowing again in February by 4.5 percent.
Donald Roller, acting chief executive officer, noted that
in February earnings before interest, taxes, depreciation
and amortization - essentially operating cash flow - was $2
million.

Interestingly, for the first time in years, Payless' news
release didn't use "dual-path," the term for the turnaround
strategy implemented by the company's now-departed
management.

As for the search for one person to be chief executive
officer and president, Roller said Payless had interviewed
a number of excellent candidates.   One change the
company's new management and board quickly implemented was
putting a store manager back in each store. Formerly, some
managers oversaw two or three stores.

In other news, Payless has sold more than half of the 29
stores it closed as part of its restructuring.
(Kansas City Star- 03/18/98)


PHELPS TECHNOLOGIES: Order Approves Counsel for Committee
--------------------------------------------------------
The employment of Kamensky & Rubinstein as counsel for the
Official Committee of Unsecured Creditors of Phelps
Technologies, Inc. and Phelps Tool and Die Houston, Inc.
was approved by the court on March 9, 1998.

The court also approved the employment of the law firm of
Berman, Singer & Rabin, PA as counsel under general
retainer to the Official Committee of Unsecured Creditors
of Phelps Technologies, Inc. and Phelps Tool and Die
Houston, Inc.


RELIANCE ACCEPTANCE: Bar Date for Creditors Fixed
-------------------------------------------------
The court entered an order in the case of Reliance
Acceptance Group, Inc., et al. fixing April 10, 1998 as the
deadline for filing proofs of claim or interest against the
debtor and its wholly-owned subsidiaries.


RELIANCE ACCEPTANCE: Petition for Equity Committee
--------------------------------------------------
Dr. Arnold Curnyn, Dr. Henry Rabinowitz, George R.
Frerichs, and Foothold Fund, LP, holders of 82,000 shares
of common stock of debtor Reliance Acceptance Group, Inc.
petition the court for the appointment of an official
committee of equity holders of Reliance.

Reliance's predecessor, Cole Taylor Financial Group, Inc.
effectuated a split-off transaction to resolve a long-
standing dispute between the controlling shareholders of
the company, the Cole family and the Taylor family. Within
weeks of the transaction, Reliance announced record losses
due to the "sudden" need for substantial loan loss
reserves.  Shareholder class action suits commenced.

The parties bringing this motion state that the shares of
stock are widely held and publicly traded, that the case
is large and complex. The parties state that the
appointment of a committee of Reliance equity holders will
not add delay or costs.  The parties to this motion state
that the equity holders are entitled to formal, official
representation in these proceedings.


SUN CITY: Seeks Court Approval of Merger
----------------------------------------
Sun City Industries, Inc., the debtor, and eight of its
subsidiaries  request that the court approve that certain
Interim Agreement entered into by and between the debtor
and Morris & Associates, Inc.

The Interim Agreement evidences the parties' intent to
proceed with the merger of Sun City and Morris whereby Sun
City will survive and Morris will merge into the public
entity presently known as Sun City Industries, Inc. The
merger will be effected subsequent to the confirmation of
a plan of reorganization of the debtor.

This agreement is proposed in lieu of a certain asset
purchase transaction previously negotiated by and between
Sheppard Foodservice, Inc., a subsidiary of SCI and Sea
Specialties, Inc.  

The debtor states that the Morris transaction, that
provides $700,000 in actual cash proceeds to be paid over
a one year period is a better offer than the
SeaSpecialties offer.

Among many other provisions, Morris will provide the
debtor inventory financing on a revolving basis of up to
$2 million.  The debtor presently owes Congress Financial
Corporation approximately $1.7 million.  Morris has agreed
to provide  a "take out" lender to satisfy the Congress
claim in a fashion satisfactory to the debtor and
Congress.  The reorganized debtor will also issue shares
of stock to unsecured creditors in a nominal amount of
$700,000.

The debtor is seeking court approval of the interim
agreement, and a specific finding that this is a "higher
and better offer" with respect to SeaSpecialties, Inc.'s
offer.


WESTERN PACIFIC: Hearing Scheduled for Aircraft Leases
------------------------------------------------------
A hearing has been scheduled for March 19, 1998 on the
motion for an order setting aside orders rejecting or
confirmation termination of aircraft leases.

An expedited hearing is also set for March 19, 1998 on the
request of Babcock & Brown Aircraft Management, Inc. on
their motion from relief from the automatic stay.
Babcock & Brown is the managing agent for the owners of
two Boeing 737 aircraft leased to the debtor.  The debtor
has failed to make the lease payments and to pay the tax
liens, both of which are events of default under the
leases.  Babcock & Brown seek expedited consideration for
this motion in that if the automatic stay is lifted and
their right to terminate and repossess the aircraft is
approved, the agents anticipate that they may be able to
place the aircraft in new leases in time for summer
travel.

                    *********

A listing of meetings, conferences and seminars appears
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Bond pricing, appearing each Friday, is supplied by DLS   
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Troubled Company Reporter is a daily newsletter, co-
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