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T R O U B L E D   C O M P A N Y   R E P O R T E R
     
  Thursday, April 2, 1998, Vol. 2, No. 64              
                    
                   Headlines

2CONNECT EXPRESS: Order Approves KPMG Peat Marwick
2CONNECT EXPRESS: Seeks Stay-Put Bonuses
ALLIANCE ENTERTAINMENT: Reports Continued Improvement
DAIICHI CORP: Decides to Shut Down
DOW CORNING: Australian Tort Claimants Respond

DOW CORNING: Response to Modification of Exclusivity
FOXMEYER: Trustee Applies to Employ Income Tax Services
GREATE BAY: Bank Objects to Use of Cash Collateral
HOMEPLACE STORES: Bank Wants Assumption or Rejection
HOMEPLACE STORES: Seek to Retain Consolidated Auctioneers

MOBILEMEDIA COMMUNICATIONS: Objection to Examinations
MONTGOMERY WARD: Bank Group Says No to Payments
MONTGOMERY WARD: Committee Says $1M Fee is Unnecessary
NAMCO CYBERTAINMENT: Motion to Set Bar Date
PAN AM: Judge Cristol Approves Ernst & Young Employ

PARAGON TRADE: Order Sets Date for Filing Proofs of Claim
PARAGON TRADE: Procter & Gamble Responds to Jurisdiction
PARAGON TRADE: Proposed Consent Order
PARAGON TRADE: Response to Kimberly-Clark
Q-ENTERTAINMENT: Vordan Objects to Compromise

RELIANCE ACCEPTANCE: Applies to Retain Kirkland & Ellis
SEARCH FINANCIAL: Applies to Employ Price Waterhouse

                   *********

2CONNECT EXPRESS: Order Approves KPMG Peat Marwick
--------------------------------------------------
Judge Raymond B. Ray entered an order on March 20, 1998 in
the US Bankruptcy Court in the Southern District of
Florida approving the application to employ KPMG Peat
Marwick LLP as accountants to the debtor, 2Connect
Express, Inc.


2CONNECT EXPRESS: Seeks Stay-Put Bonuses
----------------------------------------
2 Connect Express, Inc., debtor, filed a motion seeking an
order approving certain employee "stay-put" bonuses. The
debtor has 38 employees. To create an inducement for the
employees to remain, the debtor has agreed to pay  a
percentage of their annual salary as a bonus.

The bonuses range from 10% of the annual base salary of
executive personnel to a bonus equal to one week's salary
of the sales and direct sales consultants.  The debtor
states that these bonuses are without question necessary
to preserve the debtor's estate, and represent a
relatively small portion (7%) of the debtor's current
payroll.


ALLIANCE ENTERTAINMENT: Reports Continued Improvement
-----------------------------------------------------
Alliance Entertainment Corp. reported an improvement in its
core operating business for the month ended February 28,
1998.  In its monthly operating report filed with the
Office of the US Trustee, the company reported a
consolidated net loss of $4.5 million on net sales of $22.8
million.  The reported loss includes $2.2 million in
interest and reorganization expenses.  The company reported
that the operating loss for core operations in the
reporting period was $445,000 on net sales of $22.3
million, including the continued negative impact of Chapter
11 on operations.

Eric Weisman, Alliance's president and chief executive
officer said that several parties are interested in
pursuing an equity partnership-based plan of reorganization
including its financial advisors, The Blackstone Group and
Zolfo Cooper. Within the next 45 days, the company expects
to decide with its creditor constituencies whether to
pursue a stand-alone or equity-partner based plan.  

Weisman also said that he fully expected that in either
case the equity in the newly reorganized company will be
distributed to the company's current creditors or new
equity partners, and the current stock will be canceled.


DAIICHI CORP: Decides to Shut Down
----------------------------------
Daiichi Corp., the Tokyo-based finance company saddled with  
$3.3 billion in debt, has decided to shut down, a leading
financial daily said Wednesday.

The real estate lender, which has suffered from the decline
in Japanese property prices, decided to close after its
lender banks cut off financial support, the Nihon Keizai
newspaper said.

Daiichi would be the latest in a wave of bankruptcies since
the bursting of Japan's speculative real estate price
bubble in 1992.  The long slide in land prices, which have
yet to recover, has weakened Japan's once formidable banks
by burdening them with billions of dollars in soured loans.

\Forced to cut back on new lending in order to rebuild
their cash reserves, Mitsui Trust & Banking Co. and three
other trust banks concluded they could no longer extend
special interest-free loans to Daiichi, the national
Yomiuri newspaper said.  Those loans had helped Daiichi
announce three separate restructuring plans since the land
market's collapse.

The bankruptcy would be the fifth-largest ever by a
Japanese loan company, the Nihon Keizai said.


DOW CORNING: Foreign Tort Claimants Respond
---------------------------------------------
The Australian implant claimants filed a response to the
motion of the Tort Claimants' Committee for an order
modifying exclusivity to permit the filing of a Tort
Committee Plan.  

The foreign claimants agree with the Tort Committee's
assessment of Dow's Second Amended Plan, as being
"analogous to sinking the Titanic twice," but their support
for the motion is guarded.  

About one fourth of all claimants are defined as "foreign."  
Counsel for foreign claimants have repeatedly described
discrimination against foreign victims.  The foreign
claimants state that the motion of the Tort Claimants'
Committee to lift exclusivity  is silent regarding the type
of treatment accorded the foreign class.  The Committee's
excuse is that "domestic breast implant claims are the
largest single category of tort claims."  

The foreign claimants argue that since one of the
reasons that the court gave for requiring an amended plan
was the treatment afforded the foreign class,
the foreign claimants expected that the Tort Committee
would have devoted greater attention to the  argument that
the treatment accorded the foreign class in Dow's plan
would prevent confirmation.  These claimants seek further
help from the court.


DOW CORNING: Response to Modification of Exclusivity
----------------------------------------------------
Dow Corning Corporation, debtor,  filed a response to the
Tort Committee's motion to modify exclusivity to permit
filing of a Tort Committee Plan.

The debtor states that the Tort Committee has failed to
meet its burden of showing that circumstances have changed
to justify an alteration of the court's prior
determination concerning exclusivity.  The debtor states
that its most recent plan is the best evidence of the
debtor's willingness to make major, meaningful changes
to achieve the overriding goal of confirming a plan in
the case.  The debtor states that it has participated in
good faith in settlement negotiations.

The debtor complains that the Tort Committee's term sheet
is riddled with defects that would render legally non-
confirmable any corresponding plan that the Committee
could propose.  The debtor also complains that the
"improved" offer was first offered to the court via an
article in The Wall Street Journal.

The debtor supports its assertion that the Amended Plan is
a viable, confirmable plan by pointing to individual
provisions of the amended plan that provide for the fair
treatment of tort claims.  The debtor also asserts that
the termination of exclusivity will not facilitate
progress in this case.


FOXMEYER: Trustee Applies to Employ Income Tax Services
-------------------------------------------------------
The Trustee in the case of Foxmeyer Corporation and its
affiliates, as debtor, filed an application for an order
authorizing and approving the employment of Richard D.
Cantrell to provide income tax services to the Trustee and
authorizing certain payments in connection threrewith.

Prior to the asset sale, Cantrell was Director of Tax at
the Foxmeyer entities in their Texas offices, and he has
thorough knowledge of the records, tax issues and tax
return history of the debtors.

Following the asset sale, Cantrell was retained by the
Chapter 11 debtors as an ordinary course professional on a
fixed fee basis, in the capacity of consultant.

The Trustee seeks to retain Cantrell at a rate of $85 per
hour with a maximum cap of $35,000 to perform any and all
state tax return work required for the debtors for their
fiscal year ended March 31, 1997.  Cantrell expects that
he will quickly reach the cap, despite his relatively low
hourly rate, such that his effective hourly rate will be
significantly less.


GREATE BAY: Bank Objects to Use of Cash Collateral
--------------------------------------------------
State Street Bank and Trust Company, as Indenture Trustee
supplements its objection to the motion for an order
authorizing the use of cash collateral filed by the
debtors, Greate Bay Hotel & Casino, Inc., GB Holdings,
Inc. and GB Property Funding Corp.

The debtor received an interim order for the use of cash
collateral that expired on March 23, 1998.  The
Trustee filed an objection to an extension of the cash
collateral and the debtor filed a Reply.  This objection
is to the Reply of the debtor.  

The debtor stated that both the Management Agreement and
the Casino Control Act would prohibit the Trustee from
holding a lien on payments due under the Management
Agreement from the Operator to the owner, at least to the
extent that those payments are attributable to gaming
revenues.

The Trustee states that the basis upon which the debtor
can claim that it controls the accounts and that no moneys
are ever due to it from the Operator remains undocumented
and elusive at best.  The Trustee states that the valid
perfected lien in the revenues under the Management
Agreement are clearly established.

As to the lien on gaming revenues controlled by the Casino
Control Act, the Trustee states that it is not precluded
from holding the lien by the Act. The Trustee states that
it is seeking payment of a fixed sum, the amount due on
the Notes and the Indenture and Security Documents, and
that neither the Management Agreement nor the Casino
Control Act preclude the payment.

The Trustee requests that the debtor's authority to
utilize cash collateral be terminated or predicated upon
the provision to the Trustee of adequate protection for
use of all cash collateral including gaming and casino
revenues.


HOMEPLACE STORES: Bank Wants Assumption or Rejection
----------------------------------------------------
The Fifth Third Bank of Cincinnati (bank) moves the court
to establish a date by which the debtors, HomePlace Stores,
Inc., et al., must assume or reject certain credit card
processing agreements.  Fifth Third believes that these
agreements have been terminated by the debtors but
nonetheless seeks court approval because of the particular
circumstances.

Pre-petition, the debtors gave notice of their intent to
terminate the agreement with the bank, a merchant agreement
for processing credit card payments and a dial terminal
agreement.  The notice is effective six months after it is
given.  The six month time period ended on February 18,
1998.  If the agreements were terminated, the bank has no
obligation to perform under them.  If not terminated,
they are executory contracts.  Post-petition and to
the present, the debtors continue to use the banks
services pursuant to the agreements.

In view of a significant pre-petition claim of $691,000
and the dollar volume of the services, which averages $25
million per month, Fifth Third is unwilling to
provide services on these terms.  As Fifth Third continues
to process credit card charges for the debtors pursuant
to the agreements, Fifth Third continues to be at risk in
that the charges it is processing may be "charged-back"
by the customer.  No reserves are in place for any
charge-backs.

Despite the fact that Fifth Third believes it can cease
providing services it is reluctant to do so without court
review due to the potential impact on creditors and
debtors.


HOMEPLACE STORES: Seeks to Retain Consolidated Auctioneers
----------------------------------------------------------
HomePlace Stores, Inc. and its affiliates, as debtors,
seek authority to employ and retain Consolidated
Auctioneers & Liquidators as valuation experts.  

The HomePlace Group represents that due to objections by
several banks seeking adequate protection and payment
under purported leases of personal property, expert
opinion as to the past and present value of the fixtures
is crucial to establishing the HomePlace Group's belief
that the banks are not entitled to adequate protection
payments due to the depreciation in the fixtures' value,
and to the extent that the court determines that the
debtor is required to make payments on the fixtures, such
payments should be reduced to the fair market value for
leases of similar fixtures of like age and condition.

The debtor seeks authorization to pay Consolidated $5,000
per day of Court testimony as well as $2,500 per day for
appraisal preparation.


MOBILEMEDIA COMMUNICATIONS: Objection to Examinations
-----------------------------------------------------
MobileMedia Communications, Inc., et al., debtors, object
on behalf of themselves, Joseph A. Bondi, The Blackstone
Group and Ernst & Young LLP, in opposition to the ex parte
motion filed by the plaintiffs in two securities lawsuits
pending against various non-debtor third parties in
federal and state court.

The debtors are authorized to represent that both the
Committee and the agent for the debtors' secured lenders
support this objection.

Although couched as a request for discovery related to the
debtors' plan and disclosure statement, it is clear,
according to the debtors, that the discovery sought is
essentially the same information these parties previously
sought in the California Actions.

The debtor states that the requested discovery is outside
the scope of Rule 2004 and is barred by existing
injunctions.  The Rule 2004 motion is an attempt to end-run
this court's prior injunction and the stays in place in the
California actions. The debtor claims that the
justification is without merit, and the Rule 2004 motion
should be denied because the burden on the debtors far
outweighs any legitimate benefit to the California
Securities plaintiffs.


MONTGOMERY WARD: Bank Group Says No to Payments
-----------------------------------------------
The Long-Term Credit Bank, Ltd. and The Sakura Bank, Ltd.
(Bank Group) object on a limited basis to the motion
of Montgomery Ward Holding Corp., et al., for the entry of
an order authorizing the debtors to settle and pay certain
claims and controversies.

The Bank states that the debtors continue to seek an
unprecedented level of aggressive relief and liberal
treatment in their conduct of this case.  However, the
Bank Group states, the debtors cannot prevail here.  The
debtors' request for authority to settle and pay certain
pre-petition claims would have required ("and in a balanced
case, would have resulted in") rejection.  

The Bank Group submits that "the treatment of creditors in
this case has not qualified as balanced - nobody is right
100% of the time."

The debtors' practical argument in connection with the
pre-petition actions, that the debtors can negotiate
better settlements and save administrative expenses if
they possess the unilateral authority to settle the
actions for cash - is nonsense, according to the Bank
Group, and they believe that the debtors' argument
regarding the pre-petition actions belong in Congress, not
Court.


MONTGOMERY WARD: Committee Says $1M Fee is Unnecessary
------------------------------------------------------
The Official Committee of Unsecured Creditors of
Montgomery Ward Holding Corp., responds to the motion of
the debtors to amend their post-petition loan agreement
with GE Capital by lowering the EBITDA requirements and to
pay GE Capital a fee of $1 Million for such
amendment.

The Committee states that the $1 Million fee is
unnecessary and unseemly in view of the facts that the DIP
agreement remains highly profitable to GE Capital and that
the need for the proposed amendment is the result of the
debtors' disappointing performance.

Without the amendment, the debtors say that they will be
in default under the DIP agreement by the end of next
month.  GE Capital is charging the $1 million fee, yet the
Committee says that the DIP agreement is highly profitable
to GE Capital and will remain so, since the proposed
amendment will not materially affect the profitability.

In addition, the Committee states that GE Capital must
share some part of the responsibility of the debtors'
poor performance and the need for the proposed amendment.  
As the court is aware, GE Capital owns directly and
indirectly 57% of the common stock (as well as preferred
stock) of the debtors, and is entitled to elect 5 directors
of the debtor, and has a strong influence on the
operations of the debtors.

They also state that the debtors have failed to show that
the proposed $1 million fee is otherwise fair and
reasonable to the estate.


NAMCO CYBERTAINMENT: Motion to Set Bar Date
-------------------------------------------
Namco Cybertainment Inc., debtor, is seeking an order
setting a bar date for the filing of pre-petition proofs of
claims against the debtor.  The establishment of a bar
date at this time will, according to the debtor, enhance
the debtor's ability to promptly formulate, file and
confirm a plan of reorganization in this case by allowing
the debtor to ascertain the number, amount, nature and
character of the claims against the debtor.

The debtor proposes that May 26, 1998 be set by the court
as the Bar Date for the filing of all pre-petition claims
against the debtor and its estate.


PAN AM: Judge Cristol Approves Ernst & Young Employ
---------------------------------------------------
Judge A. Jay Cristol entered an order approving the
employment of Ernst & Young LLP as accountant and
financial advisor for the Official Committee of Unsecured
Creditors of Pan American Airways Corp. and Pan American
World Airways, Inc., debtors.


PARAGON TRADE: Order Sets Date for Filing Proofs of Claim
----------------------------------------------------------
The court entered an order setting the close of
business on June 5, 1998 as the deadline for filing
claims against Paragon Trade Brands, Inc.


PARAGON TRADE: Procter & Gamble Responds to Jurisdiction
--------------------------------------------------------
Procter & Gamble Company (P&G) filed a response to the
supplemental brief in support of the reply of Paragon
Trade Brands, Inc. regarding the motion for relief from
the automatic stay.

P&G states that there exists no jurisdictional impediment
to the Delaware District Court considering P&G's request
for injunctive relief.  P& G states that the debtor's
contentions to the contrary are completely unsupported by
applicable law.  More important, P&G asserts, the debtor's
opposition to P&G's motion appears to be motivated by
nothing more than an intent to oppose P&G at every turn,
as evidenced by the fact that both the debtor and the
Creditor's Committee acknowledge that they will seek the
same relief that they oppose if the Federal Circuit grants
P&G's motion to dismiss the appeal.


PARAGON TRADE: Proposed Consent Order
-------------------------------------
Paragon Trade Brands, Inc., Wachovia Bank, NA and the
Official Committee of Unsecured Creditors proposed a
Consent Order resolving the motion of the bank concerning
confirmation of its right to recoupment or relief from the
automatic stay to exercise right of setoff or,
alternatively, for adequate protection.

The Consent Order provides that the bank is authorized to
debit the post-petition concentration account at the bank
in the amount of $202,009 to reimburse the bank for the
employee payroll and the bank is authorized to debit the
Master Account in the amount of $1,866,625.22 to reimburse
Wachovia for payments by the bank of items presented for
payment on Paragon's account and for payment of certain
wire transfers.  The balance of $1,866,625 shall be
remitted to Paragon.


PARAGON TRADE: Response to Kimberly-Clark
-----------------------------------------
Paragon Trade Brands, Inc., debtor, supplements its
response filed in opposition to the motion for relief from
the automatic stay filed by Kimberly-Clark Corporation.

Kimberly Clark seeks to continue litigating the Texas
Action pending in the US District Court of the Northern
District of Texas, so as to liquidate its claim.

Paragon offered to stipulate to the lifting of the
automatic stay so long as Kimberly Clark would agree to
negotiate with Paragon in good faith regarding settlement
of the Texas Action and the design of a new diaper product
by Paragon.  Paragon states that it sought to engage in
settlement negotiations with KC and KC refused, "holding
such settlement discussions hostage" in exchange for
Paragon's agreement to lift the automatic stay to allow
the Texas Action to proceed.  

Paragon states that it proposes a procedure to allow the
Texas Action to move forward while still allowing this
court to retain control over the claims allowance process.
Paragon states that the Texas Action is nowhere near ready
for trial, so a measured lifting of the stay by the court
would not prejudice KC.  


Q-ENTERTAINMENT: Vordan Objects to Compromise
---------------------------------------------
Vordan Limited, an Irish corporation, and creditor of the
debtor, Q-Entertainment, Inc. and its affiliates,  filed a
response and objections to the joint motion for an order
approving the compromise of controversy between Scott
Seidel, Trustee, and Infinity Investors Limited, et al.

Vordan, through an arbitration proceeding was awarded
$991,855 plus interest from Q-Zar.  In the High Court in
Ireland, Q-Zar entered a consent decree agreeing to make
payments totaling $1 million to Vordan.  

The High Court issued a preliminary injunction restraining
any sale, mortgage, charge or disposition of the assets of
the Acquired Companies except in the ordinary course of
business.

The Trustee agreed to sell the stock and assets of the
Acquired Companies to New-Q, Inc.   The proceeds of the
sale are to be disbursed to the Trustee and to Infinity
Investors and/or Infinity Emerging Opportunities
Limited.

Vordan objects to any disposition of the proceeds of the
sale of assets covered by the notices and the Injunction,
as the disposition of the assets is prohibited.


RELIANCE ACCEPTANCE: Applies to Retain Kirkland & Ellis
-------------------------------------------------------
The debtor, Reliance Acceptance Group, Inc. et al., filed
an application to retain Kirkland & Ellis as general
bankruptcy counsel to the debtor.  The debtor is also
seeking to retain and employ the law firm of Young Conaway
Stargatt & Taylor as local counsel.

The hearing for appointment of the Official Committee of
Equity Holders in the case is scheduled for April 21, 1998


SEARCH FINANCIAL: Applies to Employ Price Waterhouse
----------------------------------------------------
MS Financial Inc., one of the debtors affiliated with
Search Financial Services, filed an application for an
order authorizing the employment of Price Waterhouse, LLP
as financial advisor.  

Price Waterhouse would provide services including assisting
in the preparation of financial information, attending
meetings with potential investors, lenders, the Creditors'
Committee, negotiating and preparing for hearings regarding
cash collateral or DIP financing, assisting in the
development of business plans, and providing expert
testimony if necessary.  The compensation MS Financial has
agreed to pay Price Waterhouse, upon approval of the court,
ranges from $100 per hour to $325 per hour.

                   *********

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.   
  
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