TCR_Public/980409.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, April 9, 1998, Vol. 2, No. 69              
                    
                   Headlines

2CONNECT EXPRESS: Motion to Convert Case to Chapter 7
AL TECH: Debtor Applies to Hire Professionals
APS: Court Extends Time to Assume or Reject Leases
APS: Meeting Of Creditors Held March 20, 1998
AUSTRALIS MEDIA: Subsidiary Files for Reorganization

BRAUN'S FASHIONS: Same-Store Sales Increase 10% in 1998
DOW CORNING: Reply of Tort Committee to Modify Exclusivity
ERNST HOME: Motion to Extend Time on FADCO Leases
GREATE BAY: Meeting of Creditors and Bar Date
GULF RESOURCES: Order Approves Trustee's Professionals

INTERNATIONAL HERITAGE: Judge Backs SEC
LA GEAR: Supplement to Employment of Financial Advisors
PARAGON TRADE: Applies to Employ Special Counsel
PARAGON TRADE: Creditors To Employ Price Waterhouse
PEGASUS GOLD: To Sell Subsidiary "Pullalli Project"

POWER DESIGNS: Order Authorizes Employ of Vantage Partners
RELIANCE ACCEPTANCE: Motion for Appointment of an Examiner
SEARCH FINANCIAL: Equity Objects to Use of Cash Collateral
SEARCH FINANCIAL: Order Approves Counsel on Interim Basis
SUN CITY: Court Approves Consolidation

TOSHOKU AMERICA: Committee Seeks to Employ Counsel
TOSHOKU AMERICA: Debtor Seeks to Employ Accountants
VENTURE STORES: Proposed Order for DG Hart for Committee

                   *********

2CONNECT EXPRESS: Motion to Convert Case to Chapter 7
-----------------------------------------------------
The Official Creditors' Committee in the case of 2Connect
Express, Inc. has filed a motion seeking to convert this
Chapter 11 case to a Chapter 7 case.  The Committee states
that the debtor allegedly now operates anywhere from 3 to
5 locations, that the debtor is losing money on a monthly
basis, that the payroll is running over $100,000 per month
and there appears to be no likelihood of any possible way
that a successful plan of reorganization can be presented
to the creditors and approved.


APS: Court Extends Time to Assume or Reject Leases
--------------------------------------------------
Judge Peter Walsh Granted the Debtors' Motion in all
respects, extending the deadline for the Debtors to assume
or reject leases of nonresidential real estate through
December 31, 1998.  Judge Walsh commented that it was
unusual in a case where some 500 Leases were under
consideration to receive so few objections.
(APS Bankruptcy News Issue #6 6-Apr-1998)


APS: Meeting Of Creditors Held March 20, 1998
---------------------------------------------
Betinna Whyte, appearing on the Debtors' behalf to give
testimony under oath, testified that, since the Petition
Date, she has served as the Debtor's President and Chief
Executive Officer.  Ms. Whyte is a principal with the
turnaround consulting firm of Jay Alix & Associates.  Ms.
Whyte explained that, in her opinion, the events leading to
the Debtors' chapter 11 filings were the result of the
company's attempts to grow too quickly through acquisitions
without proper controls and MIS system integration.  When
the company tried to renegotiate its working capital
facility with the pre-petition lenders, those negotiations
fell apart, Ms. Whyte explained.  

Since August 1997, Ms. Whyte reminded creditors the Company
has:        1.  Reduced inventory by $40,000,000;
            2.  Closed 54 ISW's;
            3.  Closed 12 company stores; and
            4.  Reduced SG&A by $7,000,000

Unfortunately, these steps were not enough, leading to these
chapter 11 filings.  Ms. Whyte reported that all vendors are
shipping to the Debtors, and about 50% are extending
ordinary trade credit at this time.

When asked about the sufficiency of a $7,000,000 limit
under the DIP Facility Ms. Whyte indicated that the Debtors'
MIS budget exceeds $7,000,000 (excluding Year 2000
Compliance expenses) and this limitation under the DIP
Facility will be renegotiated when a Replacement DIP
Facility or an Exit Facility is negotiated toward the end of
the year.  

Ms. Whyte was asked for her reaction to market perceptions
that the DIP Facility is "not intact."  Ms. Whyte said she
had no idea what that term meant.  The Debtors are in
compliance with the terms of the DIP Facility, and
$5,000,000 has been drawn to date.
(APS Bankruptcy News Issue #6 6-Apr-1998)


AL TECH: Debtor Applies to Hire Professionals
---------------------------------------------
Al Tech Specialty Steel Corporation, debtor, seeks to
employ McDonald & Company Securities, Inc. as the debtor's
investment banker.

The debtor anticipates that McDonald will render a number
of services during the term of its engagement, including
investment banking services related to a possible sale of
the debtor.  McDonald will, among other things, advise
and assist the debtor in all aspects of a possible Sale
Transaction, search for potential purchasers, evaluate
structures of a Sale Transaction, assist in evaluating any
offer, and provide court testimony if necessary.

The debtor has also applied for an order approving the
employment and retention of Harris Beach & Wilcox as
special counsel, in connection with the debtor's
involvement in five litigation and arbitration matters, in
which the firm has ongoing involvement.


AUSTRALIS MEDIA: Subsidiary Files for Reorganization
----------------------------------------------------
Australis Media Limited announced  that its immediate wholly
owned subsidiary, Australis Holdings Pty Limited has filed
for reorganization relief under Chapter 11.  AML and its
subsidiaries (the "Australis Group") comprise the leading
provider of digital pay television channels across
Australia. These channels include 'Showtime' and 'Encore'
'TV1' (a general entertainment channel comprising  
product from Universal, Paramount and Sony) and 'FoxSports'
(a sports channel comprising product from or otherwise
sourced by Prime Sports and Liberty  Sports).

The company is attempting to extinguish in excess of $375
million of the approximately $445 million accreted value of
Holdings' outstanding bond and guarantee obligations, as
well as AML's and all related subsidiaries' obligations in
respect thereof and to provide an avenue for the infusion
of permanent new capital into a reconstructed Australis
Group.

After at least three months of almost daily negotiations
with representatives of the U.S. bondholders and the new
capital investors, the Directors of AML believe that a  
successful reorganization of the Australis Group is
realistically achievable  prior to June 15, 1998.  The new
capital investors and a majority of the U.S. bond holders
have already reached agreement to support a reorganization
plan  that will include the elimination of more than $375
million of existing debt and guarantee obligations of the
Australis Group.  

    
BRAUN'S FASHIONS: Same-Store Sales Increase 10% in 1998
--------------------------------------------------------
Braun's Fashions Corporation boasted a record performance in
fiscal 1998, with pro forma operating income up 28% on 10%
growth in same-store sales for the year," said Bill Prange,
President and Chief Executive Officer.  "In fiscal 1998, we  
initiated our new store expansion program with sixteen new
openings.  We also closed seven stores as their leases
expired, resulting in 179 stores at year-end.  We have
maintained our strong inventory control disciplines and our  
inventories are current and on plan as we begin the new
year."

For the fiscal year ended February 28, 1998, Braun's net
sales increased to  $99.5 million from $87.2 million last
year. Net income climbed 46% to $4.9 million from $3.4
million, while earnings per share rose 26% to $1.02 from
$0.81 in fiscal 1997.  Earnings per share comparisons were
affected by a 15% increase in weighted average shares  
outstanding due to the issuance of 618,000 shares of common
stock in the company's debt for equity exchange during the
reorganization in fiscal 1997.

On an as reported basis, net sales in the fourth quarter
increased 11% to $27.3 million, paced by  a 5% rise in same-
store sales.  The positive effect of the fourth quarter
sales  growth was partially offset by a slight decrease in
gross margin, which  resulted from higher mark-downs taken
to keep inventories current.


DOW CORNING: Reply of Tort Committee to Modify Exclusivity
----------------------------------------------------------
The Tort Claimants' Committee states, once again, that the
fact that the debtor has filed three successive plans that
it did not negotiate, or even share in a draft with the
Tort Committee, warrants a modification of exclusivity.

The Tort Committee states that a comparison of the
competing plan proposals now before the court make the
case for modifying exclusivity all the stronger.  The
Committee states that the debtor's second amended plan is
onerous and one-sided in innumerable respects.  The
Committee states that a modification of exclusivity is the
obvious and long overdue remedy.

The Committee reiterates that the debtor has made little
progress towards a confirmable plan, and that the current
plan is unconfirmable on its face.  The Tort Committee
states that the Tort Claimants will reject the plan.  The
Tort Committee states that its plan is fair, and it
refutes the debtor's contention that the Tort Committee's
plan is not feasible.


ERNST HOME: Motion to Extend Time on FADCO Leases
-------------------------------------------------
Ernst Home Center, Inc. and FADCO LLC have filed a joint
motion to extend the time within which the debtor must
assume or reject FADCO Agreement Leases.

The court approved an agreement between Ernst and FADCO on
March 10, 1997.  Pursuant to the agreement, Ernst sold
three real property fee interests and many of Ernst's
rights to benefit from the "bonus value" in approximately
59 nonresidential real property leases.  The agreement
called for a total purchase price of $16 million subject
to adjustments.  The court granted Ernst an extension
through and including April 27, 1998 of its time to assume
or reject the FADCO leases.

Ernst believes it is in the best interests of Ernst's
estate and its creditors for the court to grant an
extension.  So long as FADCO has the right to market the
FADCO leases, Ernst's estate stands to gain economically.  
There are 14 remaining leases that have not yet been
assumed or rejected.

Ernst requests that the court extend the deadline to
assume or reject the other remaining leases through and
including June 29, 1998 and extend Ernst's deadline to
assume or reject pending assignment leases through and
including the later of June 29, 1998 and 30 days after the
court rules on the pending request for assumption and
assignment.

Ernst argues that the complexity of the cases warrants the
extension, and the fact that the leases are among the
primary assets of the estate makes it more imperative to
grant the extension.


GREATE BAY: Meeting of Creditors and Bar Date
---------------------------------------------
In the case of Greate Bay Hotel and Casino, Inc., GB
Property Funding Corp, and GB Holdings, Inc., debtors,  a
meeting of creditors is set for April 22, 1998.  A last date
for creditors to file a proof of claim is July 21, 1998, and
October 19, 1998 is the last date for the filing of a claim
by a governmental unit.


GULF RESOURCES: Order Approves Trustee's Professionals
----------------------------------------------
The court in the case of Gulf Resources Corporation and
its affiliated companies, as debtors, approved the Trustee's
application to employ Smith Production, Inc. filed by
Charles E. Bearden, Chapter 11 Trustee.

The court also approved the Trustee's request to employ John
C. Nichols as Petroleum Geologist, Turner & Allen as
Special Counsel and Jason R. Searcy PC as counsel for the
Trustee.


INTERNATIONAL HERITAGE: Judge Backs SEC
---------------------------------------
An Atlanta federal judge backs charges by the Securities and
Exchange Commission that interests sold by International  
Heritage Inc. were indeed securities as defined by federal
laws, the SEC said Tuesday.

The preliminary injunction, issued by U.S. District Judge
Richard Story in Atlanta, Ga., also found the primary
business of recruiting instead of selling products and that
the program was fraudulent, the SEC said in a statement.

Storey appointed a receiver, Lloyd Whittaker, as a monitor
of the North Carolina firm, the SEC said.  Under the ruling
issued on Friday, International Heritage's management will
be permitted to take control of the company upon posting a
$5 million bond, the agency said.

However, before enlisting additional representatives, the
company is required to develop a compensation program which
does not violate the court's order and which is approved by
Whittaker, the SEC said.  The commission charged in a civil
complaint filed last month that the company was allegedly
running what it believed to be the biggest pyramid scheme in
terms of dollars on record.

The scheme allegedly raised $150 million from over 150,000
investors since it started in April 1995, the SEC charged.
Also, between July 17, 1997 and Nov. 1, 1997, the company
was accused of selling $5 million in notes convertible  
into shares of International Heritage common stock.

On March 17, Story had issued a temporary restraining order
against International Heritage Inc., its parent
International Heritage Inc. and three of its executives.


LA GEAR: Supplement to Employment of Financial Advisors
-------------------------------------------------------
Due to the fact that the hearing on its Disclosure
Statement was continued, LA Gear, Inc. submits a
supplement to its application to employ Libra
Investments, Inc., as its financial advisor.

The success fee provided in the Engagement Letter will
apply to the current restructuring plan, and a success fee
shall also be due if a subsequent restructuring is
substantially different form the current one.  The success
fee will only be paid from the value or distributions that
would  otherwise go to current equity holders.  The
advisory fee of $25,000 per month shall be capped at an
aggregate of $150,000.


PARAGON TRADE: Applies to Employ Special Counsel
------------------------------------------------
Paragon Trade Brands, Inc. applies to employ Finnegan,
Henderson, Farabow, Garrett & Dunner, LLP as its special
counsel to evaluate patent matters, product designs, and
provide product clearance opinions.

The legal service of the Finnegan firm are very similar to
the services supplied by Rockey, Milnamow & Katz, Ltd., a
firm already approved by the court.  The reason for this
is that the Finnegan firm's duties are to provide a second
opinion on the work being done by the Rockey firm to ensure
that the product being developed by Paragon does not
infringe on any existing patents.  This "backstopping" is
important, as it is critical to the debtor's business.


PARAGON TRADE: Creditors To Employ Price Waterhouse
---------------------------------------------------
The court has entered an order authorizing the Creditors'
Committee of Paragon Trade Brands, Inc. to employ Price
Waterhouse, LLP as financial advisor on a conditional,
interim basis, from the date the application was filed
until May 31, 1998.

The court states that professionals cannot recover
fees for services rendered if the service has not been
authorized by a court order.  The court states that
retroactive orders are limited to extraordinary
circumstances to deter professionals from general non-
observance of Section 327 of the bankruptcy code.  The court
also points out that Price Waterhouse's disclaimer of
conflicts did not amount to a "Chinese Wall" insulating
personnel assigned to the case.


PEGASUS GOLD: To Sell Subsidiary "Pullalli Project"
--------------------------------------------------
Pegasus Gold Corporation and Zortman Mining, Inc. move for
an order authorizing the debtors to sell by means of an
auction their wholly owned nondebtor subsidiary, Pegasus
Minera de Chile, Ltda. which owns a certain gold
development and production project located near Santiago,
Chile, called the "Pullalli Project."

To date, the debtors' have invested approximately $23
million in developing the project, including investments
in equipment in anticipation of production.  The Pullalli
Project requires considerable ongoing capital investment.  
The asset has been written down to approximately $6
million on the debtors' consolidated balance sheet.

It is the debtors' best business judgment that the
interests of their estates and creditors would best be
served by auctioning their interests in the project.  May
21, 1998 is the date set for the auction.


POWER DESIGNS: Order Authorizes Employ of Vantage Partners
----------------------------------------------------------
Upon the application of Power Designs, Inc. and PDIXF
Acquisition Corp., debtors, the court entered an order
authorizing the retention of Vantage Partners, LLC to
provide management and financial services to the debtor.
Vantage Partners shall be compensated $4,000 per week
subject to certain conditions.


RELIANCE ACCEPTANCE: Motion for Appointment of an Examiner
----------------------------------------------------------
The Taylor Group, past officers and directors of the
debtors, Reliance Acceptance Group, Inc. et al., are the
potential targets of causes of action to be launched by the
debtors under the plan and some or all of the Taylor Group
are also co-defendants with the ongoing officers and
directors of various lawsuits.

The Taylor Group is seeking the appointment of an Examiner
in this case.  The Taylor Group seeks the Examiner to
investigate the merits of the proposed litigation and its
funding under the plan, and to examine the proposed
disparity of treatment in the plan between current and
former management, and the propriety of effectively granting
releases to officers and directors; and the propriety of the
recent conduct of the ongoing officers and directors.


SEARCH FINANCIAL: Equity Objects to Use of Cash Collateral
----------------------------------------------------------
The Official Equity Committee in the case of Search
Financial Services Acceptance Corporation et al., debtors
objects to the debtors' motion for a final order
authorizing the use of cash collateral and approving a
stipulation with Fleet Bank, NA

The debtors filed their motion on March 20, 1998, seeking
the court's approval of the terms of a stipulation between
the debtors and Fleet Bank, NA.  The stipulation provides
for a carve out of $250,000 for professionals and $10,000
for payment of statutory fees due to the US Trustee.  The
Committee objects due to a failure of the stipulation to
provide for fees necessary for the maintenance of the
Committee.  The Committee also objects to the use of Fleet
collateral to benefit affiliates of the debtors that are
not themselves in bankruptcy. The stipulation also
improperly allows Fleet to apply payments made post
petition by the debtors to interest, penalties, fees and
other non-principal items.

Fleet should not be allowed to apply payments to anything
but principal, according to the Equity Committee unless
and until it can show itself to be oversecured.  Fleet
retains the "right" to finance any third party sale of the
MS (an affiliated debtor) collateral. This "right"
provides no discernible benefit to the debtors and could
have a chilling effect on third-party buyers attempting to
acquire the MS's  assets.


SEARCH FINANCIAL: Order Approves Counsel on Interim Basis
---------------------------------------------------------
Upon the application of the debtors, Search Financial
Services Inc. and Search Funding Corp., the court
authorized and approved the employment of Hale Aston,
Seckel & Taubenfeld, PC as its bankruptcy counsel.

However, further time is afforded parties to examine the
potential conflicts of the Hale firm and the court extended
the right to object to the employment, with notice of the
objection and the provision for a hearing.


SUN CITY: Court Approves Consolidation
--------------------------------------
In the case of Sun City Industries, Inc., the court has
approved the consolidation of all of the related Chapter
11 cases into the case of Sun City Industries, Inc.

The following cases, Sun City Industries, Inc.; Sun City
Administrative Co., Inc.; Certified Poultry & Egg Co.,
Inc.; Certified Food Service of Pa., Inc.; Gulf Coast
Foodservice, Inc.; Certified Food Service of Ga., Inc.;
Certified Food Service of Orlando, Inc.; Sun City Produce,
Inc.; and Sheppard Foodservice, Inc. are substantively
consolidated for all purposes.


TOSHOKU AMERICA: Committee Seeks to Employ Counsel
--------------------------------------------------
The Official Committee of Unsecured Creditors of the
debtor, Toshoku America, Inc. and the debtor, jointly seek
to employ Hideyuki Sakai, as special counsel to assist,
advise and represent the applicants in the case of the
debtor's parent in Japan, and to assist in monitoring the
case in Japan and to prosecute claims against the debtor's
parent.  The hourly rate charged by Sakai is $336 per hour.


TOSHOKU AMERICA: Debtor Seeks to Employ Accountants
---------------------------------------------------
The debtor, Toshoku America, In., applies to employ Coopers
& Lybrand as independent auditors, certified public
accountants and tax and reorganization consultants for the
debtor.

The debtor believes that Coopers' familiarity with debtor's
industry will be invaluable to its work in this case, and
the debtor believes that it is crucial to its reorganization
efforts to hire Coopers.  In addition, Coopers has ongoing
relationships with certain of the debtor's creditors.

The debtor is also seeking to retain PENTA Advisory
Services, LLC as the debtor's special accountants.  PENTA
will undertake the necessary litigation support and
avoidance analyses services for the debtor based on factual
material prepared by Coopers.  PENTA will be used if
circumstances arise in which Coopers cannot assist the
debtor due to a potential conflict.


VENTURE STORES: Proposed Order for DG Hart for Committee
--------------------------------------------------------
The Official Committee of Unsecured Creditors in the case
of Venture Stores, Inc. has submitted a proposed order
authorizing the employment and retention of DG Hart
Associates, Inc., as real estate consultants to the
Committee.

                   *********

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