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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, July 30, 1998, Vol. 2, No. 148
                    
                  Headlines

APRIA HEALTHCARE: Batchelder Elected Director
BN1 TELECOMMUNICATIONS: Order Extends Exclusivity
CENDANT: Chairman Forbes Steps Down
DOEHLER-JARVIS: Seeks Extension of Exclusivity
FLETCHER CHALLENGE CANADA: Reports Continued Losses

GENUS INC: Reports $18 Million Net Loss for the Quarter
GOLDEN BEAR: Trading Halted by Nasdaq
L.A. GEAR: Order Confirms 2nd Amended Plan of
Reorganization
LG&E ENERGY: Shuts Down Electricity Trading
MANHATTAN BAGEL: New World Coffee & Bagels is New Owner

MARVEL ENTERTAINMENT: Panel Bid To Delay Plan
MUSTANG OIL & GAS: Court Approves Local Counsel for Trustee
NAL FINANCIAL: Hearing Set for Disclosure Statement
PEGASUS GOLD: Hearing Set for Disclosure Statement
POWER DESIGNS: Order Authorizes Accountant

SOUTHERN PACIFIC: Hires Morgan Stanley Dean Witter
STORMEDIA: Reports $21.5 Million Second Quarter Loss
TOROTEL: Signed Letter of Intent for Possible Merger
WESTMORELAND COAL: Files to Dismiss Chapter 11 Cases
WESTMORELAND COAL: Committee Employs Andrews & Kurth
WHITE PINE: Revenue Drops to $1.7 Million for 2nd Quarter

                  *********


APRIA HEALTHCARE: Batchelder Elected Director
---------------------------------------------
David H. Batchelder was elected a director of Apria
Healthcare Group Inc., increasing its board to nine
members.  Batchelder is a principal and managing member of
Relational Investors LLC, which holds about 9.9% of Apria's
shares outstanding.  he is also chairman and chief
executive officer of Batchelder & Partners Inc., a
financial advisory and investment-banking firm based in La
Jolla, California. (The Wall Street Journal 29-July-98)


BN1 TELECOMMUNICATIONS: Order Extends Exclusivity
-------------------------------------------------
On July 24, 1998, the court entered an order granting the
motion of BN1 Telecommunications, Inc., debtor, to extend
the exclusive period within which it may file a plan of
reorganization and obtain acceptance of the plan.  The
exclusive period within which the debtor may file its plan
of reorganization is extended through August 15, 1998, and
the time within which it must gain acceptance of such plan
is extended through October 14, 1998.


CENDANT: Chairman Forbes Steps Down
-----------------------------------
According to an article in The Wall Street Journal on July
29, 1998, Chairman of Cendant Corp., Walter Forbes,
resigned due to disclosures of rampant accounting fraud at
businesses he founded and led.

Forbes, who will receive $47.5 million in severance pay,
and eight of 14 directors tied to the old CUC International
Inc. resigned.

Cendant rescheduled its annual meeting fro October 1, 1998
and said it is reversing or undoing about $300 million of
the $589.8 million in merger-related charges it recorded in
the fourth quarter.

Although the accounting fraud took place before the merger,
some are saying that the bookkeeping problems continued
until after the merger.  Cendant officials have said the
reserves were calculated by former CUC executives.  There
have also been questions about the board's audit committee,
because all four members have personal and financial ties
to Cendant or Mr. Forbes.


DOEHLER-JARVIS: Seeks Extension of Exclusivity
----------------------------------------------
The debtors, Doehler-Jarvis, Inc. and its affiliated
companies seek an order further extending their exclusive
periods in which to file a plan or plans of reorganization
and solicit acceptances thereto.

The debtors seek a 90 day extension, from August 1, 1998
through and including October 30, 1998, of the period
during which the debtors will maintain the exclusive right
to file a plan of reorganization in these cases, as well as
a 90-day extension from October 30, 1998 through and
including January 28, 1999, of the period during which the
debtors will have the exclusive right to solicit
acceptances to such plan.  The debtors seek this relief
solely out of an abundance of caution to maintain the
exclusive periods through the schedule contemplated for  
plan confirmation, and allowing for some additional time if
unexpected delays are encountered.

The debtors' plan of reorganization was filed on July 10,
1998 by the debtors and Creditors' Committee as joint
proponents. The debtors seek this brief extension of the
exclusive periods to afford them additional time to resolve
any issues that may arise in connection with the plan
confirmation process. The debtors submit that they remain
in the best position to propose and confirm a consensual
Chapter 11 plan.


FLETCHER CHALLENGE CANADA: Reports Continued Losses
---------------------------------------------------
Fletcher Challenge Canada announced a net loss of $32.5
million, or 26 cents per share, for the three months ended
June 30, 1998.  This compares with net earnings of $140.3
million, or $1.13 per share, for the same quarter a year
earlier - which included net earnings from discontinued
operations of $130.5 million, or $1.05 per share.   
Earnings for the year earlier period included the gain on
the sale  of the company's 52 per cent interest in
TimberWest Forest Limited  of $135.1 million after tax.

Operations in the quarter were affected by a strike at the  
company's pulp and paper manufacturing facilities.  The
strike, which began on July 14, 1997, ended on April 18
following  ratification of a new six-year collective  
agreement.

The net loss of $32.5 million was an increase from the
$23.1 million net loss from continuing operations in the
immediately  preceding three-month period.  The loss in the
current quarter reflected one-time costs associated  
with settlement of the strike and the subsequent start-up
of operations.

Sales from continuing operations were $83 million in the  
quarter, down from  $242 million for the same period last
year.

For the year ended June 30, 1998, Fletcher Challenge Canada  
recorded net earnings of $298.6 million, or $2.40 per
share,  compared to net earnings of $119.5 million, or 96
cents per share,  for the previous year.  


GENUS INC: Reports $18 Million Net Loss for the Quarter
-------------------------------------------------------
Genus, Inc. (NASDAQ/OTC:GGNS) announced financial results
for the second quarter and for the first half of 1998.  
Genus recorded net sales of $12,970,000 for the second
quarter of 1998, compared to net sales of $19,351,000 for
the second quarter of 1997.

Net loss for the quarter was $18,829,000 or $1.10 per share
available to common shareholders, compared with net income
of $296,000 or $0.02 per share for the second quarter of
1997.  The Company's net sales for the first six months of
1998 were $20,208,000 and net loss was $26,243,000, which
resulted in a loss of $1.64 per share available to common
shareholders.  In comparison, Genus' net sales for the
first half of 1997 were $39,032,000 and net income was
$477,000 or $0.03 per share.

"During the first half of 1998, we took aggressive steps to
restructure the Company's business model and strengthen its
financial position," commented William W.R. Elder, Genus
chairman and CEO.  "We put in place stringent cost  
control measures that included a 25 percent reduction in
our workforce and the consolidation of our West Coast
manufacturing.  The restructuring charges for these changes
were taken during the second quarter; this resulted in  
anticipated losses.

However, with the anticipated completion of the sale of our
ion implant product group to Varian Associates, Inc., our
cash position will be strong as we move into the third
quarter.  The proceeds generated from this sale will
augment our efforts to establish Genus as a standalone thin
films company -- one that meets the high productivity and
low cost-of-ownership requirements of its worldwide
customer base.  With the Company's redefined thin films
product strategy and technology roadmap, we believe that
Genus can both survive and prosper during the current
semiconductor industry downturn by refocusing its products
on future advanced film applications."


GOLDEN BEAR: Trading Halted by Nasdaq
-------------------------------------
Trading of Golden Bear Golf Inc. shares has been halted
indefinitely, pending receipt of additional information
from the company.

Stephen Winslett, Golden Bear Golf's CFO said that Nasdaq
mainly wants information about the events leading up to the
company's internal review of Paragon's construction
projects, as well as details about the review itself.
Golden Bear announced on Mondayt that it would restate its
1997 financial results, reporting a loss of $24.7 million
instead of a previously reported loss of $2.9 milllion.
(The Wall Street Journal 29-July-98)


L.A. GEAR: Order Confirms 2nd Amended Plan of
Reorganization
---------------------------------------------
On June 18, 1998 the court entered its order confirming the
second amended plan of reorganization regarding L.A. Gear
Inc.'s second amended plan o f reorganization.  

All claims for damages not previously filed which arise
from the rejection of an executory contract or unexpired
lease must be filed within 30 days after mailing of the
order.  All requests for payment of administrative costs
and expenses must be filed no later than 60 days following
the Effective Date of the plan. All claims for
administrative claims and by governmental units for taxes
must be filed on or before 60 days following the Effective
Date.


LG&E ENERGY: Shuts Down Electricity Trading
-------------------------------------------
According to an article in The Wall Street Journal on
Wednesday July 29, 1998, LG&E Energy Corp. said it is
shutting down its electricity-trading operations and
incurring a $225 million second-quarter loss as a result of
the electricity crisis in the Midwest in late June.

LG&E reported a net loss for the second quarter of $231
million compared with net income of $33 million during the
year-earlier period.  The company, which has more than $3
billion in assets, said revenue grew 14% to $441 million
from $388 million.

Roger Hale, LG&E's chairman said that the company supports
the wholesale-electricity trading business, but that it had
too much exposure on three contracts to continue.


MANHATTAN BAGEL: New World Coffee & Bagels is New Owner
-------------------------------------------------------
New World Coffee & Bagels, Inc. (Nasdaq:NWCI) announced
that it has signed an agreement to acquire Manhattan  Bagel
Company (Nasdaq: BGLSQ), the bagel manufacturer and
franchiser that filed  for Chapter 11 protection last
November.  The agreement covers the acquisition of
Manhattan Bagel's approximately 310 store franchise system,
two bagel dough manufacturing plants and corporate
operations.  Both chains would retain their individual
identities while consolidating their corporate
infrastructure.

Pro forma system wide sales should approach $150 million
from the approximately 350 franchised and company-owned
Manhattan Bagel and New World stores.  Manhattan Bagel
currently franchises, licenses or operates approximately
310 units, while New World franchises or operates 43 units.

Pro forma revenues for the combined entity should exceed
$45 million, including retail store sales, sale of bagel
dough, cream cheese and coffee beans to franchisees, and
franchise royalty and fee income.

The combined entity would have a major market presence in
the Northeast, the Southeast and in California.  Existing
bagel dough plants (in Eatontown, NJ  and Los Angeles, CA),
and a coffee plant (in Branford, CT), are expected to be
capable of supplying stores on both coasts.

"This combination is a natural fit strategically and
operationally," said  Ramin Kamfar, New World's CEO and
President.  "Strategically, Manhattan Bagel  
has an award-winning bagel product which is a perfect
complement for our award-winning coffee.  In addition, our
store base complements Manhattan's strength  in the
Northeast to create a leading presence in the area.
Operationally, our strength in systems and the depth of our
management team are a match for Manhattan's needs in order
to grow its business."

"For Manhattan Bagel franchisees, the combination presents
an opportunity to increase sales by featuring New World's
highly-acclaimed branded coffee and adding iced coffees,
frozen coffee drinks and espresso-based beverages to the  
menu," Mr. Kamfar continued.  "Manhattan Bagel stores
currently average approximately 10% of their sales in
coffee where the comparable figure for Now World's bagel
stores is close to 50%.  These product lines would be
supported by a full range of merchandising and marketing
programs."

"The financial synergies of this transaction are expected
to be significant," said Jerry Novack, New World's Chief
Financial Officer.  "The benefits of maximizing plant
capacity for both parties, cross selling of coffee
and bagel products and consolidation of general and
administrative overhead should be substantial.  We will
work with Manhattan Bagel to implement a state-
of-the-art computer system that we expect will help enhance
the ability to track and improve store profitability.  The
transaction should prove strongly accretive to our
earnings."

Under the acquisition, which is subject to necessary
bankruptcy court approvals, New World would provide up to
$3.5 million for Manhattan Bagel's secured creditors,
provide $11.5 million for Manhattan Bagel's unsecured  
creditors, and assume up to $5.0 million in additional
liabilities.  No value will be provided to Manhattan Bagel
equity holders.  The transaction will be primarily financed
with cash and debt.  The two companies are currently
working on a plan of reorganization that would enable
Manhattan Bagel to emerge from Chapter 11 bankruptcy
protection.

Founded in 1993, New World Coffee & Bagels currently owns,
operates and franchises stores in New York, New Jersey,
Pennsylvania, Connecticut, Maryland, Florida and Germany.  

Manhattan Bagel Company opened its first store in 1987,
began franchising in 1989 and launched manufacturing
operations in 1991.  The company filed for Chapter 11
protection in November 1997.  The company currently
franchises, licenses or operates approximately 310 stores
in 18 states and Washington, D.C.


MARVEL ENTERTAINMENT: Panel Bid To Delay Plan
---------------------------------------------
The U.S. District Court in Wilmington, Del., has set a July
31 hearing on a bid by the Marvel Entertainment Group
Inc. creditors' committee to delay consummation of the
recently confirmed reorganization plan. The committee has
asked Judge Roderick McKelvie to stay consummation of the
plan while the panel pursues appeals of his July 13
confirmation order and June 25 order approving the
settlement between Marvel's chapter 11 Trustee, Toy Biz
Inc., and the comic book publisher's lenders.

The committee has charged that the May 11 settlement, which
gives Marvel's equity holders a package of warrants under
the plan, violates the agreement reached with the
creditors' committee in March. The committee argued that,
by entering into the settlement and incorporating it into
their plan for Marvel, Toy Biz and the lenders breached
their agreement not to amend the plan to adversely
change the distribution for unsecured creditors and not to
provide warrants with more favorable terms to equity
holders. Meanwhile, the equity committee, indenture trustee
LaSalle National Bank,and High River Limited Partnership
together with Westgate International L.P. also appealed

Judge McKelvie's rulings to the Third Circuit Court of
Appeals in Philadelphia. The equity panel's emergency
motion for a stay pending its confirmation appeal will be
considered at Friday's hearing as well. (The Daily
Bankruptcy Review Copyright c July 29, 1998; ABI 29-July-
98)


MUSTANG OIL & GAS: Court Approves Local Counsel for Trustee
-----------------------------------------------------------
The court in the case of Mustang Oil & Gas Corporation
entered an order approving the employment of Oppenheimer,
Blend, Harrison & Tate, Inc. as Local Counsel for Charles
Bearden, the Chapter 11 Trustee.


NAL FINANCIAL: Hearing Set for Disclosure Statement
---------------------------------------------------
Judge Paul G. Hyman entered an order granting the debtors'
ex parte motion to shorten the time periods for
consideration of the Disclosure Statement and Confirmation
Hearing.

The hearing to consider the debtors' Disclosure statement
is set of August 10, 1998.  

The hearing to consider confirmation of the plan is set for
September 22, 1998.

August 6, 1998 is the last day within which to file and
serve objections to the Disclosure Statement.


PEGASUS GOLD: Hearing Set for Disclosure Statement
--------------------------------------------------
In the case of Pegasus Gold Corporation, et al., a hearing
on motion for entry of order approving the Disclosure
Statement of the debtors will be held on August 25, 1998 at
2:00 p.m.

At the same time, the debtors will seek an extension of the
exclusive period to solicit votes through Confirmation
Hearing.


POWER DESIGNS: Order Authorizes Accountant
------------------------------------------
Judge Alan H.W. Schiff entered an order in the case of
Power Designs, Inc. and PDIXF Acquisition Corp., debtors,
authorizing the retention and employment of McGladrey &
Pullen, LLP as accountant to the debtors, nunc pro tunc to
June 22, 1998.


SOUTHERN PACIFIC: Hires Morgan Stanley Dean Witter
--------------------------------------------------
Southern Pacific Funding Corporation (NYSE:SFC) announced
that it has retained the investment banking firm of Morgan
Stanley Dean Witter to assist in exploring a broad range of
strategic alternatives available to the Company.

These alternatives could include a business combination,
merger or strategic alliance.

"The domestic and international non-conforming mortgage
lending market opportunities are dynamic and growing.
Southern Pacific Funding has developed a  balanced, low-
cost multi-channel loan distribution network to access
these  expanding market opportunities. In order to maximize
shareholder value and to access capital to support our
robust growth, our board of directors has engaged
Morgan Stanley to explore strategic alternatives for
Southern Pacific Funding  Corporation," commented Robert W.
Howard, CEO and Vice Chairman.

Southern Pacific and its subsidiaries originate loans
throughout  the United States and in the United Kingdom
through diversified origination channels. The Company's
largest shareholder, Imperial Credit Industries, Inc.  
(NASDAQ:ICII), currently owns 47% of the Common Stock of
the Company.

Southern Pacific Funding Corp.'s (SPFC) 'B+' rated $100
million 11.5% senior notes, due 2004, are placed on Fitch
IBCA RatingAlert with evolving implications following the
company's decision to evaluate strategic options, including
the sale of the company.  Evolving status reflects the
rating could be raised, lowered, or affirmed depending on
the outcome of the strategic review.

Fitch IBCA believes that the ability to raise capital in
the subprime home equity market is hindered due to overall
industry concerns, which include accelerating competition,
as well as prepayment and asset quality concerns.  
Because of growth objectives, SPFC operates in a negative
cash flow position and needs to actively access the debt
and equity markets.  As a result, SPFC is  seeking to
either form a partnership or be sold to a company that has
a stronger balance sheet and better access to the capital
markets.


STORMEDIA: Reports $21.5 Million Second Quarter Loss
----------------------------------------------------
StorMedia Incorporated (Nasdaq: STMD) today reported net
sales of $24.0 million, net loss of $21.5 million,
and  net loss per share of $1.04 for the quarter ended June
26, 1998. This compares with net sales of $32.6 million,
net loss of $20.9 million, and net loss per share of $1.17
for the quarter ended June 27, 1997.

For the six months ended June 26, 1998 net sales, net loss
and net loss per share were $63.2 million, $48.7 million
and $2.37, respectively. This compares with net sales, net
loss and net loss per share of $66.7 million, $30.2
million  and $1.70, respectively, for the six months ended
June 27, 1997.

Sequentially, net sales were down 39% from $39.2 million
for the first quarter ended March 27, 1998. Net loss and
net loss per share were $27.2 million and $1.34,
respectively, for the quarter ended March 27, 1998.

During the second quarter the Company successfully
completed its financial restructuring which included the
restructuring of its existing debt and raising additional
capital through debt and equity financings. In
addition the Company  took further actions to align its
cost structure to better enable it to generate positive
cash flow from operations in light of the continuing
adverse  industry conditions. Such actions included further
reduction in workforce and  plant closures.

"While we are not pleased with our operating performance in
the past quarter the financial and operating restructuring
steps taken will substantially lower our cost structure and
will enable us to be profitable on lower revenues," stated
William J. Almon, Chairman and Chief Executive Officer.


TOROTEL: Signed Letter of Intent for Possible Merger
----------------------------------------------------
Torotel, Inc. (Amex: TTL), a manufacturer of power supplies
and magnetic components for power conversion, today
announced that, as expected, lower sales and special
charges resulted in a loss for its fourth quarter and
fiscal year ended April 30, 1998.  The company also said it
signed a letter of intent for a possible merger with  
Caloyeras, Inc., using Torotel common and a new class of
preferred shares to purchase 100 percent of Caloyeras'
outstanding securities.

For fiscal 1998, net sales were $11.7 million compared with
$14.7 million for the prior year, down 20 percent.
Sales at the Torotel Products subsidiary were flat, at
$6.1 million for both years.  Increased sales of the potted
coil assembly for the Hellfire II missile nearly offset the
affect of lower shippable bookings seen in the last
six months, and production inefficiencies  and technical
design problems that delayed the shipment of other orders.  
The OPT Industries subsidiary saw a 34 percent sales
decrease.  This primarily was due to lower sales of power
supplies to a major customer, which was disclosed  in the
third quarter.

Consolidated gross profit as a percentage of net sales
decreased 6 percent due to labor inefficiencies at Torotel
Products and lower sales volume without a comparable
decrease in fixed production costs at OPT.

While the company's selling, general and administrative
expenses decreased 24 percent, the decrease  
was not enough to offset the lower sales and special
charges.  The result was a consolidated net loss of $1.5
million, equal to 54 cents per diluted share, for the
latest year, compared with a loss of $1.2 million, equal to
42 cents per diluted share, for fiscal 1997.

For the three months ended April 30, 1998, net sales were
$2.6 million, down 21 percent from $3.3 million for last
year's fourth quarter.  Gross profit as a percentage of net
sales was down 13 percent primarily due to OPT's lower  
sales volume.  

As of April 30, 1998, the company was in violation of two
financial covenants under the terms of the credit agreement
with Phillipsburg National Bank & Trust Company.  The bank
has waived compliance with these provisions through August
31, 1998, which is the expiration date of the
revolving credit line.  While the bank has expressed a
willingness to continue as the company's primary lender,
the renewal of the credit line will be subject to, among
other things, satisfactory review of the company's
operating plans, cash needs,  available collateral, and pro
forma information on the Caloyeras transaction.  

If the bank decides not to renew the credit line, it could
affect Torotel's  ability to continue as a going concern;
this statement will also be reflected  on the independent
auditors' report to be filed with Form 10-KSB.  While the
company may be able to find an alternate source for
financing, it would likely be short-term in nature, carry
substantially higher costs and lending rates,  and be much
more restrictive for liquidity purposes.

The company also said that based on its operating results
and balance sheet for the fiscal year ended April 30, 1998,
it is below the American Stock Exchange's guidelines for
continued listing.  There is no assurance that  
Torotel's common stock will continue to be listed.


WESTMORELAND COAL: Files to Dismiss Chapter 11 Cases
----------------------------------------------------
Westmoreland Coal Co., Colorado Springs, Colo., said
yesterday that it and four subsidiaries have filed a motion
to dismiss their chapter 11 cases, based on recent court
decisions in other cases and the company's significantly
improved financial condition, according to a newswire
report.

The company said its recently formed committee of equity
security holders will file a motion contending
that upon liquidation in chapter 7, claims would be limited
to only that amount incurred during the bankruptcy case.
Westmoreland filed for bankruptcy protection in December
1996 and now says it is able to immediately pay in full all
undisputed claims in cash with interest, meet its present
obligations and provide a Coal Act security of $20.8
million, as well as reinvest a residual cash
balance in new opportunities.
    

WESTMORELAND COAL: Committee Employs Andrews & Kurth
----------------------------------------------------
In the case of Westmoreland Coal Company, debtors, the
court approved the application of the Official Committee of
Equity Security Holders to employ and retain the law firm
of Andrews & Kurth L.L.P. to represent the Committee.


WHITE PINE: Revenue Drops to $1.7 Million for 2nd Quarter
---------------------------------------------------------
White Pine Software, Inc. (Nasdaq:WPNE) today announced
that it reported a net loss of $0.28 per share for the  
second quarter ended July 3, 1998, compared with a net loss
of $0.27 per share for the second quarter ended July 4,
1997.  Total Revenue for the second quarter was $1.7
million compared with $2.6 million for the comparable 1997  
quarter.

"Continued revenue problems in the Pacific Rim and Europe,
as well as the anticipated further decline in our legacy
product revenues have negatively impacted our results for
the quarter.  However, we are very pleased and encouraged
with initial adoption rates of ClassPoint which began
shipping during the second quarter.  We are also starting
to experience increased demand for our MeetingPoint server
in the corporate market as these users become more
cognizant of the benefits of standards-based IP multimedia
conferencing," said Killko Caballero, White Pine's
President.
                  *********

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

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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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