TCR_Public/980924.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, September 24, 1998, Vol. 2, No. 187

                  Headlines

AHERF: Coalition Tries to Postpone Sale
AHERF: Outcome of Sale Crucial to Thousands
CF&I STEEL: PBGC Held to Administrative Claim
CHATCOM INC: Purchase and Sale Agreement
CROWN BOOKS: $40M DIP Pact Amendment Approved

EQUALNET COMMUNICATIONS: Filed Chapter 11 Petition
FIFTH DIMENSION INC: Ability to Operate Questionable
FLAGSTAR CORPORATION: Report of Substantial Consummation
FOOD COURT: Committee Taps Gunster, Yoakley
INTERNATIONAL WIRELESS: Asks To Reject Employee Contracts

MUSTANG OIL: Distributes Ballot for Plan - JEDI Objects
NAL FINANCIAL: Confirmation Hearing Set for September 22
ORANGE COUNTY: Merrill Lynch Deal Postponed
PARADISE HOLDINGS: Seeks To Employ Financial Consultant
PARAGON TRADE: Procter & Gamble Files Contempt Order

PARAGON TRADE: Views Contempt Filing As Without Basis
PEGASUS GOLD: EPA Objects to Intercompany Settlement
PEGASUS GOLD: US Fidelity  Objects to Citibank Settlement
PERK DEVELOPMENT: Landlord Objects to Extension
PHOENIX INFORMATION: Equity Seeks To Disqualify Ballots

SYQUEST TECHNOLOGY: Special Meeting of Stockholders
WESTBRIDGE CAPITAL: Case Update

                  *********

AHERF: Coalition Tries to Postpone Sale
---------------------------------------
Members of the Coalition for Patients Not Profits yesterday
protested the sale of Allegheny Health, Education and
Research Foundation (AHERF) hospitals and asked state Rep.
Don Walko to call on Bankruptcy Judge Bruce McCullough to
delay the proposed sale so that an audit of AHERF can
establish what went wrong at the Foundation, The Post-
Gazette reported. Bids to purchase eight AHERF hospitals in
the Philadelphia area are scheduled to be received by the
bankruptcy court by Friday, and AHERF and a creditors'
committee are expected to make recommendations the
following Monday on which bids to accept. The court would
hold the auction the next day. (ABI 23-Sept-98)


AHERF: Outcome of Sale Crucial to Thousands
-------------------------------------------
Next Tuesday, the tattered remnants of the Allegheny
Health, Education and Research Foundation empire in Eastern
Pennsylvania will be sold off in federal bankruptcy court.

Even under the most optimistic projections, it is not
expected that the sale of the eight hospitals will come
close to paying off the more than billion-dollar debt that
AHERF racked up over the last few years.

Obviously, a bankruptcy proceeding is primarily focused on
seeing that bills are paid, to the extent possible, that
creditors are made as close to whole as possible and that a
reorganized entity can rise from the ashes to lead a  
fiscally healthy new life.

That is the way no-nonsense Bankruptcy Court Judge M. Bruce
McCullough is dealing with the AHERF proceeding at a
relatively rapid pace. We commend him for moving the
process along, because it is in the best interests
of the  communities involved and AHERF itself to get past
this matter and move forward.

But the commendation comes with a note of caution. We urge
Judge McCullough to keep in mind that the distribution of
AHERF's assets affects more than creditors and employees.
What happens to the hospitals will have a profound impact
on the health and well-being of hundreds of thousands of
people in Philadelphia and perhaps, ultimately, in
Pittsburgh as well.

The highest bidder may provide the best answer for
creditors who are going to get pennies on the dollar for
money owed, but it may not be the best answer for thousands
of citizens who rely on the hospitals to deliver babies,
perform emergency surgery or tend to chronic ailments.

As a not-for-profit agency, AHERF has also received the
benefits of tax exemption and has charitable assets and a
charitable purpose that must be safeguarded whoever the
buyer is.

The attorney general sought involvement in the case because
of the clear public interest. Had AHERF not entered
bankruptcy, the attorney general's office would have been
legally required to scrutinize any sale to a for-profit  
entity. And we believe that scrutiny should be extended to  
any sale involving charitable assets.

Judge McCullough denied Attorney General Fisher standing in
the case. That decision, however, does not relieve the
judge from the responsibility to weigh community interest
and community needs in whatever disposition is made.
(Pittsburgh Post Gazette - 09/22/98)


CF&I STEEL: PBGC Held to Administrative Claim
---------------------------------------------
CF&I Steel Corp. began a pension plan. It could not meet
its minimum funding contributions of about $14 million and
filed a bankruptcy petition. The Pension Benefit Guaranty
Corp. (PBGC) terminated the plan and became its statutory  
trustee. PBGC filed two claims against the bankruptcy
estate, one for unpaid contributions and one for unfunded
benefit liabilities accruing because of the lack of assets
in the benefit plan. PBGC asserted that its claims were
entitled to priority payment as a tax claim and were a cost
of the estate entitled to priority as an administrative
claim. Bankruptcy Court held PBGC was entitled to an
administrative priority claim only for the post-petition
part of its unpaid contributions claim attributable to
post-petition services of employees.

The Court denied tax or administrative priority for other
amounts. The District Court upheld these decisions but
reversed the holding that PBGC's unfunded  benefits claim
should be valued under its regulatory system and not by  
Bankruptcy Code standards. CA-10 upheld the district court
and rejected PBGC's arguments. District Court did not err
in requiring the Bankruptcy Court to employ the prudent
investor discount to reach the present value of PBGC's  
unfunded benefits liability claim. CF&I Fabricators of
Utah, 98-2 USTC 50,607  (CA-10, 1998).

Duty to warn of distribution's tax consequences. CA-9 held
that sponsors of an early retirement plan and its benefits
committee breached fiduciary duties by failing to properly
warn retiring employees about the tax consequences of lump-
sum distributions; however, it also held that the
plaintiffs had no remedies available under ERISA since the
lost tax benefits would constitute monetary relief which is
not recoverable as "other appropriate equitable relief."
Farr, et al v. US West Communications, Inc., (CA-9, 1998).
(Practical Accountant Magazine -09/19/98)


CHATCOM INC: Purchase and Sale Agreement
----------------------------------------
On August 26, 1998, the Company entered into a Purchase and
Sale Agreement with Vermont Research Products, Inc.
("VRPI") and High View Capital ("HVC"). VRPI is a major
supplier to the Company of certain products (which are
resold by the Company) and is the holder of the Company's
Series F Convertible Preferred Stock and Series G
Convertible Preferred Stock and is also the Company's
single largest trade creditor. HVC (including certain
of its affiliates) is the holder of the Company's Series D
Convertible Preferred Stock and the Company's convertible
subordinated debt in the aggregate principal amount of
$890,000.

The Sale Agreement provides for the sale by the Company of
its recently announced BrightStar product technology (the
"New Product") to VRPI and HVC (collectively, the
"Purchasers") in exchange for $400,000 in cash
($200,000 of which was advanced to the Company by VRPI
through July 7, 1998 and the remaining $200,000 was
received by the Company on September 2, 1998), the
cancellation of all outstanding loans and convertible notes
made to the Company by the Purchasers or their affiliates
including accrued interest (approximately $966,000 at
August 26, 1998), the cancellation of all trade debt owing
by the Company to the Purchasers (approximately $391,000 at
August 26, 1998), the return of certain equipment by the
Company to VRPI in the amount of approximately $289,000,
the cancellation of all shares of preferred stock (and
accrued dividends thereon) owned by the Purchasers or any
of their affiliates (approximately $4.0 million in stated
value at August 26, 1998) and the cancellation of all
warrants held by the Purchasers or their affiliates to
purchase shares of the Company's Common Stock (835,000
shares).

The Sale Agreement included certain other conditions, which
included the Company's receipt of a minimum of $300,000
from ALCO Financial Services LLC under a line of credit
(which was effected on September 2, 1998) and the execution
of a license agreement under which the Purchaser would
grant the Company an exclusive license to the New Product
(the "License Agreement"). The License Agreement
provides for royalty payments to be made by the Company to
the Purchasers in the amount of 5% of the sales price of
New Products sold by the Company. In the event of any sale
or merger of the Company or the licensing by the Company of
the New Product to a third party, the Company may elect to
buy-back the New Product from the Purchasers for $1,
provided the sale or merger or licensing arrangement
generates at least $8 million in aggregate proceeds to the
Company. In such an event, the Company would be required to
distribute the proceeds from such a transaction on the
following incremental basis: up to $1 million, 75% to
Purchasers, 25% to the Company; $1,000,000 to $5,999,999,
48.5% to Purchasers, 51.5% to the Company; $6,000,000 to
$7,999,999, 68% to Purchasers, 32% to the Company;
$8,000,000 to $9,999,999, 60% to Purchasers, 40% to the
Company; $10,000,000 to $12,999,999, 21% to Purchasers, 79%
to the Company; $13,000,000 to $16,000,000, 7.5% to
Purchasers, 92.5% to the Company; over $16,000,000, 100%
to the Company. In the event the Company enters into a
sale, merger or licensing agreement that generates less
than $8 million in aggregate proceeds to the Company, the
license granted to the Company under the License Agreement
would convert to a non-exclusive license. The Purchasers
have the right to rescind the Sale Agreement and License
Agreement for a period of one year (until September
2, 1999).


CROWN BOOKS: $40M DIP Pact Amendment Approved
---------------------------------------------
The court approved the latest amendment to Crown Books
Corp.'s $40 million debtor-in-possession credit agreement
with Paragon LLC and Foothill Capital Corp. after
the creditors' committee withdrew its limited objection.
Among other things, the amended DIP agreement provides
greater borrowing availability and reduced fees. The
modified agreement is scheduled to mature Aug. 16, 2000.
The original agreement, which was scheduled to mature Aug.
17, was extended for another 30 days pursuant to a first
amendment. (The Daily Bankruptcy Review Copyright and ABI c
September 23, 1998)


EQUALNET COMMUNICATIONS: Filed Chapter 11 Petition
--------------------------------------------------
EqualNet Corporation, the main operating subsidiary of
Equalnet Communications Corp., and EqualNet Wholesale
Services, Inc., a non-operating subsidiary of EqualNet
Corporation, filed voluntary petitions for relief under
Chapter 11 of the United States in the United States
Bankruptcy Court for the Southern District of Texas,
Houston, Texas.

At this time the cases are not being jointly administered.
Pursuant to Sections 1107 and 1108 of the Bankruptcy Code,
the Debtors, as debtors and debtors-in-possession, will
continue to manage and operate each company's assets and
businesses pending the confirmation of reorganization plans
subject to the supervision and orders of the Bankruptcy
Court.


FIFTH DIMENSION INC: Ability to Operate Questionable
----------------------------------------------------
Fifth Dimension Inc. reported to the SEC that it is unable
to commercialize its Brushless Slip ring and Mercury
Free Switch technologies with its available financial
resources. Further, the Company believes that it is
unlikely that it will receive the additional financing that
it had previously hoped to obtain. To date, the Company has  
received only $321,000 of the $880,000 in financing that it
requires to implement its plan of reorganization. As a
result of its capital shortfall, the Company's ability to
continue operating is unlikely.  Unless the Company is  
able to quickly raise the required capital, the Company
will probably be forced to convert its ongoing Chapter 11
bankruptcy proceeding into a Chapter 7  liquidation under
the Bankruptcy Code. (States SEC; 09/22/98)


FLAGSTAR CORPORATION: Report of Substantial Consummation
--------------------------------------------------------
Flagstar Corporation and Flagstar Companies, Inc., debtors,
make a report of Substantial Consummation of their
confirmed Plan of Reorganization and apply to the court for
entry of a final decree closing these cases.  The debtors
are filing their final report, the bankruptcy estates have
been fully administered and the cases should be closed.


FOOD COURT: Committee Taps Gunster, Yoakley
-------------------------------------------
The Official Committee of Unsecured Creditors of Food Court
Entertainment Network, Inc. is seeking entry of an order
authorizing the retention and employment of the law firm of
Gunster, Yoakley, Valdes-Fauli & Stewart P.A. as lead
counsel to the Committee.

The firm will advise the Committee as to its rights and
duties; investigate the acts and financial condition of the
debtor; advise the Committee with respect to a plan,
prepare documents and consult with the debtor
concerning administration of the case.  The firm charges
$250 per hour for a partner and $150 per hour for an
associate attorney.


INTERNATIONAL WIRELESS: Asks To Reject Employee Contracts
---------------------------------------------------------
The debtor, International Wireless Communications Holdings,
Inc., is seeking to reject an employee retention bonus plan
and severance agreements with nine former employees and a
letter agreement with John Lockton. The total retention
bonus amount is over $2 million, and the total
potential bonus amount for the sale of the company is
between $3 and $4 million. The total amount remaining to be
paid in severance payments is approximately $383,000,and
the agreement with John Lockton provides employment salary
of $180,000 annually and a guaranteed bonus of $70,200.

The debtor states that the parties to those contracts no
longer provide substantial services to the debtors, the
payments are burdensome to the debtors, and the debtors'
obligations under the contracts represent a significant and
unnecessary drain on the estates' administrative resources,
while the contracts provide little, if any benefit to the
estates.  The rejection and termination of the contracts
represents the exercise of the debtors' sound business
judgment.


MUSTANG OIL: Distributes Ballot for Plan - JEDI Objects
-------------------------------------------------------
Charles Bearden, Chapter 11 Trustee for Mustang Oil & Gas
Corporation, together with the Official Unsecured
Creditors' Committee of Mustang Oil & Gas Corporation filed
a plan of reorganization dated August 5, 1998.  The
court approved a Disclosure Statement with respect to the
plan.

Joint Energy Development Investments Limited Partnership
(JEDI) files an objection to the plan stating that JEDI has
an allowed claim of approximately $11 million.

The plan proposes to pay JEDI "its Pro Rata share of
distribution to holders of Allowed Unsecured Claims in full
of the Banks' Assignee's Allowed Claims."  Pursuant to the
plan, the Banks' Assignee's Allowed Pro Rata Share (which
includes the Banks' deficiency claim and the JEDI Allowed
Unsecured Claim) is limited to 50% of the distributions to
all unsecured creditors.  Additionally, the amended
Disclosure Statement states "Upon payment of the Banks'
deficiency claim in full, the Class 8 Creditor (JEDI)
will be entitled to receive distributions on its allowed
claim pari pasu with the holders of Class 7 Claims.  

JEDI states that the plan purports to subordinate the JEDI
claims to a certain $300,000 loan from Terry Petroleum I,
LP.  Since the plan proposes that equity retain its
interests in the debtor, and it is not anticipated that
JEDI will be paid in full, JEDI states that the plan
violates the absolute priority rule.  JEDI states that it
is similarly situated to the unsecured creditors in Class 7
and is receiving less, on a percentage basis, on
account of its claim than the other unsecured creditors.

JEDI also argues that the documents governing the
relationship between JEDI and the debtor do not permit the
$300,000 loan proposed by Terry.  For all of these reasons,
JEDI states that the plan should not be confirmed.


NAL FINANCIAL: Confirmation Hearing Set for September 22
--------------------------------------------------------
The hearing on confirmation of the amended plan of
reorganization of NAL Financial Group, Inc., et al. is
scheduled for September 22, 1998 at the U.S. Courthouse,
Room 308, 299 East Broward Boulevard, Fort Lauderdale,
Florida.


ORANGE COUNTY: Merrill Lynch Deal Postponed
-------------------------------------------
A hearing on a proposed legal settlement between Merrill
Lynch and Co. Inc. and Orange County, Calif., has been
postponed until late next month, Reuters reported. The
bankruptcy court hearing on the proposed $400 million deal
to settle the county's lawsuit against the brokerage has
been rescheduled for Oct. 26; originally it was to be on
Monday, Sept. 28. Instead, the court will hear arguments
Monday on Fuji Securities' motion for summary judgment in
its case with the county. Fuji and Merrill were among the
20+ investment firms, advisors and others sued by the
country following its 1994 chapter 9 bankruptcy filing.
(ABI 23-Sept-98)


PARADISE HOLDINGS: Seeks To Employ Financial Consultant
-------------------------------------------------------
The debtor, Paradise Holdings, Inc. fdba Java Centrale,
Inc., fdba Central Equipment Company, requests authority to
hire Stoneridge Capital, Ltd. as financial consultant to
the debtor.  The firm would assist with the comprehensive
strategic planning regarding finance, business plan and
reorganization, and assist with alternative to
restructuring of the debtor. The firm agrees to handle this
matter at its standard hourly rate of $200 per hour for
partners and $125 per hour for associates, plus
certain commissions.  A retainer in the sum of $10,000 was
paid to the firm prior to the bankruptcy filing.

By separate motion, the debtor seeks authority to implement
an employee retention program to minimize management and
other key employee turnover.  The debtor proposes paying a
bonus to key employees who remain employed with
the debtor through the completion of the sale of the
debtor's assets.


PARAGON TRADE: Procter & Gamble Files Contempt Order
----------------------------------------------------
Procter & Gamble Co. has filed a contempt of court motion
against Paragon Trade Brands Inc., a diaper manufacturer
that filed for chapter 11 protection after it lost a patent
infringement suit, according to a newswire report. Paragon,
which is based in Norcross, Ga., filed chapter 11 in
January after a judge ruled that it had infringed on
P&G's patent for leak-preventive Pampers and Luvs
disposable diapers. Paragon estimated it could face a
liability of up to $200 million. In the motion it filed in
Wilmington, Del., P&G charged that Paragon violated a
permanent injunction against patent infringement, stating
that it now sells diapers that are only different in color
than those they previously sold. P&G asked that Paragon be
ordered to stop manufacture and sale of the diapers,
refrain from introducing other "infringing variations"
and to send a letter to its customers notifying them that
resale of the current Paragon diapers would constitute
patent infringement. (ABI 23-Sept-98)


PARAGON TRADE: Views Contempt Filing As Without Basis
-----------------------------------------------------
Paragon Trade Brands, Inc. (NYSE: PTB) today responded to
The Procter & Gamble Company's recent filing with the  
Delaware District Court alleging Paragon violated a May
1998 injunction by continuing to sell a diaper which P&G
contends is covered by two of its dual cuff diaper patents.

Commenting on P&G's filing, Bobby Abraham, Chief Executive
Officer of Paragon, stated, "It is difficult for Paragon to
understand the basis of P&G's filing. First of all, the
disputed design which was the basis for P&G's original
claim and which led to the earlier ruling against Paragon
is a dual cuff design.  Our new product, which P&G is now
alleging infringes the same dual cuff patents, is a single
cuff design. Secondly, two major patent law firms have
independently  opined that the new design does not infringe
any valid claim of the relevant  P&G or Kimberly Clark dual
cuff diaper patents. Consequently, we find P&G's comment
that our new design is "no more than colorably different
from [our]  Ultra diaper" to be utterly without merit, and
we can only view this filing as an overreaching negotiating
tactic by P&G."

Abraham went on to say, "We have been meeting regularly
with P&G in an effort to resolve the issues surrounding the
patent infringement dispute between Paragon and P&G.  
Although economic terms and significant details are yet to
be finalized, we have felt that we have been making
significant progress in our settlement discussions with
P&G.  As part of those efforts, we gave P&G samples
of our single cuff diapers back in early July, as well as
access to design drawings and test data.  We believe that
we answered all of their questions on our new design.  We
were awaiting a response from P&G with respect to
definitive evidence we had given them that shows that our
single cuff diaper does not infringe their dual cuff
patents.  They did not respond prior to filing their motion
yesterday."  Mr. Abraham continued, "Yesterday's filing was
not only without basis but totally inconsistent with our
good faith efforts to reach an equitable settlement with
P&G. Over the past several months, we have worked
diligently to lay the ground work for emerging from Chapter
11.  Our goal has been to reach an equitable resolution of
the outstanding claims against the company, which would
allow us to protect the interests of our stakeholders while
at the same time not yielding to unjust economic
intimidation.  We are surprised and deeply disappointed at
this recent action by P&G."

As previously reported, the Delaware District Court issued
its judgment on December 30, 1997 finding that two of P&G's
dual cuff diaper patents were valid and infringed by
Paragon's Ultra diapers.  Damages in the amount of  
approximately $178.4 million and an injunction were entered
against Paragon in the Delaware Court.  As a result of the
P&G judgment, Paragon filed for relief under Chapter 11 of
the Bankruptcy Code on January 6, 1998.


PEGASUS GOLD: EPA Objects to Intercompany Settlement
----------------------------------------------------
The United States, on behalf of the Environmental
Protection Agency objects to the motion of Pegasus Gold
Corporation, and its affiliated debtors for an order
approving an intercompany settlement agreement.

The EPA objects to the motion because it provides for the
releases of non-debtors who, evidently, provided no
consideration in return for being released.  

The EPA states that PGC's property transfer motion must be
denied, notwithstanding that it is critical to the
confirmation of the plan proposed by the debtors.  The
post-petition transfer of valuable assets to the
reorganizing debtors gives rise to an administrative
expense claim on PGC's part for the fair value of the
property transferred.  However, the Reorganizing Debtors
propose to pay PGC in stock, not cash, violating 11
U.S.C. Section 1129(a) (9) (A)

By accepting inferior treatment under the plan, PGC
violates its fiduciary duty to its creditors who do not
have claims against the reorganizing debtors, and violates
its duties to federal and state regulatory and land
management agencies.


PEGASUS GOLD: US Fidelity  Objects to Citibank Settlement
---------------------------------------------------------
United States Fidelity and Guaranty Company objects to the
debtors' motion for approval of settlement agreement with
Citibank and other lenders.

As of the petition date, the banks were owed approximately
$82.5 million under the Credit Agreement and approximately
$15.975 under the Foreign Exchange contracts.

Pursuant to the settlement the banks will have allowed
claims against each debtor for $89.45 million for claims
under the Credit Agreement and allowed claims of $15.976
million for the Foreign exchange claims.

United States Fidelity and Guaranty Company argues that
this settlement is not reasonable.  The company states that
there is no "compromise."

While the outcome of the debtors' defenses to the bank
claims may be uncertain, the debtors have significant
positions for which they received no credit in the Bank
settlement.  According to the company the debtors
gave up their claim that the guarantees are fraudulent
conveyances; they gave up their claim that the banks' $17
million setoff was a breach of contract; no credit is given
by the banks for the $1.3 million to be received from the
Pullalli Proceeds or for the claim that the Banks are
only entitled to 65% thereof; no credit is given for the
continuing dropping of the Australian dollar; no credit is
given for amounts to be received from the Newco common
stock (approximately $45 million).

Finally, the Company argues that while there is an opinion
that the cost of litigating all of these issues would be
between $5 million and $10 million, the company believes
that this amount is excessive.  But even if true, the
Company argues that the Banks would have to expend an equal
amount, and since they are the principal creditors of most
of the distribution, they would, in effect, be bearing most
of the cost expended by the debtors.  The Company claims
that cost is a factor which should have impelled the Banks
to a more reasonable settlement.

In a companion motion the Company also seeks substnative
consolidation of the estates of Diamond Hill Mining, Inc.,
Florida Canyon Mining, Inc., Montana Tunnels Mining, Inc.,
Pegasus Gold International Inc., Beal Mountain Mining,
Inc., black Pine Mining, Inc., Pegasus Gold Montana
Mining, Inc. Pangea International Holdings Corp., Zortman
Mining, Inc., Pegasus Gold, Inc. and Pegasus Gold Corp.


PERK DEVELOPMENT: Landlord Objects to Extension
-----------------------------------------------
FFCA Acquisition Corporation, a party in interest, and
landlord to the debtor, Perk Development Corporation and
Brambury Associates, objects to the debtor's motion to
conditionally assume and assign leases of nonresidential
real property; or alternatively to extend the time to
assume or reject leases.

FFCA would consent to a very brief extension of the period
of time within which the debtors may assume or reject
nonresidential real property leases. FFCA argues that if
the debtors receive a long extension, any assignee will
be faced with four months of operation which are
traditionally a time when the restaurants operate at a cash
flow loss.


PHOENIX INFORMATION: Equity Seeks To Disqualify Ballots
-------------------------------------------------------
The Official Committee of Equity Security Holders of
Phoenix Information Systems Corp., Phoenix Systems, Ltd.
and Phoenix Systems Group, Inc., is seeking to disqualify
all ballots cast on the debtors' first amended joint
plan of reorganization, or in the alternative, to
disqualify the votes of the class of common stock
shareholders of Phoenix Information Systems Corp.
(class 6A). The Committee states that there were numerous
errors and improprieties in the plan solicitation process.

The plan provides that should class 6A vote to accept the
plan, notwithstanding the fact that certain members of the
class might vote against the plan, so long as the plan is
confirmed, all such members of the class shall be deemed to
release claims and causes of action against the debtors'
insiders and certain third parties.

The Committee argues that this release of claims is in
violation of the Bankruptcy Code and has been raised in the
objection, as but one objection to the confirmation of the
debtors' plan.

The insiders of the debtors control approximately 40% of
class 6A.  These same insiders are also the parties being
benefited by the release being provided under the plan.

It is the Committee's position that it is in bad faith for
the parties who will benefit most by the release be allowed
to vote in (and perhaps control) a class which vote could
then cause such class to accept the plan thereby compelling
such releases.  Therefore, the Committee asks that the
votes of Class 6A be disqualified.


SYQUEST TECHNOLOGY: Special Meeting of Stockholders
---------------------------------------------------
A special meeting of stockholders of SYQUEST TECHNOLOGY,
INC., a Delaware corporation, will be held on
October 7, 1998, at 10:00 a.m., Pacific Daylight Savings
Time, at the Company's principal executive offices at 47071
Bayside Parkway, Fremont, California 94538, to approve an
amendment to the Company's Restated Certificate of
Incorporation to effect a reverse stock split of one share
of Common Stock of the Company for every five to ten shares
of Common Stock that are issued and outstanding, with the
precise number of shares to be converted to be determined
by the Company's Board of Directors at a later time.


WESTBRIDGE CAPITAL: Case Update
-------------------------------
On the Petition Date, Credit Suisse First Boston
Corporation ("CSFB") and other creditors of Westbridge
Capital Corp., debtor, which together hold approximately
50% in principal amount of the Company's 11% Senior
Subordinated Notes due 2002 and 7-1/2% Convertible
Subordinated Notes due 2004,signed and delivered to the
Company lock-up agreements making certain undertakings and
representations for the benefit of the Company. Pursuant to
the Lock-Up Agreements, each institution has agreed,
among other things, that subject to the terms and
conditions set forth therein (i) it will support and vote
in favor of the Plan and (ii) it will not, directly
or indirectly, sell or otherwise transfer any of its Notes
or any interest or participation therein, other than to a
person who agrees in writing to be subject to the terms and
undertakings contained in the Lock-Up Agreements.

Pursuant to the Pre-Negotiated Plan, it is contemplated
that the Company will make certain cash distributions to
the holders of its 11% Senior Subordinated Notes. In order
to provide the Company with sufficient funds to make such
cash distributions, the Pre-Negotiated Plan provides that
the Company will issue to the holders of its 7-1/2%
Convertible Subordinated Notes as of May 20, 1998 rights to
purchase shares of a newly created series of convertible
preferred stock.  To ensure that sufficient shares of New
Preferred Stock are purchased from the Company, CSFB has
also entered into a Stock Purchase Agreement with the
Company pursuant to which CSFB has agreed to purchase all
of the shares of New Preferred Stock which are not
otherwise purchased pursuant to the Purchase Rights. The
New Preferred Stock to be purchased pursuant to the
Purchase Rights will initially be convertible into
approximately 41.4% of the common stock of the Company to
be issued on the effective date of, and pursuant to, the
Pre-Negotiated Plan.

Dividends on the New Preferred Stock will accrue at
an annual rate of 10.25% and will be paid in shares of
preferred stock of the Company having the same terms as the
New Preferred Stock. The New Preferred Stock will be
subject to mandatory redemption on the fifth anniversary of
the effective date of the Plan.

Pursuant to the Pre-Negotiated Plan, it is contemplated
that the Company will issue new common stock and new
warrants to the holders of its 7-1/2% Convertible
Subordinated Notes and existing preferred and common
stockholders.

At a first day hearing conducted on September 17, 1998, the
Bankruptcy Court entered various first day orders granting
the Company authority to, among other things: retain
certain bankruptcy professionals, maintain existing bank
accounts, cash management systems and investment
guidelines, and use existing business forms. The Bankruptcy
Court also established a bar date for filing proofs of
claim against the Company and established a date to
consider the adequacy of the Company's Disclosure
Statement.
         
In connection with the filing of the Pre-Negotiated Plan,
the Company also entered into employment agreements with
Patrick J. Mitchell, who was elected Chairman of the Board
and Chief Executive Officer of the Company on September 15,
1998 and retains his positions as President and Chief
Operating Officer, and Patrick H. O'Neill, the Company's
Executive Vice President, General Counsel and Secretary.


                 *********

The Meetings, Conferences and Seminars column appears in
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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.   

Copyright 1998.  All rights reserved.  ISSN 1520-9474.  
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