TCR_Public/981008.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, October 8, 1998, Vol. 2, No. 197

                  Headlines


AMERICAN RICE: Authority To Sell Comet Unit For $3 Million
AMERICAN RICE: Olive Sale On Hold
BLOCK TRADING: Plans To File Chapter 11
BOSTON CHICKEN: 20 Largest Unsecured Creditors
CALLAWAY COMMUNITY: Case Summary & 20 Largest Creditors

CHAMA INC: Case Summary & 20 Largest Creditors
CITYSCAPE: Files Chapter 11 Petition
DCH INC: Case Summary & 20 Largest Unsecured Creditors
EQUALNET CORPORATION: Case Summary & 20 Largest Creditors
INTERNATIONAL HERITAGE: Reports Filing Law Suit

INTERNATIONAL HERITAGE: Reports New Executive VP
JPE INC: Executes Letter of Intent With DGI Investments
LACLEDE STEEL: Trade Creditors Defer Balances Due
MANUGISTICS GROUP: Lays Off Workers
MEDICAL CENTER OF WINNIE: Summary & 20 Largest Creditors

MONTGOMERY WARD: Seeks OK To Sell Stores, Lease For $15 M
OXFORD HEALTH PLAN: Announces Medicare Action Plan
PENNCORP FINANCIAL GROUP: Supplement to Prospectus
SCHWEITZER MOUNTAIN: Court Clears Way For Sale
SOUTHERN PACIFIC: Working On Orderly Liquidation

                  *********


AMERICAN RICE: Authority To Sell Comet Unit For $3 Million
----------------------------------------------------------
The court has authorized American Rice to sell its Comet
Ventures Inc. subsidiary to Sage V Foods LLC, an entity
headed by a Comet officer, for approximately $3 million.  
Comet markets broken rice, rice oils, and rice extracts to
other food manufacturers, such as Frito-Lay and Quaker Oats
Co., which, in turn, use the materials for their finished
product.  The subsidiary, which operates out of American
Rice's Freeport, Texas, facility, also sells whole grain
rice to industrial markets, according to the rice milling
and marketing company's motion. (Federal Filings Inc. 06-
Oct-98)


AMERICAN RICE: Olive Sale On Hold
---------------------------------
The final hearing on the sale by American Rice Inc. of its
olive division, currently set for October 7, 1998 has been
continued indefinitely.


BLOCK TRADING: Plans To File Chapter 11
---------------------------------------
Block Trading, which was on the forefront of a trading
technique called day trading, has closed its doors after
depleting its capital.

"Common to many small businesses, whose excessive growth
outpaces its capacity, Block Trading's expenses have
exceeded its revenues," Christopher Block, company founder
and chief executive officer,  said Tuesday.

The Houston-based company, which has 92 employees in 17
offices in 10 states, blamed its downfall on runaway
expenses associated with the development of its own trading
software.

Block Trading plans to file for Chapter 11 protection from
its creditors under bankruptcy law and will try to
reorganize as a software company, Block  said.

Block customer accounts are being transferred to other day-
trading firms. Block's Austin office at 1601 Rio Grande
St., which opened in January 1996, closed two months ago
after brokers and traders "defected" to Block competitors,
Block said. At one point, the office had 26 employees,
although it had only one trader by the time it closed.

Most, if not all, of the local accounts were transferred to
CyBerCorp or Cornerstone Securities in Austin, Block said.
Block Trading gained widespread recognition by enabling
non- professional investors to make big money by profiting
from extremely quick moves in stock prices, cutting into
the spread created by marketmakers.

"Excessive expenditures devoted to developing proprietary
Block Trading day-trading software that would set the
company apart from its competitors dropped the corporation
below the fund levels required by the Securities and
Exchange Commission," Block said.

Block and his co-founder, Jeff Burke, established Block
Trading in 1994 when they were both 27. They parlayed the
popularity of day trading into a cover story by Inc.
magazine and articles in other publications.  Last October,
the University of Houston's Small Business Development
Center put Block Trading at the top of its Houston 100 list
of the area's fastest-growing small private firms.

Block said one of the biggest sources of his company's
problems was that many of its branch offices around the
nation defected to Block competitors when it was trying to
enlist their financial support to recapitalize.
Many branch offices "literally changed the name on the door
with 24 hours' notice," Block said. "We had lost half a
dozen offices in the last six months," he said.

American-Statesman staff writer Earl Golz contributed to
this report. (Austin American Statesman - 10/01/98)


BOSTON CHICKEN: 20 Largest Unsecured Creditors
----------------------------------------------
                                  Nature           Amount
                                  ------           ------

Banker's Trust Company            Bonds       $249,518,000
Chase Manhattan Bank              Bonds       $124,504,000
Harris Trust & Savings Bank       Bonds        $60,073,000
Loomis Sayles & Company           Bonds       $125,196,000
Trendex Capital Management        Bonds        $25,000,000
Dain Rauscher                     Bonds        $33,305,000
Richard Lehman                    Bonds         $5,859,000
Nadhir, Saad J.                                 $1,872,617
Beck, Scott A.                                  $1,628,940
Ley, Frederick W.                                 $230,770
Hohl, Larry D.                                    $230,770
Graves, Gary A.                                   $230,770
Lexis Document Services Inc.     Vendor Unliq.    $188,486
Frontenac VI Limited Partnership                  $158,709
1989 Ryan Family Trust                            $126,499
Bowana Foundation                                 $125,508
OBG Holdings, Inc.                                $116,651
Lewis, Charles A.                                 $113,081
Triune Venture Parners III, LP                    $109,575
B.B. Trust, B.B. Trust Company Ltd.                $98,559


CALLAWAY COMMUNITY: Case Summary & 20 Largest Creditors
-------------------------------------------------------
Debtor:  Callaway Community Hospital Assoc.
         10 South Hospital Drive
         Fulton, Missouri 65251-2513

Affiliates of the debtor are DCH, Inc., CHAMA Inc., Medical
Center of Winnie, Inc., and  Colusa Community Hospital
Association

Court: District of Delaware

Case No.: 98-2253   Filed: 10/3/98    Chapter: 11

Debtor's Counsel: Laura Davis Jones
                  Young Conaway Stargatt & Taylor LLP
                  11th Floor, Rodney Square North
                  P.O. Box 391
                  Wilmington, Delaware 19899-0391
                  (302) 571-6600

20 Largest Unsecured Creditors:

   Name                                       Amount
   ----                                       ------
TriSpan Health Services                     $378,317
University of Missouri-Physicians           $271,219
University of Missouri                      $144,461
Healthline Management                       $124,490
Owen Healthcare                              $61,170
Accelerated Receivables Mngmt                $49,465
City of Fulton                               $42,208
Biomet, Inc.                                 $39,447
IRS                                          $37,104
Burrows Company                              $19,196
University of Missouri                       $18,543
Missouri Cardiovasular Specialists           $17,955
Abbott Laboratories                          $17,077
Mid-State Petroleum Equipment, Inc.          $15,398
Boyce and Bynum Pathology                    $15,301
Medical Anesthesia Service                   $14,950
Metropolitan Life                            $13,756
Diagnostic Health Services                   $12,400
Picker International                         $11,227
Healthlink                                   $10,495


CHAMA INC: Case Summary & 20 Largest Creditors
----------------------------------------------
Debtor:  CHAMA, Inc.
         305 N.E. 102nd Avenue
         Portland, Oregon
         97220

Affiliates of the debtor are DCH, Inc., Callaway Community
Hospital Association, Medical Center of Winnie, Inc. Colusa
Community Hospital Association

Court: District of Delaware

Case No.: 98-2252  Filed: 10/3/98   Chapter: 11

Debtor's Counsel: Laura Davis Jones
                  Young, Conaway, Stargatt & Taylor LLP
                  11th Floor, Rodney Square North
                  P.O. Box 391
                  Wilmington, Delaware 19899-0391
                  (302) 571-6600

20 Largest Unsecured Creditors:

   Name                              Amount
   ----                              ------
Quadramed                           $2,873,617
Community Health Mgmt Services        $333,257
Nationsbank                           $200,000
Vinson & Elkins LLP                   $183,490
Moss-Adams LLP                        $132,388
Campbell Wilson                        $59,872
General Services Administration        $25,578
Career Decision, Inc.                   $7,500
Ruehle & Assoc.                         $6,245
Zurich-American                         $6,121
Lux Engineering                         $5,500
Neil Johnson                            $2,500
Partners Healthcare Group               $2,400
Bass, Berry & Sims                      $2,292
Family Physician Recruiter              $1,838
Riley & Dunlap PC                       $1,701
CT Corporation                          $1,204
Commerce Bank                           $1,000
John Fisher RADM                          $500


CITYSCAPE: Files Chapter 11 Petition
------------------------------------
Cityscape Financial Corp. and its Cityscape Corp. unit
filed a prepackaged reorganization plan under Chapter 11 in
the U.S. Bankruptcy Court for the Southern District of New
York.

Cityscape Financial said it expects court confirmation
despite the rejection of the plan by series B preferred
shareholders.

Holders of senior notes, convertible subordinated
debentures and series A preferred shares approved the
reorganization.

Cityscape Financial and CSC will be debtors-in-possession
and will continue to operate their business, subject to the
supervision and orders of the Bankruptcy Court.

Separately, the company announced that it has received
commitments from Greenwich Capital Financial Products Inc.,
The CIT Group/Equipment Financing Inc. and Nomura Asset
Capital Corp. to provide $250 million of debtor- in-
possession financing.

The company announced that it intends to ask the Bankruptcy
Court to set a hearing on confirmation of the
reorganization plan as expeditiously as possible, which the
company anticipates to be in one to two months.
(UPI:WallStreet - 10/07/98)


DCH INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor:  DCH, Inc.
         2174 West Oak Avenue
         Cochise County, Arizona

Affiliates of the debtor are Chama, Inc., Callaway
Community Hospital Association, Medical Center of Winnie,
Inc., Colusa Community Hospital Asscoiation

Court: District of Delaware

Case No.: 98-2250 Filed: 10/3/98    Chapter: 11

Debtor's Counsel: Laura Davis Jones
                  Young Conaway Stargatt & Taylor LLP
                  11th Floor, Rodney Square North
                  P.O. Box 391
                  Wilmington, Delaware 19899-0391
                  (302) 571-6600

20 Largest Unsecured Creditors:

   Name                              Amount
   ----                              ------
Intergroup of Arizona                $400,000
NES Arizona, Inc.                    $138,206
Bergen Brunswig Drug Co.              $58,177
HDS Service                           $50,909
Medline Industries Inc.               $45,887
Romero Construction                   $45,680
Marriott Laundry Services             $35,134
Quadramed Corporation                 $34,667
Priority Pharmaceuticals              $23,783
Sonora Quest Laboratories             $15,898
Owens & Minor                         $15,170
Abbott Laboratories                   $15,048
Arizona Public Service                $14,064
CIC Agency                            $12,545
Auto Suture                           $12,072
Sterling Medical Management           $11,135
Picker International                   $8,678
Scientific Products Division           $7,396
Kentec Medical Inc.                    $7,267
Bracco Diagnostics, Inc.               $6,704


EQUALNET CORPORATION: Case Summary & 20 Largest Creditors
---------------------------------------------------------

Debtor:  EqualNet Corporation
         1250 Woodbranch
         Houston, Texas 77079

Type of business: Long Distance Telephone Service

Court: Southern District of Texas

Case No.: 98-39561-H5-11    Filed: 09/10/98    Chapter: 11

Debtor's Counsel: Thomas Kirkendaal
                  Kirkendall, Isgur & Foltz LLP
                  700 Louisiana
                  Suite 4200
                  Houston, Texas
                  

Total Assets:              $20,726,000
Total Liabilities:         $57,305,000

No. of shares of common stock         2000 (1 holder)

20 Largest Unsecured Creditors:

   Name                        Nature of Claim  Amount
   ----                       ---------------   ------
EqualNet Communications Corp.     Affiliate     $40,662,000
AT&T         Trade         $5,488,609
Sprint        Trade         $1,275,478
WorldCom        Trade         $376,205
Netco Acquisitiion Corp.          Affiliate     $318,000
Caprock Communications            Trade         $250,603
Universal Service Fund            Trade         $259,798
Corestaff                         Trade         $142,005
SNET Diversified Group            Trade         $120,266
Centillion Data Systems           Trade         $117,176
IXC                               Trade         $125,000
SONY Signatures                   Trade         $100,000
Bell South                        Trade         $88,352
BlueGate Systems                  Trade         $80,000
Comerica                          Trade         $78,455
TCG                               Trade         $72,261
Bell Atlantic                     Trade         $71,572
BMS Management                    Trade         $60,932
Southwestern Bell                 Trade         $50,000
MFS Telecom, Inc.                 Trade         $47,463


INTERNATIONAL HERITAGE: Reports Filing Law Suit
-----------------------------------------------
On September 24, 1998, International Heritage Inc. filed an
action in the General Court of Justice, Superior Court
Division, Wake County, North Carolina, versus Douglas L.
Sims, David L. Tillman, Mark Ledger, Kim Ledger, Jon Slade
Lewis, Cindy Lewis, Tim Angus, Lana Angus, Jeff Yates,
Alice Yates, Adam Ragland and Unique Opportunities, Inc.,
case number 98 CVS 11169.  The Company alleges inter
alia: breach of contract, breach of fiduciary duty,
tortious interference with contract, and as a result of the
immediate and irreparable harm that will be
created by the ongoing and continuous breach of the
Defendants' contracts and tortious interference with the
contractual relationship between the Company
and its current Independent Retail Sales Representatives
("IRSRs"), Plaintiff's have requested a temporary
restraining order and preliminary and permanent injunction
be entered by the Court.


INTERNATIONAL HERITAGE: Reports New Executive VP
------------------------------------------------
International Heritage Incorporated reports to the SEC that
on September 21, 1998 the Company's Board of Directors
appointed O. Kenneth Rudd, III to serve as Executive Vice
President of the Company.  Mr. Rudd currently serves on the
Company's Board of Directors and has previously
been employed as the Company's Executive Vice President of
Sales.  Mr. Rudd will continue to serve as the Company's
Executive Vice President of Sales only with expanded duties
and responsibilities as an officer of the Company.


JPE INC: Executes Letter of Intent With DGI Investments
-------------------------------------------------------
JPE Inc. (OTC BB:JPEI) announced today that it has signed a
letter of intent with Toronto, Ontario- based DGI
Investments Inc., pursuant to which DGI, or its affiliate,
would acquire a controlling interest in JPE for a cash
payment of $10 million, and current shareholders of JPE
would receive a special payment of $1.25 per outstanding
share of JPE common stock, designed to partially offset the  
dilution to their ownership positions as a result of the
DGI investment, while retaining a minority interest in a
recapitalized JPE.

The proposed transaction is subject to a number of
significant conditions, including DGI's satisfaction with
its due diligence review of JPE, its operations and
properties; DGI reaching satisfactory arrangements with
JPE's creditors; approval of the company's principal
automobile manufacturing customers; and compliance with
applicable requirements relating to the bankruptcy
proceedings involving JPE subsidiaries Starboard Industries
Inc. and Plastic Trim Inc. There can be no assurance that
the proposed transaction will be consummated, and JPE
cautions that the conditions to moving forward
with the  proposed transaction are much more significant
than customary in transactions  involving more financially
viable companies than JPE. It is anticipated that DGI will
complete its due diligence and satisfy substantially
all of the  conditions in the next 35 days.

JPE also announced that following its annual meeting of
shareholders held on Sept. 30, directors John F. Daly and
Donald R. Mandich resigned from the Board and that Richard
P. Eidswick was appointed as a director.


LACLEDE STEEL: Trade Creditors Defer Balances Due
-------------------------------------------------
As stated in the Quarterly Report on Form 10-Q of Laclede
Steel Co. for the third quarter, the company has held
discussions with certain trade creditors regarding
outstanding accounts payable balances. As a result of these
discussions, payment of a significant portion of
outstanding accounts payable balances has been deferred.

Consistent with this effort, the company has notified the
trustee on its unsecured $12,000,000 Pollution Control
Revenue Bonds, Series 1976 that the Registrant is not at
this time making the payment due October 1,1998 on the PCR
Bonds.The principal amount outstanding, as of September 30,
1998, under the PCR Bonds was $8,040,000. Also, as
previously discussed in the third quarter 10-Q, the
registrant is in now in the later stages of developing a
comprehensive restructuring plan.  This plan includes
negotiations with the United Steelworkers in connection
with the Registrant's request that there be a  
restructuring of both the collective bargaining
agreement for the Alton, Illinois employees and the retiree
benefit plans.  

Preliminary discussions also have occurred with the Pension
Benefit Guaranty Corp. regarding both of the Registrant's
hourly and salaried defined benefit plans.  However, there
is no assurance that the restructuring plan will be
successful. (States SEC - 10/06/98)


MANUGISTICS GROUP: Lays Off Workers
-----------------------------------
Supply chain management software provider
Manugistics Group Inc., Rockville, Md., has laid off 6
percent of its workforce in a restructuring following the
company's second quarter net loss of $6 million, disclosed
last month, according to Supply Chain Report. The company
has lost $14.5 million in the first six months of the
fiscal year, compared to net income of $4.9 million in the
same period last year. (The Daily Bankruptcy Review and ABI
Copyright c October 7, 1998


MEDICAL CENTER OF WINNIE: Summary & 20 Largest Creditors
---------------------------------------------------------
Debtor:  Medical Center of Winnie Inc.
         538 Broadway
         Winnie, Texas 77665

Affiliates of the debtor are DCH, Inc., CHAMA, Inc.
Callaway Community Hospital Association, and Colusa
Community Hospital Association

Court: District of Delaware

Case No.: 98-2254   Filed: 10/3/98    Chapter: 11

Debtor's Counsel: Laura Davis Jones
                  Young Conaway Stargatt & Taylor LLP
                  11th Floor, Rodney Square North
                  P.O. Box 391
                  Wilmington, Delaware 19899-0391
                  (302) 571-6600

20 Largest Unsecured Creditors:

   Name                                       Amount
   ----                                       ------
Mutual of Omaha                           $1,089,300
Puckett Laboratory                           $31,986
American Medical Response                    $29,868
McKesson General Medical                     $25,712
U.S. Attorney's Office                       $24,138
Health Enhancement Group                     $21,850
Allegiance Healthcare Corp.                  $20,962
Spectrum Financial Service                   $20,841
GE Medical Systems                           $20,828
Aman ali Jafar MD                            $18,004
Smithkline Beecham CLN Lab                   $17,253
Leonidos Andres, MD                          $16,915
Office Depot                                 $14,849
Fisher Healthcare Company                    $14,114
Allsup Inc.                                  $13,089
Sullivan Kelly & Assoc                       $12,480
MCI Telecommunications                       $12,278


MONTGOMERY WARD: Seeks OK To Sell Stores, Lease For $15 M
---------------------------------------------------------
Montgomery Ward is asking the court to approve the sale of
two properties and the assignment of one lease
and another sublease, all in Minnesota, to a Saks Inc.
subsidiary for $15 million.  The sites owned by the
retailer are located in the Rosedale Shopping Center in
Roseville and a property in Midway Market Place in St.
Paul.  Montgomery Ward also is seeking to assume its lease
in Bloomington, obtained in 1957, which includes a portion
of the property subleased to Toys "R" Us Inc., and will
assign those leases to the buyer.  The proposed sale is
subject to higher bids and Montgomery Ward is asking the
court to approve a total of $300,000 in breakup fees for
the stalking horse bidder, in the event Montgomery Ward
fails to convey any part of the multi-asset package.
(Federal Filings Inc. 06-October-98)


OXFORD HEALTH PLAN: Announces Medicare Action Plan
--------------------------------------------------
Oxford Health Plans (NASDAQ: OHXP) announced on October 5,
1998, its Medicare action plan, following a successful site
visit by the Health Care Financing Administration (HCFA),
the federal agency that administers the Medicare Program.
The agency has accepted Oxford's corrective action plans,
clearing the way for the Company's continued participation
in the Medicare program in 1999.

HCFA's review earlier this month was a follow-up to a
February on-site review of Oxford's operations. In June,
Oxford voluntarily suspended marketing and most
enrollment of new members under its Oxford Medicare
Advantage Plans in New York, New Jersey, Connecticut and
Pennsylvania in order to strengthen its operations
and initiate certain corrective actions required by HCFA.

"Last month, we announced Medicare arrangements with
leading providers in Long Island and New Jersey, which
underscores our commitment to continue participation in
this important program," said Norman C. Payson, M.D.,
Oxford's chief executive officer. "Today, we are pleased to
be able to continue offering our Medicare plan in areas
serving the vast majority of our members. We're also
extremely pleased that HCFA's thorough review found
substantial improvements in our core operations." The
Company noted that HCFA will continue to monitor its
operations to ensure that Oxford continues to comply with
its corrective action plans and improve operating
performances in key areas, including claims turnaround.

"Restructuring the Company's Medicare program is an
important part of our overall turnaround plan. We recognize
that the unique characteristics of the Medicare population
require different healthcare management strategies," Dr.
Payson said. "In some areas, we are unable to continue
offering our Medicare plans without significant involvement
of hospital and physician groups in the provision and
management of care for our members. We have worked
tirelessly to solicit that involvement and have largely
been successful. However, in counties representing about 17
percent of our membership where these arrangements could
not be completed, we have made the difficult decision to
exit the business."

Current members in the counties Oxford is exiting will have
several options:

They can remain with Oxford through the end of 1998 and
automatically be transferred back to regular Medicare
effective January 1, 1999.  They can opt to disenroll from
Oxford Health Plans and return to regular fee-for-service
Medicare any time between now and the end of
the year. Members who want to purchase a Medicare
supplemental ("Medigap") health insurance policy will be
given a list of carriers that offer supplemental coverage.

They can decide to join another HMO or competitive medical
plan in their area that contracts with Medicare.

Until disenrollment is effective, all Oxford members must
continue to use Oxford Health Plans providers.
Oxford Health Plans, Inc. is based in Norwalk, Connecticut.


PENNCORP FINANCIAL GROUP: Supplement to Prospectus
--------------------------------------------------
Penncorp Financial Group Inc. filed an Eighth Supplement to
Prospectus, dated October 5, 1998 with the SEC, amending
and supplementing the Prospectus dated March 9, 1998, as
amended and supplemented, relating to the offer and sale by
the Selling Securityholders of (i) (x) up to 2,875,000
shares of $3.50 Series II Convertible Preferred Stock, par
value $0.01 per share of the Company and (y) up to
4,118,911 shares of common stock, par value $0.01 per
share, of the Company or such other number of shares of
Common Stock resulting from an adjustment to the conversion
price of the Convertible Preferred Stock pursuant to the
antidilution provisions of the Certificate of Designation
governing the Convertible Preferred Stock issuable upon
conversion of the Convertible Preferred Stock, and (ii) the
offer and sale by the Company of the Common Stock issuable
upon conversion of the Convertible Preferred Stock.


SCHWEITZER MOUNTAIN: Court Clears Way For Sale
----------------------------------------------
Schweitzer Mountain Resort can be sold within the next two
months to help pay more than $28 million in debts, a
federal bankruptcy judge ruled Friday.  U.S. Bankruptcy
Judge James D. Pappas confirmed the creditors' plan to put
the ski hill on the auction block.  Judge Pappas also
agreed that the $18 million appraisal for Schweitzer is
fair.

U.S. District Judge Edward Lodge also has to approve the
sale. That is expected to happen in the near future - much
to the pleasure of the largest creditor, U.S. Bank.
Pappas was supposed to rule on the creditors' plan to sell
the resort in mid- September. But Brown and Huguenin won a
last-minute delay. They have repeatedly tried to stop the
sale and earlier submitted their own reorganization plan
that included backing from an investor they refused to  
name.  Creditors earlier favored selling Schweitzer to
Harbor Properties of Seattle for $18 million. Now the
resort will be put up for bid. Five interested buyers
attended the hearing in Bankruptcy Court in Boise on  
Friday, attorneys said.

Once the resort is sold, part of the proceeds will go to
cover $1.4 million owed to the unsecured creditors -
ranging from Washington Water Power to bread suppliers,
Isserlis said. The rest of the money will go to U.S. Bank,
which is  owed nearly $24 million.

The remainder of the debt could be covered by the court-
supervised sale of other real estate owned by the family.
(Copyright 1998 Cowles Publishing Company - Spokesman
Review-10/04/98)


SOUTHERN PACIFIC: Working On Orderly Liquidation
-------------------------------------------------
Southern Pacific Funding Corporation announced today that
it is working to develop a plan for orderly liquidation of
its assets through its Chapter 11 bankruptcy
case commenced on Oct. 1, 1998. The company's Chapter 11
petition lists total assets and debts of about $1.17
billion and $1.02 billion, respectively

Following a court hearing on Thursday, Greenwich Capital
Markets, Inc., declined to advance funds pursuant to the
post-petition credit facility previously negotiated with
the Company because court approval was not received as to
certain financing terms. Accordingly, Southern Pacific
Funding has notified its brokers that funding of mortgage
loans has been halted permanently and is taking steps to
maximize the value of its assets for the benefit of its  
creditors.

Separately, the New York Stock Exchange suspended trading
in Southern Pacific Funding's common stock and 6.75%
convertible notes due Oct. 15, 2006 (NYSE:SFC  
and SFC 06) prior to the market opening on Friday. The NYSE
intends to apply to the Securities and Exchange Commission
to delist the issues.

E. James Hedemark, Chief Executive Officer, said "The
Company recognizes its responsibility to its creditors and
will deal fairly and honestly with its creditors. The
Company recognizes the hard work and loyalty of its
employees  who have given so much to the Company,
especially in recent days. To its maximum ability, the
Company pledges to assist its employees during this  
transition. The Company's employees are highly skilled and
valuable people and are not responsible for the Company's
financial position."
                  
                   ********
     
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