TCR_Public/990514.MBX T R O U B L E D   C O M P A N Y   R E P O R T E R
     Friday, May 14, 1999, Vol. 3, No. 93


CRIIMI MAE: Court Extends Exclusive Period
GOLDEN BOOK: Says Rebuilding is On Track
HOMEPLACE: Disclosure Statement
JUMBOSPORTS: Seeks Extension To File Plan
KIA: Hyundai to Recapitalize Kia - More Than 1 Tillion Won

LESLIE FAY: Two Funds Expected To Purchase 51% of Shares
LOGAN HOSPITAL: Fighting Off Bankruptcy
MARCO'S: Creditors Seek Appointment of Trustee
MICROFLUIDICS: Signs Forbearance Agreement With Comerica
NEW DEAL PROJECTS: Seeks Order Dismissing the Case

PHILIP SERVICES: Reports 1999 First Quarter Results
PHONETEL TECHNOLOGIES: Begins Solicitation of Acceptances
RAYTECH: First Quarter Results
SOUTHERN PACIFIC: Goldman Sachs Offers $35 Million

STARTER CORP: Applies To Retain Willkie Farr & Gallagher
TAPAJOS GOLD: Arrangement Agreement With Highgrade Ventures
UNITED COMPANIES: Italian Company Looks For Conflicts
UNITED COMPANIES: Shareholders Question Sale Price
UNITED COMPANIES: Wins Nod for Sale to Aegis



CRIIMI MAE: Court Extends Exclusive Period
The United States Bankruptcy Court overseeing the Chapter
11 reorganization of CRIIMI MAE Inc. (NYSE: CMM) has  
granted the company's motion for an extension of the
periods within which  CRIIMI MAE Inc. and two affiliates
have the exclusive right to file plans of  reorganization
and solicit acceptances of those plans.

* The court extended the period during which CRIIMI MAE and
its affiliates have the exclusive right to file a plan of
reorganization through and including August 2, 1999.

* The court also extended the period during which CRIIMI
MAE and its affiliates have the exclusive right to solicit
acceptance of a plan of reorganization through and
including October 3, 1999.

CRIIMI MAE is continuing discussions with several equity
institutional investors and expects final proposals within
the next few weeks.  The plan process is proceeding and the
Company anticipates filing a plan of reorganization by
August 2, 1999.

On October 5, 1998, CRIIMI MAE and two affiliates filed for
protection under Chapter 11 of the U.S. Bankruptcy Code.  
Before filing for reorganization, CRIIMI MAE had been
actively involved in acquiring, originating, securitizing  
and servicing multifamily and commercial mortgages
and mortgage related assets  throughout the United States.
Since filing for Chapter 11 protection, CRIIMI MAE has
suspended its loan origination, loan securitization and
CMBS acquisition businesses. The company, however,
continues to hold a substantial  portfolio of subordinated
CMBS and, through its servicing affiliate, acts as a  
servicer for its own as well as third party

GOLDEN BOOK: Says Rebuilding is On Track
The Milwaukee Sentinel & Journal reports on May 11, 1999
that executives at financially distressed Golden Books
Family Entertainment Inc. said Monday that the company's
Chapter 11 reorganization should be completed by the end of
the summer.

"We feel very confident that things are going just as
expected," Philip Galanes, chief administrative officer of
the New York-based publisher of children's books, said
after a hearing Monday on the plan in a New York   
federal court.

Golden Books, which filed to restructure its debt under
federal bankruptcy laws in February, also reported first-
quarter results Monday that showed the  company had gotten
a handle on costs but suffered a 20% decline in revenue.

Golden Books reported an operating loss of $2.7 million,
compared with a loss of $13 million during the same period
last year. The company reported quarterly revenue of $34.8
million, compared to $46.8 million in 1998.

"This was slightly better than I had been looking for from
a cash-flow standpoint," said Steve Schoene, a high-yield
analyst with Miller Tabak Hirsch & Co. in New York.
"Earnings per share aren't as important at this point. It's  
really the amount of cash they are generating."

Schoene said sales had declined because customers such as
Target and Toys R Us had scaled back orders because of the
financial uncertainty surrounding Golden Books.

"If that's the case, then revenue can be brought back when
the bankruptcy is resolved," he said.

Galanes acknowledged that sales had declined in part
because of customer uncertainty but also because the
company had eliminated low-margin products.

"The next move is to bring our attention to the sales
line," Galanes  said. "The whole reorganization process has
made people a little shy of us. We hope that as we move
forward and people see us with a few more quarters like the
one that we've just posted they'll see that we are here to

A reorganization could help the company in its quest to
sell the operation it owns in Sturtevant, where 600 people
are employed. Galanes said the company has not found a
buyer, but continues to meet with interested parties.

Under the plan announced in February, holders of preferred
and common stock would surrender their stock for out-of-
the-money warrants, giving them the right to buy 5% of a
new issue of the company's stock, with  two-thirds going  
to preferred shareholders and a third to common  

Golden Books shares closed Monday at 34 cents a share, up 3

HOMEPLACE: Disclosure Statement
The US Bankruptcy Court for the District of Delaware
entered an order on April 29, 1999 approving the Disclosure
Statement dated April 28, 1999 with respect to the debtors,
HomePlace Stores, Inc., et al.  The hearing to consider
confirmation of the plan shall commence on June 3, 1999 at
2:30 PM. May 26, 1999 at 4:00 PM is fixed as the last date
for filing and serving objections to confirmation of the

Estimated recoveries for unsecured creditors range from
76.1% to 79.7%, depending upon the amount of claims that
will actually be allowed and the number of unsecured
creditors that choose to accept the cash election offer.  
The Official Committee of Unsecured creditors of HomePlace
Stores, Inc. et al. recommends acceptance of the plan.

The plan is premised on a merger of Waccamaw and New
HomePlace and the conversion of all of the HomePlace
Group's prepetition Allowed Unsecured Claims into equity in
the surviving, post-merger entity.  The effect of the
merger and the subscription offer transactions is that upon
the Effective Date of the Plan the Waccamaw Shareholder
will own 56.2% of the stock of the combined company.  

Summary of Classification and Treatment of Claims and
Equity Interests Under the Plan:

Class 1 Priority Non Tax Claims - Unimpaired.($0)

Class 2 Other Secured Claims - Unimpaired. ($1,000)

Class 3 National City Secured Claims Impaired- National
City will receive Restructuring Treatment and will receive
a Restructuring Note in the allowed amount of its secured
claim, with interest at the non-default contractual rate
set forth in  the Maxus/National City financing
Transactions paid quarterly, with a balloon for the full
principal amount of the Allowed Secured Claim due on the
5th anniversary of the Effective Date. (No more than

Class 4 Maxus Secured Claims - Impaired. Restructuring
Treatment and will receive Restructuring Note in the
allowed amount of its secured claim with interest as
provided National City. (No more than $37,000)

Class 5 Unsecured Claims - Impaired. Each holder will
receive ratable proportion of the creditor Distributable
Shares of New Common Stock or each holder may accept the
cash election offer. ($185,000,000-$205,000,000)

Class 6 Convenience Claims - Unimpaired ($84,300)

Class 7A Old Series A Preferred Stock - Impaired. Each
holder will receive a ratable proportion of 22% of the
equity shares and 22% of the new preferred warrants.

Class 7B Old Series B Preferred Stock - Impaired - Same
treatment as 7A.

Class 7C Old Series C Preferred Stock - Impaired Each
holder shall receive a ratable proportion of 56% of the
equity shares and 56% of the new preferred warrants.

Class 8 Old Common Stock - Impaired deemed rejected and not
entitled to vote. No distribution.

Class 9 - Other equity interests - Impaired - deemed
rejected and not entitled to vote. No distribution.

Class 10 - Subsidiary Common Stock - Impaired - deemed to
have accepted the plan.

JUMBOSPORTS: Seeks Extension To File Plan
JumboSports Inc. and its debtor affiliates request an
extension of the deadline to file a plan of reorganization
through and including September 3, 1999 and provided that
the debtors file a plan within that time, an extension of
the debtors' exclusivity period through November 3, 1999.  
At the request of the Committees, however, the debtors have
agreed to limit their exclusivity period in the event of
termination of the employment of Alfred Fasola, Michael
Worrall, and Tom Noonan.  The debtors assert that there are
recent developments that further justify an extension of
the deadline to file a plan of reorganization and an
extension of the corresponding exclusivity periods.  The
debtors, led by new management have implemented an
aggressive business restructuring program that includes the
remodeling of five of JumboSports' current stores and a
resumption of JumboSports' prior trade name of "Sports a &
Recreation".  In order to emerge from Chapter 11, the
debtors will have to either negotiate an exit financing
facility with Foothill Capital Corporation or find funds
from another lender that would pay off the Foothill loan in
full.  The existence of sufficient collateral to support
exit financing from Foothill will be dependent on the
success of the debtors' business restructuring plans and
the way that the trade creditors continue to view the
debtors' business operations.  The initial reaction of
vendors has resulted in promises of substantially increased
trade credit.

KIA: Hyundai to Recapitalize Kia - More Than 1 Tillion Won
SEOUL - South Korea's Hyundai Group said Thursday that it
would reduce the debt-to-equity ratio of Kia Motors to 180
percent by the end of the year through recapitalization of
more than 1 trillion won (US$833 billion).  Hyundai
Motor took over the bankrupt Kia and its truck-making
affiliate Asia Motor last December. Kia remains an
independent entity after the takeover. Kia's financial
status improved radically after Hyundai fully paid for its
stocks in March, an official of Hyundai Group's
restructuring team said.

LESLIE FAY: Two Funds Expected To Purchase 51% of Shares
Newsday reports on May 13, 1999 that according to     
Leslie Fay Co., two private investment funds plan to buy a
51 percent  stake in the once-bankrupt women's apparel
maker for as much as $23 million.

The two funds bought 2.16 million shares, or a 36 percent
stake, for $6.95 a share from Dickstein Partners Inc.,
Leslie Fay's largest shareholder. The funds advised by New
York-based investment firm Three Cities Research Inc.
They may also purchase an additional 1.11 million shares
for $7 a share in cash, the company said. At the same time,
Manhattan-based Leslie Fay said it plans to repurchase up  
to 1 million of its approximately 6 million shares
outstanding for $7 a share. That's a premium of 9.8 percent
more than Leslie Fay's closing price yesterday of $6.37

Dickstein agreed to sell another 250,000 shares to either
the funds or the company. Leslie Fay and the funds will
purchase the rest of the shares they are seeking in the
open market, said Chief Financial Officer Warren Wishart.
Leslie Fay also said Mark Dickstein and Chai Edelstein
resigned from the company's board. Three Cities nominees H.
Whitney Wagner and Thomas Weld have been appointed to the
eight-member board, Leslie Fay said. Shares in Leslie Fay
have fallen 29 percent at yesterday's close from a 52-
week high of $9 on July 21.

LOGAN HOSPITAL: Fighting Off Bankruptcy
Logan General Hospital is off to a strong start as it seeks
to stave off bankruptcy, a court-appointed examiner has

The 132-bed hospital in Logan has revamped its board of
directors, reshuffled administrators and reviewed top
salaries, Robert Whitler reported recently to U.S.
Bankruptcy Judge Ronald Pearson.

This week, a mall spearheaded by Monterra Development, a
for-profit sister company, and nearly two dozen properties,
are to be auctioned off. Already, $750,000 has been raised
in auctions of construction equipment to pay debts incurred
by the strip mall.

Monterra Marketplace owes $81 million in liens and debts,
including $29.5 million it borrowed from Logan General to
build the mall. Meanwhile, Monterra Development has racked
up about $7.6 million in liens and debts. The report does
not recommend reduced service or cuts in the hospital's
800-member staff. The hospital filed for bankruptcy
protection in October.

MARCO'S: Creditors Seek Appointment of Trustee
Creditors of Marco's Mexican Restaurant, Original Pasta Co.
and the Billy Blues Barbecue restaurants filed a motion
asking Bankruptcy Judge Manuel Leal to replace Ghulam
Bombaywala, who heads up the operations, with a court-
appointed trustee, The Houston Chronicle reported.
Creditors' committee members said Bombaywala is incompetent
and has mismanaged the restaurants, and that if action
isn't taken, there may not be much value left in the
company. Watermarc Food Management Co., which owns the 36
restaurants, filed for chapter 11 protection in January;
Bombaywala is chairman, president, CEO and COO of
Watermarc. He will fight the filing. Court documents
indicate the dispute centers around three offers to buy
portions of the restaurant chain, and the subsequent
discovery that the total debts were $25 million, rather
than the $15 million Bombaywala had previously reported.
(ABI 13-May-99)

MICROFLUIDICS: Signs Forbearance Agreement With Comerica
Microfluidics International Corporation (NasdaqOTCBB
Symbol:MFIC) announced that on May 7, 1999 it had entered
into a forbearance agreement with its lender, Comerica
Bank.  As reported in previous releases, MFIC was notified
by Comerica on March 23, 1999 that it was in technical
default of the loan covenants under its revolving loan
credit agreement. Under the forbearance agreement, the  
Company may borrow up to $4,000,000, subject to certain
limitations and  conditions. The forbearance agreement
covers the period to July 15, 1999, and  may be extended at
the option of Comerica.

Irwin J. Gruverman, CEO and Chairman, stated, "We believe
that the revised credit facility agreed to by Comerica will
be adequate to allow us to operate for the near-term. With
the assistance of our financial advisors,
PricewaterhouseCoopers LLP, we are also pursuing other
avenues to secure new capital."

Microfluidics International Corporation, through its
Microfluidics Division, provides patented and proprietary,
high performance Microfluidizer(R) materials processing
equipment to the chemical, pharmaceutical, biotechnology,  
cosmetic/personal care, and food processing industries.
Through its Epworth Mill and Morehouse-COWLES Divisions,
the Company provides leading equipment, and innovative
technology and solutions to the chemicals, paints, pigments
and coatings industries for milling, deagglomeration and
dissolving. The combined resources and capabilities of the
Company's equipment lines are used to provide  
comprehensive solutions to materials processing.

NEW DEAL PROJECTS: Seeks Order Dismissing the Case
New Deal Projects LLC seeks dismissal of its Chapter 11
case.  There is no possibility that the debtor will be able
to confirm a plan that would provide for distributions to
unsecured non-priority creditors.

PHILIP SERVICES: Reports 1999 First Quarter Results
HAMILTON, ONTARIO Philip Services Corp. (TSE:PHV) (ME:PHV)
announced its financial results for the first quarter  
ended March 31, 1999.

All currency figures are stated in US dollars. Results have
been presented according to US generally accepted
accounting principles.

"Although we are seeing a gradual return to stability, our
first quarter financial results continued to be impacted by
general concern over our financial uncertainty," said Allen
Fracassi, interim Chief Executive Officer.

"Since the end of the first quarter, we have executed a
lock-up agreement with our secured lenders and are moving
ahead with a plan of reorganization that will ensure
business as usual throughout our financial restructuring.

"The improvement in cash flow from operations reflects the
success of our cash conservation initiatives. Our
management and our employees are focused on revenue and
margin enhancement as we continue to normalize our
businesses after a very difficult year."

Revenue for the first quarter of 1999 was $169 million less
than the revenue reported in the same period in 1998.

The net loss for the first quarter of 1999 was $41.9
million ($0.32 per share) and compares with net earnings in
the first quarter of 1998 of $14.2 million which included
other income of $14.7 million relating to the net proceeds  
received on the termination of the merger agreement to
acquire Safety-Kleen Corp.

PHONETEL TECHNOLOGIES: Begins Solicitation of Acceptances
PhoneTel Technologies, Inc. (OTC BB:PHNT) announced that is
has commenced solicitation of acceptances of a plan of
reorganization from holders of its 12% Senior Notes due
2006 and holders of its 14% Cumulative Redeemable
Convertible Preferred Stock. The terms of the Prepackaged
Plan are summarized in a Disclosure Statement mailed on May
11, 1999 to holders of record as of April 23, 1999 of the
Senior Notes and the Preferred Stock.

The Company is seeking acceptances of the Prepackaged Plan
in anticipation of the commencement of a case under Chapter
11 of the Bankruptcy Code in order to implement the
previously announced restructuring of the Company through
conversion of the Senior Notes into equity of the
reorganized Company.   The Company is seeking to obtain
acceptances from (i)holders of at least two- thirds in
amount and more than one-half in number of the Senior Notes
actually  voting, and (ii) from holders of at least two-
thirds in amount of the Preferred  Stock actually voting in
order to commence the Case with the requisite  acceptances
to confirm the Prepackaged Plan. Unless extended by the
Company, the voting deadline with respect to the
Prepackaged Plan is 5:00 P.M. Eastern Time on June 11,

Under the Prepackaged Plan, claims of employees, trade and
certain other creditors of the Company, other than Senior
Note claims, would be paid in full in the ordinary course,
with the Company retaining its rights and defense
with  respect to such claims.

In the event that the requisite acceptances are obtained,
it is the intention of the Company to promptly file the
Case and seek confirmation of the Prepackaged Plan.  The
Company will continue to operate its business under  
Chapter 11 in the ordinary course.

In January 1999, the Company announced that it had reached
an agreement in principle with an unofficial committee of
Senior Note holders providing for the conversion of the
Senior Notes into 95% of the reorganized Company's common  
stock. The unofficial committee is comprised of certain  
holders of Senior Notes currently representing
approximately 59.3% in principal  amount of all holders of
the Senior Notes. The Restructuring, as implemented by the
Prepackaged Plan, further provides that existing preferred
and common  shareholders would receive the remaining 5% of
the reorganized Company's common  stock (as well as
warrants to purchase approximately 11% of the reorganized  
Company's common stock at an exercise price of $10.50 per
share, assuming  10,000,000 common shares outstanding post-
reorganization). These equity  interests would be subject
to dilution by certain other equity issuances,  including
issuances upon the exercise of certain warrants and
awards to  purchase up to an aggregate of 5% of the common
stock under a new management  incentive plan proposed as
part of the Prepackaged Plan.

Microsoft co-founder and NFL and NBA team owner Paul Allen
is believed to have made an $85 million to purchase the
foundering Pittsburgh Penguins of the NHL. An NHL attorney
revealed the offer, but not the person who made the bid,
during a hearing on the league's request for quick work on
the fate of the team, which is in U.S. Bankruptcy Court
proceedings for the second time in 25 years. Allen also
owns the NFL's Seattle Seahawks and NBA's Portland Trail
Blazers. He reportedly would move the Penguins to Portland,
Ore. The NHL would like to see a $50 million bid led by
former Penguins star Mario Lemieux succeed.

RAYTECH: First Quarter Results
Raytech Corporation (NYSE: RAY) announced net income for
the thirteen-week period ended April 4, 1999 amounting to
$4,488 or $1.31 per basic share as compared with $4,157
or  $1.24 per basic share for the corresponding period in

Raytech Corporation continued the momentum from year-end
with net income rising in the first quarter to $4.5 million
or $1.31 per basic share as compared to $4.2 million or
$1.24 per basic share in the first quarter of 1998.
Earnings were driven by strong performance in the
aftermarket segment and improved performance in the wet
friction segment due primarily to increased sales in the
automotive original equipment market. The Company's dry
friction operations were down slightly over last year as a
result of the startup operations in China and the slowing
of the economy in Europe. Worldwide net sales rose 7.0% in
the first quarter of 1999 to $67.3 million as compared to
$62.9 million in the first quarter of 1998.

The wet friction segment reported increased sales of $.7
million as compared to the same period in the prior year.
The rise in sales is primarily the result of increased
sales of new products to New Venture Gear and increased
unit production among the automotive original equipment
manufacturers, which is reflected in the reported sales
increase of $4.2 million in this market sector over the
prior year. Domestic car and light truck sales are expected
to increase from 14.8 million units to 15.6 million units
in 1999. According to industry analysts, the heavy duty
markets continue their decline as a result of the economic
downturn in Asia and Latin America. In addition the demand
for heavy duty equipment was affected by a decline in
orders from the oil and mining industries. Sales in this
market decreased $1.6 million as compared to last year.
However domestic sales of heavy duty equipment is expected
to remain strong. Demand for agricultural equipment remains
weak as the farm sector continues to feel the effects of
depressed agricultural commodity prices. Sales in this
market decreased $1.9 million over last year.

Sales in the aftermarket segment showed significant
improvement over last year. Improved sales reflected deeper
penetration into the current customer base and sales of new
products, such as planetary gears, which were introduced  
into the product line in the latter part of 1998.
Additionally, the introduction of dry friction products in
the North American aftermarket took place during this
quarter. The combination of the above provided increased
sales of $3.7 million over the same period in the prior
year, a year-over-year growth rate of 27.7%.

The dry friction segment reported improved sales of less
than $.1 million, driven entirely by new sales from our
operation in China. The German operation remained at the
same level as that of the prior year due to the cooling of
the German economy and the European Union as a whole.

The Company has been under the protection of the U.S.
Bankruptcy Court relating to asbestos personal injury and
environmental liabilities since March 1989. The ultimate
liability of the Company with respect to asbestos-related,
environmental or other claims cannot presently be

Raytech Corporation is headquartered in Shelton,
Connecticut, with operations serving world markets for
energy absorption and power transmission products, as
well as custom- engineered components.

SOUTHERN PACIFIC: Goldman Sachs Offers $35 Million
Southern Pacific Funding Corp. reached a definitive
agreement on May 5 to sell the company and certain other
assets to the Goldman Sachs Group L.P. for $35 million in
cash plus the right to receive 50 percent of the cash flow
from certain other assets including mortgage loan pool
certificates. The sale will be consummated as part of the
subprime mortgage lender's reorganization plan.
Concurrently with entering into the sales agreement,
Goldman has refinanced the company's existing debtor-in-
possession financing. In addition, the parties entered into
a stock subscription and purchase agreement as well as
separate assets purchase contract as provided for under the
reorganization plan.  (The Daily Bankruptcy Review and ABI
May 13, 1999)

STARTER CORP: Applies To Retain Willkie Farr & Gallagher
The debtors, Starter Corporation et al. seek entry of an
order authorizing the debtors to employ and retain Willkie
Farr & Gallagher as attorneys for the debtors.

TAPAJOS GOLD: Arrangement Agreement With Highgrade Ventures
The Canada Newswire reports on May 13, 1999 that the Boards
of Directors of Highgrade and Tapajos are pleased to
announce that they have entered into an Arrangement
Agreement. In the December 2, 1998 news release it was
stated that the Boards had agreed, in principal, to pursue
a merger of the two companies. The method of merger between
the two companies and the structure of the merged entity
had yet to be determined or agreed to.  The two companies
hold interests in common resource projects in Brazil
through their respective ownership in a Brazilian  
company Brasilca Mineracao Brasileira Ltda., (Brasilca).  
The Boards consider it beneficial to the shareholders of
both companies that ownership in these common resource
projects be managed by a single company (i.e. Brasilca
which in turn is controlled by one company).  It is also
believed that the merger would also facilitate raising the
additional financing needed to continue exploration and
feasibility studies of these projects.

The Boards have now decided that the method of the merger
between the two companies shall be a Plan of Arrangement
between Tapajos and its shareholders  through an
Arrangement Agreement.  The Arrangement Agreement and in
particular  a Plan of Arrangement are subject to the
shareholders of Highgrade and Tapajos  giving their
approval and the Supreme Court of British Columbia
approving the  Plan of Arrangement by Court order.

Pursuant to the Plan of Arrangement, the following will
occur: All interest of each Tapajos Shareholder (other than
Dissenting Shareholders) in Tapajos  Shares shall be
assigned and transferred to Highgrade in consideration
for  Highgrade issuing Shares from its treasury on the
basis of 0.85 Share of Highgrade for each one Tapajos
Share.  This exchange ratio shall also apply to each
outstanding Tapajos Share Purchase Warrant and each Tapajos
Stock Option. If approved, the Plan of Arrangement shall
result in Tapajos becoming a wholly owned subsidiary of
Highgrade.  In addition, the name of the Highgrade
will be  changed to Brasilca Mining Corporation.

With reference to the trial mining at the Aragarcas
alluvial diamond project in Brazil, as mentioned in a joint
news release by the Boards on February 14, 1999,
engineering and metallurgical design work has now been
completed and equipment has been ordered for the mineral
processing plant.  It is anticipated that a preliminary
mining permit and environmental permit will be granted by  
the end of this month.

UNITED COMPANIES: Italian Company Looks For Conflicts
The Advocate Baton Rouge LA reported on May 8, 1999 that an
Italian investment company on Friday sounded new alarms
over potential conflicts of interest involving the chief
executive officer of United Companies Financial Corp.

The complaints came from Nicola Biase, the head of Findim
Investments SA, an Italian company that has seen its $26
million investment in United Companies stock wither with
the lender's share price.

Biase said Deborah Hicks Midanek, the turnaround consultant
who is serving as chief executive officer of United
Companies, should disclose any relationship she has with
Cerberus Partners LP.

Cerberus is guaranteeing Houston-based Aegis Mortgage
Corp.'s $3 million offer to buy 126 retail loan offices
from United Companies. The guarantee is in place should
Aegis default on the deal.

Last October, Midanek reported in the bankruptcy of another
client, subprime  lender Cityscape Financial Corp., that a
company owned by Cerberus was a client of Midanek's firm,
Jay Alix & Associates.

"It upsets me like a hell," Biase said of Midanek's link to
Cerberus. "It's a big surprise." But United Companies
attorney Marcia Goldstein said that any links between
Midanek and other people or companies involved in the
Cityscape and United Companies bankruptcies are not
surprising. "In small industries, and particularly where
there is financial distress, the pool of expertise is
limited, and it's not atypical for a turnaround manager who
had worked in one to be retained in another one. And it's
not atypical for many of the other parties in the situation
to overlap," she said.

Goldstein said she did not know whether United Companies or
Jay Alix had disclosed any relationship with Cerberus when
they asked the U.S. Bankruptcy Court in Wilmington, Del.,
to approve the sale of the loan offices. But Goldstein said
she expects this issue and others to be aired in bankruptcy
court when the judge in the case, Mary Walrath, decides  
whether to approve the Aegis deal.

Goldstein also confirmed that Steven Miller, the president
and chief executive officer of Cityscape Financial Corp.,
worked for a few days as a consultant for United Companies
after it filed for bankruptcy protection from its creditors
on March 1. But, she said, "They never reached agreement as
to a contract," and Miller left Baton Rouge. It is unclear
whether Miller will be paid for the work he did in Baton
Rouge, Goldstein said.

Midanek considered turning to Miller because of his
expertise in managing a lending company in "financial
distress," Goldstein said.  Miller had hired Midanek to
work as a consultant to Cityscape in December 1997.
Midanek has said her work at Cityscape ended by last
November, and that her work with Cityscape and now United
Companies posed no conflict of interest. But Biase said
Miller's involvement is troubling, and he wants to know
what work Miller did and whether he signed a
confidentiality agreement. Goldstein said she did not know
the answers to those questions. James Bailey III, chairman
of the board of directors of United Companies, said Friday
he did not know what work, if any, Miller did for the
lender. But he did offer a renewed defense of Midanek.

UNITED COMPANIES: Shareholders Question Sale Price
The Advocate Baton Rouge LA reports on May 7, 1999 that a
shareholder group on moved to block United Companies
Financial Corp.'s plan to sell 126 retail loans offices
spread across the country.

The shareholders told the judge in the high-risk mortgage
lender's bankruptcy case that the $3 million sale price for
the offices may be too low,  and that the deal may pose a
conflict of interest for the chief executive officer of
United Companies.

The group also said the deal should go forward only after
the company releases information on its finances and on any
potential conflicts of interest. The company has not issued
its 1998 financial report, and has said it is struggling to
pull together data.

Marcia Goldstein, United Companies attorney, said the
proposed sale is a proper business decision, and there are
no "disabling conflicts of interest."  She said the sale
should proceed, unless the company receives a higher offer
by May 10, the deadline for any other bidders to come

"The information supporting the deal will be made available
in court," Goldstein said.

The objections filed were the latest challenge to
management by the UC Shareholders Alliance, a group of
shareholders that coalesced through an Internet message
board. An attorney filed the objections in court on behalf
of an ad hoc committee of shareholders, which includes four
alliance members and the head of an Italian investment

That company, Findim Investments SA, paid $26 million for
United Companies stock only to see it shrink to less than a
hundredth of its value as the company struggled and then
filed bankruptcy March 1. Findim's chief, Nicola Biase,
spoke publicly for the first time on the situation Tuesday,
demanding the dismissal of United Companies CEO Deborah  
Hicks Midanek.   Midanek, a principal of Jay Alix &
Associates, a firm that specializes in rescuing troubled
companies, became chief executive officer of United
Companies in February. On Thursday, James Bailey III,
chairman of the board of United Companies, sent a reply to
Biase saying he knows of no conflict of interest. Bailey
said he is looking for any possible conflicts of interest
but, unless he finds one, the company is not likely to
dismiss Midanek.

Members of the Shareholders Alliance have said they believe
Midanek faced a conflict of interest stemming from prior
dealings with Aegis, the company seeking to buy the loan
offices. Aegis' president, Richard Thompson, is expected to
become president and chief executive officer of a mortgage
company now in bankruptcy that Midanek advised in

"Who's to say. It might be a hell of a deal, but personally
I don't think so," added Phillips, who said he was a senior
vice president, in charge of United Companies' retail
offices, when he left the company in 1993. He said he  
owns about 6,000 shares of the company's stock, which he
got from its employee stock ownership plan.

Goldstein said the sale was a good business decision, given
the company's tough position.

UNITED COMPANIES: Wins Nod for Sale to Aegis
United Companies Financial Corporation (OTC:UCFNE)
announced that the Bankruptcy Court approved the sale of a
substantial portion of the Company's retail lending
platform, UC Lending(R), to Aegis Mortgage Corporation, a
mortgage company based in Houston, Texas.

The Company previously announced on April 28, 1999  
that it had reached an agreement with Aegis for the sale,
which was subject to the satisfaction of certain conditions
and the approval of the Bankruptcy Court. Under the terms
of the sale, Aegis will pay $3 million plus the May,
1999 operating expenses relating to 127 branch offices and
related retail lending assets. Aegis will also assume the
post-closing obligations under the leases to the 127 branch
offices and under the equipment leases, auto leases  
and other contracts and agreements associated with
operating these branch offices and the Baton Rouge home
office facilities of the retail lending platform. In
addition, Aegis has agreed to purchase all of the loans
closed by UC Lending(R) during the month of May. The
closing date for the transaction is currently scheduled for
June 1, 1999. The Company confirmed that the remaining 28
branches will be closed by the end of the month.

The sale was approved after the expiration of a bidding
period for higher or better offers set by the Bankruptcy
Court and a hearing on the proposed sale in Bankruptcy
Court. The Court determined that there were no
other viable sale  options for the retail origination
business. The Creditor's Committee supported the Company in
seeking approval of the sale. Testimony by the financial
advisor to the Creditor's Committee confirmed the basis for
the Company's decision to enter into the transaction
with Aegis. The Court, in approving the sale, overruled
objections by an ad hoc group of equity holders.  United
Companies boasts a $6.4 billion servicing portfolio
according to CEO Deborah Midanek.

DLS Capital Partners, Inc., bond pricing for week of May
10, 1999

Following are indicated prices for selected issues:

Acme Metal 10 7/8 '07                   7 - 9 (f)
Amer Pad & Paper 13 '05                65 - 68
Asia Pulp & Paper 11 3/4 '05           79 - 80
Boston Chicken 7 3/4 '05                4 - 5 (f)
Brunos 10 1/2 '05                      14 - 17 (f)
Cityscape 12 3/4 '05                    9 - 11 (f)
E & S Holdings 10 3/8 '06              47 - 52
Geneva Steel 11 1/2 '01                24 - 26 (f)
Globalstar 11 1/4 '04                  70 - 72
Hechinger 9.45 '12                     17 - 22
Iridium 14 '05                         37 - 40
Loewen 7.20 '03                        54 - 56
Penn Traffic 8 5/8 '03                 47 - 49
Planet Hollywood 12 '05                24 - 26 (f)
Samsonite 10 3/4 '08                   71 - 74
Service Merchandise 9 '04              23 - 24 (f)
Sunbeam 0 '18                          14 - 15
TWA 11 3/8 '06                         51 - 52
Vencor 9 7/8 '05                       19 - 21 (f)
Zenith 6 1/4 '11                       30 - 32 (f)


The Meetings, Conferences and Seminars column appears in
the TCR each Tuesday.  Submissions via e-mail to are encouraged.  Bond pricing,
appearing in each Friday edition of the TCR,
is provided by DLS Capital Partners, Dallas, Texas.

S U B S C R I P T I O N   I N F O R M A T I O N     
Troubled Company Reporter is a daily newsletter, co-
published by Bankruptcy Creditors' Service, Inc.,
Princeton, NJ, and Beard Group, Inc., Washington, DC.  
Debra Brennan and Lexy Mueller, Editors. Copyright 1999.  
All rights reserved.  ISSN 1520-9474.  

This material is copyrighted and any commercial use, resale
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