TCR_Public/990928.MBX    T R O U B L E D   C O M P A N Y   R E P O R T E R
       Tuesday, September 28, 1999, Vol. 3, No. 187                                              

AAMES FINANCIAL: Thirty-Five East Sells 696,500 Shares Of Stock
ACTION INDUSTRIES: Consents To Orders/Chapter 11 Bankruptcy Filed
AMERICAN PAD & PAPER: Silberman Appointed VP Of Marketing
AMERICAN TRACK SYSTEMS: Court Approves Accountant To Trustee
AMERITRUCK: Disclosure Statement Hearing Continued

BONNEVILLE PACIFIC: El Paso Energy Acquires Bonneville Pacific
CONTOUR ENERGY: Oppenheimer Converts Shares
COSTILLA ENERGY: Seeks Approval To Assume Employment Contracts
COYOTE SPORTS: To Seek Chapter 11 Protection
DOW CORNING: Motion To Compromise Bermuda Fire Insurance Claims

FILENE'S BASEMENT: Seeks Expedited Hearing on Bonus Program
GALEY & LORD: Citigroup Owns 46.7% Of Company
HARNISCHFEGER: Committee Taps Professionals
HOME HEALTH CORP: Seeks Extension of Exclusive Periods
HVIDE MARINE: Chapter 11 Filed; Credit Facility Obtained

INCOMNET: Interim Order Approves Postpetition Financing
INCOMNET: Reports Chapter 11 Filing To SEC
INTOWN MANAGEMENT: Files for Bankruptcy
LOEHMANN'S: Seeks to Enter Into Consulting Services Agreement
NATIONAL RESTAURANTS: Applies To Retain Rosenberg & Estis

O'BRIEN ENVIRONMENTAL: Court Decision on Break-Up Fees
PHILIP SERVICES: Court Approves Committee's Canadian Counsel
SINGER: Receives Approval on Interim Financing
SKYTELLER: Emerges from Chapter 11  
STARMET: Considers Cost & Reputation In Replacing Accounting Firm

TRANSTEXAS GAS: Objections To Disclosure Statement and Plan
TREESOURCE INDUSTRIES: Files Chapter 11 Petition
VENCOR: Seeks To Prohibit Setoffs & Recoupment By Payors

Meetings, Conferences and Seminars


AAMES FINANCIAL: Thirty-Five East Sells 696,500 Shares Of Stock
Commencing on September 17, 1999 and as of September 21, 1999,
Thirty-Five East has sold 696,500 shares of common stock of Aames
Financial Corporation and no longer will own common stock in the
company in excess of 5%. Thirty-Five East beneficially owns, and
has the sole power to vote and dispose of, 1,529,365 shares of
common stock, or 4.93%, of Aames Financial's outstanding common

ACTION INDUSTRIES: Consents To Orders/Chapter 11 Bankruptcy Filed
On September 10, 1999, the pending involuntary bankruptcy
petitions against Action Industries Inc. and General Vision
Services, Inc., an affiliate of the company, and the pending
motions for appointment of a trustee under Chapter 11 of the
Bankruptcy Code were resolved consensually. Under a Stipulation
and Order approved by Judge Stuart M. Bernstein of the United
States Bankruptcy Court for the Southern District of New York,
Action Industries and General Vision Services, Inc. have
consented to the entry of orders for relief under Chapter 11.

Jim Jedrlinic will continue to serve as the Chief Executive
Officer of the company, and of General Vision Services, and will
manage the day-to-day operations of General Vision Services.   A
management committee composed of Mr. Jedrlinic, Shaul Kopelowitz,
a director of the company, and Mr. Ralph Balsamo of Richard A.
Eisner & Co., a New York accounting firm, has been appointed.  
Any business decisions or transactions outside of the ordinary
course of business will be subject to the approval of a majority
of the committee and the Bankruptcy Court. The committee is also
to conduct a search for a new chief financial officer and a chief
operating officer for General Vision Services. The committee will
function until a plan for reorganization for the company and
General Vision Services is confirmed and becomes effective, or
until further order of the Bankruptcy Court.

Under the Stipulation and Order, for the next ninety days, any
plan of reorganization filed by Action Industries and General
Vision Services will require the consent of the Official
Committee of Unsecured Creditors. If a joint plan is not filed
within ninety days, for thirty days immediately thereafter the
company and General Vision Services will have the exclusive
right to file plans of reorganization, and to solicit acceptances
for sixty days after such filing, unless otherwise ordered by the
Bankruptcy Court.

AMERICAN PAD & PAPER: Silberman Appointed VP Of Marketing
American Pad & Paper Company reports that Barry L. Silberman, has
been appointed Vice-President of Marketing for the AMPAD Division
of American Pad & Paper Company.

Mr. Silberman, 47, will assume overall responsibility for the
AMPAD Division marketing plan, and will develop the strategies
and tactics to achieve the Division's profit, revenue and market
share goals. Mr. Silberman will report directly to James V. Heim,
President of the AMPAD Division.  American Pad & Paper's AMPAD
Division is among the largest national suppliers of writing pads,
filing supplies, and retail envelopes to many of the fastest
growing office product retailers and distributors.

With over 22 years of marketing experience, Mr. Silberman's most
recent position prior to joining AP&P was Vice-President of
Marketing for American Camper, Inc., a division of Brunswick.  He
has also held vice-president of marketing positions with Wellmark
International, a division of Central Garden and Pet, Impact
International, a division of ERO Industries and was with the
Office Products Group of Esselte Pendaflex in several product
management positions.

"Having someone with Barry's extensive marketing experience will
help us expand AMPAD's market share," said James V. Heim,
President of the AMPAD Division.  "During his marketing career,
Barry has successfully improved market and brand presence at many
key accounts including: Wal-Mart, Kmart, Target, Sam's Warehouse
Club, Kroger, Walgreens and Office Depot. I am confident he will
help drive both immediate and long-term results in the AMPAD

American Pad & Paper Company is a leading manufacturer and
marketer of paper-based office products in North America.  
Product offerings include envelopes, writing pads, file folders,
machine papers, greeting cards and other office products.  The
key operating divisions of the company are Williamhouse, AMPAD,
and Creative Card.  Company revenues in 1998 were
$662 million.

AMERICAN TRACK SYSTEMS: Court Approves Accountant To Trustee
The US Bankruptcy Court for the District of Delaware entered an
order approving the application of Robert H. Slone, Chapter 11
Trustee for the estate of American Track Systems International,
Inc. to employ and compensate Patrick Fiore & Associates PC as
certified public accountants for the administration of the
debtor's estate.

AMERITRUCK: Disclosure Statement Hearing Continued
AmeriTruck Distribution Corp.'s disclosure statement hearing has
been continued from last Thursday, to an as of yet undetermined
date in order to give interested parties time to negotiate
some modifications to the amended plan of reorganization filed by
the company on Aug. 23. The creditors' committee had "problems"
with the amended plan but is working with the company on
resolving these issues, the committee's counsel Russell Munsch of
Munsch Hardt Kopf & Harr told Federal Filings Business News. He
added that the company is also negotiating with Volvo Commercial
Finance LLC The Americas to produce consensual treatment of its
secured claim. The Volvo secured claim totals nearly $30 million,
according to the disclosure statement related to the amended
plan. (The Daily Bankruptcy Review and ABI September 27, 1999)

BONNEVILLE PACIFIC: El Paso Energy Acquires Bonneville Pacific
El Paso Energy and Bonneville Pacific Corporation have announced
they have entered into an agreement and plan of merger whereby El
Paso will acquire all outstanding shares of Bonneville Pacific

The transaction, valued at approximately $63 million,   subject
to certain adjustments, is in addition to the value to be
realized by the shareholders of Bonneville Pacific as a result of
the  company's previously annouced sale of Bonneville Fuels
Corporation.  The transaction is expected to close by year-end or
early in the  first quarter of 2000, subject to approval by
Bonneville Pacific's stockholders and regulatory authorities.

El Paso will close on this transaction subsequent to the sale of
Bonneville Fuels Corporation to CEC Resources.  In an August 11,
1999 announcement, CEC Resources and Bonneville Fuels Corporation
reported that CEC Resources has entered into an agreement to
acquire all of the stock of Bonneville Fuels Corporation, an oil
and gas exploration and production company located in Denver,
Colorado and an wholly owned subsidiary of Bonneville
Pacific Corporation.  The purchase price is approximately $24
million in cash, subject to certain adjustments, plus CEC
Resources will assume the debt that remains with Bonneville
Fuels.  The Fuels transaction is scheduled to close by October
31, 1999.

The principal business segments of Bonneville Pacific Corporation
being acquired by El Paso are a 50-percent interest, through  
Bonneville Nevada Corporation, of Nevada Cogeneration Associates
#1  (Garnet  Valley), an 85-megawatt power plant that sells power
to Nevada Power Company under a long-term contract, and
Bonneville Pacific Services, a wholly owned subsidiary, which
provides operations and maintenance services under long
term contract to the Garnet Valley and Black Mountain
cogeneration facilities in the Las Vegas area.

"The Bonneville Pacific acquisition represents our first entry
into the Nevada power market, one of the fastest growing regions
in the country," said Greg Jenkins, president of El Paso Merchant
Energy. "This continues the expansion of our power generation
platform and brings significant net present value.  We anticipate
further expanding our presence in Western  United States power
generation projects in the near future."

Although the management of Bonneville Pacific Corporation
believes that the agreement and plan of merger will be completed,
there can be no assurance that the transaction will be closed.  

CONTOUR ENERGY: Oppenheimer Converts Shares
Oppenheimer Funds, Inc. has ceased to be the holder of Kelley Oil
& Gas Corp. Preferred Stock due to the conversion of such shares
into Contour Energy Co. Convertible Preferred Stock on 8/2/99.

COSTILLA ENERGY: Seeks Approval To Assume Employment Contracts
Costilla Energy Inc. seeks court authority to assume employment
contracts and authority to continue employee retention bonus
plan.  Costilla seeks to assume three employment agreements,
three termination agreements and one severance agreement.  The
employment agreements are for the Chairman of the Board, Cadell
S. Liedtke, Executive Vice President and Chief Operating Officer,
Henry G. Musselman, the Senior Vice President, Secretary,
Treasurer and Chief Financial Officer, Bobby W. Page.

Under the Bonus Plan, the aggregate amount paid postpetition
would not exceed $525,621. Plus an amendment to the plan provides
for an amount not to exceed $342,512.

COYOTE SPORTS: To Seek Chapter 11 Protection
Coyote Sports Inc. (OTC BB:COYT) announced today, Sept. 24,
1999, that it will seek protection under Chapter 11 of the United
States Bankruptcy Code. In addition, effective at the close of
business Sept. 22, 1999, the Nasdaq Listing Qualifications Panel
determined to delist the company's securities from the Nasdaq
Stock Market.  The securities of the company are immediately
eligible to trade on the OTC Bulletin Board.

Apollo Golf Inc. and Reynolds Cycling Technology, both fully
owned subsidiaries of Coyote Sports Inc., will continue their day
to day operations and will not be directly affected by the
bankruptcy filing.

Jim Probst, CEO and President of Coyote Sports Inc., said Apollo
and Reynolds have done a terrific job of managing their
businesses in light of very difficult times at Coyote Sports.
Apollo Golf is a premium manufacturer and marketer of steel golf
shafts, and Reynolds Cycle Technology is a premium manufacturer
and marketer of bicycle tubing.

Coyote Sports Inc. is a diversified sports manufacturing company
that specializes in golf shafts and cycle tubing through Apollo
Golf Inc. and Reynolds Cycle Technology.

DOW CORNING: Motion To Compromise Bermuda Fire Insurance Claims
Bermuda Fire & Marine Insurance Company Limited, among other
insurers, underwrote an insurance policy for Dow Corning
providing, Dow Corning believes, coverage for Breast Implant
Claims from 1965 through 1992.  Bermuda Fire is insolvent and now
bound by a Scheme of Arrangement pursuant to Sec. 99 of the
Companies Act 1981 of Bermuda and Sec. 425 of the UK
Companies Act 1985.  Bermuda Fire would have been sued with Dow
Corning's other insurers in Michigan State Court but for its
insolvency proceedings.  

Dow Corning filed a claim in Bermuda Fire's insolvency cases; and
KWLEM Management Services Limited, as agent for Bermuda Fire, has
contested Dow Corning's claim.  Negotiations have culminated in
KWELM's agreement to book an $8.3 million claim in Dow Corning's
favor against Bermuda Fire in exchange for Dow Corning's
agreement to include Bermuda Fire in the channeling injunction to
be put in place by Dow Corning's plan.  This, Dow Corning
believes, is a fair resolution.  

Accordingly, by this Motion, Dow Corning sought and obtained
Judge Spector's authority to compromise and settle its insurance-
related claim against Bermuda Fire for an allowed $8.3 million
claim against Bermuda Fire's estate.  (Dow Corning Bankruptcy
News Issue 69; Bankruptcy Creditor's Service, Inc.)

FILENE'S BASEMENT: Seeks Expedited Hearing on Bonus Program
The debtors, Filene's Basement, Inc. and Filene's Basement Corp.
are seeking an expedited hearing on the debtor's motion for an
order authorizing the debtors' implementation of employee
incentive bonus and severance program in order to stem further
losses of key employees.  The debtors are faced with a serious
attrition rate, and have already lost approximately 10 employees
who would have been covered by the bonus and severance program.

GALEY & LORD: Citigroup Owns 46.7% Of Company
As of the close of business on September 17, 1999, Citicorp
Venture Capital Limited beneficially owned 5,556,102 shares of
common stock, representing approximately 46.67% of the
outstanding shares of common stock of Galey & Lord Inc., of which
it has shared voting power and dispositive power. Citibank and
Citicorp, exclusively through their holding company structures,
also both beneficially own the same 5,556,102 shares of common
stock, representing approximately 46.67% of the outstanding
shares of common stock, with each having shared voting and
dispositive powers. Citigroup, through its direct and indirect
subsidiaries beneficially owns 5,558,735 shares of common stock
representing approximately 46.7% of the outstanding shares of
common stock with shared voting and dispositive powers.

The following public market stock purchase transactions were
undertaken by Citicorp Venture Capital Limited: on September 9,
1999, 40,000 shares of common stock for an average price of $4.00
per share, on September 10, 1999, 8,000 shares of common stock
for an average price of $3.9375 per share, on September 13, 1999,
15,000 shares of common stock for an average price of $3.946 per
share, on September 14, 1999, 5,000 shares of common stock for an
average price of $3.80 per share, on September 15, 1999, 3,900
shares of common stock for an average price of $3.80 per share,
and on September 17, 1999, 200,000 shares of common stock for an
average price of $3.30 per share.

HARNISCHFEGER: Committee Taps Professionals
The Official Committee of Unsecured Creditors sought and obtained
Judge Walsh's approval of their Application to Retain, nunc pro
tunc to June 22, 1999, New York-based Cleary, Gottlieb, Steen &
Hamilton as its lead counsel in these chapter 11 cases.  
Specifically, Cleary Gottlieb will:

(a) advise the Committee and represent it with respect to
proposals and pleadings submitted by the Debtors or others to the
Court or the Committee;

(b) represent the Committee with respect to any plans of
reorganization or dispositions of assets proposed in these cases;

(c) attend hearings, participate in the litigation of adversary
proceedings and contested matters, and generally advocate
positions on behalf of the Committee;

(d) assist the Committee in the examination of the Debtors'
affairs and the review of the Debtors' operations;

(e) assert claims on behalf of the estates in the event the
Debtors cannot or will not assert such claims;

(f) advise the Committee as to the progress of the chapter 11
proceedings; and

(g) perform other professional services for the Committee,
including, without limitation, those set forth in Bankruptcy Code
section 1103(c).  

The Committee indicates that its members voted to retain Cleary
Gottlieb at a meeting held on June 22, 1999.  

Cleary Gottlieb will bill the Debtors at its customary hourly
rates for bankruptcy services:

Partners $475 - $535
Special Counsel $445 - $490
Associates $175 - $400
Law Clerks/Summer Associates $125 - $160
Managing Attorneys $320 - $400
Paralegals/Managing Attorney $ 95 - $150

The attorneys who the Firm anticipates will be spending a
significant amount of time on this engagement, their levels of
seniority and hourly rates are:

          James E. Millstein          Partner           $535
          James L. Bromley            Partner           $475
          Gesine Albrecht             Associate         $365
          Eric M. Rosof               Associate         $320
          Seth Stuhl                  Associate         $320

The Committee also sought and obtained the Court's authority to
retain the law firm of Pepper Hamilton LLP, in Wilmington, as its
local counsel in these chapter 11 cases, nunc pro tunc to June
28, 1999.

Subject to direction from the Committee and Cleary Gottlieb,
Pepper Hamilton will:

(a) attend hearings pertaining to the case, as necessary;

(b) review applications and motions filed in connection with the

(c) communicate with Cleary Gottlieb, as necessary;

(d) communicate with and advise the Committee and attend
meetings of the Committee, as necessary;

(e) provide expertise with respect to these proceedings and
procedural rules and regulations applicable to these cases; and

(f) perform all other services for the Committee that are
necessary for it to perform in these cases.

The hourly rates of the principal attorneys and paralegals
proposed to represent the Committee are:

          David B. Stratton               $325
          David M. Fournier               $240
          Tara L. Lattomus                $160
          Monica Loftin                   $160
          Andrea B. Unterberger           $115
          Jaymi H. Cook                   $105
          Jason A. Thompson                $75

The Committee seeks the Court's authority to retain, nunc pro
tunc to June 23, 1999, Ernst & Young LLP as their accountants and
financial advisors pursuant to a Retention Agreement dated
August 3, 1999.  

Specifically, the Committee asks E&Y to:

(a) review and analyze the current financial position of the

(b) review and analyze the Debtors' business plans, cash flow
projections, foreign operations, contract performance,
restructuring programs, and other reports or analyses prepared by
the Debtor or its professionals in order to advise on the
viability of the continuing operations and the reasonableness of
projections and underlying assumptions;

(c) analyze the financial ramifications of proposed transactions
for which the Debtor seeks Court approval including, but not
limited to, DIP financing, asset dispositions,
assumption/rejection of leases, management compensation and/or
retention plans;

(d) analyze the Debtors' internally prepared financial statements
and related documentation, including subsidiary level operating
results, in order to evaluate the performance of the Debtor as
compared to its projected results;

(e) analyze the Debtors' tax position including evaluation of
potential tax attributes and plan of reorganization tax issues
and the availability of any refund opportunities;

(f) attend meetings with the Committee, its counsel and
representatives of the Debtor;

(g) assist the Committee and its counsel in the development,
evaluation and documentation of any plan(s) of reorganization;

(h) provide such other services, including but not limited to
expert testimony, valuation services and litigation consulting,
as the Committee or its counsel may request.

E&Y's Retention Agreement makes it clear that E&Y will neither
audit nor express any opinion on financial information supplied
by the Debtors to the Committee.

E&Y will bill the Debtors at its customary hourly rates:

               Partners and Principals          $480 - $550
               Senior Managers                  $395 - $450
               Managers                         $295 - $335
               Senior Consultants               $240 - $280
               Staff Consultants & Client       $105 - $205
                    Service Associates

Martin Nachimson, a Partner in E&Y's Los Angeles office, leads
the engagement, assisted by John Sordillo, a Senior Manager in
E&Y's Financial Advisory Services practice.

Because E&Y is a global accounting firm, it has many
relationships with other parties in interest in the Debtors'
cases.  Mr. Nachimson assures the Court that E&Y represents no
interest adverse to the Debtors and will decline any engagement
requiring E&Y to represent an interest materially adverse and
relating to these cases.  

Mr. Nachimson mentions that "E&Y and Jay Alix & Associates have
executed an Alliance Agreeement providing for joint marketing
efforts by the two firms of their respective services to actual
and potential clients of each firm."  (Harnischfeger Bankruptcy
News Issue 11; Bankruptcy Creditor's Service Inc.)

HOME HEALTH CORP: Seeks Extension of Exclusive Periods
The debtors, Home Health Corporation of America, Inc. et al.,
seek to extend the exclusive periods during which the debtors may
file and solicit acceptances of a plan or plans of
reorganization.  A hearing on the motion will be held on October
12, 1999 at 9:30 AM.  The debtors seek to extend the period
during which the debtors have the exclusive right to file a plan
through October 29, 1999 and they seek to extend the period
during which the debtors have the exclusive right to solicit
acceptances of such plan through December 29, 1999.

To date, the debtors have rejected a number of commercial leases
and executory contracts; resolved a significant dispute with the
Department of Health and Human services regarding pre-petition
Medicare overpayments, completed and filed their schedules of
assets and liabilities and statements of financial affairs and
established a bar date for the filing of proofs of claim.

The debtors have presented to their lender group a comprehensive
business plan.  However, the debtors aver that more time is
needed to finalize certain of the operational issues related to
the business plan, to attempt to create a consensual reorganized
capital and corporate structure and to flesh out the particulars
of implementation of a plan of reorganization.

HVIDE MARINE: Chapter 11 Filed; Credit Facility Obtained
On September 8, 1999, Hvide Marine Incorporated and certain of
its subsidiaries filed voluntary petitions under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware.  No trustee, examiner with
extended powers, receiver, fiscal agent or similar officer has
been appointed with respect to the company and such subsidiaries,
which continue to operate their businesses and manage their
assets as debtors-in-possession.

Effective September 10, 1999, the company and certain lending  
institutions entered into a debtor-in-possession revolving credit
and term loan agreement.  Subject to certain conditions and
limitations, the DIP facility provides the company with a
revolving credit facility of up to $60 million; in addition, the
approximately $241 million of borrowings previously outstanding
under the credit facility have been converted into a
term loan under the DIP facility.  On September 9, 1999, the
Bankruptcy Court granted interim approval of the DIP facility and
thus authorized the $241 million term loan and borrowings under
the revolving credit facility of up to $42 million pending a
final hearing, which is scheduled to be held on September 30,
1999.  Prior to December 15, 1999, borrowings under the
DIP facility bear  interest at three percentage points over the
"Base Rate" of Citibank,  N.A., Administrative Agent under the
DIP facility on and after December 15, 1999, any such borrowings
would bear interest at seven and one-half percentage points over
such Base Rate.  The DIP facility also provides for certain fees
payable by the company and for certain covenants relating to
earnings before interest, taxes, depreciation and amortization;  
capital expenditures; collateral coverage; and outstanding
borrowings. The DIP facility expires on February 28, 2000.

INCOMNET: Interim Order Approves Postpetition Financing
The US Bankruptcy Court for the Central District of California,
Santa Ana Division entered an order on September 20, 1999  
approving the postpetition financing of Incomnet Inc., granting
security interests and superpriority administrative expense
treatment, and modifying the automatic stay.  A final hearing is
scheduled for October 7, 1999 at 9:30 AM.

INCOMNET: Reports Chapter 11 Filing To SEC
Incomnet, Inc. and Incomnet Communications Corp. announces that,
to facilitate a financial restructuring, they have filed
voluntary petitions for protection under Chapter 11 of the U.S.
Bankruptcy Code.  Incomnet Communications Corp., a provider of
long distance telecommunications services, said the filing would
allow the company's new management the time necessary to
reorganize the company and to explore and possibly effect a
debt-for-equity exchange, merger of the company or other

George Blanco, Executive Vice President and Chief Financial
Officer of Incomnet Communications Corp. said that during the
Chapter 11 proceeding, the company's business would continue to
operate as usual. "Throughout this process, we will continue to
provide quality long distance service to our customers, while
keeping our representatives and employees informed," he
said. Mr. Blanco added that during this process, employee
salaries, bonuses and commissions will be paid without

"The company's management pursued all available strategic
alternatives prior to making this decision," he stated,
"including a sale of the company's assets, a merger, a scale-back
of operations and the restructuring of the company's debt and
other obligations. After exploring all available alternatives, we
concluded that a voluntary Chapter 11 proceeding was in the best
interests of all of the company's constituents."

Mr. Blanco said that the telecommunications industry has been
buffeted by intense competition which has affected re-sellers and
increased the cost of customer acquisition. In addition, the
company's new management team was faced with a number of
litigation matters.

"Chapter 11 will enable us to continue the operational turnaround
we have started and to clean up the company's balance sheet,
while meeting our obligations to our customers, representatives
and employees," he stated. "It will allow us to distance
ourselves from past issues." Mr. Blanco said that the company's
past history has overshadowed the progress Incomnet's
new management has made.

"We are adding 6,000 to 7,000 new customers each month, we're
introducing a new Internet product and we have completed a new
compensation plan for our marketing representatives," he stated.
"We have also cut costs and begun streamlining the organization
to be more efficient and customer responsive.  Although we
recognize that there is a lot of work yet to be done, with the
support of the company's various constituents, we expect Incomnet
to emerge from its reorganization as a stronger, more profitable
and an extremely competitive new company," he said.

Incomnet, Inc. is a marketing driven company that provides
innovative, cost-saving products to the telecommunications
industry. Incomnet, Inc.'s wholly owned subsidiary, Incomnet
Communications Corp., is a reseller of long distance and other
communications products to residential and small business
customers through its independent sales representatives using a
network marketing strategy.

INTOWN MANAGEMENT: Files for Bankruptcy
The Department of Housing and Urban Development (HUD) announced
that it has terminated its contract with InTown Management Group,
a company that was to manage and sell 7,000 HUD-foreclosed
properties in the Washington metropolitan area, The Washington
Post reported. HUD, which said the Atlanta-based company did not
effectively market, maintain and sell the 25,000 properties under
its jurisdiction, terminated the contract just before InTown
filed for chapter 11 protection. InTown also had contracts in 22
states for about half of HUD's properties throughout the country.
In March HUD stopped selling its own foreclosures and awarded
contracts to InTown and six other companies. Federal Housing
Administration Commissioner William Apgar said "InTown started
falling behind from day one. What's most shocking is that even
when they were in business, they never got around to listing half
of their properties." (ABI 27-Sept-99)

LOEHMANN'S: Seeks to Enter Into Consulting Services Agreement
The debtor, Loehmann's, Inc. seeks to enter into a Consulting
Services Agreement with Marvin Gardner.  The debtor is in the
process of closing 14 of its stores.  After the closings, the
debtor intends to sell its interest in the corresponding real
estate leases.    In addition the debtor is evaluating the real
estate leases for its other stores to determine whether any
additional lease sales or negotiated modifications to lease terms
are appropriate.  Pursuant to a Letter Agreement with Gardner, he
has agreed to provide consulting services to assist the debtor in
these decisions as well as other business related services.  
Gardner, the debtor's current General Counsel has over 20 years
of experience with the debtor.  He is familiar with all of the
debtor's real estate leases and the course of business at each of
the debtor's stores.  Gardner is uniquely qualified to assist the
debtor with lease evaluations and sales as well as ultimate
restructuring decisions.  The Letter Agreement provides that
Gardner will receive an annual salary of $185,000 plus benefits.

NATIONAL RESTAURANTS: Applies To Retain Rosenberg & Estis
The debtors, National Restaurants Management, Inc., et al. Seek
to employ the law firm of Rosenberg & Estis PC as special

The firm will represent NRM in an action presently pending in New
York Supreme Court, New York, County.  It is a foreclosure action
involving a property for which NRM provided a limited guarantee
on a mortgage for which Banque Nationale De Paris provided a
portion of the financing.  The firms hourly rates range from
$450-$200 for partners, and $100-$200 for associates.

O'BRIEN ENVIRONMENTAL: Court Decision on Break-Up Fees
The Corporate Counsellor reported in August 1999 that Judge
Dolores K. Sloviter, ruled in the case of In re O'Brien
Environmental Energy Inc. that the allowability of breakup fees,
like that of other administrative expenses, depends upon the
requesting party's ability to show that the fees were actually
necessary to preserve the value of the estate.

The case involved O'Brien Environ-mental Energy Inc., a company
that attempted to reorganize but ultimately opted to be bought
out.  Several companies sought to bid on the assets, and one,
Calpine Corp., requested a breakup fee of $2 million -- on a sale
expected to range from $ 90 million to $100 million -- before it
would offer to buy the company.

Although the bankruptcy court rejected its application for a fee
even before the bidding began, Calpine nonetheless decided to go
forward.  But in the auction, it lost out to NRG Generating Inc.
(now Cogenerational Corp.).  Calpine then renewed its request for
the breakup fee, along with expenses.

The bankruptcy court again rejected the request, applying the
standard business judgment rule for reviewing fees in the
mergers-and-acquisitions context.  But the Third Circuit, while
agreeing that Calpine was not entitled to any money, said that
only the Bankruptcy Code should govern.  "We
develop a general common law of breakup fees."

Instead, the court held that fees must be reviewed under the
bankruptcy code provision governing administrative expenses.  
"[T]he allowability of breakup fees, like that of other
administrative expenses, depends upon the requesting party's
ability to show that the fees were actually necessary to preserve
the value of the estate.  Therefore we conclude that the business
judgment rule should not be applied as such in the bankruptcy
context.  Nonetheless, the considerations that underlie the
debtor's judgment may be relevant to...a request for breakup fees
and expenses."

PHILIP SERVICES: Court Approves Committee's Canadian Counsel
The Honorable Mary F. Walrath, US Bankruptcy Court for the
District of Delaware entered an order on September 14, 1999
authorizing the Official Committee of Unsecured Creditors of
Philip Services (Delaware), Inc. to employ of Cassels Brock &
Blackwell as its Canadian counsel.

SINGER: Receives Approval on Interim Financing
The Singer Company, N.V. (NYSE: SEW), said today that it has
received Court approval of interim debtor-in-possession (DIP)
financing provided under an agreement with its major lender, The
Bank of Nova Scotia, and for the interim use of cash accounts
generated in the ordinary course of business and secured
under various other credit facilities.

The funds to be made available as a result of these actions are
intended to meet post-petition trade and employee obligations of
the filing companies and their operating needs during the first
phase of the restructuring process. As previously announced, most
Singer operating units were not included in the filing and will
continue to finance themselves and operate in the ordinary course
of business.

An interim $5.4 million, part of an initial $10 million in DIP
financing, will be provided by The Bank of Nova Scotia.  
Additionally, the Court approved an increase in Singer's cash
collateral available to $23 million from $8 million.  These funds
are intended for the parent holding company, Singer N.V., various
intermediary holding companies and for the 11 operating units
that have filed for Chapter 11 protection.  A hearing has been
set for October 21, 1999 for approval of the permanent DIP
agreement and cash collateral authority.

"We are pleased that the Court promptly approved the Company's
request for post-petition financing," said Stephen H. Goodman,
Singer president and chief executive officer.  "This funding will
help provide our vendors with additional financial assurances
that we will be operating on a business-as- usual basis, and that
they will be paid in the ordinary course for post- petition goods
and services."

In hearings on September 13, 1999 the Court also approved the
Company's requests to pay pre-petition employee wages and
benefits and use cash collateral and existing bank accounts, as
well as requests relating to the administration of the case.

Singer is the world's leading manufacturer and distributor
of consumer sewing machines and is an international retailer and
distributor of consumer durable products, doing business in 150
countries.  Singer's sales in 1998, excluding sales for Pfaff,
were approximately $1 billion.  The Company filed its petitions
in the U.S. Bankruptcy Court for the Southern District of New

SKYTELLER: Emerges from Chapter 11  
SkyTeller LLC announced last week that the Bankruptcy Court for
the District of Colorado had confirmed its plan as of Sept. 8 and
that it has emerged from chapter 11 as a subsidiary of First
Data Corp., according to a newswire report. A development stage
company based in Englewood, Colo., SkyTeller provides foreign
currency exchange services for international travelers. (ABI 27-

STARMET: Considers Cost & Reputation In Replacing Accounting Firm
On September 14, 1999, the firm of Arthur Andersen LLP was
dismissed as independent public accountants for Starmet
Corporation. The firm of BDO Seidman LLP has been appointed as
the company's new independent public accountants.  The decision
to change accountants was approved by the company's Board of
Directors upon the recommendation of its Audit Committee.

The report of Arthur Andersen LLP dated January 8, 1999 on the
company's consolidated financial statements as of September 30,
1998 and 1997, and for each of the three years ended September
30, 1998 was modified to include a paragraph which raised
substantial doubt about the company's ability to continue as a
going concern.  Starmet says the decision to replace Arthur
Andersen LLP was made upon the basis of an anticipated
reduction in the cost of services and the reputation of BDO
Seidman LLP as auditors of middle-market companies.

TRANSTEXAS GAS: Objections To Disclosure Statement and Plan
Zurich American Insurance Company objects to the Joint Disclosure
statement for the debtors' plan and the first amended plan of
reorganization proposed by TransTexas Gas Corporation, debtor.  
Zurich claims that the Disclosure Statement together with the
plans of liquidation and reorganization fail to explain how the
debtors' plans will affect the claims of Zurich and injured
parties.    Zurich states that there are a maze of definitions
and classifications that will only cause confusion, and lead to
multiple interpretations.  Under the terms of certain policies
and agreements Zurich states that it is owed over $10 million by
the debtors. These claims are being resolved in a separate
proceeding.  Nevertheless, Zurich states that the Disclosure
statement fails to address head-on what will become of Zurich's
claims and how Zurich and any injured parties will be treated
under the proposed plan.

Caterpillar Financial Services Corporation also objects to the
Joint Disclosure Statement for the debtor's plans under Chapter
11 of the Bankruptcy Code. Caterpillar provides financing for the
purposes of sale or lease of equipment.  TransTexas Transmissions
Corporation a non-debtor gave possession of certain of the Leased
Equipment to the debtor and sought to assign the rights.  
Caterpillar contends that the assignment violated the agreement
between TranTexas Transmissions and Caterpillar.  The debtor
defaulted under the terms of the lease and has not kept payments
under the lease current.  Caterpillar states that the Disclosure
Statement does not provide adequate disclosure with regard to how
the debtor intends to cure with regard to the lease, for provide
or how the debtor intends to provide adequate security or how
post-petition payments are to be brought current with regard to
the lease for the equipment.

TREESOURCE INDUSTRIES: Files Chapter 11 Petition
TreeSource Industries, Inc., (OTC Bulletin Board: TRES) reported
that it is filing today for voluntary reorganization under
Chapter 11 of the U.S. Bankruptcy Code.  The Company also
reported net income of $6.3 million for the quarter ended July
31, 1999, compared to a net loss of $1.2 million for the same
period last year.  Sales increased more than 40 percent, in spite
of operating fewer facilities as compared to the same quarter of
1998.  Higher sales volumes were achieved by operating some
facilities more aggressively, which combined with increased sales
prices, up 18 percent, to generate higher sales dollars in
total for the quarter.  The net income per share applicable to
common shareholders was $.57 per share for the quarter ended July
31, 1999 as compared to a net loss of $.11 per share in the first
quarter of last year.

In spite of these excellent earnings, weak lumber markets prior
to the current quarter led to a decline in the Company's
financial position such that in February of this year, TreeSource
announced it could no longer stay within its financial covenants.  
Since February, the Company has made no debt service payments to
its secured lenders, and has missed three consecutive
quarterly dividend payments to its preferred shareholders. These
actions were taken to conserve cash while entering into
negotiations with the secured lenders to reorganize the financial
structure of the Company.

The culmination of certain events precipitated today's
announcement. Poor market conditions in fiscal 1999, acceleration
in industry modernization; and a balance sheet encumbered with a
high level of debt and preferred stock dividend obligations all
caused the Company to file for voluntary reorganization.

TreeSource president Jess R. Drake commented: "The decision to
file for reorganization was difficult, but provides the means to
restructure the Company's balance sheet and enable the facilities
with proven earnings to continue operations and provide
employment in their communities."

Mr. Drake also commented that "I am pleased to announce today
that the results of negotiations with our secured lenders are
positive.  We have negotiated a plan with the secured lenders
that, subject to Court approval, will restructure the Company and
reduce its overall debt burden.  With the secured lenders'
support of this plan, we are arranging for interim financing, and
ongoing working capital financing subsequent to the Chapter 11
filing. Subject to Court approval, the Company has obtained
commitments for interim working capital financing of up to $14
million.  Prior to this reorganization, TreeSource has not had a
line of credit, or working capital financing, available to it.  
The new structure will establish a positive, firm foundation for
the people with whom we conduct business.  It will strengthen our
ability to be a long term partner with many key log suppliers,
and provide a much more stable and secure environment for
employees, the communities in which we operate, and the people
with whom we do business."

According to Mr. Drake, "All of the parties involved worked to
create this new structure without the need to file under the
Chapter 11 bankruptcy code. As a result of the negotiations it
has become apparent, however, that bankruptcy was the only method
of accomplishing this objective, and provides the most certainty
to all the parties involved.  Unfortunately, the Company's weak
historic operating performance and high debt levels have resulted
in negative net worth, which simply means that there is no value
remaining for its equity holders.  As a result, it is likely that
the existing preferred and common shareholders' interests will be
cancelled as part of the restructuring."

In anticipation of the filing, the Company has made a concerted
effort to reduce the disruption experienced by its log vendors
and other trade creditors.  TreeSource has limited the amount of
trade credit outstanding, and it is the intent of the parties to
pay in full the outstanding debt to the Company's log suppliers.
The Company also intends to set aside a pool of dollars to pay
the other trade credit incurred by the Company at approximately
90 percent. This should position us to continue to build
alliances with those key partners who will be instrumental to our
future success. Subsequent to the filing, the Company plans
additional steps to limit the impact on these key suppliers.

The Company has retained the law firm Perkins Coie LLP as
bankruptcy counsel. Integral with the filing are several
important first day pleadings, seeking, among other things, to
approve the interim financing arrangement; and the payment of all
stumpage, log, log hauling and log scaling suppliers' pre- filing

TreeSource Industries, Inc. operates facilities in Oregon,
Washington, and Vermont, producing softwood and hardwood lumber
products.  TreeSource Industries, Inc. can be found at its web
site at For more information, contact  
TreeSource investor relations at 503-246-3440.

VENCOR: Seeks To Prohibit Setoffs & Recoupment By Payors
In excess of 90% of the Debtors' revenues are paid by Medicare
and Medicaid, their fiscal intermediaries and agents, HMO's,
health insurance plans and purchasers of ancillary services.  The
Debtors provide services under various contracts, agreements and
other arrangements to patients and the Payors pay the Debtors for
the service performed.  

Any attempt by a Payor to withhold, offset or recoup payments due
to the Debtors for prepetition services rendered will have an
immediate and adverse impact and deleterious effect on Vencor's
ability to provide health care to patients.  An uninterrupted
flow of payments from the Payors is essential.  

By this Motion, asking the Court to draw on its broad equitable
powers under 11 U.S.C. Sec. 105(a), the Debtors ask the Court to
issue an order prohibiting any Payor from taking any action to
withhold, recoup or otherwise offset, whether in respect of
prepetition or postpetition amounts, any payments owed to the
Debtors related to any prepetition services provided.  

"The paramount policy and goal of chapter 11 is the
rehabilitation of the debtor, and all other bankruptcy policies
are subordinated to this goal," Thomas J. Moloney, Esq., argued
on the Debtors' behalf before Judge Walsh at the First Day
Hearing.  Mr. Moloney pointed to In re FPA Medical
Management, Inc., et al., Case No. 95-1354 (Bankr. D. Del. July
21, 1998 modified August 20, 1998), where virtually identical
relief was granted.

Reluctantly, and making extensive comment about how the
bankruptcy code is not designed to deal with the problems of the
healthcare industry, Judge Walsh granted the Debtors' Motion
subject to the right of any Payor, no later than October 13,
1999, to file a motion seeking reconsideration of his order.  
(Vencor Bankruptcy News Issue 2; Bankruptcy Creditor's Service

Meetings, Conferences and Seminars
September 27-28, 1999
      Conference on Corporate Reorganizations
         Regal Knickerbocker Hotel, Chicago, Illinois
            Contact: 1-903-592-5169 or   

October 5-6, 1999
      Fall International Meeting
         San Francisco Marriott, San Francisco, California
            Contact: 1-703-449-1316
October 6-9, 1999
      73rd Annual Meeting
         San Francisco Marriott, San Francisco, California
            Contact: 1-803-957-6225

October 22-26, 1999
      1999 Annual Conference
         The Fairmont--Atop Nob Hill, San Francisco, CA
            Contact: 1-312-822-9700 or

November 4-5, 1999
      Assessing the Present and Looking to the Future
         The Doubletree Hotel, Nashville, Tennessee
            Contact: 1-423-549-7000 or

November 11-13, 1999
      11th Annual Advanced ALI-ABA Course of Study:
      The Emerged and Emergine New Uniform Commercial Code
         New York Hilton Hotel, New York City
            Contact: 1-800-CLE-NEWS

November 17-20, 1999
      Educational Exchange
         Case De Campo Resort, LaRomana, Dominican Republic
            Contact: 1-703-739-0800

November 29-30, 1999
      Distressed Investing '99
         The Plaza Hotel, New York, New York
            Contact: 1-903-592-5169 or   

December 2-4, 1999
      Winter Leadership Conference
         La Quinta Resort & Club, La Quinta, California
            Contact: 1-703-739-0800

February 27-March 1, 2000
      Norton Bankruptcy Litigation Institute I
         Olympic Park Hotel, Park City, Utah
            Contact: 1-770-535-7722

March 23-25, 2000
      26th Annual Southeastern Bankruptcy Law Institute
         Marriott Marquis Hotel, Atlanta, Georgia
            Contact: 1-770-451-4448
March 30-April 2, 2000
      Norton Bankruptcy Litigation Institute II
         Flamingo Hilton Hotel, Las Vegas, Nevada
            Contact: 1-770-535-7722

May 4-5, 2000
      Bankruptcy Sales & Acquisitions
         The Renaissance Stanford Court Hotel
         San Francisco, California
            Contact: 1-903-592-5169 or   

June 29-July 2, 2000
      Western Mountains Bankruptcy Law Institute
         Jackson Lake Lodge, Jackson Hole, Wyoming
            Contact: 1-770-535-7722


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, Yvonne L. Metzler,
Editors.  Copyright 1999. All rights reserved. ISSN 1520-9474.

This material is copyrighted and any commercial use, resale
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