TCR_Public/020122.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, January 22, 2002, Vol. 6, No. 15     


AAI.FOSTERGRANT: Firming-Up Restructuring Talks with Bondholders
AMF BOWLING: Confirmation Hearing to Continue Until February 1
ACCLAIM ENTERTAINMENT: Pays 10% Notes Down by $1.3M to $24.9M
ADVANTICA: Restaurant Count Reduced to 2,366 by End of Dec. 2001
AGERE SYSTEMS: Lattice Semicon Acquires FPGA Business for $250MM

ALTERRA HEALTHCARE: Steven Vick Will Resign as President & COO
AMERICA WEST: Closes $492M Loan & Other Assistance Packages
BETHLEHEM STEEL: Court Okays Sale of Nitrogen Oxide Allowances
BIG V: Selling 27 Stores to Stop & Shop for $255 Million
BURLINGTON: Proposes New Severance & Retirement Programs

CNC: Fitch Downgrades Series 1994-1 Pass-Through Certificates
CHIQUITA BRANDS: Begins Solicitation of Votes on Pre-Pack Plan
COMDISCO INC: Citibank Clarifies Interests in Credit Agreements
EMPIRE INSURANCE: S&P Withdraws Pool Members' Low-B Ratings
ENRON CORP: Energy Units Reject 600+ Gas & Power Contracts

ENRON CORP: Gottesdiener Uncovers 'Town Hall Meeting' Transcript
ENRON GLOBAL LNG: Case Summary & Largest Unsecured Creditors
EQUUS GAMING: Unit Negotiating Cure for Mortgage Note Default
EXODUS: Deutsche Bank Buying Parsippany IDC for $45MM + Debts
FMAC: Fitch Lowers Trust 1996-A Series Ratings Over Write-Downs

GENEVA STEEL: Secures Okay for Release of Cash Collateral Pact
GRAHAM PACKAGING: Will Close UK Plastics-Container Plant in Q2
GUILFORD MILLS: Senior Lenders Extend Loan Waiver to February 15
HAMILTON BANCORP: OCC Padlocks Firm & Appoints FDIC as Receiver
HARTMARX CORP: Completes Exchange Offer for 10-7/8% Notes

HARTMARX: S&P Downgrades Corporate Credit Rating to SD from CC
HILLY REALTY: Chapter 11 Involuntary Case Summary
IMPSAT FIBER: S&P Drops $125 Million Senior Notes Rating to D
IMPERIAL METALS: Files Plan of Arrangement Under CCAA in Canada
INTEGRATED BUSINESS: Nasdaq Delists Shares Effective January 18

INTELEFILM: Closes Sale of Chelsea Pictures to Management Team
KENTUCKY ELECTRIC: Completes Debt Workout, Easing Liquidity
KMART CORP.: Doesn't Deliver $78 Million Payment to Fleming
LERNOUT & HAUSPIE: Court Extends Removal Period to February 28
LODGIAN INC: Obtains Okay to Hire Ordinary Course Professionals

METALS USA: Has Until July 3 to Decide on Unexpired Leases
METATEC INT'L: Sells Silicon Valley Plant Assets to Medius Corp.
MILLENIUM SEACARRIERS: Wants More Time to File Schedules
MOLL INDUSTRIES: S&P Drops Corporate Credit Rating to SD from CC
NATIONSRENT INC: UST Will Convene Creditors' Meeting on Feb. 7

OXFORD AUTOMOTIVE: Will File Chapter 11 with Pre-Pack Plan
P-COM INC: Taps Cagan-McAfee to Work with Bondholders on Workout
PACIFIC GAS: Agrees to Pay Class 5 Claims Interest at New Rates
POLAROID CORP: Court Okays Akin Gump as Committee's Co-Counsel
QUALITY STORES: Will Honor Gift Certificates Issued to Customers

RURAL/METRO: Banks Agree to Waive Defaults through April 1
STAIRMASTER SPORTS: Direct Focus Pitches Best Bid for All Assets
SUN HEALTHCARE: Gets 6th Extension of Lease Decision Period
SWISS AIR: New York Court Extends Preliminary Injunction
TRANS WORLD: Calls For Further Extension of Exclusive Periods

US AIRWAYS: Incurs $1.2BB Net Loss On $8BB Revenues in FY 2001
USG CORPORATION: Wants to Honor $12MM Environmental Obligations
UNITEDGLOBALCOM: Amends Tender Offer Terms for 10-3/4% Notes
WARNACO GROUP: Court Approves Sale of GJM Sleepwear to Luen Thai
WHEELING-PITTSBURGH: Court OK's Wage Deferral & Ohio Financing


AAI.FOSTERGRANT: Firming-Up Restructuring Talks with Bondholders
AAi.FosterGrant, Inc., says it is in the final stage of
negotiations with a majority of its bondholders and its
principal stockholder on a recapitalization that includes a
debt-for-equity swap and a significant additional equity
investment.  This is the latest, and near final, stage of a
successful plan to turn around and restructure AAi.FosterGrant,
a value-added seller and distributor of optical products and
costume jewelry.

The company says this restructuring is designed to improve its
balance sheet through a reduction in debt of $52 million from
$78 million, to $22 million, a reduction in interest expense by
$6 million, to $2 million annually, and a $4 million additional
equity infusion by the company's principal investor.  When
completed, this transaction will make AAi.FosterGrant one of the
financially strongest companies in its marketplace and will
significantly enhance its ability to grow the FosterGrant brand,
voted the third most recognized accessories brand in Women's
Wear Daily's most recent survey.

"This recapitalization is built on the foundation of the
profitability and operational improvements we have already
made," said John Ranelli, president and chief executive officer.  
"We have improved the sell-through, on-time delivery,
fulfillment rates and competitiveness of our products, and
reduced expenses. We are now poised to increase our investment
significantly in realizing the potential of our brand."

The informal committee of bondholders which AAi.FosterGrant is
in the final stage of negotiations which represents 69% of the
company's $51.85 million remaining 10-3/4% Senior Notes due in
2006.  Terms of the debt-equity swap have not been disclosed.  
AAi.FosterGrant has hired Affiliated Management Services of
Atlanta to advise it on the negotiations with these holders.  
The informal committee's advisor is Financo Restructuring, a New
York firm.

AAi.FosterGrant is based in Smithfield, RI, and is one of the
leading sellers of popularly priced sunglasses in the $2.2
billion U.S. market. AAi.FosterGrant is also a leading
distributor of non-prescription fashion reading glasses, a
category growing in popularity with aging baby boomers, as well
as costume jewelry.  The first pair of FosterGrant sunglasses
was sold on the boardwalk in Atlantic City in 1929.

AMF BOWLING: Confirmation Hearing to Continue Until February 1
AMF Bowling Worldwide, Inc., and its debtor-affiliates sought
and obtained an order from the Court continuing the confirmation
hearing from January 10 and 11, 2002 to January 31 and February
1, 2002.

The Court also orders that any amended or supplemental objection
the Committee or any party previously filed would be due by
January 11, 2002, while the Debtors, Senior Lenders and agent
for Debtors' DIP Lenders would have until January 18, 2002 to
respond to objections to the plan filed by the Committee and
other parties.

The Debtors believe the short continuance of the confirmation
hearing and the modification of the briefing schedule would
provide sufficient time for the parties to develop their
objections and responses while simultaneously allowing the
parties to fully explore the possibility of a consensual
confirmation. (AMF Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

ACCLAIM ENTERTAINMENT: Pays 10% Notes Down by $1.3M to $24.9M
Acclaim Entertainment, Inc. (NASDAQ.SC: AKLM), a leading global
video entertainment software developer and publisher, announced
that an additional $1.3 million of its 10% subordinated notes
have been submitted for conversion, which would reduce the
Company's total outstanding amount to $24.9 million from the
previously announced $26.2 million on January 10, 2002. These
reductions represent a 15% decrease from $29.2 million as of
December 2, 2001.

"The Company reiterates its previously stated guidance, that
based on its fiscal 2002 business operating plan projections,
the Company's cash flow supports the repayment of the
subordinated notes at maturity on March 1, 2002," said Gerard F.
Agoglia, Chief Financial Officer for Acclaim. "In addition, the
Company expects to generate sufficient positive cash flow from
operations to meet its currently projected cash and operating
requirements for the next twelve months."

"We are pleased to follow up our solid first fiscal quarter
results with the further reduction of our debt," added Gregory
Fischbach, Chief Executive Officer of Acclaim. "We remain
comfortable with our previously stated guidance for fiscal 2002,
which includes first half net revenues of $146.0 million and
$.27 per diluted share."

The Company repaid its interim $10.0 million working capital
over-formula loan on January 7, 2002. As a result of its strong
ongoing relationship with its bank, the Company renewed its
over-formula commitment for $5.0 million, which proceeds it
intends to utilize for short-term working capital purposes as
required, in the normal course of business. As previously
indicated in its recent first quarter Form 10Q, the Company's
cash flow supports the full repayment of this loan on February
28, 2002.

"Furthermore, the risk of bad debt exposure due to third-party
bankruptcy is covered under our factoring relationships, leaving
no exposure to the Company," concluded Mr. Agoglia.

Based in Glen Cove, N.Y., Acclaim Entertainment, Inc., is a
leading worldwide developer, publisher and mass marketer of
software for use with interactive entertainment game consoles
including those manufactured by Nintendo, Sony Computer
Entertainment and Microsoft Corporation as well as personal
computer hardware systems. Acclaim owns and operates six studios
located in the United States and the United Kingdom which
includes a motion capture and recording studio in the U.S., and
publishes and distributes its software through its subsidiaries
in North America, the United Kingdom, Germany, France and Spain.
The Company uses regional distributors worldwide. Acclaim also
distributes entertainment software for other publishers
worldwide, publishes software gaming strategy guides and issues
"special edition" comic magazines from time to time to support
its time valued brands, Turok and Shadow Man. Acclaim's
corporate headquarters are in Glen Cove, New York and Acclaim's
common stock is publicly traded on NASDAQ.SC under the symbol

As at November 30, 2001, the company's stockholders' equity
deficit totaled $1.2 million, and its working capital deficiency
amounted to around $24 million.

For more information please visit its Web site at

ADVANTICA: Restaurant Count Reduced to 2,366 by End of Dec. 2001
Advantica Restaurant Group, Inc. (OTCBB: DINE) reported same-
store sales for company-owned restaurants during the five-week
period, quarter and year ended December 26, 2001, compared with
the same periods in fiscal year 2000.

                           Five Weeks     13 Weeks      52 Weeks
                            Dec. 2001      Q4-2001          2001
                          -----------    ---------     ---------

Same-Store Sales

   Denny's                     7.4%         3.4%          2.7%
   Coco's                     (6.3%)       (8.1%)        (6.5%)
   Carrows                    (2.0%)       (0.6%)        (0.3%)

Guest Check Average

   Denny's                    (0.3%)        0.4%          1.7%
   Coco's                      4.1%         4.7%          3.0%
   Carrows                     4.5%         5.6%          3.9%

The increase in same-store sales at Denny's in December was
primarily attributable to a nationwide coupon promotion that ran
from mid-November to late December (contributing approximately
4.5% of the sales increase for the month) and an additional 16
hours of sales on Christmas Day as Denny's restaurants were open
twenty-four hours compared with a partial day last year
(contributing approximately 1.4% of the sales increase for the

Included below are the Company's restaurant counts at the end of
December, compared with year end 2000.

Restaurant Units                      12/26/01     12/27/00
                                      ---------   ---------


    Company-owned                          621         736
    Franchised                           1,114       1,067
    Licensed                                14          19
                                      ---------   ---------
                                         1,749       1,822

Discontinued Operations:


    Company-owned                          139         144
    Franchised                              38          35
    Licensed                               298         302
                                      ---------   ---------
                                           475         481


    Company-owned                          112         114
    Franchised                              30          27
                                      ---------   ---------
                                           142         141
                                      ---------   ---------
                                         2,366       2,444
                                      =========   =========

Advantica Restaurant Group, Inc. is one of the largest
restaurant companies in the United States, operating over 2,300
moderately priced restaurants in the mid-scale dining segment.
Advantica owns and operates the Denny's, Coco's and Carrows
restaurant brands. FRD Acquisition Co., the parent company of
Coco's and Carrows and a wholly owned subsidiary of Advantica,
is classified as a discontinued operation for financial
reporting purposes and is currently under the protection of
Chapter 11 of the United States Bankruptcy Code effective as of
February 14, 2001. For further information on the Company,
including news releases, links to SEC filings and other
financial information, please visit Advantica's Web site at

DebtTraders reports that Advantica Restaurant Group's 11.250%
bonds due 2008 (ADVRES1) are trading in the low 70s. See  
real-time bond pricing.

AGERE SYSTEMS: Lattice Semicon Acquires FPGA Business for $250MM
Lattice Semiconductor Corporation (Nasdaq:LSCC) announced that
it has completed its previously announced acquisition of the
FPGA business of Agere Systems (NYSE:AGR.A) for $250 million in

The acquisition was financed through cash on hand.

As previously reported, Lattice expects the transaction to be
accretive to the Company's 2002 proforma earnings before
goodwill. Lattice management will provide additional commentary
on the acquisition during the Company's regularly scheduled
quarterly earnings conference call at 5:30 am, Pacific Standard
Time, on January 24, 2002. Investors may access this call live
via the web at  

Oregon-based Lattice Semiconductor Corporation designs, develops
and markets the broadest range of high-performance ISP
programmable logic devices (PLDs) and offers total solutions for
today's advanced logic designs.

Lattice products are sold worldwide through an extensive network
of independent sales representatives and distributors, primarily
to OEM customers in the communication, computing, industrial and
military end markets. Company headquarters are located at 5555
N.E. Moore Court, Hillsboro, Oregon 97124 USA; Telephone
503/268-8000; FAX 503/268-8037. For more information access our
web site at:  

Lattice Semiconductor Corporation, L (& design), Lattice (&
design), in-system programmable, ISP and specific product
designations are either registered trademarks or trademarks of
Lattice Semiconductor Corporation or its subsidiaries in the
United States and/or other countries.

Agere (pronounced a-GEAR), formerly Lucent's Microelectronics
Group, offers integrated circuits (75% of sales) and
optoelectronics devices used in computer, wireless, and optical
networks. Agere has partnered with Motorola to develop digital
signal processor (DSP) products, and with chip foundry Chartered
Semiconductor to develop new manufacturing techniques. Lucent
(20% of sales) remains its top customer; other major clients
include Apple and Cisco. Lucent, which spun off Agere in 2001,
owns 63% of the company and controls 87% of its voting power.
The company is restructuring both its debt and its operations,
and reducing its workforce by a third.

ALTERRA HEALTHCARE: Steven Vick Will Resign as President & COO
Alterra Healthcare Corporation (AMEX: ALI) announced that Steven
L. Vick, the Company's President and Chief Operating Officer,
will be resigning his positions at the Company in order to
pursue other opportunities. The Company's Chief Executive
Officer, Patrick Kennedy, and other members of Alterra's senior
management group are expected to assume Mr. Vick's management

"As a co-founder of one of our Company's predecessors and as a
senior executive of Alterra, Steven has played a very
significant role at Alterra and within the assisted living
industry generally. We appreciate his contribution to the
Company and wish him all the best in his future endeavors," said
Jerry L. Tubergen, Chairman of the Board.

"We are fortunate to have added depth to our senior management
in recent months by the addition of Pat Kennedy as Chief
Executive Officer and Chet Bradeen as Senior Vice President of
Operations. As a result, we have an experienced senior
management team in place to lead the Company as we seek to
complete our restructuring and continue our focus on quality
resident care, increasing occupancy and improving operating
results," noted Mr. Tubergen.

Mr. Kennedy, a senior executive and director of Holiday
Retirement Corp., joined the Company as Chief Executive Officer
in November 2001. Prior to joining Alterra, Mr. Kennedy directed
the international operations of Holiday Retirement Corp., the
largest operator of independent living retirement facilities in
North America. Mr. Bradeen, formerly CEO/Managing Director of
Sun Healthcare Asia Pacific, joined Alterra during 2001 as
Senior Vice President of Operations. Mr. Bradeen has over 25
years of healthcare management experience, having served in
senior management positions with several multi-facility long-
term care and assisted living operators.

Alterra offers supportive and selected healthcare services to
our nation's frail elderly and is the nation's largest operator
of freestanding Alzheimer's/ memory care residences. Alterra
currently operates in 25 states.

The company operates home-like assisted-living residences for
the frail elderly and Alzheimer's sufferers who don't require
skilled nursing care. Alterra operates about 450 facilities in
nearly 30 states. The company offers personal care, health care,
and support services to its residents. After falling victim to
increased competition and its own ambitious expansion, Alterra
received a cash infusion that left entities associated with
Amway's DeVos family controlling more than 30% of the company.
Alterra is still trying to sell some residences in order to pay
off debt. As at September 30, 2001, the company's total current
liabilities exceeded its total current assets by about $1.1

AMERICA WEST: Closes $492M Loan & Other Assistance Packages
America West Holdings Corporation (NYSE: AWA) announced that its
subsidiary, America West Airlines, Inc., has closed a term loan
in the amount of $429 million and completed arrangements for
more than $600 million in concessions, financing and financial
assistance following final approval by the Air Transportation
Stabilization Board (ATSB) of approximately $380 million in loan

"This is great news for America West, its customers, employees,
shareholders and business partners," said W. Douglas Parker,
chairman, president and chief executive officer.  "America West
is now positioned, with strengthened liquidity, to build upon
the dramatic improvements in operational performance and
customer service achieved this past year.

"Our 13,000 dedicated employees, along with our many customers,
deserve recognition for their support throughout this process,"
added Parker.  "We are grateful for their continued loyalty.  We
also appreciate the significant efforts of the ATSB and the
members of its staff who worked tirelessly to close this

America West also announced that, simultaneously with the
funding of the loan, it paid in full approximately $49 million
in previously deferred aircraft lease payments.

Additionally, America West said that, at the request of the
ATSB, TPG Partners, L.P., and its affiliates, owners of all
941,431 shares of America West Class A common stock, have
undertaken not to dispose of their Class A stock other than in
connection with an offer to acquire all the shares of the
company's Class B common stock accepted or approved by the
holders of a majority of the Class B stock.  This undertaking is
subject to certain exceptions, including transfers to TPG
affiliates, repurchase of the Class A stock by America West and
exercise of TPG's rights to convert the Class A stock into Class
B stock, and will terminate when the warrants issued in
connection with the term loan transactions expire or are
exercised and the underlying shares of Class B stock are sold,
or TPG and its affiliates no longer hold the Class A stock.

Parker added, "We also want to express our gratitude to our
advisors, Salomon Smith Barney, Citibank and their counsel,
Milbank Tweed; to our lawyers, Cooley Godward, Skadden Arps and
Vedder Price; and to The Seabury Group, which led our
negotiations with aircraft lessors."

BETHLEHEM STEEL: Court Okays Sale of Nitrogen Oxide Allowances
Bethlehem Steel Corporation, and its debtor-affiliates obtained:

   (i) authority from the Court to assume the Sale Agreement
       conditioned upon the modifications set forth, provided
       that the Court authorizes the sale of the Nitrogen Oxide
       Allowances to Aquila, and

  (ii) (a) approval of the sale of the Nitrogen Oxide Allowances
           to Aquila pursuant to the terms of the Sale Agreement
           or such other party, is any, that submits the highest
           and best offer therefore, free and clear of all
           liens, claims, and encumbrances, and

       (b) authorization to transfer title to the Nitrogen Oxide
           Allowances exempt from any applicable transfer taxes.

          Bethlehem - Aquila Energy Marketing Agreement

The Debtors and Aquila Energy Marketing Corporation entered into
the Bethlehem - Aquila Energy Marketing Agreement for Purchase
and Sale of Nitrogen Oxide Allowances, dated July 13, 2001.  
According to Mr. Tanenbaum, Aquila agreed to pay $3,625 per ton
of Nitrogen Oxide Allowances, for a total purchase price of

The principal terms and conditions of the Sale Agreement are:

Property:        331 tons per year of Nitrogen Oxide Allowances
                  for the years 2003 through 2007.

Purchase Price:  $6,000,000 ($3,625.38 per ton times 331 tons).

Transfer of    (a) Simultaneous with the execution of the Sale
Allowances         Nitrogen Oxide Agreement, Aquila was required
                   to deliver to the Debtors an irrevocable
                   letter of credit from Credit Lyonnais in the
                   amount of $750,000.

               (b) Within 4 business days after the Debtors
                   certify to Aquila that the Nitrogen Oxide
                   Allowances have been allocated to the
                   Debtors, Aquila shall either increase the
                   Deposit Letter of Credit to the full amount
                   of the Purchase Price or shall, in an
                   exchange with the Debtors for the Deposit
                   Letter of Credit, deliver to the Debtors a
                   new irrevocable letter of credit in the full
                   amount of the purchase price.

               (c) Within 3 business days after the Debtors
                   receive the Upgraded Letter of Credit, the
                   Debtors and Aquila shall take such action
                   that may be required to effect the transfer.

               (d) Within 3 business days after the transfer,
                   Aquila shall pay the Debtors the purchase
                   price in full by wiring it to the Debtors'
                   account, and immediately upon receipt of the
                   purchase price the Debtors shall return the
                   Upgraded Letter of Credit to Aquila.

               (e) Except as provided in the Sale Agreement,
                   the Debtors shall not make a demand on
                   either the Deposit Letter of Credit or the
                   Upgraded Letter of Credit until after the
                   Debtors have transferred the Nitrogen Oxide
                   Allowances to Aquila and Aquila has failed
                   to pay the Debtors the purchase price in

               Each Party shall be liable for payment of any
               taxes, charges, or fees billed to it, including
               but not limited to its attorneys,' brokers,' or
               consultants' fees, in connection with the
               transactions contemplated by this Agreement.
               (Bethlehem Bankruptcy News, Issue No. 8;
               Bankruptcy Creditors' Service, Inc., 609/392-

BIG V: Selling 27 Stores to Stop & Shop for $255 Million
The Stop & Shop Supermarket Company announced that it has
entered into a letter of intent with representatives of the
creditors of Big V Supermarkets to purchase 27 of the stores and
other assets of the company for $255 million.

Stop & Shop and the creditors intend to commence negotiations to
enter into a definitive purchase agreement and seek Bankruptcy
Court permission for consideration of the transaction.  At this
time, no assurances can be given that the parties will reach a
definitive agreement or that, if an agreement is reached, the
Bankruptcy Court will allow it to proceed.  If the Bankruptcy
Court allows the agreement to proceed, regulatory approvals
would be required.

Big V operates 31 supermarkets in the Hudson Valley in New York
as Shop Rite Supermarkets. Big V filed for bankruptcy in
November 2000. Earlier this week, Big V entered into an
agreement to sell substantially all of its assets to the
Wakefern Food Cooperative. The Wakefern agreement is subject to
the review and approval of Big V's creditors and, ultimately,
with the Bankruptcy Court.

The Stop & Shop Supermarket Company, based in Quincy,
Massachusetts, operates 321 stores in Massachusetts, Rhode
Island, Connecticut, New York and New Jersey, and employs more
than 56,000 associates.

BURLINGTON: Proposes New Severance & Retirement Programs
Prior to Petition Date, Burlington Industries, Inc., maintained:

    (a) a severance program for their hourly employees, and
    (b) a severance program for their salaried employees.

Under the Hourly Severance Program, severance pay was determined
based on years of service and ranged from 1 week to 6 weeks of
base salary.  Under the Salaried Severance Plan, severance pay
was determined based on the age of the eligible employee and
years of service and ranged from 2 weeks to 12 months of base

By Motion, the Debtors ask Judge Walsh for authority to make
certain modified payments to their employees under the Pre-
petition Severance Programs.

                       The New Program

According to Paul N. Heath, Esq., at Richards, Layton & Finger
PA, in Wilmington, Delaware, the Debtors - in their sole
discretion - would pay eligible employees 50% of the severance
pay that the employees would have been entitled to receive under
the Pre-petition Severance Programs, provided, however, that:

    (a) no eligible hourly employee will receive less than one
        week of severance pay, and

    (b) no eligible salaried employee will receive less than two
        weeks of severance pay.

In addition, Mr. Heath continues, the Debtors propose that no
eligible employee will receive Permitted Severance Payments
prior to the employees executing a release and waiver agreement
in a form and substance acceptable to the Debtors.  "The
estimated total cost of the Debtors' post-petition obligations
under the Modified Severance Programs is approximately
$14,800,000 but may vary depending on the total number of
employees terminated as part of the Debtors' restructuring," Mr.
Heath states.

The Debtors contend that the Modified Severance Programs strike
a fair balance between their obligations to their creditors and
their obligations to their employees.  "If the Debtors do not
obtain the ability to make the Permitted Severance Payments,
employee attrition may increase because of the concern that
employees could be terminated without any post-employment
protection," Mr. Heath warns the Court.  The Debtors insist that
it would be difficult and expensive for the Debtors to attract
new employees to fill the critical voids left by such employee
attrition.  Moreover, Mr. Heath says, majority of the Debtors'
manufacturing operations are located in small communities in
which the Debtors are one of the largest employers.  "The
failure to pay the Permitted Severance Payments would severely
impact those communities and negatively impact the Debtors'
standing and ability to do business in those communities," Mr.
Heath speculates.  Besides, Mr. Heath observes, the estimated
cost to be incurred for the Permitted Severance Payments is
significantly less than the cost of unwarranted attrition and
loss of goodwill that would result if the Permitted Severance
Payments are not made.

The Debtors are also seeking authority to pay, as Permitted
Severance Payments, certain pre-petition severance obligations.
As of Petition Date, Mr. Heath estimates that the Pre-petition
Severance Obligations reach $3,800,000.  "The Pre-petition
Severance Obligations arose as a result of reductions in the
Debtors' salaried workforce prior to the Petition Date and
include 177 salaried employees," Mr. Heath reports.  The Debtors
propose to pay Permitted Severance Payments in accordance with
the Modified Severance Programs to the Pre-petition Terminated
Employees; provided, however, that:

  (a) any severance payments received by Pre-petition Terminated
      Employees prior to the Petition Date will be credited
      against the amount that the particular Pre-petition
      Terminated Employee is eligible to receive under the
      Modified Severance Programs, and

  (b) prior to receiving any Permitted Severance Payments, the
      applicable Pre-petition Terminated Employee will execute a
      Severance Release.

Mr. Heath asserts that the payment of the Pre-petition Severance
Obligations, as modified, is necessary to:

    (1) demonstrate the Debtors' commitment to all of their
        employees, thereby substantially enhancing the Debtors'
        goodwill with, and the overall morale of, the Debtors'
        current employees who are vital to the success of the
        Debtors' reorganization efforts; and

    (2) retain the goodwill of the many small communities in
        which the Debtors operate.

"The estimated total cost of the Pre-petition Severance
Obligations, as modified, is $1,100,000 - a reduction of
approximately $2,700,000 from the total amount of unpaid Pre-
petition Severance Obligations," Mr. Heath notes.

              Supplemental Executive Retirement Plan

Prior to Petition Date, the Debtors maintained a supplemental
executive retirement plan for certain of their key executives.
According to Mr. Heath, the Retirement Plan was created to:

  (a) compensate the Key Executives for their valuable services,

  (b) attract, retain and motivate the Key Executives.

Under the Retirement Plan, Mr. Heath says, payments are made in
120 equal monthly installment payments starting from the month
immediately following the Key Executive's Retirement Date.

As of Petition Date, Mr. Heath reports that 23 retired Key
Executives were receiving payments under the Retirement Plan in
the aggregate monthly amount of $99,000.  "The total amount of
Permitted Retirement Plan Payments due to the Retired Key
Executives under the Retirement Plan is approximately
$6,800,000," Mr. Heath informs Judge Walsh.

Mr. Heath notes that the Retired Key Executives are prominent
citizens in the communities in which the Debtors operate, and
maintain close, personal relationships with several of the
Debtors customers and employees.  The Debtors contend that their
failure to honor their commitments to the Retired Key Executives
under the Retirement Plan would undermine the Debtors' support
from these key constituencies, including the federal, state and
local representatives for the communities, and have a negative
impact on their reorganization efforts.

Thus, the Debtors also ask Judge Walsh for authority to pay the
Permitted Retirement Payments.

                     Buffalo Color Objects

Buffalo Color Corporation is an unsecured creditor of the
Debtors, having an unpaid claim of the Petition Date of nearly
$500,000.  Buffalo Color sells indigo dye to the Debtors.

Jami B. Nimeroff, Esq., at Buchanan Ingersoll PC, in Wilmington,
Delaware, notes the Debtors are seeking to pay over $22,000,000
in pre-petition payments to former employees and executive who
no longer provide any services to the Debtors.  "But the motion
is devoid of any factual basis supporting these conclusory
allegations or supporting a determination by this Court that any
of the payments sought to be made are reasonable and necessary
to support the Debtors' reorganization," Ms. Nimeroff observes.  
"It is based on the Debtors' pure speculation," Ms. Nimeroff

Even if this Court would consider allowing the Debtors to make
these substantial payments on account of pre-petition severance
obligations, Ms. Nimeroff asserts that it is far too premature
at this stage in the cases to authorize this request.  "If the
Debtors make the requested payments at this early stage, they
have no means of ensuring that the payments will cause the
former employees to speak positively about the Debtors and
promote the Debtors' reorganization efforts," Ms. Nimeroff
points out.  And even if this Court is inclined to authorize
these pre-petition payments, Ms. Nimeroff continues, this Court
should not do so at least until the Debtors have realized the
benefit of their bargain, and the former employees and
executives have promoted the Debtors and their reorganization
efforts and refrained from engaging in the negative public
relations campaign about which the Debtors claim to be so
concerned. (Burlington Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   

CNC: Fitch Downgrades Series 1994-1 Pass-Through Certificates
CNC's pass-through certificates, series 1994-1 classes are
downgraded by Fitch as follows: the $38.6 million class A-1, the
$36.5 million class A-2 and the $33.7 million class A-3 to
'BBB-' from 'A'; the $9.8 million class B to 'B-' from 'BB'; the
$7.8 million class C to 'CCC' from 'B'; and the $7.8 million
class D to 'CCC' from 'B-'. In addition all classes, A-1, A- 2,
A-3, B, C and D are placed on Rating Watch Negative. The rating
actions follow Fitch's review of the transaction as a result of
the downgrade of Fitch's corporate rating of Kmart. The
transaction closed in May 1995.

Since closing the transaction has paid down 32.4% to $132.5
million. As a result of two recent loan payoffs the current
transaction has become more concentrated with a larger exposure
to Kmart leases. Currently Kmart represents 49% of transaction's
outstanding balance. Other major tenants include Wal-Mart 34%
and Food Lion 12%.

The ratings downgrades are a result of further deterioration in
the credit ratings of the largest tenant concentration, Kmart.
Fitch downgraded its ratings of Kmart to 'CCC' from 'B+' and
while keeping the rating on Rating Watch Negative (see press
release dated Jan. 16, 2002). It appears increasingly likely
that Kmart will choose to file Chapter 11. Should this happen,
Fitch will closely monitor Kmart's decision to affirm or reject
its leases in bankruptcy court.

The ratings of credit tenant lease transactions are highly
sensitive to the movements of the corporate credit ratings of
the underlying tenants. When the 49% of the pool secured by
Kmart leases were lowered , the resulting subordination levels
generated by Fitch's analysis necessitated the downgrades.

Fitch will continue to monitor the transaction, as surveillance
is ongoing.

CHIQUITA BRANDS: Begins Solicitation of Votes on Pre-Pack Plan
Chiquita Brands International, Inc., (NYSE: CQB) announced that
Judge J. Vincent Aug, Jr., authorized Chiquita to solicit votes
on its Pre-Arranged Plan of Reorganization under Chapter 11 of
the U.S. Bankruptcy Code.

The Plan provides for the restructuring of the publicly held
debt and equity securities of Chiquita Brands International,
Inc., which is a parent holding company without any business
operations of its own.  The Plan does not affect the Company's
business operations, which are conducted by independent
subsidiaries that generate positive cash flow and have access to
their own credit facilities.  These subsidiaries continue to
operate normally, and their creditors will be unaffected.

A Disclosure Statement and an accompanying ballot will be mailed
this week to the Company's public debt and equity holders, who
will vote on the Company's restructuring plan.  All ballots must
be received by the solicitation agent by February 28, 2002.

The Court hearing on confirmation of the Plan is scheduled for
March 8, 2002, in Cincinnati.

Copies of Chiquita's press releases announcing Board nominees
(January 17, 2002), its Chapter 11 Filing (November 28, 2001),
and its agreement with bondholders (November 12, 2001) are
available on  

Chiquita is a leading international marketer, producer and
distributor of quality fresh fruits and vegetables and processed

DebtTraders reports that Chiquita Brands' 10.250% bonds due 2009
(CQB4) are trading between 89.5 and 90.5. See

COMDISCO INC: Citibank Clarifies Interests in Credit Agreements
Citibank N.A. -- as Administrative Agent under certain pre-
petition Credit Agreements -- asks the Court for an order:

  (a) clarifying that the Banks' interests under the Pre-
      Petition Credit Agreements constitute claims that can be
      freely transferred without the consent of Comdisco Inc. or
      approval of the Court, or in the alternative, that

  (b) the terms of the Credit Agreements requiring the consent
      of Comdisco to effectuate assignment of Bank interests are
      ineffective under applicable law, or in the alternative,

  (c) requiring Comdisco to consent to the assignment of
      interests under the Credit Agreements.

Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, in New York,
New York, relates that prior to the Petition Date, the Debtors
obtained $550,000,000 of credit pursuant to:

  (i) that certain Credit Agreement dated as of December 5, 2000
      -- 364 Day U.S. Credit Agreement -- among the Debtors, the
      banks, Bank of America N.A. as Syndication Agent, Bank One
      N.A. as Documentation Agent, Bane of America Securities
      LLC and Salomon Smith Barney Inc. as Lead Arrangers and
      Citibank N.A. as Administrative Agent; and

(ii) that certain Fifth Amended and Restated Global Credit
      Agreement dated as of December 16, 1996 among Comdisco,
      the subsidiaries of Comdisco as Multi-Currency Borrowers,
      the banks, the Tranche Agents, Bank of America N.A. as
      Syndication Agent and Citibank N.A. as Administrative

Under the Credit Agreements, Ms. Ball says, a Bank may assign
all or a portion of its rights and obligations under those
agreements if certain conditions are satisfied.  The conditions
include the consent of all the Agents and the consent of
Comdisco "which shall not be unreasonably withheld", Ms. Ball
informs Judge Barliant.

Since the Petition Date, Ms. Ball recalls, several Banks have
attempted to assign all or part of their interests under the
Credit Agreements and have executed the specified form of
Assignment and Acceptance.  "But Comdisco has refused to give
its consent to the assignments," Ms. Ball complains.

Even before the filing of these cases, Ms. Ball reports that
multiple Events of Default had occurred under the Credit
Agreements.  "Comdisco's filing of a bankruptcy petition
constituted an Event of Default under the Credit Agreements,"
Ms. Ball says.  Accordingly, Ms. Ball says, all obligations of
the Banks to lend under the agreements automatically terminated.  
The filing of the bankruptcy petition also caused the
obligations owed to automatically accelerate and become
immediately due and owing, Ms. Ball adds.

According to Ms. Ball, Citibank filed two Master Proofs of Claim
for obligations incurred by Comdisco prior to the Petition Date.
"Except for transfers to Affiliates of existing Banks or to
other Banks, the proofs of claim filed do not implement any
transfers of claims under the Credit Agreements that various
Banks wish to consummate," Ms. Ball explains.

Ms. Ball asserts that Rule 3001 allows a transfer of claim after
a proof of claim if filed without requiring the approval of the
Court or the Debtor.  So given that all obligations owed by the
Banks to Comdisco have been completed and a Proof of Claims has
been filed, Ms. Balls contends that any transfer of Bank
interests under the Credit Agreement simply constitutes a
transfer of claims subject to Rule 3001.

But even if the transfer of interests is not governed by Rule
3001(e), Ms. Ball insists that any consent requirement in the
Credit Agreement is ineffective under applicable law.  Under New
York law, Ms. Ball relates, any term of a contract requiring
consent of another party to an assignment of the obligations or
rights under a contract is general invalid and ineffective
unless the contract specifically and expressly states that an
assignment will be void without the consent of the applicable

Still, even if the consent provision is upheld under New York
law, Ms. Ball argues that consent to assignment cannot be
unreasonably withheld.  Consent should be granted to the Banks
upon request, Ms. Ball asserts.

Ms. Ball informs Judge Barliant that the Debtors' reason for
refusing to consent to the transfer is its fear that the bank
debt would be transferred to institutions it did not know and
that might not have the same relationship with Comdisco as the
Existing Banks.  "However, given that a large number of claims
and interests are held by holders of publicly traded bonds and
debentures whose owners change on a daily basis, Comdisco's
refusal to grant consent to assignment of bank debt is clearly
unreasonable," Ms. Ball maintains. (Comdisco Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)   

EMPIRE INSURANCE: S&P Withdraws Pool Members' Low-B Ratings
Standard & Poor's withdrew its double-'B'-minus counterparty
credit and financial strength ratings on Empire Insurance Co.,
Allcity Insurance Co., and Centurion Insurance Co., which are
the members of the Empire Insurance Intercompany Pool (Empire).  
These ratings were withdrawn at the request of company

Empire is in the process of a complete and orderly liquidation
of all the group's operations.  Empire -- though still part of
Leucadia National Corp., which will continue to be rated -- will
no longer be subject to continuous surveillance by Standard &

ENRON CORP: Energy Units Reject 600+ Gas & Power Contracts
Enron Energy Service Operations, Inc., Enron Energy Services
Inc., and Enron Energy Marketing Corp. sought and obtained the
Court's authority to reject more than 600 gas, power and bundled
services contracts effective January 4, 2002.

Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
New York, tells the Court that the Enron Energy Services Debtors
and their non-debtor affiliates are primarily engaged in the
business of extending the Enron Companies' energy expertise and
capabilities to end-use retail customers in the industrial and
commercial business sectors to manage their energy requirements
and reduce their total energy costs.

According to Ms. Gray, the Enron Energy Services Debtors have
developed long-term, multi-year relationships with their
customers, documented in the form of various executory
contracts, including the Rejected Contracts.  Among the services
that Enron Energy Services Debtors provide their customers are:

    (1) providing and/or managing commodity supply and commodity
        price risk;

    (2) providing outsourcing for energy services;

    (3) providing facilities management and project construction
        services; and

    (4) providing capital for energy related projects and

Ms. Gray informs Judge Gonzalez that the Enron Energy Services
Debtors are in the process of evaluating over 25,000 retail
power and gas contracts -- to determine which are valuable to
the estate and which are burdensome.  The Rejected Contracts are
just some of these transactions that provide no economic value
to the Debtors' estates, Ms. Gray says.  Accordingly, because
the burdens outweigh the benefits, Enron should walk away from
these contracts using the contract rejection provisions
contained in 11 U.S.C. Sec. 365.

Ms. Gray advises the Court that because the evaluation process
is ongoing, the Enron Energy Services Debtors anticipate
identifying additional burdensome executory contracts and
seeking the authority to reject such contracts at later dates.
(Enron Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

ENRON CORP: Gottesdiener Uncovers 'Town Hall Meeting' Transcript
A 10-page transcript of an electronic town hall meeting Enron
Chairman and CEO Kenneth Lay held with Enron workers on
September 26, 2001 was released Friday by The Gottesdiener Law
Firm (

According to Eli Gottesdiener, the head of the Washington, D.C.
401(k) and pension class action law firm, the transcript is "the
clearest evidence yet that Mr. Lay broke faith with his

Gottesdiener filed suit in November against Enron Corporation,
top Enron officials, Arthur Andersen and other defendants in
federal court in Houston to recover some $1 billion in Enron
employees' retirement savings (  

The meeting was held via the Company intranet on September 26,
2001. The date is important, Gottesdiener explained, because it
was more than a month after Enron Vice President Sherron S.
Watkins warned Lay in mid-August, in writing and then in person,
that questionable accounting practices could bring about the
Company's downfall and that she was "incredibly nervous that we
will implode in a wave of accounting scandals."

The transcript of the September 26, 2001 meeting with employees
reveals that Lay did not disclose that anyone had any concerns
about Enron's finances or financial reporting. To the contrary,
the transcript shows Lay repeatedly urging employees to view the
stock's then-current $27-a-share purchase price as "an
incredible bargain," "an incredibly cheap stock," and a "great
opportunity." Enron is now in bankruptcy and its stock is
selling for less than $1 a share.

In addition, although in the meeting Lay claimed that "(t)he
third quarter is looking great," "(w)e will hit our numbers,"
and "(w)e are continuing to have strong growth in our
businesses," just two weeks later, on October 16, 2001, the
Company announced a stunning $618 million third quarter loss,
its first in many years, that caught the financial markets by

The transcript also reveals an employee, one of Gottesdiener's
clients, specifically questioning Lay about the Company's use of
"special purpose vehicles," i.e., the offshore, off-balance
sheet partnerships which would later figure prominently in the
Company's collapse. This employee also specifically questioned
Enron's use of Arthur Andersen for these "SPV" transactions in
light of SEC fines Andersen had been forced to pay for its
handling of similar matters for Waste Management, Inc. The
employee asked Lay "to reassure us we have no such problems here
at Enron."

Lay did so, saying "I can assure you that I or the Board of
Directors would not approve the use of any SPVs or other types
of financial vehicles unless we were convinced both by all of
our internal officers as well as our external auditor and
counsel that they were legal and totally appropriate." Lay made
additional reference to "approval" both "internally and

Gottesdiener points out, however, that Ms. Watkins was an
"internal officer()" who, along with some other Enron officers,
did not believe Enron's use of the SPV's was legal or
appropriate and specifically told Lay so just a few weeks
earlier. Additionally, Gottesdiener noted, Lay's reference to
approval by outside counsel was also arguably misleading because
the limited review Lay authorized Houston firm Vinson & Elkins
to conduct into Ms. Watkins' contentions was not complete until
October 15th. The same was true, Gottesdiener explained, with
respect to Arthur Andersen which was reportedly taking another
look at the SPV's in the wake of Ms. Watkins' allegations.

"Knowing what he knew about Enron's phony accounting and hidden
losses," Gottesdiener asks, "how could Mr. Lay in good
conscience repeatedly tell employees, who had their life savings
tied up in Enron stock, that everything was on the up-and-up and
that they should buy even more Enron stock?"

Referring to a recent story reporting that Lay had sold millions
of dollars of his own stock after receiving Ms. Watkins'
warnings, Gottesdiener said, "Mr. Lay clearly has a lot of
explaining to do."

Based in Washington, D.C., the Gottesdiener Law Firm and its
principal attorney, Eli Gottesdiener, specialize in complex
civil and criminal litigation on behalf of plaintiffs and
defendants in federal and state courts. Mr. Gottesdiener has
prosecuted some of the leading pension and 401(k) plaintiffs'
class action cases in the country, including Mehling v. New York
Life Ins. Co., a pending pension and 401(k) class action case
against New York Life Insurance Company; Gottlieb v. SBC
Communications, Inc., a 401(k) class action against SBC; and
Franklin (I and II) v. First Union Corp., two 401(k) class
actions against First Union Corporation that were recently
successfully settled for $26 million.

ENRON GLOBAL LNG: Case Summary & Largest Unsecured Creditors
Debtor: Enron Global LNG LLC
        1400 Smith Street
        Houston, Texas 77002

Bankruptcy Case No.: 02-10060-ajg

Type of Business: Development and holding company for Enron's
                  various worldwide LNG projects.

Chapter 11 Petition Date: January 7, 2002

Court: Southern District of New York (Manhattan)

Judge: Arthur J. Gonzalez

Debtor's Counsel: Melanie Gray, Esq.
                  Weil, Gotshal & Manges LLP
                  700 Louisiana, Suite 1600
                  Houston, Texas 77002
                  Telephone: (713) 546-5000


                  Brian S. Rosen, Esq.
                  Weil, Gotshal & Manges LLP
                  767 Fifth Avenue
                  New York, New York 10153
                  Telephone: (212) 310-8000

Total Assets: $(17,511,418)

Total Debts: $10,215,264

Debtor's Largest Unsecured Creditors:

Entity                      Nature Of Claim       Claim Amount
------                      ---------------       ------------
URS Corporation             Trade Debt              $272,658
Roger Gunther
700 S. Royal Pinciana Blvd.
Suite 1000
Miami, FL 33166

Merlin Production, Inc.     Trade Debt                $20,779

AnalySys, Inc.              Trade Debt                $19,842

ERM-West, Inc.              Trade Debt                $10,500

Golder Associates Inc.      Trade Debt                 $6,000

VIP Services                Trade Debt                 $5,093

Lloyd's Register of         Trade Debt                 $5,000

R.J. Lakey & Associates     Trade Debt                 $1,700

EQUUS GAMING: Unit Negotiating Cure for Mortgage Note Default
El Comandante Capital Corporation (ECCC), a wholly owned
subsidiary of Housing Development Associates S.E., which in turn
is owned by Equus Gaming Company L.P. (OTC Bulletin Board:
EQUUE), a Virginia limited partnership, announced that ECCC is
continuing its efforts to cure the interest default on its
mortgage notes and to reach agreement with noteholders on a
standstill on principal redemptions.  Discussions with
government and bank representatives in Puerto Rico are in an
advanced stage, but at this time there are no binding financial
commitments.  Noteholders' counsel has been informed of these
developments and discussions are continuing with a view toward
reaching agreement with noteholders on bringing interest current
and allowing ECCC time to arrange alternative financing.

Equus Gaming Company (OTC Bulletin Board: EQUUE) is a publicly
traded partnership with thoroughbred horse races and
entertainment interests in Latin America and the Caribbean.

Although the Company believes the expectations reflected in the
above forward-looking statement are based on reasonable
assumptions, it gives no assurance that its expectations will be

EXODUS: Deutsche Bank Buying Parsippany IDC for $45MM + Debts
Exodus Communications, Inc., and its debtor-affiliates operate
an IDC in Parsippany, New Jersey, located in a leased facility
at Two Gatehall Drive.  They no longer require the use of this
IDC to provide services to their customers. Continued
maintenance and ownership of the IDC is not in the best
interests of the Debtors' estates.  Accordingly, the Debtors ask
the Court for permission to sell their interests in the IDC to
the highest and best bidder.

Subject to higher and better offers, Deutsche Bank, AG, offers
to pay the Debtors $45,000,000 in cash and assume the Debtors'
lease obligations.

Prior to the Petition Date, David R. Hurst, Esq., at Skadden
Arps Slate Meagher & Flom LLP reminds the Court, the Debtors and
their professionals engaged in an extensive process to elicit
bids with respect to the assignment of the Lease and the sale of
the Personal Property. Specifically, prior to the Petition Date,
the Debtors identified and contacted approximately 15-20
different parties thought to have an interest in acquiring the
IDC. Based on these initial contacts, approximately six showings
of the Property were made, approximately three of which
responded with various proposals relating to the Leased Property
and/or the Personal Property.

Mr. Hurst tells the Court that the Debtors concluded, based on
the expressed interest, that Deutsche Bank, AG's proposal to
take an assignment of the Leased Property and purchase the
Personal Property was the highest and best offer for such
assets, and thus the Debtors selected Deutsche's offer as a
"stalking horse" for soliciting competitive bids from other
interested parties.

The salient terms of the Asset Purchase Agreement:

A. Purchased Assets: Deutsche will purchase all fixtures,
   equipment, personal property and any other property
   attached to, located on or at the premises that are the
   subject of the Lease, including but not limited to all
   certificates of occupancy, approvals, licenses and permits
   utilized to operate the premises.

B. Assignment: Deutsche, through its designee, Gemini Technology
   Services, Inc., will acquire the Debtors' leasehold
   interest in the Lease, by having Gemini take an assignment
   of the Lease. The Lease shall be amended by agreement
   between Gemini and the Debtor's landlord, Two Gatehall
   Associates, LLC as more fully described in the Closing

C. Consideration: The purchase price shall be $45,000,000,
   payable as follows:

     1. a $3,000,000 deposit to be paid within two business days
        after an unstayed order is delivered to Deutsche
        approving the Break-Up Fee;

     2. $38,750,000 by wire transfer at closing; and

     3. $3,250,000 to be held in escrow subject to the terms of
        the Asset Purchase Agreement.

D. Proposed Closing Date: The proposed closing date shall be
   five business days following the date an unstayed Sale Order
   is entered and the Debtors have given Deutsche notice

E. Break-Up Fee: If Deutsche is outbid by a Court-approved
   Successful Bidder, Deutsche shall receive a Break-Up Fee of
   $1,000,000. The Break-Up Fee shall be payable two days
   after the consummation of the sale to the Successful

F. Expense Reimbursement: The Expense Reimbursement Fee in an
   amount not to exceed the Break-Up Fee will be paid as
   Reimbursement for out-of-pocket costs incurred in
   connection with Deutsche's due diligence of the Property if
   the sale to Deutsche does not go forward for reasons other
   than Deutsche's breach of the Asset Purchase Agreement. The
   Expense Reimbursement Fee shall not be payable if the
   Break-Up Fee is approved by the Court.

G. Amendments: Gemini and the Landlord have negotiated an
   amendment to the Lease, as well as an amendment to the non-
   disturbance agreement with the Landlord's lender, both of
   which documents are effective upon the consummation of the
   transactions contemplated by the Asset Purchase Agreement.

Mr. Hurst states that the Debtors have determined that they do
not require the use of the IDC located on the Leased Property to
service the needs of their customers. Accordingly, the Personal
Property located on the Leased Property is not required to
support the Debtors' on-going operations, and the Debtors'
continued ownership of such Personal Property does not benefit
the estates. On the other hand, the Debtors will receive a
substantial cash infusion from the sale of the Personal

Because the Asset Purchase Agreement was negotiated at arms-
length and in good faith after other parties and their proposals
for some or all of the Property were considered, the Court
should find that Deutsche has acted in good faith within the
meaning of section 363(m) of the Bankruptcy Code.

In order to facilitate the sale of the Property, the Debtors
require authorization to sell it free and clear of any and all
liens or interests that may be asserted, with such liens to
attach to the sale proceeds.  Mr. Hurst submits that all liens
on the Property will attach to the proceeds of sale with the
same force, effect and priority as such liens have on the
Property, subject to the rights and defenses, if any, of the
Debtors and any party in interest with respect thereto.
Accordingly, the Debtors submit that the sale of the Property
free and clear of liens, claims and encumbrances satisfies the
statutory prerequisites of section 363(f) of the Bankruptcy
Code. (Exodus Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

FMAC: Fitch Lowers Trust 1996-A Series Ratings Over Write-Downs
Fitch downgrades Franchise Loan Receivables Trust 1996-A classes
B1 and B2 to 'C' from 'BB' and class C1 to 'D' from 'C'. The
downgrade is a result of write-downs in the pool which resulted
from a restructure of a distressed loan. This downgrade also
anticipates additional losses on a second borrower, which is
currently being restructured. The deal suffered a $3.9 million
loss as a result of the restructure. The distributions of the
losses caused class C2 to be written down to $0 and class C1 to
be written down by $1.8 million. Currently, classes B1 and B2
have 3.25% subordination. Classes B1 and B2 will remain on
Rating Watch Negative.

Fitch downgrades FMAC Loan Receivables Trust 1997-A class D to
'BB' from 'BBB', class E to 'CCC' from 'B+' and class F to 'D'
from 'CCC'. The downgrade is a result of losses in the pool
resulting from the liquidation of two loans as well as an
anticipated loss on a borrower who is currently being
restructured. The distribution of losses caused the retained
certificate amount to be written down to $0 and class F to be
written down by approximately $400,000. Delinquencies in this
pool have continued to rise and now stand at nearly $23 million.
At this time Fitch is also placing classes B and C on Rating
Watch Negative. Classes D and E will remain on Rating Watch

Fitch downgrades FMAC Loan Receivables Trust 1997-C class A to
'AA-' from 'AAA', class B to 'CCC' from 'BBB-' and class C to
'C' from 'B-'. The downgrade is a result of a projected long-
term liquidity issue within the pool. Fitch has been informed by
the servicer of a plan to recoup approximately $4.7 million
dollars in protective advances made on behalf of a defaulted
borrower. The plan calls for the payment of class A interest
only with all remaining monthly collections being retained by
the servicer. The servicer has indicated that they anticipate it
will take approximately 10 months to fully recoup the advance.
All classes will remain on Rating Watch Negative.

Fitch downgrades FMAC Loan Receivables Trust 1998-C class C to
'A-' from 'A', class D to 'BB+' from 'BBB-', class E to 'B-'
from 'BB-' and class F to 'CCC' from 'B-'. The downgrade is a
result of a $5.5 million dollar loss in the pool as a result of
the restructure of a distressed borrower. This pool currently
has $17 million dollars in default, $11 million of which is
represented by a single borrower and over $30 million delinquent
greater then 60 days with $24 million represented by a single
borrower. All classes will remain on Rating Watch Negative.

GENEVA STEEL: Secures Okay for Release of Cash Collateral Pact
On January 16, 2002, Geneva Steel LLC, a wholly owned subsidiary
of Geneva Steel Holdings Corp. (Nasdaq: GNVH), obtained a
consent to the release of cash collateral agreement from the
lenders under its $110 million term loan, which is 85%
guaranteed pursuant to the Emergency Steel Loan Guarantee
Program.  The term loan is secured by a first-priority lien on
Geneva's accounts receivable, inventory and fixed assets.  The
consent permits Geneva, upon written request to the lenders for
release of collateral, to use up to $2.4 million of the proceeds
from the sale of inventory and collection of accounts receivable
through January 23, 2002, in accordance with an agreed upon
budget.  This consent may be terminated upon the commencement of
a bankruptcy proceeding by Geneva or 24 hours following written
notice to Geneva of certain circumstances justifying such
termination, if such circumstances have not been cured. Geneva
and the term loan lenders are currently negotiating an
arrangement for the use of cash collateral over a more extended
period.  There can be no assurance that these amounts will be
sufficient, if released, to fund the Company's operations or
that the Company will obtain any relief beyond January 23, 2002.

Geneva owns an integrated steel mill in Vineyard, Utah.  The
Company's products include steel plate, hot-rolled coil, pipe
and slabs for sale primarily in the Western and Central United

GRAHAM PACKAGING: Will Close UK Plastics-Container Plant in Q2
Graham Packaging Company, L.P., based in York, will close its
plastics-container manufacturing plant in Wrexham, Wales, United
Kingdom, during the second quarter of this year.

"The closing of this plant is a result of changes in our
strategic customers' needs in the European market," said Ashok
Sudan, vice president and general manager of Graham Packaging
Europe.  "Over the years, the container requirements of our
customers whose business previously supported the Wrexham
plant's operation have been moved to other locations in the
United Kingdom or to continental Europe," he explained.

"We regret the need to close this facility and sincerely
appreciate the hard work and dedication of our employees over
the years.  These are great people with a strong work ethic,"
Sudan said.  "We attempted to find a way to restructure or sell
the operation in order to preserve the jobs here, but
unfortunately this did not make economic sense."

Sudan said Graham Packaging would begin formal consultations
with union representatives to discuss the terms of the closure.  
Employees are represented by the Graphical, Paper and Media
Union.  The building that houses the Wrexham plant will be put
up for sale.

Despite this closing, Sudan said Graham Packaging remains
committed to the European market.  "We intend to continue to
restructure our business as needed to better serve our strategic
customers."  He noted that the company opened new plants in
Poland and Spain, expanded a plant in Belgium in 2001 and plans
to open a new plant in France later this year.

Over the past two years, Graham Packaging has strengthened its
management team in Europe, invested approximately US$50 million
in European locations, and has refocused the business on key
strategic customers with its most productive technology.

Graham Packaging designs and makes customized blow-molded
plastic containers for branded food and beverage products,
household and personal care products, and automotive lubricants.  
The company employs approximately 4,000 people at close to 60
plants throughout North America, Europe, and Latin America and
produces more than six billion containers per year.  Worldwide
sales for the 12 months ending in September 2001 were
approximately $900 million. In addition, as at July 01, 2001,
the company's stockholders' equity deficit totaled about $400

GUILFORD MILLS: Senior Lenders Extend Loan Waiver to February 15
Guilford Mills, Inc., (NYSE: GFD) announced that its senior
lenders agreed to extend further a waiver of the Company's non-
compliance with certain financial covenants.  The agreement
reached Friday last week between the Company and its lenders
extends the expiration date of the current waiver, and defers an
interest payment date, from January 18, 2002 to February 15,
2002. The Company and its advisors are in active negotiations
with its lenders regarding a restructuring of Guilford's senior

John Emrich, President and Chief Executive Officer, said, "We
are pleased that our lenders have agreed to this extended waiver
period, as it allows the parties to continue their negotiations
toward a mutually satisfactory restructuring of the Company's
senior debt.  The Company is working closely with its investment
bankers at Rothschild Inc., in order to develop a senior debt
restructuring plan which would afford the Company an opportunity
to implement its business plan.  While Guilford and the entire
textile industry are obviously operating under tough economic
conditions, we are fully committed to succeed in the face of
these challenges and appreciate the support of our employees,
customers and suppliers during this period."

Guilford Mills is an integrated designer and producer of value-
added fabrics using a broad range of technologies.  The Company
is one of the largest warp knitters in the world and is a leader
in technological advances in textiles, including microdenier
warp knits and wide width circular knits of cotton blended with
LYCRAr.  Guilford Mills serves a diversified customer base in
the home furnishings, apparel, automotive and industrial
markets. Through its Guilford Home Fashions subsidiary, the
company produces bedding products, window treatments and shower
curtains for the retail market.

HAMILTON BANCORP: OCC Padlocks Firm & Appoints FDIC as Receiver
Hamilton Bancorp Inc.'s (Nasdaq: HABK) subsidiary Hamilton Bank,
N.A. was placed into receivership on Friday, January 11, 2002 by
the Office of Comptroller of the Currency (OCC).  The Federal
Deposit Insurance Corporation has been designated as the
receiver.  Hamilton Bank, N.A. was the Company's sole operating
asset.  As a result of the seizure of the Bank, the Company has
limited tangible assets.  As the owner of 99.8% of the Bank, the
Company will be entitled to any net recoveries following
liquidation of the Bank by the FDIC.  At this time the Company
is unable to provide any assurances that any recovery will be
realized or the timing of any such recovery.

Hamilton Bank's management said it felt that the actions taken
by the OCC were extreme, unwarranted and unjust.  Preliminary
unaudited financial information from Bank officials indicated
that, prior to seizure, the Bank's capital was approximately $79
million with reserves for loan losses of approximately $54
million.  In addition, the Bank had approximately over $287
million in liquid and readily marketable securities consisting
largely of U.S. government obligations.  Furthermore, as the OCC
was aware, at the time of intervention, the Bank was in
discussions with a U.S. bank holding company as a potential
buyer.  Those discussions included the potential buyer's
possible acquisition and re-capitalization of the Bank as a

Bank officials vehemently dispute a number of statements
contained in the OCC's press release of January 11, 2002 and
assert that those claims are both inaccurate and misleading.  On
December 12, 2002 the Bank and the Company filed a lawsuit
against the Office of the Comptroller of the Currency alleging
that the OCC, over the course of the past two years, has engaged
in a pattern of behavior to support preconceived conclusions of
wrongdoing.  The Bank's Board of Directors remains concerned
with the OCC's irregular pattern of behavior and continued
disregard of its internal policies and procedures.

As a result of the seizure of the Bank, the Company does not
fully satisfy the requirements for continued listing on the
Nasdaq National Market.  As a result, the Company requested
delisting of its common stock from the Nasdaq National Market.  
Also, as a result of these actions, the trust preferred shares
issued by Hamilton Capital Trust I (Nasdaq: HABKP) will also be

HARTMARX CORP: Completes Exchange Offer for 10-7/8% Notes
Hartmarx Corporation (NYSE: HMX) completed its exchange offer
for its 10-7/8% Senior Subordinated Notes Due 2002 (CUSIP No.
417119AC8). The exchange offer expired as scheduled at midnight
on January 15, 2002.

Hartmarx reported that, based on information provided by the
exchange agent for the exchange offer, $31,705,000 principal
amount of Existing Notes was properly tendered during the
offering period, representing approximately 91.2% of the
outstanding Existing Notes. In accordance with the previously-
publicized terms of the exchange offer, Hartmarx will issue an
aggregate of $25,364,000 principal amount of 12-1/2% Senior
Unsecured Notes due 2003 and 2,948,565 shares of its common
stock and will pay $6,341,000 in cash to the holders of the
Existing Notes tendered and accepted for exchange in the
exchange offer. Hartmarx accepted for exchange all of the
Existing Notes properly tendered and not withdrawn prior to the
expiration of the exchange offer.

Elbert O. Hand, Chairman and Chief Executive Officer of
Hartmarx, stated, "We are pleased that we were able to
successfully complete this exchange offer. This $25 million of
additional liquidity will allow the Company to execute its
business plan."

Hartmarx produces and markets business, casual and golf apparel
products under its own brands including Hart Schaffner & Marx,
Hickey-Freeman, Palm Beach, Coppley, Cambridge, Keithmoor,
Racquet Club, Naturalife, Pusser's of the West Indies, Royal,
Brannoch, Riserva, Sansabelt, Barrie Pace, and Hawksley & Wight.
In addition, Hartmarx has certain exclusive rights under
licensing agreements to market selected products under a number
of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth
Cole, Burberry men's tailored clothing, Ted Baker, Pringle of
Scotland, Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone,
Pierre Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter.
Hartmarx's broad range of distribution channels includes fine
specialty and leading department stores, value-oriented
retailers and direct mail catalogs.

HARTMARX: S&P Downgrades Corporate Credit Rating to SD from CC
Standard & Poor's lowered its corporate credit rating on
Hartmarx Corp., to 'SD' (selective default) from double-'C' and
the senior subordinated debt rating to single-'D' from single-
'C'. The ratings were removed from CreditWatch, where they were
placed on October 4, 2001.

Subsequently, the single-'D' rating on Hartmarx' senior
subordinated 10.875% notes due January 15, 2002 is withdrawn.

The downgrade reflects the completion of an exchange offer on
the 10.875% notes due January 15, 2002 with bonds maturing in
2003 plus an amount of cash and common stock. In December 2001,
Hartmarx claimed in an 8-K filing that, if the company is
unsuccessful in completing the exchange or obtaining additional
financing, it would need to restructure its debt. Standard &
Poor's considers the completion of the exchange to be tantamount
to a default, given the coercive nature of the offer.

Standard & Poor's will assess Hartmarx' creditworthiness and
will assign a new rating to the company shortly.

HILLY REALTY: Chapter 11 Involuntary Case Summary
Alleged Debtor: Hilly Realty Corp.
                238 East 53rd Street
                New York, NY 10022

Involuntary Petition Date: January 18, 2002

Case Number: 02-10247-smb               Chapter: 11

Court:  Southern District of New York

Judge: Stuart M. Bernstein

Petitioner's Counsel: Arnold Mitchell Greene, Esq.
                      Robinson Brog Leinwand Greene et al
                      1345 Avenue of Americas
                      New York, NY 10105
                      Tel: 212 586 4050

Petitioner                Nature of Claim         Claim Amount
----------                ---------------         ------------
A.K. Harbor Associates    Debt Under Note          $4,992,384
c/o Belkin, Borden,
Wenig & Goldman
342 Madison Ave.
New York, NY 10173

Park View Associates      Default Under Note       $3,792,000
Robinson Brog et al
Attn: A. Mitchell Greene
1345 Avenue of Americas
New York, NY 10105

MV Assocuates, LLC        Debt Under Note          $1,327,651
c/o R.A. Cohen &
60 East, 42nd Street
Suite 1250
New York, NY 10165

Hudson View Associates    Default Under Note       $1,327,651
Robinson Brog et al
Attn: A. Mitchell Greene
1345 Avenue of Americas
New York, NY 10105

IMPSAT FIBER: S&P Drops $125 Million Senior Notes Rating to D
Standard & Poor's lowered its rating on Impsat Fiber Networks
Inc.'s (Impsat) US$125 million senior notes due 2003 to 'D' from

The downgrade follows the company's failure to make the interest
payment due on January 15. As was previously stated in the
December 19, 2001, press release, Impsat is under a financial
restructuring process destined to revert its high debt burden.
On December 19, 2001, Standard & Poor's lowered its corporate
credit rating on the company to 'D'. Impsat has retained the
investment-banking firm Houlihan Lokey Howard & Zukin Capital as
an advisor for the restructuring process.

Standard & Poor's will re-assess the credit quality of the
company once the restructuring process is finalized.

IMPERIAL METALS: Files Plan of Arrangement Under CCAA in Canada
Imperial Metals Corporation (TSE: IPM.) filed a Plan of
Arrangement under the Company Act of British Columbia and the
Companies' Creditors Arrangement Act with the Supreme Court of
British Columbia and was authorized to present the Plan to its
shareholders and debtholders at meetings to be held in Vancouver
on March 7, 2002.

The Plan will allow the Company to maximize the value of its
existing assets for the benefit of all stakeholders. The Plan
will also give the Company the means to strengthen its balance
sheet, secure new financing and focus on attracting and
developing new opportunities in both the mining and the oil and
natural gas businesses.

The Plan contemplates the division of Imperial's operations into
two distinct businesses, one focused on oil and natural gas and
the other focused on mining. All of the Company's existing oil
and natural gas and investment assets will be retained in
Imperial and a new company, to be owned by the shareholders of
Imperial, will be established to hold the mining assets. The
shareholders of Imperial will benefit by holding shares in two
companies that are more clearly focused on their respective

Successful completion of the corporate reorganization under the
Plan will allow the Company to move forward and explore new
avenues for growth. The Plan applies to Imperial and two of its
wholly owned subsidiaries, Mount Polley Mining Corporation and
Mount Polley Holding Company Limited.

INTEGRATED BUSINESS: Nasdaq Delists Shares Effective January 18
Integrated Business Systems and Services received notice from
the Nasdaq Listing Qualifications Panel that its stock had been
delisted from the Nasdaq Stock Market effective with the open of
business Friday, January 18, 2002.

As reported late last year, the Company received a Nasdaq Staff
Determination, on October 30, 2001, that the Company failed to
comply with the minimum market capitalization requirement for
continued listing set forth in the Nasdaq Marketplace Rule
4450(b)(1)(A). As a consequence, the Company was notified that
its common stock was subject to delisting from the Nasdaq
National Market.  As permitted by Nasdaq, the Company filed its
request for a hearing before the Nasdaq Listing Qualifications
Panel to review the Staff Determination and present the Panel
with the Company's plan for continued listing on the Nasdaq
Stock Market.  The Company presented its plan for continued
listing in a hearing before the Panel on December 13, 2001.

The panel found that the Company's plan for continued listing
did not provide satisfactory assurance that the Company would
regain the minimum market capitalization requirement for
continued listing within the time frame desired by Nasdaq.

The Company's stock is currently trading on the OTC Bulletin
Board.  The Company intends to reapply for listing on the Nasdaq
Stock Market promptly upon regaining applicable listing

IBSS is a global provider of advanced infrastructure software
that enables companies to facilitate real-time transaction
processing at every stage, from customer order entry through
shipping.  The Company's sophisticated product, Synapse
Manufacturing, is designed to accurately track and schedule each
stage of the manufacturing process and capture real-time data.  
Synapse has the capacity to coordinate any number of related
plants or operations facilities and activities instantaneously,
allowing customer advantages in production time, delivery, and
profitability.  Competitive advantages are easy and rapid
installation, lower product cost and maintenance, and
versatility of the software.  The product applies to any
industry or operations, regardless of size or complexity, and is
especially useful to manufacturing businesses. IBSS has offices
in Columbia, South Carolina and Detroit, Michigan.  Visit the
IBSS Web site at

INTELEFILM: Closes Sale of Chelsea Pictures to Management Team
iNTELEFILM Corporation (FILM) has closed on the sale of one of
its commercial production subsidiaries, Chelsea Pictures, to
that company's management team. "We are pleased to have closed
on the sale of Chelsea Pictures. This is the beginning of the
unwinding of the Company's strategy of being a diversified media
holding company. This shift in strategy, when completed, will
result in a single business focus on webADTV, our majority-owned
digital asset management company. We wish the management team of
Chelsea Pictures continued success with their business," said
Mark A. Cohn, Chairman and CEO of iNTELEFILM.

Chelsea Pictures reports that it expects to continue its steady
growth strategy, working with the best directors and advertising
agencies. Steve Wax, President of Chelsea Pictures, commented,
"Now that the cooks own the kitchen, Lisa, Allison, and I, along
with our other executives and producers are moving forward
energetically. We wish Mark and the iNTELEFILM family of
companies success with their exciting new plans."

iNTELEFILM Corporation FILM, based in Minneapolis, is currently
a diversified media holding company. Individual companies
managed under the iNTELEFILM umbrella include Curious Pictures,
an animation company, New York and San Francisco; DCode, an
advertising company, New York; and WebADTV, Inc., a technology
company, Minneapolis. iNTELEFILM trades on the Over-the-Counter
Bulletin Board under the symbol "FILM." As at Sept. 30, 2001,
the company's liquidity was strained with total current
liabilities exceeded total current assets by over $4 million.
Additional information on the Company can be found in the
Company's filings with the Securities and Exchange Commission
and on the Company's website:

Beginning as a small regional company in Boston, Chelsea has
become a national company with headquarters in New York and
production offices in Los Angeles and Sydney, Australia. Working
first with a group of feature directors known for the realism of
their films, Chelsea built a reputation for creating emotional,
honest television ads. In our thirteen years of existence, the
company has produced over five hundred television spots for such
clients as Mercedes, AT&T, Nike, and Microsoft. In addition to
commercials, Chelsea produced the feature Unmade Beds, directed
by Nicholas Barker, and released in August l998; and Killing
Joe, Directed by Mehdi Norowzian, which was nominated for an
Academy Award in 2000. Our staff includes Steve Wax, President,
Allison Amon, Executive Producer, Lisa Mehling, Executive
Producer/Head of Sales.

KENTUCKY ELECTRIC: Completes Debt Workout, Easing Liquidity
Kentucky Electric Steel, Inc. (Nasdaq:KESI) announced the
results for its fourth quarter and fiscal year ended September
29, 2001. Fourth quarter net sales were $18.4 million, down
29.4% from fourth quarter fiscal 2000 net sales of $26.1
million. The Company's net loss, including a non-cash charge,
was $11.3 million for the fourth quarter, versus a net loss of
$345,000 for the comparable period in fiscal 2000. Net loss for
the fourth quarter of fiscal 2001 included a non-cash charge of
$8.0 million for the write off of deferred tax assets previously
recorded. Net loss for the fourth quarter, excluding the non-
cash charge, was $3.3 million. Finished goods shipments for the
fourth quarter of fiscal 2001 were 43,600 tons, down 21.5% from
the comparable period in fiscal 2000. Also, the average selling
price for the fourth quarter of fiscal 2001 was down 5.9% from
the fourth quarter of fiscal 2000.

Net sales for fiscal 2001 were $77.9 million, down 35.4% from
fiscal 2000 net sales of $120.6 million. The Company's net loss
for the year ended September 29, 2001, including a non-cash
charge, was $15.3 million versus net income for fiscal 2000 of
$317,000. Fiscal 2001 net loss included a non-cash charge of
$5.7 million for the write off of deferred tax assets recorded
in prior years. Net loss for fiscal 2001, excluding the non-cash
charge, was $9.6 million. Finished goods shipments decreased by
31.5 % from 264,800 tons in fiscal 2000 to 181,500 tons in
fiscal 2001. Also, the average selling price for fiscal 2001 was
down 3.9% from fiscal 2000. Fiscal 2001 and fiscal 2000 included
other income of $.5 million and $.8 million, respectively, for a
claim settlement pertaining primarily to the Company's purchase
of electrodes during the years from 1992 to 1997. The net impact
of the electrode settlement increased fiscal 2001 and fiscal
2000 earnings by $.07 and $.11 per share, respectively.

Market conditions in the steel industry, the potential
limitation of utilizing net operating losses under Section 382
of the Internal Revenue Code (as discussed below), and
continuing losses, created uncertainty regarding the
realizability of previously recognized deferred tax assets.
Therefore, the Company recorded a non-cash charge in fiscal 2001
for the entire amount of the previously recognized deferred tax
assets. The Company will not record any additional deferred tax
benefits in the future until the Company returns to an
appropriate level of cumulative financial accounting income. The
ultimate realization of a future tax benefit related to net
operating loss carryforwards depends on the Company's ability to
generate sufficient taxable income in the future.

The realization of a benefit from net operating loss
carryforwards may be limited by Section 382 of the Internal
Revenue Code. Section 382 of the Internal Revenue Code contains
rules designed to discourage persons from buying and selling the
net operating losses of companies. These rules generally operate
by focusing on ownership changes among stockholders owning
directly or indirectly 5% or more of the common stock of a
company or any change in ownership arising from a new issuance
of stock by a company. In general, Section 382 rules limit the
ability of a company to utilize net operating losses after a
change of ownership of more than 50% of its common stock over a
three-year period. Purchases of the Company's common stock in
amounts greater than specified levels could inadvertently create
a limitation on the Company's ability to utilize its net
operating losses for tax purposes in the future.

Charles C. Hanebuth, President and Chief Executive Officer,
commented, "Operating results for the fourth quarter and the
fiscal year ended September 29, 2001 continued to be severely
impacted by weak economic conditions and steel imports which
depressed both shipments and selling prices. In addition,
manufacturing costs per ton increased reflecting lower
production levels and higher energy costs partially offset by
lower raw material costs."

Commenting on current market conditions Mr. Hanebuth stated,
"The general consensus appears to be that the sluggish economy
will continue into the first half of fiscal 2002. As a result,
shipping levels, pricing, and margins will likely remain under
pressure for the next several quarters." Mr. Hanebuth further
stated, "We believe improvements in the overall economy combined
with the Bush Administration's 201 Initiatives related to
imports should have a positive impact on the domestic steel
industry and the demand for our products."

The Company has entered into an amended and restated Line of
Credit Agreement with National City Bank of Kentucky in the
amount of $18,000,000 with a variable interest rate of prime
plus 2.5%. The Agreement expires on November 1, 2005. The
Company also announced that its Senior Note Agreement was
amended to provide for deferral of principal payments and an
increase in the fixed interest rate from 7.66% to 9.0%.
Substantially all of the Company's assets including accounts
receivable, inventory, and property, plant and equipment are
pledged as security for the revised Line of Credit Agreement and
the amended Senior Note Agreement. As of January 16, 2002, the
Company had $10.0 million outstanding and $4.2 million available
under its line of credit as well as $.7 million in cash.

Charles C. Hanebuth, President and Chief Executive Officer,
commented, "We are pleased that we were able to restructure our
short and long term borrowing to improve the Company's
liquidity. We will continue to aggressively manage our working
capital and our cost reduction initiatives."

In accordance with the recently enacted safe harbor provisions
of the securities law regarding forward-looking statements,
except for the historical information contained herein, the
above discussion contains forward looking statements that
involve risks and uncertainties. KESI's actual results could
differ materially from those projected or implied by such
forward looking statements. These risks and uncertainties
include but are not limited to, the reliance on truck and
utility vehicle industry; excess industry capacity; product
demand and industry pricing; volatility of raw material costs,
especially steel scrap, intense foreign and domestic
competition; management's estimate of niche market data; the
cyclical and capital intensive nature of the industry; and cost
of compliance with environmental regulations.

Kentucky Electric Steel, Inc. is a publicly held company which
operates a specialty steel mini-mill manufacturing special
quality steel bar flats for the leaf-spring suspension, cold
drawn bar conversion, truck trailer support beam, and steel
service center markets. Kentucky Electric Steel, Inc.'s common
stock (symbol: KESI) is traded on the NASDAQ SmallCap Market.

KMART CORP.: Doesn't Deliver $78 Million Payment to Fleming
Press reports circulated yesterday disclose that Kmart
Corporation failed to deliver a weekly $78 million payment to
Fleming Companies, Inc.

Fleming Companies, Inc., supplies all of Kmart's "Big K" and
"Super K" stores with their pantry merchandise under a Five-Year
Agreement dated February 2, 2001.  The Agreement explicitly
states its purpose and objectives: to create a strategic
alliance between Fleming and Kmart to merchandise, procure and
distribute pantry and supermarket products in the most cost
efficient manner [and] to provide for the joint exploration,
evaluation, and implementation of practices and procedures to
reduce total supply chain costs and allow each party to  
equitably share the benefits of such practices and procedures.  
Termination of the Fleming Agreement requires 12-months' notice
from either side, except (i) if Kmart's purchases decline by 30%
or Kmart closes 30% of its stores, in either of which event,
Fleming can walk or (ii) in the event of a change in control of
the other party.

"It's one thing if you don't have T-shirts or lawn products. You
can live without the deliveries for a week or so, but you can't
sell yesterday's wilted lettuce," said Kurt Barnard, president
of Barnard's Retail Trend Report, based in Montclair, N.J., told
reporters for the Associated Press yesterday.  "The company is
fast approaching the end of its available options either to file
for bankruptcy or extend its financing. Something has to happen
very fast."

Kmart's silence continues.  

LERNOUT & HAUSPIE: Court Extends Removal Period to February 28
Dictaphone Corp.'s removal period is extended to the earlier of
(i) confirmation of the Third Amended Plan; or (ii) February 28,
2002, and (iii) 30 days after the entry of an order terminating
the automatic stay with respect to the particular action sought
to be removed.

L&H's removal period is extended to the earlier of (i)
confirmation of the L&H Joint Plan, (ii) February 28, 2002, and
(iii) 30 days after the entry of an order terminating the
automatic stay with respect to the particular action sought to
be removed. (L&H/Dictaphone Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  

LODGIAN INC: Obtains Okay to Hire Ordinary Course Professionals
Lodgian, Inc., and its debtor-affiliates sought and obtained an
order authorizing the retention of those professionals that are
utilized by the Debtors in the ordinary course of business
without the submission of separate employment applications,
affidavits, and the issuance of separate retention orders for
each individual professional.

The Court also orders that each law firm retained as an Ordinary
Course Professional shall file an affidavit with the Court,
within the later of 30 days of the entry of the order granting
this Motion and the engagement of such law firm by the Debtors
in these chapter 11 cases, setting forth that such law firm does
not represent or hold any interest adverse to the Debtors or
their respective estates.

In addition, the Court authorizes the Debtors to pay to each
Ordinary Course Professional, on an interim basis, and without
an application to the Court by such professional, 100% of fees
and disbursements incurred. Such payments would be made
following the submission to and approval by the Debtors of
appropriate invoices setting forth in reasonable detail the
nature of the services rendered and disbursements actually
incurred; provided, however, that subject to further order of
the Court, if any Ordinary Course Professional's fees and
disbursements exceed a total of $30,000 per month or, annually,
$360,000 in the aggregate, then the payments to such
professional for such excess amounts shall be subject to the
prior approval of the Court.

The Debtors desire to continue to employ the Ordinary Course
Professionals to render many of the services to their estates
similar to those services rendered prior to the Commencement
Date. Mr. Rogoff submits that these professionals render a wide
range of legal, tax, real estate, finance, insurance, and other
services for the Debtors that impact the Debtors' day-to-day
operations and will be necessary to assist with the
reorganization of the Debtors' business operations. It is
essential that the employment of the Ordinary Course
Professionals, many of whom are already familiar with the
Debtors' affairs, be continued on an ongoing basis so as to
avoid disruption of the Debtors' day-to-day business operations.

The Debtors submit that the proposed employment of the Ordinary
Course Professionals and the payment of monthly compensation on
the basis set forth above is in the best interest of their
estates and their creditors. Mr. Rogoff points out that the
relief requested will save the estates the substantial expenses
associated with applying separately for the employment of each
professional. Further, the requested relief will avoid the
incurrence of additional fees pertaining to preparing and
prosecuting interim fee applications. Likewise, Mr. Rogoff
asserts that the procedure outlined will relieve the Court and
the United States Trustee of the burden of reviewing numerous
fee applications involving relatively small amounts of fees and
expenses. (Lodgian Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)  

METALS USA: Has Until July 3 to Decide on Unexpired Leases
Metals USA, Inc., and its debtor-affiliates sought and obtained
an Order from the Court extending the time within which they
must decide whether to assume, assume and assign, or reject
unexpired leases of non-residential property.  The extension
runs through the earlier of July 3, 2002 or the effective date
of a plan of reorganization, without prejudice to the Debtors
seeking further extension of the deadline if circumstances so

According to Zack A. Clement, Esq., at Fulbright & Jaworski LLP,
in Houston, Texas, although the Debtors may ultimately seek the
Court's permission to reject some of the unexpired lease prior
to the conclusion of the cases, many, if not most of those may
prove to be desirable to the continued operation of the Debtors'
businesses and thus may most likely be assumed.  Others, while
not necessary to the Debtors' ongoing operations, may prove to
be below market leases that may yield value to the estates
through their assumption and assignment to third parties.

It is impossible for the Debtors to adequately assess whether to
assume or reject all leases within the 60-day period provided
under 11 U.S.C. Sec. 365(d)(4).  The Debtors confirm that they
are currently reviewing the leases and are conducting market
analyses where it is appropriate.  Mr. Clement argues that cause
exists for an extension of the assumption or rejection time
period, because these cases are complex and involves a large
number of leases, the leases are primary among the assets of the
Debtors and the lessor continues to receive post-petition rental

Mr. Clement notes that the largeness and complexity of these
cases is clear in that the Debtors employ thousands and operate
in several states. The Debtors' leased premises, meanwhile, are
vital to their reorganization efforts and thus are components of
the their strategic business plan. Even if a particular location
ultimately is due for closure or sale, the lease for such may
contain favorable terms that would allow the Debtors to assume
or assign the lease for value to third parties.

Mr. Clement maintains that the Debtors have also remained
current, and will continue to remain current, on all their post-
petition rent obligations.  Pursuant to the various interim cash
collateral orders, Debtors have continued to make their lease
payments on non-residential real property and would represent to
the court that they will continue to do so.

Mr. Clement assures the Court that the relief obtained will not
prejudice the landlords under the leases since the proposed
order will be without prejudice to a landlord's right to compel
assumption or rejection at an earlier date, although none of the
lessors have demanded for the Debtors to give a decision on
their respective leases.

Mr. Clement notes that if the Lease Decision Period were not
extended, the Debtors would be compelled prematurely to assume
substantial, long term liabilities under the Unexpired Leases or
forfeit benefits from some leases, to the detriment of the
Debtors' ability to operate and preserve the going-concern value
of their business for the benefit of their creditors and other
parties-in-interest. (Metals USA Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

METATEC INT'L: Sells Silicon Valley Plant Assets to Medius Corp.
Metatec International, Inc., (Nasdaq:META) has sold its Silicon
Valley manufacturing plant assets to Medius Corporation and has
resolved all financial obligations associated with the plant,
including the termination of the lease for the facility.

The termination of the lease relieves Metatec of $9.5 million in
lease and other financial commitments over the next seven years.

"The successful disposal of our Silicon Valley obligations is a
significant component of our plan to restore our financial
strength and return to profitable operations," said Christopher
A. Munro, president and chief executive officer. "Resolving our
Silicon Valley plant commitments permits us to devote more of
our attention to our continuing operations and the growth
initiatives that will drive our recovery."

Metatec incurred a restructuring charge of approximately $2
million in the fourth quarter of 2001 related to the closing of
the Silicon Valley facility and the sale of its associated

The company is putting significant focus on expanding its
growing supply chain services business. Some of the nation's
largest software, telecommunications, entertainment, hardware
and media/publishing companies use Metatec to help manage their
supply chains -- from optical disc manufacturing and packaging
through distribution, fulfillment, procurement, warehouse
management and selective packaging services.

Metatec continues to provide quality CD-ROM and DVD
manufacturing services to U.S. companies through its Dublin,
Ohio, manufacturing and supply chain services facility and to
international customers through its disc manufacturing plant in
The Netherlands. It also continues to offer disc production and
distribution services to many West Coast customers.

In addition to purchasing disc replication and associated
equipment, Medius also retains some of Metatec's operations and
management staff.

The successful resolution of the financial commitments
associated with its Silicon Valley plant is the latest in a
series of actions taken by Metatec during the past year to
return the company to profitable operations. Metatec has also
restructured operations, reduced manufacturing capacity to match
current market demand, expanded its supply chain services
business and is working to restructure its financing to position
itself favorably for the eventual upturn in the economy.

Metatec International enables companies in the computer
hardware, software, telecommunications and media/publishing
markets to streamline the process of delivering products and
information to market by providing technology driven supply
chain solutions that increase efficiencies and reduce costs.
Technologies include CD-ROM and DVD manufacturing services, a
full range of supply chain management services and secure
Internet-based software distribution services. Extensive real-
time customer-accessible online reporting and tracking systems
support all services. Metatec maintains operations in Ohio and
The Netherlands. As at September 30, 2001, the company had a
working capital deficit of about $16 million.

More information about Metatec is available by visiting the
company's web site at  

MILLENIUM SEACARRIERS: Wants More Time to File Schedules
Millenium Seacarriers, Inc., asks the U.S. Bankruptcy Court for
the Southern District of New York to extend its time to file
lists of secured and unsecured creditors, equity security
holders, schedules of assets and liabilities, a statement of
financial affairs, and schedules of executory contracts and
unexpired leases.

Due to the complexity and diversity of their operations, the
Debtors anticipate that they will be unable to complete their
Schedules and Statements within the 15-day deadline. The debtors
wish to enlarge the deadline through March 5, 2002.

To prepare the said Schedules and Statements, the Debtors must
compile information from books, records and documents from
various locations, including Greece. Such information relates to
over a dozen affiliates and a multitude of transactions.

Collection of the necessary information requires substantial
time and effort on the part of the Debtors' employees in excess
of the 15-day period provided by the Rule.

Millenium Seacarriers, Inc. is a holding company of
international shipping company subsidiaries engaged in the
transportation of cargo around the world on vessels acquired and
operated through its subsidiaries. The Company filed for chapter
11 protection on January 15, 2002 in Southern District of New
York. Christopher F. Graham at Thacher Proffitt & Wood represent
the Debtors in their restructuring effort. When the Company
filed for protection from its creditors, it listed $85,078,831
in assets and $112,874,053 in liabilities.

MOLL INDUSTRIES: S&P Drops Corporate Credit Rating to SD from CC
Standard & Poor's lowered its corporate credit rating on Moll
Industries Inc. to 'SD' (selective default) from double-'C'. At
the same time, Standard & Poor's lowered its subordinated debt
rating on the company's 10.5% notes due July 2008 to 'D' from

These actions reflect completion of a tender offer in which
holders of $66.5 million of the notes received $200 per $1,000
principal amount. In addition, all ratings on Moll, AMM Holdings
Inc., and Anchor Advanced Products Inc. have been removed from
CreditWatch and withdrawn.

The 'SD' corporate credit rating was assigned to reflect Moll's
ongoing payments to certain other creditors, including the bank

Privately held Moll is a producer of custom-molded and assembled
plastic components.

            Ratings Lowered and Removed from CreditWatch

                                       To               From
     Moll Industries Inc.
        Corporate credit rating        SD                CC
        Subordinated debt              D                 C

                          Ratings Withdrawn

     Moll Industries Inc.
        Corporate credit rating        NR
        Senior secured bank loan       NR
        Subordinated debt              NR

     AMM Holdings Inc.
        Corporate credit rating        NR
        Senior unsecured debt          NR

     Anchor Advanced Products Inc.
        Senior secured debt            NR

NATIONSRENT INC: UST Will Convene Creditors' Meeting on Feb. 7
Pursuant to 11 U.S.C. Sec. 341(a), the United States Trustee
will convene a meeting of the creditors of NationsRent Inc., and
its debtor-affiliates on February 7, 2002, in Wilmington.  All
creditors are invited, but not required, to attend.  This
Official Meeting of Creditors offers the one opportunity in a
bankruptcy proceeding to question a responsible office of the
Debtor under oath on matters of interest to the general creditor
body.  The U.S. Trustee does not allow creditors to use this
meeting as a way to bypass Rule 2004 of the Federal Rules of
Bankruptcy Procedure.  Further, company officials and
professionals don't disclose material non-public information at
these gatherings. (NationsRent Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

OXFORD AUTOMOTIVE: Will File Chapter 11 with Pre-Pack Plan
As part of its ongoing restructuring plan Oxford Automotive,
Inc., announced it has entered into an agreement with CSFB
Global Opportunities Fund to make a significant investment in
Oxford by infusing new capital into the company and converting
its holdings of Oxford bonds into Oxford equity.

Selwyn Isakow, Chairman of Oxford said: "We appreciate CSFB
Global Opportunities Fund's confidence in our management and
business plan.  Their investment and the exchange of their bonds
to equity is a key component of our restructuring plan which
will improve our balance sheet and better position Oxford to
continue as a global leader of specialized metal-formed modules
and assemblies for the global automotive industry."

Isakow further stated, "As a result of the restructuring we
announced [Fri]day, Oxford will reduce debt levels by over $200
million, thereby saving $20 million in annual interest costs.  
The additional infusion of $50 million by CSFB into the company
will enable Oxford to continue to meet the global needs of its
customer base."

Friday's announced financial restructuring plan and agreement
with CSFB Global Opportunities Fund will be implemented through
the prearranged filing of a Chapter 11 proceeding at Oxford
Automotive, Inc., the parent level of the company's operations.  
The company's manufacturing operations, including its foreign
subsidiaries will be unaffected.  The restructuring plan is
being supported by the Company's lenders and Oxford anticipates
that the financial restructuring plan will be completed within
90 days.  Concurrent with the filing, the Fund will provide to
the Company $50 million in cash structured as DIP Funding, which
will be converted to equity upon conclusion of the
restructuring.  Oxford will also add one member to its board of
directors designated by the Fund.

In the current fiscal year Oxford is managing the launch of nine
new programs for its customers.  Over the past three years
Oxford has made over $270 million in capital investments
positioning Oxford as a major global tier one automotive
supplier with new production capabilities in Mexico and Europe.
Oxford has now grown to a company with sales of approximately a
billion dollars with 7,000 employs at 38 facilities in nine

CSFB Global Opportunities Fund is managed by Credit Suisse First
Boston, a global investment and commercial banking firm.  The
Fund holds over eighty percent of Oxford Automotive's 10-1/8%
Senior Subordinated Notes.

Mark Patterson, Chairman of CSFB Global Opportunities Advisers,
LLC (the investment adviser to the Fund) stated: "We could not
be more pleased with the opportunity to play an important role
in assisting Oxford to reach a global leadership position in its
business segment.  We are excited about becoming a shareholder
of Oxford and supporting Oxford's implementation of its long-
term strategic plan."

Last year Oxford announced that it was initiating a Capacity
Rationalization Plan in North America that would match Oxford's
manufacturing capacity with its customers' needs.  Closing and
consolidating five plants and an engineering/prototype center
over the next eighteen months will competitively position Oxford
to more efficiently launch and produce several new products.  
The plan will also reduce the company's overall fixed costs,
making it more competitive on future business.

John Potter, President and CEO of Oxford stated, "The financial
restructuring plan announced [Fri]day, coupled with the capacity
rationalization plan announced by the company last year will
ensure that we remain a successful global automotive supplier
and position Oxford financially and operationally at the
forefront of its competition.  The difficult times the
automobile industry has been through over the past year has
required bold and decisive actions to remain viable.  Oxford has
stepped up to these challenges and now looks forward to
successfully anticipating and exceeding our customer needs in
the future."

Oxford Automotive, Inc., headquartered in Troy, Mich., is a
leading full- service automotive supplier of highly engineered
metal-formed component assemblies and modules and mechanisms
used by automotive manufacturers. Oxford Automotive employs
7,000 people and currently operates at 38 facilities with
industry-leading expertise in underbody and suspension modules,
body-in- white, assembly operations, structural and Class A
components and modules and mechanisms.  Visit the company's Web
site at

P-COM INC: Taps Cagan-McAfee to Work with Bondholders on Workout
P-Com, Inc. (Nasdaq:PCOM), a leading provider of wireless
telecom products and services, announced a customer-focused
restructuring plan to return the company to cash-flow positive
by the fourth quarter 2002, strengthen the management team, and
introduce a new product line with enhanced features.

P-Com said the plan includes the following:

     -- George Roberts, Chairman of the Board and founder of the
company, has been named interim CEO effective immediately,
replacing CEO Jim Sobczak. Randy Carl has been appointed as
Senior Vice President, Sales, and John Wood has been named to
the newly created position of Chief Technical Officer.

     -- The company is consolidating its R&D and manufacturing
operations, closing four facilities in the U.S. and United

     -- The company has set an operating expense reduction goal
of $3.3 million, or 31 percent, in the first quarter of 2002,
compared to the fourth quarter of 2001. With these reductions,
P-Com has cut quarterly operating expenses $8.1 million, or 53
percent, compared to the first quarter of 2001. Included in
these reductions is an additional decrease in the company's
workforce of 42 full-time employees by the end of the first
quarter. Over the past four quarters, the company has reduced
its workforce 41 percent from 612 to 363.

     -- Cagan-McAfee Capital Partners of Cupertino, Calif., has
been engaged as a strategic advisor to help develop and
implement the restructuring plan and work with bondholders and
private equity investors on behalf of the company.

"P-Com's large installed base of world-class products, its
global strategic alliances and partners, and its blue-chip
portfolio of customers continue to be the future growth engine
for our shareholders," Roberts said. "The changes announced
[Thurs]day instill additional financial and operational
discipline initiated in 2001 and will ensure execution of our
business strategy. Equally important, we intend to aggressively
market our family of next-generation products, which deliver
superior quality and performance."

Roberts, who founded the company in 1991 and took it public in
1995, said P-Com will concentrate on supplying broadband
wireless equipment and services to wireless operators and
telecom services providers. The company's strategic roadmap
focuses on marketing product lines that will demonstrate
immediate revenue gains and improved financial performance.

P-Com will continue to provide Point to Point systems, both for
licensed and unlicensed frequencies; Point to Multipoint systems
operating in either TDMA or FDMA modes; and engineering and
installation services for both wire-line and wireless customers.

"This broad range of products gives us the flexibility to
concentrate resources wherever customer spending is occurring
and in the areas least impacted by the global slowdown in the
telecommunications equipment and services market," Roberts said.
"To meet shareholder expectations, we have significantly reduced
costs to adapt to changing market conditions. We will continue
to look for additional opportunities to reduce overall operating
costs, while growing our top line. As a result, our plan calls
for achieving positive cash-flow by the fourth quarter of 2002."

Roberts said P-Com will seek to strengthen relationships with
its current alliance partners, which include Siemens
(worldwide), Myntal (China), Hitachi-Kokusai Corp. (Japan), and
Philipinas Wincom (Philippines). P-Com's current customers
include AT&T, China PTIC Information Industry Corporation,
Vodafone Mannesmann, Mercury One-2-One (Deustche Telecom),
Orange Personal Communications Services (France Telecom), and
Technology Bureau S.A. P-Com has more than 100,000 radios
installed in more than 100 countries around the world.

"P-Com is recognized as one of the world's most innovative
providers of high-quality wireless equipment because of the
outstanding team we've assembled," Roberts said. "This ongoing
series of initiatives will enable the company to rapidly respond
to emerging market opportunities."

P-Com, Inc. develops, manufactures, and markets complete lines
of Point-to-Multipoint, Point-to-Point, Spread Spectrum wireless
access systems, and through it's wholly owned subsidiary, P-Com
Network Services, provides related installation, engineering and
system maintenance services for the worldwide telecommunications
market. P-Com broadband wireless access systems are designed to
satisfy the high-speed, integrated network requirements of
Internet access providers and competitive local exchange
carriers (CLECs). Cellular and personal communications service
(PCS) providers utilize P-Com Point-to-Point systems to provide
backhaul between base stations and mobile switching centers.
Government, utility, and business entities use P-Com systems in
public and private network applications. For more information

P-Com, Inc.'s world headquarters are located in Campbell,
California, USA. P-Com has offices located in Florida, Virginia,
the United Kingdom, Italy, China, and Singapore. P-Com is an ISO
9001 certified Company. For additional information, contact P-
Com at 3175 S. Winchester Boulevard, Campbell, CA 95008 USA.
TEL: 408/866-3666, FAX: 408/866-3655.

PACIFIC GAS: Agrees to Pay Class 5 Claims Interest at New Rates
On January 13, 2002, PG&E Corporation, its debtor-subsidiary,
Pacific Gas and Electric Company, and the Ad Hoc Committee of
certain of the Debtor's unsecured debtholders, reached an
agreement in principal settling disputes relating to the
treatment afforded Class 5 General Unsecured Claims under the
First Amended Plan of Reorganization dated December 19, 2001.

Under the Settlement, the Ad Hoc Committee agrees to withdraw
its objections to the Disclosure Statement and Plan and to
support confirmation of the Plan.  PG&E Corporation and the
Debtor agree to pay the holders of allowed Class 5 Claims pre-
and post-petition interest on the principal amount of such
claims at new agreed rates:

Type of Claim     New Agreed Interest Rate   Old Interest Rate
-------------     ------------------------   -----------------
Commercial        7.466% per annum fixed     3-month floating
Paper Claims                                 LIBOR

Floating Rate     7.583% per annum fixed     Floating LIBOR
Notes             (calculated based on       plus 2.05%
                  actual days/360 days,
                  implied yield of 7.690%)

Senior Notes      9.625%                      9.625%
                                              (starting 5/1/01)
                                              (through 4/30/01)

Medium Term       5.810% to 8.450% (or        Same
                  higher) as stated in the
                  relevant documents
                  governing the issuance of
                  the applicable Medium Term
                  Notes including the
                  prospectus and pricing
                  supplement relating thereto

Revolving Line    8.00% per annum fixed       Floating Prime
of Credit Claim                                   rate

In addition, if the effective date of the Plan does not occur on
or before February 15, 2003, the Agreed Rate will be increased
by 37.5 basis points.  If the effective date of the Plan does
not occur on or before September 15, 2003, the Agreed Rate will
be increased by an additional 37.5 basis points.  Finally, if
the effective date of the Plan does not occur on or before March
15, 2004, the Agreed Rate will be increased by an additional
37.5 basis points.

As soon as practicable, but not later than 10 days following
Bankruptcy Court approval of this Settlement and subject to
certain conditions, the Debtor is required to make a cash
payment to holders of allowed Class 5 Claims of all accrued and
unpaid pre- and post-petition interest.  Interest accruing on
and after the initial payment date shall be paid quarterly in

PG&E Corporation and the Debtor have agreed to amend the Plan to
provide that the placement fee to be divided among the holders
of certain allowed claims will be increased from an
approximately 1.5%, or $40 million, placement fee to an
approximately 2.5%, or $67 million, placement fee.  The Debtor
will pay an additional placement fee equal to 50 basis points in
connection with any creditor notes issued by ETrans and GTrans
in connection with the Plan, that have a maturity date longer
than ten years.

The Settlement also provides that the interest rates on new
notes issued to creditors in accordance with the Plan will
increase in an amount equal to the increase in the spread over
treasuries quoted in the Lehman Brothers Electric Utility
Corporate Bond Index that may occur between the date the new
notes are priced and the next marked Electric Index quotation
occurring on or after the twentieth trading day after the
pricing date, subject to a maximum increase of 25 basis points.

Other than with respect to the Ad Hoc Committee's agreement to
withdraw its objection to the Disclosure Statement and Plan,
the Settlement will become effective only if the Bankruptcy
Court approves the disclosure statement describing the Plan, the
Settlement (and the agreements contemplated by the Settlement)
is approved by the Bankruptcy Court, and holders of Class 5
Claims, including each Ad Hoc Committee member, holding in the
aggregate at least $3 billion (or such lesser amount as PG&E
Corporation and Debtor may, in their sole discretion, determine)
in allowed Class 5 Claims shall have entered into agreements to
carry out the terms of the Settlement. (Pacific Gas Bankruptcy
News, Issue No. 20; Bankruptcy Creditors' Service, Inc.,

POLAROID CORP: Court Okays Akin Gump as Committee's Co-Counsel
The Official Committee of Unsecured Creditors of Polaroid
Corporation, and its debtor-affiliates received authority from
the Court to employ and retain Akin, Gump, Strauss, Hauer &
Feld, LLP as its co-counsel in the Debtors' Chapter 11

The Committee will look to Akin Gump to provide these services:

  (a) advise the Committee with respect to its rights, duties
      and powers in these cases;

  (b) assist and advise the Committee in it consultations with
      the Debtors relative to the administration of these cases;

  (c) assist the Committee in analyzing the claims of the
      Debtors' creditors and the Debtors' capital structure and
      in negotiating with holders of claims and equity

  (d) assist the Committee's investigation of the acts, conduct,
      assets, liabilities and financial condition of the Debtors
      and other parties involved with the Debtors, and of the
      operations of the Debtors' businesses;

  (e) assist the Committee in its analysis of and negotiations
      with the Debtors or any third party concerning matters
      related to, among other things, the assumption or
      rejection of certain leases of non-residential real
      property and executory contracts, asset dispositions,
      financing of other transactions and the terms of a plan of
      reorganization for the Debtors;

  (f) assist and advise the Committee as to its communications
      to the general creditor body regarding significant matters
      in these cases;

  (g) represent the Committee at all hearings and other

  (h) review and analyze all applications, orders, statements of
      operations and schedules filed with the Court and advise
      the Committee as to their propriety;

  (i) assist the Committee in preparing pleadings and
      applications as may be necessary in furtherance of the
      Committee's interests and objectives; and

  (j) perform such other legal services as may be required and
      are deemed to be in the interests of the Committee in
      accordance with the Committee's powers and duties as set
      forth in the Bankruptcy Code.

Moreover, Akin Gump will charge for its legal services on an
hourly basis in accordance with ordinary and customary hourly

             Billing Category                Range
             ----------------                -----
             Partners                     $360 - $615
             Associates and Counsel       $185 - $425
             Paraprofessionals            $ 60 - $150
(Polaroid Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

QUALITY STORES: Will Honor Gift Certificates Issued to Customers
Quality Stores, Inc., received bankruptcy court approval
yesterday to honor gift certificates that were issued to
customers from November 1, 2001 (the date of the Company's
voluntary bankruptcy filing) through December 31, 2001. Under
the authority granted, customers who purchased or received
purchased gift certificates during the period November 1,
2001, through December 31, 2001, will be permitted to redeem
them for merchandise at any of the stores that are currently

Quality Stores announced that it is closing all of its stores
over the next several months and encourages customers to take
advantage of store closing offers on its in-stock merchandise.
Alternatively, customers may redeem them for cash by mailing
their valid unredeemed gift certificate with a stamped, self-
addressed envelope to the Quality Stores corporate office. The
address is:

          Quality Stores, Inc.
          Attn: Gift Certificate Redemption
          P.O. Box 3315
          Muskegon, MI 49443-3315

Quality Stores, Inc., also indicated that gift certificates
purchased prior to November 1, 2001, but not yet redeemed, will
be treated as pre-petition claims. These certificates should be
attached to a proof of claim form (available through and mailed to Bankruptcy  
Management Corporation, the Company's claims processing agent.
The address is:

          Bankruptcy Management Corporation
          Attn: Quality Stores
          1330 East Franklin Avenue
          El Segundo, CA 90245

RURAL/METRO: Banks Agree to Waive Defaults through April 1
Rural/Metro Corp. (Nasdaq:RURL), a national leader in ambulance
transportation and fire protection services, announced that it
has agreed to a new waiver of covenant compliance under its
revolving credit facility through April 1, 2002. The Company's
prior waiver expired Dec. 3, 2001.

Terms of the waiver are consistent with prior waivers. In
addition, the Company is supporting the formation of a steering
committee comprised of bank lenders and senior note holders to
further explore debt-restructuring opportunities. The Company's
financial and legal advisors, Imperial Capital, LLC and Squire,
Sanders & Dempsey L.L.P., will advise the Company in discussions
with the bank lenders and senior note holders. The steering
committee has engaged Chanin Capital Partners to act as its
financial advisor and Akin, Gump, Strauss, Hauer & Feld, L.L.P.
as its legal advisors.

The Company will negotiate with the steering committee in an
effort to reduce the Company's debt and further improve its
liquidity and long term financial flexibility. The Company will
consider all appropriate strategies to achieve these objectives.

Jack Brucker, president and chief executive officer, said,
"Discussions with our lenders have progressed in a positive
manner. We remain confident in our ability to work together
toward a long-term solution while continuing to strengthen the
Company's operations and results. We are pursuing a solution
that will benefit the Company and its stakeholders, and will
enthusiastically support the efforts of the steering committee."

Rural/Metro Corp. provides mobile healthcare services, including
emergency and non-emergency ambulance transportation, fire
protection and other safety-related services to municipal,
residential, commercial and industrial customers in more than
400 communities throughout the United States and Latin America.

STAIRMASTER SPORTS: Direct Focus Pitches Best Bid for All Assets
Direct Focus, Inc. (Nasdaq:DFXI), a leading marketing company
for fitness and healthy lifestyle products, announced today that
it was the highest bidder to acquire substantially all of the
assets of StairMaster Sports/Medical, Inc., through a bankruptcy
auction in the U.S. Bankruptcy Court for the Western District of

Under the terms of the bid, Direct Focus will pay approximately
$25 million in cash for StairMaster and expects to close the
transaction in the first quarter of 2002, subject to final
auction approval by the Court. Based on the preliminary
analysis, StairMaster's operations are expected to contribute
over $40 million to annual sales and be accretive to earnings in

"We are very pleased with our auction bid," said Brian Cook, CEO
of Direct Focus. "The anticipated acquisition would strengthen
our position as a leader in the worldwide fitness market.
StairMaster would bring us a strong product line of commercial
cardiovascular equipment, complementary retail products and
enhanced manufacturing capabilities. We also gain more great
brand names in the fitness area, StairMaster and Quinton, that
add to our powerful combination of Bowflex, Nautilus, and
Schwinn brands."

"At the end of 2001, we had cash and short term investments in
excess of $50 million. We believe this acquisition is an
excellent use of our financial and management resources, and
offers significant growth opportunities."

Direct Focus is a marketing company for fitness and healthy
lifestyle products with direct, retail, and commercial sales
channels worldwide. The Company currently markets its Bowflex
line of home fitness equipment and Nautilus Sleep Systems
directly to consumers, using an effective combination of
television advertising, 800-call centers and Web sites. The
Company sells its Schwinn Fitness products, under the Schwinn
and Trimline brand names, and its Nautilus consumer fitness
products through retail athletic stores. In addition, Direct
Focus sells its Nautilus commercial fitness equipment directly
to health clubs and other institutions. The Company is
headquartered in Vancouver, Wash. Direct Focus is located on the
Web at  

Based in Kirkland, Wash., StairMaster is a leading manufacturer
of fitness equipment, addressing the needs of a diverse array of
customers. The company offers a family of fitness products,
including stairclimbers, elliptical striding systems,
treadmills, exercise bikes, Crossrobicsa trainers, and strength
equipment, as well as group exercise programs like STOMP?.
StairMaster has a long history in sports medicine and is
committed to helping people get healthy, stay healthy, control
weight, live longer and have fun while exercising. For more
information, see

SUN HEALTHCARE: Gets 6th Extension of Lease Decision Period
The time within which Sun Healthcare Group, Inc., and its
debtor-affiliates may assume or reject the Unexpired Leases of
nonresidential real property is extended to and including the
earlier of:

    (a) March 13, 2002, and

    (b) the date on which an order is entered confirming a plan
        of reorganization for the Debtors.

However, the Court makes it clear that such extension of time is
without prejudice to the right of any of the Debtors' lessors to
file an appropriate motion with the Court for a hearing to
consider a reduction of such time. (Sun Healthcare Bankruptcy
News, Issue No. 30; Bankruptcy Creditors' Service, Inc.,

SWISS AIR: New York Court Extends Preliminary Injunction

In re                                   :  
Petition of Karl Wuthrifch, as Temporary: In a Proceeding Under
Trustee of SWISSAIR, SWISS AIR          : Section 304 of the
TRANSPORT CO., LT.,; SAIRGROUP AG;      : Bankruptcy Code
SWISSCARGO AG; and CARGOLOGIC AG        : Case No. 01-4236 (SMB)
    Debtors in a Foreign Proceeding     :

   Notice is hereby given that is in connection with the
Petition filed on October 9, 2001 pursuant to Section 304 of the
Bankruptcy Code (the "Petition") for Swissair, Swiss Air
Transport Co., Ltd.; SairGroup AG; SairLines AG; Flightlease AG;
Swisscargo AG, and Cargologic AG (collectively, the "Company"),
the United States Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court") at a hearing on December 11,
2001 extended a Preliminary Injunction Order originally entered
October 18, 2001 (the "Order"), the pertinent terms of which, as
extended, are summarized below.

   1.  Subject to all provisions in the Order, all personas and
entities are enjoined from:  (a) seizing, repossessing,
attaching, transferring, relinquishing, or disposing of any
legal or equitable interests of the Company in property (whether
real or personal, tangible or intangible, choate or inchoate) in
the United States (or the proceeds of such property), including,
without limitation, airplanes and related property located at
airports, air travel slots, gates and receivables from airline
ticket sales to third parties (all of the same located in the
United States, "Company Property"); (b) commencing or continuing
any action or legal proceeding in the United States (including
without limitation, arbitration, or any judicial, quasi-
judicial, administrative or regulatory action, proceeding or
process whatsoever, but excluding (x) all actions in which the
Company is fully insured including, without limitation, the
cases against the Company arising out of the Flight SR 111
accident in September 1998 and (y) actions and proceedings in
this Court), including by way of counterclaim, against the
Company, or any Company Property that is involved in the Swiss
proceedings, or taking any discovery from the Petitioner or the
Company in the United States unless specifically authorized by
this Court, provided however, the Petitioner shall timely
respond to informal and reasonable requests for information that
are made through the Petitioners' United States counsel, Steptoe
& Johnson LLP, 1330 Connecticut Avenue, N.W., Washington, DC
20036 to such extent as is permitted under the Swiss Debt
Enforcement and Bankruptcy Ace and the order of the Swiss Courts
under the Swiss Debt Enforcement and Bankruptcy Act; (c)
enforcing any judicial, quasi-judicial, administrative or
regulatory judgment, assessment, order or arbitration award
against the Company, and commencing or continuing any act or
action or other legal proceeding (including, without limitation,
arbitration, or any judicial, quasi-judicial, administrative or
regulatory action, proceeding or process whatsoever, but
excluding (x) all actions in which the Company is fully insured
including, without limitation, the cases against the company
arising out of the Flight SR 111 accident in September 1998 and
(y) actions and proceedings in this court) or any counterclaim
to create, perfect (other than acts to maintain pre-existing
perfected status) or enforce any lien, attachment, garnishment,
setoff or other claim against the Company, or any Company
Property; (d) drawing down any letter of credit established by,
on behalf or at the request of, the Company in excess of amounts
authorized by applicable law or by the terms of the contract,
other agreement or applicable law pursuant to which such letter
of credit has been established, and (c) withdrawing from,
selling off against, or otherwise applying property that is the
subject of any trust or escrow agreement or similar arrangement
in which the Company has an interest in excess of amounts
authorized by applicable law or by the terms of the trust,
escrow or similar arrangement or applicable law; but that the
injunction shall not apply to any act, action or proceeding that
(a) is of a kind that would be exempted from the automatic stay
pursuant to Section 362(b) of the Bankruptcy code or (b) is
protected by Section 555, 556, 559, or 560 of the Bankruptcy

   2.  All persons and entities in possession, custody or
control of Company Property shall account for such property or
its proceeds to the Petitioner upon formal demand therefore by

   3.  Nothing in the Order shall in any respect (a) require any
person or entity to take any action or commence any proceeding,
or (b) prohibit or prevent any person or entity from taking any
action or commencing any proceeding against the Company or
Company Property, where such action or proceeding would not be
required, prohibited or prevented by the Swiss Debt Enforcement
and Bankruptcy Act or orders of the Swiss Courts pursuant to the
Swiss Debt Enforcement and Bankruptcy Ace in connection with the
company's Swiss proceedings in effect as of the date of the

   4.  The Bankruptcy Court shall retain jurisdiction to resolve
all disputes arising under or relating to the Order, including
any requests for revocation or modification thereof.  The Order
shall remain in effect pending, determination following a
hearing to consider whether it shall be continued, which hearing
is scheduled to be held before the Honorable Stuart M.
Bernstein, Chief United States Bankruptcy Judge, United States
Bankruptcy court, One Bowling Green, New York, New York on June
18, 2002 at 10:00 a.m. (the "Return Date"); the Return Date may
be adjourned with notice, in open court, and the Order shall
remain in effect without further order of the Bankruptcy Court
during such period; and all papers submitted for the purpose of
opposing continuation of the Order after the Return Date shall
be filed with the Court with a copy to the Chambers of the
Honorable Stuart M. Bernstein, and served on Steptoe & Johnson
LLP, 1330 Connecticut Avenue, N.W., Washington, DC 20036,
Attention:  Greg Yates, Esq., counsel for the petitioner, so as
to be received by June 11, 2002 except that the foregoing is
subject to modification by the Bankruptcy Court at any time and
is without prejudice to the right of any party-in-interest to
seek, upon appropriate notice and hearing, to terminate or limit
the Order prior to the Return Date.  Any party-in-interest that
has not received a copy of the Petition, supporting papers
and/or the Order, and wishes to do so, should contact counsel
for the Petitioner at the address below:

                    Steptoe & Johnson LLP
                    1330 Connecticut Avenue, NW
                    Washington, DC 20036
                    (202) 429-3000
                    Attn:  William Karas, Esq.
                    Steven K. Davidson, Esq.
                    Greg R. Yates, Esq.
                    Attorneys for the Petitioner

                            *   *   *

According to DebtTraders, Swissair Group's 7.500% bonds due 2004
(SWAIR2) are trading between 38 and 40. See  
real-time bond pricing.

TRANS WORLD: Calls For Further Extension of Exclusive Periods
To permit the deliberate consideration of the filed joint plan,
Trans World Airlines, Inc., asks the U.S. Bankruptcy Court for
the District of Delaware to extend their exclusive time to file
a chapter 11 plan and their exclusive time to solicit votes on
that plan. The Debtors seeks to further extend the Exclusive
Filing Period through April 30, 2002 and the Exclusive
Solicitation Period through June 30, 2002.

The Debtors' cases consist of twenty-six procedurally
consolidated cases, which is unusually large and complex. The
Debtors further assert that their cases are more complex than
any chapter 11 cases because they operated an airline, which is
highly regulated and complex, interdependent industry. Added to
this, they have a highly unionized workforce and conducted
business around the world. The Debtors believe that the
complexity of these cases alone will grant them the extension

Trans World Airlines filed for chapter 11 protection on January
10, 2001 in Delaware Bankruptcy Court, before AMR bought its
assets and formed TWA Airlines LLC, whose operations are being
combined with those of American. TWA serves more than 160 cities
in North America, the Caribbean, Europe, and the Middle East.
James H.M. Sprayregen, Esq. at Kirkland & Ellis and Laura Davis
Jones, Esq. at Pachulski, Stang, Ziehl, Young & Jones represent
the Debtors in their restructuring effort.

US AIRWAYS: Incurs $1.2BB Net Loss On $8BB Revenues in FY 2001
US Airways Group, Inc., reported a net loss of $1.17 billion for
the full year 2001, on revenues of $8.29 billion, excluding
unusual items.

For the fourth quarter 2001, US Airways Group, Inc. reported a
$552 million net loss, on revenues of $1.57 billion, excluding
unusual items.

Including unusual items, the net loss for the full year 2001 was
$1.97 billion, while the net loss for the fourth quarter was
$1.01 billion.

"US Airways' results reflect the impact of the economic
recession, the tragic events of September 11, and increasing
regional jet competition," said US Airways Chairman and Chief
Executive Officer Stephen M. Wolf.  "Yet, despite the enormous
challenges facing the industry, our employees remain steadfast
in their dedication to our customers.  As a result of their
superb efforts, our customers are flying with an on time,
efficient, customer focused airline."

Wolf said that US Airways has taken difficult yet necessary
steps to create a platform from which the company can move
forward.  "We have eliminated unprofitable flying, retired four
fleet types substantially improving our operating efficiencies,
deferred new aircraft deliveries, consolidated and closed
facilities, and sadly, but necessarily, reduced our workforce
significantly," he said.

The company's focus has turned to attracting more passengers and
increasing revenue, Wolf said, adding that full restoration of
US Airways service at Ronald Reagan Washington National Airport
is "extremely important to our company's future."

Reemphasizing the acute need for more regional jet flying, Wolf
added, "we continue to be in discussions with our ALPA
representatives on this issue as we face more and more regional
jet flying from our competition."

Under new authority by the U.S. Department of Transportation, on
Jan. 6, 2002, US Airways and US Airways Express added 17
additional roundtrip flights to six new destinations from Reagan
National Airport.  Between Feb. 1 and March 1, US Airways will
add as many as 29 additional destinations.  US Airways, US
Airways Express and US Airways Shuttle currently operate 83
daily departures at Reagan National Airport and expect to
operate 153 daily departures by March 2.

In terms of cash, US Airways Group, Inc., began the fourth
quarter 2001 with $1.04 billion and completed the year with
$1.08 billion.

In accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" and in light of the
company's recent cumulative losses, compounded by the current
economic downturn, US Airways Group, Inc. recognized $369
million of non-cash tax expense in the fourth quarter 2001 to
establish a full valuation allowance against its deferred tax
asset.  Results for the fourth quarter 2001 include two other
unusual items: charges of $76 million relating to the on-going
implementation of the company's restructuring plan, and a
reduction of $11 million in the expected Federal Airline
Stabilization Act grant.  For the full year of 2001, unusual
items relating to aircraft impairment, restructuring charges,
the Federal Airline Stabilization Act grant, merger termination
fees and the tax valuation allowance resulted in net unusual
charges of $803 million after tax.  Results for the fourth
quarter 2000 and full year 2000 include a $12 million after tax
impairment loss related to warrants the company held in

Fourth quarter 2001 operating revenues were $1.57 billion, down
33.6 percent compared to the fourth quarter 2000, while
operating expenses of $2.06 billion excluding unusual items were
down by 15.9 percent year-over-year.  The loss for the quarter
excluding unusual items was $552 million, or $8.16 on a diluted
per share basis.  This compares to a fourth quarter 2000 loss of
$89 million, or $1.33 on a diluted per share basis.

US Airways, Inc. unit costs for the fourth quarter 2001
increased to 12.85 cents, while passenger unit revenues of 8.51
cents decreased 22.7 percent compared to the fourth quarter
2000.  Available seat miles for the quarter declined 19.9
percent while revenue passenger miles declined 26.9 percent. The
passenger load factor for the quarter was 63.2 percent, a
decline of 6.1 percentage points compared to the same period

Operating revenues for the full year 2001 were $8.29 billion,
down 10.6 percent compared to the same period 2000, while
operating expenses of $9.33 billion excluding unusual items were
0.1 percent higher than the previous year.  The loss for the
year, excluding unusual items and the accounting change was
$1.17 billion, or $17.46 on a diluted per share basis.  This
compares to a full year 2000 loss of $154 million, or $2.30 on a
diluted per share basis.

US Airways, Inc. unit costs for the full year 2001 decreased to
12.46 cents, while passenger unit revenues of 9.86 cents
declined 13.9 percent for the year compared to 2000.  Available
seat miles for the year decreased 0.2 percent, while revenue
passenger miles decreased 2.3 percent.  The passenger load
factor for the year was 68.9 percent, a decline of 1.4
percentage points compared to the same period 2000.

DebtTraders reports that US Airways Inc.'s 10.375% bonds due
2013 (USAIR3) currently trade in the low 80s. See  
real-time bond pricing.

USG CORPORATION: Wants to Honor $12MM Environmental Obligations
As would be expected of any company with extensive manufacturing
operations, USG Corporation, and its debtor-affiliates have
certain potential environmental liabilities associated with
their operations.  Given the size of the Debtors' operations,
however, the potential environmental liabilities are very
limited and are estimated at less than $12,000,000, Paul N.
Heath, Esq., at Richards Layton & Finger relates.

In the ordinary course of business, Mr. Heath tells Judge
Newsome, the Debtors are involved in various actions to address
their potential environmental liabilities, including, without

     -- resolution of alleged operating permit violations;

     -- entry into consent orders with applicable governmental

     -- participation as a potentially responsible party in the
        characterization, clean up and monitoring of certain
        Superfund sites; and

     -- characterization, monitoring or remediation of Superfund
        and other sites through consultants and contractors or
        by directly conducting such activities themselves as
        required (or potentially required) by consent orders and
        decrees, or otherwise.

Many of the Environmental Response Activities are within the
ordinary course of the Debtors' business, and as a result,
should not require the Court's authorization. Out of an
abundance of caution and to give certainty to third parties who
may be involved, however, the Debtors seek authority under
sections 105 and 363 of the Bankruptcy Code, to undertake all
Environmental Response Activities.

The majority of case law holds that environmental obligations of
the type the Debtors want to satisfy with the Environmental
Response Activities are not subject to discharge in a
bankruptcy.  Mr. Heath refers to In re CMC Heartand Partners,
966 F. 2d 1143, 1146 (7th Cir. 1992), where the Court held that
a property owner cannot discharge obligations to remediate
ongoing or threatening nuisance, and United States v. LTV Corp.
(In re Chateaugay Corp.), 944 F.2d 997, 1009 (2d Cir. 1991)
opining "it is difficult to understand how any injunction
directing a property owner to remedy ongoing pollution could be
a dischargeable "claim". . . .

Because a debtor in possession is obligated to operate its
property in accordance with the laws of the state the property
is situated in the same manner that the owner would be bound to
do in the absence of bankruptcy, Mr. Heath asserts that certain
actions by governmental entities to enforce environmental laws
against a debtor are generally exempt from the automatic stay
under the "police or regulatory" power exemption in Section
362(b)(4) of Bankruptcy Code.

Mr. Heath further relates that the Debtors believe that the
assets of their estates will be preserved if they are allowed to
conduct the Environmental Response Activities. The United States
Environmental Protection Agency typically has the statutory
authority to levy significant penalties and issue costly
administrative orders against   a company unwilling or unable to
comply with the EPA's requests for performance of remediation
activities. Therefore, it is important for the Debtors to
respond promptly to the EPA's requests to minimize its
environmental liabilities. Timely response will help the Debtors
avoid mandated and far more costly remedies to certain of the
Debtors' environmental situations.

Mr. Heath states that the Debtors are proactively monitoring and
managing several environmental situations to maintain and
control the costs and manner of any required clean up actions.
The Debtors have hired consultants and contractors to take
preliminary steps leading to the remediation of certain sites in
a cost efficient manner. Failure to continue those Environmental
Response Activities could expose the Debtors to much larger
environmental liability.  For these reasons, the value of the
Debtors' estates will maximized for all parties in interest if
the Debtors are permitted to conduct all Environmental Response

The Debtors respectfully ask Judge Newsome to enter an order
authorizing them to conduct the Environmental Response
Activities at an aggregate cost to the Debtors not to exceed $12
million from January 1, 2002 various sites, including:

                  Superfund Responsibilities

Site Name     USG Entity      Location        Description
---------     ----------      --------        -----------
Cherokee      USG Interiors  Charlotte, NC    Groundwater

Commencement  USG Interiors  Tacoma, WA       Sediment
Bay                                           Contamination

Dirt Roads    United States  Jersey City, NJ  Soil &
               Gypsum Company                 Groundwater

Duane Marine   La Mirada     Perth Amboy, NJ  Drums &
Salvage        ProductsCo,Inc                 Surface Clean

D'Imperio      La Mirada     Hamilton, NJ     Groundwater

ECC/Third Site La Mirada     Zionsville, IN   Soil &

Ewan Durabond  La Mirada     Shamong, NJ      Groundwater

Four County    USG           DeLong, IN       Landfill Closure

Lightman Yard  La Mirada     Winslow, NJ      Soil & Groundwater

Northside Sanitary
Landfill       La Mirada     Zionsville, NJ   Drum, Surface
                                              Groundwater & Soil

Ohio Drum      USG           Cleveland, OH    Unknown

Operating                    Monterey Park,   Soil & Groundwater
Industries,    USG Corp.     CA.              Contamination

Spectron, Inc. USG Interiors Elkton, MD       Drum Disposal,
                                              & Groundwater

                  RCRA Off-Site Responsibilities

Corsicana      USG Interiors                  Landfill Closure

Linthicum      USG Interiors                  Groundwater

Red Lion       USG Interiors                  Groundwater

Tacoma         USG Interiors                  Post-Closure

Tacoma         USG Interiors                  Soil Remediation

Unimast        United States Gypsum Co.       Soil Remediation

Wabash         USG Interiors                  Waste Handling

                  RCRA On-Site Responsibilities

AMC Westlake   USG Interiors                  Soil & Groundwater

Boston         United States Gypsum Co.       Soil & Groundwater

Jacksonville   United States Gypsum Co.       Groundwater

LaMirada       United States Gypsum Co.       Groundwater

Midland        United States Gypsum Co.       Landfill Closure

Plaster City   United States Gypsum Co.       Soil Remediation

Plaster City   United States Gypsum Co.       Environmental

Sperry         United States Gypsum Co.       Landfill Closure
(USG Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

UNITEDGLOBALCOM: Amends Tender Offer Terms for 10-3/4% Notes
IDT United, Inc., a corporation formed by IDT Venture Capital
Corporation and Liberty UGC Bonds, Inc., a wholly-owned
subsidiary of Liberty Media Corporation (NYSE: L, LMC.B),
announced amended terms for its previously announced cash tender
offer for all of the $1,375,000,000 10-3/4% Senior Secured
Discount Notes due 2008 of UnitedGlobalCom, Inc. (Nasdaq:
UCOMA), a Delaware corporation.  IDT United is also soliciting
consents to the amendment of certain provisions of the indenture
governing the Notes to remove substantially all of the covenants
with respect to the Notes, to the termination of the related
pledge agreements and return of the security securing the Notes,
to the waiver of any defaults or events of default under the
Notes, the indenture governing the Notes or the related pledge
agreements, and to the waiver of compliance with the pledge
agreements and the provisions of the indenture that will be
deleted as a result of the consent solicitation.

IDT United also announced that noteholders who hold in excess of
66-2/3% in aggregate principal amount at maturity of Notes have
indicated that they intend to promptly tender their Notes into
the tender offer on the amended terms and will consent to the
amendments and related matters.  This is sufficient consent to
amend the indentures and terminate the pledge agreements as more
fully described in IDT United's tender offer and consent
solicitation documents.  United intends to promptly execute a
supplemental indenture to implement these amendments and waivers
after formal receipt of the requisite consents.

Pursuant to the terms of the definitive merger agreement
relating to United's transaction with Liberty, United has
consented to the tender offer and consent solicitation as well
as to the amended terms.  Pursuant to the terms of that
agreement, a subsidiary of New UnitedGlobalCom, Inc., a new
corporation, will merge into United and Liberty will contribute
certain assets to New United.  Following the closing of the
merger and the tender offer, New United will acquire Liberty's
interest in IDT United.

United is the largest international broadband communications
provider of video, voice and data services with operations in 26
countries.  At September 30, 2001, United's networks, in
aggregate, reached over 18.8 million homes and served over 10.6
million video customers, 671,500 telephony subscribers and
672,900 high speed internet access subscribers.  In addition,
the company's programming businesses reached approximately 48
million subscribers.

United's significant operating subsidiaries include United Pan-
Europe Communications N.V. (UPC) (53% owned), a leading pan-
European broadband communications company; Austar United
Communications (56% owned) a leading satellite, cable television
and telecommunications provider in Australia and New Zealand;
and VTR Global Com (100% owned), the largest broadband
communications provider in Chile.

WARNACO GROUP: Court Approves Sale of GJM Sleepwear to Luen Thai
The Warnaco Group, Inc. (OTC: WACGQ.OB) announced that it has
received bankruptcy court approval to sell its GJM Sleepwear
division to Luen Thai Overseas Limited, a Hong Kong-based
apparel manufacturing and logistics services provider.

As previously announced, Warnaco filed for protection under
Chapter 11 of the US Bankruptcy Code on June 11, 2001. Warnaco
received approval for the sale of GJM from the bankruptcy court
at a hearing on January 17, 2002.

Tony Alvarez, Jr., Chief Executive Officer of Warnaco, said,
"The sale of GJM is another important step forward in our
restructuring process, and is part of our effort to dispose of
non-core assets and focus on our core businesses in sportswear,
swimwear and intimate apparel."

Henry Tan, President of Luen Thai, said, "GJM is a great company
and has a strong management team. Our objective is to bring more
product types and value-added services to our customers by
combining GJM's strengths in product design and marketing in
sleepwear, with Luen Thai's existing infrastructure in
manufacturing and supply chain/logistics in other product

In another previous announcement, Warnaco said that it is also
seeking to sell other non-core assets, including its Lejaby, ABS
and Ubertech businesses.

The Warnaco Group, Inc., headquartered in New York, is a leading
manufacturer of intimate apparel, menswear, jeanswear, swimwear,
men's and women's sportswear, better dresses, fragrances and
accessories sold under such brands as Warner's, Olga, Lejaby,
Bodyslimmers, Chaps by Ralph Lauren, Calvin Klein men's and
women's underwear, men's accessories, and men's, women's, and
junior women's jeans, Speedo/Authentic Fitness men's, women's
and children's swimwear, sportswear and swimwear accessories,
Polo by Ralph Lauren women's and girls' swimwear, Oscar de la
Renta, Anne Cole Collection, Cole of California and Catalina
swimwear, and A.B.S. Women's sportswear and better dresses.

Luen Thai Overseas Limited, headquartered in Hong Kong, is a
leading manufacturing and logistics services provider with over
13,000 employees worldwide and with manufacturing facilities and
offices in Hong Kong, the United States, China, Mexico, Japan,
the Philippines, Saipan, Cambodia and Taiwan. The company's
customers include Abercrombie & Fitch, Fast Retailing (UNIQLO),
Jones New York, the Limited, Liz Claiborne and Polo Ralph

WHEELING-PITTSBURGH: Court OK's Wage Deferral & Ohio Financing
Represented by Michael E. Wiles, Esq., at Debevoise & Plimpton,
Wheeling-Pittsburgh Steel Corp., and its debtor-affiliates ask
Judge Bodoh for entry of an Order:

       (i) approving and authorizing a wage deferral agreement
with the United Steelworkers of America, AFL-CIO-CLC;

       (ii) providing interim approval and authorization of a
Commitment Letter and of a secured loan with the Ohio Department
of Development, and scheduling a final hearing thereon;

       (iii) granting certain associated liens, security
interests and claims pursuant to 11 U.S.C. Secs. 363 and 364;

       (iv) granting related relief.

The Debtors generally, and WPSC in particular, have been working
since the commencement of these cases to develop a business plan
that will improve WPSC's cash flow and liquidity and facilitate
the Debtors' emergence from Chapter 11. The agreements that are
the subject of this Motion are designed to stem ongoing
operating losses, to improve liquidity and to sustain continued
operations for sufficient time to enable consummation of a plan
of reorganization.

More particularly, WPSC has arranged a series of transactions
and agreements (some of which are said by the Debtors to require
Judge Bodoh's approval and some of which do not) that
collectively are designed to provide WPSC with the additional
funds that it requires to continue its operations. These

       (a) This Court previously has approved a Modified Labor
Agreement with the USWA which provided, among other things, for
a wage reduction of 15% during the period October 1, 2001
through March 31, 2002. The USWA has agreed (subject to
ratification) to the deferral of an additional portion of the
wages that otherwise would be due and payable to hourly
employees with respect to the period January 15, 2002 through
March 31, 2002. This deferral will be combined with
proportionate deferrals of salaries that otherwise would be due
and payable to salaried employees with respect to that same time
period, with the effect that the total wage and salary deferrals
(for hourly and salaried workers) will total $2 million per
month. These deferrals are expected to provide WPSC with cash-
flow relief of roughly $5 million during the first three months
of 2002.

       (b) The Department of Development of the State of Ohio
has agreed to complete a $7.2 million secured loan, to be
secured by certain caster segments at WPSC's facilities in Mingo
Junction, Ohio.

       (c) The State of West Virginia has agreed to provide an
infusion of $5 million of cash which, from the perspective of
WPSC, will effectively constitute a grant, in that the repayment
will be through a State appropriation and in that WPSC will not
be obligated to repay the amount that is to be advanced.

       (d) WPSC's parent corporation, WHX Corporation, has
agreed (through one or more of its subsidiary corporations) to
make a pre-payment of $3 million for steel ordered from WPSC.

       (e) WHX has also agreed, on the condition that the
foregoing monies have been received from the ODOD and the State
of West Virginia and that ratification of the USWA agreement has
been obtained, in each case by the end of this week, that WHX
(through one or more of its subsidiaries) will purchase an
additional $7 million of steel from WPSC on a pre-paid basis.

Those matters which the Debtors believe require Judge Bodoh's
approval are the Wage Deferral Agreement and the Ohio Financial

                   The Wage Deferral Agreement

The USWA represents the overwhelming majority of WPSC's hourly
employees and hourly retirees. Wages and benefits paid to hourly
active employees and hourly retirees represent a substantial
portion of WPSC's ongoing cash flow expenses.  The Debtors have
engaged in extensive meetings with representatives of the USWA
to discuss the Debtors' cash position, reorganization prospects
and business plans. Those discussions have led to an agreement
by the USWA (subject to ratification) to the deferral of an
additional portion of the wages that otherwise would be due and
payable to hourly active employees. These wage deferrals will be
combined with proportionate deferrals of the salaries payable to
active salaried employees, with the effect that total deferrals
for the period January 15, 2002 through March 31, 2002 will be
$5 million.

One of the conditions to the foregoing agreement is that the
deferrals give rise to administrative expense claims against
WPSC. The salary deferrals similarly are subject to the
condition that the affected employees be granted administrative
expense claims against WPSC in the amounts of the deferred sums.
The provision of such administrative expense claims to the
affected employees was a necessary inducement in obtaining these
deferrals, and it is fair and appropriate to grant such
administrative expense claims to the affected employees in light
of the significant concessions that they are making,
particularly since such wages and salaries otherwise would
constitute administrative expenses in any event.

                    The Ohio Financial Package

On August 28, 2000, the State Controlling Board of Ohio approved
a financial package consisting of a $200,000 grant and a
$6,985,000 loan to assist with WPSC's purchase and installation
of two additional caster segments to WPSC's facility located in
Mingo Junction, Ohio. On September 19, 2000, the Debtors
requested that the proposed financing commitment be postponed.
In December 2001, WPSC renewed its request to the Ohio
Department of Development to provide the proposed financing in
connection with the caster segment project. Subsequently, the
ODOD submitted a revised commitment letter, reflecting its
agreement to provide certain loans.

       The Loan.  The Commitment Letter calls for the ODOD to
make a secured loan to WPSC in the amount of $6,985,000 for a
term of up to 7 years.

       Interest.  The loan will bear interest at the rate of 0%
per annum in year 1 and 3% per annum in years 2 through 7.

       Deferred Principal Payments.  Principal payments will be
deferred in year 1.

       Costs.  The ODOD will also commit up to $50,000 to help
defray the costs of eligible fixed assets associated with the
caster segment project in addition to the $200,000 grant that
was already approved.

       Security.  The credit supplied by the ODOD to WPSC
through the foregoing loan will be secured by liens and security
interests in WPSC's caster segments in Mingo Junction, Ohio.  
The caster segments are currently encumbered by liens and
security interests in favor of the Debtors' post-petition
lenders. However, in Amendment and Waiver No. 2 to the Debtors
in Possession Credit Agreement, dated as of May 24, 2001, those
lenders agreed to subordinate their liens and security interests
to the lien and security interest in favor of the ODOD. The
caster segments have been omitted from the collateral packages
provided for other court-approved extensions of credit to WPSC.

                    The Debtors' Arguments

To the extent that any aspect of the pre-paid purchases of steel
by WHX Corporation and/or its subsidiaries are viewed as being
out of the ordinary course of business, the Debtors submit that
such transactions are reasonable and should be approved.

The Bankruptcy Code provides that a debtor in possession, "after
notice and a hearing, may use, sell, or lease, other than in the
ordinary course of business, property of the estate." In
general, a debtor may use, sell or lease property of the estate
outside the ordinary course of its business where such use
represents an exercise of the debtor's sound business judgment.
In addition, the Bankruptcy Code allows debtors to (i) obtain
unsecured credit in the ordinary course of business, (ii) obtain
unsecured credit out of the ordinary course of business and
(iii) obtain credit with specialized priority or with security.
If a debtor-in-possession cannot obtain post-petition credit on
an unsecured basis, the court may authorize the obtaining of   
credit or the incurring of debt, repayment of which is entitled
to superpriority administrative expense status or is secured by
a lien on the debtor's property, or a combination of the

Courts have applied the business judgment test to evaluate
motions to obtain credit under these terms and conditions.

The Debtors assert that the proposed agreements and transactions
will allow WPSC to reduce its operating costs and will
facilitate the ultimate restructuring of the Debtors. They are
said by the Debtors to be critical and positive steps towards
the Debtors' completion of a successful reorganization.
Accordingly, the Debtors submit that, under the circumstances
and in the exercise of their business judgment, the approval of
these agreements and transactions, and the related relief sought
in this Motion, is in the best interests of the Debtors'
respective estates and creditors.

WPSC proposes to obtain financing from the ODOD by providing
security interests in and liens on the caster segments pursuant
to the Bankruptcy Code. Since WPSC's working capital assets are
already encumbered and given its current financial condition, it
is not possible for WPSC to obtain credit on an unsecured basis.
WPSC believes that the secured financing terms set forth in the
Commitment Letter are reasonable financing terms.

        Interim Approval and Scheduling of Final Hearing

The Federal Rules of Bankruptcy Procedure provides that the
court may commence a final hearing on a motion for authority to
obtain credit no earlier than 15 days after service of the
motion. However, the court may authorize interim extensions of
credit to the extent necessary to avoid immediate and
irreparable harm to the estate pending a final hearing.

In this case, WPSC requires approval, on an interim basis, of
the full amount of the credit to be extended by the ODOD. WPSC
has immediate need for an influx of cash to cover accumulated
expenses and other expenses that are expected to come due during
the next two weeks.

Furthermore, WHX has made clear that its pre-paid purchases of
steel are conditioned on this Court's approval of all of the
various transactions and agreements that are described in this
Motion, including the completion of the ODOD loan. Similarly,
the other parties who have agreed to provide deferrals and cash
infusions have agreed to do so in the expectation that all of
the foregoing matters will be put in place. If WPSC cannot close
the ODOD loan and receive the full proceeds thereof on an
interim basis, the entire financial package may collapse,
leaving WPSC without adequate funds and producing immediate and
irreparable harm to the estate.  Accordingly, WPSC requests that
Judge Bodoh grant immediate and interim approval for WPSC to
close to ODOD loan and to receive the full proceeds thereof.

                   Judge Bodoh's Interim Order

Recognizing the immediacy of the need described in this Motion,
Judge Bodoh finds that WPSC "presently faces cash flow shortages
and requires immediate influxes of additional capital and other
cash flow relief." Judge Bodoh therefore grants the interim
relief requested by the Debtors and schedules this Motion for a
final hearing at a later date before Judge Kendig in Youngstown,
Ohio. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  


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S U B S C R I P T I O N   I N F O R M A T I O N

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Copyright 2002.  All rights reserved.  ISSN: 1520-9474.

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