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        T R O U B L E D   C O M P A N Y   R E P O R T E R

              Tuesday, May 21, 2002, Vol. 6, No. 99     

                          Headlines

ADELPHIA BUSINESS: Committee Signs-Up Kramer Levin as Counsel
ADELPHIA COMMS: Misses Interest & Preferred Dividend Payments
ADELPHIA COMMS: James R. Brown Steps-Down as VP of Finance
AMES DEPARTMENT: Elliot Seeks Okay to File Late Proof of Claim
AMTROL: S&P Cuts Corp. Credit Rating to B- On Liquidity Concerns

ARMSTRONG HOLDINGS: Proposes Uniform Claims Settlement Protocol
BGF INDUSTRIES: Market Weakness Prompts S&P to Junk Ratings
BANYAN STRATEGIC: Fails to Meet Nasdaq Listing Requirements
BETHLEHEM STEEL: Stahls Seek Stay Relief to Pursue Injury Claim
BROADBAND WIRELESS: Disclosure Statement Hearing Set for June 6

COPYTELE INC: Falls Below Nasdaq Minimum Bid Price Requirements
CORRECTIONAL SERVICES: Working Capital Deficit Narrows to $5.8M
COVANTA ENERGY: Asks Court to Deem Utilities Adequately Assured
DIGITAL BROADBAND: Auditors Express Going Concern Doubt
ENCHIRA BIOTECHNOLOGY: Violates Nasdaq Listing Requirements

ENRON CORP: Bridgeline Asks Court to Lift Stay to Allow Setoff
ENRON CORP: ENA Resolves Claims Dispute with Citrus Trading
ENRON POWER: Case Summary & 20 Largest Unsecured Creditors
EVOLVE: Fails to Regain Nasdaq Listing Requirement Compliance
EXIDE TECHNOLOGIES: Will Honor $9.7M Prepetition Shipping Claims

EXODUS COMMS: Wants to Assign Assumed Arca Systems Pacts to C&W
FFC HOLDING: Has Until July 28 to Make Lease-Related Decisions
FLAG TELECOM: Seeks Approval to Slash Workforce by About 50%
FOAMEX INT'L: Completes Interest Rate Swap Deals in Early May
FRUIT OF THE LOOM: Court Sets May 31 Bar Date for Admin. Claims

GENTEK INC: S&P Junks Credit Rating Amid Heightened Fin'l Risk
GRANITE BROADCASTING: Ernst & Young Issues Going Concern Opinion
GRANITE BROADCASTING: Commences "Modified Dutch Auction" Offer
HOLLYWOOD CASINO: S&P Affirms B Rating Over Improved Performance
HOMELAND STORES: Expects to Meet Cash Requirements through 2002

ICG: Telecordia Wants $35MM Claim Allowed for Voting Purposes
IT GROUP: KeyCorp Wants Debtors to Promptly Decide on Leases
ITC DELTACOM: Falls Short of Nasdaq Continued Listing Criteria
INTERLIANT INC: Continues Nasdaq Trading Pending Hearing Outcome
KAISER ALUMINUM: Asbestos Claimants Win OK to Tap Legal Analysis

KMART CORPORATION: Wrestles with General Star over Venue Dispute
LTV: Steel Debtor Wins Nod to Hire Receivables Outsource Mgt.
LIVEPERSON INC: Applies for Listing Transfer to Nasdaq SmallCap
MAGELLAN HEALTH: Q2 Cash Flow from Operations Drop to $14 Mill.
MARY KAY: S&P Ups Ratings to BB- on Improved Operating Results

METROMEDIA FIBER: Files for Chapter 11 Reorganization in SDNY
NATIONAL ENERGY: Case Summary & 20 Largest Unsecured Creditors
NATIONAL STEEL: Court Fixes August 15, 2002 as General Bar Date
NATIONSRENT INC: Court Approves Stipulation with KeyCorp Leasing
NEOMEDIA TECHNOLOGIES: Begins Trading on OTCBB Effective May 17

NETZEE INC: Nasdaq Will Delist Shares Effective May 24, 2002
NEWCOR INC: Seeking Court OK to Sign-Up PricewaterhouseCoopers
NEWCOR INC: Asks Court to Fix June 28 General Claims Bar Date
PACER INTERNATIONAL: S&P Places Low-B Ratings on Watch Positive
PACIFIC GAS: Voting Record Date Scheduled for May 21, 2002

PAPER WAREHOUSE: Violates Nasdaq Minimum Net Tangible Asset Rule
PEGASUS COMMS: S&P Places B Corp. Credit Rating on Watch Neg.
PILLOWTEX CORP: First Quarter Net Sales Plummet 12% to $241MM
POTOMAC ENERGY: Case Summary & 20 Largest Unsecured Creditors
PRESIDENT CASINOS: Feb. 28 Balance Sheet Upside-Down by $45MM

PSINET INC: NTFC Secures Temporary Allowance of Claim for Voting
RARE MEDIUM: Fails to Comply with Nasdaq Min. Bid Price Standard
REPUBLIC TECHNOLOGIES: Banks Agree to Finance RAC's Acquisition
SPECTRASITE: S&P Junks Corp. Credit Rating After Tender Offer
SUCCESSORIES: Obtains Waiver of FY 2001 Loan Covenant Violations

TRICO STEEL: Court Extends Lease Decision Period thru Sept. 23
TRICORD SYSTEMS: Receives Additional Nasdaq Noncompliance Notice
US STEEL: S&P Affirms BB Ratings As Industry Conditions Improve
USG: Court Okays Kinsella Communications as Notice Consultants
VELOCITY EXPRESS: Says Cash Flow Ample to Fund Operating Needs

WILLIAMS COMMUNICATIONS: Proposes Uniform Compensation Protocol
WORLDCOM: S&P Cuts Ratings on 4 Related Synthetic Deals to BB
WYNDHAM INT'L: S&P Rates Proposed $750 Million Debentures at B-
ZIFF DAVIS: Expects to Reach Debt Workout Pact Middle of June
ZILOG INC: Court-Confirmed Reorganization Plan Is Now Effective

                          *********

ADELPHIA BUSINESS: Committee Signs-Up Kramer Levin as Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Adelphia
Business Solutions, Inc., and its debtor-affiliates hereby
applies to the Court to authorize it to retain Kramer Levin
Naftalis & Frankel LLP as counsel for the Committee in the
Chapter 11 cases, effective as of April 5, 2002.

Charles R. Owen, Chairman of the Committee, tells the Court that
they have selected Kramer Levin to serve as counsel to the
Committee. This firm would perform all of the services necessary
and desirable to the conduct of the Chapter 11 Cases on behalf
of the Committee. The Committee selected Kramer Levin primarily
because Kramer Levin's Bankruptcy Department has extensive
experience in the fields of bankruptcy and creditors' rights.  
In particular, this firm has represented creditors' committees
in some of the largest and most complex Chapter 11
reorganization cases of recent years.  These include Chapter 11
cases for Dow Corning Corporation, Bethlehem Steel Corp., SGL
Carbon Corporation, Borden Chemicals and Plastics, American
Architectural Products, Big V Holdings, VF Brands Inc., London
Fog Industries, Inc., MMH Holdings, Inc., Edison Brothers,
Olympia & York, SLM International, Inc., Integrated Resources,
Inc., Financial News Network, Inc., INTERCO Incorporated and
Public Service Company of New Hampshire. Furthermore, Kramer
Levin's broad-based practice, which includes expertise in the
areas of corporate and commercial law, litigation, tax,
intellectual property, employee benefits and real estate, will
permit it to represent fully the interests of the Committee in
an efficient and effective manner.

Mr. Owen expects Kramer Levin to render any legal services as
the Committee may consider desirable to discharge the
Committee's responsibilities and further the interests of the
Committee's constituents in these cases. In addition to acting
as primary spokesman for the Committee, it is expected that
Kramer Levin's services will include, without limitation,
assisting, advising and representing the Committee with respect
to the following matters:

A. The administration of these cases and the exercise of
    oversight with respect to the Debtors' affairs including all
    issues arising from the Debtors, the Committee or these
    Chapter 11 cases;

B. The preparation on behalf of the Committee of necessary
    applications, motions, memoranda, orders, reports and other
    legal papers;

C. Appearances in Court and at statutory meetings of creditors
    to represent the interest of the Committee;

D. The negotiation, formulation, drafting and confirmation of a
    plan or plans of reorganization and matters related thereto;

E. Such investigation, if any, as the Committee may desire
    concerning, among other things, the assets, liabilities,
    financial condition and operating issues concerning the
    Debtors that may be relevant to these chapter 11 cases;

F. Such communication with the Committee's constituents and
    others as the Committee may consider desirable in
    furtherance of its responsibilities; and

G. The performance of all of the Committee's duties and powers
    under the Bankruptcy Code and the Bankruptcy Rules and the
    performance of such other services as are in the interests
    of those represented by the Committee.

Mitchell A. Seider, a member of the law firm of Kramer Levin
Naftalis & Frankel LLP, relates that the principal attorneys
expected to represent the Committee in this matter and their
current hourly rates are:

       Mitchell A. Seider          $500 per hour
       Robert T. Schmidt           $450 per hour

In addition, other attorneys and paraprofessionals may from time
to time provide services to the Committee in connection with
these bankruptcy proceedings. The range of Kramer Levin's hourly
rates for Kramer Levin's attorneys and legal assistants is as
follows:

       Partners                     $440-$625
       Counsel                      $435-$440
       Associates                   $210-$435
       Legal Assistants             $150-$175

Kramer Levin's hourly billing rates are subject to periodic
adjustments to reflect economic and other conditions.

Mr. Seider assures the Court that Kramer Levin is a
"disinterested person" within the meaning of section 101(14) of
the Bankruptcy Code.  Neither Kramer Levin nor its professionals
have any connection with the Debtors, the creditors or any other
party-in-interest.  Kramer Levin does not hold or represent any
interest adverse to the Committee in the matters for which it is
to be retained. Kramer Levin, however, currently represents or
in the past has represented these parties-in-interests in
matters unrelated to these cases:

A. Shareholder: Alliance Capital Management LP, and JP Morgan
    Fleming Asset Management;

B. Bondholder: American Express Financial Advisors Inc., Bear
    Stearns Asset Management, Blackrock Inc., Carpenters Pension
    Fund Massachusetts State, Connecticut General Life
    Insurance, Credit Suisse First Boston, Deutsche Asset
    Management, JP Morgan Fleming Asset Management, Los Angeles
    County Employees Retirement System, Metropolitan Life
    Insurance Co., Morgan Stanley Diversified Income Trust,
    Morgan Stanley High Income Advantage Trust II, Morgan
    Stanley High Yield Securities, Morgan Stanley Institutional
    Fund Tr. High Yield Port., Morgan Stanley Select Dimension
    Diversified Income, Morgan Stanley Universal High Yield
    Portfolio, Morgan Stanley Variable High Yield, MSDW High-
    Yield Fund, MSIF Trust Multi Asset Class Portfolio, Morgan
    Stanley Investment Management Inc., Northwestern Mutual Life
    Insurance Co., OFFIT Bank, Oppenheimer Funds Inc., Pacific
    Investment Management Co., Pilgrim High Yield Fund, Putnam
    Investments Inc., RBC Dominion Securities Corp., Redwood
    Capital Management, Salomon Smith Barney, Smith Barney Asset
    Management, Smith Barney Inc. Seg. Comm., Teachers Insurance
    and Annuity Association, UBS Warburg LLC, Unibank (Nordea),
    and UNUM Life Insurance Company of America/First UNIM Life
    Insurance Co.;

C. Vendor: AT&T, COMPUSA, LeBoeuf Lamb Green & MacRae LLP, MCI
    Worldcom, Metromedia Fiber Net, Pirelli Cable Corp., SNET,
    Sprint, Telergy Network Serv, and WorldCom;

D. Underwriter: Bank of America Securities, Bear Stearns & Co.
    Securities, Chase Securities Inc., CIBC World Markets,
    Donaldson Lufkin & Jenrette, First Union Capital Markets,
    First Union Securities Inc., Goldman Sachs & Co., and
    NationsBanc Montgomery Securities LLC;

E. Committee Member: Bank of New York, Fidelity Investments,
    Fujitsu Network Communications, and Wilmington Trust
    Company;

F. Lessor: Bellevue Associates, Chase Company, Crescent Real
    Estate, Cushman & Wakefield, First Union National
    Bank/Wachovia Bank, Guardian Life Insurance Company, KB
    Fund/CB Richard Ellis, Mack-Cali Realty LP, Mid America, PNC
    Bank N.A., and Prudential Insurance Co. of America;

G. Professionals: Deloitte & Touche LLP. (Adelphia Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)


ADELPHIA COMMS: Misses Interest & Preferred Dividend Payments
-------------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAE) announced
three developments related to the issues currently facing the
Company.

                    Adelphia Meets with NASD

Adelphia said it had a hearing Thursday before the National
Association of Securities Dealers regarding the possible
delisting of the Company's shares from the Nasdaq stock market.  
On Tuesday, May 14, 2002, Nasdaq suspended trading in Adelphia's
shares.  The NASD announced no decision following Thursday's
hearing.  Adelphia expects to receive an indication from the
NASD in the near future regarding the Company's listing status.

Newly appointed Chairman and interim CEO Erland E. Kailbourne
said, "We appreciate the opportunity to discuss with the NASD
our Company and the actions that our Special Committee of
independent directors is taking to restore the integrity of
Adelphia's financial reporting.  We are determined to have a
company that is based on the principle of full and accurate
disclosure of information to shareholders.  As we move forward,
we will of course be cooperating fully with the NASD."

               Company Misses Interest Payment
                and Preferred Dividend Payment

Separately, Adelphia also announced that on May 15 it missed a
$23,437,500 interest payment on its 9-3/8% Senior Notes due
November 15, 2009, and a $6,468,750 dividend payment on its 7-
1/2% Series E Mandatory Convertible Preference Stock.  In
addition, the Company announced that on that same date its
subsidiaries, Olympus Communications, L.P. and Olympus Capital
Corporation, missed a $10,625,000 interest payment on their 10-
5/8% Senior Notes due November 15, 2006 and that another
subsidiary, Arahova Communications, Inc. missed a $4,187,500
interest payment on its 8-3/8% Senior Notes due November 15,
2017.  Adelphia also said that certain of its subsidiaries made
interest payments on bank credit facilities on May 15 totaling
$4,787,500.

"The Company decided not to make these payments on outstanding
bonds and preferred shares because we are now pursuing a
thorough evaluation of Adelphia's business objectives and
financial requirements.  Adelphia has valuable assets, and we
are working to restore the confidence of our lenders and
shareholders.  Our intention is to preserve and build upon the
underlying value of the Company, and we will pursue the
previously announced plan for asset sales to significantly
reduce debt.  We also hope to increase revenues from existing
properties and reduce costs throughout the Company.  As part of
this process, we are carefully developing a full picture of our
financial needs and we look forward to working with our lenders
to address those requirements."

                    Grand Jury Investigations

Adelphia further said that grand juries in the Southern District
of New York and the Middle District of Pennsylvania are
investigating certain matters related to the Company.  The
Company said that it is cooperating fully with these
investigations.

Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth-largest cable television
company in the country.

Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1),
DebtTraders says, are trading at about 86.75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.


ADELPHIA COMMS: James R. Brown Steps-Down as VP of Finance
----------------------------------------------------------
Adelphia Communications Corporation (Nasdaq:  ADLAE) announced
that James R. Brown has resigned from his position as Vice
president of Finance, effective immediately.  Mr. Brown worked
for the Company for nearly 18 years.

Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth-largest cable television
company in the country.


AMES DEPARTMENT: Elliot Seeks Okay to File Late Proof of Claim
--------------------------------------------------------------
Elliott Associates, L.P. asks the Court to permit it to file a
proof of claim against Ames Department Stores, Inc., and its
debtor-affiliates notwithstanding that the March 25, 2002 Bar
Date has expired.  Despite having received the Bar Date Notice
dated January 31, 2002, the notice was not actually mailed to
Elliott until on or about February 15, 2002.  In addition, the
Bar Date Notice was not received by the responsible person at
Elliott until on or about March 1, 2002 or thereafter.  Elliott
filed a tardy proof of claim on March 28, 2002, three days after
expiration of the Bar Date.

Richard F. Casher, Esq., at Kasowitz, Benson, Torres & Friedman
LLP in New York, New York, explains that Elliott's omission was
the result of an innocent oversight for which it should not be
penalized.  Elliott's oversight involved the inadvertent failure
to identify the Bar Date set forth in the Bar Date Notice in
time to timely file a proof of claim in respect of the Elliott
Claim.  Mr. Casher informs the Court that Elliott is the holder
of an unsecured claim against Ames in the sum of $1,116,925,
representing the unpaid balance of claims against Hills Stores
Company, Inc. totaling $3,873,346.  The claim is evidenced by a
proof of claim filed by Republic Factors Corporation on April
24, 1991 in the Hills Chapter 11 Case. Republic assigned the
full amount of the Republic Claim to Amroc Investments, Inc.
pursuant to an Assignment of Claim, dated January 30, 1992, and
a Purchase and Sale Agreement, dated January 30, 1992. Amroc
subsequently assigned the full amount of the Republic Claim to
Elliott pursuant to an Assignment of Claim, dated June 18, 1992.
A notice of the transfer of the Republic Claim by Amroc to
Elliott was mailed to Amroc by the Clerk of the Court on March
16, 1992. It notified Amroc of Elliott's substitution as the
claimant absent objection by Amroc.

Consequently, Mr. Casher continues, a reorganization plan in the
Hills Chapter 11 Case was confirmed by the Bankruptcy Court.
Thereafter, Elliott received distributions under the Chapter 11
plan in respect of the Republic Claim approximately for
$2,756,422.  Later on, Hills was acquired by Ames in March of
1999.  Therefore, the Republic Claim originally filed in the
Hills Chapter 11 Case and treated under the Hills Plan now lies
against the Debtors.

Mr. Casher contends that there exists no danger of prejudice
since the delay has been minimal. The allowance of an additional
claim would not likely jeopardize the administration of the
estate and reorganization efforts. Surely, in this case were the
delay is merely a matter of days, no significant negotiation or
progress toward the confirmation of a plan could have taken
place and the allowance of an additional claim will not result
in a delay of such a confirmation.

Moreover, Mr. Casher informs the Court that, on March 28, 2002,
Mr. Dan Gropper, a representative of Elliott, and Elliott's
counsel had a telephone conversation with Michele Meises, an
associate with Weil, Gotshal & Manges, for the purpose of
advising Ms. Meises that Elliott had an unsecured claim against
the Debtors. Thereafter, on or about April 1st, Mr. Gropper
again spoke with Ms. Meises and advised her that Elliott had
filed the Tardy Proof of Claim with the Court on March 28, 2002.  
The Debtors should not be able to claim that they will be
prejudiced by the allowance of a claim that they should have
anticipated and had actual notice of within only three days
after the Bar Date.

Mr. Casher submits that Elliott has not acted in bad faith in
failing to file its claim before the Bar Date. Bad faith in
failing to file a timely proof of claim is usually found in
circumstances where the movant knew of the bankruptcy proceeding
and the impending deadline and deliberately chose not to file a
proof of claim before the bar date. To the contrary, the very
shortness of the delay is evidence that Elliott did not
intentionally ignore the Bar Date, or intend to hamper the
Debtors' reorganization efforts. (AMES Bankruptcy News, Issue
No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900)


AMTROL: S&P Cuts Corp. Credit Rating to B- On Liquidity Concerns
----------------------------------------------------------------
On May 17, 2002, Standard & Poor's lowered its ratings on AMTROL
Inc. and removed them from CreditWatch where they were placed
with negative implications on December 3, 2001. The corporate
credit rating was lowered to single-'B'-minus from single-'B'.
The senior secured debt ratings were withdrawn as the rated bank
credit facility has been replaced with an unrated facility.

The downgrade was the result of continuing tight liquidity
following the refinancing of bank debt with two new credit
facilities. AMTROL replaced its former bank credit facility with
a $42.5 million first-priority term loan and revolving credit
facility with Foothill Capital Corp. and a $25 million payment-
in-kind senior second-priority secured credit facility with
affiliates of its equity sponsor, The Cypress Group LLC.
Although the parental support and lower cash interest burden are
positives, the company had only $7.7 million of undrawn
availability as of March 31, 2002. Liquidity should gradually
improve as the company enters into a seasonally stronger period,
but is likely to remain strained. Recovery in sales and earnings
is dependent primarily on economic conditions, which are still
uncertain. In addition, the company faces higher steel costs
this year.

The ratings reflect West Warwick, Rhode Island-based AMTROL's
below-average business position as a leading manufacturer of
niche flow control, fluid treatment, and storage products used
primarily in water systems and HVAC (heating, ventilating, and
air-conditioning) applications. The company has a modest revenue
base, an aggressive capital structure, and a growth-via-
acquisition strategy. AMTROL has about $170 million of debt
outstanding.

                        Outlook

Liquidity remains a primary concern, and any worsening could
lead to a another downgrade.

Ratings List:                           To:            From:

                              AMTROL Inc.

* Corporate credit rating               B-               B
* Senior secured                        NR               B+
* Subordinated debt                    CCC              CCC+


ARMSTRONG HOLDINGS: Proposes Uniform Claims Settlement Protocol
---------------------------------------------------------------
In January 2001, Armstrong Holdings, Inc., and its debtor-
affiliates filed their Schedules in which they listed
approximately 182,584 claimants.  In April 2001, the Court set
August 31, 2001, as the bar date for filing proofs of claim by
various types of creditors and interest holders, although some
types of creditors, such as asbestos-related personal injury
claims (other than claims for contribution, indemnity or
subrogation) are not within the scope of the Order establishing
this bar date.  In accordance with the Bar Date Order, Trumbull
Services LLC, the court-appointed noticing agent, mailed notices
of the bar date and proofs of claim.  In addition, notice of the
bar date was published on two occasions in the national edition
of The Wall Street Journal, The New York Times, and USA Today,
as well as at least 14 trade publications.  Approximately 4,506
proofs of claim have been filed with the Clerk or with Trumbull,
including proofs of claim that were filed after the Bar Date.

By this Motion the Debtors seek Judge Newsome's authorization to
establish a procedure to settle claims against the Debtors'
estates, as well as claims asserted by the Debtors themselves.  
The Debtors propose to settle these claims in a manner
substantially consistent with their prepetition practices in
settling such claims and without the need for obtaining Court
approval of certain settlements on a case-by-case basis.

In negotiating and achieving such settlements, the Debtors would
be guided by several factors, including the likelihood of the
Debtors succeeding in their defense against or prosecution of
the claims and the estimated costs they would incur in
litigating or otherwise resolving such claims. The Debtors
believe that granting the authority requested in this Motion
would enable them to efficiently and economically settle
numerous claims against their estates, and, thus, limit their
potential liability on such claims. By settling claims in
this fashion, the Debtors believe that they will significantly
reduce the postpetition costs incurred in resolving claims,
thereby increasing the recoveries of all creditors.

                 The Debtors' Prepetition Procedures
                          For Settlement

Prior to the Petition Date, in the ordinary course of their
business, the Debtors' management team, with the assistance of
outside counsel, would investigate, evaluate and attempt to
resolve claims or potential causes of action asserted by or
against them.  Depending upon the specific facts and the risks
involved in engaging in litigation with respect to these claims,
the Debtors, in the exercise of their business judgment, would
make appropriate offers to settle such claims.

During the course of these chapter 11 cases, the Debtors will be
required to liquidate the numerous claims that have been filed.
In addition, the Debtors may assert various claims for recovery
against other parties. In many cases, engaging in litigation
over disputed claims will require the Debtors to expend
significant funds. When the Debtors, consistent with their
prepetition practices, evaluate the probabilities of success in
challenging or asserting such claims against the potential cost,
they may decide, in the exercise of their reasonable business
judgment, that a compromise and settlement of certain claims is
appropriate. Absent the relief requested in this Motion, the
Debtors would be required to seek specific Court approval for
each individual compromise and settlement into which they wish
to enter. Given the number of claims that the Debtors believe
can be settled for relatively moderate amounts, as well as the
active participation of the Committees in these cases, holding
individual hearings, filing individual pleadings with respect to
each proposed settlement, and sending notice of each compromise
and settlement to every one of the almost 200 creditors and
interested parties entitled to receive notice in these cases
pursuant to this Court's order establishing certain notice
procedures dated January 29, 2001, would be an expensive,
cumbersome and highly inefficient way to resolve many of the
disputed claims.

             Asbestos Personal Injury Claims Against
                  Debtors and Insiders Included

Accordingly, this Motion sets forth various guidelines and
procedures the Debtors propose to implement with respect to the
compromise and settlement of disputed claims asserted both by
and against the Debtors, other than claims against AWI, whether
in the nature of or sounding in tort, contract, warranty or any
other theory of law, equity or admiralty for, relating to, or
arising by reason of, directly or indirectly, physical,
emotional or other personal injuries caused or allegedly caused,
directly or indirectly, by exposure to asbestos or asbestos-
containing products and arising or allegedly arising, directly
or indirectly, from acts or omissions of any of the Debtors and
claims asserted by or against any of the Debtors' "insiders"
against any of the Debtors. The Debtors believe that it would be
far more efficient and cost effective for their estates and
creditors if they were authorized to settle claims under the
terms and conditions outlined in this Motion. If the Debtors are
so authorized, their estates will be spared the expense, delay
and uncertainty that otherwise would be associated with
resolving such claims.

              Settlement of Employee Litigation Claims

In the past, claims have been asserted against the Debtors'
estates by current or former employees for alleged wrongful
termination or other contractual, statutory and tort-based
employment claims allegedly occurring prior to the Petition
Date.  The Employee Litigation Claims do not include claims for
workers' compensation or for employee or retiree benefits.  
Several of the Employee Litigation Claims had progressed to the
point of actual lawsuits against one or more of the Debtors as
of the Petition Date.  The balance of the Employee Litigation
Claims consist primarily of demand letter sent to one or more of
the Debtors and/or charges of discrimination filed with the
Equal Employment Opportunity Commission or similar state
agencies prior to the Petition Date which could escalate into
full-scale civil lawsuits if they are not resolved, and claims
or grievances for alleged violations of collective bargaining
agreements between AWQI and the unions that represent its
employees, which are subject to arbitration proceedings if not
settled or resolved through internal procedures.

The Debtors cannot predict with any degree of certainty their
potential liability with respect to many of the Employee
Litigation Claims.  The standards for determining liability and
awarding damages in connection with discrimination actions are,
to a large degree, subjective. Moreover, plaintiffs often allege
special damages in connection with Employee Litigation Claims.

               Administrative Expenses Necessary to
                   Litigate Prepetition Claims

The Debtors would likely be required to incur substantial legal
expenses in defending the Employee Litigation Claims.  Legal
fees and expenses can exceed $100,000 for the defense of a
single claim and hundreds of thousands of dollars for the
defense of all such claims in the aggregate.  Any legal fees and
expenses incurred after the Petition Date would constitute
administrative expenses of the Debtors' estates, notwithstanding
that the Employee Litigation Claims themselves would constitute
prepetition claims.

Based upon the Debtors' historical experience in dealing with
such claims, the Debtors believe they could settle the
substantial majority of the Employee Litigation Claims for cash
payments of significantly less than $25,000 each. Given the
considerable potential liability faced by the Debtors with
respect to the Employee Litigation Claims, as well as the
substantial legal fees they would incur in litigating such
actions, the Debtors seek authorization to settle such Employee
Litigation Claims under terms and conditions which include
permitting settlement of Employee Litigation Claims for cash
payments:

       a.  $25K Cash or $50K Claim:

Without further order of the Court or notice to or approval of
the Committees, the Debtors may enter into a compromise and
settlement of any Employee Litigation Claim, whether or not a
law suit had been commenced prior to the Petition Date, for a
cash payment not to exceed $25,000 per claimant or an allowed
prepetition, unsecured claim not to exceed $50,000 per claimant.

       b.  $25K Plus, But Less Than $74K Cash or $50 Plus But
Less Than $100K Claim:

For settlements of Employee Litigation Claims where:

             (1) the proposed cash payment per claimant is
greater than $25,000 but less than $75,000, or

             (2) the proposed allowed, unsecured, prepetition
claim is greater than $50,000 but less than $150,000, the
Debtors will submit the proposed settlement to the Committees
together with:

                   (i) the name of the other party to the
settlement,

                   (ii) a summary of the dispute with such other
party, including a statement of the settlement amount and the
basis for the controversy,

                   (iii) an explanation of why the settlement of
such Employee Litigation Claim is favorable to the Debtors,
their estates, and their creditors, and

                   (iv) a copy of any proposed settlement
agreement. The Committees will be required to submit any
objections to a proposed settlement reflected on an Employee
Litigation Settlement Summary on or before ten business days
after service of the Employee Litigation Settlement Summary. In
the event that one or more of the Committees objects to the
settlement set forth in the Employee Litigation Settlement
Summary, the Debtors may:

                         (1) seek to renegotiate the proposed
settlement and may submit a revised Employee Litigation
Settlement Summary in that connection, or

                         (2) file a motion with the Court
seeking approval of the proposed settlement.

If the Committees do not timely object to the proposed
settlement, then the Debtors will be deemed, without further
order of the Court, to be authorized by the Court to enter into
an agreement to settle the Employee Litigation Claim at issue as
provided in the Employee Litigation Settlement Summary
previously submitted to the Committees.

       c.  For any other settlement of an Employee Litigation
Claim, the Debtors will be required to file a motion with the
Court requesting approval of the compromise and settlement under
Bankruptcy Rule 9019.

                   Settlement of Tax Claims

The Debtors file over 2000 tax returns a year with various
federal, state, county, and city taxing authorities. Due to the
size of the Company, the Debtors are required to make estimated
tax payments at the federal, state and local level no less than
four times a year to each of the taxing authorities. From time
to time, the Debtors may miscalculate their tax liability for a
particular period resulting in either an underpayment or
overpayment of the Debtors' tax obligations and/or interest
payments. Other times, the Debtors and a taxing authority may
have a dispute regarding whether, or the extent to which, a tax
is payable by the Debtors. Often, in order to challenge a taxing
authority's determination, the Debtors must pay the disputed tax
and then request a refund. In either case, the Debtors
eventually assert a claim with the relevant taxing authority for
a refund of the overpayment.

Furthermore, the taxing authorities audit certain of the
Debtors' tax returns on either a yearly basis in the case of the
Debtors' state and local tax returns, or once every three years
in the case of the Debtors' federal tax returns filed with the
Internal Revenue Service. The taxing authorities use such audits
to determine whether the Debtors are liable for any additional
tax payments, taking into account all estimated prepayments, and
to assess each of the Debtors for any due but unpaid portion of
such taxes.

As of the Petition Date, the Debtors had thirty-three Tax Claims
pending in twenty-one different jurisdictions. These Tax Claims
consist of approximately seven Tax Assessment Claims and twenty-
six Tax Refund Claims. Furthermore, the Debtors anticipate that
they may assert a number of additional Tax Refund Claims during
the course of these chapter 11 cases on account of the
overpayment of prepetition tax obligations, while certain of the
taxing authorities may assert new Tax Assessment Claims as they
complete their audits of the Debtors' numerous tax returns.

In many cases, a Debtor will assert a Tax Refund Claim against a
taxing authority that has or will assert a Tax Assessment Claim
against the Debtor resulting, to a certain extent, in
potentially offsetting claims.

                   The Tax Assessment Claims

By this Motion, the Debtors are seeking authority to resolve Tax
Assessment Claims through a three-tier claim settlement analysis
based on the proposed settlement amount for the Tax Assessment
Claim.

        a.  State or Local Taxing Authority.

With respect to Tax Assessment Claims involving a Debtor and any
state or local taxing authority:

             (1) $500,000 or Less.  The Debtors shall be
authorized to settle any and all Tax Assessment Claims, without
prior approval of the Court or any other party in interest,
whenever the Tax Assessment Settlement Amount is less than or
equal to $500,000.

              (2) $500,001 Plus But Less Than $4 Million.  With
respect to Tax Assessment Claims where the Tax Assessment
Settlement Amount is greater than $500,000, but less than
$4,000,000, the Debtors will submit the proposed compromise and
settlement to the Committees together with:

                    (i) the name of the taxing authority,

                    (ii) a summary of the dispute with the
taxing authority, including the basis for the controversy, and

                    (iii) an explanation of why the settlement
of such Tax Claim is favorable to the Debtors, their estates,
and their creditors.

The Committees will be required to submit any objections to the
Tax Assessment Settlement Amount on or before ten business days
after service of such Tax Assessment Settlement Summary. In the
event that one or more of the Committees objects to the
settlement set forth in the Tax Assessment Settlement Summary,
the Debtors may:

             (i) seek to renegotiate the proposed settlement and
will submit a revised Tax Assessment Settlement Summary in
connection therewith, or

             (ii) file a motion with the Court seeking approval
of the proposed settlement of the Tax Assessment Claim. If the
Committees do not timely object to the proposed settlement, then
the Debtors may enter into an agreement to settle the Tax
Assessment Claim at issue for the settlement amount previously
submitted to the Committees in the Tax Assessment Settlement
Summary.

For any other settlement of a Tax Assessment Claim, the Debtors
will be required to file a motion with the Court requesting
approval of the compromise and settlement under Bankruptcy Rule
9019.

             b.  IRS.  With respect to Tax Assessment Claims
involving a Debtor and the I.R.S.:

                   (1) The Debtors shall be authorized to settle
any and all Tax Assessment Claims for each three-year audit
period without prior approval of the Court or any other party in
interest, whenever the aggregate Tax Assessment Settlement
Amount for such Tax Assessment Claims is less than or equal to
$5,000,000.

                   (2) With respect to Tax Assessment Claims for
each three-year audit period where the aggregate Tax Assessment
Settlement Amount for the Tax Assessment Claims is greater than
$5,000,000, but less than $20,000,000, the Debtors will submit
the proposed compromise and settlement to the Committees
together with the Tax Assessment Settlement Summary as described
in subparagraph (a) above.

The Committees will be required to submit any objections to the
Tax Assessment Settlement Amount on or before ten business days
after service of such Tax Assessment Settlement Summary. In the
event that one or more of the Committees objects to the
settlement set forth in the Tax Assessment Settlement Summary,
the Debtors may:

             (i) seek to renegotiate the proposed settlement and
will submit a revised Tax Assessment Settlement Summary in
connection therewith, or

             (ii) file a motion with the Court seeking approval
of the proposed settlement of the Tax Assessment Claim. If the
Committees do not timely object to the proposed settlement, then
the Debtors may enter into an agreement to settle the Tax
Assessment Claim at issue for the settlement amount previously
submitted to the Committees in the Tax Assessment Settlement
Summary.

            (iii) For any other settlement of a Tax Assessment
Claim, the Debtors will be required to file a motion with the
Court requesting approval of the compromise and settlement under
Bankruptcy Rule 9019.

                    The Tax Refund Claims

With respect to the Tax Refund Claims, such claims represent
assets of the Debtors' estates, and allowing the Debtors to
recover the Tax Refund Claims as efficiently and expediently as
possible is in the best interests of the Debtors, their estates,
and their creditors. Furthermore, upon the commencement of their
chapter 11 cases, the Debtors were charged with a fiduciary duty
to their creditors and their equity holders. As such, the
Debtors are obligated to seek to recover any and all assets that
they believe rightfully belong to the chapter 11 estates.  
Because the Debtors owe a fiduciary duty to creditors and equity
holders, they will seek to settle the Tax Refund Claims at fair
and reasonable amounts in accordance with their business
judgment.

Accordingly, by this Motion, the Debtors are seeking authority
to resolve Tax Refund Claims pursuant to a three-tier claim
settlement analysis based on the difference between (i) the
proposed settlement amount for such Tax Refund Claim, and (ii)
the amount of the Tax Refund Claim sought to be recovered by
such Debtor.  Under this tier method, the difference between the
Tax Refund Amount and the Tax Refund Settlement Amount will be
referred to as the "Tax Refund Documented Difference" and will
determine the level of approval required for a proposed
settlement.

The Debtors are seeking to implement the following settlement
procedures for Tax Refund Claims:

       a.  With respect to Tax Refund Claims involving a Debtor
and any state or local taxing authority:

             (1) Less Than $500,000.  The Debtors shall be
authorized to settle any and all Tax Refund Claims without prior
approval of the Court or any other party in interest, whenever
the Tax Refund Documented Difference for such Tax Refund Claim
is less than $500,000.

             (2) $500K to $2M.  With respect to Tax Refund
Claims where the Tax Refund Documented Difference is greater
than $500,000, but less than $2,000,000, the Debtors will submit
the proposed compromise and settlement to the Committees
together with:

                     (1) the name of the taxing authority,

                     (2) a summary of the dispute with the
taxing authority, including the basis for the controversy, and

                     (3) an explanation of why the settlement of
such Tax Refund Claim is favorable to the Debtors, their
estates, and their creditors.

The Committees will be required to submit any objections to the
Tax Refund Settlement Amount on or before ten business days
after service of the Tax Refund Settlement Summary. In the event
that one or more of the Committees objects to the settlement set
forth in the Tax Assessment Settlement Summary, the Debtors may:

             (i) seek to renegotiate the proposed settlement and
will submit a revised Tax Assessment Settlement Summary in
connection therewith, or

             (ii) file a motion with the Court seeking approval
of the proposed settlement of the Tax Assessment Claim.

If the Committees do not timely object to the proposed
settlement, then the Debtors may enter into an agreement to
settle the Tax Refund Claim at issue for the settlement amount
previously submitted to the Committees in the Tax Refund
Settlement Summary.

             (iii) For any other settlement of a Tax Refund
Claim, the Debtors will be required to file a motion with the
Court requesting approval of the compromise and settlement under
Bankruptcy Rule 9019.

       b.  With respect to Tax Refund Claims involving a Debtor
and the I.R.S.:

             (1) Less Than $5M.  The Debtors shall be authorized
to settle any and all Tax Refund Claims for each three-year
audit period without prior approval of the Court or any other
party in interest whenever the aggregate Tax Refund Documented
Difference for such Tax Refund Claim is less than $5,000,000.

             (2) $5M Plus But Less Than $10M.  With respect to
Tax Refund Claims for each three-year audit period where the
aggregate Tax Refund Documented Difference for such Tax Refund
Claims is greater than $5,000,000, but less than $10,000,000,
the Debtors will submit the proposed compromise and settlement
to the Committees together with the Tax Refund Settlement
Summary as described in subparagraph (a) above. The Committees
will be required to submit any objections to the Tax Refund
Settlement Amount on or before ten business days after service
of such Tax Refund Settlement Summary. In the event that one or
more of the Committees objects to the settlement set forth in
the Tax Refund Settlement Summary, the Debtors may:

                   (i) seek to renegotiate the proposed
settlement and will submit a revised Tax Refund Settlement
Summary in connection therewith, or

                   (ii) file a motion with the Court seeking
approval of the proposed settlement of the Tax Refund Claims.

If the Committees do not timely object to the proposed
settlement, then the Debtors may enter into an agreement to
settle the Tax Refund Claims at issue for the settlement amount
previously submitted to the Committees in the Tax Refund
Settlement Summary.

                   (iii) All Other Settlements.  For any other
settlement of Tax Refund Claims involving a Debtor and the
I.R.S. for each three-year audit period, the Debtors will be
required to file a motion with the Court requesting approval of
the compromise and settlement under Bankruptcy Rule 9019.

                         Remaining Claims
          (Other than Asbestos Personal Injury Claims)

With respect to all other types of Claims (i) asserted against
the Debtors' estates (other than Employee Litigation Claims, Tax
Assessment Claims, Insider Claims and Asbestos Personal Injury
Claims) or (ii) asserted by the Debtors against other parties
(other than Tax Refund Claims and Insider Claims) the Debtors
are seeking to implement a three tier claim settlement analysis
based on the difference between (i) the amount of the General
Claim as scheduled on the Debtors' Schedules or, with respect to
General Claims asserted by a Debtor, the amount sought to be
recovered by such Debtor and (ii) the proposed amount of the
allowed general unsecured claim for which the Debtors are
seeking to settle such General Claim.  Under this method, for
claims asserted by a Debtor the difference between the Debtor's
Amount and the Settlement Amount will be referred to as the
"Documented Difference."

For claims asserted against a Debtor, the "Documented
Difference" will be the difference between the Settlement Amount
and the Debtor's Amount. In each case, the Documented Difference
will determine the level of approval required for a proposed
settlement. The Debtors are seeking to implement the following
settlement procedures for General Claims:

      a.  With respect to claims asserted by the Debtors:

             (1) Less Than $1M.  The Debtors will be authorized
to settle any and all General Claims asserted by the Debtors
without prior approval of the Court or any other party in
interest whenever the Documented Difference is less than
$1,000,000.

             (2) $1M Plus But Less Than $5M.  With respect to
General Claims asserted by the Debtors where the Documented
Difference is greater than or equal to $1,000,000 but less than
$5,000,000, the Debtors will submit the Settlement Amount to the
Committees together with:

                    (i) the name of the party to the settlement,

                    (ii) a summary of the dispute with the other
party, including the basis for the controversy, and

                    (iii) an explanation of why the settlement
of such General Claim is favorable to the Debtors, their
estates, and their creditors.

The Committees will be required to submit any objections to the
General Settlement Amount on or before ten business days after
service of the General Settlement Summary. In the event that one
or more of the Committees objects to the settlement set forth in
the General Settlement Summary, the Debtors may:

                   (i) seek to renegotiate the proposed
settlement and will submit a revised General Settlement Summary
in connection therewith, or

                   (ii) file a motion with the Court seeking
approval of the proposed settlement of the General Claim. If the
Committees do not timely object to the proposed settlement, then
the Debtors may enter into an agreement to settle the General
Claim at issue for the settlement amount previously submitted to
the Committees in the General Settlement Summary.

For any other settlement of a General Claim, the Debtors will be
required to file a motion with the Court requesting approval of
the compromise and settlement under Bankruptcy Rule 9019.

             (3) $5M Plus.  For each General Claim asserted by
the Debtors where the Documented Difference is greater than or
equal to $5,000,000 the Debtors will be required to file a
motion with the Court requesting approval of the compromise and
settlement under Bankruptcy Rule 9019.

       b.  With respect to Claims asserted against the Debtors:

             (1) Less Than $100K.  The Debtors will be
authorized to settle any and all General Claims asserted against
the Debtors without prior approval of the Court or any other
party in interest whenever the Documented Difference is less
than $100,000.

             (2) $100K But Less Than $1M.  With respect to
General Claims asserted against the Debtors where the Documented
Difference is greater than or equal to $100,000 but less than
$1,O00,000, the Debtors will submit the Settlement Amount to the
Committees together with:

                    (i) the name of the other party to the
settlement,

                    (ii) a summary of the dispute with the other
party, including the basis for the controversy, and

                    (iii) an explanation of why the settlement
of such General Claim is favorable to the Debtors, their
estates, and their creditors.

The Committees will be required to submit any objections to the
General Settlement Amount on or before ten business days after
service of such General Settlement Summary. In the event that
one or more of the Committees objects to the settlement set
forth in the General Settlement Summary, the Debtors may:

                   (i) seek to renegotiate the proposed
settlement and will submit a revised General Settlement Summary
in that connection, or

                   (ii) file a motion with the Court seeking
approval of the proposed settlement of the General Claim. If the
Committees do not timely object to the proposed settlement, then
the Debtors may enter into an agreement to settle the General
Claim at issue for the settlement amount previously submitted to
the Committees in the General Settlement Summary.

For any other settlement of a General Claim, the Debtors will be
required to file a motion with the Court requesting approval of
the compromise and settlement under Bankruptcy Rule 9019.

             (3) $1M Plus.  For each General Claim asserted
against the Debtors where the Documented Difference is greater
than or equal to $1,000,000 the Debtors will be required to file
a motion with the Court requesting approval of the compromise
and settlement under Bankruptcy Rule 9019.

                         Insider Claims

For any compromise or settlement of Insider Claims, the Debtors
will be required to file a motion with the Court requesting
approval of such compromise and settlement under Bankruptcy Rule
9019.

With respect to claims asserted by the Debtors' former employees
under the Debtors' retirement benefit programs, the Documented
Difference for such Retiree Benefit Claims will be calculated on
an annualized basis, and not on the total value of any such
Retiree Benefit Claim based on the life expectancy of the
retiree or any other measure of time.

                      Notice of Settlements

As part of the procedures set forth herein, the Debtors will
file with the Court, on a quarterly basis beginning 90 days
after entry of an order granting the relief requested herein,
reports of all settlements of claims into which the Debtors have
entered during such quarter pursuant to the authority requested
in this Motion. Such reports will set forth the name of the
party with whom the Debtors have settled, the types of claims
asserted by or against such party, and the amounts for which
such claims have been settled. The Debtors will serve copies of
these reports on (i) the U.S. Trustee, (ii) the agent for AWI's
prepetition bank lenders, (iii) the agent for the Debtors'
postpetition bank lenders, and (iv) the attorneys for each of
the Committees.

The Debtors request that, pursuant to Bankruptcy Rule
2002(a)(3), Judge Newsome find that cause exists to limit notice
as described above of any settlements entered into under the
terms of this Motion. Limiting notice will enable the Debtors to
promptly and efficiently enter into the settlements contemplated
by this Motion.

         Decisions to Settle Are Within the Exercise
          of the Debtors' Sound Business Judgment

By this Motion, the Debtors are requesting that they be
permitted to enter into certain compromises and settlements
without the approval of the Court, and, in some cases, the
Committees. Nevertheless, the Debtors will continue to exercise
their reasonable business judgment in negotiating compromises
and settlements and will continue to be guided by the      
factors established by relevant case law regarding the
reasonableness of such settlements. These factors include:

       a.  the probability of success in the litigation;

       b.  the complexity, expense and likely duration of the
litigation;

       c.  all other factors relevant to making a full and fair
assessment of the wisdom of the proposed compromise; and

       d.  whether the proposed compromise is fair and equitable
to the Debtors, their creditors and other interested parties.

To minimize litigation and expedite the administration of a
bankruptcy estate, compromises are favored in bankruptcy.  The
relevant factor is whether the terms of the proposed compromise
fall within the reasonable range of litigation possibilities.  
Basic to the process of evaluating proposed settlements is the
need to compare the terms of the compromise with the likely
rewards of litigation.

With respect to any proposed settlement, the Debtors will
particularly focus on the merits of the underlying claims, the
risk to the Debtors if such claims were to go to trial, and the
expense the Debtors would likely incur in connection with
defending or prosecuting such claims. Accordingly, the Debtors
are confident that each proposed settlement will clearly meet
the applicable standards.

The Debtors assure Judge Newsome that he has the authority to
grant the relief requested in this Motion pursuant to section
105(a) of the Bankruptcy Code and Bankruptcy Rule 9019(b).
Section 105(a) of the Bankruptcy Code provides that "[t]he court
may issue any order ... that is necessary or appropriate to
carry out the provisions of this title." Providing the Debtors
with the authority to efficiently and economically settle
potentially hundreds of claims against their estates is clearly
beneficial to the Debtors' estates and creditors and will assist
the Debtors in their reorganization efforts. Bankruptcy Rule
9019(b) provides that the Court may authorize the Debtors to
settle certain classes of controversies without requiring
separate notice and a hearing with respect to each separate
controversy. Other courts have granted similar authority to
debtors in possession in other large chapter 11 cases, including
In re W.R. Grace & Co., et al, (Bankr. D. Del.); In re PWS
Holding Corporation, Bruno's, Inc., et al., (Bankr. D. Del.); In
re Edison Brothers Stores, Inc., et al., (Bankr. D. Del.); In re
Weiner's Stores, Inc., (Bankr. D. Del.); In re R.H. Macy Co.,
(Bankr. S.D.N.Y.); In re Best Products Co., Inc., et al.,
(Bankr. S.D.N.Y.); In re Circle K, (Bankr. D. Ariz.); In re
Hooker Investments, Inc., et al., (Bankr. S.D.N.Y.). (Armstrong
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   


BGF INDUSTRIES: Market Weakness Prompts S&P to Junk Ratings
-----------------------------------------------------------
On May 17, 2002, Standard & Poor's lowered its ratings on BGF
Industries Inc. and placed them on CreditWatch with negative
implications. The corporate credit rating was lowered to triple-
'C'-plus from single-'B'. The downgrade was the result of
extreme market weakness, delays in arranging a new credit
facility, somewhat higher than expected debt levels, and
potential covenant violations under the company's existing bank
credit facility.

Greensboro, North Carolina-based BGF Industries has been
severely affected by the dramatic downturn in the electronics
industry, its largest end market. Despite a modest recent pick-
up in sales and EBITDA from very low levels, demand and earnings
prospects remain uncertain, and EBITDA is not currently covering
interest expense.

The company has been in discussions with a prospective lender
regarding a facility to replace its existing $50 million
revolving credit facility. However, negotiations are taking
longer than anticipated. Management currently expects this
facility to close before June 30, 2002. However, if it does not,
the company may be in violation of financial covenants under its
existing facility as of that date. In addition, BGF is now
unlikely to receive an expected tax refund of approximately $6
million, resulting in somewhat higher than projected debt
levels.

On the positive side, the company is taking all possible
measures to conserve cash. Inventories are down significantly
from their mid-2001 highs, and major capital projects have been
substantially completed.

BGF Industries Inc. is a leading manufacturer of glass fiber and
other high performance fabrics used in electronic, aerospace,
marine, filtration, insulation, and construction products. The
ratings reflect a relatively narrow product mix and modest sales
base, cyclical end markets, significant customer and supplier
concentration, and aggressive debt leverage. The company
currently has about $130 million of debt outstanding.

BGF is wholly owned by France-based Porcher Industries Group
(Porcher), which also owns 51% of Advanced Glassfiber Yarns LLC.
The other 49% of Advanced Glassfiber is owned by Owens Corning.
Advanced Glassfiber is one of BGF's two primary glass fiber yarn
suppliers.

Standard & Poor's will continue to monitor the company's credit
availability and performance. Ratings will be lowered if
liquidity worsens or market conditions do not improve.

Ratings List:                                  To:       From:

                         BGF Industries Inc.

* Corporate credit rating                     CCC+         B
* Senior secured debt                         CCC+         B
* Subordinated debt                           CCC-        CCC+


BANYAN STRATEGIC: Fails to Meet Nasdaq Listing Requirements
-----------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) received a Nasdaq
Staff Determination on May 16, 2002, indicating that Banyan
fails to comply with the Minimum Bid Price requirements for
continued listing set forth in Marketplace Rule 4450(a)(5), and
that its securities are, therefore, subject to delisting from
The Nasdaq National Market.  Banyan has requested a hearing
before a Nasdaq Listing Qualifications Panel to review the Staff
Determination. The request for hearing stays the delisting of
Banyan's securities, pending the Panel's decision. There can be
no assurance that the Panel will grant Banyan's request for
continued listing.

Banyan further announced that if it is unsuccessful in its
appeal, it currently intends to list its securities on the Over
The Counter Bulletin Board.

Commenting upon the receipt of the Nasdaq notice, Banyan Interim
President, Chairman and CEO, L.G. Schafran said:  "As we
announced in press releases of February 21, March 25, April 1,
May 1, and May 8, 2002, we anticipated the receipt of Nasdaq's
notice.  We have decided to appeal, based upon the unique
situation that our Plan of Termination and Liquidation presents.  
If we are unsuccessful, we do not presently anticipate moving to
the Nasdaq Small Cap Market, because of its cost and its
compliance requirements, which we may not be able to meet.  
Instead, our shares will be available for exchange on the OTC
Bulletin Board."

Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) that adopted a Plan of Termination and
Liquidation on January 5, 2001. On May 17, 2001, the Trust sold
approximately 85% of its portfolio in a single transaction.
Other properties were sold on April 1, 2002 and May 1, 2002.
Banyan now owns a leasehold interest in one (1) real estate
property located in Atlanta, Georgia, representing approximately
9% of its original portfolio. This property is subject to a
contract of sale, currently scheduled to close on July 17, 2002.  
Since adopting the Plan of Termination and Liquidation, Banyan
has made liquidating distributions totaling $4.95 per share.  On
May 1, 2002, Banyan announced that an additional distribution of
$0.30 per share would be made on May 31, 2002 to shareholders of
record as of May 16, 2002, thus increasing the total liquidating
distributions to $5.25 per share.  As of this date, the Trust
has 15,496,806 shares of beneficial interest outstanding.


BETHLEHEM STEEL: Stahls Seek Stay Relief to Pursue Injury Claim
---------------------------------------------------------------
On December 23, 1996, at Bethlehem Steel Corporation's Indiana
facilities, George Stahl sustained personal injuries due to the
negligent operation of a crane by an employee of Hunter
Corporation, a contractor.

On October 29, 1998, Mr. Stahl and his wife, Rita, commenced an
action against the Debtors, Hunter Corporation, Charles Lee and
Rector Equipment Company before the Lake Superior Court at
Hammond in Lake County, Indiana to recover damages.

In February 2002, the Plaintiffs filed a Proof of Claim in the
amount of $2,000,000 for George Stahl and $1,000,000 for Rita
Stahl. The claim remains contingent and unliquidated.

David W. Holub, Esq., at Ruman, Clements & Holub, PC, in
Hammond, Indiana, informs Judge Lifland that the Debtors failed
to disclose its liability insurance coverage and its amount,
which the Plaintiffs believe to exist. According to Mr. Holub,
the Debtors' insurance will cover some portion, if not all, of
any judgment against the Debtors.

Furthermore, Mr. Holub relates that the Debtors have an
indemnity agreement with Hunter Corporation during its service
to the Debtors in the Indiana facility.

Accordingly, the Plaintiffs ask the Court to lift the automatic
stay so that the personal injury action may proceed to judgment.

Mr. Holub contends that the Debtors will not be greatly
prejudiced with the relief because:

    (a) the Debtors have an insurance coverage; and

    (b) the Debtors are indemnified by Hunter.

However, Mr. Holub argues that denying the motion would put the
Plaintiffs to more financial suffering since the injuries and
disabilities sustained by George Stahl has affected his ability
to pursue employment. (Bethlehem Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)


BROADBAND WIRELESS: Disclosure Statement Hearing Set for June 6
---------------------------------------------------------------
Broadband Wireless International Corporation (OTC Bulletin
Board: BBAN) announces the following developments in its Chapter
11 bankruptcy case.

On May 7th, 2002, Broadband, as debtor in possession, filed the
following documents with the U.S. Bankruptcy Court for the
Western District of Oklahoma:

     1.   Disclosure Statement prepared by Broadband Wireless
International Corporation f/k/a Black Giant Oil Company

     2.   Class 7 and Class 8 Disclosure Statement prepared by
Broadband Wireless International Corporation f/k/a Black Giant
Oil Company

     3.   Plan of Reorganization proposed by Broadband Wireless
International Corporation f/k/a Black Giant Oil Company

     4.   Summary of Plan of Reorganization proposed by
Broadband Wireless International Corporation f/k/a Black Giant
Oil Company

     5.   Application for Order Establishing Time Within Which
Proofs of Claim and Proofs of Interest Must Be Filed, Procedure
for Filing, and Notice Thereof, Combined with Brief in Support

On May 8th, 2002, the following order and notice were filed in
the Broadband case:

     6.   Order Establishing Bar Date By Which Proofs of Claim
and Proofs of Interest Must Be Filed, Establishing Procedure for
Filing Claims and Interests, and Providing Notice Thereof

     7.   Notice of Chapter 11 Bankruptcy Case, Meeting of
Creditors and Equity Security Interest Holders & Deadlines,
Including Proof of Claim and Interest Bar Date, & Order and
Notice for Hearing on Disclosure Statement

Key upcoming events are:

May 31st, 2002, at 9:30 A.M., will be the date and time for the
continued meeting of creditors and the initial meeting of equity
security interest holders.  These meetings will be held at the
U.S. Bankruptcy Court for the Western District of Oklahoma, 215
Dean A. McGee Avenue, first floor, Room 119, Oklahoma City, OK
73102.  Attendance is strictly optional for creditors and
shareholders, and may include counsel, or not, at each party's
option.

June 14th, 2002 is the deadline to file proofs of claims and
proofs of interests at the bankruptcy clerk's office, at the
above address, with a copy to be sent to Kline, Kline, Elliott,
Castleberry & Bryant, P.C., 720 N.E. 63rd St., Oklahoma City, OK
73105, attention: Lisa Mueggenborg

June 6th, 2002, at 10:00 A.M., is the date and time for the
hearing as to approval of the debtor's disclosure statement.  
The hearing will be conducted in the 9th floor courtroom at the
above-stated address for the bankruptcy court.  If the
disclosure statement is approved at that hearing, Broadband
intends to request that the bankruptcy court set a plan
confirmation hearing for early July, 2002.

Copies of the Disclosure Statements and Plans may be viewed
online and downloaded at the Web site
http://www.bbanwireless.comas may copies of forms for filing  
proofs of claims and proofs of interests.


COPYTELE INC: Falls Below Nasdaq Minimum Bid Price Requirements
---------------------------------------------------------------
CopyTele, Inc. (NASDAQ:COPY) announced that on May 16, 2002, it
received a Nasdaq Staff Determination that CopyTele has not
complied with the minimum bid price requirements for continued
listing set forth in Market Place Rule 4450(a)(5) and that its
securities are, therefore, subject to delisting from The Nasdaq
National Market.

CopyTele intends to request a hearing before a Nasdaq Listings
Qualification Panel to review the Staff Determination. During
the appeal process, CopyTele's securities will remain listed on
The Nasdaq National Market. If CopyTele is not successful in its
appeal, CopyTele can apply for transfer of its listing to The
Nasdaq SmallCap Market where, if the transfer application is
approved and CopyTele remains in compliance with that Market's
other continued listing requirements, CopyTele will be afforded
a grace period until August 13, 2002 to regain compliance with
the $1 bid price requirements. There is no assurance that
CopyTele will be accepted to The Nasdaq SmallCap Market.

If, on August 13, 2002, CopyTele meets the other initial listing
standards of The Nasdaq SmallCap Market, the Company may be
granted an additional 180-day period, or until February 10,
2003, to regain compliance with the bid price requirement. If
during that period CopyTele regains compliance with the bid
price requirement and is in compliance with the other continued
listing requirements of The Nasdaq National Market, it may be
eligible to apply for transfer of its listing back to The Nasdaq
National Market.

CopyTele's principal operations include jointly developing with
Futaba Corporation a full-color video display and our own
development, production and marketing of high-grade, hardware
based multi-functional encryption products for voice, fax and
data that provide information security for domestic and
international users over virtually every communications media.
These products are being marketed through a world-wide network
of dealers and distributors. For additional information, visit
CopyTele's Web site at http://www.copytele.com


CORRECTIONAL SERVICES: Working Capital Deficit Narrows to $5.8M
---------------------------------------------------------------
Correctional Services Corporation (Nasdaq:CSCQ) announced
financial results for the first quarter of 2002. Revenues for
the first quarter were $40,057,000 versus $45,090,000 in the
comparative period in 2001. For the quarter the company reported
contributions from operations of $3,533,000 versus $3,420,000 in
the first quarter of 2001. Net income was $541,000 for the first
quarter versus net loss of $567,000 for the same period in 2001
which included startup costs and other one-time charges of $0.06
per diluted share.

The period to period revenue decrease was primarily attributable
to the discontinuance of operations at several under-performing
facilities. The Company's operating results increased as a
result of continued improvement in facility based operating
margins and a reduction in general and administrative expenses
of over 30%.

                    First Quarter 2002 Highlights

Commenting on the company's performance for the first quarter,
James F. Slattery, C.E.O. and President stated "I am very
pleased with the results of the first quarter as we continue to
realize the benefits from all aspects of our restructuring plan.
Our focus on cost controls allowed us to report both improved
facility margins and a substantial reduction in general and
administrative expenses. Adding to the margin improvement was
the discontinuance of operations at several under-performing
facilities. In addition, we continue to move forward with our
asset sale and debt reduction plan while maintaining our focus
on the delivery of high quality services and the outcome based
analysis of our programs."

The quarter was highlighted by:

     --  First Quarter 2001 to First Quarter 2002 financial
turnaround with 2002 earnings of $0.05 per diluted share
compared to $0.00 per diluted share in 2001 (excluding startup
costs and other one-time charges).

     --  An increased utilization by federal agencies of over
300 beds in our Texas facilities during the first quarter.

     --  Despite significant increases in insurance related
costs, general and administrative expenses were reduced to 5.17%
of revenues in first quarter 2002 from 6.93% in the first
quarter of 2001.

     --  Successful ACA audits at our Okaloosa Youth Development
Center and Cypress Creek Juvenile Correctional facilities
operated in Florida.

Slattery further stated that "through the remainder of this year
we will continue to follow through on the remaining initiatives
of our plan with the overall goals of predictable earnings
growth, reduced debt and improved shareholder value."

Through its Youth Services International subsidiary, the Company
is the nation's leading private provider of juvenile programs
for adjudicated youths with 24 facilities and 3,700 juveniles in
its care. In addition, the Company is a leading developer and
operator of adult correctional facilities operating 11
facilities representing approximately 4,300 beds. On a combined
basis, the Company provides services in 14 states and Puerto
Rico, representing approximately 8,000 beds including aftercare
services.

At March 31, 2002, the company's working capital deficit dropped
to $5.8 million from $7.8 million at December 31, 2001.


COVANTA ENERGY: Asks Court to Deem Utilities Adequately Assured
---------------------------------------------------------------
In connection with the operation of their businesses and
management of their properties, explains Deborah M. Buell, Esq.
at Cleary Gottlieb, Covanta Energy Corporation and its debtor-
affiliates obtain traditional utility services including
electricity, telephone and similar services from many different
utility companies in a variety of states throughout the country.  
The Debtors' businesses require uninterrupted access to the
services provided by the Utilities. Any interruption in the
service will cause significant harm to the Debtors' ability to
conduct their businesses in an efficient and orderly manner.

She relates that on April 3, 2002, this Court issued an Order
forbidding the Utilities from altering, refusing or
discontinuing service.  The Order did not allow discriminating
against the Debtors, solely on the basis of the commencement of
the Chapter 11 cases or because of any unpaid invoice for
service provided prior to the Petition Date.

The Utility Order provided the Utilities with an opportunity to
request additional assurances of payment of post-petition
invoices in the form of deposits or other security from the
Debtors on or before April 23, 2002. The Utility Order also
provided that the Debtors were to file a Determination Motion on
April 26, 2002 to the extent that the Debtors believed that any
requests were unreasonable.

As of the filing of this response, the Debtors have received
requests for adequate assurance from nine entities, demanding,
in the aggregate, cash deposits totaling $546,261.40. These
requests for cash deposits are unreasonable under Section 366(b)
of the Bankruptcy Code because the Requesting Entities are
already adequately assured by:

     * The Debtors' excellent pre-petition payment history;
     * The Debtors' post-petition liquidity;
     * The administrative expense priority afforded by Sections
       503(b) and 507(a)(1) of the Bankruptcy Code and
     * additional safeguards (which she will describe).

Whether a utility is subject to an unreasonable risk of
nonpayment must be determined from the facts and circumstances
of each case. In determining what constitutes adequate assurance
of performance by the debtors of post-petition payment
obligations, the courts consider the debtor's pre-petition
payment history, its Post-petition liquidity as well as
safeguards designed to protect the utilities from the risk of
nonpayment. See In re Caldor, Inc. - NY, 199 B.R. 1 (S.D.N.Y.
1996) (affirming bankruptcy court's determination that, in light
of the debtor's pre-petition payment history and their post-
petition liquidity, the utilities had adequate assurance of
payment with these safeguards in place:

      * administrative expense priority;
      * expedited procedure for relief in the event of payment
        default by the debtor and
      * order requiring debtor to convey their monthly
        operating statements directly to utilities.

The Debtors have an excellent pre-petition payment history with
the Utilities. Over the past 12 months, the Debtors have
routinely paid all invoices of Requesting Entities in a timely
manner.  However, with the exception that there were payment
interruptions that were caused by the commencement of these
Chapter 11 cases. In addition, there was one account held by the
Florida Power Corporation ("FPC") that was normally paid 15 days
after the due date without objection from FPC.

The Debtors have obtained $289 million in debtor in possession
(DIP) financing, of which $34 million has been designated to
assist in the payment of operating expenses, including utility
invoices. Even without the DIP financing, she states, the
Debtors believe that their ongoing operations will provide them
with sufficient cash to pay for all of their post-petition
utility services on a current basis.

Any post-petition utility services are classified as
administrative expenses of the Debtors' Chapter 11 cases
pursuant to Sections 503(b) and 507(a)(1) of the Bankruptcy
Code. Therefore, these will be paid before general unsecured
creditors. This administrative priority also provides adequate
assurance in these circumstances. In addition, with the filing
of these cases, the Debtors now pose a significantly lesser risk
than other customers. Within the confines of Chapter 11, pre-
petition claims against the Debtors are stayed. In the context
of these cases, this breathing spell will enable the Debtors to
meet their obligations to the Requesting Entities in a timely
manner. (Covanta Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)   


DIGITAL BROADBAND: Auditors Express Going Concern Doubt
-------------------------------------------------------
For the three-month period ended March 31, 2002, Digital
Broadband Networks Inc. reported a net loss of $65,803 and at
March 31, 2002, has an accumulated deficit of $1,298,780. The
Company suffered losses from operations and had negative cash
flows from operating activity during the past two years, and
expects to incur continued cash outflows, which are expected to
result in an increased working capital deficiency within the
current fiscal year. As a result, the Company may experience
difficulty and uncertainty in meeting its liquidity needs during
the current fiscal year.

The Company is developing a wireless broadband network,
"VISIONET", in Malaysia and intends to acquire additional
licenses and spectrum rights in other Asian markets. In November
2000, PTSB entered into a strategic alliance with a Malaysian
Internet service provider. In September 2001, PTSB was awarded
an Application Service Provider (ASP) license by the Malaysian
Communications and Multimedia Commission. Management believes
the ASP license will complement the wireless broadband license
previously granted to the Company in 1997. The Company has now
developed a revised business model based on the operations of an
integrated national broadband network.

The Company's plan to overcome its financial difficulties and
return to profitability centers on expanding its business in
multimedia content production and the roll out of VISIONET. The
Company established its first VISIONET cell in December 2001 and
hopes to commence commercial operation sometime in the first
half of 2002 but cannot provide assurance that any target launch
date will be met. The Company is currently negotiating with
application service providers to host and deliver their content
via VISIONET.

The Company believes that sufficient cash will be generated from
the following sources to fund its operations for the next twelve
months:

     o    Intensification of efforts to collect overdue
receivables. The Company intends to keep close contact with its
debtors to keep updated on their liquidity status. Legal action
will only be taken as a last resort.

     o    Advances from a director/officer who is also a major
shareholder as required to finance the Company's working capital
requirements.

     o    Additional revenue provided by: (i) a consulting
contract, which is estimated to generate $2.85 million in
revenue, to carry out the planning, design, project execution
(including contract and project management) of all broadband
communications and networking systems/services for Pulau Indah-
Marina Village, (ii) a contract, which is estimated to generate
$550,000 in revenue over a three-year period, to carry out the
planning, design, project execution of all broadband
communications and networking systems/services for a
commercial/housing project in Selangor, Malaysia.

     o    The Company may consider a private placement of its
shares.

     o    The Company may also seek to obtain equipment
financing.

The Company also hopes that additional cash will be generated
from the marketing agreement with Worldlink Dotcom Sdn. Bhd. to
distribute its service gateway for home/office automation in
Malaysia, Singapore and Australia and from the distribution
agreement with Mutual Base Equity Sdn. Bhd. for sale of the
Eystar SmartHome Console in Malaysia and Singapore.

With the above plans and barring any unforeseen circumstances,
Management believes the Company will be able to continue as a
going concern.

Revenues for the three months ended March 31, 2002 totaled
$3,335,338 compared to $936,053 for the three months ended March
31, 2001, an increase of $2,399,285 or 256%. The increase in net
sales in the three months ended March 31, 2002 as compared to
the three months ended March 30, 2001 was mainly due to an
increase in fees earned from the production of multimedia
programs and revenue received for project consulting services.
For the three months ended March 31, 2002, two customers,
respectively, accounted for 50% and 48% of total revenue. No
single customer accounted for more than 10% of total revenue for
the three months ended March 31, 2001.

Gross profit increased to $177,109 for the three months ended
March 31, 2002, compared to $107,079 for the three months ended
March 31, 2001, an increase of $70,030, or 65%. The increase in
gross profit was due to higher revenue in 2002. As a result of
higher revenue, cost of revenue increased by $2,329,255, or
281%, to $3,158,229 in 2002 from $828,974 in 2001. This increase
was a result of the Company requiring additional external
resources in order to fulfill the higher demand for the
Company's services. The outsourcing of content production work
enabled the Company to develop a team of contractors that will
assist the Company in producing multimedia content and
applications that are crucial to its future business operation.

The Company recorded a net loss of $65,803 for the three months
ended March 31, 2002 compared to a net loss of $99,749 for the
three months ended March 31, 2001.

As of March 31, 2002, the Company had cash of $14,433. All
operations were funded from internally generated funds and
working capital advanced by the principal shareholder, director
and officer of the Company. These advances bear no interest and
have no fixed terms of repayment.

The independent auditors' report on the Company's financial
statements for the year ended December 31, 2001 included a
"going concern" explanatory paragraph, meaning the auditors have
expressed substantial doubt about the Company's ability to
continue as a going concern.


EDISON INT'L: Shoos-Away Arthur Andersen and Brings-In PwC
----------------------------------------------------------
The Audit Committee of the Board of Directors of Edison
International has the responsibility, at least annually, to
recommend to the Board of Directors the appointment of Edison
International's independent public accountants.  The Board of
Directors and the Audit Committee have the ultimate authority
and responsibility to select, evaluate, and, where appropriate,
replace the independent public accountants, who are ultimately
accountable to the Board of Directors and the Audit Committee.  

On May 8, 2002, following a recommendation from the Audit
Committee, the Board of Directors decided to no longer engage
Arthur Andersen LLP as Edison International's independent public
accountants, and appointed PricewaterhouseCoopers LLP to serve
as Edison International's independent public accountants for the
balance of 2002.  Edison International has noted that the
decision to change auditors is not a reflection of Andersen's
capabilities, commitment, or quality of service to Edison
International.  According to the Company during Andersen's long
relationship with Edison International, the Andersen audit teams
exhibited the highest degree of professionalism and quality
service.

Edison International is a premier international electric power
generator, distributor, and structured finance provider. It is
the parent company of Southern California Edison, Edison Mission
Energy, Edison Capital, Edison O&M Services, and Edison
Enterprises.

As previously reported on March 12, 2002 in Troubled Company
Reporter, Fitch raised Edison International's junk debt ratings
to low-B level.


ENCHIRA BIOTECHNOLOGY: Violates Nasdaq Listing Requirements
-----------------------------------------------------------
Enchira Biotechnology Corporation (Nasdaq: ENBC) received a
Nasdaq Staff Determination on May 16, 2002 indicating that the
Company fails to meet the minimum market value of publicly held
shares requirement and the minimum bid price requirement for
continued listing on The Nasdaq National Market set forth in
Marketplace Rules 4450(a)(2) and 4450(a)(5), respectively, and
that its common stock is, therefore, subject to delisting from
The Nasdaq National Market.  In addition, the Company was
informed that it does not comply with either the minimum net
tangible asset requirement or the minimum stockholders' equity
requirement set forth in Marketplace Rule 4450(a)(3). The
Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination.  The
Company's request to transfer listing of its common stock to The
Nasdaq SmallCap Market also may be considered at such hearing.  
There can be no assurance that the Panel will grant the
Company's request for continued listing or transfer to The
Nasdaq SmallCap Market.  Until Nasdaq considers the Company's
appeal and makes its decision, the Company's common stock will
remain listed on The Nasdaq National Market.

The hearing with Nasdaq is expected to occur within 45 days, but
could occur later.  If Nasdaq rejects the Company's request for
continued listing and its request for transfer to The Small Cap
Market, shares of the Company's common stock will most likely be
traded on the OTC Bulletin Board or the so called "pink sheets."

Paul G. Brown, III, President of Enchira noted, "We will
undertake any and all actions available to us to remain listed
on either The Nasdaq National or SmallCap Markets.  As
previously announced, the Company recently took steps to
minimize its expenses and plans to continue with reduced
operations while we investigate all opportunities to redeploy
the Company's assets in order to realize the greatest value for
the Company's stockholders.  We will make every effort to remain
listed until that time."

Enchira Biotechnology is a drug discovery and development
company engaged in the development of Anti-Cancer Ligand
[ACL(TM)] proteins that block validated receptor tyrosine kinase
targets implicated in the most aggressive forms of cancer.  
Additional information is available at the Company's Web site:
http://www.enchira.com


ENRON CORP: Bridgeline Asks Court to Lift Stay to Allow Setoff
--------------------------------------------------------------
About 40% of Bridgeline Holdings LP is owned by Enron North
America Corporation and its subsidiaries.  The remaining 60% is
held by Texaco Exploration and Production Inc., a subsidiary of
Chevron/Texaco Corp.

James Matthew Vaughn, Esq., at Porter & Hedges LLP, in Houston,
Texas, relates that Bridgeline's business was established
pursuant to a contribution agreement between ENA and TEPI as of
February 3, 2000.  According to Mr. Vaughn, the Contribution
Agreement required each of ENA and TEPI to enable Bridgeline to
commence and operate its business.

Among the important agreements entered into at or shortly
following the establishment of Bridgeline's business are:

  (a) Contribution Agreement by and among Enron North America
      Corp., Bridgeline Holdings, L.P., Texaco Exploration and
      Production, Inc., Louisiana Resources Company, LRCI, Inc.,
      Louisiana Gas Marketing Company, and LGMI, Inc., dated as
      of February 3, 2000;

  (b) Bridgeline Holdings, L.P. Amended and Restated Limited
      Partnership Agreement, dated March 1, 2000, by and among
      Bridgeline, LLC, as general partner, Texaco Exploration
      and Production, Inc., as a limited partner, and the "Enron
      Partners," as limited partners, consisting of Louisiana
      Resources Company, LRCI, Inc., Louisiana Gas Marketing
      Company and LGMI, Inc. -- the Partnership Agreement; Enron
      North America Corp. is made liable for breaches by the
      Enron Partners of the Partnership Agreement pursuant to
      Section 8.2 of the Contribution Agreement;

  (c) NGPA Section 311 Firm Gas Storage Agreement between
      Bridgeline Storage Company, LLC and Enron North America
      Corp., dated as of March 1, 2000;

  (d) Firm Gas Transportation Agreement between Enron North
      America Corp., Bridgeline Holdings, L.P. and Bridgeline
      Gas Distribution LLC, dated as of March 1, 2000; and

  (e) Employee Services Agreement, dated March 1, 2000, by and
      between Enron North America Corp. and Bridgeline Holdings,
      L.P.

Mr. Vaughn tells the Court that ENA and Bridgeline have mutual
debts incurred both before and after the Petition Date, arising
from the Agreements.  ENA owes Bridgeline $2,799,986 and
Bridgeline owes ENA $577,120.

By this motion, Bridgeline Holdings and its three wholly owned
subsidiaries -- Bridgeline Storage Company LLC, Bridgeline Gas
Marketing LLC, and Bridgeline Gas Distribution LLC, ask the
Court for an order modifying the automatic stay to allow
Bridgeline to deduct what it owes from what ENA owes.

In the alternative, Bridgeline seeks adequate protection of its
setoff claims in the form of cash deposits or escrow accounts in
the amounts due from ENA for pre-petition setoff claims and for
post-petition setoff claims. (Enron Bankruptcy News, Issue No.
28; Bankruptcy Creditors' Service, Inc., 609/392-0900)


ENRON CORP: ENA Resolves Claims Dispute with Citrus Trading
-----------------------------------------------------------
To resolve their dispute, Citrus Trading Corporation and Enron
North America Corporation stipulate and agree that:

  1. As of May 2, 2002 (the day the Court approved this
     stipulation), the Contracts will be deemed rejected, as a
     matter of law, by ENA. As of the Effective Date, ENA and
     any other debtor in these cases will have no further
     obligation or liability under the Contracts, except as
     otherwise provided in connection with Citrus' rejection
     damage claim under Sections 365 and 502(g) of the
     Bankruptcy Code.  In addition, as of the Effective Date,
     Citrus will have no further obligation or liability under
     the Contracts.

  2. For purposes of calculating Citrus' rejection damage claims
     under Sections 365 and 502(g) of the Bankruptcy Code, the
     Contracts will be viewed as a single contract and thus
     Citrus will be entitled to a single rejection damage claim
     in these cases.

  3. ENA will pay Citrus Trading as an administrative expense of
     the estate $2,427,997, in full satisfaction of the total
     amount due Citrus Trading under the Contracts in connection
     with ENA's post-petition purchases of gas.

  4. Citrus withdraws the Motions with prejudice, except to the
     extent of the balance of the alleged claim of Citrus for
     which Citrus seeks administrative expense status in the
     Administrative Expense Motion.  As to the Disputed Claim,
     Citrus withdraws the Administrative Expense Motion, without
     prejudice. ENA reserves all of its rights and defenses as
     to the Disputed Claim. Citrus Trading reserves all of its
     rights and arguments with respect to the Disputed Claim,
     including the potential argument that certain payments
     under the contracts represent a portion of the purchase
     price for post-petition purchases of gas.

  5. ENA withdraws the Extension Motion with prejudice. (Enron
     Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
     Service, Inc., 609/392-0900)


ENRON POWER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Enron Power & Industrial Construction Company
        121 SW Salmon Street
        Suite 1520
        Portland, Oregon 97204
        aka EPICEnron Consolidated Construction Company

Bankruptcy Case No.: 02-12400

Type of Business: Enron Power & Industrial Construction Company
                  is primarily engaged in the business of
                  providing unionized construction services
                  required in connection with lump-sum
                  engineering, procurement construction of
                  electrical power generation stations in North
                  America.

Chapter 11 Petition Date: May 20, 2002

Court: Southern District of New York (Manhattan)

Judge: Arthur J. Gonzalez

Debtors' Counsel: Brian S. Rosen, Esq.
                  Weil, Gotshal & Manges LLP
                  767 Fifth Avenue
                  New York, New York 10153
                  212-310-8602
                  Fax: 212-310-8007
                  
                  and
   
                  Melanie Gray, Esq.
                  Weil, Gotshal & Manges LLP
                  700 Louisiana, Suite 1600
                  Houston, Texas 77002
                  Telephone: (713) 546-5000

Total Assets: $14,988,280

Total Debts: $15,644,020

Debtor's 20 Largest Unsecured Creditors:

Entity                     Nature of Claim        Claim Amount
------                     ---------------        ------------
Morrison Construction      Trade                      $728,315
Dale Walter
1990 Saint St
Richland, WA 99352
509-375-1818
509-375-1708

Electrical Benefit Fund    Trade                      $312,359
140 South Arthur
Spokane, WA 99202

Local 598 Trust Funds      Trade                      $290,078
P.O. Box 94724
Seattle, WA 98124

Emmert International       Trade                      $259,307
11811 Se Hwy 212
Clackamas, OR 97015
503-655-7191
503-655-3933
Gary Weir

North Coast Electric       Trade                      $209,670
Company

Industrial Distribution    Trade                      $207,311
Group

Fnw Pasco                  Trade                      $195,665

Rental Service Corp        Trade                      $152,153

Columbia Electric Supply   Trade                      $120,506

Coast Crane Company Of     Trade                       $94,299
Washington

Lampson International Llc  Trade                       $89,664

Norco Inc                  Trade                       $86,455

T Bailey Inc               Trade                       $77,000

Oregon-Washington          Trade                       $74,030
Carpenters

Northwest Ironworkers      Trade                       $50,466
Trusts

Boilermakers National      Trade                       $41,873
Pension

Operating Engineers Trust  Trade                       $36,958
Fund

Boilermakers Health &      Trade                       $35,579
Welfare

The Oregon Laborers        Trade                       $33,054
Employers

Coast Crane & Equipment    Trade                       $30,141


EVOLVE: Fails to Regain Nasdaq Listing Requirement Compliance
-------------------------------------------------------------
Evolve(R) (Nasdaq: EVLV), a leading provider of service delivery
solutions that optimize the way organizations drive revenue and
value through people and projects, has received a Nasdaq Staff
Determination Letter regarding its status with the Nasdaq.

The Staff Determination Letter, dated May 16, 2002, indicates
that the Company has not regained compliance with the minimum
bid price requirements for continued listing set forth in the
Marketplace Rules 4310(C)(8)(B) and 4310(C)(4) and therefore is
subject to delisting.  Evolve intends to appeal the Staff
Determination and during this process Evolve's stock will remain
listed on the Nasdaq National Market.

"We intend to appeal this Staff Determination Letter from
Nasdaq," said Linda Zecher, CEO for Evolve.  "Our recent third
quarter fiscal results demonstrate the Company's significant
momentum with $6M in customer bookings; a solid cash position;
the strong demand for Evolve 5 by Fortune 500 companies and our
outstanding new management team.  Evolve's board of directors
and major investors remain enthusiastic and 100% committed to
its continued success."

Evolve is a leading provider of service delivery solutions that
optimize the way organizations drive revenue and value through
people and projects. Global 2000 organizations including
Autodesk, EDS, Ericsson, Fleet Capital Leasing, Novell, Pershing
(a CSFB company), Ryder and Siemens rely on Evolve's solutions
to automate key business processes that deliver strategic
initiatives to internal and external customers.  Evolve is
headquartered in Emeryville, California, and has offices
throughout North America and the UK. For more information please
visit http://www.evolve.comor call 1-888-2EVOLVE.


EXIDE TECHNOLOGIES: Will Honor $9.7M Prepetition Shipping Claims
----------------------------------------------------------------
Exide Technologies and its debtor-affiliates obtained Court
approval and authority to honor and pay certain prepetition
claims related to shipping. Thus, the Debtors, with Court
approval, will make payments to the Shippers and Warehousemen as
they deem necessary to obtain the release of the goods held by
such Shippers and Warehousemen. Such payments are not expected
to exceed $9,700,000.

Also, the Debtors obtained authority to make such payments in
the amounts necessary to satisfy non-disputed pre-petition
Shipping and Warehousing Charges and to satisfy any potential,
asserted, or actual possessory liens on goods that may by held
by a Shipper or a Warehouseman, pending the payment of such
charges. The Debtors represent that they will only pay Shipping
and Warehousing Charges that they believe, in their business
judgment, benefit their estate and creditors.

DebtTraders reports that Exide Technologies' 10% bonds due 2005
(EXIDE2) are quoted at a price of 14.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXIDE2for  
real-time bond pricing.


EXODUS COMMS: Wants to Assign Assumed Arca Systems Pacts to C&W
---------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates ask to
assume and assign some executory contracts between Arca Systems
Inc. and certain Government Entities to Cable & Wireless
Internet Services, Inc. (f/k/a Digital Island, Inc.) in
connection with the sale of substantially all of the Debtors'
assets to Cable & Wireless.

The Debtors further request that the Order provide that the
contracts will be transferred to, and remain in full force and
effect for the benefit of Cable & Wireless notwithstanding any
provisions in the contracts, including those described in
Sections 365 of the Bankruptcy Code, that prohibit such
assignment.

David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, cites an amendment to the Asset
Purchase Agreement, dated January 31, 2002, which provides, in
relevant part:

"Section 6.28. Arca Contracts. Notwithstanding anything in this
Agreement, or any schedule hereto or notice hereunder, to the
contrary, (i) the Contracts between Arca Systems, Inc. and
certain Government Entities listed on Schedule 6.28 will not be
assumed and assigned to Buyer or its Designee at Closing. . . .
The Sellers will use commercially reasonable efforts to cause
the assignment of the Arca Contracts to the Buyer."

Mr. Hurst submits that with this motion, the Debtors are only
seeking to fulfill their obligations under the Asset Purchase
Agreement. He adds that the business judgment rule, which is
seen to be incorporated in Section 365 of the Bankruptcy Code,
is also a reason why the Court should grant the relief
requested.

Mr. Hurst believes that the Debtors they have satisfied the
requirements of Section 365 of the Bankruptcy Code in connection
with the assumption and assignment of the contracts in that:

A. the Debtors are not aware of any defaults in connection with
    the contracts or of any cure amounts due or owing in
    connection with the contracts, and that

B. Cable & Wireless has provided adequate assurance of future
    performance of contracts that are assigned to it. (Exodus
    Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
    Service, Inc., 609/392-0900)


FFC HOLDING: Has Until July 28 to Make Lease-Related Decisions
--------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, the lease decision period of FCC Holdings, Inc. and
its debtor-affiliates has been extended. The Debtors obtained an
extension until July 8, 2002 to elect whether to assume, assume
and assign, or reject unexpired nonresidential real property
leases.

FFC Holding, Inc. filed for Chapter 11 protection on July 13,
2001. Christopher James Lhulier, Esq. and Laura Davis Jones,
Esq. at Pachulski Stang Ziehl Young represent the Debtors in
their restructuring efforts.


FLAG TELECOM: Seeks Approval to Slash Workforce by About 50%
------------------------------------------------------------
FLAG Telecom Holdings Limited and its debtor-affiliates ask the
Court to approve a global cost-saving program that involves
eliminating about one-half of their total employees.

Kees van Ophem, Secretary and General Counsel of FLAG Telecom
Holdings Ltd., says the program is endorsed with "extreme
reluctance." It was developed after consulting with financial
advisers and negotiations with key creditor constituencies and
officers and the board of directors.

The Debtors forecast $23,000,000 in annual savings if the
overall cost-reduction plan, which includes the mass layoffs,
comes into effect.

For fiscal 2002, FLAG Telecom budgets $58,000,000 a year to pay
for 425 employees who are mostly based in the United Kingdom.
The budget translates roughly to $135,000 per employee per year
to pay for salaries, bonuses and employment-related expenses.

Mr. van Ophem says that based on current market environment, the
Debtors' Chapter 11 status and changes in the business plan, the
volume of work required has been reduced. That makes possible
running the Debtors' business with significantly fewer employees
than are currently at work. With the layoffs, the Debtors are
thought to be able to close some offices outright and downsize
operations at others.

No specific employees have been targeted for layoff, Mr. van
Ophem says. Although the specific jobs that will be scrapped are
still unknown, the extent of the layoffs will likely span the
globe and involve employees in the Netherlands, Thailand, China,
Belgium, Egypt, England, Denmark, the United Arab Emirates,
Ireland, Germany, Hong Kong, Spain, India, France, Italy, Korea,
Singapore, Taiwan, Japan and the United States.

The Debtors will await Court approval before determining and
announcing the jobs that will get the chop. Laws in the UK and
other European jurisdictions require that employers talk first
with employees who are targets of termination before starting
the reduction process. The Debtors did say, however, that the
percentage eliminations for most departments vary from about
one-third to two-thirds.

The Debtors are consulting with an international team of legal
advisers to determine the effect of, and requirements for,
layoffs under various local laws.

Mr. van Ophem says foreign law requires severance payments,
apart from contractual rights under the Debtors' severance
benefit program. European and Asian countries, for instance,
require the payment of the equivalent of several months' pay,
based on total compensation (base salary, benefits, bonuses and
commissions), and the continuation of all contractual benefits
for a certain period.

Costs for nonpayment or failure to follow local requirements can
be considerable, Mr. van Ophem says. In the UK, for example,
this compensation would be capped at 62,000 pounds, or $90,000,
per employee. Mr. van Ophem says the failure to comply with
local law not only will result in significant litigation
exposure. It will also create difficulties in doing business in
foreign jurisdictions.

Mr. van Ophem says the Debtors need to cut costs significantly,
expecting that no significant revenue will be realized during
the remainder of 2002. Also, they anticipate that cash on hand
will be used to repay creditors and not to fund operations.

                       Retention Payments

In connection with the layoffs, the Debtors seek authority from
the Court to make severance payments and to implement a
retention program for key employees.

Mr. van Ophem estimates that severance benefits and retention
payments will total $7,750,000.  This is an amount that he
expects to recover in less than four months through direct
savings.

Before the bankruptcy filing, FLAG Telecom announced a retention
program under which employees would receive payments just so
they would agree to remain through the end of 2002. All but 18
employees have received payments. Mr. van Ophem requests payment
of $750,000 due the unpaid employees.

Mr. van Ophem says the Debtors recognize that employees who
remain after the layoffs will be critical to their business
operations. Specifically, there is concern that, upon
announcement of the jobs elimination, the most talented and best
trained employees, whose skills are the most marketable, will
begin looking for other jobs.

                        Severance Payments

The Debtors tell the Court that an integral part of the job cuts
is the payment of severance benefits estimated to be $7,000,000.
The amount is merely an estimate, the Debtors say. They make
clear that no specific list of employee terminations is drawn up
as yet.

Mr. van Ophem says FLAG Telecom has an established program for
employees who are involuntary terminated. That program, aimed at
giving standardized employee benefits regardless of nationality,
is like statutory severance schemes adopted in European and
Asian countries where FLAG Telecom does business.

FLAG Telecom's severance policy contemplates that employees will
receive the following payments:

   1. For employees who have a tenure of less than two years of
      service, a minimum payment equivalent to four weeks pay,
      calculated based upon total annual cash compensation
      including a deferred compensation component

   2. For employees who have a tenure of more than two years of
      service, payments equivalent to two weeks of pay per year
      served, calculated based upon total annual cash
      compensation including a deferred compensation component

   3. Normal medical, dental and life insurance benefits for
      specified notice periods

   4. Outplacement service

         In foreign jurisdictions with statutory severance
         benefits, the benefits described above apply except
         where the statutory requirements are greater, in which
         case the greater benefits would apply. Of the total
         reductions, FLAG currently estimates that 90 percent
         will take place in foreign jurisdictions, more than
         half of which have statutory requirements greater
         than FLAG's contractual benefits. The benefits
         described in this paragraph, when applied to the
         employees whose positions are eliminated in the
         Reduction Program, are referred to as the Severance
         Benefits.

Mr. van Ophem says honoring severance and retention payments is
critical to FLAG's continued operations. Such payments cushion
the economic shock from workforce attrition.

Also, the company's handling of departing employees will be used
as a gauge by the remaining employees to evaluate the likelihood
that FLAG Telecom will honor its obligations to those who
remain.

                         Funding

The Debtors ask the Court to allow them to access cash held by
parent FLAG Telecom Holdings Ltd. to defray severance benefits
and retention payments.

Judge Allan L. Gropper temporarily approved on April 29, 2002
the use of FTHL cash by certain Debtors. As approved, FTHL is
granted administrative priority claims and liens in the inter-
company receivables of the borrowing subsidiaries. Reach Ltd.
has objected to making the Order permanent as it applies to FLAG
Asia Ltd.

Mr. van Ophem says the Debtors, in seeking funding for severance
and retention payments, ask the Court to allow them to use FTHL
cash under the same terms as the interim Order provides.

Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, says that
Section 364(c) of the Bankruptcy Code permits a Debtor to obtain
post-petition credit under certain conditions.

Courts have articulated a three-part test to determine whether a
Debtor is entitled to Section 364(c) financing:

   (a) The Debtor is unable to obtain unsecured credit merely by
       allowing a lender an administrative expense, as described
       in Section 364(b);

   (b) The credit transaction is necessary to preserve the
       assets of the estate; and

   (c) The terms of the transaction are fair, reasonable and
       adequate, given the circumstances of the Debtor and the
       proposed lender.

Mr. van Ophem says the Debtors have no other source of
financing, and the FTHL funds provide the only means to infuse
funds to satisfy severance benefits and retention payments.
(Flag Telecom Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


FOAMEX INT'L: Completes Interest Rate Swap Deals in Early May
-------------------------------------------------------------
Foamex International Inc. (Nasdaq: FMXI), the leading
manufacturer of flexible polyurethane and advanced polymer foam
products in North America, announced its 2002 first quarter
results.

                              Results

Sales

Net sales for the first quarter were $314.1 million, up 4.0%
from $301.9 million in the first quarter of 2001. Gross profit
was $38.2 million in 2002, down 7.1% from $41.2 million in 2001.
Gross profit as a percentage of sales in 2002 decreased to 12.2%
from 13.6% in 2001.

Earnings

Net income for the quarter was $4.5 million compared with net
income of $5.9 million in the first quarter of 2001. Net income
in 2002 was reduced by an extraordinary charge of $4.2 million
for the write-off of debt issuance costs associated with the
early extinguishment of debt in connection with the Company's
previously announced debt refinancing. Net income in 2002 was
increased by the cumulative effect of a change in accounting
principle of $1.3 million related to the write-off of negative
goodwill. Income before the extraordinary charge and change in
accounting principle was $7.3 million or $0.28 per diluted share
in the 2002 first quarter.

Income from operations was $22.1 million for the 2002 first
quarter, compared to $24.2 million in the first quarter of 2001.
The first quarter of 2002 included a restructuring, impairment
and other credit of $1.5 million while the first quarter of 2001
included goodwill amortization charges of $1.5 million. The
Company experienced higher manufacturing costs and a 4.5%
increase in selling, general and administrative expenses which
was due principally to increased professional fees.

EBITDA for the 2002 first quarter was $30.9 million, down 5.5%
from the 2001 period. (The Company is transitioning from its
traditional EBDAIT disclosure to the more widely recognized
EBITDA, and will be reporting both measures through 2002. EBDAIT
numbers are available in the attached table, as are definitions
of EBDAIT and EBITDA.)

Interest and debt issuance expense for the quarter was $14.3
million, a decrease of 17.5% from the 2001 quarter, due to lower
average debt levels and interest rates. Consolidated net debt at
March 31, 2002 was $691 million.

Commenting on the results, Peter Johnson, Foamex's President and
Chief Operating Officer, said: "The lingering effects of an odor
problem in bedding products sold by our Foam Products group
(caused by a defective raw material supplied to the Company
during the fourth quarter of 2001) hurt sales and raised
manufacturing costs in the quarter. Despite this, overall sales
for the quarter were good, and strengthened throughout the
quarter. The business units' results for this quarter were
mixed, reflecting continued economic and market instability. We
are working to reduce our costs and increase our profitability
through our Project Transformation activities, the benefits of
which are mainly loaded towards the second half of the year.
During the first quarter we focused on procurement, production
site optimization and SG&A cost reduction and we have made
significant improvements in those areas. We remain committed and
focused on our business strategy and we are aggressively working
toward generating long-term shareholder value."

                              Outlook

Commenting on the Company's outlook, Thomas Chorman, Executive
Vice President and Chief Financial and Administrative Officer of
Foamex said: "The refinancing we completed in the first quarter
provides Foamex with flexibility and a much stronger balance
sheet. In early May, Foamex L.P. completed a series of interest
rate swap transactions which should lower the effective interest
cost of the newly issued senior secured notes. In terms of our
operational performance, we have seen strong sales into the
second quarter and expect that momentum to continue. In the
second quarter we expect to see a very slight residual impact
from costs related to odorous foam as we work to completely
resolve that issue. For the full year, we continue to expect to
deliver modest growth and to further de-leverage our balance
sheet."

                          Business Update

Refinancing

On March 25, 2002, Foamex completed the previously announced
sale of senior secured notes and amendment of its credit
facilities. Foamex L.P. raised $300 million of senior secured
notes, increased from an expected $200 million, in a private
placement under rule 144A. These notes bear interest at the rate
of 10 3/4% and are due April 1, 2009. Prior to the refinancing,
S&P upgraded the Company's credit ratings and Moody's raised its
outlook to positive from stable.

Net proceeds of $280 million were used to pay a portion of the
Company's debt outstanding. Additionally, the financial
covenants were adjusted to reflect changes in Foamex's capital
structure and the current business environment. Under the
covenants, the Company may spend up to $48.5 million of the
proceeds from the senior secured notes to either repurchase or
redeem some of its senior subordinated notes or further reduce
its bank debt.

                    Interest Expense Reduction

Effective May 1, 2002, the Company completed a series of
interest rate swap transactions on $300 million of long-term
debt. The effect of these interest rate swap transactions is to
convert the fixed interest rate on the Company's 10 3/4% senior
secured notes due April 1, 2009 to floating rates set twice per
year. Given current market interest rates, the Company expects
to realize significant cost savings in annual interest expense
as a result.

               "Project Transformation" Operational
                       Restructuring Program

In December, Foamex announced its comprehensive profit
enhancement plan, Project Transformation, leveraging Foamex's
VPF technology to reduce costs, spur revenue growth, and drive
increased long-term profitability and shareholder value. The
program is on schedule and the Company expects to meet its
targets. During the first quarter, procurement savings at an
annual rate of over $10 million were identified and are being
implemented.

Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The Company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. For more information visit the Foamex Web site at
http://www.foamex.com

Foamex's December 31, 2001 balance sheet shows a total
shareholders' equity deficit of about $108 million.


FRUIT OF THE LOOM: Court Sets May 31 Bar Date for Admin. Claims
---------------------------------------------------------------
Judge Walsh establishes May 31, 2002 at 4:00 pm EST, as the
final date and time for all parties, except those specified, to
file requests for allowance of administrative expense claims
against Fruit of the Loom Ltd., arising under 11 U.S.C. Sections
503(b) or 507(a)(i).


GENTEK INC: S&P Junks Credit Rating Amid Heightened Fin'l Risk
--------------------------------------------------------------
On May 16, 2002, Standard & Poor's lowered its corporate credit
rating on GenTek Inc. to triple-'C' from single-'B'-minus due to
increasing financial risk, including the company's recent
announcement that that it has received a notice of default from
its senior lenders. The Hampton, New Hampshire-based company has
nearly $1 billion in debt securities outstanding. All ratings
remain on CreditWatch negative.

GenTek is not in compliance with its bank covenant and its
senior lenders now have the right to accelerate payment on more
than $700 million in bank debt. If GenTek faced an acceleration
of payment, the company would likely be unable to meet its
payment obligations.

GenTek is in negotiations with its senior lenders to resolve the
default. Given the large amount of senior debt outstanding
relative to the total capital structure, significant
deterioration in cash generation, and that this will be the
third amendment, bank negotiations may prove to be challenging.
During the first quarter of 2002, the company drew down fully on
its bank facility, expecting bank covenants violation.
Currently, GenTek has $148 million in cash and no access to its
bank facility. GenTek has remained up to date on its
subordinated debt interest payments, however, it is possible
that its bank group will not allow the company to make its
August 2002 interest payment.

For the first quarter ended March 31, 2002, EBITDA declined more
than 45% to $24.2 million compared with $45.7 million for the
same period in 2001. As a result of weak market conditions,
operating performance is not expected to improve materially in
the near term and full year 2002 results are expected to be well
below full year 2001 results. At March 31, 2002, credit measures
are weak with total debt to EBITDA of about 7.3 times and EBITDA
to interest coverage of about 1.4x.

GenTek is a manufacturer of industrial components,
telecommunications equipment, and performance chemicals sold
into diverse markets for a wide variety of end uses. The company
operates three business segments through more than 80
manufacturing and production facilities located in 11 countries.

Standard & Poor's will continue to monitor the company's
operating and financial results and its progress in obtaining
bank amendments to cure its default. If the company fails to
meet its near-term debt obligations, cure the default, or if its
subordinated debt holders are impaired as a result of bank
negotiations, the rating will be lowered.

Ratings List:                                    To:       From:

          Ratings Lowered, Still On Creditwatch Negative

* Corporate credit rating                        CCC         B-
* Senior secured                                 CCC         B-
* Subordinated debt                              CC         CCC


GLOBAL CROSSING: Fiber Optek Unveils $7.3BB Proposed Reorg. Plan
----------------------------------------------------------------
Fiber Optek made public a plan of reorganization for Global
Crossing Ltd. (OTCBB:GBLXE), which it intends to sponsor.

According to Michael S. Pascazi, president and chief executive
officer of Fiber Optek, its plan provides a sizeable current
cash payment, a significant ownership position to the creditors
as well as a meaningful equity position for existing Global
Crossing shareholders.

Highlights of the plan follow:

     --  The name "Global Crossing" will be changed to "Fiber
Optek Networks Ltd." since "Global Crossing" has become a
negative brand.

     --  It is projected that the restructured company will have
a book value of approximately $9.7 billion.

     --  It is also projected that the per share common stock
price will rise approximately 10,000 percent from the current
level ($0.05 to $5.00) after the restructuring.

     --  Secured creditors will receive $250 million in cash,
assignment of $500 million in accounts receivable, approximately
28 percent equity and zero cost warrants convertible to
approximately 8 percent additional equity in the reorganized
company.

     --  Unsecured creditors will receive $50 million in cash
and zero cost warrants convertible to approximately 3 percent
equity in the reorganized company.

     --  Existing shareholders will retain approximately 25
percent equity and will be allowed to purchase warrants
convertible to an additional approximate 25 percent of the
equity in the reorganized company.

Under Chapter 11 bankruptcy rules, Global Crossing's management
has an exclusive right for 120 days to submit a formal plan or
reorganization. Pascazi asserted that as soon as that period of
exclusivity ends, now expected to be in late June, Fiber Optek
intends to submit its competing plan to the bankruptcy court.

Fiber Optek also intends to appoint Pascazi as chairman and CEO
and Frank P. Zarzeka Jr. as COO of the reorganized company. Both
men are entrepreneurs with 20 years experience in the fiber
optic telecommunications industry and have no prior relationship
with Global Crossing.

Both men were with IBM before founding Fiber Optek, a leading
developer and installer of fiber optic telecommunications
networks.

Pascazi is of the opinion that the existing management of Global
Crossing no longer commands the respect and confidence of the
investing public or its clients, and he has pledged to all
parties that he will take all steps necessary to restore that
confidence should Fiber Optek's plan come to fruition.

Fiber Optek is currently seeking creditor and stockholder
support for its plan. Complete details can be found at
http://www.gblxplan.com  

A formal plan may not and will not be submitted to the court
until such time as the debtor's exclusivity rights under section
1(2) of the U.S. Bankruptcy Code expire.

Fiber Optek is a registered trademark of Fiber Optek
Interconnect Corp.

DebtTraders reports that Global Crossing Holdings Ltd.'s 9.625%
bonds due 2008 (GBLX3) are trading at about 2.125. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for  
real-time bond pricing.


GRANITE BROADCASTING: Ernst & Young Issues Going Concern Opinion
----------------------------------------------------------------
Granite Broadcasting Corporation is a group broadcasting company
founded in 1988 to acquire and manage network-affiliated
television stations and other media and communications-related
properties. The Company's goal is to identify and acquire
properties that management believes have the potential for
substantial long-term appreciation and to aggressively manage
such properties to improve their operating results. As of
December 31, 2001, the Company owned and operated nine network-
affiliated television stations: WTVH-TV, the CBS affiliate
serving Syracuse, New York ("WTVH"); KSEE-TV, the NBC affiliate
serving Fresno-Visalia, California ("KSEE"); WPTA-TV, the ABC
affiliate serving Fort Wayne, Indiana ("WPTA"); WEEK-TV, the NBC
affiliate serving Peoria-Bloomington, Illinois ("WEEK-TV");
KBJR-TV, the NBC affiliate serving Duluth, Minnesota and
Superior, Wisconsin ("KBJR"); WKBW-TV, the ABC affiliate serving
Buffalo, New York ("WKBW"); WDWB-TV, the WB Network affiliate
serving Detroit, Michigan ("WDWB"); KBWB-TV, the WB Network
affiliate serving San Francisco-Oakland-San Jose, California
("KBWB"); and KNTV, the NBC affiliate serving San Francisco-
Oakland-San Jose, California ("KNTV"). The Company also owns a
sixty percent indirect interest in Channel 11 License, Inc., the
permittee of television station KRII, Channel 11, International
Falls, Minnesota. On April 30, 2002, the Company sold KNTV to
NBC.

Net revenue for the year ended December 31, 2001 totaled
$113,075,000; a decrease of $26,995,000, or 19 percent, compared
to $140,070,000 for the twelve months ended December 31, 2000.
The decrease was primarily due to a weak advertising climate
with local and national advertising down $24,631,000, a decrease
in political advertising in a non-election year of $9,246,000
and decreased revenue at KNTV of $4,660,000 as it operated as an
independent television station for a full year in 2001.

Station operating expenses totaled $116,374,000; an increase of
$13,694,000, or 13 percent, compared to $102,680,000 for the
twelve months ended December 31, 2000. The increase was
primarily due to an increase in news expense at KNTV of
$2,572,000, increased programming costs of $2,579,000 at the
Company's WB affiliates, and the accelerated amortization of
certain syndicated programs totaling $6,806,000.

Corporate expense totaled $9,687,000; a decrease of $705,000, or
7 percent, compared to $10,392,000 for the twelve months ended
December 31, 2000. The decrease was primarily due to a decrease
in professional fees. Non-cash compensation expense totaled
$1,473,000; a decrease of $501,000 or 25 percent compared to
$1,974,000 for the twelve months ended December 31, 2000. The
decrease was primarily due to a one-time charge to earnings
taken in 2000 resulting from the rescission of the exercise of
certain stock options exercised offset in part by increased
stock awards granted to certain executives.

On December 14, 2001, the Company entered into a definitive
agreement with NBC to sell KNTV. The sale transaction was
completed on April 30, 2002. NBC paid the Company $230,000,000
plus a working capital and other adjustments of $14,545,000. In
addition, NBC refunded the Company $20,473,000 of the
affiliation payment due to NBC on January 1, 2002 under the
terms of the KNTV NBC affiliation agreement, which the Company
prepaid on March 6, 2001. The Company repaid $170,000,000 of
outstanding senior debt and $14,763,000 of deferred interest and
other fees associated with the senior credit facility and the
amended credit agreement upon consummation of the sale. The San
Francisco Affiliation Agreement terminated upon the closing of
the sale and the Company is not required to make any further
affiliation payments to NBC. The warrants issued to NBC as part
of the San Francisco Affiliation Agreement have been returned to
the Company. The Company's affiliation agreements for KSEE-TV,
WEEK-TV, and KBJR-TV, which involve no payment obligations, will
remain in effect until their expiration on December 31, 2011.

Simultaneously with the closing of the sale of KNTV, the Company
entered into an amended and restated senior credit agreement.
The Credit Agreement consists of (i) a committed $60,000,000
Tranche A term loan facility, (ii) a committed $80,000,000
Tranche B term loan facility and (iii) an uncommitted
$10,000,000 Tranche C supplemental term loan facility. The
Tranche B loan commitment expires 120 days after the closing,
unless previously canceled by the Company, and may be extended
at the lenders' option for an additional period of time. The
terms of the Tranche C term loan have not been fully negotiated,
and borrowing of the Tranche C loans will require supplemental
action by the Board of Directors of the Company. The obligations
of the Company with respect to all of the loan facilities are
secured by substantially all of the assets of the Company and
its subsidiaries.

Upon entering into the Credit Agreement, the Company rolled over
existing outstanding loans under the prior loan facility into an
initial Tranche A borrowing in the amount of $35,000,000.
Proceeds from Tranche A and Tranche B term loans shall be used
for working capital and general corporate purposes. The Tranche
A loans bear interest at the greater of LIBOR plus 4.50% or
6.50% and the Tranche B loans bear interest at the greater of
LIBOR plus 9% or 11%. All interest is payable monthly in
arrears. The Credit Agreement matures on April 15, 2004, at
which time the Company must repay the principal amount of all
outstanding loans and all other obligations then due and owing
under the Credit Agreement. The Credit Agreement requires the
Company, among other matters, to maintain compliance with
certain financial tests, including but not limited to, minimum
net revenue, broadcast cash flow, EBITDA, working capital and
cash balances.

As of May 3, 2002, the Company had approximately $73,214,000 of
cash on hand, of which approximately $36,000,000 is reserved for
the payment of income taxes and other expenses related to the
sale of KNTV.

The Company expects to spend approximately $13,000,000 in 2002
and $22,000,000 in 2003 in capital expenditures, of which a
total of approximately $2,300,000 is associated with the initial
implementation of digital technology pursuant to the FCC's
relaxed digital television build-out rules. The Company
requested a six-month extension from the FCC to effect a portion
of such initial implementation because of the Company's
financial situation. The Company anticipates it will need an
additional $10,700,000 to effect the full build-out of digital
television. Granite Broadcastin believes that borrowings under
is amended senior credit facility together with internally
generated funds from operations and cash on hand will be
sufficient to satisfy the Company's cash requirements for its
existing operations for the next twelve months and for the
foreseeable future thereafter. Under the terms of the
Certificate of Designations for the Company's 12-3/4% Cumulative
Exchangeable Preferred Stock, the Company is required to make
the semi-annual dividends on such shares in cash beginning
October 1, 2002. The cash payment of dividend is restricted by
the terms of the indentures governing the Company's senior
subordinated bonds and is prohibited under the terms of the
Credit Agreement. The Company does not anticipate paying cash
dividends on its exchangeable preferred stock in the foreseeable
future.

In April 2002, Ernst & Young LLP, New York City independent
auditors for Granite, stated, concerning their Auditors Report
under date of February 20, 2002:  "Since the date of completion
of our audit of the accompanying financial statements and
initial issuance of our report thereon dated February 20, 2002,
which report contained an explanatory paragraph regarding the
Company's ability to continue as a going concern, the Company,
as discussed in Note 17, has sold KNTV and the proceeds were
used to satisfy its obligations under its bank credit agreement,
and the Company entered into an amended and restated credit
agreement. Therefore, the conditions that raised substantial
doubt about whether the Company will continue as a going concern
no longer exist."


GRANITE BROADCASTING: Commences "Modified Dutch Auction" Offer
--------------------------------------------------------------
Granite Broadcasting Corporation (Nasdaq: GBTVK) has commenced a
"Modified Dutch Auction" tender offer for up to 45,000 shares of
its 12.75% Cumulative Exchangeable Preferred Stock.

Under the tender offer, holders of Shares will have the
opportunity to tender some or all of their Shares (each Share
having a $1,000 liquidation preference) at a price within a $590
to $670 price range. The Company will utilize no more than
$30,150,000 available from cash on hand and borrowings under the
senior credit agreement to consummate the Offer. Subject to the
terms and conditions of the Offer, Granite will accept tendered
Shares in the Offer in the order of the lowest to the highest
tender prices specified by tendering holders within the price
range, and will select the single lowest price (the "Purchase
Price") that will enable Granite to purchase 45,000 Shares, or
such lesser number of Shares that are properly tendered. Granite
will pay the same Purchase Price for all Shares that are
tendered at or below the Purchase Price, upon the terms and
subject to the conditions of the Offer, including the proration
terms. In the event that more than 45,000 Shares are tendered at
or below the Purchase Price, Granite will accept for payment
such Shares that are tendered at or below the Purchase Price on
a pro rata basis from among such tendered Shares.

Neither Granite nor its board of directors makes any
recommendation to shareholders as to whether to tender or
refrain from tendering their Shares in the tender offer.
Shareholders must decide how many Shares they will tender, if
any, and the price within the stated range at which they will
offer their Shares for purchase by the Company.  The
consummation of the Offer for the Shares is subject to certain
conditions, which are described in the Offer to Purchase.

Granite Broadcasting Corporation (Nasdaq: GBTVK) operates eight
television stations in geographically diverse markets reaching
over 6% of the nation's television households. The Company's
station portfolio consists of three NBC affiliates, two ABC
affiliates, one CBS affiliate and two major market WB
affiliates. The NBC affiliates are KSEE-TV, Fresno-Visalia,
California, WEEK- TV, Peoria-Bloomington, Illinois, and KBJR-TV,
Duluth, Minnesota-Superior, Wisconsin. The ABC affiliates are
WKBW-TV, Buffalo, New York, and WPTA-TV, Fort Wayne, Indiana.
The CBS affiliate is WTVH-TV, Syracuse, New York. The WB
affiliates are KBWB-TV, San Francisco-Oakland-San Jose,
California, and WDWB- TV, Detroit, Michigan.


HOLLYWOOD CASINO: S&P Affirms B Rating Over Improved Performance
----------------------------------------------------------------
On May 17, 2002, Standard & Poor's revised its rating outlook on
Hollywood Casino Corp. to positive from stable. In addition,
Standard & Poor's affirmed its single-'B' corporate credit and
senior secured debt ratings of Hollywood Casino Corp.

The outlook revision reflects the improved performance at the
company's Aurora, Illinois and Shreveport, Louisiana facilities,
the steady operations in Tunica, Missouri, and Standard & Poor's
expectation that the positive momentum will continue in the near
term.

Ratings reflect Hollywood Casino Corp.'s narrow business focus,
high debt levels, and competitive market conditions. These
factors are offset by continued solid performance at each of the
company's properties, improving credit measures, and the
expectation that this trend will continue in the near term.

Dallas, Texas-headquartered Hollywood Casino Corp. owns and
operates casino gaming facilities in Aurora, Illinois, Tunica,
Missouri, and Shreveport, Louisiana. The company's Aurora
facility has been a steady cash flow generator and has benefited
from solid market growth, readjusted marketing programs, and the
partial opening of the barge facility in February 2002, which
will replace the two existing riverboats. Given the facility's
positive momentum and with the remainder of the barge facility
scheduled to open in mid-2002, operating performance is expected
to be solid in the near term.

In Tunica, the competitive environment remains intense amid
aggressive marketing programs initiated by existing operators.
Still, Hollywood has done a good job maintaining its market
share and remains a solid performer. Nevertheless, with the
market expected to remain highly competitive in the near term,
material improvement in cash flow is unlikely.

The Shreveport facility opened in late 2000 and performed well
below the company's expectations during 2001 because of start-up
operating inefficiencies, slower-than-expected market growth,
and an intensely competitive market environment. However,
management's efforts to reduce the property's cost structure and
redefine marketing programs have been successful and EBITDA
during the first quarter 2002 was $8 million, a dramatic
improvement over the EBITDA loss of $4.4 million generated
during the prior-year period. Although the outstanding debt at
Shreveport is non-recourse to the parent, Hollywood Casino Corp.
has shown a commitment to the facility through additional equity
contributions and Standard & Poor's expects that the parent will
continue its support if needed.

During the three months ended March 31, 2002, consolidated
EBITDA (after land leases, minority interest, and development
and corporate expenses) increased to $29.9 million from $13.6
million in the prior-year period due to solid results in both
the Aurora and Shreveport facilities, and continued stable
results in the Tunica facility. Based on current operating
trends, total debt to EBITDA is expected to be around 5 times
and EBITDA coverage of interest expense greater than 1.5x for
2002.

                             Outlook

The outlook reflects Hollywood's solid competitive position in
the Chicago, Shreveport, and Tunica marketplaces and the good
prospects for near-term growth in each market. Ratings could be
raised if Hollywood's consolidated operating performance
continues to improve, resulting in a further strengthening of
credit measures.

                            Ratings List

                         Hollywood Casino Corp.

               * Corporate credit rating B/Positive/--

               * Senior secured debt B


HOMELAND STORES: Expects to Meet Cash Requirements through 2002
---------------------------------------------------------------
The results of operations of Homeland Stores, Inc.'s continuing
stores represents a comparison of 44 stores for the twelve weeks
ended March 23, 2002 with 68 stores for the twelve weeks ended
March 24, 2001. The additional 24 stores in 2001 were stores
that were closed in 2001 but are required, under the
transitional rules to be presented as continuing operations
since these stores were closed prior to the adoption of SFAS No.
144.

Net sales decreased $35.9 million, or 31.6%, from $113.8 million
for the twelve weeks ended March 24, 2001, to $77.9 million for
the twelve weeks ended March 23, 2002. The decrease in sales is
attributable to the closing of 24 stores and a 0.1% decline in
comparable store sales.

During the 12 weeks ended March 23, 2002, there were three new
competitive openings within the Company's markets, all of which
were Target Supercenters. Based on information publicly
available, the Company expects that, during the remainder of
2002, Wal-Mart will open one Supercenter and one Neighborhood
Market, Aldi will open one store, and independents will open two
new stores.

Homeland Stores intends to emerge from bankruptcy with a total
of 44 stores. Net sales for the 44 stores decreased $0.1
million, or 0.1%, from $78.0 million for the 12 weeks ended
March 24, 2001 to $77.9 million for the 12 weeks ended March 23,
2002. Based in part on the anticipated impact of proposed and
recent new store openings and remodelings by competitors,
management believes that market conditions will remain highly
competitive, placing continued pressure on these 44 comparable
store sales and net sales. Management believes that comparable
store sales for these 44 stores will decline approximately 2.0%,
during the second quarter of 2002. In response to this highly
competitive environment, the Company intends to utilize its
merchandising strategy to emphasize a competitive pricing
structure, as well as emphasizing quality products and services,
selection and convenient store locations. The in-store
merchandising strategy combines a strong presentation of fresh
products along with meaningful values throughout the store on a
wide variety of fresh and shelf stable products each week.

Gross profit as a percentage of sales increased 0.5%, from 24.7%
for the twelve weeks ended March 24, 2001, to 25.2% for the
twelve weeks ended March 23, 2002. The increase principally
reflects the unfavorable gross profit performance of the stores
that were closed in 2001 partially offset by a decline in gross
profit margin in the core group of 44 stores. The decline in the
44 store group is attributable to lower rebates and allowances
made available to the Company by its suppliers.

Loss from continuing operations decreased $0.6 million from a
loss of $0.3 million for the twelve weeks ended March 24, 2001
to a loss of $0.9 million for the twelve weeks ended March 23,
2002. The decrease reflects the impact of the reorganization
expense and the decline in operating income, partially offset by
the decline in interest expense.

Income from operation of discontinued stores decreased $1.8
million from income of $0.4 million for the twelve weeks ended
March 24, 2001 to a loss of $1.4 million for the twelve weeks
ended March 23, 2002. The decrease reflects a decline of $0.8
million in operating profit, a $0.9 million charge for inventory
write-down, a $0.4 million charge for holding costs, partially
offset by a $0.3 million gain on the sale of one store.

Net income decreased $2.4 million from net income of $0.1
million, or net income per diluted share of $0.02, for the
twelve weeks ended March 24, 2001 to net loss of $2.3 million,
or net loss per diluted share of $0.47, for the twelve weeks
ended March 23, 2002.

EBITDA from continuing operations decreased $1.3 million from
$4.6 million, or 4.1% of sales, for the twelve weeks ended March
24, 2001 to $3.3 million, or 4.2% of sales for the twelve weeks
ended March 23, 2002.

The markets in which the Company operates remain increasingly
competitive, negatively affecting the Company's liquidity. The
Company's near and long-term operating strategies focus on
improving sales, improving operational efficiencies, and the
productivity of assets. The Company intends to pursue its
merchandising strategy in an attempt to increase its sales and
the Company has devised plans to improve its gross margin and
expense performance.

Homeland Stores believes that cash on hand, net cash flow from
operations, proceeds from certain expected asset sales and
borrowings under the DIP Financing will be sufficient to fund
its cash requirements through fiscal year 2002 or, if earlier,
through the confirmed date of a plan of reorganization which
will be contingent, in part, upon securing financing on
acceptable terms. Cash requirements will consist primarily of
payment of principal and interest on outstanding indebtedness,
working capital requirements and capital expenditures. The
Company's future operating performance and ability to service or
refinance its current indebtedness will be subject to future
economic conditions and to financial, business and other
factors, many of which are beyond the Company's control.


ICG: Telecordia Wants $35MM Claim Allowed for Voting Purposes
-------------------------------------------------------------
In April 2001 Telecordia Technologies, Inc., represented by Carl
A. Eklund filed a proof of claim against ICG Communications,
Inc., and its debtor-affiliates in the amount of $35,364,195.06.  
An objection to allowance of part of this claim is included in
the Debtors' First Omnibus Objection.  Based on a review of the
Debtors' Plan as amended, Telecordia believes that its claim
falls within Class S-4 of the Plan.  Under Judge Walsh Order
establishing procedures for voting, a motion under Rule 3018 is
necessary for temporary allowance for voting, and Telecordia
makes that motion for allowance of its claim for voting purposes
in the full amount. (ICG Communications Bankruptcy News, Issue
No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900)  


IT GROUP: KeyCorp Wants Debtors to Promptly Decide on Leases
------------------------------------------------------------
KeyCorp Leasing, a division of Key Corporate Capital, Inc. asks
the Court to:

(1) compel The IT Group, Inc., and its debtor-affiliates to
    assume or reject leases within 10 days of an order granting
    this Motion;

(2) compel immediate payment of administrative and Bankruptcy
    Code Section 365(d)(10) rent as well as all other lease
    obligations under Section 365(d)(10) and other ancillary
    relief; or in the alternative,

(3) provide adequate protection; and,

(4) grant relief from the automatic stay.

Dale Dube, Esq., at Blank Rome Comisky & McCauley LLP in
Wilmington, Delaware, avers that the Debtors are in default of
their post-petition obligations in respect of the leases for the
KeyCorp Equipment. More than 60 days has passed in this case and
it is unclear whether the Debtors are seeking to avoid their
Section 365(d)(10) obligations as to KeyCorp. The Debtors are
enjoying the use of the KeyCorp Equipment and generating income
from their operations but are not concomitantly paying their
obligation to KeyCorp. Presumably, the Debtors at this point can
make a reasoned business judgment as to whether it requires the
KeyCorp Equipment.

Mr. Dube accords that KeyCorp is the lessor and assignee of
rights on various types of light and heavy-duty construction
equipment for use in the Debtor's business. The items of
Equipment are set forth on individual contracts, or in some
cases, grouped together on schedules. The schedules and
respective contractual payment amounts are:

             Schedule          Monthly Payment Amount
             --------          ----------------------
                1                   $ 34,506
                2                      7,975
                3                     17,592
                4                        837
                8                      8,296
               10                      1,538
               12                      2,403
               16                        445
               17                      1,504
               18                      3,901
               19                     34,449
               20                      1,250
               21                      1,021
               28                        961
               30                      4,768
               32                      4,828
                                    --------
             TOTAL                  $126,274

Mr. Dube informs the Court that, to date, KeyCorp is owed
approximately $4,400,000 on an accelerated basis as of the
Petition Date. However, only a small partial payment has been
made amounting to $31,285, which was received on March 22, 2002.

Mr. Dube asserts that the KeyCorp Leases are "true leases,"
entitled to the protections Bankruptcy Code Section 365. At the
bid procedures hearing, this Court directed the Debtors to
commence an adversary proceeding on or before March 16, 2002
against any equipment lessor that the Debtors intended to seek
to re-characterize as leases intended as security. Since no such
action has been commenced, apparently the Debtors do not dispute
this issue. Furthermore, Shaw's schedules indicate that the
leases may be either assumed or rejected.

Mr. Dube reckons that the Debtors intend to sell its assets to
Shaw for $105,000,000, substantially less than what is owed to
the Debtors' secured creditors. There does not appear to be any
funds available to pay Section 503(b) administrative claims and
KeyCorp should not have to involuntarily fund the Debtors'
estates through non-payment of its administrative claim. Based
on the equities of the case, KeyCorp should be paid for the
first 59 days of rent and not be forced to wait until a plan or
conversion of the case. In the alternative, even if the Debtors
were ever successful in commencing an action to re-characterize
the KeyCorp Leases, KeyCorp would be entitled to adequate
protection.  In this event, the Debtors should be required to
provide protection of KeyCorp's interest in the Equipment by
making the regular rental payments due under the Leases.

Lastly, Mr. Dube contends that, because the Debtors have failed
on their obligations under the Leases, KeyCorp should be granted
relief from the automatic stay to exercise its rights and
remedies with respect to the KeyCorp Equipment. The Court must
direct the debtor to deliver to KCCI the Equipment within 10
days of the date of entry of an order granting this relief. (IT
Group Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  


ITC DELTACOM: Falls Short of Nasdaq Continued Listing Criteria
--------------------------------------------------------------
ITC DeltaCom, Inc. (Nasdaq/NM:ITCD) has received a letter from
the staff of The Nasdaq Stock Market, Inc. informing the Company
that it does not comply with the minimum bid price requirement
for continued listing of the Company's common stock set forth in
Nasdaq Marketplace Rule 4450(a)(5). As a result, the common
stock is subject to delisting from the Nasdaq National Market.

The Company also announced that, as permitted by the Nasdaq
Marketplace Rules, it will request a hearing before a Nasdaq
Listing Qualifications Panel to review the staff's
determination. The common stock will continue to be listed on
the Nasdaq National Market pending the outcome of the appeal,
which is expected to take a minimum of 30 days. The Company
cannot provide assurance that the panel will grant the Company's
request for continued listing. Should the Company's appeal be
unsuccessful, the Company will consider whether to seek to
transfer the listing of the common stock to the Nasdaq SmallCap
Market or to list the common stock for trading on the over-the-
counter bulletin board.

ITC DeltaCom, headquartered in West Point, Georgia, through its
operating subsidiaries, provides voice and data
telecommunications services on a retail basis to businesses in
the southern United States and is a regional provider of
broadband transport services to other telecommunications
companies. ITC DeltaCom's business communications services
include local, long distance, enhanced data, Internet access,
managed IP, network monitoring and management, operator
services, and the sale and maintenance of customer premise
equipment. ITC DeltaCom also offers colocation, web hosting, and
managed and professional services. The Company operates 35
branch offices in nine states, and its 10-state fiber optic
network of approximately 9,980 miles reaches approximately 175
points of presence. ITC DeltaCom has interconnection agreements
with BellSouth, Verizon, Southwestern Bell and Sprint for resale
and access to unbundled network elements and is a certified
competitive local exchange carrier (CLEC) in Arkansas, Texas,
and all nine BellSouth states. For additional information about
ITC DeltaCom, please visit the Company's Web site at
http://www.itcdeltacom.com


INTERLIANT INC: Continues Nasdaq Trading Pending Hearing Outcome
----------------------------------------------------------------
Interliant, Inc. (Nasdaq:INIT), a leading provider of managed
infrastructure solutions, announced that late Thursday it
received a Nasdaq Staff Determination indicating that the
Company failed to comply with the minimum market value of the
publicly held shares requirement and the minimum bid price
requirement for continued listing under Marketplace Rules
4450(b)(3) and (4), respectively. The Company's securities,
therefore, are subject to delisting from The Nasdaq National
Market.

On or before May 23, 2002, the Company will request a hearing
before the Nasdaq Listing Qualifications Panel to appeal the
Staff Determination and, under Marketplace Rules, the hearing
will be scheduled, to the extent practicable, within 45 days of
this request. Pending a final decision by the Nasdaq Listing
Qualifications Panel, the Company's common stock will continue
to trade on The Nasdaq National Market. There can be no
assurance as to the outcome of the appeal. If the Company is
unsuccessful on appeal and its common stock is delisted from The
Nasdaq National Market, the Company intends to apply for listing
on the OTC Bulletin Board or another quotation system or
exchange on which the Company's stock could qualify.

Interliant, Inc. (Nasdaq:INIT) is a leading provider of managed
infrastructure solutions, encompassing messaging, security and
hosting plus an integrated set of professional services products
that differentiate and add customer value to these core
solutions. The company makes it easier and more cost-effective
for its customers to acquire, maintain and manage their IT
infrastructure via selective outsourcing. Interliant sells to
the large/enterprise market through its direct sales force and
to the small and medium-business market (SMB) through its INIT
Branded Solutions program, which allows companies to private
label its offerings. Headquartered in Purchase, NY, Interliant
has forged strategic alliances and partnerships with the world's
leading software, networking and hardware manufacturers,
including Check Point Software Technologies Inc., DELL Computer
Corporation, IBM and Lotus Development Corp., Microsoft, Oracle
Corporation, Sun Microsystems Inc. For more information about
Interliant, visit http://www.interliant.com


KAISER ALUMINUM: Asbestos Claimants Win OK to Tap Legal Analysis
----------------------------------------------------------------
The Official Committee of Asbestos Claimants, in Kaiser Aluminum
Corporation's chapter 11 cases, obtained Court approval to
retain Legal Analysis Systems, Inc., nunc pro tunc as of
February 25, 2002, as asbestos-related bodily injury consultant
to the Committee.

Official Committee of Asbestos Claimants member, Thomas Craig
relates that Legal Analysis provides expert services regarding
the identification and treatment of asbestos bodily injury
claimants. The services that Legal Analysis will perform for the
Committee include:

A. Estimation of the number and value of present and future
   asbestos personal injury claims;

B. Development of claims procedures to be used in the
   development of financial models of payments and assets of a
   claims resolution trust;

C. Analyzing and responding to issues relating to the setting of
   a bar date regarding the filing of personal injury claims;
   and

D. Analyzing and responding to issues relating to providing
   notice to personal injury claimants and assisting in the
   development of such notice procedures.

The firm is compensated on an hourly basis to be paid by the
Debtors. The professionals expected to render services for the
Committee and their current hourly rates are:

       Professionals             Position           Rate
       -----------------   ----------------------  ------
       Mark A. Peterson                             $500
       Daniel Relles           Statistician         $330
       Patricia Ebener     Data Collection Expert   $240
       Mary Gail Brauner       Statistician         $185
       Gregory Ridgeway        Statistician         $150
(Kaiser Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)   


KMART CORPORATION: Wrestles with General Star over Venue Dispute
----------------------------------------------------------------
Nancy Hoffman, Esq., at Querrey & Harrow, Ltd., in Chicago,
Illinois, explains that General Star Indemnity Company has a
dispute with Kmart Corporation for damage caused by Hurricane
Georges at its stores in Puerto Rico and the U.S. Virgin
Islands.

From September 21 to 25, 1998, Hurricane Georges created havoc
throughout Puerto Rico, the U.S. Virgin Islands, the Florida
Keys, and the Gulf Coast of the United States.  The damage to
Kmart stores was riddled with controversy.  Kmart employees
allegedly inflated and exaggerated the extent of the loss cause
by Hurricane George.  Among the methods reportedly used were:

  (i) wetting otherwise undamaged merchandise to make it appear
      as if it had been damaged by Hurricane Georges,

(ii) including undamaged merchandise in Kmart's insurance
      claim,

(iii) including merchandise that was damaged by causes other
      than Hurricane Georges in Kmart's insurance claim, and

(iv) including old and discontinued merchandise that was not
      otherwise saleable.

At the time of the Hurricane Georges loss, Kmart was insured
under tiered property insurance program, where it had a
$1,000,000 windstorm deductible.  Thereafter, Lexington
Insurance Company provided the primary coverage of $2,500,000;
Allianz Insurance Company provided the first excess coverage of
$2,500,000; the next $2,500,000 was shared by General Star
($1,250,000), Essex Insurance Company ($625,000) and
Commonwealth Insurance Company ($625,000).  The third excess
layer was also $2,500,000.  This tier was shared by General Star
($1,750,000) and The Travelers Indemnity Company ($750,000).  
The next tier (excess of $10,000,000 after deductible) was
provided by Zurich American Insurance Company.

After a difficult claim process, Kmart finally filed its proof
of loss setting a claim in the amount of $12,298,006:

  (1) $11,210,736 for loss or damage at 27 stores in Puerto Rico
      and the U.S. Virgin Islands, and

  (2) $1,087,270 for loss or damage at approximately 150 stores
      in the Florida Keys and the Gulf Coast States.

The claim was investigated.  But Kmart's alleged refusal to
cooperate with the investigation of the claim led General Star
and Essex to commence a declaratory judgment action in the U.S.
District Court for the District of Puerto Rico on March 15,
2001. The next day, Kmart filed a breach of contract action in
District Court in Michigan.

According to Ms. Hoffman, General Star moved to transfer Kmart's
Michigan action to Puerto Rico and Kmart moved to dismiss or
transfer General Star's Puerto Rico action to Michigan.

Ms. Hoffman informs Judge Sonderby that the District Court in
Michigan has held in abeyance its ruling on the transfer motion
so as to allow the District Court in Puerto Rico, as the Court
in which the action was first filed, to issue its ruling.  "But
before the Puerto Rico Court could make its decision, Kmart
filed its Chapter 11 petition and invoked the automatic stay
provision," Ms. Hoffman says.

By this motion, General Star asks the Court to lift the
automatic stay so that the District Court in Puerto Rico can
decide that motion and resolve the venue issue.  Based on that
ruling, Ms. Hoffman explains, a single lawsuit will go forward
in either Michigan -- where Kmart currently is litigating
actively the action that it filed -- or in Puerto Rico.  "Under
no circumstances will the insurance dispute be litigated in both
courts," Ms. Hoffman emphasizes.

Ms. Hoffman assures the Court that lifting the automatic stay
will not prejudice Kmart, impose any hardship, or interfere with
judicial economy in any way.  Ms. Hoffman points out that the
litigation costs will be the same regardless of whether the
action proceeds in Michigan or Puerto Rico.  "The parties are
the same, the issues are the same, and the discovery is the
same," Ms. Hoffman says.  Moreover, Ms. Hoffman argues, even a
judgment in General Star's favor in the Puerto Rico Action will
not require Kmart to pay General Star any money.  However, Ms.
Hoffman notes, denying this request to lift the automatic stay
will deprive General Star of a determination on the merits of
the proper venue in which to resolve the insurance dispute.

                         Debtors Object

The Debtors complain that General Star is attempting to force
the Debtors to incur additional costs by defending the Puerto
Rico Action in a separate forum.  "A lifting of the stay would
merely force the Debtors to litigate the actions in two separate
forums and incur unnecessary costs to the detriment of the
Debtors' estates, when a substantial amount of discovery and
court action has already taken place in the Michigan Action," J.
Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom, in
Chicago, Illinois, argues.

Mr. Ivester lists the considerations that warrant denial of
General Star's motion at this time:

  (1) the Debtors will be prejudiced if the stay is modified in
      that the Debtors will be compelled to incur unnecessary
      costs in pursuing actions in two forums at a time when the
      Debtors' resources are already stretched significantly as
      they examine numerous other aspects of their business
      while attempting to restructure their affairs.  A
      requirement that they pursue complex insurance litigation
      in an additional forum when a substantial amount of
      activity has already taken place in the Michigan Action
      should not be forced upon the Debtors at this time;

  (2) General Star will not experience any hardship if the stay
      remains in effect with respect to the Puerto Rico Action.
      In fact, General Star has not alleged any hardship to it
      at all in its motion if the stay is not lifted, and
      otherwise fails to allege any facts constituting "cause"
      for modification of the stay.  Thus, there is no hardship
      to General Star by continuation of the stay that outweighs
      the hardships to the Debtors by modification of the stay;
      and

  (3) the interests of judicial economy will not be served by
      modification of the stay at this time.  General Star's
      declaratory judgment action was not on the eve of trial,
      nor was it in an advanced stage, when the Debtors
      commenced their Chapter 11 cases.  Indeed, the action was
      in its very early stages, with the parties disputing
      venue.  No discovery had taken place, nor was there a
      trial date in the near future.  Because the litigation is
      a long way from being resolved on the merits, there is no
      judicial efficiency to be gained from pushing it forward
      at this time.

Thus, the Debtors assert, there is no "cause" to enter an order
modifying the stay at this time.

                      General Star Talks Back

Kmart is mistaken to think that the litigation will be pursued
in two venues, General Star points out.  Ms. Hoffman tells Judge
Sonderby that Kmart simply ignores the fact that the most
appropriate venue for the coverage action has not yet been
decided and cannot properly be decided unless the Court lifts
the automatic stay.  "The automatic stay is not only preventing
the Court in the Puerto Rico action from deciding the venue
motion before it, but it is also preventing the Michigan Court
from ruling on the venue motion before it because the Michigan
Court is holding its ruling in abeyance until the Puerto Rico
Court rules," Ms. Hoffman clarifies.

Ms. Hoffman notes that Kmart does not offer any real alternative
to resolve the issue.  "Kmart appears to believe that the
automatic stay somehow moots the pending question regarding the
proper venue for the coverage action," Ms. Hoffman observes.  
Ms. Hoffman contends that Kmart should not be permitted to use
the automatic stay to gain an advantage by forcing General Star
to litigate this matter in Kmart's preferred forum, particularly
since:

    1) the Puerto Rico Court, as the "first filed" forum, is
       presumptively the proper forum; and

    2) the Michigan Court has explicitly stated that the Puerto
       Rico Court should first decide the venue issue.

General Star insists that Kmart's objection has no basis and,
therefore, should be overruled. (Kmart Bankruptcy News, Issue
No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900)


LTV: Steel Debtor Wins Nod to Hire Receivables Outsource Mgt.
-------------------------------------------------------------
The Official Committee of Unsecured Creditors in The LTV
Corporation's chapter 11 cases announces it supports the
Motion and engagement of ROM - but only to the extent that the
expense incurred as a result of the engagement of ROM will be
offset by a corresponding payroll reduction of LTV Steel by
elimination of approximately eight employees.  Paul M. Singer of
Reed Smith LLP says that the Committee reserves the right to
confirm that such reduction in employment has "appropriately
occurred, and that the Debtor be compelled to honor the terms of
the two key employee retention programs approved by the Court,
including the denial of payment to employees who did not perform
their job satisfactorily."

                      Judge Bodoh's Ruling

Judge Bodoh grants the Motion and authorizes LTV Steel to enter
into and perform the letter agreement with ROM and permits
payment of all fees, including the discovery fee, without
further Order or judicial oversight.  Judge Bodoh does not
mention any of the conditions the Committee raised, only
acknowledging that he has seen the Response.

                           *   *   *

                       The ROM Agreement

By the Letter Agreement, ROM will assume the role of LTV Steel's
accounts receivable collection department for the covered
accounts receivable and will be responsible for the collection
of all accounts included in the report included with the Letter
Agreement.  ROM will not be responsible for the collection of
accounts receivable identified separately in the Letter
Agreement or any other accounts receivable identified by LTV
Steel prior to the commencement of ROM's efforts to collect such
accounts.  To facilitate the collection of the receivables, LTV
Steel has agreed to provide ROM with possession, control or
access to all data and documents to the extent necessary for
ROM to fulfill its obligations under the Letter Agreement.  The
Letter Agreement may be terminated by LTV Steel if LTV Steel
secures approval of a sale of the receivables to a third party.

In connection with ROM's obligations under the Letter Agreement,
LTV Steel's management may establish parameters for any
settlements in respect of the receivables.  In the event that
any settlements are obtained outside of the ordinary course of
business, and in accord with LTV Steel's directives, LTV Steel
will bear the responsibility of obtaining Court approval for the
settlement.

In exchange for these services to be provided by ROM, LTV Steel
has agreed to pay certain fees and expenses as:

       (1) Initial set-up charge:  $100,000, payable upon Judge
Bodoh's approval of the letter agreement;

       (2) Collection fee:  2.5% of all amounts collected by ROM
or its agents or paid to LTV Steel on account of the
receivables;

       (3) Storage, Copying, Etc:  Upon approval by LTV Steel,
any storage charges, copying charges and unforeseen information
technology expenses;

       (4) Litigation Expenses:  Including the fees of attorneys
retained by ROM with LTV Steel's consent, and fees for advisory
services;

       (5) Litigation Support:  Hourly fees for any material
litigation support, advisory or consulting services provided.  
These hourly rates are:

                    Partners               $350
                    Senior Managers        $250
                    Project Managers       $200
                    Associates             $100

           and

       (6) All travel expenses.

In addition to these fees and expenses, ROM will be entitled to
retain a fee of $150,000 as a "discovery fee" from the proceeds
that it has collected on behalf of LTV Steel prior to remitting
any net proceeds to LTV Steel if either (a) the receivables are
sold by LTV Steel to a third party; or (b) 30% of the
receivables (i) are not just, due and owing, (ii) are not free
from offset or counterclaim, or (iii) have been, or will be,
credited off the aging report or diminished for reasons beyond
the control of ROM (except for warranty claims) and for reasons
other than cash payments.

Finally, LTV Steel has agreed to indemnify and hold ROM and its
affiliates, directors, officers, employees, agents and
representatives harmless from and against claims, liabilities,
costs and expenses brought against them or paid or incurred in
respect of the services provided by ROM to LTV Steel.  LTV Steel
will not indemnify these parties for actions resulting from the
negligence, gross negligence, or willful misconduct of any of
them. (LTV Bankruptcy News, Issue No. 30; Bankruptcy Creditors'
Service, Inc., 609/392-00900)


LIVEPERSON INC: Applies for Listing Transfer to Nasdaq SmallCap
---------------------------------------------------------------
LivePerson, Inc. (Nasdaq: LPSN), a leading Application Service
Provider of technology facilitating real-time sales and customer
service for companies doing business on the Internet, has
applied to The Nasdaq Stock Market, Inc. to transfer the listing
of its common stock from the Nasdaq National Market to the
Nasdaq SmallCap Market.

"Moving to the SmallCap Market would allow us to remain a
Nasdaq-listed security and let our management avoid the
distraction of a delisting proceeding, so we can continue
executing on our business plan," said Robert LoCascio, Chairman
and Chief Executive Officer.  "Reducing any uncertainty
associated with our Nasdaq listing will allow investors to focus
on the fundamental performance of the Company."

Nasdaq notified LivePerson in February that its common stock
would be delisted from the National Market if not in compliance
with Nasdaq's minimum bid price of $1.00 per share by May 15,
2002.  The application by LivePerson will stay all National
Market delisting proceedings. The voluntary switch to the
SmallCap Market may allow LivePerson to take advantage of the
SmallCap Market rule that provides a grace period through
February 2003 to satisfy the minimum $1.00 per share bid price
requirement.

Because the $1.00 bid price requirement applies to securities
quoted on either the National Market or the SmallCap Market, the
steps taken by LivePerson in connection with its application do
not change the recommendation of the LivePerson Board of
Directors that stockholders vote at the May 23 Annual Meeting in
favor of each of the proposals to effect a reverse split of the
common stock.

LivePerson -- http://www.liveperson.com-- is a leading  
Application Service Provider of technology facilitating real-
time sales and customer service for companies doing business on
the Internet.  The LivePerson service enables online businesses
to communicate with Internet users in real time, thereby
enhancing the online experience.  The LivePerson services,
consisting of Chat, FAQ, Email and Document Management tools,
offer clients the opportunity to increase sales, reduce customer
service costs and increase responsiveness to customer needs.  
LivePerson is headquartered in New York City, with R&D
facilities in Tel Aviv, Israel.


MAGELLAN HEALTH: Q2 Cash Flow from Operations Drop to $14 Mill.
---------------------------------------------------------------
Magellan Health Services, Inc., (NYSE:MGL), reported operating
results for the second quarter of fiscal year 2002.

The company reported net revenues for the quarter of $437.9
million and segment profit (net revenues less cost of care,
direct service costs and other operating expenses plus equity in
earnings of unconsolidated subsidiaries) of $46.7 million. For
the same period a year ago, revenues were $444.2 million and
segment profit was $63.8 million. Prior year results for the
second quarter, as previously disclosed, were impacted by the
settlements of pricing adjustments under two of the company's
TRICARE contracts and an adjustment to the company's estimate of
claims incurred in prior years. Excluding these non-recurring  
items, prior year quarterly revenues were $435.5 million
and segment profit was $52.8 million.

Income from continuing operations was $5.1 million for the
quarter on a fully diluted basis. Excluding restructuring
charges incurred in the current quarter of approximately $3.4
million pre-tax, income from continuing operations would have
been $7.1 million, or $0.16 per share. Earnings were impacted by
greater than expected net decreases in the company's membership
resulting from losses in membership experienced by Aetna, and
greater than anticipated costs of care resulting primarily from
continued higher utilization of services.

Cash flow from operations for the quarter was $14.1 million
compared to $21.5 million in the prior year quarter. The company
ended the quarter with $24.1 million in unrestricted cash,
restricted cash of $116.3 million and approximately $72.7
million of availability on its revolving credit facility.

"Magellan's second quarter results and projections for the year
were primarily impacted by two factors," said Mark S. Demilio,
chief financial officer of Magellan. "First, the net reduction
in risk membership resulting from Aetna's membership losses was
greater than expected due, in part, to our other customers
obtaining less of the Aetna lost membership than anticipated.
Second, we continued to experience an increase in cost of care,
driven primarily by increased utilization. Cost of care is
approximately 6 percent to 8 percent above last year's level and
we expect this trend to continue for the foreseeable future.
Accordingly, these factors will continue to affect our results
for the remainder of this year. However, the continued effects
of our cost reduction efforts and renewal pricing, as well as
seasonality in the cost of care should enable us to produce
improved results over each of the next two quarters," Demilio
concluded.

"While these two external forces adversely impacted our results,
we will stay the course on Magellan's transformation,
proactively moving forward on several fronts to continue to
improve the operating and financial effectiveness of our
company," said Daniel S. Messina, president and CEO of Magellan.
"We believe there is greater awareness of mental health and
employee assistance benefits since September 11th and this,
combined with a continued lessening of the stigma associated
with seeking treatment, ultimately bodes well for our business,
the industry, and, of course, the general population as more
people receive the care that they need. Moving forward, we will
pursue rate increases with our customers that address this cost
of care trend. In this regard, we are very pleased to announce
the recent extension of our agreement to manage services through
the TennCare program at prices that we believe adequately
reflect the current trend in care costs. In addition, we are
encouraged by President Bush's recent support for mental health
parity, which we believe increases the likelihood that federal
legislation will be enacted effective January 1, 2003. In that
event, our contracts entitle us to renegotiate our pricing to
reflect parity benefits," Messina said.

Headquartered in Columbia, Md., Magellan Health Services, Inc.
(NYSE:MGL), is the country's leading behavioral managed care
organization, serving over 69 million individuals nationwide -
nearly one in three insured Americans. Its customers include
health plans, government agencies, unions, and corporations.

                         *   *   *

As reported in the April 16, 2002 edition of Troubled Company
Reporter, Standard & Poor's said it revised its outlook on
Magellan Health Services Inc. to negative because the results of
Magellan's continuing operations in behavioral health managed
care, now its sole business, were considerably weaker in the six
months ended Dec. 31, 2001, than in the past several years.

At same time, Standard & Poor's said that it affirmed its
single-'B'-plus counterparty credit rating on Magellan.

S&P says, "Magellan's leverage continues to improve slowly.
Nevertheless, in December 2001, management needed to obtain an
amendment from its bank group to a covenant in its credit
agreement that called for a decline in a key leverage ratio.
Standard & Poor's believes that if the current run rate of
operating results does not improve, Magellan might have to seek
another amendment of this covenant.

"Ongoing concerns remain, including extremely high leverage,
contingencies arising from discontinued operations and a
concentration of business in two large customers that account
for more than 30% of revenue."


MARY KAY: S&P Ups Ratings to BB- on Improved Operating Results
--------------------------------------------------------------
On May 17, 2002, Standard & Poor's raised its corporate credit
and bank loan ratings on Mary Kay Inc. to double-'B'-minus from
single-'B'-plus. The outlook is stable.

The upgrade reflects Mary Kay's improved operating performance
stemming from continued sales volume growth, ongoing cost-saving
initiatives, and reduced debt levels, which have resulted in a
strengthening of the company's financial ratios.

The ratings on Dallas, Texas-based Mary Kay reflect the
company's reliance on the mature and highly competitive U.S.
cosmetics market, challenges with international operations, and
industry risk of direct sales distribution. These factors are
partially offset by the company's solid position within the
cosmetics industry and improved operating performance. Mary Kay,
a privately held company, is a leading manufacturer and direct
seller of premium cosmetics and beauty care products.

Mary Kay's operating performance and financial profile have
shown improvement over the past few years due to the growth in
revenues and the reduction in debt. The company increased the
number of active sales consultants year-over-year, which has
resulted in revenue growth. Nevertheless, productivity per
consultant has fallen somewhat, reflecting high turnover and the
challenges involved in maintaining a motivated and productive
sales force. Additionally, Mary Kay faces competition for sales
consultants from a number of direct sellers. Still, the
incremental volume achieved through an enlarged sales force has
had a positive impact on margins and cash flow generation.

Mary Kay's average credit protection measures support the rating
despite the company's below-average business risk profile
resulting from the direct-selling business model. The company's
credit measures improved in 2001 and Standard & Poor's believes
that the credit ratios will continue to strengthen over the
intermediate term due to lower projected debt levels and higher
earnings. The rating incorporates the expectation that near-term
acquisitions will not be material and that the company will
utilize free cash flow to reduce debt.

                              Outlook

The outlook incorporates Standard & Poor's expectations that
Mary Kay will sustain credit measures above those expected for
its rating category to compensate for increased business risks.
Ratings List

Ratings Raised                              To          From

* Corporate credit rating                   BB-          B+

* Bank loan rating                          BB-          B+


METROMEDIA FIBER: Files for Chapter 11 Reorganization in SDNY
-------------------------------------------------------------
Metromedia Fiber Network, Inc. (Nasdaq: MFNXE) announced that it
and most of its domestic subsidiaries have filed voluntary
petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code.   The Company will continue to operate
without interruption.

In conjunction with the filing, MFN has reached an agreement
with its senior secured lenders which will enable the Company to
fund its operations while it implements its plan to become cash
flow positive. The plan includes significant cost reductions
through a substantial deleveraging of the Company's balance
sheet, the disposal of non-productive properties (including idle
data centers or non-essential offices), rejection of burdensome
vendor contracts and reduction of personnel. By shedding
expenses and focusing on the Company's highest margin
operations, MFN expects to quickly stabilize its financial
status.

"First and foremost, I want to assure our customers that our
top-notch service levels will not be compromised by the
reorganization process," said John Gerdelman, president and
chief executive officer of Metromedia Fiber Network. "Dedication
to our customers and their businesses continues as a top
priority."

"We believe that our core metro-fiber and data center businesses
are some of the best assets in the telecommunications industry.  
However, in growing the business we, along with others in the
industry, out-paced the demand and, as a result, are overbuilt.  
We are committed to taking the painful but necessary steps to
ensure stability and long term success for our company. Our
objective is to move through Chapter 11 expeditiously and have
the "New MFN" emerge with a sound capital structure and
operational base, fully positioned to take advantage of market
opportunities."

Metromedia Fiber Network Government Services, Inc. was not one
the subsidiaries included in this filing and will continue to
operate outside of the Chapter 11 proceeding.  MFN also
announced that it has hired Impala Partners to assist in the
restructuring and UBS Warburg to advise on strategic
alternatives.

Finally, MFN announced that it had been notified by The Nasdaq
Stock Market that as a result of not meeting certain listing
criteria, the Company's securities would be delisted effective
with the open of business on May 20, 2002.

MFN is the leading provider of digital communications
infrastructure solutions.  The Company combines the most
extensive metropolitan area fiber network with a global optical
IP network, state-of-the-art data centers, award-winning managed
services and extensive peering relationships to deliver fully
integrated, outsourced communications solutions to Global 2000
companies.  The all-fiber infrastructure enables MFN customers
to share vast amounts of information internally and externally
over private networks and a global IP backbone, creating
collaborative businesses that communicate at the speed of light.

Customers can take advantage of MFN's complete, end-to-end
solution or select individual components to complement their
existing infrastructures.  By leasing MFN's metropolitan and
regional fiber, customers can create their own, private optical
network with virtually unlimited, un-metered bandwidth at a
fixed fee.  For more reliable, secure and high-performance
Internet connectivity, customers can use MFN's private IP
network to communicate globally without ever touching the
public-switched network.  Moreover, MFN's comprehensive managed
services enable companies to create a world-class Internet
presence, optimize complex sites and private optical networks,
and transform legacy applications, all with a single point of
contact.

PAIX.net, Inc., a subsidiary of MFN and the original neutral
Internet exchange, offers secure, Class A co-location facilities
where ISPs and other Internet-centric companies can form public
and private peering relationships with each other, and have
access to multiple telecommunications carriers for circuits
within each facility.

For more information on MFN, please visit its Web site at
http://www.mfn.com

Metromedia Fiber Network's 10% bonds due 2009 (MTFIB1),
DebtTraders says, are quoted at a price of 7. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MTFIB1for  
real-time bond pricing.


NATIONAL ENERGY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: National Energy Production Corporation
        11831 North Creek
        Parkway North
        Bothell, WA 98011
        aka NEPCO
        aka Enron Engineering Acquisition Corp.

Bankruptcy Case No.: 02-12398

Type of Business: National Energy Production Corporation, an
                  affiliate of Enron Corporation is
                  primarily engaged in the business of lump
                  sum engineering, procurement construction of
                  electrical power generation stations in
                  North America.

Chapter 11 Petition Date: May 20, 2002

Court: Southern District of New York (Manhattan)

Judge: Arthur J. Gonzalez

Debtors' Counsel: Brian S. Rosen, Esq.
                  Weil, Gotshal & Manges LLP
                  767 Fifth Avenue
                  New York, New York 10153
                  212-310-8602
                  Fax: 212-310-8007
                  
                  and
   
                  Melanie Gray, Esq.
                  Weil, Gotshal & Manges LLP
                  700 Louisiana, Suite 1600
                  Houston, Texas 77002
                  Telephone: (713) 546-5000

Total Assets: $772,266,650

Total Debts: $752,769,950

Debtor's 20 Largest Unsecured Creditors:

Entity                     Nature of Claim        Claim Amount
------                     ---------------        ------------
Labov Mechanical Inc.         Trade                 $6,869,578
c/o Ilene Caprioppi
6754 W. Washington Avenue
Pleasantville, NJ 08232
Labov Mechanical Inc.
(609) 383-9600
(609) 383-9069

Turner International Piping  Trade                  $3,465,374
c/o Mr. T.M. Glascock
1200 19th Street SW
Paris, Texas 75460
(903) 782-9362
(903) 782-9379

Parsons Energy & Chemicals   Trade                  $3,161,987
Group
c/o Tom Brock
5 E. Greenway Plaza
Houston, TX 77046
(713) 407-5000
(713) 407-7598

Foster Wheeler Energy        Trade                 $2,985,985
Corporation  
c/o Ken Andrejko
Perryville Corporate Park
Clinton, New Jork 08809
(908) 713-3004
(908) 713-3025

SM Electric Co., Inc.        Trade                 $2,547,161
601 New Brunswick Avenue
Rahway, NJ 07065-1144
c/o Steve Ray
(732) 388-3540
(732) 388-3052

Frank Lill & Son Inc.        Trade                 $2,326,022
656 Basket Road
Webster, NY 14580-9770
c/o Bill Cole
(716) 265-0490
(716) 265-1842

Nepcan Engineering Ltd.      Trade                 $2,081,513
c/o Diane Basarich
#200-1770 W. 7th Avenue
Vancouver, BC
Canada V6J 4Y6
(604) 736-3273
(604) 736-1519

Pro Business                 Trade                 $1,982,326
201 Spear Street
San Francisco, CA 94105

Consolidated Pipe            Trade                 $1,857,015
c/o Randy Bring
950 Stage Road
Memphis, TN 38127
(800) 467-8912
(901) 357-4491

Milam Construction Co.       Trade                 $1,817,997
c/o Tom Goza
1605 Haynesville Hwy.
El Dorado, TX 71731
(870) 862-4258
(870) 862-8740

General Electric Company     Trade                 $1,619,860
c/o Don Cramer
1 River Road, Bldg. 2-411A
Schenectady, NY 12345
(518) 385-4269
(518) 386-4799

Granite Construction Co.      Trade                 $1,608,151
4115 East Illinois St.
Tucson, AZ 85726
c/o Mark Sutton
(502) 748-8000
(502) 748-4862

Furino & Sons                 Trade                 $1,354,860
c/o Doug Reina
767 North Avenue
Plainfield, NJ 07062
(908) 756-7736
(908) 756-3783

Ram-Fab Inc.                  Trade                 $1,247,894
c/o Steve Jones
150 Hwy 133 N Spur
Crossett, TX 71635
(870) 364-7473
(870) 364-3163

Rockland Materials            Trade                 $1,170,386
c/o Tami Shadd
3636 S. 43rd Avenue
Phoenix, AZ 85009
(602) 278-7777
(602) 233-1100

Horizon Constructors, Inc.    Trade                   $984,495
c/o Glenn Judice
11255 Ricecrest Street
Houston, TX 77035
(713) 721-6136

James Machine Works Inc.      Trade                   $879,775
c/o Marty Herlevic
1521 Adams Street
Monroe, LA 71210
(318) 322-6104
(318) 388-4245

One Source Wire & Cable       Trade                   $876,866
c/o Dennis McCabe
700 Aberdeen Loop
Panama City, FL 32405
(850) 265-9473
(850) 265-9909

Bray Controls                 Trade                  $681,779
c/o Paul Le
13333 Wetland E Blvd.
Houston, TX 77041
(281) 894-5454
(281) 894-9499

Empire Rental                 Trade                  $662,297
227 West Iron Avenue
Mesa, AZ 85210
c/o Grant Shaw
(480) 633-4900
(480) 633-4675


NATIONAL STEEL: Court Fixes August 15, 2002 as General Bar Date
---------------------------------------------------------------
Judge Squires sets the Bar Date on August 15, 2002 for general
claims against National Steel Corporation and its debtor-
affiliates.  Claims of governmental units will be due no later
than September 6, 2002.

The Court amends the list of entities excluded from asserting
proofs of claim to include:

   -- any holder of the Debtors' Bonds where HSBC Bank USA is
      the Indenture Trustee.  The Indenture Trustee for the
      Bonds shall file a proof of claim on behalf of the holders
      of the Bonds for all principals and interest due under the
      Bonds and all other amounts payable under the indenture to
      which the Bonds are issued:

      (a) the Indenture of Mortgage and Deed of Trust, dated as
          of May 1, 1952, among the Debtors and Great Lakes
          Steel Corporation, as Issuers, City Bank Farmers Trust
          Company, as Trustee, and Ralph E. Morton, as
          Individual Trustee, under which $300,000,000 aggregate
          principal amount of the Company's First Mortgage
          Bonds, 8-3/8% Series due 2006 and $60,500,000
          aggregate principal amount of the Company's First
          Mortgage Bonds, 9-7/8% Series D due 2009 were issued;
          and

      (b) the Indenture of Trust, dated as of April 1, 1981 --
          the Pollution Control Indenture -- between the City of
          Granite City, Illinois, as Issuer, and Pittsburgh
          National Bank, as Trustee, under which $10,500,000
          aggregate principal amount of Granite City's Floating
          Rate Pollution Control Revenue Bonds Series 1981 were
          issued.

   -- any of the Debtors or any direct or indirect subsidiary of
      any of the Debtors that hold claims against one or more of
      the other Debtors; and

   -- any holder of equity securities or other interests in the
      Debtors solely with respect to such holder's ownership
      interest in or possession of such equity securities or
      other interests.  This is provided, however, that any such
      holders who wish to assert a claim against any of the
      Debtors based on transactions in the Debtors' securities
      including claims for damages or rescission based on the
      purchase or sale of the securities, must file a proof of
      claim on or prior to the applicable Bar Date. (National
      Steel Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
      Service, Inc., 609/392-0900)


NATIONSRENT INC: Court Approves Stipulation with KeyCorp Leasing
----------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates obtained Court
approval of a stipulation with KeyCorp Leasing, a party to
certain commercial leases, which cover approximately 502
different items of construction equipment owned by KeyCorp. The
Debtors and KeyCorp desire to provide for the remittance to
KeyCorp of certain post-petition payments regarding each of the
schedules.

Both parties stipulate and agree that:

A. Process of Equipment Evaluation:

    a. The Debtors will review the Equipment Information and
       determine the Equipment that is subject to the Agreements
       to be assumed, rejected, re-characterized as secured
       indebtedness or, in certain cases, restructured with
       KeyCorp;

    b. The Debtors will provide KeyCorp with their proposal with
       respect to each schedule by June 30, 2002 or such other
       dates as mutually agreed by the parties and engage in
       discussions to settle each schedule;

    c. to the extent an appraisal or audit is conducted by the
       Debtors on the Equipment, the Debtors will provide a copy
       to KeyCorp;

    d. if KeyCorp wants to conduct an appraisal or audit at any
       time during the case, the parties will mutually agree
       upon a procedure and to the extent the parties cannot
       agree, the procedure shall be determined by the Court;

B. Confidentiality: The parties have entered into a separate
    Confidentiality Agreement that will be deemed incorporated
    herein by references as it is set forth fully herein, in its
    entirety;

C. Payment:

    a. on the contractual payment date for each of the schedules
       that falls due postpetition after February 14, 2002, the
       Debtors will remit payment to KeyCorp of not less than
       80% of the contractual rent due under the JLG schedule
       and 67% under the LaSalle schedule;

    b. By April 26, 2002, the Debtors will have remitted to
       KeyCorp 79% of the total quarterly rent that was due
       under the JLG schedule on January 1, 2002 and 79% of the
       quarterly rent that was due under the LaSalle schedules
       on January 1, 2002 in full settlement of any rent
       accruing as allowed administrative expense claims
       pursuant to the Agreements for the period December 17,
       2001 through March 31, 2002 for the Debtors' use of the
       Equipment;

    c. all payments will be created against the Debtors'
       obligations to KeyCorp pursuant to the Agreements;
       provided, however, that the parties reserve all rights
       concerning the ultimate characterization and application
       of all payments based, among other things, on whether the
       Agreements are true leases or secured indebtedness and
       the valuation of the Equipment is the collateral for any
       secured indebtedness;

D. No Disgorgement of Payments: The Debtors will not seek to
    recover or otherwise disgorge any post-petition payments
    made to KeyCorp pursuant to this Stipulation, other than
    payments made on account of Agreements that are later re-
    characterized as secured indebtedness, which shall then be
    treated as adequate protection;

E. Cash Collateral: KeyCorp reserves the right to assert claim:

    a. that post-petition revenues obtained by the Debtors
       through rental of the equipment constitute cash
       collateral; and,

    b. KeyCorp is entitled to adequate protection of its
       interests in these rents, revenues, income, profits and
       proceeds; and,

    c. The parties agree that during the time this Stipulation
       is in effect, KeyCorp will not actively assert rights or
       prosecute such positions in the Bankruptcy Court or other
       wise, and that such deferral of exercise of such claims
       is not a waiver or relinquishment of such claims by
       KeyCorp, or its claims of priority, or entitlement of
       adequate protection of its interest in these rents,
       revenues, income, profits and proceeds. (NationsRent
       Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
       Service, Inc., 609/392-0900)


NEOMEDIA TECHNOLOGIES: Begins Trading on OTCBB Effective May 17
---------------------------------------------------------------
NeoMedia Technologies, Inc. (OTC BB: NEOM), has received
notification from the Nasdaq Listing Qualifications Department
that its stock is being delisted effective May 17, 2002, from
The Nasdaq SmallCap Market, and will trade on the Over the
Counter Bulletin Board (OTC BB).

The Nasdaq Delisting Qualification Panel informed NeoMedia after
close of market yesterday that, in its opinion, the company has
not demonstrated the ability to comply within a reasonable
period of time with all requirements for continued listing on
The Nasdaq SmallCap Market.

NeoMedia Technologies, Inc. -- http://www.neom.com-- develops  
technologies that link physical information and objects to the
Internet, marketing services under the PaperClick(TM) trademark.
In addition, NeoMedia's Systems Integration Group specializes in
Open & Storage System solutions and automating print production
operations.


NETZEE INC: Nasdaq Will Delist Shares Effective May 24, 2002
------------------------------------------------------------
Netzee, Inc. (Nasdaq: NETZ), a leading provider of Internet
banking products and Internet commerce solutions for community
financial institutions, announced that on May 16, 2002, it
received notification from The Nasdaq Stock Market indicating
Nasdaq's intention to delist the company's common stock from the
Nasdaq National Market effective at the opening of business on
May 24, 2002.

In its notification, Nasdaq stated that it is taking this action
because Netzee has failed to comply with the minimum market
value requirement for continued listing set forth in Marketplace
Rule 4450(a)(2).  Specifically, the company was notified on Feb.
14, 2002, that it was out of compliance with the $5 million
minimum market value requirement for its publicly held shares,
and was provided 90 calendar days, or until May 15, to regain
compliance.  The notification stated that since the company has
not regained compliance, its securities will be delisted.

On April 3, 2002, Nasdaq also notified the company that it was
out of compliance with the minimum bid price requirement of $1
for its common stock as set forth in Marketplace Rule
4450(a)(5).

Netzee's stock will be eligible for trading on the NASD over-
the-counter bulletin board subsequent to the delisting.  The OTC
Bulletin Board (OTCBB) is a regulated quotation service that
displays real-time quotes, last-sale prices and volume
information for more than 3,600 securities.  Information
regarding the OTCBB can be found at http://www.otcbb.com  

Netzee provides financial institutions with a suite of Internet-
based products and services, including full-service Internet
banking, bill payment, cash management, Internet commerce
services, custom web design and hosting, branded portal design,
access to brokerage services, targeted marketing and
implementation and marketing services.  Netzee was formed in
1999 as a subsidiary of InterCept, Inc. (Nasdaq: ICPT), and as
the successor to a company founded in 1996.  Further information
about Netzee is available at http://www.netzee.com


NEWCOR INC: Seeking Court OK to Sign-Up PricewaterhouseCoopers
--------------------------------------------------------------
Newcor, Inc. and its debtor-affiliates wish to bring-in the firm
of PricewaterhouseCoopers, LLP as accountants, independent
auditors and tax service providers.  

In their application to the U.S. Bankruptcy Court for the
District of Delaware, the Debtors want the retention effective
as of February 25, 2002.

PwC will render services including:

     a. auditing the consolidated financial statements of the
        Debtors at December 31, 2001 and for the year then
        ending for inclusion in Form 10-K to be filed with the
        Securities and Exchange Commission (as of the date
        hereof, the Form 10-K has been filed with the Securities
        and Exchange Commission);

     b. reviewing the Debtors unaudited consolidated quarterly
        financial statements for the quarters ending March 31,
        2002, June 30, 2002 and September 30, 2002 before the
        Form 10-Q is filed;

     c. preparing the federal and various state income tax
        returns; and

     d. assisting the Debtors in being compliant with financial
        reporting requirements, including required filings with
        the Securities and Exchange Commission.

The Debtors assure the Court that the PwC's services will not
duplicate the services that other professionals will be
providing to the Debtors in these chapter 11 cases.  PwC will
use reasonable efforts to avoid duplicating services with other
professionals.

The Debtors assert that PwC has substantial expertise in
providing accounting, independent auditing and tax services to
debtors in chapter 11 cases. Moreover, PwC has already provided
services to the Debtors and, as a result, has obtained valuable
institutional knowledge of the Debtors' businesses and financial
affairs.

The hourly billing rates, which will be charged by PwC for the
professional services, are:

          Professional               Per Hour
          ------------               --------
          Partner                    $416.00
          Senior Managers/Director   $330.00
          Manager                    $260.00
          Senior Associate           $172.00
          Associate                  $110.00

Newcor, Inc., along with its subsidiaries, design and
manufacture a variety of products, principally for the
automotive, heavy-duty, capital goods, agricultural and
industrial markets. The Company filed for chapter 11 protection
on February 25, 2002 Laura Davis Jones, Esq. at Pachulski,
Stang, Ziehl Young & Jones P.C. represents the Debtors in their
restructuring efforts. When the Debtors filed for protection
from its creditors, it listed $141,000,000 in total assets and
$181,000,000 in total debts.


NEWCOR INC: Asks Court to Fix June 28 General Claims Bar Date
-------------------------------------------------------------
Newcor, Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to fix the Claims Bar Dates
by which creditors must file proofs of claims against the
Debtors' estates or be forever barred from asserting that claim.  

In order for the Debtors to complete the reorganization process
and make distributions under a plan, the Debtors want the Court
to establish the General Bar Date on June 28, 2002, 4:00 p.m.
Pacific Daylight Time.  The Debtors want the Government Bar Date
scheduled on August 23, 2002.  The Government Bar Date would
apply to all governmental units holding prepetition claims
against the Debtors. The Debtors anticipate that certain
entities may assert claims in connection with the Debtors'
rejection of executory contracts and unexpired leases.

The Debtors propose that for any claim arising from a Debtor's
rejection of contracts or leases, the Rejection Bar Date shall
either be the date stipulated in any Rejection Order or the
later of:

          a) the General Bar Date, or

          b) 30 days after the entry of a Rejection Order.

All proofs of claim must be received by the court-approved
claims agent, Kurtzman Carson Consultants LLC, on the applicable
Bar Date by mail, by courier, by overnight delivery, by first-
class mail or in person.

Proofs of claim are not required to be filed by claimants
asserting:

     a) claims already properly filed with the Court;

     b) claims not listed as "disputed," "contingent" or
        "unliquidated" in the Schedules; and who agrees with the
        nature, classification and amount of such claim set
        forth in the Schedules; and

     c) a claim or interest previously allowed by, or
        paid pursuant to, an order of this Court.

Newcor, Inc., along with its subsidiaries, design and
manufacture a variety of products, principally for the
automotive, heavy-duty, capital goods, agricultural and
industrial markets. The Company filed for chapter 11 protection
on February 25, 2002 Laura Davis Jones, Esq. at Pachulski,
Stang, Ziehl Young & Jones P.C. represents the Debtors in their
restructuring efforts. When the Debtors filed for protection
from its creditors, it listed $141,000,000 in total assets and
$181,000,000 in total debts.


PACER INTERNATIONAL: S&P Places Low-B Ratings on Watch Positive
---------------------------------------------------------------
On May 17, 2002, Standard & Poor's placed its single-'B'-plus
corporate credit rating on Pacer International Inc. on
CreditWatch with positive implications following the company's
filing for an initial public stock offering. The rating action
reflects the potential for a modest upgrade if the stock
offering is successfully completed. Pacer has stated that it
expects $135 million in net proceeds (assuming an initial public
offering price of $16 a share), and that it will use proceeds to
repay debt. Concord, California-based Pacer, which provides
intermodal and logistics services, has about $650 million in
debt (including off-balance sheet leases).

Pacer has built its solid position in the intermodal market
through a series of acquisitions that have left the company
highly leveraged. Pro forma debt to capital (adjusted for
operating leases) is estimated to be 75% (compared with 99% at
the end of 2001). Pro forma funds from operations to debt
(adjusted for operating leases) is expected to improve to the
low- to mid-teen percentage area (compared with 10% for 2001.)

In its intermodal service business, Pacer transports cargo
containers stacked two high on specially designed railcars
(stacktrains). Logistics services include intermodal marketing,
truck brokerage, freight forwarding, freight consolidation and
handling, and supply chain management services. The company
benefits from the non-asset intensive nature of its business and
the solid contractual relationships Pacer maintains with
railroads in its intermodal operations, which help offset the
risks associated with high (albeit declining) debt leverage and
exposure to cyclical pressures, especially in its logistics
business.

Standard & Poor's will meet with management to discuss the
company's near-term operating outlook, growth objectives and
financial goals. If it appears that the improvement in the
financial profile, expected following the stock offering, will
be sustained, the ratings are likely to be raised.

                         Ratings List

          Ratings Placed on CreditWatch Positive

               * Corporate credit rating B+

               * Senior secured bank loan B+

               * Subordinated debt B-


PACIFIC GAS: Voting Record Date Scheduled for May 21, 2002
----------------------------------------------------------
Pacific Gas and Electric Company, the California Public
Utilities Commission and the Committee stipulate and agree that
the Voting Record Date for the PG&E Plan and the CPUC Plan will
be set for May 21, 2002.

Judge Montali has given his stamp of approval to the
Stipulation. (Pacific Gas Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


PAPER WAREHOUSE: Violates Nasdaq Minimum Net Tangible Asset Rule
----------------------------------------------------------------
Paper Warehouse, Inc., (Nasdaq:PWHS) has received notifications
from The Nasdaq Stock Market that it is back in compliance with
two maintenance standards and out of compliance with one
maintenance standard. As previously reported in February 2002,
Nasdaq notified the company that it was not in compliance with
two of its maintenance requirements. The two standards the
company is now in compliance with are the requirement that the
company maintain a minimum value of $1 million of public float
and the requirement that the company maintain a minimum bid
price of $1.00 per share.

The maintenance standard that the company is not in compliance
with is the requirement that the company maintain a minimum of
$2 million in net tangible assets, or a minimum of $2.5 million
in stockholders' equity. The company plans to submit a plan on
or before May 22, 2002, covering how it plans to achieve and
sustain compliance with this requirement. If the plan is not
deemed adequate by Nasdaq compliance staff, Paper Warehouse may
appeal the decision to the Nasdaq Listing Qualification Panel.

If Paper Warehouse does not ultimately satisfy the maintenance
requirement, the company may decide to apply for quotation of
its common stock on the Nasdaq Bulletin Board, or any other
organized market on which its shares may be eligible for
trading, or it may decide to appeal the decision by Nasdaq to
delist its common stock.

Paper Warehouse specializes in party supplies and paper goods
and operates under the names Paper Warehouse, Party Universe,
and PartySmart.com, which can be accessed at
http://www.PartySmart.com Paper Warehouse stores offer an  
extensive assortment of special occasion, seasonal and everyday
party and entertainment supplies, including paper supplies, gift
wrap, greeting cards and catering supplies at everyday low
prices. As of May 3, 2002, the company had 141 retail locations
(87 company-owned stores and 54 franchise stores) conveniently
located in major retail trade areas to provide customers with
easy access to its stores. The company's headquarters are in
Minneapolis.


PEGASUS COMMS: S&P Places B Corp. Credit Rating on Watch Neg.
-------------------------------------------------------------
On May 16, 2002, Standard & Poor's placed its ratings, including
its single-'B' corporate credit rating, on Pegasus
Communications Corp. and its related entities on CreditWatch
with negative implications. The action was based on Pegasus'
rising financial risk and operating challenges. The company
continues to operate with heavy subscriber acquisition costs and
high leverage, and recorded a net reduction in subscribers in
the first quarter of 2002. Although Pegasus has reduced
subscriber acquisition spending and is narrowing its
discretionary cash flow deficit, the pay TV market remains
intensely competitive. In July 2002, Pegasus is scheduled to
begin paying cash dividends on its 12-3/4% debt-like preferred
stock, further pressuring liquidity. Debt maturities begin
rising substantially in 2004. The company had about $40 million
cash at March 31, 2002 and availability under its revolving
credit facility was approximately $131 million. In addition to
Pegasus' financial pressures, the potential merger of EchoStar
and DirecTV raises important questions about its future
competitive position. Standard & Poor's will resolve the
CreditWatch listing upon further review of Pegasus' operating
and financial prospects.

                        Ratings List:

               Pegasus Communications Corp. Rating

                 * Corporate credit rating B

                 * Preferred stock CCC

               Pegasus Satellite Communications Inc.

                 * Corporate credit rating B

                 * Senior unsecured debt CCC+

                 * Subordinated debt CCC+

               Pegasus Media & Communications Inc.

                 * Corporate credit rating B

                 * Senior secured bank loan rating B+


PILLOWTEX CORP: First Quarter Net Sales Plummet 12% to $241MM
-------------------------------------------------------------
Pillowtex Corporation, since its Chapter 11 bankruptcy filing in
April 2000, has been operating as a Debtor-in-Possession.  

The Company reported net sales of $240.9 million in the first
quarter of 2002, a decrease of $32.9 million, or 12.0%, from the
first quarter of 2001. Approximately $18.0 million of the
decrease is due to the loss of the Company's Ralph Lauren
licensing agreement, which expired on June 30, 2001. The
remaining decrease is primarily attributable to the one-time
inventory liquidation in 2001. The Company had taken a charge in
December 2000 to reduce certain inventories to net realizable
value. Sales of these products were approximately $17.0 million
in the first quarter of 2001.

Gross profit increased $7.0 million from $2.4 million in the
first quarter of 2001 to $9.4 million in the first quarter ended
2002. Gross margin increased from 0.9% in the first quarter of
2001 to 3.9% in the first quarter of 2002. This increase is
attributable to lower overhead costs resulting from the
Company's manufacturing rationalization plan and reduced
material costs and natural gas prices. These savings have been
partially offset by operating inefficiencies experienced due to
the relocation of certain manufacturing operations required by
the recently announced facility closures. The Company announced
the closure of the towel finishing operations in Columbus,
Georgia and Phenix City, Alabama and the Pillow and Pad
automated sewing line facility in Dallas, Texas in the first
quarter of 2002. The operations at these facilities have begun
to be transferred to existing facilities.

The Company incurred $5.3 million of reorganization items in the
first quarter of 2002, compared to $7.6 million in the first
quarter of 2001. The decrease is due to lower professional fees
and retention bonus expense.

During the first quarter of 2001, the Blanket Division incurred
a loss from operations of $3.0 million. The Blanket Division was
sold on September 6, 2001.

Comprehensive loss consists of net loss, pension equity
adjustments and foreign currency translation adjustments and
aggregated $49.2 million and $48.4 million for the three months
ended March 30, 2002 and March 31, 2001, respectively.

Factors which could affect the Company's future results, among
others: (a) the significant challenges faced in connection with
the Chapter 11 Cases; (b) the substantial doubt as to whether
the Company will continue as a going concern; (c) the
restrictions on the conduct of the Company's business as a
result of the Chapter 11 Cases and provisions contained in the
DIP Financing Facility; (d) the Company's dependence on specific
raw materials; (e) the effects of adverse retail industry
conditions; (f) the Company's dependence on specific brand
names; (g) the risks related to loss of material customers; (h)
the risks related to organized labor; (i) the seasonality of the
Company's businesses; (j) the difficulties in attracting and
retaining personnel; and (k) the substantial effort of
management required in connection with the Chapter 11 Cases.

Pillowtex Corp.'s 10% bonds due 2006 (PTX2), an issue in
default, are quoted at a price of 1, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PTX2for  
real-time bond pricing.


POTOMAC ENERGY: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Potomac Energy Corporation
        3168 Bel Air Drive
        Las Vegas, Nevada 89109
        dba Butte Coal, Inc.
        dba Potomac Coal, Inc.

Bankruptcy Case No.: 02-15616

Type of Business: The Debtor is into the energy business.

Chapter 11 Petition Date: May 17, 2002

Court: District of Nevada (Las Vegas)

Judge: Robert C. Jones

Debtor's Counsel: David A Riggi, Esq.
                  823 S. Las Vegas Boulevard
                  Las Vegas, Nevada 89101
                  (702) 735-4335

Total Assets: $19,000,000

Total Debts: $700,000

Debtor's 20 Largest Unsecured Creditors:

Entity                                            Claim Amount
------                                            ------------
Seven Seas Petroleum                                  $417,000
5555 San Felipe Boulevard Suite 1700
Houston, Texas 77056

Swan Petroleum Corp.                                   $50,000

William & Webster PS                                   $15,000

Dunn Swan & Cunningham                                 $15,000

Pawnee Leasing Corp.                                   $14,302

Merrill Communications LLC                             $13,763

Otto & Rees                                            $12,000

Dell Financial Services LP                             $10,442

A1 Freeman Moving & Storage                            $10,000

Glenn J. Shrader                                       $10,000

William Federman                                        $7,500

CMI                                                     $4,286

Mark E. Swan                                            $5,237

Smith Carney & Co.                                      $5,206

Standard & Poor's                                       $2,975

Oklahoma Tax Commission                                 $2,769

Oklahoma Employment Security                            $2,094

Southwest Credit System                                 $1,728

Business Wire                                           $1,650

Federal Express                                         $1,513


PRESIDENT CASINOS: Feb. 28 Balance Sheet Upside-Down by $45MM
-------------------------------------------------------------
President Casinos, Inc. (OTC Bulletin Board: PREZ) announced
results of operations for the fourth quarter and the fiscal year
ended February 28, 2002.

For the fourth quarter ended February 28, 2002, the Company
reported a net loss of $11.3 million compared to a net loss of
$7.4 million for the fourth quarter ended February 28, 2001.
Revenues for the fourth quarter ended February 28, 2002 were
$32.5 million, compared to revenues of $28.1 million for the
fourth quarter ended February 28, 2001.  The Company had
earnings before interest, taxes, depreciation and amortization
(EBITDA) and before reorganization costs, impairment of long-
lived assets and gain/loss on disposal of property and equipment
of $3.0 million, compared to $0.1 million in the prior year.

Results for the fourth quarter ended February 28, 2002, included
(i) increases of approximately $2.8 million and $0.5 million in
operating income at St. Louis and Biloxi, respectively; and (ii)
an impairment of long-lived assets of $7.1 million compared to
$1.3 million for the comparable previous year quarter relating
to assets currently held for sale.  The fourth quarter ended
February 28, 2001, included one month of operations at the
Company's previous St. Louis site and two months at the new
location.  In the fourth quarter of fiscal year 2002, the St.
Louis casino operation experienced an increase of 25% in gaming
revenues compared to the fourth quarter of the prior year.  
Results of operations in Biloxi included $1.1 million of
reorganization costs associated with the bankruptcy proceedings
for the Broadwater Hotel property.  The hearing on the debtor's
plan of reorganization is scheduled to begin in September 2002.

For the year ended February 28, 2002, President Casinos reported
a net loss of $20.7 million compared to a net loss of $0.2
million for the year ended February 28, 2001. Revenues for the
year ended February 28, 2002 were $129.2 million, compared to
revenues of $152.1 million for 2001.  The Company had EBITDA
before reorganization costs, impairment of long-lived assets and
gain/loss on disposal of property and equipment of $10.7
million, compared to $10.8 million in the prior year.

Changes in revenues, EBITDA and net income for the year ended
February 28, 2002, compared to the prior year were due primarily
to the disposal of certain operations and the improved
performance of the St. Louis casino operations. During the year
ended February 28, 2001, the Company sold the assets of its
Davenport operations.  The sale resulted in a $34.5 million gain
on disposal of property and equipment during fiscal year 2001
and a reduction of $39.5 million in revenue during fiscal year
2002.  During the year ended February 28, 2002, the Company sold
its St. Louis non-gaming cruise operations which resulted in a
$0.8 million gain on disposal of property and equipment and a
$1.1 million reduction in revenue for fiscal year 2002 compared
to fiscal year 2001.  On a combined basis, the Biloxi casino and
hotel operations and St. Louis casino operations achieved
increased revenues and EBITDA, before reorganization costs,
impairment of long-lived assets and gain/loss on disposal of
property and equipment, of $17.7 million and $7.0 million,
respectively, during fiscal year 2002 compared to fiscal year
2001.  The increases are primarily the result of the St. Louis
casino operations, which have experienced an increase of 31% in
gaming revenues compared to the prior year.

President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.

At February 28, 2002, President Casinos' upside-down balance
sheet shows a total shareholders' equity deficit of about $40
million.


PSINET INC: NTFC Secures Temporary Allowance of Claim for Voting
----------------------------------------------------------------
Pursuant to Federal Rule of Bankruptcy Procedure 3018, the Court
granted NTFC's motion, authorizing that NTFC's secured claim is
temporarily allowed in the amount of $82,743,188.45. NTFC's
deficiency claim is also temporarily allowed in the amount of
$82,743,188.45 for accepting or rejecting a plan in the PSINet
Chapter 11 cases. (PSINet Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)   


RARE MEDIUM: Fails to Comply with Nasdaq Min. Bid Price Standard
----------------------------------------------------------------
Rare Medium Group, Inc. (NASDAQ: RRRR) received notice of a
Nasdaq Staff Determination on May 16, 2002, indicating that the
Company failed to comply with the minimum bid price requirement
for continued listing on the Nasdaq National Market as set forth
in Marketplace Rule 4450(a)(5), and is subject to delisting from
the Nasdaq National Market.

The Company is filing a request for a hearing before a Nasdaq
Listing Qualifications Panel to review the determination. As a
result of the Company's request, the Company's common stock will
continue to trade on the Nasdaq National Market pending a
decision by the Panel. The request for a hearing is based upon
the Company's previously announced one for ten reverse stock
split that is being put forth for stockholder approval at the
special meeting of the Company's stockholders to be held on or
about July 11, 2002. If the reverse stock split is approved by
stockholders, it is expected to bring the Company into
compliance with the minimum bid requirement.

At this time, the Company believes it is in compliance with all
of Nasdaq's continued listing requirements except for the
minimum bid requirement.

There can be no assurance that the Company's actions will
prevent delisting of its common stock. The Company will not be
notified until the Panel makes a formal decision. Until then,
the Company's shares will continue to be traded on the Nasdaq
National Market. In the event the shares are delisted from the
Nasdaq National Market, it will attempt to have its common stock
traded on the NASD OTC Bulletin Board.


REPUBLIC TECHNOLOGIES: Banks Agree to Finance RAC's Acquisition
---------------------------------------------------------------
Republic Technologies International LLC, the nation's leading
supplier of special bar quality steel, said that RTI Acquisition
Corp. (RAC) has secured a new equity partner and an agreement in
principle with Republic's existing bank group to finance its
transaction. RAC is the company with which Republic has signed a
letter of intent to sell its primary assets.

RAC's new equity partner is Hunt Investment Co., L.P. of Dallas,
Texas. Republic's bank group is agented by Fleet Capital, J.P.
Morgan Chase and Bank of America. RAC's agreement in principle
for financing with the bank group also extends financing for
Republic to permit the sale to RAC to be completed. RAC now has
concluded significant agreements concerning the transaction with
Republic, Republic's bank group and Republic's hourly employees
as represented by the United Steelworkers of America. These
agreements will clear the way for the completion of the
bankruptcy process and the sale of the company's primary assets.

"As we had expected, KPS Special Situations Fund was able to
secure a replacement investment partner to proceed with its
acquisition," said

Joseph F. Lapinsky, Republic's president and chief executive
officer. "This again demonstrates the value that exists in
Republic's business.  The agreement in principle on new
financing is an important step in Republic's effort to emerge
from Chapter 11 stronger than ever.  This will facilitate the
business plan developed by RAC, which represents the best course
for serving our creditors and customers, saving jobs, protecting
our suppliers and benefiting the communities where Republic
operates."

The U.S. Bankruptcy Court in Akron, Ohio, has set a tentative
date of Tuesday, May 21 for a status conference on the sale.

According to the letter of intent signed by RAC and Republic,
the transaction is valued at significantly in excess of $450
million. RAC will operate the facilities it expects to acquire
under a newly negotiated contract with the United Steelworkers
of America.  The agreement between RAC and the USWA is credited
with facilitating the transaction.

RAC expects to operate Republic's primary steelmaking facilities
in Canton and Lorain, Ohio, as well as many of its other
facilities. In all, the investors propose hiring approximately
2,500 of Republic's nearly 4,000 employees.

Hunt Investment Co., L.P., is operated by the Ray L. Hunt family
of Dallas, which has interests in oil and gas exploration and
production, real estate development, electric power, ranching,
agriculture and private investing.

KPS Special Situations Fund, L.P. -- http://www.kpsfund.com--  
is a $210 million private equity fund focused on constructive
investing in turnarounds, restructurings, bankruptcies and other
special situations. Based in New York, KPS seeks to realize
significant capital appreciation by making controlling equity
investments in companies engaged in manufacturing,
transportation and service industries challenged by the need to
effect immediate change.  This transaction would be the fourth
bankruptcy-related acquisition completed by KPS in two years.

Republic Technologies International, based in Fairlawn, Ohio, is
the nation's largest producer of high-quality steel bars. With
nearly 4,000 employees and 2001 sales of approximately $1
billion, Republic was included in Forbes magazine's 2001 and
2000 lists of the largest U.S. private companies. Republic has
plants in Canton, Massillon, and Lorain, Ohio; Beaver Falls,
Pa.; Chicago and Harvey, Ill.; Gary, Ind.; Lackawanna, N.Y.;
Cartersville, Ga.; and Hamilton, Ont. The company's products are
used in demanding applications in the automotive, agricultural,
aerospace, off-highway, industrial machinery and energy
industries.


SPECTRASITE: S&P Junks Corp. Credit Rating After Tender Offer
-------------------------------------------------------------
The corporate credit rating on SpectraSite Holdings Inc. was
lowered to 'CC' from 'B', the senior secured bank loan rating
was lowered to 'CC' from 'B+', and the senior unsecured debt
rating was lowered to 'C' from 'CCC+' on May 17, 2002, following
the company's announced debt tender offer to repurchase portions
of five of its senior unsecured note issues at an average
discount to current accreted value of about 65%. Outlook is
negative.

At that time, the corporate credit rating and the five senior
unsecured note issues affected under the tender offer were
placed on CreditWatch with negative implications, and the senior
secured bank loan and the rating on the company's 6.75% senior
convertible notes were placed on CreditWatch with developing
implications.

The maximum principal amount SpectraSite is seeking under its
tender offer, assuming investors sell at the low end of the
price range offered by the company, is about $960 million at the
current accreted value, representing 66% of total accreted value
of these issues.

Standard & Poor's views the debt transaction as a distressed
exchange because of the magnitude of the targeted debt tender
combined with the company's highly leveraged capital structure
and uncertain business prospects in its tower and network
services businesses. Therefore, the corporate credit rating will
be lowered to 'SD' and the affected senior unsecured debt issues
will be lowered to 'D' on completion of the transaction.

Subsequent to the completion of the exchange, Standard & Poor's
will reassign a corporate credit rating based on its evaluation
of SpectraSite's business plan for the next few years and the
company's prospective capital structure.

The 6.75% senior convertible notes and secured bank loan ratings
are on CreditWatch with developing implications to reflect the
fact that these ratings could be raised once the corporate
credit rating is re-rated.

Ratings List                                       To      From

     Ratings Lowered and Placed on CreditWatch Negative

* Corporate credit rating                         CC        B

* Five senior unsecured note issues               C        CCC+

     Ratings Lowered and Placed on CreditWatch Developing

* Senior secured bank loan                        CC       B+

* 6.75% senior convertible notes                  C       CCC+

DebtTraders reports that Spectrasite Holdings Inc.'s 12.875%
bonds due 2010 (SITE5) are quoted at a price of 25.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=SITE5for  
real-time bond pricing.


SUCCESSORIES: Obtains Waiver of FY 2001 Loan Covenant Violations
----------------------------------------------------------------
Successories (Nasdaq:SCES) reported a net loss of $10,804,000
for its fiscal year 2001 which ended February 2, 2002. In fiscal
2000, the Company reported net income of $430,000 and fully
diluted earnings per common share of $0.03.

Reduced sales, which declined 20.6% from those reported for the
prior year, and the current year's lower gross profit percentage
from product sales of 50.1% as compared to last year's 54.4%,
resulted in a decrease in gross margin of $8,039,000 or 26.5%
below fiscal 2000.

Sales, which were negatively impacted by a weak economy and the
events of September 11, 2001, declined in all segments; 18.4% in
direct marketing, 17.4% in Company-owned retail stores, 35% in
sales to franchisees, and 44.9% in other segments.

Gary J. Rovansek, President and Chief Executive Officer,
commented, "Our sales results were disappointing across all
segments. The economic downturn and events of September 11,
2001, significantly impacted our performance. Even direct
marketing which had experienced consecutive years of double-
digit growth reflected a decrease in sales of 18%. While we took
steps to improve the productivity of the catalogs, our
customers, mid to large size businesses, remained cautious with
their spending."

The 4.3 percentage point reduction in gross profit was primarily
attributable to changes in product sales mix, increased
promotional selling and higher costs per unit associated with a
decrease in units produced as compared to the prior year.

Total operating expenses of $27,671,000 were $172,000 below the
prior year's $27,843,000. The current year's operating expenses
included $681,000 of Company-owned retail stores non cash asset
write-offs and write-downs, $576,000 of expenses associated with
payment delinquencies and defaults by three of its franchisees,
a $161,000 non recurring asset write-off due to discontinuance
of a system enhancement project no longer warranted on account
of lower distribution volume, and $146,000 of other expenses not
considered recurring in nature.

The impact of lower sales volume and a reduced gross profit
percentage resulted in a loss from operations of ($5,411,000) in
the current fiscal year as compared to last year's operating
income of $2,456,000.

Mr. Rovansek continued, "We implemented several initiatives
during the course of the year to reduce expenses, most notably a
17 percent headcount reduction in the corporate headquarter
staff in August 2001. These initiatives only stemmed our loss
and could not overcome the impact of the economic downturn."

Fiscal 2001's total interest expense of $269,000 represents an
improvement of $1,113,000 compared to the prior year. Cash and
non cash interest expenses were substantially less than last
year benefiting from the payoff of term and fixed rate debt in
the first quarter 2001 made possible by the Company's September
2000 Common Stock Rights Offering.

A non cash income tax expense of $4,873,000 was recorded in
fiscal 2001. The charge fully reserves the Company's deferred
tax asset recognizing the reduced likelihood that benefits
associated with future tax savings from utilization of the net
operating loss carryforward will be realized. The Company's net
operating loss carryforwards do not begin to expire until 2010
and will not fully expire until 2022. Any actual tax savings
from utilization of the net operating loss carryforward will be
recorded in future years if and when realized.

The Company has obtained a waiver of fiscal 2001 financial
covenant violations from its lender, The Provident Bank. In
addition, the Company and Provident Bank have reached an
agreement in principal which will allow continued access to its
credit facility through May 31, 2003. The revised agreement
will, on a going forward basis, provide relaxed financial
covenants, modified advance rates, and reduced loan limits.
Based upon current operating forecasts the revised agreement
will provide equal or greater borrowing capabilities than the
existing agreement.

Mr. Rovansek added, "We are very pleased to continue our
relationship with Provident Bank and appreciate their continued
confidence in the Company."

Due to the continuing soft economic climate and the substantial
loss sustained in fiscal 2001, the Company retained the
professional services of Duff & Phelps, LLC, an investment
banking and financial advisory firm. Duff & Phelps is assisting
the Company in identifying, assessing and pursuing strategic
alternatives. No assurance can be given that a strategic
alternative shall be effected.

"The retention of Duff & Phelps reinforces our commitment to
maximize shareholders' value," stated Mr. Rovansek.

The Company will continue its primary focus on sales growth in
the direct marketing channel and support of its current
franchisees. In the process of reviewing its strategic options,
the Company has decided to take immediate steps to close all of
its 100% owned retail stores. The Company-owned retail stores
segment reported a loss of $1,936,000 on sales of $9,403,000 for
fiscal 2001 and the Company anticipates future losses.

At the end of the first quarter in fiscal 2002, the Company
discontinued contract-framing services for third party products.
This segment of the Company's operations accounted for a loss of
$79,000 on $873,000 of net sales in fiscal 2001. Any future
contract-framing services will be limited primarily to large,
multiple unit production runs.

In a further step to reduce expenses, on May 10, 2002, the
Company eliminated 27 positions at its Aurora facility. This
reduction in force represents annualized savings of
approximately $1.1 million and a net cash savings over the
balance of the current fiscal year of $750,000.

Successories, Inc. designs, manufactures, and markets a diverse
range of motivational and self-improvement products, many of
which are the Company's own proprietary designs, for business
and for personal motivation. The Company's products are sold via
the millions of catalogs it mails each year and through a
network of over 55 retail franchise and company-owned stores.
Additionally, the Company's products may be purchased online via
its Web site at http://www.successories.com


TRICO STEEL: Court Extends Lease Decision Period thru Sept. 23
--------------------------------------------------------------
Trico Steel Company LLC won approval from the U.S. Bankruptcy
Court for the District of Delaware to extend its lease decision
period.  The Debtor has until September 23, 2002 to elect
whether to assume, assume and assign, or reject its unexpired
nonresidential real property leases.

Trico Steel Company, LLC filed for chapter 11 protection on
March 27, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Edward J. Kosmowski, Esq. and Michael R. Nestor, Esq.
at Young Conaway Stargatt & Taylor represent the Debtor in its
restructuring effort.


TRICORD SYSTEMS: Receives Additional Nasdaq Noncompliance Notice
----------------------------------------------------------------
Tricord Systems, Inc. (Nasdaq:TRCD) received an additional
notice of non-compliance from Nasdaq. This notice indicated that
the company is no longer in compliance with the requirement to
sustain a minimum level of net income, stockholders equity, net
tangible assets or market capitalization. Tricord had previously
received a notice of non-compliance with respect to the $1.00
minimum bid requirement.

"As we indicated in our last 10-Q, we anticipated receiving this
additional notice of non-compliance," said Keith Thorndyke,
president and CEO. "We believe that continued listing on Nasdaq
is an important element of our goal of providing value to our
stockholders, and we therefore intend to take actions to attempt
to maintain our listing."

Thorndyke did caution, however, that there can be no assurance
that Tricord will be successful in its efforts to satisfy
Nasdaq's continued listing requirements. If Tricord is
ultimately unsuccessful in these efforts, its common stock would
be subject to delisting, although any such delisting would
likely not occur before September of this year. Any such
delisting, however, would have a material adverse effect on
Tricord as outlined in Tricord's recent SEC filings.

Tricord's Illumina(TM) software consists of a revolutionary
distributed file system and management technology that clusters
multiple server appliances into a single resource. Because
multiple appliances in a cluster are managed as one entity, many
of the tasks associated with managing and growing storage
systems are eliminated. Illumina-enabled appliances are
literally plug-and-play, offering seamless growth and continuous
access to content with no downtime. As the number of appliances
grows, performance and throughput scale along with capacity.
This is achieved without expensive system administration or
downtime due to the ability of the appliances to operate as a
single unit.

Tricord Systems, Inc. designs, develops and markets clustered
server appliances and software for content-intensive
applications. The core of Tricord's revolutionary new technology
is its patented Illumina(TM) software that aggregates multiple
appliances into a cluster, managed as a single resource.
Radically easy to deploy, manage and grow, Tricord's products
allow users to add capacity to a cluster with minimal
administration. Appliances are literally plug-and-play, offering
seamless growth and continuous access to content with no
downtime. The technology is currently designed for applications
including general file serving, virtual workplace solutions,
digital imaging, and security. Tricord is based in Minneapolis,
MN with offices in Colorado, California and Georgia. For more
information, visit http://www.tricord.com


US STEEL: S&P Affirms BB Ratings As Industry Conditions Improve
---------------------------------------------------------------
On May 17, 2002, Standard & Poor's affirmed its double-'B'
corporate credit and senior unsecured debt ratings on United
States Steel Corp. and removed them from CreditWatch with
negative implications. The ratings had been placed on
CreditWatch following the company's announcement on Jan. 17,
2002, that it entered into an option agreement to acquire NKK's
ownership in National Steel (approximately 53% of National
Steel's outstanding shares) and that USS would seek other
opportunities to consolidate the U.S. steel industry. The
Pittsburgh, Pennsylvania-based integrated steel producer
currently has about $2 billion of total debt (including
operating leases).

The actions reflected the meaningful turnaround expected in the
company's earnings performance, as a result of improving steel
industry conditions in the U.S. following the government's
recent implementation of import tariffs under section 201. The
affirmation also reflected management's commitment to
maintaining a moderate financial profile, evidenced by its
recent $192 million sale of common equity. In addition,
uncertainty regarding funding for USS's plan to consolidate the
U.S. steel industry has been removed, as USS is no longer
expected to engage in a broad consolidation. USS abandoned the
consolidation plan because efforts to obtain relief from the
industry's burdensome retiree medical and pension costs have
been unsuccessful. Rather USS has announced that it will attempt
to purchase select value-added assets. Although the company has
announced that it is considering making additional investments
in Central European operations, Standard & Poor's expects that
management will take actions to preserve its liquidity and fund
growth in a similar fashion to that of its November 2000 Kosice
acquisition in the Slovak Republic, which was mostly financed
with nonrecourse debt or use proceeds from divestitures of
noncore assets.

The ratings on USS reflect the difficult prospects the company
faces as a large, integrated steelmaker and its fair liquidity
position. The company participates in mature, volatile markets
that are subject to cyclical economic swings, overcapacity,
imports, and encroachment by efficient minimills. USS is the
largest U.S. integrated steelmaker with approximately 12.8
million tons of steelmaking capacity. USS has another five
million tons at USSK. The company benefits from a product mix
that is more diverse and higher-value-added than its
competitors. However, USS's operations have a high degree of
operating leverage and require high capacity utilization rates
to generate earnings. Due to difficult steel industry
conditions, including excess supply from the flood of imports
and weakened demand due to the recession, USS generated
significant losses during the past 12 months ended March 31,
2002. Nevertheless, with imports abating following section 201,
capacity reductions, and the economy and demand strengthening,
U.S. steel sheet prices have risen $100 per ton and USS's
capacity utilization rate has climbed above 90% from about 68%
in the quarter ended December 31, 2001. USS is well positioned
to realize a strong improvement in its average selling price, as
approximately 60% of its sheet sales are to the spot market.
Still, there are several factors that could threaten the USS's
performance. The re-emergence of bankrupt steel companies with
healthier balance sheets and the possible re-entry of steel
imports if domestic prices climb too high, could disrupt markets
and prices.

USSK has also seen a similar trend in its capacity utilization
rate and has also realized some moderate selling price
increases. USSK's operating costs are much lower than the
company's U.S.-based facilities, mainly due to its low labor
costs but its product mix is less value-added, consisting mostly
of commodity hot-rolled sheet. Management has increased spending
there to reduce costs and increase its value-added production,
which should enhance its margins.

USS also produces tubular products for the oil and gas
industries. This segment was barely profitable in the first
quarter ended March 31, 2002, generating $2 million in operating
income. Shipments and selling prices of tubular products remain
depressed, due to a decline in North American oil and gas
drilling activity and a continuing surge of imports. These
products were not included in the section 201 action. As a
result, this segment will remain weak until drilling activity
rebounds.

Although USS incurred $83 million net loss for the quarter ended
March 31, 2002, benefits from higher steel sheet prices and
utilization rates, along with lower energy costs and savings
from cost cutting initiatives, should enable the company to
return to profitability for the year 2002. USS's liquidity
rapidly declined from $705 million in December 2001 to $496
million at March 31, 2002, as a result of significant losses and
its high operating leverage. Liquidity will be bolstered by
proceeds from the company's equity offering and expected
increases in availability under its revolving credit facilities,
which are subject to accounts receivables and inventory levels.
The company also could dispose of some of its noncore assets to
provide additional liquidity for growth or to reduce debt. USS
is the only U.S. integrated producer that benefits from a
pension plan that is overfunded (by approximately $1.2 billion)
and does not require any near-term pension funding. Debt
maturities are also manageable, as 89% of its debt matures after
2007.

USS's financial flexibility is a key rating factor, as the
company's operations are so capital-intensive and can experience
heavy drains to its cash flows during weak markets. Although the
company is benefiting from an upturn, Standard & Poor's expects
USS to generate negative free cash flow primarily due to working
capital growth. However, Standard & Poor's does expect USS to
return to positive free cash flow in 2003. USS will also have to
pay additional $75 million to complete its purchase of USSK,
$37.5 million in both 2002 and in 2003. In addition, USS needs
to provide some collateral (mostly through letters of credit)
for its surety bonds to remain in place, which will likely
reduce availability under its revolving credit facility. Despite
these payouts, USS's liquidity is expected to remain in excess
of $600 million throughout the year.

                            Outlook

Over the near term, improved steel industry conditions, a better
cost profile, and profitability should enable the company to
attain financial measures appropriate for its ratings level. The
company's liquidity position also provides some support.
However, Standard & Poor's remains concerned about the prospects
for improved market conditions over the long term.

                         Ratings List:

               United States Steel Corp. Ratings

                  * Corporate credit rating BB

                  * Senior unsecured debt BB


USG: Court Okays Kinsella Communications as Notice Consultants
--------------------------------------------------------------
Paul N. Heath, Esq. at Richards, Layton & Finger, explains that,
in order to establish an Asbestos-Related Notice Program, the
services of Kinsella Communications, Ltd. as asbestos claimant
notice consultant are necessary in USG Corporation's Chapter 11
cases. Judge Newsome approved this application.

Kinsella can potentially design the Personal Injury Notice
Program and implement media buys and placements as required by
the Debtors for the Property Damage Notice Program and any
potential Personal Injury Notice Program. Mr. Heath states that
the large-scale notification process involved requires expertise
and experience related to negotiation, design and preparation of
notice materials for publication.

As a leading advertising and notification consulting firm that
specializes in the design and implementation of class action and
bankruptcy notification programs to reach unknown putative
claimants. Kinsella has developed and directed large and complex
notification programs and consulted on such cases involving
Johns Manville Corp., Celotex, Dow Corning, Armstrong World
Industries and W.R. Grace, among others.

The notification services with respect to the Personal Injury
Notice program may include:

    (a) developing and implementing a comprehensive notification
        plan of the Debtors' bar date with recommendations for
        materials and media distribution;

    (b) creating all necessary and relevant notice materials,
        including print and television advertisements;

    (c) implementing media buys and placement;

    (d) executing an affidavit or other documentation and
        testimony as required by the Court and/or requested by
        the Debtors describing the notification services
        provided;

    (e) providing a summary and analysis of the notification
        activities and media placements as required by the
        Debtors, and;

    (f) performing all other asbestos claimant notification
        consultant services that may be necessary  or
        appropriate in connection with the Personal Injury
        Notice Program.

Notification services for the Property Damage Notice Program
will likely involve implementing media buys and placements and
providing a summary and analysis of the notification activities
and media placements as the Debtors require.

Kinsella will receive its standard 15% commission rate, plus
reimbursement for actual, necessary expenses and any other
incurred charges.

Mr. Heath relates to Judge Newsome that the Debtors request that
Kinsella be excused from the established professional
compensation procedures and that the Debtors be permitted to pay
Kinsella for its services without further Court order.

To the best of the Debtors' knowledge, information and belief,
Kinsella has no connection with the Debtors, their creditors or
the U.S. Trustee. Kinsella's client contacts were researched to
determine any potential conflicts of interest. Despite these
efforts, Kinsella is unable to state with certainty that every
client representation or other connection has been disclosed. if
Kinsella discovers any additional information pertinent to these
Chapter 11 cases, Kinsella will file a supplemental Court
disclosure. (USG Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


VELOCITY EXPRESS: Says Cash Flow Ample to Fund Operating Needs
--------------------------------------------------------------
On December 18, 2001, United Shipping & Technology, Inc.
reincorporated in Delaware through a merger with and into its
wholly-owned Delaware subsidiary, Velocity Express Corporation.
The merger was effective as of January 4, 2002 at which time
United Shipping & Technology, Inc. ceased to exist as a separate
corporate entity, and all of its assets and liabilities became
the assets and liabilities of Velocity Express Corporation. The
name of the Company was changed to Velocity Express Corporation.

In the third quarter of fiscal 2002, Velocity Express reported
income from operations of $0.6 million as compared to a loss
from operations of $10.2 million in the third quarter of fiscal
2001, an improvement of $10.8 million. Furthermore, the Company
reported positive EBITDA of $1.7 million as compared to negative
EBITDA of $2.9 million in the third quarter of fiscal 2001, an
improvement of $4.6 million, and cash net income of $1.0 million
as compared to cash net loss of $4.2 million in the third
quarter of fiscal 2001, an improvement of $5.2 million.

For the nine months ended March 30, 2002, the Company reported
income from operations of $0.2 million as compared to a loss
from operations of $21.8 million for the same period in fiscal
2001. The Company also reported positive EBITDA of $4.9 million
as compared to negative EBITDA of $8.5 million for the same
period in fiscal 2001, and cash net income for the first nine
months of fiscal 2002 of $2.3 million as compared to cash net
loss of $12.9 million in the same period last year, an
improvement of $15.2 million.

The net loss for the quarter ended March 30, 2002 was $0.2
million, compared with $11.5 million for the same period in
fiscal 2001, an improvement of $11.3 million, or 99.1%.

The net loss for the nine months ended March 30, 2002 was $11.4
million, compared with $26.7 million for the same period in
fiscal 2001, an improvement of $15.3 million, or 57.3%. Had the
effect of one-time non-cash interest charges of $9.7 million
been excluded, net loss for the nine months ended March 30, 2002
would have been $1.7 million, compared with $26.7 million for
the same period in fiscal 2001, which would have been an
improvement of $25.0 million.

The Company's operating plan includes the continued
implementation and consolidation activities it had initiated in
fiscal 2001 to further improve the operating performance of the
Company. In fiscal 2002, the Company also implemented additional
initiatives to further reduce direct and SG&A expenses.
During April 2002, the Company completed the private placement
of its Series G Convertible Preferred Stock, through which it
raised approximately $4.5 million. Proceeds from the Series G
offering will primarily be used to fund the Company's technology
initiatives. Going forward, the Company believes cash flows from
operations and the equity raised via the private placement of
the Series G offering will be sufficient to fund its operating
needs. If the Company's growth strategy requires additional
funding, the Company will continue to secure, if necessary,
additional financing from its lenders or through the issuance of
additional equity; however, there can be no assurance that such
funding can be obtained.


WILLIAMS COMMUNICATIONS: Proposes Uniform Compensation Protocol
---------------------------------------------------------------
Williams Communications Group, Inc., and its debtor-affiliates
ask the Court to establish procedures for monthly compensation
and reimbursement of expenses for professionals paid by the
Debtors in the Chapter 11 cases.

The Debtors propose that, except as otherwise provided in an
order of the Court authorizing the retention of a particular
professional, the Professionals be permitted to seek monthly
payment of compensation and reimbursement of expenses in
accordance with these procedures:

A. On or before the 20th day of each month following the month
   for which compensation is sought, each professional seeking
   compensation under these procedures will serve a monthly
   statement, by hand or overnight delivery on

  a. Williams Communications Group, Inc., One Technology Center,
     TC 15L, Tulsa, OK 74103 (Attn: Donald Hellwege, Esq.);

  b. Jones, Day, Reavis & Pogue, counsel for the Debtors, 222
     East 41st Street, New York, New York 10017 (Attn: Erica M.
     Ryland, Esq.);

  c. Kirkland & Ellis, counsel to the Official Creditors'
     Committee, 777 South Figueroa Street, Los Angeles, CA 90017
     (Attn: Richard L. Wynne, Esq.);

  d. The Office Of The United States Trustee for the Southern
     District of New York, 33 Whitehall Street, 21st Floor, New
     York, New York l0004 (Attn: Pamela Lustrin, Esq.); and

  e. Clifford Chance Rogers & Wells, counsel to the Agent for
     the Debtors' prepetition secured lenders, 200 Park Avenue,
     New York, New York 10166 (Attn: Margot B. Schonholtz,
     Esq.);

B. The monthly statement need not be filed with the Court and a
   courtesy copy need not be delivered to the presiding judge's
   chambers since these procedures are not intended to alter the
   fee application requirements outlined in Sections 330 and 331
   of the Bankruptcy Code and since professionals are still
   required to serve and file interim and final applications for
   approval of fees and expenses in accordance with the relevant
   provisions of the Bankruptcy Code, the Federal Rules of
   Bankruptcy Procedure and in compliance with the Local
   Bankruptcy Rules for the Southern District of New York;

C. Each monthly fee statement will contain:

  a. a list of the individuals who provided services during the
     statement period;

  b. their respective titles (e.g. attorney, accountant, or
     paralegal);

  c. their respective billing rates;

  d. the aggregate hours spent by each individual;

  e. a reasonably detailed breakdown of the disbursements
     incurred; and

  f. contemporaneously maintained time entries for each
     individual in increments of 1/10 of an hour;

D. Each Notice Party will have at least 15 days after service to
   review the monthly statement;

E. At the expiration of a 35-day period, the Debtors must
   promptly pay 80% of the fees and 100% of the expenses
   identified in each monthly statement to which no objection
   has been served in accordance with paragraph (d);

F. If the Debtors receive an objection to a particular fee
   statement, they may withhold payment of that portion of the
   fee statement to which the objection is directed and promptly
   pay the remainder of the fees and disbursements in certain
   percentages;

G. If the parties to an objection are able to resolve their
   dispute following the service of the Notice of Objection to
   Fee Statement, and if the party whose statement was objected
   to serves all of the Notice Parties with a statement
   indicating that the objection is withdrawn and describing in
   detail the terms of the resolution, then the Debtors must
   promptly pay that portion of the fee statement which is no
   longer subject to an objection;

H. All objections not resolved by the parties will be presented
   to the Court at the next interim or final fee application
   hearing to be heard by the Court in accordance with paragraph
   (j) below;

I. The service of an objection in accordance with paragraph (d)
   will not prejudice the objecting party's right to object to
   any fee application made to the Court in accordance with the
   Bankruptcy Code on any ground whether raised in the objection
   or not. Furthermore, the decision by any party not to object
   to a fee statement will not be a waiver of any kind or
   prejudice that party's right to object to any fee
   applications subsequently made to the Court in accordance
   with the Bankruptcy Code;

J. Pursuant to Sections 330 and 331 of the Bankruptcy Code,
   approximately every 120 days, but no more than every 150
   days, each of the professionals must serve and file with the
   Court an application for interim or final Court approval and
   allowance of the compensation and reimbursement of expenses
   requested;

K. Any professional who fails to file an application seeking
   approval of compensation and expenses previously paid under
   this motion when due:

  a. will be ineligible to receive further monthly payment of
     fees or expenses as provided herein until further order of
     the Court and

  b. may be required to disgorge any fees paid since retention
     or the last fee application, whichever is later;

L. The pendency of an application or a court order that payment
   of compensation or reimbursement of expenses was improper as
   to a particular statement will not disqualify a professional
   from the future payment of compensation or reimbursement of
   expenses as set forth above, unless otherwise ordered by this
   Court;

M. Neither the payment of, nor the failure to pay, in whole or
   in part, monthly compensation and reimbursement as provided
   herein will have any effect on this Court's interim or final
   allowance of compensation and reimbursement of expenses of
   any professionals;

N. Counsel for any official committee(s) appointed in these
   cases are required to use these Compensation Procedures and
   must, in accordance with the Compensation Procedures, collect
   and submit statements of expenses, with supporting vouchers,
   from members of any such committee(s) counsel represents;
   provided, however, that the committee counsel ensures that
   these reimbursement requests comply with the Court's
   Administrative Orders dated June 24, 1991 and April 21, 1995.

The Debtors also propose that each professional may submit its
first monthly statement pursuant to this Motion on or after June
1, 2002.  Any party may object to requests for payments made
pursuant to this Motion on the grounds that the Debtors have not
timely filed their monthly operating reports or remained current
with the payment of administrative expenses and fees payable
pursuant to 28 U.S.C. Section 1930.

Ms. Ball tells the Court that the implementation of the
Compensation Procedures is justified because multiple
Professionals will be involved in these cases, and, absent
streamlined compensation procedures, the professional fee
application and review process could be exceptionally burdensome
on the Debtors, the Professionals, the Court, and other parties.
By contrast, under the Compensation Procedures, the mechanism
for payment of professional fees will be simplified and will
avoid unnecessary Court involvement.

Furthermore, by encouraging the submission of monthly
statements, Ms. Ball submits that the Compensation Procedures
will enable the Debtors and other key parties to more closely
monitor the levels of professional fees incurred in these cases.
In addition, monthly statements will allow the Debtors to more
accurately predict and manage their monthly cash expenditures.
(Williams Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


WORLDCOM: S&P Cuts Ratings on 4 Related Synthetic Deals to BB
-------------------------------------------------------------
Standard & Poor's lowered its ratings on four synthetic
securities related to WorldCom Inc. to double-'B' from triple-
'B'. At the same time, the ratings remain on CreditWatch with
negative implications, where they were placed on April 17, 2002.

The lowered ratings reflect the May 10, 2002 downgrade of
WorldCom's long-term corporate credit and senior unsecured debt
ratings.

These synthetic securities are weak-linked to their underlying
collateral, WorldCom debt. The lowered ratings on the synthetic
transactions reflect the credit quality of the underlying
securities issued by WorldCom.

     Ratings Lowered And Remain On Creditwatch Negative

     Corporate Backed Trust Certificates, Series 2001-17 Trust
          $25.000 million corporate-backed trust certs

                              Rating
               Class     To              From
               A-1       BB/Watch Neg    BBB/Watch Neg

               PreferredPLUS Trust Series WCM-1
        $80.703 million corporate bond-backed trust certs

                              Rating
               Class    To               From
               Certs    BB/Watch Neg     BBB/Watch Neg

               CorTS Trust For WorldCom Notes
        $57.156 million corporate backed trust securities

                              Rating
               Class    To               From
               Certs    BB/Watch Neg     BBB/Watch Neg

                    SATURNS Trust No. 2001-5
          $26.023 million debenture-backed securities

                              Rating
               Class    To               From
               Units    BB/Watch Neg     BBB/Watch Neg

Worldcom Inc.'s 8.25% bonds due 2031 (WCOM31USN1), DebtTraders
reports, are quoted at a price of 40. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM31USN1
for real-time bond pricing.


WYNDHAM INT'L: S&P Rates Proposed $750 Million Debentures at B-
---------------------------------------------------------------
On May 17, 2002, Standard & Poor's assigned its 'B-' rating to
upscale hotel owner/operator Wyndham International Inc.'s
proposed $750 million senior secured debentures due 2008. These
securities are expected to be privately placed under Rule 144A.
Debenture proceeds will be used to pay off a portion of
Wyndham's debt outstanding under its credit facility. At the
same time, Standard & Poor's assigned a 'B-' rating to Dallas,
Texas-based Wyndham's credit facility due 2006. In addition,
Standard & Poor's assigned its 'B' corporate credit rating to
the company. Outlook is stable.

The ratings reflect Wyndham's very high debt leverage for its
rating, and expectations for limited discretionary cash flows
available to reduce debt in the intermediate term. The ratings
further incorporate the company's geographically diverse and
good quality portfolio of upscale hotels and resorts.

Wyndham is a hotel owner, operator, and franchisor of upscale
and luxury hotels and resorts. The company has grown rapidly
from 20 hotels in 1995 to 220 hotels at the end of the first
quarter 2002, representing around 57,000 rooms. Wyndham
currently owns three brands: Wyndham Hotel & Resorts, Wyndham
Luxury Resorts, and Summerfield Suites by Wyndham. Its portfolio
consists of 158 core proprietary-branded hotels and 62
nonproprietary-branded hotels. Although its portfolio has good
geographic diversity, there is some concentration in Florida,
which represents 12% of its total owned hotels; California, 11%;
and Texas, 11%.

Wyndham's hotels compete in the upscale and upper-upscale price
segment of the lodging market. These price segments have been
hardest hit by the decline in lodging demand following the
terrorist attacks on September 11 and the soft economy. Even
though Wyndham has a good, high quality brand, it is still
smaller and less recognized than many of its competing brands in
the upper-upscale price segment. In addition, Wyndham has less
brand and price-segment diversity than many of its peers such as
Marriott, Hilton and Starwood. Wyndham's portfolio includes 55
owned and leased hotels under various hotel brands such as
Marriott, Doubletree, Hilton, and Crowne Plaza.

Since 1999, Wyndham has been focusing on rebranding its hotels,
selling its noncore assets, and using proceeds for debt
reduction. However, the operating environment declined in the
first half of 2001 as the economy slowed, and the events of
September 11 had a significant impact on the industry in the
last few months of the year. The lodging environment is expected
to remain challenging in 2002. As a result, Wyndham experienced
much weaker credit measures and difficulty in selling assets.
Progress from this more leveraged level is expected to be
measured over the medium term.

In January 2002, Wyndham received a second amendment to its
credit facility, resulting in greater financial flexibility. In
May 2002, the company also received a third amendment to its
credit facility, which included a maturity extension to 2006,
changes to the structure of the credit facility, and allocation
of payments. Also, certain amendment changes will become
effective in conjunction with the successful issuance of the
proposed $750 million senior secured notes due 2008. These notes
will be secured by a pledge of $140 million intercompany notes
from each of the subsidiaries that acts as guarantor under the
company's bank facility. However, the credit facility will have
a priority claim on proceeds from asset sales, and in a default
scenario, all collateral claims will be shared pro rata and the
lenders of the credit facility will have authoritative power.
Both the credit facility and the senior secured notes are
notched one level below Wyndham's corporate credit rating, due
to sizeable amounts of priority debt that currently exist in its
capital structure.

                           Outlook

The stable outlook assumes successful issuance of the senior
secured notes and expectations that the company's credit
measures will recover to levels more consistent with its current
rating as lodging demand improves and the company progresses on
its asset sale program.

                          Financials

At the end of 2001, Wyndham's operating lease-adjusted debt
leverage was very high, in the 8.5 times area, and interest
coverage was around 1.3x. Due to expectations for limited
discretionary cash flow available to reduce debt in the
intermediate term, debt leverage levels are expected to remain
high with improvement, as EBITDA recovers along with the market
and the company sells assets. The successful issuance of the
$750 million of senior secured notes will alleviate the
company's intermediate-term maturity profile. Pro forma for the
note issuance, Wyndham will have around $100 million in cash and
adequate availability under its revolver.
           
                         Ratings List

               * Corporate credit B/Stable/--
     
               * Senior secured debt B-


ZIFF DAVIS: Expects to Reach Debt Workout Pact Middle of June
-------------------------------------------------------------
Ziff Davis Media Inc., reported operating results for the first
quarter ended March 31, 2002 for Ziff Davis Publishing Inc. its
established business segment and principal restricted subsidiary
and for Ziff Davis Development Inc. and Ziff Davis Internet Inc.
its developing business segment and unrestricted subsidiaries.
Ziff Davis Publishing Inc. reported earnings before interest
expense, provision for income taxes, depreciation, amortization
and restructuring charges ("EBITDA") of $5.1 million for the
quarter ended March 31, 2002 a decrease of 53.2% compared to the
$10.9 million of EBITDA for the same period last year. However,
the Company beat its previously announced business outlook of
$3.0 to $5.0 million for the first quarter of 2002.

"While the EBITDA is down from last year, our results are ahead
of plan. We are squarely focused on improving the performance of
our businesses by gaining market share and implementing
intelligent cost controls," said Robert F. Callahan, Chairman
and Chief Executive Officer. "Our new management team is doing a
great job of effectively putting this game plan to work.  Recent
operating achievements and the announcement of our debt
restructuring plans two weeks ago are important milestones.  The
technology and advertising marketplace remains tough, with
stingy signs of recovery. However, we are confident that we have
put the Company on the right path to drive meaningful future
revenue and EBITDA growth and deliver value for our customers,
employees and investors."

                    Debt Restructuring Update

On March 14, 2002, Ziff Davis Media entered into an amendment
and forbearance agreement with respect to its Senior Credit
Facility with its existing senior bank lenders that will be in
effect until June 28, 2002.  As part of the previously announced
financial restructuring plan, the Company has initiated
discussions with the lead banks in its Senior Credit Facility to
put a comprehensive long-term amendment in place.  These
discussions and negotiations have been productive and the
Company believes that it will successfully reach an agreement by
mid-June 2002.

     Continued Cost Reduction Program and Restructuring Charge

Reflecting the continued difficult economic climate and weak
magazine advertising marketplace, the Company has decided to
discontinue one of its publications, Ziff Davis SMART BUSINESS,
and reduce its related infrastructure costs.  The Company will
publish a newsletter and Internet version of Ziff Davis SMART
BUSINESS and believes that it can transition successfully and
profitably to these platforms.

"This difficult decision is the result of our continuing need to
focus our resources and investments in assets that will deliver
for our customers and investors over both the short and long-
term.  As we have demonstrated with our successful launches of
CIO Insight, Baseline and Xbox Nation we are prepared and
capable of seeing new market opportunities and capitalizing on
them. We look forward to doing more of the same in the next
months and years ahead," said Mr. Callahan.

As a result of the recent operating and financial restructuring
decisions the Company expects to take a pre-tax restructuring
charge in the range of $15.0 million to $20.0 million in the
second quarter of 2002.    The charge will reflect employee
severance and consolidation costs for certain office locations,
as well as certain transaction costs associated with the
Company's debt restructuring initiatives.

First Quarter Operating Highlights and Milestones

     *  PC Magazine maintained its strong #1 market share
position.

     *  Ziff Davis Media Game Group grew its #1 market share
position within the games category and the group reported a
14.1% increase in advertising pages for the first quarter.

     *  Ziff Davis Media redesigned the print and online
versions of eWEEK and expanded its news and labs-based testing
coverage.

     *  Ziff Davis Media entered into a strategic marketing
relationship with Monster(R), the leading global online careers
site.

     *  Ziff Davis Media continued its innovative circulation
market leadership and entered into an agreement with Zinio
Systems, Inc., a leading developer of digital magazine
technology and services, to create digital versions of PC
Magazine and eWEEK.

     *  CIO Insight continued its record of market share growth
in every quarter since its launch in May 2001 and its first
quarter market share reached 24.4%. CIO Insight and Balanced
Scorecard Collaborative entered into a relationship to produce
research, online seminars and a two-day conference focused on
information technology alignment with business strategy.

     *  Baseline won a 2002 Jesse H. Neal National Business
Journalism Award for best single article for its story "Avon
Products: The Ultimate CRM Machine."

     *  Internet sales continued to grow with over 46% of our
top-50 print advertisers advertising on our websites during the
quarter.

     *  Circulation subscriber gains via the Internet also
continued to grow as online subscribers represent 9% of our
subscribers acquired during the quarter.

                    Business Outlook

The company anticipates that EBITDA (which excludes
restructuring charges) for the quarter ending June 30, 2002 for
Ziff Davis Publishing Inc. will be between $3.0 and $5.0
million, which is comparable to the $3.5 million in EBITDA
reported for the quarterly period ended June 30, 2001.

"The tech advertising market remains difficult and our projected
earnings for the second quarter demonstrate this continued
softness in the magazine business in particular.  However, our
projections also reflect the efficiencies we have achieved from
the expense control and cost reduction programs we have
implemented over the last several quarters.  We will continue to
be vigilant and proactive in this area until we see sustained
evidence that ad pages per issue and page yields are growing,"
said Bart W. Catalane, Chief Operating Officer and CFO.

Ziff Davis Media Inc. -- http://www.ziffdavis.com-- is the  
information authority for buying and using technology. In the
United States, the company publishes 11 industry leading
business and consumer publications: PC Magazine, eWEEK,
Baseline, CIO Insight, The Net Economy, Yahoo! Internet Life,
Electronic Gaming Monthly, Official U.S. PlayStation Magazine,
Computer Gaming World, GameNow, and Xbox Nation. There are 48
foreign editions of Ziff Davis Media's publications distributed
in 78 countries worldwide. In addition to producing companion
sites for its magazines, the Company develops tech enthusiast
sites such as ExtremeTech.com.  It provides custom publishing
and integrated marketing solutions through Ziff Davis Custom
Media; industry analyses through Ziff Davis Market Experts; and
state-of-the-art Internet and technology testing through
eTesting Labs. The company also produces seminars and webcasts.

Ziff Davis' March 31, 2002 consolidated balance sheets show that
the company has a total shareholders' equity deficit of close to
$65 million, almost twice as much as recorded at December 31,
2001.


ZILOG INC: Court-Confirmed Reorganization Plan Is Now Effective
---------------------------------------------------------------
ZiLOG(R), Inc. announced that its Plan of Reorganization as
confirmed by the U.S. Bankruptcy Court in San Jose, Calif., on
April 30, 2002 is now effective.

"This announcement underscores the dramatic improvement that
ZiLOG's management team and employees have made in turning
around the company, despite the difficult business conditions in
the semiconductor industry," said Jim Thorburn, ZiLOG's Chairman
and CEO. "We are a very focused company with a great brand name
and rich heritage of intellectual property and products. We see
significant opportunity for ZiLOG as we deliver our new products
to our customers and generate value for our stakeholders."

The record date for the holders of the Company's $280 million
Senior Notes is May 3, 2002. The Senior Notes will be exchanged
for 28 million shares of common stock and certain interests in
ZiLOG-Mod III, Inc. The exchange is expected to be completed
within 20 days of the effective date of the Plan. By August 9,
2002, the Company will file with the SEC a shelf registration
statement allowing certain of its affiliates to resell their
common stock received in the exchange. For details of this
exchange, please see ZiLOG's Web site at
http://www.zilog.com/about/fs.html  

ZiLOG(R), Inc. designs, manufactures and markets semiconductors
for communications and embedded control markets, providing
leading connectivity, and consumer and industrial control
solutions. Headquartered in San Jose, Calif., ZiLOG employs
approximately 750 people worldwide. ZiLOG maintains design
centers in San Jose, Calif.; Ft. Worth, Texas; Nampa, Idaho;
Seattle, Wash.; and Bangalore, India; manufacturing in Nampa;
and test operations in Manila, Philippines. Visit
http://www.zilog.comfor more information about the company.

                          *********

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provided by DLS Capital Partners in Dallas, Texas.

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Real-time pricing available at http://www.debttraders.com/

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.

                          *********

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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                     *** End of Transmission ***