TCR_Public/990406.MBX T R O U B L E D   C O M P A N Y   R E P O R T E R
     Tuesday, April 6, 1999, Vol. 3, No. 66


AMERICAN RICE: Deloitte & Touche Seeks To Withdraw
AMERICAYA: Major Japanese Shoe Retailer Bankrupt
ANCHOR GLASS: Reaches 3-Year Contract With Largest Union
BIG RIVERS: To Appeal Court Ordered Payment
BUCKEYE BEANS: Files Chapter 7

CORDEX PETROLEUM: Case Summary & 20 Largest Creditors
FLORIDA COAST: Case Summary & 20 Largest Creditors
HEARTLAND: Out of Chapter 11; Changes Name to Nucentrix   
JOTAN INC: Attorney to Committee Approved By Court

LOEWEN GROUP: DCR Lowers Preferred Stock Ratings
MOBILEMEDIA: Receives "Objectors Proposal"
MONTGOMERY WARD: Cost-Cutting Helps Control Losses
MONTGOMERY WARD: Handsome Bonus Awaits CEO
NATIONAL MARKETS: Operator Files Bankruptcy

PARTY CITY: Charged With Misleading Investors
RAINBOW HEALTH: Going Out of Business
SERVICE MERCHANDISE: Deloitte & Touche Approved
SERVICE MERCHANDISE: Jay Alix To Serve As Financial Advisor

SERVICE MERCHANDISE: Skadden, Arps Approved as Counsel
THE PENN TRAFFIC: Posts $93.6 Million Loss
TRITEAL CORP: Files Chapter 11; To Liquidate
U.S. LEATHER: To Go Private
USN COMMUNICATIONS: Judge Approves Sale of Assets

WORLDWIDE DIRECT: Seeks To Employ Crossroads Capital
ZENITH: Bondholders Agree To Prepack Chapter 11

Meetings, Conferences and Seminars

AMERICAN RICE: Deloitte & Touche Seeks To Withdraw
Deloitte & Touche LLP and Deloitte & Touche Consulting
Group LLC filed a motion for authority to withdraw as  
professionals for American Rice, Inc.  On February 18,
1999, four alleged current and former shareholders of ERLY
Industires, Inc. (majority shareholder of debtor) filed a
putative class action asserting that Deloitte & Touche LLP
has committed various violations of the Securitites and
Exchange Act, specifically, "falsely representing that
Erly's financial statements were presented in accordance
with GAAP, in connection with ERLY's failutre to disclose
the existence of certain lallegedly material litigation in
its March 31, 1997 financial statements."  While Deloitte &
Touche strongly contests the allegations of the suit, the
firm believes that it would be in the best interests of
both the estate and the firm to withdraw at this time.

AMERICAYA: Major Japanese Shoe Retailer Bankrupt
The Tokyo District Court declared major shoe retailer
Americaya Shoe Co. bankrupt, Tokyo Shoko Research said.
Americaya has incurred about 22.3 billion yen in debts, the
credit research firm said.  Established in 1925, the Tokyo-
based company has nearly 100 stores across the nation, in
addition to subsidiaries in Singapore and Hong Kong.

The company's sales, which peaked at 21 billion yen in
fiscal 1992, fell to 16 billion yen in fiscal 1997.
Its finances have steadily weakened owing to dwindling
sales and substantial stock losses incurred during the
asset-inflated bubble economy of the late 1980s.

The company applied for the district court for bankruptcy
last Wednesday.

ANCHOR GLASS: Reaches 3-Year Contract With Largest Union
Anchor Glass Container Corporation, the nation's third
largest glass manufacturing company, has reached a contract  
agreement with its largest union, the Glass, Molders,
Pottery, Plastics and Allied Workers International Union.  
The union represents 80 percent of the company's 4,500
employees.  Terms of the three-year contract were not  

Chairman and Chief Executive Officer John J. Ghaznavi, who
engineered Anchor's rescue from bankruptcy just two years
ago, said the agreement will allow the company to continue
its modernization and growth in the highly competitive
glass container market.  

Anchor Glass Container Corp. supplies bottles, jars and
other containers to beverage and food producers and
consumer products manufacturers nationwide. Based in Tampa,
Florida, Anchor operates facilities in ten U.S. locations.  
Parent company Consumers Packaging Inc. (Toronto Stock
Exchange: CGC) is a leading international designer and
manufacturer of glass containers.  

BIG RIVERS: To Appeal Court Ordered Payment
The Evansville Courier reports on April 2, 1999 that
Big Rivers Electric Corp. will appeal a ruling by U.S.
Bankruptcy Judge David Stosberg ordering the utility to pay
a $2.1 million fee enhancement to the Louisville lawyer who
served as court-appointed examiner during the utility's
recent bankruptcy proceeding.

Big Rivers' eight directors, in a telephone conference
Tuesday, voted unanimously to appeal Stosberg's order to
the U.S. District Court, said Mike Core, Big Rivers'
general manager. The bankruptcy judge filed his
order Friday.

The utility's attorneys moved Tuesday to file a bond with
the court to cover the money to be paid to examiner Baxter
Shilling plus interest and court costs.

Big Rivers is also seeking a clarification on Stosberg's
order which required the utility to report to Bankruptcy
Judge J. Wendell Roberts, who oversaw the utility's $1.2
billion Chapter 11 filing, on its ability to pay
the  judgment and to cease paying the fees of other
professionals until it obtained  approval from Roberts.

He described Stosberg's often scathing 38-page opinion as
"a disappointment" for Big Rivers and its board. But it
does not jeopardize the settlement reached last year
between the utility and its creditors, he said.

At the request of creditors, the bankruptcy court appointed
Shilling to oversee the arrangement, which included
termination of an expensive long-term coal supply contract
with Green River Coal Co., appeasing aluminum smelters  
which use most of Big Rivers' power and were demanding
lower rates and  repayment of loans to the Rural Utilities

The Big Rivers case, regarded as Kentucky's largest
bankruptcy and one of the 10 largest in the nation, also
involved settling about 75 other related lawsuits.

At Shilling's urging, Roberts scrapped Big Rivers' planned
lease of its generating plants to PacifiCorp, an Oregon-
based utility, and ordered the lease be auctioned.
LG&E Energy Corp. of Louisville won that lease by bidding
$50 million more than PacifiCorp's offer. Shilling said his
efforts as examiner brought more than $147 million in new
value to the Big Rivers estate and that he should  
receive 3 percent of that amount, $4.4 million. Shilling
and his law firm had been paid more than $527,000 in hourly
fees for work on the case.

When an agreement could not be reached, Roberts turned the
matter over to Stosberg for a decision. He awarded Shilling
only half of what he was seeking but, in his opinion,
blistered almost every one connected with the case.

Most of his invective was directed toward the Rural Utility
Service, but Stosberg characterized concern expressed by
the Kentucky Attorney General's office over the impact an
enhancement of Shilling's fee would have on rates paid by
the utility's 90,000 customers as grandstanding.

Granting the entire $4.4 million requested, Stosberg said,
would amount to $48 per customer or $1 a month over four
years. He questioned why the attorney general had not shown
this same level of concern over the more than $16  
million, or $183 per customer, Big Rivers had paid to its
attorneys and other professionals during the bankruptcy and
the year preceding it.

Stosberg criticized the Rural Utility Service's "lemming-
like support" of Big Rivers' planned lease to PacifiCorp.
In opposing Shilling's fee application, the judge said the
agency was biting "the hand of the examiner that fed it at
least another $30 million."

BUCKEYE BEANS: Files Chapter 7
Buckeye Beans and Herbs, Hillyard, Wash., has filed a
chapter 7 petition, with debts of $1 million to $10
million, The Spokesman-Review reported. Buckeye Beans had
received a presidential award as one of the country's most
innovative small businesses, but it has cut product lines
and staff in recent months to try to keep the company,
which produces pastas, dried soups and bean dishes, in
business. Founded in 1983, the company grew rapidly but
began to struggle when it shifted to big producers. In
December 1997, the original owners sold a majority share to
a new group, headed by Spokane businessman George Van
Houten and Caprock, a California investment company. (ABI

CORDEX PETROLEUM: Case Summary & 20 Largest Creditors
Debtor:  Cordex Petroleums Inc.

Type of business: Oil and Gas Exploration and development
and technical services; Port Project Development

Court: District of Colorado

Case No.: 99-12506   Filed: 03/05/99    Chapter: 11

Debtor's Counsel:  
James Markus
Howard R. Tallman
1700 Lincoln Street, Suite 3550
Denver, Colorado 80203

Total Assets:            $235,845 plus contingent claim and
unliquidated interco accounts
Total Liabilities:       $1,763,235
                                                   No. of
                                         Amount    Holders
                                         ------    -------
Fixed, liquidated unsecured debt        $22,299        16
Contingent unsecured debt              $799,289        15
Disputed unsecured debt                 $67,043         3
Unliquidated unsecured debt            $624,604         3          
Unliquidated, disputed, contingent     $250,000         1

No. of shares of common stock         5,830,500         1

20 Largest Unsecured Creditors:

   Name                              Nature         Amount
   ----                              ------         ------
Chilean Franchise Taxes      Last half 1999        $51,000

Cordex Petroleums Inc. Canada       Interco     $8,886,330

Cordex Petroleums Inc. Chile        Interco       $738,754

Dan Gish                         Wage Claim        $48,456

Donna Anderson                   Consulting         $6,607

Dufford & Brown, PC   Professional Services        $17,000

ENAP                          Cutoff Issues       $235,604

EQP                            Office Lease        $36,000

Holme Roberts & Owen              GENER fee       $468,810

Holme Roberts & Owen         Prof. Services        $22,747

HIS Energy                    Drillstem test       $10,525

IICE                       Investor Mailings        $7,422

KPMG Peat Marwick              Audit and Tax       $62,600

Lofh, Shaiman & Jacobs           AWM farmout       $16,400

Marka Ltd.                        Consulting        $5,500

Peter Moss                 Computer Services       $13,097

Standard Geological Services        Analysis        $8,700

Stivers Temporary Personnel    Temp Services        $5,576

Strovest Holdings         Accrued Since 1995      $120,000

Transaction Taxes                                 $380,000

FLORIDA COAST: Case Summary & 20 Largest Creditors
Debtor:  Florida Coast Paper Holding Co., LLC
         600 West Highway 98
         Port St. Joe, Florida 32457

Type of business:

Court: District of Delaware

Case No.: 99-755    Filed: 04/02/99    Chapter: 11

Debtor's Counsel:  

James L. Patton, Jr.
Robert S. Brady
Edwin J. Harron
Young Conaway Stargatt & Taylor LLP
11th Floor, Rodney Square North
PO Box 391
Wilmington, Delaware 19899-0391

Affiliates of the Debtor:
Florida Coast Paper Corporation
Florida Coast Paper Company, LLC
Florida Coast Paper Finance Corporation

20 Largest Unsecured Creditors:

   Name                              Nature         Amount
   ----                              ------         ------
Donald Lufkin & Jenrette     Promissory Note    14,000,000
Tax Collector, Gulf County,            Taxes     5,111,315
Port St. Joe WWTP        Waste Treatment Fee     1,529,753
ABB C-E Power Products                 Trade       736,100
St. Joe Natural Gas                  Utility       296,202
Olicn Chlor Alkali Products            Trade       183,041
Florida Gas Transmission             Utility       131,844
Sunds Defibrator                       Trade       113,106
Nations Bank NA                         Note        78,792
Voith Sulzer Paper                     Trade        63,987
US Filter/Permutit                     Trade        62,338
Scapa Rolls           Trade        54,714
Price Waterhouse LLP      Acct'g. Services        53,810
Hydrochem Industrial Services          Trade        49,617
GE Industrial & Power Systems          Trade      34,364
Star Service Inc.       Trade        30,820
Dept. Of Insurance & State Treasury    Taxes        28,421
Orin CEM, Inc.        Trade        28,390
Foxboro Company        Trade        24,282
Hyster Credit Company       Lessor       23,254

South Suburban Aviation, which owns the Frankfort Airport,
Frankfort, Ill., has filed chapter 11,listing more than
$500,000 in liabilities, according to The Chicago Sun-
Times. The owner filed the bankruptcy to prevent
foreclosure proceedings by the Bank of Homewood, which had
lent the airport $550,000 in 1991. The bank had been
allowing interest-only payments on the note, but it refused
to continue that arrangement when the loan became due last
May. The owners hope the bankruptcy filing will provide
enough time to pay off the debts and find a new owner
who will preserve the 79-acre airport. (ABI 05-Apr-99)

HEARTLAND: Out of Chapter 11; Changes Name to Nucentrix   
Heartland Wireless Communications, Inc., a provider of
wireless broadband network and multichannel subscription
television services at 2.1 GHz to 2.7 GHz, has emerged from
its prenegotiated Chapter 11 proceeding and changed its
corporate name to Nucentrix Broadband Networks, Inc. as of
April 1, 1999. The name change is part of a previously-
announced business restructuring aimed at maximizing
the value of  the company's wireless broadband spectrum by
delivering high-speed Internet  access and other broadband
IP (Internet Protocol) services to medium-sized  businesses
and SOHOs (small offices/home offices).

The completion of the company's previously-announced
financial reorganization leaves Nucentrix with
approximately $28 million in unrestricted cash and  
approximately $12 million in net long-term debt related to
FCC licenses.

The common stock of Nucentrix will be quoted on the OTC
Bulletin Board quotation service under the symbol NCNX,
with 10 million shares outstanding. Settlement through
Depository Trust Corporation (DTC) of the exchange of new  
common stock for claims in respect of the company's old
senior notes will take place at the close of business on
April 7, with the shares of new common stock being
distributed to the accounts of DTC participants on April 8.
Under the company's plan of reorganization, the outstanding
shares of common stock of Heartland Wireless
Communications, Inc. were canceled effective 5:00 p.m. EST  
on April 1, 1999. The plan provides that holders of
Heartland common stock may receive warrants to purchase up
to 2.5% of the outstanding common stock of Nucentrix at an
exercise price of $26.73, subject to resolution of the
amount, if any, of certain litigation claims described in
the plan. Distribution of the warrants, if any, will not
occur until these litigation claims are liquidated  
or settled.

Nucentrix Broadband Networks(TM) is a federal trademark
application owned by Nucentrix Broadband Networks, Inc.
DIRECTV(R) is a trademark of DIRECTV, Inc., a unit of
Hughes Electronics Corporation.

JOTAN INC: Attorney to Committee Approved By Court
The U.S. Bankruptcy Court for the Middle District of
Florida, Jacksonville Division, entered an order on March
15, 1999 appointing Michael H. Traison as legal counsel for
the official Unsecured Creditors' Committee of Jotan, Inc.
and Southland Container Packaging Corp., debtor.  A $20,000
carve-out was also approved by the court.

LOEWEN GROUP: DCR Lowers Preferred Stock Ratings
Duff & Phelps Credit Rating Co. (DCR) has lowered the
ratings of the preferred securities of The Loewen Group,
Inc.  (Loewen) and Loewen Group Capital, L.P. to 'DP'
(Preferred stock with dividend arrearages).  The rating
action follows the deferral of dividends on Cdn.$220  
million of 6 percent cumulative redeemable convertible
first preferred shares  and on $75 million of cumulative
monthly income preferred securities (MIPS),  series 'A'.

The senior debt rating of Loewen and related entities was
downgraded on March 22, 1999 to 'CCC' (Triple-C), DCR's
lowest rating prior to default. Those ratings remain on
Rating Watch -- Down, where they were placed February 12,  
1999.  Securities remaining on Rating Watch--Down are: --
The Loewen Group, Inc.'s senior guaranteed notes; -- Loewen
Group International Inc.'s (LGII) senior guaranteed notes;
and  -- Loewen Pass-Through Asset Trust 1997-1's pass-
through asset trust certificates (PATS).   

The continued Rating Watch -- Down recognizes risk
regarding Loewen's liquidity and efforts to sell assets,
reduce debt and significantly improve the company's
financial condition.  Loewen has reached agreements with
its bank lenders and other senior debt holders to waive
defaults related to the company's financial results as of
December 31, 1998.  According to these agreements, Loewen
will retain for working capital purposes a portion of the  
cash proceeds from the recent sale of certain cemetery

The waivers alleviated an immediate liquidity crisis, but
the company still faces ongoing liquidity concerns.  Loewen
can no longer borrow under its bank credit facility and
must refinance the $300 million PATS by September 15, 1999.  
The company's future prospects depend on a quick turnaround
of its troubled operating performance and additional asset
sales. Loewen completed the sale of selected cemetery
properties for $193 million of gross proceeds on March 31,
1999.  However, the likelihood of concluding additional
asset sales on a timely basis is still uncertain.

MOBILEMEDIA: Receives "Objectors Proposal"
MobileMedia Corporation announced that it has received an
"Objectors Proposal" on April 1, 1999 as contemplated by
the Stipulation approved by the Bankruptcy Court on
March 23, 1999 (the "Stipulation") relating to
MobileMedia's Third Amended Plan of  Reorganization (the
"Plan"). The Plan provides for the merger of MobileMedia  
into Arch Communications Group, Inc ("Arch") (Nasdaq:

Under the Stipulation, the confirmation hearing relating to
the Plan was continued until April 12, 1999 (the "Continued
Confirmation Hearing"), and certain unsecured creditors
(the "Objectors") that have opposed confirmation of the
Plan were permitted to deliver an alternative Objectors
Proposal for the reorganization of the Debtors on or before
April 1, 1999. The Objectors Proposal received by the
Debtors contemplates a combination of the business and  
assets of MobileMedia with those of TSR Wireless LLC
("TSR"), a privately held  company.

Unless the Objectors Proposal is withdrawn, the Bankruptcy
Court will decide at the Continued Confirmation Hearing
whether the Objectors Proposal meets the requirements of
the Stipulation (the "Requirements"), including
requirements that the Objectors Proposal (A) be capable of
confirmation and consummation within a reasonable period of
time, (B) provide (x) for payment in full in cash of (i)
all administrative claims, including the breakup fee in
the amount of  $25, 000,000 that may be payable to Arch
under the merger agreement with Arch,  and (ii) the Allowed
Claims of Classes 4 and 5 (except for default interest)  
under the Plan (approximately $485 million), and (y)
for a distribution to  Class 6 (general unsecured
creditors) that is materially greater in value than  the
distribution to Class 6 under the Plan, (C) have financing
committed or  reasonably capable of being obtained and (D)
after taking into account all  relevant business factors
(including, without limitation, any conditions and  
contingencies), be superior to the Plan.

Under the Stipulation, if the Court finds that the
Objectors Proposal does not meet the Requirements, the Plan
would be confirmed, subject to a determination  that the
Plan meets all requirements of the Bankruptcy Code.
If the Bankruptcy Court finds that the Objectors Proposal
meets the Requirements, the Bankruptcy Court would deny
confirmation of the Plan.

The Objectors Proposal includes a letter from TSR to the
Objectors setting forth a non-binding offer of TSR (the
"TSR Letter") which proposes a business combination
involving the formation of a new parent corporation
("Newco") and the acquisition, by merger or asset
acquisition, of the business and properties of the Debtors
and TSR (such transactions being called the "Acquisition").
A majority of the Newco common stock would be owned by
TSR's existing equity owners and the unsecured creditors of
the Debtors would own a minority of the Newco common stock.
The TSR Letter states that TSR believes that the terms of
its offer comply with the Requirements.

The TSR Letter indicates that funds for the Acquisition
aggregating $755 million would be comprised of (i) $290
million to be obtained under a secured senior bank credit
facility, (ii) $250 million in senior notes to be raised  
through an offering, (iii) $150 million in senior
subordinated notes to be raised through an offering, and
(iv) $65 million to be raised through the offering of Newco
rights to purchase Newco common stock to the unsecured  
creditors of the Debtors (the TSR Letter does not indicate
the source of such funding if or to the extent that the
rights offering is not fully subscribed).

The TSR Letter does not constitute a legally binding
commitment of TSR or its affiliates and does not include
any commitments of financing sources to provide
the financing contemplated thereby. The TSR Letter
indicates that TSR's willingness to proceed is subject to
(i) completion of business, legal and accounting due
diligence, (ii) final approval of the Acquisition and all  
governing documentation by TSR directors and equity
holders, (iii) receipt of all necessary financing
commitments, and (iv) an agreement for the payment of a
breakup fee of $25 million (which agreement would be
contained in a binding acquisition agreement).

The Debtors, together with financial and legal advisors,
are reviewing the Objectors Proposal and are not yet able
to take a position as to the Objectors Proposal (including
whether or not it meets the Requirements). As contemplated  
by the Stipulation, the Debtors will be meeting and
conferring with TSR and the Objectors concerning the
Objectors Proposal. The Stipulation provides that the
Debtors have the right to file a written presentation of
their position with respect to the Plan and the Objectors
Proposal not later than 9:30 a.m. on April 9, 1999, in
advance of the Continued Confirmation Hearing on April 12,  

MONTGOMERY WARD: Cost-Cutting Helps Control Losses
The Fresno Bee reports on April 3, 1999 that Montgomery
Ward Holding Corp., the department-store retailer expected
to emerge from bankruptcy protection this year, said its
loss narrowed in fiscal 1999 as it cut costs.

The loss from continuing operations narrowed to $942
million for the year ended Jan. 2 from $1.17 billion the
year before, according to a regulatory filing.

The results include pretax reorganization costs, such as
for store closings, of $218 million in the most recent year
and $553 million the year before. The Chicago-based
retailer, which recently renamed its stores Wards, has  
been under bankruptcy protection from creditors since July
1997, when it filed  for Chapter 11 after years of anemic
earnings and slumping sales.

The chain has since closed more than 100 poorly performing
stores and repositioned itself between discount retailers
and lower-priced department stores.

Sales last year fell 20% to $3.63 billion from $4.53
billion. Sales at stores open at least a year fell 2%.
The chain operates about 252 stores in 32 states, not
including 39 stores it planned to close early this year,
according to the annual report filed today. The company
said it intends to emerge from bankruptcy in mid-1999.

Reduced costs helped the gross margin, or the amount of
revenue left after subtracting the costs of goods sold,
widen to about 19% from 13%. Operating, selling, general
and administrative costs declined to 29% of sales from 33%.  
The earnings don't include Montgomery Ward's Signature
Group direct marketing arm.  In February, the retailer said
it will emerge from bankruptcy protection this year after
selling Signature to a General Electric Co. unit for an
undisclosed sum.

It will use the sale's proceeds to pay off unsecured
creditors. Meantime, Montgomery Ward has focused on
attracting more female shoppers with remodeled stores
stocked with updated clothing and home furnishings.
That's helped boost sales, the company said. Same-store
sales of children's clothes rose 8% while housewares gained
5%. Montgomery Ward opened three redesigned prototype
stores in September, and they've been "extremely  
successful," the company said in a statement, noting that
sales at those stores have been more than 40% higher than
the entire chain. It plans to convert 40 stores to the
format this year and at least 40 more in 2000 and 2001.
Not including taxes and reorganization costs, Montgomery
Ward said its loss last year was cut by more than half to
$418 million from $1 billion. The discontinued operations
lost $29 million last year, resulting in a final
loss of $971 million.

MONTGOMERY WARD: Handsome Bonus Awaits CEO
Montgomery Ward & Co. on Friday reported a net loss of $971
million for 1998, compared to a $1.15 billion loss in 1997,
The Chicago Sun-Times reported. In addition, CEO Roger
Goddu has waived a $50,000 pay increase until the company
completes its restructuring. Goddu and four other top
executives will share a bonus of $2.75 million, with Goddu
receiving $1 million, if the company's reorganization plan
is approved by Oct. 1. After Oct. 1, the bonus decreases to
$1.375 million. The retailer also announced that it expects
to exit chapter 11 in July. Total sales were down 20
percent, with 100 stores closed during the last year-and-a-
half, but Montgomery Ward did report strong sales in
several areas, including children's apparel, textiles and

NATIONAL MARKETS: Operator Files Bankruptcy
The St. Louis Post-Dispatch reports on April 3, 1999
that the company that operates National Markets filed for
bankruptcy Friday evening with a plan that would shut down
many of its stores.

Family Co. of America, which has operated the chain since
1996, is seeking to liquidate the grocery chain's assets
under Chapter 7 of the bankruptcy code. Family Co. kept the
Bankruptcy Court in St. Louis busy until well
after dark  with its filing, which will give it some
breathing room from creditors.

The company did not publicly announce the action, and
executives leaving its headquarters in Maryland Heights
wouldn't answer questions. Under the liquidation plan, some
stores could be sold to new operators.

National is the third-biggest grocery chain in the St.
Louis area behind Schnuck Markets Inc. and Dierberg Markets

PARTY CITY: Charged With Misleading Investors
In the past two weeks several law firms have announced
filing shareholder class actions.
One such firm, Berman DeValerio & Pease LLP announced that  
Party City Corporation (Nasdaq: PCTY) was charged with
violating the federal securities laws in a class action
filed in the United States District Court for the District
of New Jersey on March 23, 1999.  The case was filed on
behalf of all persons and entities who purchased the common
stock of PCTY during the period February 26, 1998 through
and  including March 18, 1999 (the "Class Period") and who
suffered losses on their investments.

The action charges that PCTY and certain of its officers
issued materially false and misleading statements during
the Class Period.  In particular, it is charged that PCTY
materially misrepresented its financial condition and  
compliance with its loan covenants. During the class
period, it is alleged that certain of the defendants sold
their PCTY common stock with inside information for
proceeds of more than $1.5 million.  On March 18, 1999 PCTY
announced that  its year-end 1998 audit would be delayed
due and that the company was "in default of certain
reporting covenants" on its secured credit facility.  Upon  
the revelation of this news, PCTY's stock plummeted 45%
in a single day,  falling from $7 5/16 per share to $4 per
share on March 19, 1999.

The Pittsburgh Post-Gazette reports on April 2, 1999 that
U.S. Bankruptcy Judge Bernard Markovitz  said that he would
determine if bankruptcy laws would allow new owners to
break the agreement and move the team from the Civic Arena,
backing off his former pronouncement.

Though Markovitz said he touched on the issue in his
initial ruling last week, he said he wanted to be sure he
addressed it "fully and completely," to facilitate matters
if his ruling is appealed. Markovitz last week made
permanent his order that the Penguins' current  
owners could not move the franchise or even hold
discussions about moving with out-of-town  interests. He
ordered the team to honor an agreement it signed to  
stay at the arena and not seek out- of-town offers.

After a discussion with the lawyers, Markovitz decided to
hear arguments May 19 on whether the agreement would bind a
new owner who gets the franchise through bankruptcy.
He said he also would hear from secured creditors, the
banks and insurance companies that hold liens on the

Those creditors supported Marino's attempt to escape the
lease, figuring their chances of recovering the money they
lent the Penguins would improve if the team had the option
of moving. Shapira said the companies knew all along about
the agreement not to move the team.

"It's hypocritical in the extreme for them now to take a
position that they should be able to escape these
{agreements}," Shapira said. Fred Hodara, attorney for
Principal Life Insurance Co., Allstate Life Insurance Co.
and TMG Life Insurance Co., would not comment on whether
the firms would continue to support dissolving the arena

RAINBOW HEALTH: Going Out of Business
The Milwaukee Sentinel Journal reports on April 3, 1999
that three ailing Milwaukee Rainbow Community Health
Centers have run out of money and will close their doors
Friday, leaving hundreds, if not thousands, of patients in
the lurch.

In a notice posted on its clinic doors Friday, the
Milwaukee Indian Health Board, which runs the three
clinics, said it would cease operations at 5 p.m.  
next Friday. Patients who do not belong to an HMO or to  
Milwaukee County's General Assistance Medical Program "will
need  to find another provider on their own."

The Health Board said that although it believes that a task
force of community advocates is seeking alternatives for
addressing the care needs of patients, "at this time no
definitive arrangements have been made."

The Rainbow Health Centers have been in existence for more
than a decade and had grown steadily, reflecting the
importance of the niche that community health centers and
clinics filled for the medically underinsured or uninsured.
Where once there were just a few such clinics, there are
now more than two dozen in the county.

SERVICE MERCHANDISE: Deloitte & Touche Approved
The Court granted the Debtors' Application to approve their
employment of Deloitte & Touche LLP as accountants and
independent auditors. to perform the accounting, auditing,
tax and related business advisory services necessary to the
administration of the Debtors' chapter 11 cases.
Reported By Service Merchandise Bankruptcy News, Issue 2,
April 2, 1999 - Bankruptcy Creditors' Service, Inc., Phone
609-392-0900 FAX 609-392-0040.

SERVICE MERCHANDISE: Jay Alix To Serve As Financial Advisor
Subject to any objection interposed on or before April 12,
1999, Judge Paine has granted the Debtors' authority to
employ Jay Alix & Associates as their financial advisor in
these chapter 11 cases.

Prior to the Petition Date, Jay Alix & Associates was paid
approximately $1,671,676 for various services to the
Debtors and $73,375 for reimbursement of expenses. This
amount included Jay Alix & Associate's hourly billing for
services performed by Bettina M. Whyte.  

The firm will charge the Debtors its customary hourly rates
for services performed in these cases.  The hourly rates
range as follows:

     Consultants               $190-225
     Associates                $295-335
     Senior Associates         $350-375
     Principals                $450-530

The firm will be paid a $3,000,000 basic contingent success
fee, subject to adjustment, upon:

(1) substantial consummation of a plan of reorganization
that enables the Debtors to emerge from bankruptcy as a
going concern or

(2) the sale of substantially all of the Company's assets
such that it continues as a going concern.
Reported By Service Merchandise Bankruptcy News, Issue 2,
April 2, 1999 - Bankruptcy Creditors' Service, Inc., Phone
609-392-0900 FAX 609-392-0040.

SERVICE MERCHANDISE: Skadden, Arps Approved as Counsel
The Debtors have sought and obtained the Court's authority
to employ the national law firm of Skadden, Arps, Slate,
Meagher & Flom LLP as their lead bankruptcy counsel in
these chapter 11 cases.  

Specifically, the Debtors want Skadden to:

(a) advise the Debtors with respect to their duties as

(b) attend meetings and negotiate with representatives of
creditors and other parties in interest;

(c) take all necessary action to protect and preserve the
Debtors' estates;

(d) prepare all motions, applications, answers, orders,
reports, and papers necessary to the administration of the

(e) negotiate and prepare on the Debtors' behalf plan(s) of
reorganization, disclosure statement(s), and all related
agreements and/or documents, and take any necessary action
on behalf of the Debtors to obtain confirmation of such

(f) advise the Debtors in connection with any contemplated
sales of certain assets;

(g) appear before the Court, any appellate courts, and the
United States Trustee, and protect the interest of the
Debtors' estates before such courts and the United States

Skadden discloses that it has previously represented the
Debtors from June 20, 1997 to January 31, 1999 and from
1981 to 1990.  According to Skadden, for the year prior to
March 27, 1999, the total value of services worked
and expenses charged was approximately $1,910,628.  Skadden
received approximately $1,649,643 from the Debtors for
legal services performed and approximately $260,985 in
reimbursement of expenses incurred, including
approximately $256,087 of fees and expenses incurred in
connection with the chapter 11 cases.

The Debtors entered into an engagement agreement with
Skadden, dated March 12, 1999 and paid a retainer in the
amount of $600,000.

Skadden will charge the Debtors its customary hourly rates
for services performed in these cases:

              Partners                 $390 to $600
              Special Counsel          $375
              Associates               $180 to $360
              Legal Assistants          $65 to $130

Reported By Service Merchandise Bankrutpcy News, Issue 2,
April 2, 1999 - Bankruptcy Creditors' Service, Inc., Phone
609-392-0900 FAX 609-392-0040.

THE PENN TRAFFIC: Posts $93.6 Million Loss
In the financial quarter before it filed for bankruptcy,
The Penn Traffic Co. lost $93.6 million and saw its
revenues fall 8 percent, the regional grocer reported
Thursday. The latest losses will not have any impact on the
company's bankruptcy proceedings and reorganization, said
Marc Jampole, a Penn Traffic spokesman.

Syracuse-based Penn Traffic declared bankruptcy last month
in a prearranged plan with its major creditors, who will
forgive $1.1 billion of the company's  $1.7 billion debt in
return for control of the company. The company lost more
than $220 million between 1994 and 1998 and will  
absorb another $317 million in losses in 1999.

Penn Traffic said revenues for the three-month period ended
Jan. 30 were $690.5 million, compared to $750.6 million for
the same period a year ago. For the year, revenues were off
6 percent, from $3 billion to $2.83 billion. Same store
sales dropped 3.8 percent during the quarter. Operating
losses total $22.4 million for the quarter, compared to a
net operating loss of $11.2 million for the same period a
year earlier. However, the company also recorded $70
million in unusual charges during the quarter. A special
charge of $17.7 million related to store closings while
Penn  Traffic took a $52.3 million non-cash charge as a
write-down of long-lived  assets.  The $93.6 million loss
translated into a decrease of $8.85 per share of stock for
the quarter.

TRITEAL CORP: Files Chapter 11; To Liquidate
TriTeal Corporation announced that it has filed a voluntary
chapter 11 petition under the United States Bankruptcy Code
in the United States Bankruptcy Court for the Southern
District of California on April 2, 1999.  

The Company filed a plan of liquidation with the court
providing for the liquidation of the Company's assets,
payment to its  creditors and the distribution of any
remaining cash to the stockholders of the  Company. In its
bankruptcy petition, the Company indicated that it held
$5.5  million of cash and cash equivalents and estimated
its liabilities at $2.6  million, although some additional
liabilities were listed in an "unknown"  amount.  

The chapter 11 filing came after extensive efforts to
achieve  profitability and find a suitable acquirer proved
unsuccessful.  The decision reflects the Board of
Directors' efforts to preserve value for creditors and  
shareholders.  In connection with the chapter 11 filing,
the directors of the Company, Jeff Witous, Richard Noling
and Dennis Morin, submitted their  resignations.

The Company also announced that it has received court
approval of the settlement of the class action securities
litigation pending against the Company, certain of its
current and former officers and directors, and certain  
of the underwriters of the Company's public offering of
common stock.  Under the settlement, amongst other terms,
the plaintiff classes and their attorneys were paid $12
million (of which $10 million was paid by the Company), and
the plaintiffs dismissed with prejudice all claims pending
in the actions against the Company, certain of its current
and former officers and directors and the underwriters of
the Company's public offerings.

Headquartered in Carlsbad, California, TriTeal Corporation
was a provider of mission-critical desktop solutions for
Global 1000 enterprise environments.  Except for the
liquidation of its assets, the Company has ceased doing  

U.S. LEATHER: To Go Private
The Milwaukee Sentinel & Journal reports on April 3, 1999
that United States Leather Inc. has filed notice with the
Securities and Exchange Commission that the company no
longer will be registered  as a public company.

In past years, Milwaukee-based U.S. Leather had been
required  to report its activities as a public company
because its debt was publicly traded. In 1998, the company
went through a reorganization under Chapter 11 of federal  
bankruptcy law. As part of that proceeding, bondholders
traded the debt for  equity in the company. Because the
number of shareholders falls below 500, the company is not
required by law to be registered as a public company.

Chief Executive Officer Ed Schenck said in a prepared
statement Wednesday that the decision to de-register was
prompted by a need to save money and management time.

"The costs associated with being a public company, both in
dollars and management's time, are prohibitive," Schenck

USN COMMUNICATIONS: Judge Approves Sale of Assets
Bankruptcy Judge Peter Walsh, District of Delaware, on
Friday approved the sale of USN Communications Inc.'s
assets to CoreComm Ltd. and the stock of USN Wireless Inc.
to Unified Signal Corp.; the deals have a total value of
$61.2 million, according to a newswire report. At a hearing
on Friday, USN's attorney told the judge that at an auction
on Tuesday l last week, Unified Signal agreed to pay $20
million in cash for the USN Wireless stock.  Unsecured
creditors who have a $270 million claim support the asset
and stock sales, but current shareholders are not expected
to receive any payouts under the reorganization.
Chicago-based USN and eight affiliates filed chapter 11 on
Feb. 18.

WORLDWIDE DIRECT: Seeks To Employ Crossroads Capital
Worldwide Direct Inc., et al., debtors, seek court
authority to employ Crossroads Capital Partners LLC and
William K. Snyder as CEO.

Snyder will serve as CEO of SmarTalk, and will report to
SmarTalk's Board of Directors.  Crossroads is to receive a
fee of $295 per hour for the services actually rendered by
Snyder; reimbursement of expenses and coverage under the
D&O insurance liability policy.

ZENITH: Bondholders Agree To Prepack Chapter 11
The Chicago Sun Times reports on April 2, 1999 that
Zenith Electronics Corp., which lost nearly $276 million
last year, said Thursday it is making progress in its goal
to reach bankruptcy.

Glenview-based Zenith said it has won approval of its
bondholders to proceed with a "prepackaged" Chapter 11
bankruptcy filing. Zenith spokesman John Taylor said the
company has no timetable for filing for Chapter 11,
although the agreement moves the company forward.

"The timing will depend on the review process at the
Securities and Exchange Commission,"  whose approval is
required, Taylor said.

Zenith has lost more than $1 billion in 10 years, and its
pending bankruptcy is no surprise. The company said that
after it files Chapter 11, it will continue to pay its
vendors, creditors and employees as usual.

On Thursday, the company released its dismal financial
results for 1998. The company said it lost $275.5 million
last year, compared with a loss of $299.4 million in 1997.
Sales fell to $984.8 million, compared with $1.173  
billion in 1997. For the quarter ending Dec. 31, the
company lost $87.7 million, compared with $155.7 million
for the same period a year earlier. Sales for the quarter  
fell to $309.7 million, compared with $347.7 million for
the same period a year earlier.

"The numbers speak for themselves," Taylor said.

Zenith's biggest shareholder, LG Electronics of Korea, has
won approval from the Korean government relating to the
bankruptcy plan.  Zenith, founded in Chicago in 1918, was
once the world's leading producer of televisions. Now it is
turning itself into a sales and distribution company  
for televisions manufactured by others.

Last year, Zenith closed its Melrose Park manufacturing
plant and laid off 1,200 workers. The company also closed
two plants in Mexico.

Meetings, Conferences and Seminars
April 15-18, 1999
      Annual Spring Meeting
         J.W. Marriott, Washington, DC
            Contact: 1-703-739-0800

April 19-20, 1999
      21st Annual Current Developments in
      Bankruptcy and Reorganization Conference
         Grand Hyatt, San Francisco, California
            Contact: 1-800-260-4PLI or

April 22-23, 1999
      Conference on Revised Article 9 of
      the Uniform Commercial Code
         Sheraton New York Hotel, New York, New York
            Contact: 1-800-CLE-NEWS

April 22-25, 1999
      69th Annual Chicago Conference
         Westin Hotel, Chicago, Illinois
            Contact: 1-312-781-2000 or   

April 26-27, 1999
      Bankruptcy Sales, Mergers & Acquisitions
         The Mark Hopkins, San Francisco, California
            Contact: 1-903-592-5169 or   

April 28-30, 1999
      INSOL Bermuda '99 Conference of the Americas
         Castle Harbour Marriott Resort

April 30-May 4, 1999
      Annual Meeting and conference, including a one-day
      program on cross-border insolvencies
         Shangi-La Hotel, Bangkok, Thailand
            Contact: 011-66-2-233-0055

May 28-31, 1999
      51st Annual New England District Meeting
         Equinox Resort, Manchester Village, Vermont
            Contact: 1-413-734-6411   

June 3-6, 1999
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Michigan
            Contact: 1-703-739-0800

July 1-4, 1999
      Western Mountains Bankruptcy Law Institute
         Jackson Lake Lodge, Jackson Hole, Wyoming
            Contact: 1-770-535-7722
July 10-15, 1999
      105th Annual Convention
         Chateau Mont Tremblant, Mont Tremblant, Quebec
            Contact: 1-312-781-2000 or

July 15-18, 1999
      Northeast Bankruptcy Conference
         Mount Washington Hotel & Resort
         Bretton Woods, New Hampshire
            Contact: 1-703-739-0800

August 4-7, 1999
      Southeast Bankruptcy Workshop
         The Ritz-Carlton, Amelia Island, Florida
            Contact: 1-703-739-0800

August 29-September 1, 1999
      1999 Convention
         Grove Park Inn, Asheville, North Carolina
            Contact: 1-803-252-5646 or

September 16-18, 1999
      Southwest Bankruptcy Conference
         The Hotel Loretto, Santa Fe, New Mexico
            Contact: 1-703-739-0800

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

The Meetings, Conferences and Seminars column appears
in the TCR each Tuesday.  Submissions via e-mail to are encouraged.  


The Meetings, Conferences and Seminars column appears
in the TCR each Tuesday.  Submissions via e-mail to are encouraged.  

Bond pricing, appearing in each Friday edition of the TCR,
is provided by DLS Capital Partners, Dallas, Texas.

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

This material is copyrighted and any commercial use, resale
or publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly
prohibited without prior written permission of the

Information contained herein is obtained from sources
believed to be reliable, but is not guaranteed.   
The TCR subscription rate is $575 for six months delivered
via e-mail. Additional e-mail subscriptions for members of
the same firm for the term of the initial subscription or
balance thereof are $25 each.  For subscription
information, contact Christopher Beard at 301/951-6400.  
          * * *  End of Transmission  * * *