UNITED MERCHANTS & MANUFACTURERS INC /NEW/
8-K, 1997-01-29
COSTUME JEWELRY & NOVELTIES
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                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                            ------------------

                                 FORM 8-K

                              CURRENT REPORT
                  PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) - December 31, 1996   



                   UNITED MERCHANTS AND MANUFACTURERS, INC.           
            (Exact Name of Registrant as Specified in Charter)


          Delaware                    1-3185              13-1426280      
(State or Other Jurisdiction        (Commission        (I.R.S. Employer
     of Incorporation)              File Number)      Identification No.)


   Two Executive Drive, Fort Lee, N.J.                   07024-3308    
(Address of Principal Executive Offices)                 (Zip Code)      


Registrant's telephone number, including area code      (201) 585-2100    




























                                     1


<PAGE>


Item 5. Other Events.

As previously reported, the Registrant and its 79%-owned subsidiary, 
Reunited Holdings, Inc. (formerly Victoria Creations, Inc.), each filed 
petitions for reorganization relief under Chapter 11 of the United States  
Bankruptcy Code on February 22, 1996.  Registrant is continuing to operate 
its business as debtor-in-possession while the reorganization case is 
pending.  Registrant and its subsidiary are in the process of evaluating 
their businesses and formulating a plan or plans of reorganization.

Registrant and its subsidiary requested that the Securities and Exchange 
Commission allow them to follow a modified reporting procedure in lieu of 
the periodic reports required under the Securities Exchange Act of 1934, 
as amended.  The Commission granted the Registrants' request.  Therefore, 
the Registrants will file, under cover of Form 8-K, the financial reports 
and schedules that are filed with the Bankruptcy Court.  

Included herewith, Registrant is filing the cover letter, certificate and 
verified financial statements/operating reports for the month ended 
December 31, 1996 as filed with the Bankruptcy Court.  

                                SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.

                                  United Merchants and Manufacturers, Inc.




Date January 29, 1997             By /s/ Norman R. Forson
                                     Norman R. Forson
                                     Senior Vice President

<PAGE>
             UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
                      REUNITED HOLDINGS, INC., D.I.P.
                      Two Executive Drive, Suite 780
                             Fort Lee NJ 07024
                               201-585-2100
January 29, 1997

United States Bankruptcy Court
Southern District of New York
Attn: Office of the Clerk
Alexander Hamilton Customs House
One Bowling Green
New York NY 10004-1408

In re:  United Merchants and Manufacturers, Inc. and Reunited Holdings, 
        Inc. (formerly Victoria Creations, Inc.), Debtors, Jointly 
        Administered Chapter 11 Case No. 96 B 40941 (AJG)

Enclosed herewith is a copy of the verified financial statements/operating 
reports for the month of December 1996. 

Also enclosed is a schedule of and receipts for Federal, state, and local 
taxes withheld and paid for the month.  

The companies do not make sales subject to sales tax.  

All property taxes due and payable have been paid.

All insurance policies, including for workers compensation and disability, 
have been paid for the current period.



UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.
VICTORIA CREATIONS, INC., D.I.P.



by Norman R. Forson, Senior Vice President

cc: U.S. Department of Justice
    Office of the United States Trustee
    Southern District of New York
    Attn: Goodwin Benjamin, Esquire
    80 Broad Street, 3rd Floor
    New York NY 10004

    Zalkin, Rodin & Goodman LLP
    Attn: Andrew D. Gottfried, Esquire
    750 Third Avenue
    New York NY 10017

    Skadden, Arps, Slate, Meagher & Flom
    Attn: Michael L. Cook, Esquire
    919 Third Avenue
    New York NY 10022-3897


<PAGE>





UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

in re
                                                 CASE NO. 96 B 40941 (AJG)
                                                 CHAPTER 11
UNITED MERCHANTS AND MANUFACTURERS, INC. AND
  REUNITED HOLDINGS, INC. (formerly VICTORIA CREATIONS, INC.), Debtors

                      MONTHLY OPERATING STATEMENT FOR
                        THE MONTH OF DECEMBER 1996

DEBTORS' ADDRESS:
2 Executive Drive, Suite 780
Fort Lee NJ 07024

                               Monthly Disbursements - see Statement of 
                                                            Cash Flows

DEBTORS' ATTORNEY:
Michael L. Cook (MC 7887)
Lawrence V. Gelber (L 9384)
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York NY 10022-3897

                               Monthly Operating Profit - see Statement of
                                                               Operations

REPORT PREPARER:
Norman R. Forson, Senior Vice President

    This operating statement must be signed by a representative of the 
    Debtor.

    The undersigned, having reviewed the attached report and being 
familiar with the Debtors' financial affairs, verifies under penalty of 
perjury, that the information contained therein is complete, accurate and 
truthful to the best of my knowledge.




Date January 29, 1997          /s/ Norman R. Forson, Sr. V.P.    
                               Signature and Title

Indicate if this is an amended statement by checking here. 

                                          AMENDED STATEMENT [  ]
<PAGE>







             UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.



                           FINANCIAL STATEMENTS



                                   INDEX




                                                                    Page  
                                                                   Number 

Statement of Operations.............................................  2 

Balance Sheet.......................................................  3 

Statement of Cash Flows.............................................  4 
  
Notes to Financial Statements.......................................  5 




























                                     1

<PAGE>


         UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.

         STATEMENT OF OPERATIONS  (000 omitted)




                                                              MONTH OF
                                                              DECEMBER
                                                                1996
                                                             ---------
         Rental income.......................................      $36


         General and administrative expenses.................     (180)
                                                             ---------
                                   Operating Earnings (Loss)     ($144)

         Interest expense-net (reversal of interest expense).      376
         Sale of assets......................................       21
         Reorganization expenses.............................       (1)
         Amounts billed to 79%-owned subsidiary:
          Management services during reorganization..........      160
          Reversal of interest income
           on intercompany indebtedness......................   (1,363)
                                                             ---------
                                         Net Earnings (Loss)     ($951)


         Dividends applicable to preferred stock.............      375
                                                             ---------
             Net Earnings (Loss) Applicable to Common Shares   ($1,326)
                                                             =========

         Average common shares outstanding...................   17,845

         Net Earnings (Loss) per Common share................   ($0.07)

         ----------

         See Notes to Financial Statements.















                                         2









         UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.

         BALANCE SHEET  (000 omitted)
                                                             DECEMBER 31
                                                                1996
                                ASSETS                       ---------
         Current Assets:
          Cash...............................................   $1,075
          Receivables........................................       50
                                                             ---------
                                        Total Current Assets    $1,125

         Land and buildings..................................   $1,611
          Less accumulated depreciation and amortization.....   (1,158)
                                                             ---------
                                      Net Land and Buildings      $453

         Investment in and advances to 79%-owned subsidiary..   15,331

         Other Assets and Deferred Charges...................       88
                                                             ---------
                                                Total Assets   $16,997
                                                             =========
            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
         Current Liabilities:
          Trade payables.....................................      $26
          Accrued expenses and sundry liabilities............      929
                                                             ---------
                                   Total Current Liabilities      $955

         Liabilities subject to compromise:
          Accounts payable...................................   $1,252
          Accrued expenses...................................      828
          Long-term debt.....................................   62,173
          Other long-term liabilities........................        8
                                                             ---------
                     Total Liabilities Subject to Compromise   $64,261

         Other Long-Term Liabilities.........................    2,417

         Stockholders' Equity (Deficit):
          Preferred stock, par value $1 per share; 10,000,000
           shares authorized; 450,000 shares outstanding.....     $450
          Common stock, par value $1 per share: 40,000,000
           shares authorized; 17,845,000 shares outstanding
           (excluding 22,800 shares held in treasury)........   17,845
          Capital in excess of par value.....................   64,674
          Retained earnings (deficit)........................ (129,605)
          Notes receivable from stock purchase agreement.....   (4,000)
                                                             ---------
                        Total Stockholders' Equity (Deficit)  ($50,636)
                                                             ---------
                                Total Liabilities and Equity   $16,997
                                                             =========
         See Notes to Financial Statements.

                                          3









         UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.

         STATEMENT OF CASH FLOWS  (000 omitted)



                                                              MONTH OF
                                                              DECEMBER
                                                                1996
                                                             ---------
         Cash Flows from Operating Activities:
          Net earnings (loss)................................    ($951)
          Adjustments to reconcile net earnings (loss) to
           net cash used for operating activities:
            Depreciation and amortization....................        7
            Reversal of interest income charged
             to 79%-owned subsidiary.........................    1,363
            Reversal of interest expense accrued.............     (376)
          Decrease (increase) in assets:
           Other assets......................................       15
          Increase (decrease) in liabilities:
           Trade payables ...................................      (11)
           Accrued expenses and sundry liabilities...........       12
           Other long-term liabilities.......................       (1)
                                                             ---------
            Net Cash Provided (Used) by Operating Activities       $58

         Cash Flows from Financing Activities:
          Increase in long-term debt.........................        0
          Decrease in long-term debt.........................      (78)
                                                             ---------
            Net Cash Provided (Used) by Financing Activities      ($78)
                                                             ---------
                                 Increase (Decrease) in Cash      ($20)

         Cash at beginning of period.........................    1,095
                                                             ---------
                                       Cash at end of period    $1,075
                                                             =========
         -------------------
         Supplemental disclosures of cash flow information:
          Interest...........................................       $0
          Income Taxes.......................................        0

         See Notes to Fianacial Statements.












                                          4






             UNITED MERCHANTS AND MANUFACTURERS, INC., D.I.P.

                       NOTES TO FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION 

The accompanying financial statements of United Merchants and 
Manufacturers, Inc. ("UM&M" or the "Company") are unaudited, are as of and 
for the month ended December 31, 1996 and have been prepared in accordance 
with generally accepted accounting principles (except on a separate 
company basis - see the accompanying financial statements of the Company's 
79%-owned subsidiary which is accounted for herein on the equity method) 
for interim financial information.  Accordingly, they do not include all 
of the information and footnotes required by generally accepted accounting 
principles for complete financial statements.  In the opinion of 
management, all adjustments (consisting of normal recurring accruals) 
considered necessary for a fair presentation have been included.

The Company's equity in the loss on the sale by the Company's 79%-owned 
subsidiary of most of its operating assets on July 1, 1996 (see the 
Company's financial statements as of and for the month ended July 31, 
1996) reduced the Company's investment in the subsidiary to zero.  
Therefore, so long as the subsidiary's net equity is a deficit, the 
Company's equity in the results of operations of the subsidiary will not 
be reflected in the Company's statement of operations.

During the month of December 1996, the Company determined to adjust the 
amount due from its 79%-owned subsidiary to the amount due at petition 
date, February 22, 1996, by, primarily, reversing interest income charged 
to the subsidiary subsequent to that date.  The reversal is shown as an 
expense in the December 1996 month.

The results of operations of interim periods are subject to year-end audit 
and adjustments and are not necessarily indicative of the results of 
operations of the fiscal year.  For further information, refer to the 
consolidated financial statements and footnotes thereto included in the 
Company's consolidated verified financial statements/operating reports for 
the year ended June 30, 1996 filed with the United States Bankruptcy 
Court, Southern District of New York, New York NY.

The accompanying financial statements have been prepared in conformity 
with generally accepted accounting principles applicable to a going 
concern which contemplate the realization of assets and the liquidation of 
liabilities in the normal course of business.  In the event that a plan of 
reorganization (see Note B below) is not consummated, certain adjustments 
may be required to the stated amounts and classification of assets and 
liabilities.

NOTE B - PETITION FOR REORGANIZATION UNDER CHAPTER 11

Effective February 22, 1996, the Company and its 79%-owned subsidiary, 
Reunited Holdings, Inc. (formerly Victoria Creations, Inc.), filed 
petitions for reorganization relief under Chapter 11 of the Bankruptcy 
Code in the United States Court for the Southern District of New York.  

Pursuant to the Bankruptcy Code, the Company is continuing to operate its 
businesses as debtor-in-possession while the reorganization case is 
pending.  The Company is allowed to use, and is using, its cash and other 
resources at the operating level in the ordinary course of business.

                                     5

<PAGE>


Under Chapter 11, the presentation and collection of certain prepetition 
claims against the Company are stayed.  These claims are reflected in the 
accompanying balance sheet as "Liabilities Subject to Compromise".  
Additional claims (liabilities subject to compromise) may arise resulting 
from rejection of executory contracts, including leases, and may be 
determined by the court (or agreed to by the parties in interest) for 
contingencies and other disputed amounts.  

Creditors holding claims secured by the Company's assets are also stayed, 
although such claimants may move the court for relief from the stay.  
Secured claims are secured by liens on substantially all of the Company's 
assets.

Liabilities subject to compromise are stated at the Company's carrying 
value and not at the amounts for which the claims may be settled.  

The statement of cash flows reflects changes in applicable liabilities 
before the reclassification of such amounts to Liabilities Subject to 
Compromise.  

The Company anticipates that it will not be required to pay postpetition 
interest on certain of its prepetition debt obligations and, accordingly, 
effective with the filing, discontinued accruing interest on those debt 
obligations included in Liabilities Subject to Compromise.  Contractual 
interest not accrued and not reflected in the statement of operations with 
respect to those obligations during the month amounted to $412,000.

NOTE C - INCOME TAXES

The Company has net operating loss carryforwards to offset earnings, if 
any. 

NOTE D - DIVIDENDS APPLICABLE TO PREFERRED STOCK

The Company has not declared nor paid any cash dividends on its 10% 
Cumulative Preferred Stock in order to retain its available cash for use 
in its operations. For financial statement purposes, cumulative preferred 
dividends are deducted from the results of operations in determining 
earnings applicable to common shares whether or not such dividends are 
declared or paid.
















                                     6

<PAGE>


NOTE E - LONG-TERM DEBT   

Long-term debt classified as subject to compromise consists of the 
following:
                                                       DEC 31   
                                                        1996     
                                                       (000)     
                                                      --------   
  Secured term loan.................................  $  6,480   
  3 1/2% Senior Subordinated Secured Debentures
   due 2009, net of unamortized discount of
   $46,211,000......................................    22,931   
  5% Subordinated Notes due 2019:
   Issued to former senior lender...................    30,000   
   Issued in settlement of lawsuit, net of
    unamortized discount of $20,852,000.............     1,148   
  Other.............................................     1,614   
                                                      --------   
          Total Long-Term Debt Subject to Compromise  $ 62,173   
                                                      ========   

The term loan is secured by substantially all of the Company's assets, 
matures July 31, 2000 and bears interest at the rate of 12% a year.  
Subsequent to the filing of the petition for reorganization, the Company 
accrued interest on this debt but did not pay the interest in cash.  
During the month of December 1996, the Company determined that the term 
loan became subject to compromise effective July 1, 1996.  Therefore, the 
Company reversed the accrued interest applicable to this loan for the 
period subsequent June 30, 1996.  The reversal of interest is reflected in 
the financial statements for the month of December 1996.

NOTE F - SUPPLEMENTAL BALANCE SHEET INFORMATION

                                                       DEC 31   
                                                        1996     
                                                       (000)     
                                                      --------   
Other long-term liabilities:
 Deferred shutdown costs............................. $  1,323   
 Accrued workers compensation........................    1,094   
                                                      --------   
                                                      $  2,417   
                                                      ========   













                                     7


<PAGE>


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