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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-Q/A-1

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 1995

                                 OR

/ /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from            to                    
                               ----------    -----------        

Commission file number 1-6675

                             THE ARLEN CORPORATION
         -------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                    New York                                 13-2668657
         -------------------------------         ------------------------------
         (State or other jurisdiction of                 (I.R.S. Employer
          incorporation or organization)               Identification No.)

         505 Eighth Avenue, New York, New York                10018
         -------------------------------         ------------------------------
         (Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code: (212) 736-8100

                                Not Applicable
         -------------------------------------------------------------
     (Former name, former address and former fiscal year, if changed since
                                  last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes      X       No
                                  ----------      ---------

Indicate the number of shares outstanding of each of the issuer's  classes of
common stock, as of the latest practicable date:

  Common Stock, $1 par value - 29,770,234 shares outstanding as of January 4,
        1996 (excluding shares owned by subsidiaries of the Registrant)

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                         PART II - OTHER INFORMATION

Note: Part II of the Registrant's Quarterly Report on Form 10-Q for the fiscal 
quarter ended November 30, 1995 is amended in this Form 10-Q/A-1 to (1) add a 
new Item 1 (Legal Proceedings) to read as follows and (2) amend Item 3 
(Defaults Upon Senior Securities) to read in its entirety as follows.

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Item 1.          Legal Proceedings.

                 In Item 3 of the Registrant's Annual Report on Form 10-K for 
the fiscal year ended February 28, 1995, the Registrant reported that its 
subsidiary, Grant Products, Inc. ("Grant"), had received a general notice of 
liability from the United States Environmental Protection Agency (the "EPA"), 
indicating that Grant may be a potentially responsible party, with numerous 
other such parties, with respect to the San Fernando Valley Area 2 Superfund 
Site, Glendale North Operable Unit (the "Site"), in Los Angeles County, 
California. In October 1995, the Registrant received a special notice letter 
from the EPA stating that the EPA considers Grant to be potentially 
responsible, with numerous other such parties, for the costs incurred in 
connection with contamination at the Site. The EPA is seeking an agreement from 
the potentially responsible parties to conduct remedial action and to pay the
EPA's  oversight costs for overseeing the work and past and future response
costs in  connection with the Site, and has demanded payment of $21,743,970
(plus  recoverable interest) in costs incurred in connection with conditions at
the  Site and at other Superfund sites and operable units within the San
Fernando  Valley. Reference is made to Item 3 of the 1995 10-K for further
information  regarding this environmental proceeding.         

Item 3.          Defaults Upon Senior Securities.

                 On November 30, 1995, Rucon Services Corp. (formerly Arlen
Holdings Corp.), a wholly-owned subsidiary of the Registrant ("Rucon"), failed
to make a $175,000 installment payment to Arthur G. Cohen ("Mr. Cohen"), the
Registrant's Chairman of the Board, pursuant to the Current Obligations
Agreement dated March 29, 1993 between Rucon and Mr. Cohen.  In December 1995,
the Registrant and Rucon received a notice of such default (the "Current
Obligations Default") from Mr. Cohen.  The Current Obligations Default is an
event which, after notice and time to cure, becomes an Event of Default under
the Registrant's 5-1/4% Subordinated Notes, having an outstanding balance of
approximately $125,000,000, issued to Mr. Cohen (the "Cohen Notes") and to
members or entities of the family of Arthur N. Levien, a deceased former
director/officer of the Registrant (the "Levien Notes" and, collectively with
the Cohen Notes, the "Notes").  The Cohen Notes, which had an outstanding
balance of approximately $84,000,000 at November 30, 1995, have been pledged
since 1993 to Bank Leumi Trust Company of New York ("Bank Leumi") as security
for certain obligations of Mr. Cohen to Bank Leumi.  In 1993, the Registrant
collateralized the Notes with, among other things, a pledge of the outstanding
shares of capital stock of Rucon (the "Rucon Shares"), which  indirectly owns
the outstanding capital stock of all the Registrant's operating subsidiaries.

                 Shortly after January 1, 1996, the Registrant and Rucon
received from Mr. Cohen, as the agent (the "Agent") for the holders of the Notes
(the "Holders"), a notice accelerating all principal and interest due under the
Notes and were advised by the Agent that, in his capacity as the Agent, he
expected to ultimately foreclose on the Rucon Shares and to conduct a public
sale of the Rucon Shares in accordance with the New York Uniform Commercial
Code.  Such a sale (the "UCC Sale"), if consummated, will result in the loss by
the Registrant of all its operating subsidiaries and produce for the Registrant
only (a) a reduction in the outstanding indebtedness under the Notes equal to
75% of the net purchase price paid for the Rucon Shares by the successful bidder
at the public sale and (b) proceeds for the residual interest of the Registrant
in the Rucon Shares equal in amount to 25% of such net purchase price.

                 Inasmuch as neither the Registrant nor Rucon is currently
financially able to cure the Current Obligations Default, to pay the principal
and accrued interest asserted by the Agent to be due under the Notes or to
challenge the UCC Sale in the courts, the Registrant and Rucon have, since the
Current Obligations Default, been discussing certain opportunities which the
Agent and Mataponi, L.L.C. ("Mataponi"), a limited liability company controlled
by Mr. Cohen's wife (who is a principal shareholder of the Registrant), have
offered to the Registrant and Rucon if Mataponi is the successful bidder at the
UCC Sale.  These opportunities include the opportunity to:

                 (1) facilitate the assignment of the indebtedness of Mr. Cohen
         secured by the Notes (and the collateral securing the Notes) from Bank
         Leumi to Mataponi, following which Mataponi and the Agent will 
         consent to an extension in the maturity date of the Notes from July 
         31, 1997 to December 28, 2033 and the release of the pledged shares 
         of Common Stock of the Registrant's and Rucon's subsidiary, Grant 
         Products, Inc. ("Grant"), from the collateral securing the Notes;

                 (2) satisfy the currently-unsatisfied judgment obtained against
         the Registrant by Morgan Guaranty Trust Company of New York ("Morgan"),
         have discontinued (with prejudice) the pending lawsuits initiated by
         Morgan against the Registrant and Rucon and have discharged and
         cancelled the two past due promissory notes held by Morgan which the
         Registrant had issued to Mr. Cohen and which Mr. Cohen had assigned to
         Morgan (all of the foregoing obligations to Morgan being collectively
         referred to as the "Morgan Obligations" and being described in the
         Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
         August 31, 1995), all of which could not be accomplished without (i)
         the availability of the shares of Common Stock of Grant (the

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         "Grant Stock") for their pledge to Grant's lender, Sumitomo Bank of
         California ("Sumitomo"), as security for a $3,000,000 term loan which
         would be upstreamed to Arlen to discharge and satisfy the Morgan
         obligations and (ii) the consent of the Agent to such term loan and the
         use of the proceeds thereof for such purpose;

                 (3) satisfy, with the 25% of the net proceeds of the UCC Sale
         that the Registrant will retain for its residual interest, if Mataponi 
         is the successful bidder for the Rucon Shares, certain secured 
         obligations (the "Secured Obligations") to third parties who may be 
         deemed to be affiliates of Mr. Cohen; and

                 (4) attempt to acquire on favorable terms, with the assistance
         of Mataponi if Mataponi is the successful bidder for the Rucon Shares,
         two mortgage notes (the "Mortgage Notes"), secured by certain 
         property on White Plains Road, Bronx, New York.

                 After considering the opportunities (including the 38-year
extension in the maturity date of the Notes) offered by Mataponi and the
holders of the Notes to mitigate the anticipated loss of the Registrant's
operating companies which will occur upon the involuntary UCC Sale of the Rucon
Shares, the Registrant and Rucon entered into a Forbearance Agreement (the
"Forbearance Agreement") with Mataponi and Mr. Cohen, dated as of January 5,
1996, which provides (assuming that Mataponi is the successful bidder for the
Rucon Shares at the UCC Sale), among other things, that:                

                 (a) in consideration for the forbearances, extensions,
         opportunities and other benefits provided to the Registrant and Rucon
         under the Forbearance Agreement, they will not litigate or otherwise
         contest the acceleration of the Notes or the foreclosure and public
         sale of the Rucon Shares;

                 (b) Rucon, as an accommodation to Mataponi, will acquire from
         Bank Leumi, pursuant to an Assignment and Assumption Agreement between
         Bank Leumi and Rucon (the "Assignment Agreement"), for $5,500,000 to be
         provided by Mataponi, and then assign to Mataponi, certain indebtedness
         (the "Leumi Debt") of Mr. Cohen to Bank Leumi, having a principal
         balance of approximately $12,000,000, which is secured by the Cohen
         Notes (which in turn are secured by, inter alia, the Rucon Shares and
         the Grant Stock);

                 (c) in order to induce Mataponi and the Agent to consent to the
         release of the Grant Stock from the collateral for the Notes, Rucon
         will pledge to Bank Leumi, pursuant to a Restructuring Agreement
         between Bank Leumi and Mr. Cohen (the "Restructuring Agreement"), as 
         collateral for indebtedness of Mr. Cohen to Bank Leumi in the 
         principal amount of $2,722,513.33, 55% of the outstanding shares of 
         capital stock of Rucon's wholly-owned subsidiary, Curtis Holding 
         Corporation ("Curtis Holding"), and will cause Curtis Holding to 
         pledge to Bank Leumi, as additional collateral therefor, 55% of the 
         outstanding shares of capital stock of Curtis Partition Corporation 
         ("Curtis Partition");

                 (d) upon the assignment to Mataponi of the Leumi Debt and the
         collateral therefor and the pledge of 55% of the capital stock of
         Curtis Holding and Curtis Partition to Bank Leumi, the Holders,
         Mataponi and the Agent will cause the Grant Stock to be released;

                 (e) upon the release of the Grant Stock from the collateral for
         the Notes, it will be pledged to Sumitomo to induce Sumitomo to loan to
         Grant and a sister company, on a term loan basis, $3,000,000 (the
         "Sumitomo Advance"), which Sumitomo, Mataponi and the Agent would 
         permit to be dividended through to Rucon, which would


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         pay these funds to the Registrant to obtain a release of certain
         obligations that had been assumed by Rucon from the Registrant in 1993;

                 (f) upon the receipt of the aforesaid $3,000,000 payment from
         Rucon, the Registrant will use these funds to obtain from Morgan the
         satisfaction, discharge and cancellation of the Morgan Obligations;

                 (g) the Registrant may attempt to acquire the Mortgage Notes,
         which will mature on December 28, 2034, on favorable terms, with the
         assistance of Mataponi if Mataponi is the successful bidder for the
         Rucon Shares;

                 (h) in addition to receiving 25% of the net proceeds from the
         UCC Sale of the Rucon Shares for the Registrant's residual interest
         therein (which the Registrant will apply to the satisfaction of the
         Secured Obligations), the Registrant will receive, if Mataponi is the
         successful bidder for the Rucon Shares, a $2,000,000 promissory note
         (the "$2,000,000 Note") payable in quarterly installments over a two
         year period, to be issued by Automotive Accessories Holdings, L.L.C.,
         which will be the parent of the companies owning the assets of the
         Registrant's current automotive accessory subsidiaries; and

                 (i) the Registrant, on the one hand, and Rucon and its
         subsidiaries, on the other hand, will exchange mutual releases, the
         Registrant will deliver a general release to Mataponi and the
         Registrant will be released from any further obligations under the 1993
         Current Obligations Agreement between Rucon and Mr. Cohen.

                 On January 16, 1996, the transactions described above in
clauses (b), (c), (d), (e) and (f) were consummated and, on January 17, 1996,
the Agent notified the Registrant and Rucon that the UCC Sale has been scheduled
for February 6, 1996.

                 If the UCC Sale takes place as contemplated (a situation which
is outside the control of the Registrant and in which the Registrant is not a
participant) and Mataponi is the successful bidder for the Rucon Shares, the
Forbearance Agreement requires that (1) the Agent remit 25% of the net proceeds
from the UCC Sale to the Registrant for its residual interest in the Rucon
Shares, (2) the Holders, Mataponi and the Agent withdraw the
previously-delivered acceleration notice and extend the maturity date of the
Notes to December 28, 2033, (3) Rucon deliver the $2,000,000 Note to the
Registrant and (4) Mataponi assist the Registrant in attempting to acquire the
Mortgage Notes on a favorable basis.

                 In the event that the UCC Sale occurs, the Registrant will
lose all of its operating companies and cease to have any source of income from
operations in the near term.  However, the Registrant will receive 25% of the
net proceeds from the UCC Sale and, if Mataponi is the successful bidder for the
Rucon Shares, will have the installment payments from the $2,000,000 Note to
meet its short-term cash needs and the opportunity to acquire the Mortgage Notes
to add long-term asset value to its balance sheet.  The Notes will have been
extended for 38 years (during which time interest will accrue at the current 
rate of 8% per annum) and will no longer be subject to default other than for
non-payment of principal or interest or bankruptcy-related events.  As
extended, the Notes will provide for the Holders to receive 50% of the
Registrant's Net Income (as defined in the Forbearance Agreement) quarterly on
account of the indebtedness under the Notes and will, at the request of the
Holders, be secured by certain assets which may be acquired by the Registrant
within the next 18 months.                                         

                 In entering into the Forbearance Agreement, the Registrant
believed that if the benefits thereof are not available, the Registrant would be
unable to pay the accelerated Notes and would be compelled to liquidate, as a 
result which the Registrant would cease to continue as a viable business
entity.

                If the Forbearance Agreement is consummated, the Registrant 
retains its substantial net operating loss carryforwards and, having
satisfied the Morgan Obligations and, with the cooperation of Mataponi, having
achieved the release of the Notes and the collateral therefor from the liens
thereon of Bank Leumi, expects to seek new business opportunities.

                 In the event that the UCC sale occurs but Mataponi is not the
successful bidder for the Rucon Shares, the Registrant will be entitled to
payment for its 25% residual interest therein.  However, inasmuch as the
transactions contemplated by the Forbearance Agreement are intended to be
integrated parts of a single transaction which can be consummated only in its
entirety, the Registrant will not receive certain of the benefits provided for
in the Forbearance Agreement, including the extension in the maturity date of
the Notes (which will then remain immediately due and payable in full) and the
$2,000,000 Note which the Registrant considers necessary to meet its short-term
operating expenses.  The Registrant will also have certain obligations to
Mataponi, including obligations to pay to the holders of the Notes an amount
equal to the Sumitomo Advance and to deliver the Grant Stock back to Mataponi.
However, the Registrant has been advised that, in order to enhance the value of
the Rucon Shares, the Agent and Mataponi have agreed, whether or not Mataponi is
the successful bidder for the Rucon Shares, to release their security interests
in the outstanding stock of Arlen Automotive, Inc. ("Automotive") at the closing
of the UCC Sale. Automotive is wholly-owned by Rucon and is the direct parent of
all of the Registrant's operating subsidiaries other than Curtis Partition.

                 The foregoing summary of the transactions described in the
Forbearance Agreement, the Assignment Agreement and the Restructuring Agreement
is qualified in its entirety by reference to such Agreements, copies of which
are filed as Exhibits 10.15, 10.16 and 10.17, respectively, to this Report.


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                                   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 thereunto duly authorized.


                                            THE ARLEN CORPORATION


                                              /s/ Allan J. Marrus
                                            ------------------------------------
Date:  February 5, 1996                     By    Allan J. Marrus, President


                                              /s/ David S. Chaiken
                                            ------------------------------------
Date:  February 5, 1996                     By    David S. Chaiken, Treasurer


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