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: December 14, 1998

                                ALLSTAR INNS INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
                            (State of Incorporation)

                 0-22930                          77-0323962
          (Commission File No.)       (IRS Employer Identification No.)

                          200 E. Carrillo Street, #300
                         Santa Barbara, California 93101
                    (Address of principal executive offices)

                                 (805) 730-3383
                         (Registrant's telephone number)
                                  



ITEM 5.   OTHER EVENTS

The Registrant issued the following press release on December 10, 1998:

      FOR IMMEDIATE RELEASE:

      Contact: Edward J. Gallagher, Vice Chairman / 
               (805) 730-3383

                           ALLSTAR INNS INC. ANNOUNCES
                         FINAL LIQUIDATING DISTRIBUTION

            SANTA BARBARA, CALIFORNIA. DECEMBER 10, 1998. In accordance with the
      Plan of Complete  Liquidation and Dissolution  approved and adopted by the
      stockholders  of Allstar Inns on May 8, 1997, the Company  announced today
      that  it has set  December  28,  1998 as the  Record  Date  for the  final
      liquidating  cash  distribution to its holders of common stock. The amount
      of the final distribution will be $3.04 per share, or $3,184,227, and will
      be made to stockholders  according to their holdings of common stock as of
      the Record Date.

            On the Record Date the Company will close its stock  transfer  books
      and  discontinue  recording  transfers of shares of its common stock.  The
      payment  date for the final  distribution  has been set for  approximately
      January 19,  1999.  Holders of Company  common stock as of the Record Date
      will not be required to surrender their common stock certificates in order
      to receive the pro rata portion of the final distribution.

                                      # # #


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                                    SIGNATURE

      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.
 
                                             ALLSTAR INNS INC.

                                             By: Edward J. Gallagher
                                                 -------------------------
                                                 Edward J. Gallagher
                                                 Vice Chairman - Principal
                                                 Accounting Officer

Dated:  December 14, 1998


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