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 Earliest Event Reported: July 18, 2001



                         THE HALLWOOD GROUP INCORPORATED
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             (Exact name of registrant as specified in its charter)



            DELAWARE                      1-8303                 51-0261339

(State or other jurisdiction of   (Commission File Number)     (IRS Employer
 incorporation or organization)                              Identification No.)

3710 Rawlins, Suite 1500
Dallas, Texas                                                     75219
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(Address of principal executive offices)                       (Zip Code)



Registrant's telephone number, including area code (214) 528-5588









ITEM 5.           OTHER EVENTS AND REGULATION FD DISCLOSURE

On July 18, 2001,  the Delaware  Chancery  Court  rendered its opinion in Gotham
Partners, L.P. v. Hallwood Realty Partners, L.P. et al. (C.A. No. 15754). In its
decision,  the court  determined  that an option plan and a sale of units to the
Company in connection  with a reverse unit split  implemented by Hallwood Realty
Partners,  L.P.  ("HRP")  in 1995  were in  compliance  with  HRP's  partnership
agreement.  The  court  also  found  that the sale of  units to the  Company  in
connection  with a 1995  odd-lot  offer  by HRP  did  not  comply  with  certain
procedures required by the HRP partnership  agreement.  The court ruled that the
defendants other than HRP pay a judgment in the amount of $3,417,423,  plus pre-
judgment  interest from August 1995 to HRP. The amount represents what the court
determined was an underpayment by the Company. The court's judgment is not final
until all rehearings and appeals have been exhausted.











                                    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, thereunto duly authorized.

Dated: July 25, 2001


                                            THE HALLWOOD GROUP INCORPORATED



                                            By:  /s/ Melvin J. Melle
                                                 -------------------------------
                                            Name: Melvin J. Melle
                                            Title: Vice President