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Two suppliers of Joe’s Sports & Outdoor have filed demands to reclaim property in the retailer’s Ch. 11 bankruptcy reorganization; meanwhile, the unsecured creditors committee has filed a motion with the court to force Joe’s into Ch. 7 liquidation.
Seattle Bike Supply and Umpqua Feather Merchants filed the property reclamations with the U.S. Bankruptcy Court, District of Delaware, on March 17 and March 23 for a total of approximately $100,000 in property. The creditors committee, which was appointed March 16, filed its motion on March 17 to move the Northwest retailer to Ch. 7.
The committee includes Raleigh America, TRF Capital, VF Outdoor, Columbia Sportswear, Rocky Brands, Under Armour, and All Sports Supply. In the March 17 motion, the committee asked the court enter an order sustaining the committee’s objections to the debtor in possession motion and the sale motion before the court, as well as reconsider and terminate the bid processes order and convert the case to Ch. 7 liquidation from the Ch. 11 reorganization case initially filed March 4, 2009 (Click here to read a March 5, 2009 SNEWS® story, “Joe’s Sports & Outdoor files for bankruptcy protection.”)
“Over the past several months, this court has stood witness to the progression of an alarming and deeply concerning trend in the overall case posture of retail chapter 11 filings,” the committee wrote in its court filing. “This court has far too frequently been asked to bless inadequate financing facilities and truncated sale schedules that achieve little more than to guarantee the repayment of lenders at the expense of administrative and unsecured creditors. These cases are no different.”
Noting that the committee was not appointed or formed until March 16, after the interim Debtor in possession order and bid procedures order were entered, the committee stated it never had an opportunity to properly express its concerns to the court regarding the orders.
Further in the court documents, the committee stated, “The committee submits this objection and cross-motion because the debtors have not articulated any business justification (other than their desire to placate the lenders) for a chapter 11 liquidation process that (a) they cannot afford, (b) is not projected to yield proceeds sufficient to fund a confirmable plan of liquidation, and (c) will extinguish any prospect of a meaningful opportunity for the debtors’ employees, vendors and landlords to maintain their employment or continue a valuable business relationship.”