Joe's Sports' creditors committee asks court to end cash collateral use, convert Chapter 11 case

By Caroline Salls

Pittsburgh, March 17 - Joe's Sports & Outdoor's official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Delaware to terminate the company's interim cash collateral use and objected to Joe's proposed debtor-in-possession financing, according to a Tuesday court filing.

The committee is also asking the court to reconsider its order approving the company's asset sale procedures, deny approval of the sale and DIP financing and convert Joe's Chapter 11 bankruptcy case to Chapter 7 "with the hope that the Chapter 7 trustee can right these sinking ships."

"The committee is gravely concerned with the interim DIP order, as it clearly serves as the backbone for the lenders' scheme to utilize these Chapter 11 cases for their sole and exclusive benefit and without regard to its disastrous effect on administrative, priority and general unsecured claims," the committee said in the filing.

The committee said the company has conceded that a reorganization of all or part of its business is not possible.

According to the filing, the interim DIP financing order is designed to provide the company with access to severely limited borrowings "that would achieve little more than to support a liquidation of the debtors' assets, enable the senior lenders to siphon substantial sums of money out of the debtors' estates and grant the lenders liens and super-priority claims on all of the debtors' previously unencumbered assets."

Joe's Sports, a Portland, Ore.-based sports and outdoor retailer, filed for bankruptcy on March 4 under the name G.I. Joe's Holding Corp. Its Chapter 11 case number is 09-10713.

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