Former DCL Holdings’ bankruptcy case converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Aug. 30 – DCLHWD (USA) Inc., formerly known as DCL Holdings (USA), Inc., had its Chapter 11 bankrutpcy case converted to Chapter 7, according to an order filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company sold its assets to Pigments Holdings, Inc. through a $45 million credit bid of prepetition term loan debt, in addition to enough cash to repay ABL debt in full, an additional cash consideration of up to $2.75 million and assumed liabilities.

Following the closing of the sale, the debtors provided certain transition services to the purchaser and simultaneously began winding down its estates.

The passage of the governmental bar date on June 20 allowed the debtors to gain a more complete understanding of the outstanding claims and the potential, if any, for a plan confirmation process, the company said in a motion seeking the conversion.

During this time, the debtors also engaged in discussions with the official committee of unsecured creditors regarding the future of the Chapter 11 cases, but the discussions have not yielded a potential path forward except for conversion of the cases, the company said.

The debtors currently hold $950,372.31 at Wells Fargo Bank, NA, which includes $254,679.45 in a professional fee account and $695,692.86 in a separate operating account.

The company said it believes there are material valid claims under section 507(a)(8) of the bankruptcy code, but the debtors have no further source of financing to pay these claims, and the debtors aren’t generating any revenue because of the asset sale.

Thus, confirmation of a feasible liquidating plan under Chapter 11 is highly unlikely, if not impossible, the company had said.

Based in Toronto, DCL is a manufacturer and supplier of pigments to customers in the coatings, plastics, printing inks and paper industries around the world. The company filed Chapter 11 bankruptcy on Dec. 21, 2022 under case number 22-11319.

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