Former Escada's U.S. Trustee asks court to convert case to Chapter 7

By Caroline Salls

Pittsburgh, March 19 - EUSA Liquidation Inc.'s U.S. Trustee asked the U.S. Bankruptcy Court for the Southern District of New York to convert the company's Chapter 11 bankruptcy case to Chapter 7, according to a Friday court filing.

According to the motion, EUSA has sold substantially all of its assets and is currently not operating.

U.S. Trustee Diana G. Adams said all that is left to do is prosecute some causes of action, if there are any claims, and to distribute "the limited pot of funds" to creditors.

Despite the fact that the company promised to file a plan and disclosure statement shortly after the sale of substantially all of its assets, which was completed in mid-January, Adams said a plan has yet to be filed.

The U.S. Trustee said EUSA's official committee of unsecured creditors has indicated that it is prepared to file a plan in the near future, but proceeding with the confirmation of a plan does not appear to benefit unsecured creditors.

In addition, Adams said the administrative expenses related to the wind-down in Chapter 11 would undoubtedly be higher than those related to a Chapter 7 case.

A hearing is scheduled for April 29.

EUSA was formerly Escada (USA), which is a wholly owned subsidiary of Escada AG, an Aschheim/Munich, Germany, designer and marketer of upscale women's apparel. The subsidiary filed for bankruptcy on Aug. 14, 2009. Its Chapter 11 case number is 09-15008.

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