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Malden Mills bankruptcy judge says case refiled just to prompt venue change
By Caroline Salls
Pittsburgh, Jan. 22 - Malden Mills Industries, Inc.'s previous Chapter 11 case was closed in Massachusetts and refiled in the U.S. Bankruptcy Court for the District of Delaware just to prompt a change of venue, according to a decision filed Monday with the U.S. Bankruptcy Court for the District of Massachusetts.
According to the decision, the company's bankruptcy case filed on Nov. 29, 2001 in the Massachusetts court was closed on Jan. 9 after the plan of reorganization took effect and the current case was filed only 14 hours later in the Delaware court.
After the second Chapter 11 filing, the company's creditor trust, which owns 26% of the company's common stock, filed a motion asking the court to vacate the order closing the previous case and to change the venue of the new case to the Massachusetts court.
As previously reported, the case was transferred to Massachusetts following a Jan. 12 hearing.
The creditor trust said it was misled and it never would have consented to the final decree in the first case if it had known the company planned to turn around and refile in Delaware.
In the decision, judge Joel B. Rosenthal said the company chose the timing of the second filing "not based on its economic situation and the needs of all constituencies, but to facilitate venue selection, possibly to the detriment of the estate."
Malden Mills, a Lawrence, Mass.-based textile company, filed for bankruptcy on Jan. 10 in the U.S. Bankruptcy Court for the District of Delaware. The case was transferred to the Massachusetts court on Jan. 16. Its Chapter 11 case number is 07-40124.
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