Merit committee opposes asset sale, seeks unsecured creditor benefits

By Caroline Salls

Pittsburgh, July 18 - Merit Group, Inc.'s official committee of unsecured creditors objected to the proposed sale of substantially all of the company's assets, arguing that "the sale does not appear to provide any real or meaningful benefit to the unsecured creditors in these cases," according to a Monday filing with the U.S. Bankruptcy Court for the District of South Carolina.

"The only beneficiary of the proposed sale is Regions Bank, which will receive almost all of the net proceeds, possibly leaving the estates administratively insolvent and with no distribution for general unsecured creditors," the committee said in the objection.

"Regions and the management of the debtors should not be permitted to use the this court as a foreclosure court and liquidate its collateral in Chapter 11 without providing sufficient resources to administer the estates post-sale and to fund a distribution to unsecured creditors."

The sale hearing is scheduled for Thursday.

Merit, a Spartanburg, S.C., paint sundry distributor, filed for bankruptcy on May 17. The Chapter 11 case number is 11-03216.

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