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Special Devices creditors committee calls for conversion to Chapter 7
By Caroline Salls
Pittsburgh, May 6 - Special Devices, Inc.'s official committee of unsecured creditors has requested conversion of the company's Chapter 11 bankruptcy case to Chapter 7, citing "grave concerns about the company's bankruptcy case," according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.
Specifically, the committee said the company's proposed plan of reorganization is incomplete and offers "scant recovery" for unsecured creditors.
In addition, the committee said "a bad situation became worse" when Special Devices asked for an increase to its debtor-in-possession credit facility because the company was apparently surprised by the continued decline in the automotive market, which accounts for more than 88% of its revenue.
"The debtor has gone from seeking a confirmation hearing on June 30, 2009 to admitting there is no likelihood of confirming a plan anytime soon," the committee said in the motion.
"In the meantime, the debtor seeks to saddle the company with even more secured debt."
Special Devices, a Moorpark, Calif., manufacturer of pyrotechnic devices for airbags, filed for bankruptcy on Dec. 15. Its Chapter 11 case number is 08-13312.
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