Value City's U.S. Trustee says disclosure statement needs to better detail claim funding

By Jennifer Lanning Drey

Portland, Ore., March 10 - Value City Holdings, Inc.'s U.S. Trustee Diana G. Adams objected to the company's disclosure statement for its joint plan of liquidation on the grounds that it contains insufficient information about the funding of the $300,000 distribution to unsecured creditors, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, Adams said it appears that Value City must recover $2.5 million from avoidance actions to fund distributions to unsecured creditors and to fully fund priority claims.

The company appears to have only collected $1 million, Adams added.

"The disclosure statement must provide further information on how the debtors expect to collect $2.5 million from vendor avoidance actions and file a feasible plan," the trustee said.

Additionally, Adams said the disclosure statement needs to provide more detail on causes of action that were previously considered by the company's official committee of unsecured creditors and why the committee has abandoned all potential causes of action.

The disclosure approval hearing is scheduled for March 16.

Value City, a Columbus, Ohio, off-price retailer, filed for bankruptcy on Oct. 26, 2008. Its Chapter 11 case number is 08-14197.

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