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Werner U.S. trustee objects to motion to convert case to Chapter 7 bankruptcy
By Reshmi Basu
New York, Aug. 1 - Werner Holding Co. (DE)'s U.S. trustee objected to a motion filed by the official committee of unsecured creditors to convert the company's Chapter 11 case to Chapter 7 liquidation, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.
As previously reported, the committee formulated its plan of reorganization based on the assumption that the company's only administrative expenses would be its wind-down expenses and that there were no pre-sale administrative or priority claims remaining.
The committee said both assumptions turned out to be wrong, and it now believes that the company's wind-down budget will be insufficient to pay for its wind-down expenses.
The committee said its latest analysis shows a $450,000 shortfall in the wind-down budget and more than $75 million in unfunded administrative expense and priority claims.
Based on this new information, the committee said it does not believe it will be able to confirm its proposed Chapter 11 plan, or any other reorganization plan, in a reasonable time period.
According to Tuesday's filing, the trustee argues that conversion of the case to Chapter 7 would usurp her power and duties to oversee the case.
Furthermore, the purchasers of the company's assets, Levine Leichtman Capital Partners III LP and its affiliate Milk Street Investors LLC (LLCP), "would not be subject to supervision by either the UST [U.S. trustee] or the court, and would not be fiduciary," wrote Kelly Beudin Stapleton in the objection.
Werner, a Greenville, Pa., manufacturer and distributor of ladders, climbing equipment and ladder accessories, filed for bankruptcy on June 12, 2006. Its Chapter 11 case number is 06-10578.
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