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Former Karmaloop interim trustee seeks dismissal of Chapter 7 cases
By Mark Reccek
Bethlehem, Pa., Jan. 26 – KL Wind-Down, Inc.’s, formerly Karmaloop, Inc., interim trustee Jeoffrey L. Burtch requested court approval to dismiss the Chapter 7 cases, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.
Burtch argues cause ex\ists to dismiss the cases as there are no unencumbered funds and assets available to administer the cases and estates.
Burtch said the company has a 401k benefits plan. The funds, he said, were distributed prior to case conversion. However, Burtch said plan termination will require assistance from professionals, whom the estates are unable to hire.
The company also issued paychecks to certain employees, without withholding and remitting payroll taxes for certain periods. Burtch contends the preparation of the W2s requires professional assistance, which cannot be provided.
Burtch additionally said he attempted to conduct a section 341 (a) meeting without success and has had to postpone the meeting three times due to the company’s inability to produce a witness.
According to the motion, “the trustee is unable to administer these cases. Moreover, in light of the absence of assets in these estates, no purpose is served by having these cases remain in Chapter 7. As such, the trustee believes that cause exists to dismiss these cases under section 707 (a) of the Bankruptcy Code."
A hearing is scheduled for March 9.
Karmaloop, a Boston-based cross-platform digital commerce and media property company specializing in the sale of global streetwear fashion and culture, filed for bankruptcy on March 24. The Chapter 11 case number is 15-10635.
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