Schramm’s Chapter 11 bankruptcy cases converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Dec. 11 – Schramm, Inc.’s Chapter 11 cases were converted to Chapter 7 on Dec. 11 by the U.S. Bankruptcy Court for the District of Delaware, according to an order.

As previously reported, the company asked the court in October 2019 to convert the cases, but the conversion was put on hold pending resolution of an asset sale order appeal filed by the official committee of unsecured creditors appointed for the company’s case.

The committee said in a motion to have its sale appeal sent directly to the U.S. Court of Appeals for the Third Circuit that the company’s motion to convert the case came after the sale order was appealed.

The committee also said it is specifically appealing the sale of avoidance actions over its objections.

In its case conversion motion, Schramm said under its debtor-in-possession financing and sale orders, the asset purchaser agreed to fund the administrative expenses of the Chapter 11 cases through and including a sale.

The company said the sale closed on Oct. 2, 2019.

In accordance with the sale order, Schramm said the DIP lender has funded cash needed for remaining case obligations that were not assumed by the buyer, as well as $200,000 that remains owed by the debtors and was not assumed by the purchaser under the sale order, as well as $200,000 on account of estate wind-down expenses.

Now that the sale has closed, the company said it has liquidated collateral and has no further sources of financing or additional funds other than the potential proceeds of retained litigation.

In addition, Schramm said it does not have the ability to fund ongoing administrative expenses that may be incurred after the closing of the sale.

Schramm is a West Chester, Pa.-based drilling company. The company filed bankruptcy on June 24, 2019 under Chapter 11 case number 19-11396.

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