Tuesday Morning committee seeks deeper look into debtor finances

By Sarah Lizee

Olympia, Wash., May 8 – Tuesday Morning, Inc.’s official committee of unsecured creditors is seeking an order authorizing the examination of the debtors and requiring them to produce certain documents, according to a motion filed with the U.S. Bankruptcy Court for the Northern District of Texas.

The committee said that, to date, the debtors have yet to conduct a comprehensive investigation into the existence or viability of any prepetition causes of action that could return substantial benefit to the creditors of the estates.

“Irrespective of the reasoning behind this delay, the committee can neither sit idly by nor effectively discharge its duty without lifting the proverbial curtain on the debtors’ financial decisions and condition,” the group said in its motion.

The committee said there are several areas that require an in-depth investigation by the committee, including the debtors’ prepetition debt structure, transfers to and from insiders, and its financial deterioration over the past two years since emergence from its previous Chapter 11 cases.

And, given the tumultuous start to these Chapter 11 cases, the debtors’ prepetition and post-petition conduct must also be objectively evaluated, as several decisions (or the lack thereof) may have caused material harm to the estates, the group stated.

“Immediate receipt of this information is crucial given the necessary timeline of this case,” the committee said.

The committee said it tried to confer with the debtors regarding a mutually agreeable date, place and time for the examination, but agreement could not be reached.

The group said the examination will allow it to determine the nature, extent and scope of the debtors’ assets, including any claims that it may hold.

Tuesday Morning is a discount off-price retailer based in Dallas. The company began its second Chapter 11 bankruptcy case on Feb. 14 under case number 23-90001. The previous case started on May 27, 2020 under case number 20-31476. The company exited that round of bankruptcy on Dec. 31, 2020.

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