Christmas Tree Shops committee withdraws motion for case conversion

By Sarah Lizee

Olympia, Wash., July 14 – Christmas Tree Shops, LLC’s official committee of unsecured creditors withdrew its motion seeking conversion of the company’s Chapter 11 bankruptcy case to Chapter 7 filed with the U.S. Bankruptcy Court for the District of Delaware on July 10.

As previously reported, the committee had said the cases are administratively insolvent, as admitted by the debtors, who are suffering a “continuing loss to or diminution to the estate” that is detrimental to creditors.

The group also said the affiliation between debtor-in-possession lender Restore Capital, LLC and affiliate Hilco, the selected going-out-of-business (GOB) liquidator, could create “mixed motives” for Restore, whose affiliate “earns a dramatically better return from GOB sales” than Restore will on its $4.8 million last-out DIP position.

The group said it believes that this affiliation between the DIP lender and liquidator necessitates a higher level of scrutiny with respect to any wind-down/GOB sale budget agreed to by the secured lenders, particularly one that will pay only those administrative expenses that support the GOB sale process, but not remaining administration.

“Thus, given the administrative insolvency, i.e., the continuing loss to or diminution of the estate, coupled with the fact that administrative expenses remain unbudgeted by the liquidating secured lenders, including Hilco's affiliate, Restore, these cases ought to be converted to ensure a fair liquidation process for all creditors,” the committee had said.

Middleborough, Mass.-based Christmas Tree Shops sells home goods with a specialty focus on seasonal products. The company filed bankruptcy on May 5 under Chapter 11 case number 23-10576.

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