Levine Motions to Convert Diamond Bankruptcy to Chapter 7 Case
Kenneth Levine, former Diamond Glass chairperson and the company's largest shareholder, has filed a motion to convert the company's bankruptcy case to a Chapter 7 liquidation case. Originally, the petition for bankruptcy was filed for reorganization under Chapter 11.
In the motion, Levine notes that the "Debtors have had no business to operate since June 30, 2008," and due to that, the company, now known as DG Liquidation Corp., has no income, the only cash on hand is "either quickly diminishing as it is used to fund these cases."
The debtors had filed a Chapter 11 plan on August 15, but Levine notes that the confirmation hearing has not yet been held, and that Levine's own cash collateral currently is funding the case.
"Levine has not objected to the use of his cash collateral-despite the fact that these chapter 11 liquidation cases are more expensive than chapter 7 cases-because Levine, the Debtors, the Committee and Plainfield have been negotiating an attempted global settlement of potential estate causes of action against Levine in return for releases and the allowance of Levine's claim in a reduced amount," reads the motion.
Plainfield filed a suit against Levine in September, alleging that he had delayed Diamond's bankruptcy filing in an effort to preserve $10 million he invested in the company. (CLICK HERE for related story.)
In the recent motion, Levine claims that "settlement negotiations have stalled because Plainfield alone has failed to respond to offers and shows no sign of reviving settlement negotiations."
The motion goes on to state that "any further use of Levine's cash collateral will be an unauthorized use."
"All that remains to be done in this case is litigation or settlement with Levine and prosecution of avoidance actions, both of which can be done far more cheaply and efficiently by a chapter 7 trustee paying one set of lawyers on a contingency fee basis, rather than a chapter 11 case where Debtors' and Committee counsel will be paid an hourly rate," the motion continues.
CLICK HERE for full text of motion.
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