Debtor Closes on Post-Petition Loan; Committee Dissolves

As expected, the Debtor closed on its Post-Petition Loan of $2,047,448.31 from Mercer County State Bank on or about 5/31/11.  It is expected that the initial distribution to unsecured creditors in the amount of $30,000.00 will occur shortly.  The terms of the Debtor’s Confirmed Chapter 11 Plan of Reorganization (“Plan”) govern the administration of the Debtor’s Bankruptcy Estate moving forward.

Also pursuant to the Plan, the Official Committee of Unsecured Creditors (“Committee”) is dissolved and employment of Committee Counsel is terminated, with certain limited exceptions.  As a result, this will be the final report made by the Committee pursuant to its obligations under 11 U.S.C. § 1102(b)(3).

As always, if you would like to have complete access to the Bankruptcy Court docket in this case, you can request a PACER I.D. by following the PACER link on this page, which will enable you to access the docket as well as view and print documents filed in the case. 

Court Enters Order Approving Emergency Joint Motion to Increase Amount of Court-Approved Post-Petition Loan

On 5/26/11, the Debtor, together with Official Committee of Unsecured Creditors and Mercer County State Bank ("Mercer Bank"), filed an Emergency Joint Motion to Increase Amount of Court-Approved Post-Petition Loan ("Joint Motion").  The primary purpose of the Joint Motion was to increase to amount being borrowed by the Debtor from Mercer Bank from the previously approved amount of $2,000,000 to $2,047,448.31.  The increase was necessary to cover a shortfall in funds needed to close the Post-Petition Loan, and the Joint Motion was presented on an emergency basis in light of the necessity to close the Post-Petition Loan by 5/31/11.  The rights of all other parties remain unaffected and continue to be governed by the terms of the Debtor's confirmed Chapter 11 Plan and/or otherwise by previous stipulation as filed.

Upon notification by the parties that the Joint Motion had been filed pursuant to the Judge's General Procedures on emergency matters, the Order approving the Joint Motion was also entered on 5/26/11.  The Post-Petition Loan is expected to close on 5/31/11.

Court enters Order confirming Debtor’s Second Amended Chapter 11 Plan of Reorganization

Following the confirmation hearing held on 4/28/11, the Bankruptcy Court entered an Order confirming the Debtor's Second Amended Chapter 11 Plan of Reorganization (“Plan”) filed on 4/26/11.  The Debtor shall pay unsecured creditors as follows:  1) $30,000 on the Effective Date of the Plan (which will be approximately 5/18/11); 2) $105,000 in six (6) semi-annual installments; and 3) the Contingent Payment to General Creditors, if any, as defined in Paragraph 1.17 and described in Exhibit A to the Plan.  The Debtor estimates that payments will result in a pro-rata distribution of approximately ten percent (10%) to unsecured creditors with claims greater than $1,500.00, plus any Contingent Payment.  Creditors with claims less than $1,500.00 will receive fifty percent (50%).  

In addition, the Debtor made certain concessions in its Plan and by way of Stipulations filed with the Court to address the prior Objections filed by various Parties.  A closing on certain material actions necessary to effectuate the Plan is currently scheduled for 5/18/11.

If you would like to have complete access to the Bankruptcy Court docket in this case, you can request a PACER I.D. by following the PACER link on this page, which will enable you to access the docket as well as view and print documents filed in the case.  Please also feel free to contact us at wldcommittee@quinnfirm.com to obtain a copy of the Second Amended Plan, Second Amended Disclosure Statement, and/or any other pleadings as filed.

Court Enters Order Directing Debtor to File Second Amended Plan and Disclosure Statement

On 4/1/11 the Bankruptcy Court entered an Order dismissing the Debtor’s Amended Chapter 11 Plan of Reorganization (“Amended Plan”).  On or before 4/26/11, the Debtor shall file and serve a Second Amended Plan and Disclosure Statement primarily to address those Objections raised with respect to the Amended Plan.  No further balloting will be necessary unless there are detrimental proposed changes as to any class of creditors.  A hearing on the confirmation of the Second Amended Plan and Disclosure Statement has been scheduled for 4/28/11 at 10:00 a.m. in the Erie Bankruptcy Courtroom, United States Courthouse, 17 South Park Row, Erie, Pennsylvania 16501.  The Court also entered Orders continuing generally all Objections until that date and time.

In addition, on 4/5/11 the Court entered an Order Authorizing Use of Cash Collateral pursuant to Mercer County State Bank’s (the “Bank”) agreement with the Debtor to extend the deadline upon which its commitment to refinance the Debtor expires until 5/18/11.  The Court also entered an Order continuing generally the hearing on the Debtor’s Motion for Authority to Incur Secured Debt, to Enter into Financing Agreement with the Bank, and to Grant First Priority Liens pursuant to Bankruptcy Code Section 364(C) until 4/28/11.