SUPERIOR BANKRUPTCY CONVERTED FROM CHAPTER 11 TO CHAPTER 7
On October 28, 2009, the Honorable Judge Jennemann conducted a status conference in the Superior Homes & Investments, LLC (“Superior”) bankruptcy proceeding. Wendy Anderson represents the Petitioning Creditors, who successfully filed the Involuntary Chapter 11 Bankruptcy Petition against Superior. Ms. Anderson was also successful in obtaining the appointment of an independent Trustee in the bankruptcy action. The Trustee's counsel made a Motion to convert the case to a Chapter 7 bankruptcy from the involuntary Chapter 11 proceeding. This Motion was not unexpected. Since there is no business to reorganize (which is the purpose of a Chapter 11 proceeding) then it is more appropriate to convert to a Chapter 7 proceeding, which is a liquidation of the Debtor's assets, with the pro rata proceeds paid to creditors. A Chapter 7 proceeding is less expensive than a Chapter 11 case, as the Debtor has to pay quarterly fees to the U.S. Trustee during a Chapter 11 case. These fees do not need to be paid during a Chapter 7 case.
Robert Morrison, the Trustee appointed in the Chapter 11 case, has agreed to remain as Trustee during the Chapter 7 case. This is good news for the creditors. As a forensic accountant, he is using his skills to follow the Superior “money trail” to find assets to be recovered and liquidated for the benefit of creditors. His attorneys have propounded discovery on Superior's affiliates to determine if there were any inter-company transfers that can be avoided (or unwound) as preferential or fraudulent transfers. The Trustee and his counsel do not receive any compensation unless and until they recover assets. The discovery process will take months (maybe longer). Developments will be posted on our website as they occur.