The U.S. Trustee filed with the U.S. Bankruptcy Court an expedited motion to convert BioNitrogen Holdings’ cases to Chapter 7 and an objection to the motion to dismiss.
The motion explains, “After nearly 18 months as in chapter 11, the Debtors have been unsuccessful in securing the necessary financing or strategic partner necessary to proceed with a plan of reorganization. The Debtors have now sought dismissal of the cases and for authority to disburse the remaining funds to professionals and in a separate motion to transfer the most valuable asset in these cases, the patents and trademarks (‘Assets’) owned by 4A Technologies to Annon Consulting. Annon is a secured creditor in the lead case, but an unsecured creditor in 4A Technologies. The Debtors describe the proposed transaction as a credit bid but in reality there is no sale and there is no credit bid. The sale motion is in essence seeking authority to transfer the Assets owned by 4A Technologies to Annon as a general unsecured creditor in lieu of a distribution on its unsecured claim in that case. The proposed transfer allows Annon to take ownership of the Assets without actually foreclosing on its security interest in the membership interests of 4A Technologies….In these cases, the record supports a finding of cause to deny dismissal and convert these cases. There is no ongoing business. The Debtors have sought dismissal and cannot proceed in chapter 11. The Debtors are seeking a structured dismissal by arranging for a transfer of the patents to Annon and attempting to distribute funds on deposit in violation of the priority scheme established by the Code…the UST respectfully requests that this Court to deny the Motion to Dismiss and to enter of an order converting the above-captioned Chapter 11 cases to cases under Chapter 7, and grant such other further relief as may be just and proper.” The Court scheduled an April 25, 2017 hearing on the motion.
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