According to the U.S. Bankruptcy Court docket, American Eagle Energy’s official committee of unsecured creditors filed a motion to convert the Chapter 11 reorganization case to a liquidation under Chapter 7.
The motion explains, “What the Ad Hoc Noteholder Group is trying to do through the Plan — at this late stage of the case after substantially all of the Debtors’ assets have been sold and after clear rulings were issued by the Court – is transparent and clearly not in the best interest of the estates and their unsecured creditors….The Noteholders’ continued improper, bad faith purposes for the Chapter 11 process and attempts to vitiate the Court’s prior cash collateral orders and have unsecured creditors foot the Noteholders’ bill provide good cause for conversion.”
The motion continues, “Moreover, when the focus is properly placed on effectively and cost-efficiently wrapping up the cases for the benefit of the estates and their creditors, and away from matters that are strictly intercreditor disputes or matters indisputably solely for secured creditors’ benefit, only one outcome, as a practical matter, makes any sense – prompt conversion to Chapter 7. Conversion will be a significantly cheaper and more expeditious process than continued administration under Chapter 11, resulting in larger recoveries for unsecured creditors; the Noteholders’ unnecessarily multi-layered, prohibitively expensive, defective plan, together with the substantial expense of litigating or otherwise fixing all such defects, would deplete such recoveries, likely to zero or close to zero. In short, conversion is clearly in the best interest of the estates and their creditors.”
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