The U.S. Trustee (UST) assigned to the American Eagle Energy case filed with the U.S. Bankruptcy Court a motion to convert the Chapter 11 reorganization case to a liquidation under Chapter 7.
The Trustee explains, “Since the closing of the asset sale, the estates’ assets have consisted principally of cash, receivables, and causes of action, including potential avoidance actions. Surprisingly, the estates’ assets are not described in any meaningful way in the Disclosure Statement….The Debtors are not engaged in any business operations and are not generating revenue. By contrast, administrative expenses continue to accrue….Professional fees will continue to be incurred by the estates, particularly as it appears that the plan confirmation process will be contested. The Disclosure Statement is lacking in basic information, including a description of assets, a meaningful liquidation analysis, and estimated distributions on claims.”
The motion continues, “The Plan cannot be confirmed because, among other things, it contemplates extensive discharges for debtors ineligible for discharges and contemplates extensive releases of third parties, but does not contemplate the payment in full of administrative expenses….On the other hand, if these cases were converted to chapter 7, a trustee could investigate avoidance actions and, if appropriate, pursue them for the benefit of creditors and the estates. In addition, claimants entitled to administrative priority would continue to enjoy priority upon conversion, in contrast to dismissal.”
Read more energy bankruptcy news.
The post American Eagle Energy Bankruptcy Liquidation Sought appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.