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Zohar III Bankruptcy Dismissal, Trustee Sought

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MBIA Insurance (MBIA) and the Zohar III Controlling Class (together, the “Secured Creditors” filed with the U.S. Bankruptcy Court a motion to dismiss Zohar III’s Chapter 11 case or, if not dismissed, for appointment of a Chapter 11 trustee.

The motion explains, “The Secured Creditors move to dismiss these chapter 11 cases because they were filed in bad faith. The petitions serve no valid bankruptcy purpose and, instead, were filed solely as a litigation tactic by Lynn Tilton in a transparent and admitted attempt to avoid her day of reckoning as a defendant in multiple pending litigations brought against her by the Debtors, acting through their duly-appointed and independent current collateral manager.”

In addition, “There can be no proper bankruptcy purpose for these particular Debtors. They have no operations and employees of their own. They are structured by contract to be governed entirely by their collateral manager and an Indenture Trustee….If the bankruptcy proceeds, however, the appointment of a trustee over the Debtors’ estates is essential. Cause exists for such an appointment: Tilton will not protect the Funds’ property, as their assets principally consist of assets she has attempted to misappropriate and litigation claims for damages and equitable relief against her; Tilton has incurable conflicts of interests that prevent her from exercising her fiduciary duties on behalf of the Debtors whose interests are directly adverse to hers; Tilton has a history of favoring her own interests as an insider to the detriment of the interests of the Debtors and their creditors–in these cases, for all practical purposes, MBIA and the Zohar III noteholders; and the parties have a litigious and acrimonious history.”

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The post Zohar III Bankruptcy Dismissal, Trustee Sought appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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