U.S. Trustee’s Office Challenges Gibson’s Effort to End Chapter 11 Cases
On December 14, the U.S. Trustee’s Office filed a motion asking the Delaware bankruptcy court to delay action on Gibson Brands, Inc.‘s bid to close its Chapter 11, claiming “a number of critical tasks” remain undone. Andrew Vara, a trustee, said Gibson still has “unresolved claim objections and fee applications.”:
“None of the debtors’ claims are fully administered, and the motion is premature. Moreover, the form of relief the debtors seek, collapsing 12 separate cases into a single consolidated case for administration, is a form of substantive consolidation which would modify the debtors’ confirmed and substantially consummated plan.”
Gibson has saught to do away with underperforming, non-core subsidiaries and to eliminate $500 million in debt from its balance sheet. In October, U.S. Bankruptcy Court judge Christopher Sontchi confirmed the Chapter 11 strategy, which involved a group of five investors, was put into motion by Gibson on November 1. According to Vara, on the 29th of that month, the company attempted to close 11 of 12 current Chapter 11 cases. “In reality, the debtors are seeking a form of substantive consolidation that would allow them to administer all 12 cases in the guise of, and for the price of a single case,” he claimed.
