California Bankruptcy Lawyer Blog

Maiden Mills Industries Inc., the maker of Polartec fleece, says that it wants to convert from Chapter 11 bankruptcy to a Chapter 7 case. This announcement comes after the textile maker’s lender, General Electric Capital Corp., and the committee of unsecured creditors failed to work out a liquidation plan under Chapter 11.

In its petition to the U.S. Bankruptcy Court in Worcester, Massachusetts, Maiden Mills said the conversion would make the winding process easier for the company. A hearing is set for March 15.

Chapter 11 cases are allowed to convert to Chapter 7 as long as the debtor is still in possession. Debtors who were involuntarily forced to declare bankruptcy are not allowed to convert their bankruptcy cases.

Last month, the textile maker won court approval to sell its assets to Chrysalis Capital Partners, a private equity firm, for $44 million. Chrysalis will run the mill under the name Polartec LLC. Proceeds from the sale will be used to settle remaining costs from the Chapter 11 case and fund the conversion, the Company said.

Maiden Mills had filed for Chapter 11 Bankruptcy on January 10.

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In Central Florida, an involuntary petition for personal bankruptcy against music entrepreneur Lou Pearlman was filed by American Bank of St. Paul, Minnesota, First National Bank of Trust of Williston, North Dakota, Tatonka Capital Corp. of Denver, Colorado and Integra Bank of Evansville, Indiana. They claim he owes them a combined $48 million.

Claims by each petitioner:

· American Bank $27.1 million
· Tatonka $6.2 million
· First National Bank $14.2 million
· Integra $895,000

In an unrelated Chapter 11 bankruptcy petition, a number of Pearlman’s downtown properties moved closer toward the auction block.

Continue reading "Three Banks and a Venture Capital Company Push Music Entrepreneur Lou Pearlman Toward Personal Bankruptcy" »