Your humble editor sat in during the bankruptcy call on 15 JUNE involving Deco Lighting and several of its creditors, some of which include Crossroads, ABS, and Signify. The judge initially broached the topic of mediation and allowed each attorney present to provide their input. She suggested that including Crossroads and Signify in the mediation process could potentially lead to a resolution, with the assistance of a mediator. However, after further deliberation, the judge decided against ordering mediation.
Subsequently, the judge granted Signify’s motion to convert the bankruptcy from Chapter 11 to Chapter 7. However, she set the effective date for 31 JULY, providing all parties involved with a 45-day period to explore potential solutions.
The judge expressed her thoughts on the matter, stating, “Perhaps the urgency of this situation will motivate the parties to come to an agreement. I don’t want to prolong this indefinitely.” She emphasized the need for a definitive deadline, using the analogy of having a figurative gun to one’s head and a drop dead date.
During the call, Mr. Weiss, representing Signify, suggested, “My thought is let’s just convert it. The trustee will be responsible for managing the mess, and it removes the debtor from the equation.”
Based on our understanding, ABS and Crossroads are the two secured debtors, while Signify holds an unsecured position. Sam Sinai informed us that “ABS is owed approximately $3.0 million, and Crossroads is owed around $500,000. This is why we fail to comprehend Signify’s insistence on the conversion. Since Signify is unsecured, they may not receive any repayment if the conversion takes place.”
The judge clarified her flexibility in the matter, stating that she could potentially postpone the conversion date or reconsider it entirely if an alternative solution arises.
Developing…