Representation: Creditors’ Committee
Bankruptcy – Western District of Pennsylvania
Situation: Queen City operated several sporting good stores in the Pittsburgh area for several decades. Management apparently did not respond promptly enough to the competition from chains and discounters and the company entered Chapter 11 on December 31st. Unsecured creditors totaled more than $1.2 million. Bernstein and Bernstein, P.C. was chosen to represent the Committee of Unsecured Creditors.
Action: For the first five months of the case, the company lost more than $40,000.00 per month. Each month, the Committee was told that the losses had been stemmed and the company turned around. Acting through the firm, the Committee increased its pressure significantly, filing not only a Motion to Convert the Case to Chapter 7, but also a Plan of Liquidation. While the Debtor believed the liquidation value for creditors was less than 15%, the Committee believed it significantly higher.
By October (10 months later) a Plan was confirmed that provided for a distribution in excess of 25% to unsecured creditors and allowed the possibility that the Debtor would restart operations and pay creditors an additional 25% over five years. If the Debtor did not restart its operations, the balance of funds would be distributed to creditors, resulting in another 3% to 8% dividend.
The aggressive action by Bernstein and Bernstein, P.C. and the Creditors’ Committee resulted in a favorable Plan of Reorganization.