Armstrong Flooring is no lengthier in demand of its own affairs in personal bankruptcy court docket.
A Delaware personal bankruptcy court choose has ordered Armstrong Flooring’s individual bankruptcy to be converted from Chapter 11 to Chapter 7 since the U.S Trustee and a massive creditor were disappointed with Armstrong’s approach for paying out out remaining money.
The buy filed Monday places a court-appointed trustee in demand of which collectors are paid and how much, if any.
Beneath Chapter 7 of the U.S. Personal bankruptcy Code, a debtor’s assets are liquidated to spend creditors. Under Chapter 11, the debtor, usually a business, reorganizes and may well spend some creditors. Armstrong Flooring reorganized via a sale of its property in the summer season.
An interim trustee has been appointed by the court to settle Armstrong Flooring’s assets to maximize the return to Armstrong’s unsecured collectors. Armstrong Flooring experienced just $2 million in assets remaining as of early April, according to courtroom paperwork, and reported it was administratively insolvent. It had, having said that, submitted legal actions to get money it claimed it was owed from firms it experienced previously carried out small business with.
There are $21.5 million in authorized statements, in accordance to court files, which is a fraction of the $500 million in promises. Permitted promises are kinds that the court docket has accredited for payment in a reorganization.
In March, Armstrong Flooring sought to dismiss the Chapter 11 situation, declaring there would not be enough proceeds to pay back the secured personal debt and administrative and precedence statements in entire.
Armstrong Flooring, which is made up of individual bankruptcy lawyers, questioned Judge Mary Walrath to dismiss the circumstance instead than convert it to Chapter 7. It proposed paying out some collectors just after it experienced obtained dollars from 47 claw again statements, which are legal actions filed to get money from companies it says are owed.
Armstrong Flooring also held out the prospect that it could recover income following the termination of its pension strategy and an audit by the Pension Gain Guaranty Corp., amongst other things, the U.S. Trustee reported in court docket filings.
Big creditor objects
One of its critical suppliers, Ohio-primarily based Mexichem Specialty Resins Inc., objected to the dismissal. Mexichem required a 3rd celebration overview of the fiscal predicament. Mexichem maintains it is owed about $2 million.
Mexichem mentioned dismissing the circumstance would mail the concept that for the duration of a reorganizing individual bankruptcy sellers must demand all debtors pay out cash in advance or risk not being paid out for their administrative expense statements.
The interim trustee has until eventually Saturday to accept the appointment. Armstrong Flooring has until eventually May possibly 2 to file schedules of unpaid debts and by May possibly 17 should file and transmit to the United States Trustee a remaining report.
Very last month, Walrath accepted the sale of Armstrong Flooring Inc.’s 1-acre good deal in Manheim Township to developer Robert Bowman. Armstrong Flooring has an settlement to provide the large amount for $295,000 to Web page Construction Homes L.P. Court docket documents display Bowman, president of Constitution Households & Neighborhoods, is the sole member of the company’s basic lover.
The sale of the assets arrived nearly 8 months right after the corporation sold most of its property.
In September, Armstrong Flooring received $84,000 from the sale of machines from its tech middle that was not scooped up in the $107 million personal bankruptcy sale of its North American belongings.
The legendary international flooring company’s North American belongings, including community vegetation, were being bought in a personal bankruptcy sale in July to West Hempfield-centered AHF Solutions Inc. and Gordon Brothers Business & Industrial of Boston. About 500 U.S. staff transferred to AHF, in accordance to courtroom paperwork. The full for all of the enterprise, like operations in Australia and China, was $203 million.
The company filed for Chapter 11 personal bankruptcy in May, citing provide chain problems, the inflationary natural environment and continued headwinds from the COVID-19 pandemic.