Liberty House
hearing scheduled

By Peter Wagner
Star-Bulletin

A May 26 hearing has been set in U.S. Bankruptcy Court to consider a reorganization plan for Liberty House, the first sign that the company and its creditors may be near an agreement on a negotiated plan.

But a plan hasn't been filed yet as talks continue behind closed doors on the mainland and the hearing could be canceled if nothing materializes by the end of next month.

Under court rules, a reorganization plan must be filed at least 28 days before its hearing date.

That would put the filing deadline on April 28 in order to keep the May 26 hearing date.

For weeks, attorneys representing Liberty House, its owner JMB Realty Corp., the Bank of America-led lending group, and a creditors committee have been trying to work out a consensual reorganization plan. It's an unusual alliance of competing parties, including two separate boards of directors.

Attorneys in the case say a major stumbling block has been conflicting opinions on the value of Liberty House's assets estimated at about $150 million by the lending group and at about $250 million by JMB.

Liberty House had the exclusive right to file a reorganization plan detailing its business strategy and plans to repay debts but that exclusivity expired on Feb. 28. Any interested party, including the court itself, may now file a plan of its own.

The court also could convert the Chapter 11 bankruptcy to a Chapter 7 liquidation if other parties delay or can't come up up with a viable plan.