freeze on Liberty
The ruling gives the partiesBy Peter Wagner
more time to plan a reorganization
U.S. Bankruptcy Judge Lloyd King has given Liberty House and its creditors about three more months to reach agreement on a reorganization plan, free of the distraction of lawsuits among warring parties.
At a hearing in bankruptcy court yesterday, King extended his earlier freeze on a legal battle between two competing Liberty House boards of directors until June 24.
The lawsuits were filed last year by the boards, each claiming to be in control of the company. The battle was prompted by the appointment of a "new" board of directors by major creditors last March, an action which in turn triggered the company's Chapter 11 bankruptcy filing.
King yesterday praised the negotiating parties, including Liberty House; its owner JMB Realty Corp.; major creditors led by Bank of America; and a court-appointed creditors committee representing about 2,000 small creditors, for their continuing efforts to agree on a single reorganization plan.
The plan would detail how Liberty House plans to conduct business in the future and pay off debts.
If approved in a ballot vote by creditors and ultimately by the court, the bankruptcy case would be closed.
Liberty House had the exclusive right to file a reorganization plan until Feb. 28.
But with all parties in intense discussions, the deadline came and went without a plan.
Under the court's rules, any interested party is now entitled tofile a plan.
Meanwhile, attorneys representing the negotiators have obtained a May 26 hearing date for the hoped-for reorganization planthe first indication of progress in negotiations that have been held in numerous mainland cities for the past six weeks.
While not an absolute deadline for the filing of a plan, the hearing date could prompt an agreement by the end of this month.
Under the court's rules, a reorganization plan must be filed at least 28 days before its scheduled hearing -- putting the filing deadline at April 28.
Attorneys in the case have been tight-lipped about the negotiations and said the newly set deadline is no guarantee a plan is in the offing.