Court Approves Committee’s First Amended Plan of Orderly Liquidation

Following a hearing on July 2, 2014, the Court entered an Order confirming the Committee’s First Amended Plan of Orderly Liquidation (the “Plan”) regarding the administration of the Debtor’s remaining assets.  Pursuant to the terms of the confirmed Plan, Lawrence C. Bolla, Esq., current counsel to the Committee, has been appointed by the Committee as the Plan Administrator to oversee the orderly liquidation process, with the supervision of the Plan Advisory Board.   

As indicated previously, the primary remaining assets of the Bankruptcy Estate consist of the claims against various named insiders and/or affiliates of the Debtor, together with any other parties currently under investigation by the Committee, which will be assumed under the terms of the Plan by the Plan Administrator.  The Plan Administrator proposes to make distributions to unsecured creditors from any recovery on those claims. 

The Effective Date of the Plan is expected to be July 17, 2014, at which time the Committee will dissolve.  As such, this will be the last update provided by the Committee on this site.

Committee Files Complaints against Affiliated Entities; Amended Disclosure Statement Approved and Plan Confirmation Hearing Scheduled

On or about April 14, 2014, the Committee filed a Complaint against Dlubak Glass and Frank C. Dlubak for fraudulent transfers related to the sale of the Debtor’s scrap glass in the amount of approximately $83,000.  Additionally, on or about April 29, 2014, the Committee filed Complaints against GreenHeat, LP and GreenHeat Management, Inc. (“GreenHeat”), as well as Global Ceramic Services, Inc., a/d/b/a Dlubak Powder Coating, a/k/a Dlubak PC Designs (“GCS”).  Each of the Complaints relates to fraudulent transfers made from the Debtor to pay the expenses/purchases of each affiliated entity.  The Complaint against GreenHeat is for approximately $582,000, and the Complaint against GCS is for approximately $590,000.  Answers to the Complaints are due in May 2014.  

In addition, on or about May 1, 2014, the Committee filed its First Amended Plan ( “Plan”) and Disclosure Statement regarding the liquidation of the Debtor’s remaining assets.  With substantially all of the Debtor’s operating and real estate assets having been sold, the primary remaining assets consist of the Bankruptcy Estate’s claims against Dlubak Glass, Frank Dlubak, GreenHeat, GCS, and any other parties currently under investigation by the Committee.  The Committee proposes to make distributions to unsecured creditors from any recovery on those claims.

Subsequently the Court entered an Order on May 6, 2014, approving the Amended Disclosure Statement as containing adequate information, and a Plan Confirmation Hearing has been scheduled for Wednesday, July 2, 2014, in the Johnstown Bankruptcy Courtroom, or via video conference from Pittsburgh, with objections due by June 25, 2014.  All creditors will soon be receiving a ballot for the purposes of accepting or rejecting the Plan.

Court Denies Frank Dlubak’s Motion to Convert and Grants Committee Authority to Pursue Affiliated Entities

Following hearings held on April 4, 2014, the Court entered an Order denying the Motion to Convert Case from Chapter 11 to Chapter 7 filed by Frank Dlubak.  In conjunction therewith, the Court also entered an Order, over the objection of Frank Dlubak, allowing the Committee to file an amended Disclosure Statement within the next thirty (30) days. 

Additionally, the Court directed the Committee to file a proposed order granting their Motion for Authority to Prosecute Avoidance Action (“Motion for Authority”).  Per the Court’s instruction, the proposed order should grant authority to the Committee to not only pursue Dlubak Glass Co. and Frank Dlubak for fraudulent transfers as described in the Motion for Authority, but also to pursue affiliated entities Greenheat, Global Ceramic Services, and Dlubak Powder Coating for similar transfers.  Upon entry of the proposed order by the Court, the Committee will have authority to file claims against those entities, which claims are estimated to be in excess of $1 million.

Frank Dlubak Files Motion to Convert and Objection to Disclosure Statement; All Hearings Continued

On or about March 7, 2014, interested party Frank Dlubak filed a Motion to Convert Case from Chapter 11 to Chapter 7 (“Motion to Convert”).  In conjunction therewith, Frank Dlubak also filed an Objection to the Committee’s Disclosure Statement, as well as a response opposing the Committee’s Motion for Authority to Prosecute Avoidance Action (“Motion for Authority”).  The essence of Frank Dlubak’s position is that all operating assets of the Debtor have been liquidated, and any remaining claims that may be property of the Estate are speculative, meritless, and provide no benefit to the Estate.  As a result, he argues that the remainder of the Case is better administered by a Chapter 7 Trustee. 

A hearing on the Motion to Convert has been scheduled for Friday, April 4, 2014, at 11am in the Johnstown Bankruptcy Court (or via video conference from Pittsburgh), with responses due by March 28.  Additionally, hearings on the Committee’s Disclosure Statement and Motion for Authority have been continued to the same day and time.

Court Enters Order Granting Motion for Sale of Property

On or about February 14, 2014, following a public sale hearing, the Court entered an Order granting the Debtor’s Motion for sale of its former operating facility to KMS Property Acquisition Co. for the sum of $800,000.  After payment of real estate taxes, broker’s fees, US Trustee’s fees, and related closing costs, the entire remainder of the sale proceeds are likely to be paid to the Debtor’s primary secured lender, First Commonwealth Bank.  As a result, there presently appear to be no funds available from this sale for the benefit of the Bankruptcy Estate.  Closing is set to occur on or before March 31, 2014, with a report of sale to be filed shortly after closing.

Committee Files Liquidating Plan and Motion for Authority to Prosecute Avoidance Action

On or about February 10, 2014, following an Order from the Court directing any party in interest to file a Plan and Disclosure Statement, the Official Committee of Unsecured Creditors of Dlubak Corp. (the “Committee”) filed a liquidating Chapter 11 plan (the “Plan”).  The crux of the Plan revolves around the disbursement of any sale proceeds available to the Estate from the disposition of substantially all of the Debtor’s assets, as well as the pursuit of potential preference, fraudulent transfer, and related claims against third-parties.  A hearing has been scheduled on the Disclosure Statement for March 27, 2014, at 10:00am in the Johnstown Bankruptcy Court, or via video conference from Pittsburgh, with objections due by March 20, 2014. 

In conjunction therewith, the Committee also filed a Motion for Authority to Prosecute Avoidance Action (the “Motion”) against the Debtor with respect to potential fraudulent and/or unauthorized post-petition transfers made by the Debtor to Dlubak Glass Co. and Frank C. Dlubak.  The Committee demanded that the Debtor pursue said action valued at approximately $83,000 or otherwise that it be granted derivate standing to do so.  A hearing has been scheduled on the Motion for March 13, 2014, at 10:00am in the Johnstown Bankruptcy Court, or via video conference from Pittsburgh, with responses due by March 6, 2014.