Debtor Files Motion to Sell Real Estate; Public Sale Hearing Scheduled

On or about January 9, 2014, the Debtor filed a Motion to Sell Real Estate Free & Clear of Liens & Encumbrances (the “Motion”) with respect to the sale of its former operating facility located at 520 Chestnut Street, Blairsville, PA 15717.  The Debtor previously sold substantially all of its non-real estate assets to Dlubak Specialty Glass Corporation, an affiliate of Grey Mountain Partners (the “Buyer”).   As a result, the Debtor has essentially ceased doing business, while its former operating facility is being leased by the Buyer.  The Debtor now proposes to sell substantially all of its real estate assets to KMS Property Acquisition Co. (“KMS”) for the sum of $800,000.  With approximately $660,000 still reportedly owed to First Commonwealth Bank, and additional costs expected to total in excess of $75,000, including real estate taxes and a broker’s fee, there presently appears to be limited funds available from the sale for the benefit of the Bankruptcy Estate. 

The proposed sale to KMS is subject to higher bidding by qualified third-party buyers.  A Sale Hearing has been scheduled for Thursday, February 13, 2014, at 10am in the Johnstown Courtroom, or via video conference from Pittsburgh.  Responses to the Motion are due by February 6, 2014.  For additional information regarding the terms of the proposed sale or third-party buyer qualifications, please do not hesitate to contact us at dlubakcommittee@quinnfirm.com.

Debtor Files Application to Employ Broker; United Steelworkers File Priority Claim

On or about December 27, 2013, the Debtor filed an application to employ a real estate broker (the “Application”) with respect to the sale of the Debtor’s manufacturing facility.  The Debtor previously sold substantially all of its non-real estate assets to Grey Mountain and has essentially ceased doing business.  In conjunction therewith the Debtor had been attempting to procure a buyer with respect to its remaining real estate holdings, which Grey Mountain currently leases.  The Debtor now seeks to have Laurence Neish of Whyte/Stone Realty LLC appointed as broker because no purchase offers have been forthcoming.  A hearing on the Application has been scheduled for January 23, 2014, at 10am in the Johnstown Courtroom, with responses due by January 16, 2014.

Additionally, the United Steelworkers (the “USW”) filed an unsecured priority claim in excess of $224,000 (the “Claim”) based on certain pre-petition wages/benefits that have purportedly not been paid to union employees.  As alleged in the documents attached to the Claim, the Debtor has purportedly not honored certain pre-petition obligations per the terms of a collective bargaining agreement with the USW.  The Claim currently represents an unsecured priority claim that would get paid ahead of general unsecured claims.  The Claim is generally subject to further amendment and/or objection.

Bar Date to File Proof of Claim About to Expire

Updating an earlier post, the Bankruptcy Court on August 20, 2013, entered a Notice setting the deadline for all creditors to file a proof of claim in the Bankruptcy Case for December 12, 2013.  All claims must be filed by that date in order to receive potential distributions thereon.

Order Entered Resolving Dispute between Debtor, Grey Mountain, and Bank

Updating a previous post, the Court entered an Order on or about November 5, 2013, resolving the dispute between the Debtor, GMP, and First Commonwealth Bank regarding the allocation of certain monetary obligations in the wake of the Debtor’s non-real estate asset sale.  Per the terms of the Order stipulated by the Parties, the Bank will turn-over to GMP certain funds attributable to accounts receivable, and GMP will pay certain unpaid employee obligations subject to offset against its lease payments to the Bank.  As a result, the evidentiary hearing on these matters has been cancelled.

Court Enters Order Scheduling Evidentiary Hearing on Contested Matters between Debtor, Grey Mountain, and First Commonwealth Bank

On October 7, 2013, the Debtor and Grey Mountain Partners Fund II, L.P. (“GMP”) filed a Joint Motion to Expedite Hearing on Emergency Motion for an Order Compelling First Commonwealth Bank to Comply with Sale Order.  A dispute has arisen out of the prior sale of substantially all of the Debtor’s non-real estate assets regarding the allocation of certain monetary obligations primarily incurred after the entry of the Sale Order and prior to the closing of the sale.  An expedited hearing was held on October 22, after which the Court entered an Order scheduling an evidentiary hearing for November 22 in Courtroom D, 54^th Floor, U.S. Steel Tower, 600 Grant Street, Pittsburgh, PA 15219.  The scheduling Order also sets forth various deadlines for discovery and pre-trial pleadings/exhibits to be submitted in advance of the hearing.

Court Enters Order Approving Sale of Debtor’s Non-Real Estate Assets; Sale of Debtor’s Real Estate Anticipated

On or about September 25, 2013, the Court entered an Order Approving (I) the Sale of Assets; (II) Approving the Asset Purchase Agreement; and (III) Authorizing the Debtor to Assume and Assign Certain Executory Contract (“Sale Order”) with respect to sale of the Debtor’s non-real estate business assets to Grey Mountain Partners Fund II, L.P. (“GMP”) for the purchase price of $3,250,000.00.  The sale to GMP has been substantially consummated, and the bulk of the sale proceeds have been paid to the Debtor’s primary secured lender, First Commonwealth Bank, with the exception of certain holdbacks for equipment lessors and administrative expenses of the Bankruptcy Estate.  

Additionally, the Debtor previously filed on or about September 11, 2013, an Expedited Motion to Authorize Lease of Real Estate (“Lease Motion”), which was also approved by Order of Court on September 24, 2013.  The authorization of the lease of the real estate allows GMP to lease the premises while parties prepare for a potential sale of the real estate to the Indiana County Development Corporation (“ICDC”) for approximately $1m.  It is anticipated that a motion regarding the proposed sale of the Debtor’s real estate to ICDC will be forthcoming.  

Please feel free to contact us at dlubakcommittee@quinnfirm.com to obtain a copy of the Sale Order, Lease Motion, and/or any other pleadings as filed.