The Mitchell Gold + Bob Williams saga has entered a new phase: liquidation. On Friday, a Delaware Court judge overseeing the case converted the case from Chapter 11 (a process designed to reorganize the assets of a distressed company) to Chapter 7, a process in which assets are expediently sold to pay back creditors.
The company now has two weeks to turn over records of its assets and liabilities to the interim bankruptcy trustee, and a month to submit a full report. The trustee is David W. Carickoff, a Delaware-based lawyer specializing in corporate bankruptcy cases.
According to court documents, recent weeks have seen MG+BW and its chief antagonist and primary secured creditor, PNC Bank, filing competing motions back and forth over how best to move forward. Lawyers representing the distressed retailer have been arguing for an orderly reorganization, and requesting arrangements in which some customers could pick up finished product; the bank has been pushing for an expedited sale of assets. The conversion to Chapter 7 decreases the likelihood that customers will be refunded or receive their furniture orders.
Mitchell Gold + Bob Williams first filed for bankruptcy on September 6, less than two weeks after it abruptly ceased operations and abruptly laid off its more than 700 employees. According to the initial documents submitted with the case, the company says it owed between $10 and $50 million to its creditors, a group that included logistics firms Transportation Insight and Ryder Last Mile; fabric powerhouse Kravet; leather purveyor Moore & Giles; and 3D product visualization firm Cylindo.