Robb & Stucky U.S. Trustee eyes case conversion instead of dismissal

By Caroline Salls

Pittsburgh, Aug. 31 - Robb & Stucky Ltd. LLLP U.S. Trustee Donald F. Walton asked the U.S. Bankruptcy Court for the Middle District of Florida to convert the company's Chapter 11 bankruptcy case to Chapter 7, according to a Tuesday court filing.

As previously reported, the company asked the court to approve procedures for dismissal of its bankruptcy case earlier this month.

However, the U.S. Trustee said "the cost of administration of a Chapter 7 estate would likely be less than the cost of the wind-down of this estate and clearly would result in a more equitable distribution scheme."

Since there are not enough assets to satisfy all administrative claims of the estate, and the company's proposed distribution scheme favors the professionals who will would recover100% of their claims, Walton said that other administrative creditors are not being treated in accordance with the priorities of the Bankruptcy Code.

The U.S. Trustee said conversion to Chapter 7 would result in a neutral party being appointed to redistribute the funds among the administrative claimants and ensure that all administrative creditors are treated equally, as required by the Bankruptcy Code.

In addition, Walton said causes of action that might be abandoned if the case is dismissed could be prosecuted by a Chapter 7 trustee.

Robb & Stucky, a Sarasota, Fla.-based retailer of upscale, high-end furnishings, filed for bankruptcy on Feb. 18, 2011. Its Chapter 11 case number is 11-02801.

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