Former Real Mex lacks funds to pay claims, requests case dismissal

By Caroline Salls

Pittsburgh, April 5 – RM Wind-Down Holdco LLC, which operated Real Mex Restaurants, asked the U.S. Bankruptcy Court for the District of Delaware to dismiss its Chapter 11 bankruptcy cases, according to a motion filed Thursday.

RM Wind-Down is also seeking court approval to dissolve its debtor entities and to make distributions to creditors holding first-priority secured claims and 503(b) claims.

The company said the sale of substantially all of its assets closed on Oct. 29, resulting in the satisfaction of its debtor-in-possession financing obligations, the buyer’s agreement to satisfy some administrative expense claims and the payment or assumption of some other debt.

“Although the $46.75 million proceeds from the RM asset sale were sufficient to repay the DIP financing, the debtors commenced these Chapter 11 cases with over $255 million in secured pre-petition indebtedness,” the motion said.

“Given the extent of the secured lenders’ liens and the magnitude of their deficiency claim, any value received by the debtors’ estates on account of remaining assets (and subsequent monetization thereof) would redound to the benefit of the secured lenders.

“Accordingly, there is no reasonable prospect of distributions from any debtor’s estate to any holders of pre-petition unsecured claims against the debtors (other than prepetition claims afforded administrative priority under section 503(b) of the Bankruptcy Code), and the estates do not and will not have available funds to satisfy either priority claims or general unsecured claims.”

In addition, RM Wind-Down said it is unable to pursue a confirmable Chapter 11 plan.

A hearing is scheduled for April 25.

Real Mex is a restaurant company based in Cypress, Calif. It filed for bankruptcy on Aug. 5, 2018 under Chapter 11 case number 18-11795.

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