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Wachovia wants to convert Heilig-Meyers' Chapter 11 case into Chapter 7
By Ellen Chang
Houston, Feb. 18 - Wachovia Bank is seeking to convert Heilig-Meyers Co.'s Chapter 11 case into a Chapter 7 case, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.
Wachovia, as the collateral and administrative agent for the bank lenders, seeks the conversion for Helig-Meyers Co., Helig-Meyers Furniture Co., MacSaver Financial Services, Inc. and HMY Star, Inc. It is not seeking the conversion for HMY RoomStore, Inc. which will emerge from Chapter 11 as the reorganized business.
Wachovia said it is seeking the conversion because the tangible assets of the companies have been liquidated over the past four and a half years. None of those companies are currently operating and there are no plans to reopen them.
Wachovia also said that Helig-Meyers continues to "suffer from substantially negative cash flows." The company is also being "crippled by mounting professional fees," the bank said in the filing. The company has paid $34 million since its petition date.
This combination results in a "deepening administrative insolvency of the estates of the liquidating debtors," Wachovia said.
Wachovia also claims that there are "material conflicts of interest" between Helig-Meyers and RoomStore.
Wachovia said "the truly horrific fact of these bankruptcy cases is that, after the complete liquidation of all of the tangible assets of the liquidating debtors, comprising the largest retail furniture chain in America on the petition date, only $11 million in cash is left, some of it apparently belonging to RoomStore."
The bank also claims that there is "no end in sight to this erosion" of the estates and suggested appointing an independent trustee.
Heilig-Meyers, a Richmond, Va.-based furniture retailer, filed for bankruptcy on Aug. 16, 2000. Its Chapter 11 case number is 00-34533.
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