hhgregg’s motion to dismiss Chapter 11 bankruptcy case denied by court

By Sarah Lizee

Olympia, Wash., Sept. 15 – hhgregg, Inc.’s motion seeking dismissal of its Chapter 11 bankruptcy case was denied by the U.S. Bankruptcy Court for the Southern District of Indiana, according to an order filed Wednesday.

As previously reported, the motion had drawn multiple objections, including from Region 10 U.S. trustee Nancy J. Gargula and creditors Whirlpool Corp. and Haier US Appliance Solutions.

The company had said in its motion that in mid-January, the debtors were in the process of analyzing and engaging with stakeholders on the best path forward to winding down their cases without unreasonable delay and cost.

“The debtors now believe that even if the ongoing liquidation of remaining assets yields recoveries at the high end of estimates, the estates are not expected to satisfy projected priority claims in full, much less permit distributions to general unsecured creditors,” the company said in its motion.

“And of the various procedural vehicles to accomplish this task, the debtors are unable to justify the significant additional administrative burden that would undoubtedly accompany the prosecution of an unconfirmable Chapter 11 plan or the inefficiency of conversion of these cases to Chapter 7.

“This leaves a structured dismissal of the Chapter 11 cases as the best option to get the most amount of money into the hands of creditors in 2021.”

The debtors sought authority to implement a two-step process intended to culminate with the entry of the annexed dismissal order in the second half of 2021.

First, the wind-down procedures would include a phased claims reconciliation process for administrative claims and, if warranted based on recoveries, for priority claims, followed by pro rata distributions to holders of allowed claims in order of statutory priority.

Concurrently with claims reconciliation, the debtors would work to liquidate all remaining assets primarily in the form of three adversary proceedings pending before the court.

To fund the administrative costs of proposed wind down, including payment of professional fees incurred on and after Jan. 1, the debtors also sought approval of a wind-down budget.

Second, the debtors would file a final report once claims reconciliation is complete and all remaining assets have been liquidated or otherwise resolved. And in conjunction with the final report, the debtors’ cases would be dismissed and the debtors will be dissolved.

“The debtors believe that the merits of dismissal here, both in terms of efficiency and lack of prejudice to creditors, render the plan and Chapter 7 conversion alternatives pointless as well as burdensome false options,” the company had said.

hhgregg is an Indianapolis-based specialty retailer of consumer electronics and home appliances. The company filed for bankruptcy on March 6, 2017 under Chapter 11 case number 17-01302.

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