Wachovia stay request on HMY Roomstore reorganization plan denied again

By Caroline Salls

Pittsburgh, June 21 - Wachovia Bank NA's request for a stay of the confirmation order of HMY Roomstore Inc.'s plan of reorganization was denied for a second time, this time by the U.S. District Court for the Eastern District of Virginia, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The bankruptcy court denied the stay pending appeal on June 1.

Wachovia Bank is the collateral agent for HMY Roomstore's pre-bankruptcy secured lenders.

In his memorandum of opinion on his decision to deny the stay request, judge James R. Spencer agreed with bankruptcy court judge Douglas O. Tice Jr., who said "the court finds that Wachovia has failed to demonstrate that it will suffer irreparable injury should the stay be denied."

Spencer and Tice said HMY Roomstore and its creditors, not Wachovia, are more likely to "suffer irreparable harm if the stay is entered" by negatively impacting ongoing operations.

Also, Wachovia has not demonstrated the likelihood of success in its appeal because its arguments lack merit.

Wachovia appealed the confirmed plan because the bank said it caps the lenders' secured claim at $128.5 million, in turn eliminating the lenders' replacement liens and super-priority claims against Roomstore.

HMY Roomstore is a Richmond, Va.-based home furnishing retailer that will emerge as the surviving company from Heilig-Meyers Co.'s Chapter 11 case. Heilig-Meyers will be liquidated.

Heilig-Meyers filed for bankruptcy on Aug. 16, 2000 with the U.S. Bankruptcy Court for the Eastern District of Virginia. Its Chapter 11 case number is 00-34533. HMY Roomstore's case number is 00-34536.

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