Malden Mills asks court to convert case to Chapter 7 to wind down operations

By Caroline Salls

Pittsburgh, March 7 - Malden Mills Industries, Inc. asked the U.S. Bankruptcy Court for the District of Massachusetts to convert its Chapter 11 case to Chapter 7 to allow it to wind down its operations following the sale of substantially all company assets, according to a Tuesday court filing.

According to the motion, the court approved the asset sale on Feb. 26, and now Malden Mills expects to wind down its cases under an orderly Chapter 7 wind down.

Under the company's wind-down order, all administrative claims incurred through the conversion and other claims detailed in a wind-down budget that are incurred through the closing date will be paid.

The wind-down order also provided for General Electric Capital Corp.'s consent to the use of cash collateral in the form of sale proceeds to fund the Chapter 11 expenses from the closing date through the conversion subject to the wind-down budget.

Sale closing is expected to occur on March 13.

Malden Mills, a Lawrence, Mass.-based textile company, filed for bankruptcy on Jan. 10 in the U.S. Bankruptcy Court for the District of Delaware. The case was transferred to the Massachusetts court on Jan. 16. Its Chapter 11 case number is 07-40124.

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