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Merit Group U.S. Trustee says asset sale only benefits one creditor
By Caroline Salls
Pittsburgh, July 14 - Region 4 U.S. Trustee W. Clarkson McDow Jr. objected to The Merit Group, Inc.'s proposed asset sale, arguing that the sale would only benefit one of the company's creditors, according to a Thursday filing with the U.S. Bankruptcy Court for the District of South Carolina.
"The sole creditor that stands to benefit from the sale of the assets has controlled the timing of the sale, approval of the sale, financing of the potential purchaser and numerous other aspects of the sale," McDow said in the objection.
"The bankruptcy case and sale have proceeded in a quick fashion with no evidence of the benefit to the estate and other creditors resulting from the proposed sale.
"With no clear picture of who benefits, who loses and what is left after the sale of substantially all the assets of the estate, the sale should not be approved."
As previously reported, Merit was granted court approval to enter into a stalking horse agreement with MG Distribution, LLC, but the bid procedures order said the company is not required to do so.
Merit's official committee of unsecured creditors objected to the bidding procedures last month, calling the bid protections "exorbitant' and arguing that insider second-lien creditor Stonehenge should not be allowed to credit bid.
The right of Stonehenge to credit bid at the auction was under advisement by the court when the bid procedures were approved in early July and are to be determined by further court order.
Merit, a Spartanburg, S.C., paint sundry distributor, filed for bankruptcy on May 17. The Chapter 11 case number is 11-03216.
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