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OM Industries' U.S. Trustee backs up case conversion request
By Caroline Salls
Pittsburgh, March 29 - OM Industries, Inc.'s U.S. Trustee asked the U.S. Bankruptcy Court for the District of Massachusetts to convert the company's Chapter 11 case to Chapter 7 despite objections from the official committee of unsecured creditors, according to a Wednesday court filing.
The U.S. Trustee said the company has sold substantially all of its assets and is no longer an operating entity.
In addition, the U.S. Trustee said the company has no change of rehabilitation, and under the current case circumstances, will soon be facing continuing losses and diminution of the estates.
As previously reported, the company itself requested the case be converted to Chapter 7 on March 6, and the committee objected to that motion on the grounds that it would be cheaper to continue the cases in Chapter 11.
U.S. Trustee Phoebe Morse said she disputes the committee's contention, and asserts that conversion is appropriate for several reasons, including the fact that there are a number of professionals now employed in the Chapter 11 cases who would not be working in the Chapter 7 cases.
However, although grounds exist to convert the case, the U.S. Trustee said she does not oppose the appointment of a trustee if the court believes the case should remain in Chapter 11.
A hearing on case conversion is scheduled for Friday.
OM Industries, formerly Malden Mills Industries, Inc. before its asset sale, is a Lawrence, Mass.-based textile company that 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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