Progrexion committee objects to motion for conversion of case

By Sarah Lizee

Olympia, Wash., Aug. 21 – The official committee of unsecured creditors for PGX Holdings, Inc., which does business as Progrexion, objected on Friday to a motion from the Consumer Financial Protection Bureau (CFPB) seeking conversion of the company’s case to Chapter 7, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

The CFPB argues that the estate will realize no value under the company’s proposed sale and plan process.

However, the committee said that a global settlement reached by the debtors, debtor-in-possession lenders and the committee creates significant value by repurposing and carving out DIP lender collateral for general unsecured creditors and subordinating the deficiency claims of the prepetition secured lenders, so that other general unsecured creditors may be paid.

The group also said the CFPB has not shown that conversion would produce a greater net benefit for the estates.

“To the contrary, conversion would jeopardize any recoveries for unsecured creditors by eliminating cure payments, returning certain assets to the DIP lenders’ collateral package, and adding millions of dollars of deficiency and rejection damages claims back into the unsecured claims pool,” the committee said.

Progrexion is a provider of consumer credit repair services based in Salt Lake City. The company filed bankruptcy on June 4 under Chapter 11 case number 23-10718.

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