Product Quest bankruptcy case converted to Chapter 7 as of Oct. 31

By Caroline Salls

Pittsburgh, Oct. 30 – Product Quest Manufacturing, LLC’s Chapter 11 bankruptcy case was converted to Chapter 7 on Tuesday by the U.S. Bankruptcy Court for the Middle District of North Carolina.

As previously reported, Product Quest said it has two insurance policies that cover potential claims against former or present directors and officers. Of those two policies, one is scheduled to expire on Nov. 4, while the other was renewed for six years in 2017.

The company said the reporting period of the expiring policy can also be extended for six years for an additional premium equal to 150% of the annual premium, which was $45,875.

According to the motion, Product Quest intended to renew the expiring policy for an additional year, but, when it requested a quote for a six-month extension, “the premium quoted for renewal and a six-year prepaid run-off was $475,000 for six months (or $525,000 for 12 months).”

Product Quest said it has no source of funds to pay the premium without the consent of the lenders to use cash collateral for this purpose.

However, the company said the lenders “have not agreed to the use of cash collateral to fund a payment of $475,000 to maintain D&O coverage.”

In addition, the company said Conway MacKenzie and Product Quest Management, LLC and Ei LLC chief executive officer Michael Musso are only willing to continue providing services to Product Quest as long as the insurance coverage is maintained. The company’s board of managers has imposed a similar condition on its willingness to oversee the cases and the liquidation of assets.

Tuesday’s order specifies Oct. 31 as the conversion date and appoints Edwin Allman III as the Chapter 7 trustee.

Product Quest was also ordered to disburse $7.5 million of its existing cash collateral to its lenders, with the balance to be turned over to the trustee.

Holly Hill, Fla.-based Product Quest manufactures primarily over-the-counter drugs and cosmetics, as well as some prescription drugs and animal health products. The company filed bankruptcy on Sept. 7 under Chapter 11 case number 18-50946.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.