Northwest: Committee objects to Ashford’s motion to convert cases

By Sarah Lizee

Olympia, Wash., Nov. 3 – Northwest Co., LLC’s official committee of unsecured creditors objected to Ashford Textiles, LLC’s motion to convert the debtors’ Chapter 11 cases to Chapter 7, according to a Tuesday filing in the U.S. Bankruptcy Court for the Southern District of New York on Thursday.

“While Ashford provided no notice of its intent to seek conversion, both the committee and the debtors have worked cooperatively to determine the best path forward for these Chapter 11 cases – the path that benefits all interested parties, not just Ashford,” the committee said in its objection.

The committee said that while it strongly believes conversion is not in the best interests of the debtors’ estates or creditors, the committee and Northwest informed Ashford that they were willing to consent to conversion, only if it does not prejudice administrative claimants that would otherwise be paid in connection with confirming a plan.

“Ashford rejected the proposal, insisting, once again, that it be permitted to dictate the outcome of these cases,” the committee said.

The committee claims that Ashford is “dissatisfied with the methodical approach” the committee is taking in addressing the potential claims against Ross Auerbach and others and is frustrated by the committee’s refusal to file a frivolous motion for pre-judgment attachment and commence an adversary proceeding against Auerbach.

“The notion that the committee may pursue a consensual resolution of the claims against Auerbach – which would save the estates hundreds of thousands of dollars in litigation costs and expedite the recovery of millions of dollars – was apparently a bridge too far for Ashford,” the committee said.

“Notwithstanding Ashford’s baseless claims to the contrary, the committee has worked diligently throughout this matter.”

As previously reported, Northwest agreed to sell its assets to Ashford Textiles and Ashford Partners LLC for $31.46 million, including $24 million in cash and $7.46 million for payment of cure costs.

“Conversion is the only appropriate remedy when creditors are faced with tactics by debtors and a creditors’ committee that repeatedly demonstrate bias and blatant disregard of the best interests of creditors,” Ashford said in its motion.

Northwest is a Roslyn, N.Y.-based branded home textiles company. The company filed bankruptcy on April 18, 2020 under Chapter 11 case number 20-10990.

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