L&L Wings: TD Bank fires back at creditor’s attempt to pursue claims

By Sarah Lizee

Olympia, Wash., Nov. 30 – L&L Wings, Inc. pre-petition secured creditor TD Bank, NA objected to unsecured creditor Beach Mart Inc.’s motion seeking authority to prosecute actions on behalf of the debtors against lenders TD Bank, Bank of America, NA, Truist Bank and United Community Bank, Inc., according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

“By the motion, Beach Mart Inc., a judgement creditor holding an unsecured claim in the principal amount of $4.1 million with motivations in this case that transcend mere repayment, seeks standing to pursue claims against certain lenders, including TD Bank, holding guaranties by the debtor of real estate loans made to non-debtor affiliates of the debtor,” TD said in its objection.

The bank said that since June, it has engaged with the official committee of unsecured creditors regarding the terms of the debtor’s use of cash collateral, including the challenge deadline for the committee to pursue potential avoidance claims.

“These discussions resulted in an agreement with the committee that any litigation to disrupt the debtor’s existing and potential future relationship with TD Bank would not be beneficial to the estate, particularly since all creditors of this estate would benefit from the debtor’s ability to successfully emerge and continue business operations,” TD Bank said.

TD said it also agreed to extend the challenge period for the committee to start avoidance actions to challenge the bank’s liens and claims through the earlier of Feb. 1 and the effective date of a plan.

“Thus, as of today, the only party in this case with standing to do what BMI seeks to do through the motion, is the committee,” TD said. “It is on this basis alone that the motion should be denied.”

A hearing is scheduled for Dec. 2.

The New York-based beachwear and beach sundry items retailer filed bankruptcy on April 24, 2021 under Chapter 11 case number 21-10795.

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