Tuesday Morning asks court to convert bankruptcy case to Chapter 7

By Sarah Lizee

Olympia, Wash., June 30 – Tuesday Morning, Inc. is seeking conversion of its Chapter 11 bankruptcy case to Chapter 7, according to a motion filed Friday with the U.S. Bankruptcy Court for the Northern District of Texas.

The debtors have sold substantially all of their assets. Secured creditors hold competing, unresolved liens against the sale proceeds, and have filed numerous pleadings setting out their alleged entitlement to payment, Tuesday Morning said.

Either the parties will reach a settlement, or the court will decide these disputes, the company said, but neither outcome will leave behind any sale proceeds for unsecured creditors.

Meanwhile, the debtors currently have insufficient unencumbered funds to pay administrative expense claims.

By July 31, the debtors believe they will have fulfilled all their obligations under the sale documents and their authority to use cash collateral will have ended.

As such, the company asked to have the case converted on July 31.

Tuesday Morning is a discount off-price retailer based in Dallas. The company began its second Chapter 11 bankruptcy case on Feb. 14 under case number 23-90001. The previous case started on May 27, 2020 under case number 20-31476. The company exited that round of bankruptcy on Dec. 31, 2020.

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