Industry News

Gibson: Missed It By That Much

Believe it or not, it’s not over yet. Reports of Gibson Brands’ emergence from Chapter 11 bankruptcy were, as it turns out, premature. In Copper #72 we reported the news that thanks to agreements between the creditors, Gibson Brands would be emerging from bankruptcy all shiny and new, and far sooner than such things generally occur.

The creditors may have been satisfied by the terms, but as it turns out, Andrew Vara, the acting US Bankruptcy Trustee for this case in Region 3 of Fedearal Bankruptcy Court—-was not. In a 12-page motion entitled, “UNITED STATES TRUSTEE’S OBJECTION TO MOTION OF THE REORGANIZED DEBTORS FOR ENTRY OF ORDER (I) ISSUING A FINAL DECREE CLOSING CERTAIN CHAPTER 11 CASES AND GRANTING RELATED RELIEF; AND (II) AMENDING JOINT ADMINISTRATION ORDER TO DESIGNATE CHAPTER 11 CASE OF GUITAR LIQUIDATION CORPORATION, F/K/A CAKEWALK, INC., AS THE LEAD CASE (D.I. 1018)” (phew!), Vara laid out how the group of 12 creditors had cut corners, and had simply not followed the procedures of the Court.

In his conclusion, Vara states, “37. None of the Debtors’ cases are fully administered, and the Motion is premature. Moreover, the form of relief the Debtors seek, collapsing twelve separate cases into a single consolidated case for administration, is a form of substantive consolidation which would modify the Debtors’ confirmed and substantially consummated Plan. The final relief requested by the Debtors, a change of caption to reflect the closing of eleven of the twelve cases, is superfluous unless and until a particular case is actually fully administered and closed.

“38. The U.S. Trustee leaves the Debtors to their burden of proof on each element of relief requested, and reserves any and all rights, remedies, duties and obligations,
including all discovery rights.”

In brief, wrists have been slapped, attorneys chastised, and all and sundry have been ordered to go back and do it right this time. The tone of the motion shows thinly-veiled impatience and disgust not unlike that of a ninth grade English teacher who is fed up with having to explain footnote protocol yet again.

The full motion can be read here; an easier to follow summary is provided, as usual, by our friend Ted Green at Strata-gee.com.

Onward, into the Court’s calendar in 2019!