Flying Star Owners and Creditors Trade Accusations in the Bankruptcy Case

by San Antonio Attorney

Owners of Flying Star, a café restaurant chain in Albuquerque, New Mexico, are accused of trying to deceive creditors in their plan to retain the restaurant chain, based on the objections filed against the company in the bankruptcy court.

However, owners Mark and Jean Bernstein make the same accusations against the creditors, who are proposing a different debt repayment plan and another buyer of the business.  Objections have been filed by both parties a week ago.

Two previous executives of the café restaurant, Donna Schmidt and Clyde Harrington, also interjected their personal objection.

The objecting former executives and Unsecured Creditors Committee disapprove of the owners’ disclosure statement as part of their bankruptcy plan.  The Bernsteins want to hand over all their equity in Flying Star and withdraw all their claims against the business, but then it wants to regain control by bidding $1.5 million in funding at a bankruptcy auction.  The offer would settle some debt right away and some will be paid in installment.  But unsecured creditors would just recover a fraction of the money owed to them.

The bankruptcy court has to accept the debtor’s disclosure statement before the creditors can vote on the reorganization plan.

The Bernsteins are asking the bankruptcy judge to disapprove the disclosure statement filed with the plan of the creditors’ committee.  The creditors want to sell the assets of Flying Stars to Southwest Brands for $2.5 million and allow the chain to continue operating.  The cash payment would pay off some debts.  It would be insufficient to settle all unsecured debt, but the creditors aim to pursue more money the Bernsteins and their businesses owe to Flying Star.

The court will have to consider whether the disclosure statements present enough information to creditors.

The Bernsteins claims the creditors’ committee’s proposal overlooks other expenses the estate would have to shoulder.  The creditors’ committee argues that the Bernsteins’ allegations lack details and supporting evidence.

 

 

Leave a Comment

Previous post:

Next post: