Byline: Jeff Siegel

NEW YORK--Things are starting to heat up between Crystal Brands Inc. and its unsecured creditors, who contend that they are being rushed through the bankruptcy proceeding and are not being paid enough for their claims.
The unsecured creditors committee, upset over the terms of Crystal Brands' disclosure statement that would give unsecured creditors a 31 percent payout, said last week it would file an objection by Tuesday to some of the assumptions in the sportswear maker's disclosure statement.
On Friday, Thomas Maloney of Cleary, Gottlieb, Steen & Hamilton, counsel to the unsecured creditors, said his group feels that a 50 percent payout "would be fair."
In a bankruptcy court filing, the committee said that although it planned to file an objection, it still planned to meet with Crystal Brands' senior executives and examine the firm's financial condition and projected payouts.
Among the issues to be discussed, according to the court filing, is the $160 million value Crystal Brands has placed on the secured portion of its banks' claims. Unsecured creditors contend the valuation is too high.
The unsecured creditors also object to the limited time given to file a response to the document. The hearing has been set for Oct. 28.
"Giving creditors only a week from receipt to evaluate and respond to the disclosure statement is simply unreasonable," the committee said.
Crystal Brands, the committee said, has stressed that it needs to shorten the response time from the normal 28-day period. In order for Crystal Brands to retain its net operating loss carryforward, the committee added, "the debtors must consummate a confirmed plan of reorganization by yearend 1994."
During plan negotiations, however, the committee said Crystal Brands "consistently downplayed or even denied the value of these tax benefits."
The committee charges that the debtors have been "attempting to bulldoze over the unsecured creditors to maintain what may well be a meaningless benefit."
Alan Miller of Weil, Gotshal & Manges, lawyer for Crystal Brands, said he has not seen the filing and could not comment.
--Fairchild News Service

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