JUDGE PERMITS PAMELA B. INVOLUNTARY CH. 7 TO PROCEED
Byline: Rich Wilner
NEW YORK — After months of legal wrangling between the defunct Pamela B. Apparel Inc. and its trade creditors, a bankruptcy judge here has allowed the creditors’ involuntary Chapter 7 case to proceed.
The creditors’ attorney stated in court papers that he pressed for Chapter 7 because a trustee is needed to investigate the circumstances that led to the sportswear firm’s demise.
The company stopped operating in August 1995 after it ran out of money and couldn’t obtain financing. Walter Baker, the former president and an owner of Pamela B., said in court papers that the firm made a bulk sale of its assets to a company — B. Walter Inc. — he created at the time.
Baker said he made the sale because it was the only way to gain financing to complete work on $900,000 in orders in-house at that time.
In an affidavit, Baker said the $375,000 sale of the assets was analyzed at arm’s length and was found to be in the best interests of creditors. He fought the creditors’ Chapter 7 petition and asked Bankruptcy Judge Stuart M. Bernstein to dismiss the case.
Alan D. Pekelner, counsel to Pamela B.’s petitioning creditors, successfully argued that the Chapter 7 case should continue because Pamela B. filed no proof the deal was made in the best interest of creditors and because the best way to probe the sale was with a Chapter 7 trustee.
Pekelner, of Blum, Gersen & Wood, said in court papers that a trustee would, among other issues, examine if Baker or Howard Wendy, an owner of the defunct company, received bonuses while creditors failed to get paid.
Pamela B.’s petitioning creditors are Westwood Inc., 1460 Broadway; Omega Textile Corp., 148 West 37th St., and Allied Shoulder Pads, 247 West 38th St.
— Fairchild News Service