MGR LIQUIDATION TO BE HANDLED BY COURT TRUSTEE
WASHINGTON — Following a contentious six-hour hearing on Friday, a Bankruptcy Court judge in Baltimore put Merry-Go-Round Enterprises’ liquidation into the hands of a trustee.
Saying he lacked confidence in MGR’s ability to complete the liquidation, Judge E. Stephen Derby converted the bankruptcy to a Chapter 7 liquidation from a Chapter 11 filing. Derby said he will appoint an interim trustee as soon as possible. Creditors later will vote on whether to keep the appointee or elect one of their choice.
MGR has spent more than $100 million on bankruptcy proceedings since filing for Chapter 11 protection in January 1994. It is now in a state of administrative insolvency, which means it does not have enough money to pay all of its unsecured creditors.
The company remains behind on many of its February rent payments despite being ordered three times by Derby to pay its landlords. MGR also is in dispute with its liquidator, Columbus, Ohio-based Schottenstein, claiming Schottenstein has paid only $4.8 million of the $17 million it agreed to pay in advance for inventory.
About 450 MGR units remain open for going-out-of-business sales, which began Feb. 24. At its height in the early Nineties, MGR operated more than 1,400 mall-based stores.
— Fairchild News Service