WITH PETITION DROPPED, MOSSIMO AVOIDS BANKRUPTCY
Byline: Kristi Ellis
LOS ANGELES — Mossimo Inc. skirted involuntary bankruptcy earlier this week when a U.S. Bankruptcy Court judge dismissed a petition filed by three unsecured creditors who were subsequently paid.
The dismissal, which was expected, came on the heels of a $4.5 million loan from CIT Inc., which was secured earlier this month by Mossimo Giannulli, the company’s founder, through a partial personal guarantee for half the amount. The company’s inventory and accounts receivable were also used as collateral.
Mossimo will use the financing to pay off creditors and fund operations of the company.
As previously reported, the company agreed to pay $336,000 to the three unsecured creditors — Pacific Apparel Resources, Wilmar Concepts and Caeco Enterprises — who filed the involuntary Chapter 7 liquidation bankruptcy petition against the company in May. The total includes payments of $125,000 to Caeco for finished goods that were ordered and $58,000 to Pacific Apparel for fabric, according to court papers.
“Obviously the petitioning creditors were pleased with the outcome,” said Mark Brutzkus, an attorney for the three creditors.
The three companies had contended that they were owed a combined $650,000. Prior to the filing of the petition, unsecured creditors were owed between $1 million and $1.5 million, according to industry sources, and were offered either full payment over four years or an immediate single cash payment of between 35 and 50 cents on the dollar.
Peter M. Gilhuly, an attorney representing Mossimo, declined to comment on the dismissal.