Springfield Granite misses court deadlines

After company owners John and Tracy Hardwick twice received extensions to file a reorganization plan for the company, both deadlines have come and gone with no plan. Now the company’s creditors are unsure how the case should proceed.

Creditor Great Southern Bank on Sept. 2 filed a request to convert the case to a Chapter 7 proceeding in order to liquidate the company’s assets and distribute them among the creditors. In its filing, Great Southern cites several reasons for its request, including the “absence of a reasonable likelihood of rehabilitation” for the company and an “inability to effectuate a plan” for reorganization.

The unsecured creditors committee in the case, however, feels that Chapter 11 proceedings are appropriate, as it stated in its Sept. 9 response. The group reviewed the company’s finances and found, among other things, “grossly overstated” inventories and net losses where profits had been reported.

The committee states that Chapter 11 is the right way to go, assuming that the company would be sold and reorganized under new ownership; two different potential purchasers were referred to in the filing.

John Cruciani of Blackwell Sanders Peper Martin, the attorney for the UCC, said continuing Chapter 11 proceedings makes the most sense.

“Absent unusual circumstances, when a case is converted to Chapter 7, the business is supposed to stop operating,” he said. “Typically a business’ value is tied to its ability as a going concern to continue to operate. We just don’t believe … that converting the case to Chapter 7 and having it cease to operate would be in the best interests of the creditors.”

The group has requested that a Chapter 11 trustee be appointed to run the business, with the intent of either selling the business or putting a reorganization plan in place.

For the full story from the Sept. 26 issue of SBJ, click here.

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