Court Denies Dlubak’s Motion to Convert; Grants Committee Authority to Pursue Affiliated Entities

courthouseFollowing hearings held on April 4, 2014, the U.S. Bankruptcy Court for the Western District of Pennsylvania entered an Order denying Frank Dlubak’s Motion to Convert from a Chapter 11 to Chapter 7 bankruptcy case. In conjunction, the Court also entered an Order allowing the Committee to file an amended Disclosure Statement within by May 4.

In addition, the court granted a Motion for Authority to Prosecute Avoidance Action filed by the Official Committee of Unsecured Creditors of Dlubak Corp. According to court documents, “the motion is granted … as the committee has demonstrated sufficient grounds for derivative standing based on colorable claims against Dlubak Glass Co., Frank Dlubak, Dlubak Powder Coating, Global Ceramic Services Inc., and Greenheat LP (collectively the ‘Parties’), based on the Debtor’s unwillingness to pursue such claims in light of the insider status of the Parties, and based on the potential benefit to the Debtor’s Estate of pursuing such claims.”

Court documents note that “the Committee is authorized to file adversary proceedings against the Parties in pursuit of any/all claims under Chapter 5 of the Bankruptcy Code.”

In the months since Dlubak’s initial Chapter 11 bankruptcy protection filing made last summer, the company’s assets were sold off in two separate transactions. The company first sold its non-real estate assets to Grey Mountain Partners, agreeing to do so shortly after it filed for Chapter 11 protection. This past February, the court approved the sale of the company’s real estate assets, specifically its operating facility, to KMS Property Acquisition Co., for $800,000. That sale closed on March 6.

Stay tuned to™ for more updates as they are made available.

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