The Justice Department’s bankruptcy watchdog is sounding the alarm over several recent “pre-packaged” chapter 11 cases that take only days, or even hours, from start to finish, Bloomberg Law reported. Some recent bankruptcies in particular have wrapped up very quickly. Retailer Belk Inc.'s 16-hour case in February set a record, while shale oil driller HighPoint Resources Corp.'s case concluded in March within four days of filing. These rapid-fire cases, which ostensibly are supposed to be reserved for extraordinary circumstances, are renewing concerns about fairness to creditors and transparency in the bankruptcy process. “Pre-packaged plans offer a means of expediting the bankruptcy process by doing most of the work in advance of the filing,” the U.S. Trustee said in a filing in HighPoint’s case, citing an appeals court decision. “That efficiency however, must not be obtained at the price of diminishing the integrity of the process.” Yet the U.S. could fall behind other countries if it doesn’t pick up the pace and lower the cost of chapter 11 proceedings. The DOJ’s U.S. Trustee’s Office says these ultra-rapid plan confirmations lack adequate notice to creditors and can block stakeholders from having any meaningful input. According to the UST, federal bankruptcy rules require at least 28 days’ notice before a court can approve a disclosure statement, the document that details a company’s chapter 11 plan. To get around this rule, the debtor must show “irreparable and immediate harm” to the bankruptcy estate if the court doesn’t confirm the plan sooner, the UST says. Belk’s “breakneck schedule precludes parties from meaningfully inquiring into the terms of the Plan, from examining the Debtors using the ordinary discovery tools available in contested matters, and from objecting to the Plan in a considered way,” the UST said in a court filing in the retailer’s chapter 11 case.
Cicis pizza buffet announced that it has successfully emerged from chapter 11 protection, FoxBusiness.com reported. The company has reorganized its corporate team, company operations and financial structure alongside an acquisition by D&G Investors. Cicis confirmed that it had entered into an agreement to sell itself to D&G Investors in early February. The growing popularity of food delivery has been a problem for Cici’s, especially since the COVID-19 pandemic has forced many diners across the country to stay home. The chain has relied primarily on an in-person, all-you-can-eat buffet model, the company said in a court filing, according to the report. Before the COVID-19 pandemic, dine-in customers accounted for 86% of Cici’s business.
