May 15, 2008
An attorney for the shuttered Short Hills Caterers said those owed money by the business will receive “100 cents on the dollar,” and questioned a move by a creditors’ lawyer to force the company into involuntary bankruptcy.
The caterer abruptly closed its doors on April 18 and filed for insolvency. According to Richard Honig of the Newark law firm Hellring, Lindeman, Goldstein & Siegal, who represents the caterers, all of the creditors would be paid in full and that there are “sufficient assets to do so.”
He questioned why a lawyer representing three creditors of the catering hall, Stuart Nachbar, would file for involuntary bankruptcy under Chapter 7.
Involuntary bankruptcy forces a corporation in question into bankruptcy court.
“We already have an offer that would pay all of the creditors 100 cents on the dollar,” said Honig. “I have no idea why any attorney would go ahead and file for involuntary bankruptcy when he’s been told that all of the creditors would be paid in full and that there are sufficient assets to do so, other than to see a fee.”
Honig said he would seek to have the case dismissed from bankruptcy court.
Nachbar, of the Union law firm Middlebrooks, Shapiro & Nachbar, said the bankruptcy filing protects those who are owed money.
“If it is accepted, it will gain protections for all of the creditors, so all of the creditors are treated on a level playing field,” said Nachbar, who has been in contact with 10 of the Short Hills Caterers’ creditors, and represents three of them.
According to Nachbar, filing for insolvency, or assignment for the benefit of creditors, approximates bankruptcy in state court, but does not include oversight by the United States Bankruptcy Court.
“The benefit of bankruptcy court is that if there’s a sale of any assets done, the court can make a determination if it is an arm’s length transaction, not an insider deal; whether it was for the right amount of money and not a sweetheart deal. It makes the proceeding more clean, and gives more protection to the creditors,” said Nachbar.
He said the issue is not as “cut and dried” as Honig portrayed it.
“How can they know what all the people’s damages are yet when they haven’t even computed them yet?” said Nachbar. “There are regular damages but also consequential damages — the difference in price between caterers, the cost of reprinting invitations, the value of their emotional distress. And quite honestly, some of the assets we’re talking about are real estate assets, and they can be very complicated transactions.”
The bankruptcy court will hold a conference on May 27 to determine whether or not the case should remain in involuntary bankruptcy or be dismissed.
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