UPDATE: Bank sale won't be affected by Eagle Inds. Chapter 7 filing
June 26, 2013-- Furniture Today,
BOWLING GREEN, Ky. — An involuntary Chapter 7 bankruptcy case filed earlier this month against Eagle Inds. will not affect assets already granted to Citizens First Bank in receivership proceedings earlier this year.
The bankruptcy case against Eagle Inds. was filed earlier this month in U.S. Bankruptcy Court here.
Citizens sued Eagle, putting the entertainment, office and bedroom furniture manufacturer into receivership after it defaulted on $3 million in loans. In March, the bank was granted a judgment in Kentucky's Warren Circuit Court that Eagle turn over personal property used to secure its loans.
However, in a Chapter 7 case, an automatic stay stops actions by creditors against a company when the bankruptcy proceeding is filed. Earlier this month, a group of creditors filed a Chapter 7 petition against Eagle to force it into involuntary bankruptcy.
Citizens aimed to protected assets that were already sold by the bank to an auction company.
Petitioning creditors included Pan Ocean Imports, Bommer Inds., Clearwater Wood Group, Consolidated Paper Group and Waljon Inds., who say they are owed a total of $222,870.
Citizens argued that the circuit court gave it the right to sell Eagle's equipment - which it sold to Industrial Recovery Service, an auction company, for about $1.28 million, according to court documents.
The bank said those assets are no longer property of the bankruptcy estate and the automatic Chapter 7 stay is not applicable. Additionally, it said there is no longer any equity in the personal property of Eagle. A hearing on Citizens request for relief from the stay is scheduled for June 25.
Prior to the receivership, investors had been sought for Eagle, which had received notice that Citizens planned to call its loans. The company shut down indefinitely this spring after a sale fell through. No officials from the company have been available in recent weeks.
Additionally, last week PBI Bank asked for similar relief from the automatic Chapter 7 stay on property securing $6.2 million in mortgage liens owed by Eagle.