ScripsAmerica filed with the U.S. Bankruptcy Court a motion for an order directing disbandment of the official committee of unsecured creditors or, alternatively, the removal of Ironridge Global Partners and Robert Schneiderman from the committee.
The motion explains, “Simply put, the Committee should not have been formed because a committee consisting of less than three members cannot properly function. Additionally, the Committee (as presently constituted) is incapable of carrying out its fiduciary obligations to general unsecured creditors. First, with respect to the size of the Committee, the statute indicates that an official committee shall ‘ordinarily’ consist of seven members.”
The motion continues, “Second, the Committee members that were appointed – Ironridge, a substantial holder of the Debtor’s equity that was (and is) hell-bent on destroying the Debtor’s business via litigation, and Schneiderman, the Debtor’s former Chief Executive Officer (i) who is the target of estate claims and causes of action stemming from, inter alia, his role in the events at issue in the Ironridge litigation and (ii) who signed a non-disclosure agreement in connection with the Debtor’s pending sale process – are decidedly unfit to serve the interests of general unsecured creditors as a whole.”
In addition, “The interests of Ironridge and Schneiderman are not aligned with the interests of general unsecured creditors of the Debtor’s estate. Ironridge is a substantial equity security holder whose litigious approach threatens to both deplete the estate and dilute general unsecured creditor recoveries. Schneiderman is an equity security holder, a former insider (the Debtor’s Chief Executive Officer), a central figure in the Debtor’s pre-petition slide into bankruptcy, and a potential purchaser who has formally expressed interest in bidding on the Debtor’s assets. Neither are qualified to serve in a fiduciary capacity.”
The Court scheduled a December 6, 2016 hearing, with objections due by November 21, 2016.