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Xtera Communications Conversion Sought

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Xtera Communications filed with the U.S. Bankruptcy Court, a motion seeking to convert its Chapter 11 reorganization case to a liquidation under Chapter 7.

The motion explains, “On February 13, 2017, the Debtors completed a sale of substantially all of their assets to H.I.G. Europe – Neptune, Ltd. The Debtors do not believe that they will have sufficient funds to be able to propose or confirm a plan in these cases, and are continuing to incur administrative expenses. Further, the Debtors request that the professional fee reserve established as part of final order authorizing Debtors to obtain postpetition financing and granting adequate protection to the prepetition secured parties [D.I. 164] (the ‘DIP Order’) be administered outside of the chapter 7 estate. Based on these circumstances, the Debtors request that the Court grant the Motion to convert these cases as soon as possible and that the Court extend the time for filing the schedules required by Bankruptcy Rule 1019(5)(A)(i).”

In addition, “The Debtors further request authorization for DLA Piper to retain the Professional Fee Reserve in the amount of $1,425,000 for distribution to DLA Piper, Cowen and the Committee Professionals in accordance with the DIP Order and the Budget, the Interim Compensation Order, and any order on the Final Fee Applications….Because the Debtors have liquidated or disposed of substantially all of their assets and have no ongoing business operations there is no reasonable likelihood of their rehabilitation. Further, the Debtors do not have sufficient funds to effectuate a plan of liquidation. Although the Debtors believe that they will have sufficient funds to pay administrative costs through the date of the proposed conversion of these cases, the Debtors likely would become administratively insolvent soon thereafter.”

The Court scheduled a February 21, 2017 hearing to consider the conversion motion.

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