Tuesday Morning Corporation: Judge Hale Blocks Aspects of Trade Claimants Committee’s Campaign for ‘No’ Votes on Tuesday Morning Plan, Grants Sanctions

Types : In the News

Judge Harlin Hale granted the Tuesday Morning debtors’ motion to compel the Invictus-led trade claimants committee, or TCC, to comply with the disclosure statement approval order during a hearing today, finding that the information disseminated by the TCC in a website and press release contains false and misleading statements. Judge Hale also granted sanctions, corresponding to the attorneys’ fees of the debtors, the official committee of unsecured creditors and the official equity committee for those parties “having to deal with this,” with the actual amount of such fees to be determined at a later date on notice and opportunity for a hearing. Judge Hale also reserved decision on further sanctions on harm to the estate as “events unfold.”

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Edward Schnitzer of Montgomery McCracken, for the UCC, pointed to a few “particularly troubling” things, including that (a) the TCC holds itself out as a committee of trade claimants, which he said is misleading since they are not an official committee and are not average trade claimants that provide goods and services, (b) the TCC’s identification of the wrong federal judgment rate and (c) the lack of recitation of risk factors and the “false” claim that a vote to reject the plan would have no consequences.

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