Morabito Comments on Court Approval of Bankruptcy Sale Process for GST AutoLeather Inc.

Partner Erika Morabito is quoted in a Law360 article, “GST AutoLeather Cleared For Ch. 11 Bidding, Borrowing,” about a bankruptcy court’s approval of the bankrupt upholstery maker’s debtor-in-possession loan agreement.

Morabito, counsel to the company’s official committee of unsecured creditors, said secured lenders had failed to make meaningful concessions during earlier compromise efforts on fees. She also said that lender efforts to downplay the committee’s work ignored the fact that AutoLeather has yet to produce a budget or fully compile a list of unsecured claims, which could be $136 million higher than currently estimated.

“It seems to me the only thing that’s holding this up is the lender, who’s saying, `We are not going to fund under any scenario’’’ except the opening proposal, she said.