QSGI, Inc.(fka QSGI)

[Kharybdis]

Note that the order by the Judge was filed after the Trustee’s withdrawal of the motion to convert or dismiss. The Trustee’s motion to withdraw was predicated on the Debtor’s agreement to file a POR by the filing deadline. Normally the court does not have to warn a debtor of the ramifications of failing to file a disclosure statement and POR by the filing deadline, but apparently the Court felt compelled to do so in this case. In the event that the Debtor fails to file by the filing deadline, then the court has indicated that it may set a hearing to consider the dismissal or conversion as the Trustee originally requested.
 
It is interesting that the Trustee pointed out that the assets were about $8 million and the liabilities were in excess of $110 million. Well, that was before they sold the business for $2.4 million. I am guessing the purchaser did not assume the full $110 million in liabilities.  Since many here believe there will be an equity recovery I am wondering how this company managed to fill the negative equity gap that exceeds $100 million? Does anyone have any other cases they could point to where the absolute priority rule was subverted to the detriment of creditors in favor of shareholders? That would certainly be interesting to study. I know it has been mentioned that the debt has been dealt with but is that suggesting that they just walked away from what the trustee describes as over $110 million in debt claims?
 
The Trustee also pointed out his concerns that the Debtors lacked the financial wherewithal to even file a POR. I guess the Trustee was just bashing in a court document? You never know where these bashers will come from. I guess all will be made clear on or before the 24th.