In Re American Kitchen Foods, Inc.
United States Bankruptcy Court for the District of Maine
1976 Bankr. LEXIS 6 (1976)
- Written by Philip Glass, JD
Facts
On October 17, 1975, American Kitchen Foods, Inc. (AKF) (debtor), which operated processing facilities in Maine, filed a Chapter 11 petition. AKF relied on cash flow from accounts receivable and inventory to cover operating costs and thus petitioned the court for an order authorizing continued cash conversion of collateral. AKF insisted that the court select a going-concern valuation standard, resulting in the value of the collateral exceeding the creditors’ claims. The value of inventory and accounts receivable in AKF’s commercially viable business was forecasted not to decline. As market conditions suggested AKF’s products would enjoy an average markup at one-third over cost, AKF could convert the collateral into cash at prices above forced-sale recovery levels. Disputing this, the creditors insisted that the court impose a forced-sale valuation standard, which would show that the value of the collateral fell short of the lien amount. The court heard arguments from both AKF and Chemical Bank and First Pennsylvania Bank, N.A. (collectively, the creditors) (creditors).
Rule of Law
Issue
Holding and Reasoning (Cyr, J.)
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