In Re Ames Department Stores, Inc.
United States Bankruptcy Court for the Southern District of New York
115 B.R. 34 (1990)
- Written by Philip Glass, JD
Facts
Ames Department Stores, Inc. (Ames) (debtor) petitioned for Chapter 11 bankruptcy on April 25, 1990. Exigently requiring $250 million in corporate financing, Ames contacted four major lenders, failing to obtain a workable arrangement from any of them. Likewise, a lending opportunity with Citibank N.A. fell through. Ames entered into a postpetition financing agreement with Chemical Bank (Chemical) (creditor), which obtained super-priority status. This agreement included some controversial clauses. Appointment of a trustee with increased powers would result in default. Were the court to lift the automatic stay for any creditor whose claim exceeded $20 million, default would result. Professional fees for Chemical's super-priority were not included in the agreement. These provisions functioned as leverage for Chemical. Ames filed a motion to approve the financing agreement with Chemical.
Rule of Law
Issue
Holding and Reasoning (Buschman, J.)
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