Judge orders Malden Mills bankruptcy filing back to Worcester
A federal judge in Worcester today ordered Malden Mills Industries Inc. to move its recent bankruptcy proceeding to Massachusetts. The order was a victory for some of the company's creditors who had accused the Lawrence textile maker's leaders of bad faith in seeking Chapter 11 protection in Delaware earlier this week.
"It's our view that the case belongs in Massachusetts, and that view has prevailed,'' said the creditors attorney, Andrew Schwartz, in a telephone interview this afternoon.
Schwartz represents a group of creditors who were assigned 26 percent of the stock in the company follow its emergence from a previous bankruptcy case in 2003. These creditors could see the value of their shares sharply reduced in the latest bankruptcy, and sought to have it returned to the same court that oversaw the previous bankruptcy. Company executives said the new bankruptcy is needed in order to complete a $44 million sale of the company they have arranged to Boston investors Gordon Brothers Group.
In a court filing, the leaders had argued that they filed court papers in Delaware "to underscore that the new bankruptcy case has a limited and distinct purpose.''
(By Ross Kerber, Globe staff)
