Five creditors filed a joint petition to force Commerce Corp. into Chapter 7 bankruptcy in mid February, court papers show. Commerce did not contest being placed in bankruptcy, but filed to have the Chapter 7 bankruptcy changed to Chapter 11, which the court granted on March 14.
Chapter 7 would have forced Commerce into immediate liquidation, while Chapter 11 allows it room to operate.
In its court response to the involuntary bankruptcy, Commerce says it wants to pay for current employees, including bonuses for 16 employees, who “are necessary to complete the ongoing liquidation and disposition of its assets.” The same court document also mentions vacation payments to 30 employees. The Baltimore Sun reports that Commerce currently has 31 employees as of late February.
The five firms that filed the petition are Dramm Corporation, Premier Horticulture, J.R. Peters, DeWitt Company and Franklin Electric. Combined, Commerce owes the companies $1.7 million.
Another reason for Commerce’s counter petition for Chapter 11 may have been an agreement it entered to dispose of its inventory. In early March, Big Lots agreed to purchase Commerce’s inventory for more than $6 million, The Baltimore Sun reports.