Former CarbonLite Chapter 11 plan draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Aug. 24 – CL H Winddown LLC’s, formerly CarbonLite Holdings LLC, Chapter 11 plan of liquidation drew an objection on Tuesday from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the plan can’t be confirmed because it violates the bankruptcy code.

Specifically, the plan would exclude all post-confirmation distributions or expenditures made by the liquidation trust from the “disbursements” made in the case for purposes of calculating the statutorily-mandated fee that must be paid in the debtors’ cases every quarter, the U.S. trustee said.

As quarterly fees are not calculated upon the transfer to the trust of non-cash assets such as causes of action, the plan would allow those non-cash assets to be liquidated post-confirmation and disbursed to creditor-beneficiaries or trust vendors without ever being included in calculating quarterly fees, Vara said.

The plan confirmation hearing is scheduled for Sept. 2.

CarbonLite is a Riverside, Calif.-based producer of food-grade post-consumer recycled polyethylene terephthalate. The company filed bankruptcy on March 8 under Chapter 11 case number 21-10528.

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