Wilmington, Del.–KBC Bank NV wants a U.S. bankruptcy court to stop Exelco North America Inc. from selling its assets to a liquidation company, the latest court filing in this complicated bankruptcy case shows.
On Nov. 28, Exelco North America, along with Exelco NV, FTK Worldwide Manufacturing BVBA and Ideal Diamond Trading USA and Ideal Diamond Trading Ltd., told the court that it had found a stalking horse bidder in SimplexDiam Inc., which has agreed to purchase Exelco’s assets for $6 million.
On Monday, KBC moved to block the potential sale for a laundry list of reasons laid out in court documents: the issue of proper jurisdiction for the case (United States or Belgium) hasn’t been resolved, the company’s value isn’t being maximized, and, moreover, it’s not even 100 percent clear what exactly Exelco is selling to SimplexDiam.
Regarding value specifically, KBC states in court papers that the $6 million being offered is less than half what the bank is owed ($13.8 million) and “significantly” less than the nominal amount of accounts receivables pledged to KBC, which total more than $8 million.
KBC said that Exelco is attempting to “put the cart before the horse” by rushing this sale process, despite the fact that they have not identified any “melting-ice issues” that warrant its acceleration.
“Marketing, bidding, auction and sale of the debtor’s assets should be conducted, if at all, only after these critical issues are determined,” court papers state.
Exelco’s attorney, Michael Nestor, did not respond to request for comment on Monday’s filing.
Exelco NV and FTK Worldwide Manufacturing BVBA, along with U.S.-based affiliates Exelco North America and Ideal Diamond Trading USA, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Delaware at the end of September.
Since then, there has been much back and forth between the diamond company and its lender over issues of jurisdictions and ownership of assets, prompting U.S. Bankruptcy Judge Kevin Gross to call the case a “mess” in court on Oct. 23, Law360 reported.
Jean-Paul Tolkowsky, a member of the famous diamond-cutting family, started Exelco in 1993 with Leon and Lior Kunstler.
The company is a mid-stream supplier of diamonds, buying rough from miners and then cutting, polishing and/or setting the stones and selling them to retail jewelers.