UMB Bank, as trustee for $185 million in green bonds, has filed a motion to dismiss Brightmark Plastics Renewal's Chapter 11 cases, calling them a "charade" designed solely to impair the trustee's claims and prevent it from exercising legitimate remedies against its collateral. The motion, filed April 18 in Delaware bankruptcy court, represents an escalation in what the trustee describes as a "quintessential two-party dispute" that has no place in bankruptcy proceedings.
"The Trustee never asked for these cases. It never imposed pressure on the Debtors to file these cases. And it sees no reason for the Debtors to be in chapter 11, especially if it is not going to result in a fair and open process," UMB Bank stated in its filing.
According to court documents, Brightmark Plastics Renewal LLC and two affiliated entities filed for bankruptcy protection on March 16, 2025, shortly after defaulting on a March 1 debt service payment. The companies operate a plastic recycling plant in Ashley, Indiana that was financed through tax-exempt green bonds but has reportedly never functioned as intended, operating at no more than 5% capacity.
At the heart of the dispute is the trustee's claim that Brightmark's bankruptcy filing serves no legitimate reorganization purpose. UMB Bank asserts it holds valid first-priority liens on substantially all of Brightmark's assets securing approximately $179 million in bond debt. The trustee alleges that Brightmark's parent company, referred to as the "Insider Parent" in court filings, orchestrated the bankruptcy filing to prevent UMB from enforcing its rights after Brightmark defaulted.
"The Debtors stated unequivocally that they filed these Chapter 11 Cases for the 'sole purpose of valuing the [Trustee's] collateral,'" UMB wrote in its motion. "What is consistent though, is that the Debtors continue to pursue the clear goal of the Insider Parent/DIP Lender to prevent any exercise of remedies by the Trustee and impair its (and no other party's) claim."
The court documents reveal a contentious pre-bankruptcy period. According to UMB, just days before filing for Chapter 11, Brightmark informed the trustee that it intended to seek approval of a "priming" DIP loan from its parent company that would subordinate the bondholders' claims. The trustee alleges that Brightmark attempted to leverage the situation by threatening that a non-debtor affiliate would revoke intellectual property licenses necessary for the plant's operation if UMB did not consent to being primed.
When that approach failed, Brightmark allegedly pivoted to a different strategy, filing for bankruptcy with junior DIP financing of approximately $13 million from an affiliate of the parent company. More recently, according to the motion, Brightmark filed a request under Section 506(c) of the Bankruptcy Code seeking to charge the trustee's collateral for virtually all bankruptcy expenses, which UMB characterizes as an attempt to "prime the Trustee's liens" indirectly.
"Having failed to directly prime the Trustee's liens, the Debtors seek to do so indirectly using Section 506(c)," the motion states. "The Debtors essentially threaten that if the Trustee successfully credit bids on its own collateral, the Trustee should pay the entire $13 million junior DIP loan in cash."
UMB's motion asks the court to dismiss the bankruptcy cases for "cause" under Section 1112(b) of the Bankruptcy Code, arguing that the filing fails the "good faith" requirement for Chapter 11 protection. Alternatively, if dismissal is not granted, UMB seeks relief from the automatic stay to allow it to exercise its rights against the collateral.
The motion identifies multiple factors supporting dismissal, including that this is essentially a two-party dispute, the debtors have no cash or income of their own, there is no pressure from creditors other than UMB, there is no possibility of successful reorganization, and the cases were allegedly filed solely to invoke the automatic stay.
"It is time for the charade to end," the trustee declared in its motion. "From the start these Chapter 11 Cases have been run directly adversely to the Trustee's interests. The Trustee is the Debtors' sole meaningful creditor and has a blanket lien on the Debtors' sole meaningful asset."
The bankruptcy case is being heard by Judge Laurie Selber Silverstein in the United States Bankruptcy Court for the District of Delaware (Case No. 25-10472). UMB Bank is represented by Womble Bond Dickinson (US) LLP and ArentFox Schiff LLP. A hearing on the motion is scheduled for May 9, 2025, the same day as the debtors' proposed asset sale.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 25 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.