Mondee Holdings, Inc., a travel technology company, is seeking court approval to convert its Chapter 11 bankruptcy case to a liquidation under Chapter 7, even as it moves forward with the sale of substantially all its assets to a stalking horse bidder composed of its debtor-in-possession lenders.
In a motion filed on March 19 with the U.S. Bankruptcy Court for the District of Delaware, Mondee and its 20 affiliated debtors requested conversion to Chapter 7 effective April 4, citing an inability to fund post-closing administrative expenses, including at least $1 million in anticipated tax liability that would arise from the sale transaction.
"While the Debtors have explored all potential exit strategies from chapter 11, including through confirmation of the Combined Disclosure Statement and Plan, following the Sale the Debtors will have minimal liquidity, no further sources of financing, no sources of additional funds, and, as a result, will lack the ability to fund ongoing administrative expenses," the company stated in its filing.
The Austin, Texas-based travel technology firm filed for Chapter 11 protection on January 14, 2025, and has been operating as debtor-in-possession since then. According to court documents, the sale to the stalking horse bidder will preserve more than 1,000 jobs and result in the satisfaction of at least $3.5 million in claims that would otherwise remain unpaid.
"The Debtors have undertaken all efforts to maximize value through these Chapter 11 Cases. The Sale to the Stalking Horse Bidder is the result of these efforts," the company explained in its motion.
The company had previously proposed a plan of reorganization and completed solicitation of votes on its Combined Disclosure Statement and Plan on March 3, with a confirmation hearing scheduled for April 3. However, the impending administrative tax liability has made confirmation of that plan impossible.
Court documents reveal that Mondee's bankruptcy case has faced complications, including opposition from Tuesday Investor LP, which filed objections to various motions and unsuccessfully sought the appointment of an examiner. The financial strain of this litigation appears to have contributed to the need for additional financing, as Mondee's DIP facility was amended on March 14 to increase the new money term loans by $5 million due to "ongoing litigation with Tuesday Investor, increased operational costs, and decreased revenue."
In the same filing, Mondee also asked the court to establish April 25, 2025, as the deadline for professionals to file their final Chapter 11 fee applications.
The court has set April 2, 2025, as the objection deadline for the conversion motion, with a hearing date yet to be determined.
Young Conaway Stargatt & Taylor, LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are serving as co-counsel to the debtors.
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