Travel technology company Mondee Holdings, Inc. and its affiliated debtors have filed a motion seeking to convert their Chapter 11 bankruptcy cases to Chapter 7 liquidation, citing inability to pay administrative tax liabilities following the sale of substantially all their assets.
In a filing dated March 31, 2025, with the U.S. Bankruptcy Court for the District of Delaware, the debtors requested conversion effective May 1, 2025, or alternatively, dismissal of their Chapter 11 cases. The motion comes just days after the court approved the sale of Mondee's assets to a stalking horse bidder comprised of the company's DIP (debtor-in-possession) lenders.
"Upon closing of the Sale, the Debtors will not have sufficient liquidity to satisfy the anticipated administrative tax liability that would otherwise be necessary to confirm the Combined Disclosure Statement and Plan," the debtors stated in the filing. The company estimates it will incur at least $1 million in administrative tax liability after closing the sale.
Mondee Holdings, which operates various travel-related businesses, filed for Chapter 11 protection on January 14, 2025. The company's debtor entities include numerous travel service providers such as Cosmopolitan Travel Service, Skylink Travel, and TransWorld Travel, among others.
According to court documents, the sale to the stalking horse bidder preserves more than 1,000 jobs and satisfies at least $3.5 million in claims that would otherwise remain unpaid. The debtors received no qualified bids other than the stalking horse bid, leading to the cancellation of a planned auction on March 19.
"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 filing stated.
The bankruptcy process has been complicated by ongoing litigation with Tuesday Investor LP, which filed objections to various motions including the DIP financing and bidding procedures. These disputes contributed to increased professional fees and operational costs, necessitating multiple increases to the company's DIP facility, which grew from an initial $27.5 million to $35 million.
The debtors noted that while they had explored all potential exit strategies from Chapter 11, including confirmation of a 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 motion also seeks to establish May 22, 2025, as the deadline for professionals to file final Chapter 11 fee applications. A hearing on the conversion motion is proposed for April 11, 2025, with an objection deadline of April 7.
The case is being heard before Judge J. Kate Stickles in the U.S. Bankruptcy Court for the District of Delaware (Case No. 25-10047). The debtors are represented by Young Conaway Stargatt & Taylor, LLP and Fried, Frank, Harris, Shriver & Jacobson LLP.
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