SL Beverage Liquidation, LLC and its affiliated debtors have filed a motion to convert their Chapter 11 bankruptcy cases to Chapter 7 liquidation, citing insufficient funds to confirm their proposed liquidation plan and pay administrative expenses.
The motion, filed on March 3, 2025, in the United States Bankruptcy Court for the District of Delaware (Case No. 24-11468), comes after the debtors have substantially liquidated their assets and vacated nearly all their properties. According to court documents, the debtors face administrative expense claims exceeding $1.85 million and priority claims exceeding $20.87 million.
The companies, which include Delta Apparel, Inc. and several related entities, commenced their Chapter 11 cases on June 30, 2024. Since then, they have completed numerous asset sales, including the Salt Life business assets and certain non-Salt Life assets related to the Soffe brand. Liquidation sales of inventory and equipment were completed by January 31, 2025.
A critical factor in the decision to convert is the stance of the DIP lenders, who have informed the debtors they will not fund payment of administrative and priority claims either under the DIP facility or pursuant to the previously filed liquidation plan. Without this funding, the debtors and the Unsecured Creditors Committee cannot move forward with plan confirmation.
"The Debtors have determined that they have no choice but to, and that it is in the best interest of all creditors to, seek to convert these Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code so that a chapter 7 trustee can complete the administration of the Debtors' estates in a cost-effective manner," the filing states.
The debtors are represented by Christopher A. Ward, Michael V. DiPietro, Jeremy R. Johnson, and Jerry L. Switzer, Jr. of Polsinelli PC. A hearing on the motion is scheduled for March 24, 2025, with objections due by March 17, 2025.
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