By Dietrich Knauth
NEW YORK, Aug 24 (Reuters) – A U.S. bankruptcy judge on Monday rejected auto parts maker First Brands’ proposal to pay back creditors by pursuing litigation against insiders, instead converting the case to a more straightforward Chapter 7 liquidation.
U.S. Bankruptcy Judge Christopher Lopez said that First Brands’ proposed Chapter 11 plan was not acceptable, in part because it sought to defer payment on at least $222 million in debts racked up during the company’s bankruptcy. First Brands owes billions more from before its bankruptcy, and its efforts to sell off business lines generated only a fraction of what it owes to its creditors.
“Unfortunately, time was not on the debtor’s side,”…