Convert Avenue Stores Bankruptcy to Chapter 7, U.S. Trustee Says (1)

The Justice Department is seeking to force the plus-size clothing retailer Avenue Stores LLC to convert its bankruptcy to Chapter 7, citing possible causes of action against an equity owner.

An unsecured creditors committee has found “potential valuable causes of action against” Ornatus URG Funding LLC, one of the retailer’s private equity owners, according to a Nov. 14 motion filed by the U.S. Trustee, the DOJ’s bankruptcy watchdog.

Converting the case from Chapter 11 reorganization would allow an independent Chapter 7 trustee to pursue such claims, the U.S. Trustee said in its filing at the U.S. Bankruptcy Court for the ...