Montgomery Ward Creditors Sue GE Capital
Montgomery Ward & Co. creditors sued GE Capital Corp. for more than $1 billion, claiming the financial services unit of General Electric Co. benefited unfairly from the defunct department store chain’s bankruptcy at their expense.
Montgomery Ward filed for bankruptcy and announced it was going out of business 13 months ago.
The Chicago-based company first filed for Chapter 11 in July 1997. It emerged from that reorganization in 1999 after GE Capital, which had owned 53% of the retailer, agreed to buy the rest for about $1.65 billion, court documents say.
A panel representing Montgomery Ward’s unsecured creditors in the second Chapter 11 case filed the new suit in U.S. Bankruptcy Court in Wilmington, Del., accusing GE Capital of profiting by manipulating the timing of the second bankruptcy filing.
A spokesman for GE Capital said the company is offering the creditors a settlement that would provide at least a 20% recovery of their losses.
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