Retailer’s case
to be heard here

The dispute over control
of Liberty House will be resolved
in Hawaii

By Peter Wagner
Star-Bulletin

A Philadelphia judge today ruled that a boardroom dispute over control of Liberty House will be heard in a Hawaii court.

U.S. District Judge William H. Yohn Jr. denied a request by Bank of America Group to settle the matter in Pennsylvania, where Liberty House is incorporated.

Yohn ordered the case heard in U.S. District Court, not Bankruptcy Court, where the company is currently undergoing reorganization under Chapter 11 of the bankruptcy code.

The issue before the Hawaii court will be whether the Bank of America-led group of Liberty House's lenders was justified in appointing a new board of directors to replace the existing board on March 19. The action triggered a bankruptcy filing by the existing board to protect the company's assets from possible liquidation. Attorneys for the bank group say a new board was legitimately appointed under terms of $173 million in loans on which Liberty House had defaulted.

The action came after Liberty House failed to meet a Jan. 30 payment of more than $1 million.

Bank of America Group recently granted $50 million in emergency financing to the struggling company. Liberty House officials say the money will help them back on the road to recovery.