Maclaren Bankruptcy Trustee Demands Answers

When Maclaren USA entered bankruptcy in December, its Chapter 7 filing made for a lot more questions about what the company was doing in bankruptcy than it provided answers—questions that have remained largely unanswered since, The Wall Street Journal Bankruptcy Beat blog reported. Why did sales drop so drastically in 2011, to $34,251 from over $20 million in 2010? Does Maclaren, the U.K.-based company that manufactures the strollers and other products, plan to continue selling in the U.S.? Why doesn’t the company have any secured debt and why do most of the creditors appear to be associated with Maclaren USA? And what will happen to the pending litigation and potential future liability claims from those injured by the strollers recalled in 2009? In court papers filed Tuesday, the trustee in the case, Roberta Napolitano, started demanding answers. According to the trustee, Maclaren (HK) Ltd., the organization that Maclaren USA had its distribution agreement with, didn’t renew the licensing agreement at the end of December 2010, after the 2009 recall. This begins to explain the plummeting income, “nonetheless, the debtor paid its directors $126,755.60 in 2011,” Napolitano, who has seen the licensing agreement, said in court papers. Since then, Maclaren (HK) Ltd. has begun distributing its strollers through a company called Maclaren NA Inc., “which shares at least one officer with the debtor,” the trustee said. Napolitano also questioned the creditors mentioned in Maclaren USA’s petition. “Aside from the claim of Netto Collections, LLC and claims stemming from product liability litigation, the only claims the debtor lists are from entities which may be affiliates of the debtor…it is necessary that the trustee investigate the relationship between the debtor and its potential affiliates.” Read more. (Subscription required.)