July 14 (Reuters) - Unsecured creditors of bankrupt body armor maker Point Blank Solutions Inc PBSOQ.PK have asked a court to appoint an examiner or a Chapter 11 trustee, saying there was an immediate need to displace the fraud-hit company’s board.
In papers filed with a Delaware bankruptcy court on Tuesday, the official committee of unsecured creditors claimed that the company had placed the interests of insiders above maximizing value of the business.
Point Blank was not immediately available for comment.
“The committee has lost all confidence in the debtors (Point Blank Solutions),” the filing said.
Point Blank Solutions filed for bankruptcy in April, hurt partly by legal costs associated with a former chief executive who was indicted for fraud.
The company, which has also been investigated by the Securities and Exchange Commission, is the subject of a shareholder lawsuit, and spends about $600,000 a month on legal fees.
The filing said Point Blank’s “inaction” over the past three months to develop a plan of reorganization and consider restructuring alternatives had benefited Steel Partners, which provided Point Blank with a $20 million debtor-in-possession loan.
The filing claims there are conflicts of interests between Point Blank and Steel Partners.
Steel Partners controls the company’s four-member board, according to the filing. Point Blank’s chief executive and chairman is a managing partner of Steel Partners and the company’s chief restructuring officer has ties with Steel Partners, the filing said.
As a result, the creditors requested for the appointment of a neutral and independent fiduciary to oversee the estates and manage their restructuring process.
The Pompano Beach, Florida-based company supplies more than 80 percent of the U.S. military’s soft body armor vest requirements, according to court documents. It employs 920.
The case is In re Point Blank Solutions Inc, U.S. Bankruptcy Court, District of Delaware, No. 10-11255. (Reporting by Santosh Nadgir in Bangalore; Editing by Maju Samuel)