Wachovia Sues Hoboken After Judge Tosses Filing

Wayne, NJ, November 27, 2007—Wachovia is suing Hoboken Wood Flooring, which filed for Chapter 7 bankruptcy.

Wachovia Corp.'s Wachovia Bank National Association filed suit against Hoboken Wood Flooring LLC and three related companies November 20 in Superior Court in Camden, said Ronald J. Nelson, Hoboken Wood Flooring's former counsel.

The suit was filed three days after a judge in U.S. District Court in Delaware threw out the flooring company's Chapter 7 bankruptcy case, in part because of the lack of unsecured funds to pay for the bankruptcy administration.

Once the largest wood flooring distributor in the nation, Hoboken Wood Flooring laid off employees Oct. 29.

In court papers, Wachovia said it is the lead agent for several secured creditors who are owed $66 million. That was down from $100 million owed in June, the court papers said.

Hoboken’s liabilities have never been disclosed although in its initial filing the firm said it had assets and liabilities of more than $100 million.

Its initial bankruptcy filing said only that the company had assets and liabilities of more than $100 million.

The dismissal of the bankruptcy filing means the bank and other secured creditors can pursue the Hoboken’s assets in place of a trustee.

Wachovia filed suit under "replevin" laws, in which the company seeks to recover goods that were improperly taken.

Nelson told The Record that the case is unusual because the main parties involved appear to agree that Hoboken Wood Flooring had such a shortfall of assets that no one but the secured creditors would get paid.