In Re Studio Five Clothing Stores Inc.

OPINION ON COURT’S ORDER TO SHOW CAUSE WHY PRESENT CHAPTER 7 CASE SHOULD NOT BE DISMISSED DUE TO THE FACT THAT THIS DEBTOR HAS A CHAPTER 11 CASE STILL OPEN

I. INTRODUCTION

Studio 5 Clothing Stores, Inc. (“Debtor”) is a California Corporation. In 1993, Debtor operated a chain of women’s retail clothing stores. On July 12, 1993, Debtor filed a voluntary Chapter 11 bankruptcy, Case No. LA-93-34546-KM. On September 16, 1994 this Court confirmed a Chapter 11 Plan in that case.

Debtor’s Chapter 11 Plan was a “reorganizing/operating” Plan, which provided for the reorganized Debtor to continue operating various stores and to make the Chapter 11 Plan payments from certain exit financing and from projected post-confirmation operating profits. Debtor was thus eligible to receive a discharge, and Article 9.2 of Debtor’s Plan granted Debtor a discharge, pursuant to 11 U.S.C. § 1141 (d), on the effective date of the confirmed Plan.

Debtor continued to operate its business during the remainder of 1994 and in 1995. On October 27, 1995 a second bankruptcy case, an involuntary Chapter 7, was commenced by various petitioning creditors, with Debtor as respondent. When the involuntary Chapter 7…