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Chapter 7 conversion urged for M.W. Johnson
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A federal watchdog is pushing for M.W. Johnson Construction Incorporated's Chapter 11 bankruptcy case to be converted to a Chapter 7 liquidation in an effort to save the Minnesota homebuilder's bankruptcy estate money.
Habbo Fokkena, a Justice Department employee charged with ensuring that parties in M.W. Johnson's case are following bankruptcy laws, argued that by the time an Oct. 22 hearing is held on the issue, M.W. Johnson will have fully liquidated its assets and have no remaining business operations left. Yet, as long as the homebuilder's case remains under Chapter 11, its management, attorneys, and other professionals will be able to continue collecting "substantial" salaries and fees.
For example, owners of M.W. Johnson -- M. William Johnson and Maureen K. Johnson -- each get $175,000 a year. Meanwhile, their sons Trent and Troy Johnson and Bryan Wolfe each receive $125,000 a year.
A liquidation under Chapter 7 would force the company to let go most of the professionals working on the bankruptcy, thereby saving the company administrative expenses, Fokkena said in court papers Thursday.
M.W. Johnson Construction, of Lakeville, filed for Chapter 11 protection on June 13. Since then, the company has received permission to sell its land, homes and equipment.
DOW JONES NEWS SERVICE
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