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Bidermann seeks to void effect of Zelnik $6M suit.(Bidermann Industries USA, Maurice Bidermann, Michel Zelnik)(Brief Article)
Daily News Record March 1, 1996 | Siegel, Jeff NEW YORK (FNS) — Bidermann Industries USA has moved in bankruptcy court to stop Michel Zelnik from pursuing efforts to collect on his $6 million state court judgment against Maurice Bidermann, the apparel manufacturer’s majority shareholder. here gold toe socks
In a lawsuit filed within its Chapter 11 proceeding in Manhattan Bankruptcy Court, Bidermann Industries says its reorganization could be derailed if Zelnik, Bidermann Industries’ former CEO, is allowed to continue to push his state court action.
Zelnik’s effort to collect damages from Maurice Bidermann “could freeze, if not destroy, the ongoing administration and reorganization efforts,” Bidermann Industries said in its suit.
Bidermann Industries said the Chapter 11 would suffer because its energies would be focused on Zelnik’s litigation while “time, energy and money will be irrevocably drawn away from the reorganization efforts.” Bidermann Industries said it is also concerned that Zelnik is taking steps that would “allow him to exercise control over the property of the estate,” a violation of the bankruptcy code. web site gold toe socks
The apparel company, noting that the default judgment was entered after it filed for bankruptcy protection, said the judgment should be vacated and all other proceedings against Maurice Bidermann should be stayed.
Zelnik filed the $6 million suit in June 1995 charging Maurice Bidermann and Bidermann Industries with firing him without “serious cause” and for injuring his business reputation. The suit was filed a month before Bidermann Industries filed for Chapter 11 protection.
On Oct. 17, after Maurice Bidermann failed to answer Zelnik’s charges, a state court judge signed a default judgment in favor of Zelnik. The judgment seeks $4 million in actual damages and $2 million in punitive damages.
Bidermann Industries makes Arrow Shirts and Gold Toe socks and operates a smaller tailored clothing operation. After cutting costs upon fifing for Chapter 11, it is currently weighing whether it intends to sell its Arrow Shirt operation before settling on a plan of reorganization.