According to an article in the Daily Finance, the U.S. Bankruptcy Court for the Southern District of New York granted a bankruptcy petition for Ellen Tracy LLC forcing the company into an involuntary Chapter 7 bankruptcy . The Chapter 7 bankruptcy filing means that the company will be liquidated. The bankruptcy petition was filed by three creditors/manufacturers of the company who are seeking $4 million in claims. Ellen Tracy LLC is the former licensee of Ellen Tracy the fashion label; however the license to use the name was terminated early this year. Ellen Tracy, the fashion label is not in bankruptcy. Unfortunately for Ellen Tracy LLC, this bankruptcy case suffers a case of missing assets.
The article said:
"One question we have is who liquidated Ellen Tracy's inventory and who collected the receivables," says Rosen. "Where did they go and at what price? Were they sold in bulk or at auction? These are questions that need to be answered."
The bankruptcy trustee will investigate the missing inventory, receivables and assets. If it is found that inventory was misappropriated, or that the proceeds from inventory was misappropriated, Tracy Ellen LLC could be facing a lot more trouble than a simple bankruptcy. Companies must provide an accurate accounting of assets, including inventory, receivables and cash during a bankruptcy proceeding. If they fail to do to report assets or if they hide or inaccurately report their assets, they could be charged with defrauding the bankruptcy system, which carries fines and even prison time.