Star Group Communications & Chapter 7 Bankruptcy Protection

Choppy waters for Star Group Communications

Star Group Communications, the largest female-owned marketing agency in the U.S., announced recently that its creditors are seeking to force the company into Chapter 7 bankruptcy protection. According to the Philadelphia Business Journal, the New Jersey-based company had closed down after 30 years of operation.

Star Group’s creditors pushed for Chapter 7 filing

Three of Star Group’s largest creditors filed an involuntary petition against the company in U.S. Bankruptcy Court in New Jersey. The creditors listed the company’s insolvency for several months as the reason for its filing against Star Group.

In court papers, Echelon Title stated that it was owed $1.61 million, Spongecell was owed $66,638 and Interstate Building Maintenance Corp. was owed $6,424. According to an interview with the Philadelphia Business Journal, Jeffrey Kurtzman, an attorney for Klehr Harrison Harvey Branzburg representing the creditors, explained that the value of the liquidated assets will be distributed among the creditors.

“We’re trying to capture the value of whatever was transferred and reallocating that to the legitimate creditors of Star, which were left holding the bag when the company shut its door,” Kurtzman stated.

In accordance with the court summons, Star Group was given 21 days to respond to the involuntary petition.

Star Group closes its doors

On July 2, Star Group officials sent out a memo to its 170 employees in Philadelphia, New York and Las Vegas to inform them that the company was to abruptly shut down, according to a Philly.com report. In the memo, the company stated that it was forced to shut down, but that it planned to re-open its doors once it secured capital financing.

At its peak, the company boasted Comcast, Teva Pharma, the Wharton School at the University of Pennsylvania, Fox Rothschild and Tropicana Entertainment casinos as clients. According to Ad Week’s AgencySpy blog, the failed merger between Comcast and Time Warner Cable, which resulted in significant layoffs at Time Warner Cable’s ad agency, Goodby Silverstein & Partners, could have sent the Star Group into insolvency.

The future of Star Group after the Chapter 7 filing

The creditors want the involuntary filing to help them recapture the debt and the transfers they are owed from Star Group. As part of the Chapter 7 filing, upon approval from the court, Star Group would be forced to liquidate its remaining assets through a court-appointed trustee.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.