Reddi Brake Seeks Change in Bankruptcy Status

Reddi Brake Supply Co. in Ventura has filed a petition to convert its involuntary Chapter 11 proceeding to a voluntary case.

An involuntary petition under Chapter 11 of the Bankruptcy Code was filed against Reddi Brake on March 17 by four unsecured creditors in U.S. Bankruptcy Court in Santa Barbara.

The next day, Reddi Brake closed its 84 warehouses and laid off all its field employees and most of its administrative personnel.

Since then, the company has reached a preliminary nonbinding agreement with its secured lender and certain of its unsecured trade creditors, including the four who filed the involuntary petition.

Pursuant to the agreement, Reddi Brake would convert to a voluntary Chapter 11 proceeding and reorganize. The purpose of the reorganization will be to attract additional capital to finance the company’s continued operation. If no additional capital can be raised, Reddi Brake agreed to sell its assets in an orderly liquidation.

Since the bankruptcy proceedings began, Richard McGorrian has resigned as Reddi Brake’s chief executive officer and president. Chief Financial Officer Sanford T. Waddell was appointed by the board of directors to serve as interim CEO.