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Emergency Hearing Held in Diamond Case to Review TPA Motion

The U.S. Bankruptcy Court for the District of Delaware held an emergency hearing this morning in the case of Diamond Glass Inc.'s petition for reorganization under Chapter 11 to review a supplement to Diamond's motion authorizing them to honor or pay pre-petition customer obligations. The supplemental to the motion, authorizing Diamond to honor or pay prepetition obligations arising under the third-party administration (TPA) program and to continue the TPA program, was filed when the company realized that the TPA program "was inadvertently omitted from the description of the Customer Programs in the Customer Obligation Motion." (CLICK HERE for related story.)

"Accordingly, the Debtors file this Supplement and seek entry of an order authorizing the Debtors to honor or pay pre-petition obligations arising under the TPA Program and to continue, renew, replace, modify and/or terminate the TPA Program as they see fit in their business judgment," the motion reads.

Court documents note that as of the petition date, a substantial amount of work had been performed by third-party repair shops that had not yet been paid in accordance with Diamond's work as a third-party administrator. Diamond notes that it expects the total amount to be paid for pre-petition work by third-party shops "not to exceed $105,000 in the aggregate."

"Any delay in honoring or paying Customer Obligations under the TPA Program will severely and irreparably impair the Debtors' customer relations, as well as the Debtors' relations with the Third-Party Repair Shops, at a time when the loyalty and support of their customers and Third-Party Repair Shops are extremely critical," the motion says.

Judge Christopher S. Sontchi, who is overseeing the Diamond case, granted the motion during this morning's hearing.

CLICK HERE for full text of motion.

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