Solutia Wickes Dura Plastech Levitt W.R. Grace Bankruptcy
Solutia, Wickes, Dura, Plastech, Levitt, W.R. Grace: Bankruptcy
By Bill Rochelle
Feb. 13 (Bloomberg) — Solutia Inc., the specialty chemical
manufacturer whose reorganization plan can;t be completed
despite being approved in November, intends to be in bankruptcy
court tomorrow demanding the right to take testimony under oath
from Vikram Pandit, the chief executive officer of Citigroup
Inc.
Solutia says in court papers that Citigroup;s decision not
to fund a $2 billion loan commitment from October “was made
directly by Pandit himself.;;
Solutia says it learned that Pandit made the decision in a
meeting two days after the company was told the lenders wouldn;t
complete the loan, citing a material adverse change in the
syndication market.
The papers filed by Solutia assert that Gregory Milmoe, one
of Citigroup;s lawyers from Skadden, Arps, Slate, Meagher %26amp;
Flom, told a Solutia lawyer that the decision was made by
Pandit.
The examinations under oath are being taken ahead of the
trial to begin Feb. 21 on Solutia;s lawsuit to compel Citigroup
and the other lenders to fund the loan.
The commitment was given in October by Citigroup Global
Markets Inc., Goldman Sachs Credit Partners LP, Deutsche Bank
Trust Company Americas and Deutsche Bank Securities Inc.
The new financing was to include a $1.2 billion senior
secured term loan, a $400 million senior secured revolving
credit and $400 million in senior unsecured notes. The banks
were to provide a $400 million bridge loan if the notes couldn;t
be sold.
If the lenders complete the loan, Solutia can carry out the
Chapter 11 plan approved in a Nov. 29 confirmation order. The
plan would give unsecured creditors 46.6 percent of the new
stock for an intended 69.8 percent recovery. Those participating
in a rights offering should recover 83.1 percent, Solutia
estimates.
Noteholders are to have 48.6 percent of the stock, for an
assumed 75 percent dividend. By purchasing in a rights offering,
noteholders could recover 84.4 percent, in Solutia;s judgment.
Existing stockholders would receive five-year warrants to
buy 7.5 percent of the new stock plus the right to participate
in a rights offering.
Solutia, based in St. Louis, filed its Chapter 11
reorganization petition in December 2003, listing assets of
$2.85 billion against debt totaling $3.22 billion.
The case is In re Solutia Inc., 03-17949, U.S. Bankruptcy
Court, Southern District New York (Manhattan).
Other Updates
Wickes Furniture Intending to Auction 43 Stores on Feb. 25
Although Wickes Furniture Co. has no buyer for its 43
stores, the Wheeling, Illinois-based company will be in
U.S. Bankruptcy Court in Delaware on Feb. 19 asking for
permission to conduct a Feb. 25 auction to sell the assets.
Wickes is hoping one or more buyers will offer either to
purchase the business as a going concern or bid to conduct
going-out-of business sales at the stores in four states.
If the bankruptcy court agrees with the company;s proposed
schedule, bids would be due Feb. 22 and the sale
approval hearing would occur Feb. 28. Wickes wants the right to
pay a 3 percent breakup fee to a buyer willing to sign a
contract and thus provide a floor price for the auction.
The Feb. 3 petition listed assets of $190 million against
debt totaling $208 million, including $23.5 million on a
revolving credit and more than $56 million on a series of
secured term loans. The operating company also owes $15 million
to the parent holding company on a secured subordinated note.
The holding company also filed in Chapter 11.
The case is In re Wickes Holdings LLC, 08-10212, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Pope %26amp; Talbot Latest Asset Sale Approved
Pope %26amp; Talbot Inc., the Canadian pulp and lumber producer,
won court approval yesterday to sell the pulp business to
affiliates of Indonesia-based Sinar Mas Group
in a transaction intended to generate $225 million.
The sale involves two mills in British Columbia and one in
Oregon. The price includes assumption of debt and receivables to
be generated from collections on working capital, the company
said in a statement when the contract
was announced.
Pope %26amp; Talbot said yesterday Sinar Mas signed a $6 million
contract to buy a sawmill in Fort St. James,
British Columbia. Fox Lumber Sales Inc. agreed to buy the Midway
sawmill for $750,000. Both sales are conditioned on approval by
the U.S. Bankruptcy Court in Delaware.
In January, Pope %26amp; Talbot was given the green light to sell
softwood sawmills to International Forest Products Ltd.
Pope %26amp; Talbot began reorganizing in Canada near the end of
October and filed under Chapter 11 in Delaware in November. The
filing in Canada was under the Companies; Creditors Arrangement
Act. The Canadian case was moved from Ontario to British
Columbia.
The company says the assets are $347.9 million while total
debt is $473.2 million.
The U.S. case is In re Pope %26amp; Talbot Inc., 07-11738,
U.S. Bankruptcy Court, District of Delaware (Wilmington).
Still Without Creditor Consent, Dura Trims Executive Bonuses
Unable to gain approval from the creditors; committee
for a management bonus program, Dura Automotive Systems Inc.
modified the proposal the auto-parts maker said was needed to
alleviate “uncertainty;; among executives.
Where the original program would have cost $8.5 million,
the revised price tag is $2.5 million. Dura;s court filing says
the chief executive officer, chief financial officer, chief
operating officer and vice president of human resources
voluntarily dropped out of the
program “at this time.;; Dura reserved the rights to seek
bonuses for the top officers in the future.
The bonuses, to cover the first half of 2008, would pay
between 5 percent and 45 percent of a manager;s annual
salary.
Dura said there “has been no appreciable progress;; in
negotiations with the committee over the bonus program. The
committee asked for a hearing on the bonuses to be pushed back
to late March. Dura refused, scheduling the
U.S. Bankruptcy Court in Delaware to hold a Feb. 21
hearing.
Dura filed under Chapter 11 in September 2006 with 16,000
employees at 63 factories in 14 countries. The
operations outside the U.S. and Canada aren;t in reorganization.
The petition by Rochester Hills, Michigan-based Dura listed $2
billion in assets and debt of $1.7 billion.
The case is In re Dura Automotive Systems Inc., 06-11202,
U.S. Bankruptcy Court, District of Delaware
(Wilmington).
MediCor Has Agreement in Principle to Sell Foreign Affiliates
Although MediCor Ltd. was unable to sell its assets
despite gaining permission from the bankruptcy court, the
company said in a Feb. 11 court filing that a previously
interested purchaser resurfaced and agreed in principle to buy
most of the subsidiaries.
While papers haven;t yet been filed regarding a sale,
MediCor lodged a request with the U.S. Bankruptcy Court in
Delaware to increase funding for the reorganization from $5
million to $7 million.
MediCor said it has 17 percent of the breast-implant
market outside of the U.S. and generated almost $40 million in
sales last year.
MediCor began the Chapter 11 case in June after the flow of
money from affiliate Southwest Exchange Inc. was cut off. The
Nevada state court receiver for Southwest charged in a lawsuit
begun in December that Donald McGhan, who controlled both
companies, siphoned money out of Southwest so MediCor could buy
its assets, including a French unit called Eurosilicone SAS.
The case is In re MediCor Ltd., 07-10877, U.S. Bankruptcy
Court, District of Delaware (Wilmington).
Committee Says Friedman;s Financing Not Needed, Benefits CIT
The official creditors; committee of Friedman;s Inc.
and affiliate Crescent Jewelers Inc. plans to appear in
bankruptcy court today to oppose final approval of financing.
The committee says financing isn;t needed because the
jewelry retailers and the 473 stores could live on their
incoming cash until the businesses are sold.
The committee contends the “principal beneficiary;; of the
financing is the lender CIT Group/Business Credit Inc.
The committee argues the financing permits New York-based
CIT “to convert its pre-petition debt into a fully cross-
collateralized post-petition financing.;;
The financing consists of a $75 million revolving credit
supplied by the pre-bankruptcy first-lien lender CIT and a $17.2
million term loan from the second-lien pre-bankruptcy lender
Harbinger Capital Partners Master Fund I Ltd.
A court filing disclosed that debt on the filing date
included $57.9 million on the first-lien loan, $10.3 million on
the second lien and $27 million on an unsecured subordinated
loan made by shareholders to enable the Crescent acquisition.
The Crescent petition said the two companies together have
assets of $245 million and debt totaling $172 million.
Addison, Texas-based Friedman;s completed a reorganization
in November 2005 by confirming a Chapter 11 plan giving Harbert
Distressed Investment Master Fund Ltd. all the stock in return
for a $25 million cash infusion.
In July 2006, Crescent, the largest jewelry retailer in
California, completed its own Chapter 11 reorganization plan
under which Friedman;s and Harbinger Capital Partners Master
Fund I Ltd. took all the new stock in exchange for their claims
and capital investment.
Creditors filed an involuntary Chapter 7 petition against
Friedman;s on Jan. 22. Three days later, Friedman;s consented to
having a reorganization in Chapter 11 and at the same time put
its affiliate Crescent into Chapter 11, also in Delaware.
Friedman;s and Crescent together have 3,500 employees.
The case is In re Friedman;s Inc., 08-10161, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Neumann to Sell Framing Business for $2.5 Million to Masco
Neumann Homes Inc., the homebuilder that filed to
reorganize in Chicago in early November, is proposing to sell
its Precision Framing Systems LLC business for $2.5 million to a
subsidiary of Masco Corp.
Precision Framing makes factory-built floor decks, wall
panels and roof systems.
The hearing to approve the sale is Feb. 20. While Neumann
doesn;t intend on holding an auction, the Warrenville, Illinois-
based company will consider another offer if someone makes a
better bid before the hearing.
Neumann listed assets of $291.8 million and debt totaling
$286.9 million, including $151.1 million in secured debt. In
addition to undeveloped land, assets include 233 homes completed
or in construction.
The case is In re Neumann Homes Inc., 07-20412, U.S.
Bankruptcy Court, Northern District of Illinois (Chicago).
Briefly Noted
Plastech Engineered Products Inc., the plastic component
manufacturer that filed in Chapter 11 on Feb. 1 in Detroit,
reached a financing agreement with customers so the business can
continue until Feb. 27. The agreement
prohibits Plastech from making products for major customers that
aren;t participating in the financing. Dearborn,
Michigan-based Plastech entered bankruptcy reorganization with
$111 million owing on a revolving credit, $265 million on a
first-lien term loan, and $100 million on a second-lien term
loan. Standard %26amp; Poor;s said Plastech had $488 million in debt
in September. The case is In re Plastech Engineered Products
Inc., 08-42417, U.S. Bankruptcy Court, Eastern District of
Michigan (Detroit).
Fortunoff Fine Jewelry %26amp; Silverware LLC, the 86-year-old
jewelry, gifts and home-furnishing retailer that filed a Chapter
11 petition on Feb. 4 in New York, has an official creditors;
committee with nine numbers, including
Movado Group Inc. Uniondale, New York-based Fortunoff has a
contract to sell the 23 stores for $80 million cash to the owner
of Lord %26amp; Taylor department stores. The petition listed assets
of $268 million against debt totaling $306 million. Debt
includes $60 million owing on a secured revolving credit and
$19.5 million on a secured term loan.
The case is In re Fortunoff Fine Jewelry %26amp; Silverware LLC, 08-
10353, U.S. Bankruptcy Court, Southern District of New York
(Manhattan).
Levitt %26amp; Sons LLC, the homebuilder that filed under Chapter
11 in November, submitted amended lists of assets
and liabilities showing more than $430 million in debt. Fort
Lauderdale, Florida-based Levitt previously listed $340 million
in debt. Parent company Levitt Corp. didn;t file and neither did
affiliate Core Communities LLC, a developer of master planned
communities. The case is In re Levitt %26amp; Sons LLC, 07-19845, U.S.
Bankruptcy Court, Southern District Florida (Fort Lauderdale).
W.R. Grace %26amp; Co., the specialty-chemical manufacturer
approaching seven years in bankruptcy reorganization, has a
March 17 court appearance to obtain approval for extending the
expiration of the $250 million financing agreement
until April 2010. The financing otherwise will expire April 1.
Grace will also request approval to make a $17.8 million minimum
funding contribution for the pension funds. In January, the
company began a trial in bankruptcy court in Pittsburgh designed
to put a value on asbestos claims. Columbia, Maryland-based
Grace and 61 subsidiaries filed Chapter 11 petitions in April
2001 to deal with asbestos liability. The case is In re W.R.
Grace %26amp; Co., 01-01139, U.S. Bankruptcy Court, District of
Delaware (Wilmington).
Domain Inc., the operator of 27 furniture and home-
furnishing stores in seven states, said it will begin
liquidation sales of the $20 million inventory today. The
company announced yesterday in a statement that the U.S.
Bankruptcy Court in Delaware approved the sale. The sale will be
managed by Hudson Capital Partners and Great American Group. All
the stores will close when the sale is completed in several
weeks. Domain filed under Chapter 11 on Jan. 18 in Delaware
intending to sell the assets. The petition didn;t include a list
of assets and liabilities other than a statement that both are
more than $50 million but less than $100 million. At filing,
$4.9 million was outstanding on a secured revolving credit loan.
The chain uses the name Domain Home Furnishings. The case is In
re Domain Inc., 08-10132, U.S. Bankruptcy Court, District of
Delaware (Wilmington).
Aspen Executive Air LLC was given an extension of the
exclusive right to propose a plan of liquidation until May 12.
The assets were sold to an insider named John P. Calamos, who is
to invest in Pinnacle Air LLC, become Pinnacle;s controlling
shareholder, and have Pinnacle buy Aspen;s assets. Aspen listed
assets of $6.5 million and debt totaling $64.7 million,
including judgments for more than $31 million that were settled.
Basalt, Colorado-based Aspen before filing was operating five
private jets, and chartered others when needed. The case is In
re Aspen Executive Air, 07-11341, U.S. Bankruptcy Court,
District of Delaware (Wilmington).
Involuntary Filing
Creditors File Petition Against Electro-Chemical Technologies
Creditors filed an involuntary petition to liquidate
Electro-Chemical Technologies Ltd. under Chapter 7 in U.S.
Bankruptcy Court in Las Vegas, where the company is located.
The developer of municipal water and wastewater treatment
systems said it is “evaluating the effect of this event on the
Corporation and how it plans to respond to the filing.;;
The case is In re Electro-Chemical Technologies Inc. 08-
11053, U.S. Bankruptcy Court, District of Nevada (Las Vegas).
To contact the reporter on this story:
Bill Rochelle in New York at
