Kaiser Aluminum says disclosure statement objector misunderstood settlement agreement

By Caroline Salls

Pittsburgh, Aug. 24 - Kaiser Aluminum Corp.'s official committee of unsecured creditors said creditor Sherwin Alumina's objection to Kaiser's disclosure statement lacks merit, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

"Nearly seven months after it was approved by this court, Sherwin brazenly alleges that Kaiser's intercompany settlement agreement was fraught with irreconcilable conflicts on interest and breaches of fidicuiary duty by the [company] and the creditors' committee," the committee's reply said.

The committee questioned why Sherwin is objecting to the settlement agreement seven months after it was approved, "especially considering the fact that Sherwin was apprised of the ISA motion with pleadings or notices not once, not just twice, but on eight separate occasions."

The committee also said the process surrounding the settlement agreement was not secret, as Sherwin contends.

In its objection, Sherwin Alumina, a creditor of Kaiser debtor Kaiser Bauxite Corp., said the plan proposes an intercompany settlement agreement that strips Kaiser Bauxite of all of its assets, causing the company to release all of its intercompany claims and transfer at least $4 million to two affiliated debtors.

Sherwin said the practical effect of the intercompany settlement agreement appears to have been to render its $68 million claim against the company worthless.

"If the plan proceeds to confirmation, Sherwin appears to be the only unsecured creditor in these bankruptcy cases who will not receive a distribution of some amount," according to the objection.

A hearing on approval of the disclosure statement is scheduled for Sept. 1.

Kaiser, a Houston-based aluminum company, filed for bankruptcy on Feb. 12, 2002. Its Chapter 11 case number is 02-10429.

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