U-Haul Co. of West Virginia: U.S. trustee objects to statement

By Sarah Lizee

Olympia, Wash., Aug. 4 – U-Haul Co. of West Virginia’s disclosure statement for its Chapter 11 plan of reorganization drew an objection Tuesday from the U.S. trustee overseeing the case, according to a filing with the U.S. Bankruptcy Court for the Southern District of West Virginia.

Region 4 U.S. trustee John P. Fitzgerald, III said he objects to the disclosure statement because the method of sale proposed for the new equity under the plan is structured in such a way that U-Haul International, its sole shareholder, will “almost certainly” be the successful bidder.

The debtor has not disclosed how it proposes to identify potential upset bidders for the new equity and has set the required amount for an incremental upset bid at a sum of $125,000 that would have a “chilling” effect, rather than encourage competitive bidding, the U.S. trustee said.

Fitzgerald said that to ensure the debtor’s new equity is sold for the highest and best price, the debtor should be required to market the new equity in some tangible way to outside parties who may be interested in submitting an upset bid.

The U.S. trustee said he believes full and fair disclosure requires that creditors of the estate be provided with information describing how the debtor intends to market the new equity, prior to approval of a bidding procedure.

“The debtor’s proposed method of sale does not appear to be structured in a way that will bring the highest and best priced for the new equity,” Fitzgerald said.

“Accordingly, the disclosure statement does not provide adequate information that is reasonably necessary to permit creditors and parties-in-interest to fairly and effectively evaluate the plan.”

The company serves do-it-yourself moving and self-storage customers in West Virginia and small parts of Kentucky, Virginia, and Ohio. It filed bankruptcy on June 16 under Chapter 11 case number 21-20140.

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