Exide responds to creditors' objections, says plan meets all statutory requirements

By Carlise Newman

Chicago, Oct. 17 - Exide Technologies Inc. responded to various objections to its reorganization plan from its committee of unsecured creditors. Exide said the plan meets all statutory requirements for confirmation and that it satisfies the requirements of the bankruptcy code by placing only substantially similar claims or equity interests in each class.

Exide said it divides claims and equity interests into 11 classes, and that it has placed similarly situated creditors in the same class.

Creditors argue that holders of the 10% senior note claims should not be classified together with holders of general unsecured claims because they are not similarly situated, Exide said in a court filing containing its response to their objections.

Exide argued that the basis for this conclusion is that the creditors believe that holders of 2.9% subordinated notes are not subordinated to the rights and holders of general unsecured claims - although they believe those notes are contractually subordinated to the 10% senior note claims.

But Exide said that view is unreasonable because the distribution by the pre-petition lenders is to settle an adversary proceeding with the creditors committee, which is not a distribution subject to the normal requirements of sections 1122 and 1123 of the bankruptcy code. These sections require that only substantially similar claims or equity interests be placed in each class.

The company said if there was an improper classification of holders of general unsecured claims, it is not material to confirmation of the plan.

Exide said that the plan meets the seven requirements in section 1123 of the bankruptcy code: it designates classes of claims and interests; specifies unimpaired classes of claims and interests; specifies the treatment of impaired claims; provides the same treatment for each claim of a particular class; provides adequate means for the plan's implementation; provides for the prohibition of nonvoting equity securities; contains only provisions consistent with interests of the creditors and equity security holders with public policy with respect to the manner of selection of the reorganized company's officers and directors.

Exide is a Princeton, N.J.-based battery manufacturer. Its Chapter 11 proceeding is in the U.S. Bankruptcy Court for the District of Delaware. The confirmation hearing is scheduled for Oct. 21.

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