Exide creditor committee objects to plan confirmation, claim treatment

By Kali Hays

New York, Jan. 2 – Exide Technologies’ official committee of unsecured creditors objected to confirmation of the company’s proposed plan of reorganization and approval of the related disclosure statement in a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Exide said in a November news release that the plan and statement are consistent with the terms of a plan support agreement and term sheet Exide entered on Nov. 4 with holders of a majority of the principal amount of its senior secured notes.

The company said there is substantial support among the noteholders for entry into a definitive backstop agreement for the $175 million of new capital included in the plan.

However, the committee claims that the plan is “patently unconfirmable,” that Exide is “seeking court approval of a fundamentally deficient disclosure statement for a foreclosure sale disguised as a plan of reorganization” and that “the value of all of the debtor’s assets is allocated to the holders of senior notes.”

“Without any explanation in the disclosure statement, the plan provides that holders of general unsecured claims and subordinated notes claims are provided no recovery notwithstanding the fact that a significant portion of the debtor’s assets, including, but not limited to, 35% of the debtor’s voting capital stock in Exide Global Holding Netherlands CV, are not encumbered by the secured noteholders’ liens and security interests,” the objection stated.

The committee goes on to allege that the plan was proposed in “bad faith” as it was not included in any of the negotiations between Exide and the noteholders and that “potentially significant estate assets” are not adequately accounted for in either the plan or disclosure statement.

Included in these assets are “potential claims against third parties arising from the joint lead pricing investigation” and certain intellectual property rights the committee says it is “in the process of analyzing and attempting to monetize,” according to the objection.

In light of these allegations, the committee asked that the court order Exide to “put forth a disclosure statement that at least provides all stakeholders with some level of meaningful information” and an order to file an amended plan that reflects the additional information.

A hearing to consider approval of the disclosure statement is scheduled for Jan. 12.

Exide Technologies, a Milton, Ga.-based maker and recycler of lead-acid batteries, filed for bankruptcy on June 10, 2013. Its Chapter 11 case number is 13-11482.

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