Keystone trustee objects to proposed lock-up agreement

By Caroline Salls

Pittsburgh, April 13 - Keystone Consolidated Industries Inc.'s proposed lock-up agreement drew an objection from U.S. Trustee David W. Asbach, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

The trustee said he was opposed to Keystone's proposal because the company has not given enough notice of the agreement and because the court does not have authority to approve the agreement.

In addition, Asbach objected that Keystone has solicited votes of the parties signing the agreement before the court has approved a disclosure statement.

Furthermore, the agreement provides for "broad" releases and contains provisions that seem to give beneficial treatment to members of the official committee of unsecured creditors above and beyond those given to general unsecured creditors, the trustee said.

The company announced on March 28 that the lock-up agreement will establish a "blueprint" for facilitating its emergence from Chapter 11.

As part of the agreement, the creditors committee agreed to drop its effort to have the company's exclusive period ended, while Keystone said it would cooperate with any alternative plan of reorganization that meets certain standards.

Keystone asked the bankruptcy court to hold a status conference and to approve the lock-up agreement, according to the March 28 filing. A hearing was scheduled for April 13.

Keystone, a Dallas-based fencing and wiring company, filed for bankruptcy on Feb. 26, 2004. Its Chapter 11 case number is 04-22422.

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