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Lexington Precision creditors committee asks court to terminate exclusivity
By Caroline Salls
Pittsburgh, May 23 - Lexington Precision Corp.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Southern District of New York to terminate the company's exclusive right to file a plan of reorganization and solicit votes on the plan, according to a Thursday court filing.
If the exclusivity is terminated, the committee said it would file a competing plan that follows the same timeline as the plan proposed by Lexington's management and would consolidate both sides' valuation proceedings and disclosure statements.
The committee said the company is not entitled to exclusivity because Precision executives and controlling shareholders Warren Delano and Michael Lubin are not acting as fiduciaries to its creditors.
"Rather than attempting to pay or satisfy unsecured creditor claims and maximize recoveries to unsecured creditors, the debtors' reorganization efforts revolve solely around maintaining management's ownership of, and control over, the debtors' business post-confirmation," the committee said in the motion.
In addition, the committee said management and the unsecured creditors are at an impasse after 18 months of negotiations related to a potential restructuring of the company's 12% notes.
As a result, the committee said there is no justification to further delay the bankruptcy case.
"There is no justification for unsecured creditors to be held hostage by management," the committee said in the motion.
A hearing is scheduled for June 11.
Lexington Precision, a New York-based manufacturer of rubber and metal components for the automobile and medical devices industries, filed for bankruptcy on April 2. Its Chapter 11 case number is 08-11153.
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