Metalforming unsecured creditors committee objects to selling assets to 'insider'

By Caroline Salls

Pittsburgh, Oct. 17 - Metalforming Technologies, Inc.'s proposed sale of its assets to Zohar Tubular Acquisition, LLC drew objection from Metalforming's official committee of unsecured creditors amid allegations the potential buyer has not acted in good faith, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the objection, there is no sound business reason for the proposed sale because the company is not facing a financial crisis and its assets are not declining in value.

Also, the committee said the bid price is not fair and reasonable because it was not negotiated and only reflects the forced liquidation value of the assets.

"It sets the floor too low, conveys the wrong message to the market and will not generate the best and highest price," the committee said in the objection.

In addition, the committee contends the proposed buyer is using its insider position as a lender to force a sale when the market is down, thereby breaching its fiduciary duty "by exploiting [Metalforming's] confidential forecasts of future value and attempting to usurp those future profits for its own benefit."

The sale hearing is scheduled for Oct. 24.

Metalforming, a Chicago-based automobile parts manufacturer, filed for bankruptcy on June 16. Its Chapter 11 case number is 05-11697.

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