MSD Performance seeks OK for bid procedures; November auction on tap

By Jim Witters

Wilmington, Del., Sept. 13 - MSD Performance, Inc. is seeking approval of bidding procedures that would lead to a November auction for substantially all of the company's assets, according to a Sept. 13 filing with the U.S. Bankruptcy Court for the District of Delaware.

No stalking horse bidder has been named.

But MSD has been engaged in discussions since May with Z Capital MSD, LLC. Z Capital purchased a majority of MSD's outstanding debt under the senior pre-petition facility.

"The debtors believe that a timely sale and new ownership will provide the debtors with the strategic, operational and financial resources necessary for the debtors to adequately invest in and grow their business, develop new products and strategic partnerships, implement and execute on a long term strategic plan, retain and attract key management and other personnel, and remain competitive in the industry," the filing stated.

"Absent a competitive auction process that generates a significant purchase price for the assets, there is a strong possibility that a sale may be followed by a conversion of these cases to Chapter 7," MSD said.

Sale opposition

As previously reported, Ronald Barliant, attorney for the original par lenders, said at a Sept. 9 hearing that his clients will not consent to a sale.

Barliant said his clients drafted a proposed Chapter 11 plan of reorganization and submitted it to the debtors.

If MSD elects to not pursue that plan or offer one of its own, the par lenders will seek authority to pursue their plan.

Barliant's clients include CIFC Funding 2006-I, Ltd.; Golub Capital CP Funding LLC; Golub Capital Partners 2007-2 Ltd.; Golub Capital Partners V, LP; Golub Capital Partners VI, LP; Golub International Loan Ltd. I; Madison Capital Funding LLC and OFSI Fund III, Ltd.

Proposed procedures

Under the bidding procedures proposed by MSD:

• The bidding deadline would be Nov. 18;

• If a stalking horse is identified, the debtors will schedule a hearing for court approval of revised bidding procedures that include stalking horse protections;

• An auction, if necessary, will be conducted on Nov. 21; and

• The initial overbid and subsequent bids at auction will be in $500,000 increments.

A hearing to consider the bid procedures is scheduled for 9:30 a.m. ET on Oct. 1.

MSD Performance, an El Paso, Texas-based maker of performance auto products, filed for bankruptcy on Sept. 6. The Chapter 11 case number is 13-12286.

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