Former employees, creditors object to confirmation of Old Ladder's liquidating plan

By Reshmi Basu

New York, Oct. 16 - Former employees and creditors of Old Ladder Co. (DE), Inc., formerly Werner Holding Co. (DE), Inc., objected to the confirmation of the company's second amended liquidating plan, arguing that there is no need for the company to substantially consolidate its estate, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the reorganization plan, the company will wind down its operation. Also under the plan, the liquidation trustee has the discretion to distribute funds received on a pro-rata basis to class 4 creditors if the trustee determines that it is impossible or impracticable to allocate distributions on an estate-by-estate basis.

According to the objection filed by the company's former general counsel Eric J. Werner and former officer Craig R. Werner, there is a lack of evidence that a substantive consolidation is warranted and therefore creditors should receive recoveries on an estate-by-estate basis.

The creditors also negate the claim made in the disclosure statement that the company's assets and liabilities became intertwined after April 22, an "incredulous" event given that the debtors were not even operating their businesses within a five-month period of that date, according to the objection.

"There is no legitimate reason why the liquidation trustee cannot allocate distributions ... among the various estates on an estate-by-estate basis," the creditors said in the objection.

"This would require nothing more than the litigation designee ... keeping track of the claims asserted and revenues received and the applicable estate to which such recoveries belong."

As previously reported, the reorganization plan is based on a sale-related stipulation, under which some of the bid sponsors who collectively purchased the company's assets were granted a $96.91 million second-lien claim against Werner.

Under the plan, the bid sponsors' claim, along with the company's other general unsecured claims, will be transferred to a liquidation trust and will receive distributions from the proceeds of the trust assets based on a sharing mechanism contained in the sale stipulation.

The confirmation hearing is scheduled for Oct. 25.

Werner, now Old Ladder, is a Greenville, Pa., manufacturer and distributor of ladders, climbing equipment and ladder accessories. It filed for bankruptcy on June 12, 2006, and its Chapter 11 case number is 06-10578.

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