Tower Automotive creditors committee objects to exclusivity extension, nears purchase commitment letter

By Caroline Salls

Pittsburgh, Jan. 29 - Tower Automotive Inc.'s official committee of unsecured creditors objected to the company's request for a ninth extension to its exclusive periods to file a plan of reorganization and solicit votes on the plan, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said it believes it is close to finalizing a commitment letter and term sheet with a strategic investor who Tower has largely ignored seeking to purchase substantially all of the company's North American assets, as well as a plan term sheet based on the proposed sale.

According to the objection, continuance of the company's exclusive periods will only further impede the reorganization of the Chapter 11 cases, do further damage to the value of Tower's estates and likely further diminish creditors' recoveries.

In addition, the committee said the company's situation has significantly deteriorated because of its singular focus upon a failed equity raise, and is fundamentally different than it was in November 2006 when the last exclusivity extension was granted.

"After two years of patiently waiting for the [company] to "right the ship" and get these Chapter 11 cases moving towards an exit, the committee reached the conclusion that it was necessary to file this objection," the filing said.

The committee said the company has failed to formulate, let alone file, a feasible plan of reorganization, manage its businesses effectively or preserve estate assets.

The committee also said it has implored Tower for the last several months to explore any and all options for exiting these Chapter 11 cases, including a sale of the company as a whole or in business segments, to no avail.

As a result, the committee said it believes that an open process with no restrictions on the ability of parties-in-interest to formulate and propose a plan of reorganization is necessary "to salvage the value of the debtors' estates for the benefit of creditors."

Tower, a Novi, Mich.-based auto parts maker, filed for bankruptcy on Feb. 1, 2005. Its Chapter 11 case number is 05-10578.

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