Transport Industries settles plan objection; agreement allows unsecured creditor distribution

By Caroline Salls

Pittsburgh, March 27 - Transport Industries, LP requested court approval of a settlement that resolves the official committee of unsecured creditors' objection to the company's asset sale and allows the company to provide a distribution to general unsecured creditors, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said the settlement also resolves any claims the committee might have been able to file against Transport's first-lien lenders.

Under the settlement, the $3.5 million wind-down budget funded by the company's first-lien lenders under the asset sale order will be used to satisfy wind-down expenses, with any unused portion to be used to fund a plan of liquidation.

In addition, the settlement requires the first-lien lenders to carve out $1.5 million of their collateral recoveries and gift that amount to eligible unsecured creditors.

Also under the settlement, the purchase price paid for the assets will be adjusted by an amount equal to 2% multiplied by the amount by which the net proceeds exceed a threshold amount.

The threshold amount is defined as the sum of $381.52 million plus 7.56% compounded quarterly from Oct. 20, 2008 until the sale is completed, plus the sum of all capital contributions or other investments made to the company by the buyer before closing of the sale, less the amount of distributions or dividends made by the company or buyer to its respective equity holders, less 7.56% compounded annually from the date the subsequent distribution is made until the sale is complete.

Additionally, the agreement calls for the waiver of the first-lien lenders deficiency claim if none of the lenders under the company's second-lien credit agreement object to the terms of the settlement, the plan or disclosure statement on the grounds of equal treatment of general unsecured creditors or substantive consolidation; a plan that provides for substantive consolidation is confirmed; and the plan takes effect.

If these conditions are not met, the deficiency claim will not be waived, and any amounts received on account of the claim will benefit eligible unsecured creditors, provided, however, that the second-lien lenders will not be entitled to participate in the unsecured give-up fund.

A hearing is scheduled for April 20.

Transport Industries, a Dallas-based third-party provider of transportation services, filed for bankruptcy on Oct. 20. Its Chapter 11 case number is 08-12430.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.