Vitro Asset: Court OKs settlement with holders over guaranty dispute

By Lisa Kerner

Charlotte, N.C., March 15 - Vitro Asset Corp. was granted court approval of a settlement it reached with an informal group of its noteholders, Vitro SAB de CV and Fintech Investments Ltd., according to documents filed Friday with the U.S. Bankruptcy Court for the Northern District of Texas.

Specifically, the dispute was between the Vitro Asset debtors and the holders of Vitro's 8 5/8% senior notes due 2012, 11¾% senior notes due 2013 and 9 1/8% senior notes due 2017 regarding the debtors' guaranty obligations.

Settlement terms

As previously reported, under the proposed settlement:

• The parties agreed to a standstill of litigation from the date of the settlement through the closing, except as necessary to protect and preserve their legal rights as they currently stand in pending proceedings, subject to a bankruptcy court injunction;

• Upon the closing, Fintech will purchase all of the holdings of old notes from members of an informal noteholders group, together with the rights related to the transferred notes, for 85.25% of the principal amount of the old notes held by group members;

• Fintech will pay a total of $57.5 million to the indenture trustee and informal group members to pay fees, costs and expenses, including those incurred in litigation in Mexico and the United States.

According to the motion, Fintech and Vitro entered into a separate transaction in furtherance of the settlement;

• Fintech further agreed to a process that will allow for the offer of consideration, proportional to the consideration it is paying for the transferred notes, to all holders of old notes who are not members of the informal group and have not consented to Vitro's concurso plan. These unaccounted holders only hold about 3% of the old notes;

• The parties will dismiss all suits, actions and appeals among them; and

• The group members agreed to discontinue all actions to collect against the non-debtor guarantors, return to the appropriate Vitro entity any monies collected, consent to the release of funds held by specified garnishees in escrow and release the underlying garnishments.

According to Vitro Asset, settlement brings two-year's worth of litigation in Mexico and the United States to a close and will eventually assist in the resolution of the Vitro Asset Chapter 11 cases.

Also, the settlement provides the debtors' estates with valuable consideration in the form of a release of large administrative claims for the attorney's fees of the creditors that filed the involuntary bankruptcy cases.

Vitro is a Nuevo Leon, Mexico-based glass manufacturer. Its Chapter 11 case number is 11-32600.

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