Werner creditors committee files liquidation plan based on sale consent agreement

By Caroline Salls

Pittsburgh, June 19 - Werner Holding Co. (DE), Inc.'s official committee of unsecured creditors filed a liquidating plan and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware that provides the committee's consent to the previously approved sale of substantially all of Werner's assets.

The committee said its 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 receive distributions from the proceeds of the trust assets based on a sharing mechanism contained in the sale stipulation.

Specifically, after paying trust expenses, the bid sponsors have agreed to share recoveries from the proceeds of the trust assets with the holders of other general unsecured claims, with the first $50 million of distributions payable to the bid sponsors on account of their claim to be divided 80% to the bid sponsors and 20% to the other general unsecured creditors.

The next $10 million in distributions payable to bid sponsors on account of their claim will be divided 90% to the bid sponsors and 10% to the other unsecured creditors, and any further distributions in excess of $60 million payable to the bid sponsors on account of their claim will be divided 98% to the bid sponsors and 2% to the other general unsecured creditors.

The bid sponsors also agreed to fund up to $1.9 million of the expenses related to investigating causes of action.

According to the disclosure statement, the bid sponsors include BDCM Opportunity Fund II, LP and BDC Finance, LLC; Brencourt BD, LLC; Levine Leichtman Capital Partners III, LP; Milk Street Investors LLC; TCW Shared Opportunity Fund V, LP; TCW Shared Opportunity Fund IV, LP; TCW Shared Opportunity Fund IVB, LP; TCW/Drum Special Situation Partners, LLC; TCW Shared Opportunity Fund III, LP; Schultze Master Fund, Ltd.; Schultze Offshore Fund, Ltd.; Schultze Partners, LP; and Schultze Asset Management, LLC.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of other priority claims will receive full payment in cash from the company's wind-down amount. If these creditors agree to have any part of their claims paid through the liquidation trust, those claims will be paid before general unsecured claims;

• Holders of other secured claims will receive either the return of the collateral securing the claim or the proceeds from the sale of the collateral securing the claim;

• Holders of the second-lien bid sponsors claim will receive full payment in cash from the liquidation trust;

• Holders of general unsecured claims will receive their share of proceeds from the liquidation trust; and

• Equity interests will be cancelled and holders will receive no distribution under the plan.

The plan confirmation hearing is scheduled for Aug. 23.

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

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