Sherwin Alumina committee eyes hearing adjournment to await mediation

By Caroline Salls

Pittsburgh, Feb. 23 – Sherwin Alumina Co., LLC’s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Southern District of Texas to adjourn the March 1 hearing on approval of the company’s assets sale procedures and cash collateral use until after a completion of scheduled mediation, according to a motion filed Monday.

The committee said the mediation session is scheduled for March 4.

“There is no legitimate reason to move forward with debtors’ cash collateral and bid procedures motions prior to the mediation,” the committee said in the motion.

“Various issues relevant to the debtors’ bid procedures and cash collateral motions (and of significant importance to the debtors’ estates and unsecured creditors and the outcome of these cases) will be addressed in, and be the subject of, the mediation.

“Holding the hearing on March 1 is therefore both premature and inappropriate.”

In addition, the committee said moving forward with the hearing while the parties are preparing for mediation could jeopardize the likelihood of successful mediation.

In addition, the creditor group said it “has serious concerns with respect to the relief requested in the debtors’ motions.”

Specifically, the committee said Sherwin is asking the court to allow pre-bankruptcy lender Commodity Funding, LLC to credit bid its secured debt, as well as to grant Commodity Funding liens on avoidance and other estate causes of action as adequate protection in connection with the cash collateral motion before the court rules on the validity and amount of Commodity’s debt and liens.

The committee said it believes that Commodity Funding’s debt should be recharacterized as equity or equitably subordinated to the claims of Sherwin’s unsecured creditors.

Sherwin, a Gregory, Texas-based alumina producer, filed bankruptcy on Jan. 11. The Chapter 11 case number is 16-20012.

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