Borden seeks approval of settlement that paves way for sale closing

By Caroline Salls

Pittsburgh, July 15 – Borden Dairy Co. requested court approval of a settlement that the company said resolves the last two main obstacles to closing its asset sale by the target date of July 20, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, Borden said the settlement resolves a dispute over the assumption and assignment of its rights under a license with trademark licensor Comercializadora de Lacteos y Derivados, SA de CV (Comlade) and an adversary proceeding related to a reserve account.

Under the proposed settlement, purchaser New Dairy will pay Comlade $685,000 as cure costs under the license.

A group of Laguna entities will release all of their claims against the reserve account so that the full $17 million of proceeds are available to the Borden debtors to make payments required to close the sale.

The motion said the Laguna entities include former Borden shareholder Laguna Dairy, S de RL de CV, new investor, ACON Dairy Investors, LLC and a new Laguna affiliate.

The Laguna entities will also contribute $2.5 million to the Borden debtors’ estates, and the estates and other parties to the settlement will provide full releases in favor of the LALA U.S., Inc./Laguna entities.

Borden will assume and assign to the buyer a separate license agreement with LALA U.S. resolving that party’s objection to the assignment.

A hearing is scheduled for July 16.

Borden is a Dallas-based dairy company. The company filed bankruptcy on Jan. 5, 2020 under Chapter 11 case number 20-10010.

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