Stanadyne gets green light for asset sale after reaching settlement

By Sarah Lizee

Olympia, Wash., July 11 – Stanadyne LLC received approval to sell its assets to stalking horse bidder S-PPT Acquisition Co., an entity formed by the company’s prepetition secured lenders, according to an order filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company was engaged in extensive negotiations with creditors, with the results of some of those negotiations reflected in a revised sale order that will pave the way for the company’s Chapter 11 plan.

The additional provisions in the sale order protect a wind-down funding amount, as defined in a settlement term sheet, which was included in the official committee of unsecured creditors’ statement supporting the sale.

The committee, Cerberus Business Finance, LLC (as agent for the prepetition lenders) and the purchaser reached an agreement under which S-PPT will fund a total of $4 million in the following three tranches: a wind-down budget of $1 million; $375,000 to fund a liquidating trust; and $2.63 million for distribution to general unsecured creditors of the debtors’ estates from which the prepetition secured parties will not receive any distribution on account of their deficiency claim, which will enhance recoveries for other general unsecured creditors.

The purchaser also agreed to assume material liabilities of the debtors, including all “core liabilities” and all critical vendors’ claims.

Taking into account the material increase in assumed liabilities, the parties agreed to reduce the prepetition debt bid amount portion of the purchase price to $205 million from $225 million.

S-PPT also agreed to purchase and waive avoidance actions and commercial tort claims that the estates may have as against purchaser’s go-forward creditors.

The purchaser also agreed that it will not pursue affirmative recovery from avoidance actions against non-insiders that are not go-forward creditors, although it may use those claims defensively to offset against assumed liabilities.

And as additional potential material recoveries, the purchaser agreed to exclude from its purchase and transfer to the liquidating trust the estates’ claims and causes of action against insiders, including avoidance actions and commercial tort claims.

The net proceeds of those claims and causes of action will be used for additional distribution to unsecured creditors, including on account of the deficiency claim of the prepetition secured lenders.

Stanadyne is an automotive parts manufacturer based in Jacksonville, N.C. The company filed bankruptcy on Feb. 16 under Chapter 11 case number 23-10207.

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