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Real Industry Bankruptcy Committee Denied

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The U.S. Bankruptcy Court denied Real Industry’s ad hoc committee of equity holders’ motion for an order directing the U.S. Trustee assigned to the case to appoint an official committee of equity holders.

The order states, “The Motion is DENIED for the reasons set forth on the record at the Hearing.” The ad hoc committee previously argued, “Although typically there are a number of factors that should be considered, the tendency is to treat the likelihood of recovery to shareholders as the preeminent factor in the determination to appoint an equity committee….Moreover, Real Industry has no pre-petition debt and only two classes of equity and it has substantial net operating losses (‘NOLs’). Real Industry’s emergence from chapter 11 with its NOLs intact depends on the continuity of ownership of greater than 50 percent of the shares by the existing equity as required by the United States Tax Code.”

In addition, “The value of common shareholders’ recovery depends on a number of factors, including the value and treatment of Preferred Stock. As a result of these factors, the usual inquiries about whether the value of operating assets, proven either by the market or in projections, are sufficient to provide a recovery to shareholders over creditor claims in accordance with the absolute priority rule are inapplicable at this junction here….In sum, the shareholders of Real Industry have no meaningful representation in the case with a fiduciary duty to the entire class.”

Read more Real Industry bankruptcy news.

The post Real Industry Bankruptcy Committee Denied appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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