March 18, 2020 – The Court hearing the Dura Automotive Systems case extended the periods during which the Debtors have an exclusive right to file a Chapter 11 Plan, and solicit acceptances thereof, through and including April 29, 2020, and June 29, 2020, respectively, [Docket No. 774]. Absent the requested relief, the Plan filing and solicitation periods expire on February 14, 2020 and April 14, 2020, respectively.
The Debtors' request for more time was largely premised on their need to obtain approval of the proposed sale of the Debtors' assets; and the status of that sale continues to be something of a mystery. In a March 22nd order [Docket No. 722], the Court approved a second extension of section 363 auction/sale dates; with an auction scheduled for March 10th and a sale hearing (now adjourned, see below) for March 23rd.
The Debtors have not filed a notification of successful bidder as required should the March 10th auction have proven fruitful. In an objection filed by PBGC, however, relating to the Plan's uncertain treatment of pension obligations, PBGC states: "On March 11, 2020, the Debtors advised PBGC that they received one bid from the DIP lender, that the DIP lender’s treatment of the Pension Plan is uncertain, and the Debtors will advise PBGC as soon as the DIP lender makes a decision. Despite requests for updates, PBGC has not been advised whether the DIP lender will assume the Pension Plan. As of the date of this objection, no decision has been communicated to PBGC….The Motion states that the Disclosure Statement and POR provide for the transfer of substantially all of the Debtors’ assets to a winning bidder or to the Debtors’ term loan lender through a credit bid. Motion at 7, EFC No. 591. The Debtors have not filed information regarding any update on how this sale is proceeding. There is simply no clarity about the status of the Pension Plan."
In a related development (also on March 18th), the Debtors’ notified the Court that the hearing to approve the Disclosure Statement and asset sale scheduled for March 23, 2020, had been adjourned (again) to April 6th (with objections to the rescheduling due by March 30th).
As previously reported in respect of the Debtors’ motion requesting the extensions [Docket No. 654], “The Debtors commenced these chapter 11 cases… to pursue a value-maximizing sale of substantially all of their assets free and clear of any liens, claims, or encumbrances. In the approximately four months since the Petition Date, the Debtors and their advisers have made progress in these matters…[t]he Debtors…secured Court approval on a fully consensual basis of the bidding procedures authorizing the Debtors to market their assets in an open and transparent manner. Thereafter, the Debtors and their advisers advanced the sale and marketing process, including finalizing a business plan, executing confidentiality agreements with approximately 70 potentially interested parties and convening 10 in-person management meetings with prospective buyers.
This record notwithstanding, certain contingencies remain before the Debtors can seek approval of a sale transaction and confirm a chapter 11 plan. More specifically, approval of the Debtors’ proposed sale transaction is a gating item to confirmation of a chapter 11 plan. However, additional work remains before the Debtors may seek approval of their sale transaction. Among other things, the Debtors obtained first-round non-binding bids on January 30, the Debtors expect to receive final bids on February 21, and the Debtors will (if necessary) conduct a live auction on February 26. In the midst of their sale process, extending the Exclusivity Periods will afford the Debtors and their stakeholders time to finish their marketing process, select and pursue consummation of the highest and best offer for their assets, and ultimately negotiate and confirm a chapter 11 plan in an efficient, organized fashion.
Confirmation of a chapter 11 plan will ultimately be dependent on the Debtors’ ability to reach agreement on the terms of a sale transaction with a purchaser of the Debtors’ assets. Though the Debtors are actively involved in a robust marketing process, they have not yet identified a stalking horse bidder. Through the sale process, the Debtors will determine what transaction or combination of transactions will provide the greatest value to their estates and the greatest recovery to their creditors. The chapter 11 plan filing exclusive period currently is set to expire on February 14, 2020. Based on the Debtors’ projected sale timeline, this date would fall within a critical period of the sale process, just a week before the bid deadline of February 21, 2020, and while the Debtors’ disclosure statement motion is due to be heard on March 2, 2020. The Debtors plan to use the extended Exclusivity Periods, should the Court grant them, to continue their efforts to market their assets and find a purchaser consistent with the bidding procedures, and also to negotiate with their DIP lenders and the Zohar funds regarding the terms of a backstop chapter 11 plan that would be consummated if a third-party bid is not accepted by the Debtors.”
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The post Dura Automotive Systems, LLC – Court Extends Exclusive Plan Filing Period Extended by 75 Days, Delays Hearing on Disclosure Statement and Asset Sale as Status of Sale Process Remains Murky appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.