Dana reclamation claims value ruling continues to draw appeals

By Caroline Salls

Pittsburgh, May 4 -The ruling that set Dana Corp.'s reclamation claims value at zero drew several new appeals Friday, according to filings with the U.S. Bankruptcy Court for the Southern District of New York.

The new appellants include Emhart Teknologies, Inc., Parker-Hannifin Corp., The Timken Corp., Toyotetsu America, Inc. and Toyotetsu Mid America, LLC.

As previously reported, Toyota Tsusho America, Inc. was the first to appeal the ruling on Thursday.

Before June 30, 2006, more than 450 parties demanded the return of previously shipped goods from Dana and asserted more than $297 million in reclamation claims.

In response, Dana asserted that various fact-intensive defenses to the reclamation claims reduced the total amount of reclamation claims acknowledged as valid to about $3 million, and the company argued that legal defenses to the reclamation claims based upon the existence of prior liens on the goods to be reclaimed rendered all of the reclamation claims valueless.

Dana said that, under the prior lien defense, the reclamation claims are rendered valueless because those claims are subject to the superior rights of a holder of a security interest in the reclaimed goods.

Specifically, Dana argued that $377 million of its outstanding pre-bankruptcy debt was secured by liens on substantially all of its assets, including liens on the reclaimed goods, and this debt was satisfied by the proceeds of the company's debtor-in-possession financing.

As a result, Dana said the reclamation claims are entitled to only general unsecured claim status.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets. It filed for bankruptcy on March 3, 2006. Its Chapter 11 case number is 06-10354.

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