Reddy Ice reaches deal with direct purchaser antitrust suit plaintiffs

By Caroline Salls

Pittsburgh, May 11 - Reddy Ice Holdings, Inc. requested court approval of a settlement reached with direct purchaser class action antitrust litigation plaintiffs, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Before it filed for bankruptcy, Reddy Ice said several putative class action lawsuits were filed by some direct and indirect purchasers of the company's products in federal courts in multiple jurisdictions based upon alleged violations of federal and state antitrust laws and related claims.

In the consolidated amended complaint, the direct purchasers asserted a claim against Reddy Ice and other packaged ice manufacturers based on alleged violations of the federal antitrust laws, seeking actual and treble damages, attorneys' fees and costs.

Under Reddy Ice's proposed plan of reorganization, the named plaintiffs and proposed class are classified as general unsecured creditors, with holders of general unsecured claims against Reddy Ice Holdings entitled to receive a share of $300,000 and holders of general unsecured claims against Reddy Ice Corp. slated to receive no distribution.

However, the company said it believes that, absent the proposed settlement, the plaintiffs and proposed class members would file a formal claim in its Chapter 11 cases and object to the plan.

Agreement terms

Under the settlement:

• The parties will jointly seek approval for the payment of the claims of the direct purchasers under the settlement, and the direct purchasers will thereafter seek further relief in the district court regarding approval of the settlement in the ongoing antitrust litigation;

• Reddy Ice will pay a $750,000 settlement amount to the direct purchasers and, if specified additional events occur, an additional payment of $250,000;

• To the extent that notice of the settlement agreement is ordered by the district court, Reddy Ice will reimburse the direct purchasers for all notice costs, capped at $140,000;

• Upon approval of the settlement motion, the direct purchasers will submit a motion to the district court asking it to enter an order certifying the settlement class, appointing class counsel, preliminarily approving the settlement and scheduling a hearing to consider the final approval of the settlement and entry of a final judgment;

• The named plaintiffs and direct purchasers will release all claims; provided that, if the district court does not approve the settlement, the releases in the agreement and the plan will not prevent the named plaintiffs and direct purchasers from participating in the claims process;

• If the district court does not approve the settlement or its approval is significantly modified or overturned on appeal, the settlement proceeds, net of noticing costs, will be returned to the company and available exclusively to the holders of allowed claims who purchased packaged ice in the United States directly from Reddy Ice from Jan. 1, 2011 to March 6, 2008, not including governmental entities or Reddy Ice and their parents, subsidiaries, predecessors or successors and Reddy Ice's alleged co-conspirators; and

• The direct purchasers and named plaintiffs in the class have agreed to support and not object to the plan.

Reddy Ice, a Dallas-based manufacturer and distributor of packaged ice, filed for bankruptcy on April 12. The Chapter 11 case number is 12-32349.

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