UCI settlements approved, clearing path for consensual reorganization

By Caroline Salls

Pittsburgh, Nov. 30 – UCI International, LLC received court approval of a global settlement agreement that the company said will “provide the debtors with a clear path towards a fully consensual reorganization, a greater recovery for the debtors’ general unsecured creditors and, ultimately, significant benefits to the reorganized debtors’ business going forward.”

The settlement was approved Nov. 30 by the U.S. Bankruptcy Court for the District of Delaware.

According to a court motion, the parties to the settlement include UCI, the official committee of unsecured creditors appointed in its bankruptcy case, some holders of the company’s 8 5/8% senior unsecured notes due 2019 and Rank Group Ltd. and affiliates.

In addition, the company obtained approval of a settlement among United Components, LLC, Pactiv LLC and the Pension Benefit Guaranty Corp.

Settlement terms

Under the global settlement, and in exchange for the release of potential causes of action against Rank Group that the committee was prepared to litigate, the parties agreed to the following:

• A consensual resolution of responsibility for the UCI debtors’ three defined benefit plans through the assumption of the plans by Rank Group member Pactiv;

• The provision of services by members of the Rank Group to the UCI debtors and reorganized debtors on the terms and conditions as set in an Aug. 3 letter agreement. Those services will run through Jan. 31;

• Cooperation between the debtors and the Rank Group on tax and other corporate matters to facilitate the completion of the business separation between UCI and some members of the Rank Group, including cooperation in connection with up to NZ$10 million in tax losses for the benefit of debtor UCI Holdings Ltd. and the ultimate deregistering and dissolution of UCI Holdings, to the extent permitted under New Zealand law;

• The transfer by the Rank Group of specified patents and an agreement between the UCI debtors and the Rank Group on mutually acceptable perpetual licenses for the use of intellectual property;

• The withdrawal of previously filed proofs of claim by the members of the Rank Group and the waiver of general unsecured claims scheduled by UCI;

• Continued product sourcing on existing terms between the UCI debtors and Autoparts Holding Ltd. (APH), subject to termination or modification on 60-days’ notice by either party;

• Cooperation between APH and the debtors on the resolution of any joint contracts; and

• The grant by APH of a $1.6 million credit to be applied dollar-for-dollar against amounts owed by the UCI debtors and their non-debtor subsidiaries on account of purchases made following approval of the global settlement.

Rank Group contribution election

As previously reported, UCI’s Chapter 11 plan provides for an increased recovery for general unsecured creditors through a Rank contribution election, under which members of the Rank Group could elect to assume the pension plans in exchange for releases.

UCI said the Rank Group had a deadline of 14 days following the beginning of solicitation, or Oct. 26, to make the contribution election.

Following the approval of the disclosure statement and solicitation procedures for the plan on Oct. 14, the company said negotiations ultimately resulted in the global settlement through which the Rank Group elected to make the contribution election.

UCI is an Evansville, Ind.-based supplier to the light- and heavy-duty vehicle aftermarket for replacement parts, including filtration, fuel delivery systems, vehicle electronics and cooling systems products. The company filed bankruptcy on June 2 under Chapter 11 case number 16-11354.

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