Constellation Enterprises: Creditor, buyer deal ‘a watershed moment’

By Caroline Salls

Pittsburgh, Sept. 8 – Constellation Enterprises LLC requested court approval of a settlement reached with its official committee of unsecured creditors, the company’s asset purchaser and an informal committee of noteholders, according to a motion filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

“The settlement before the court marks a watershed moment in these cases,” Constellation said in the motion.

The company said it has been working since its bankruptcy filing date to broker a settlement between the key constituents in its Chapter 11 cases.

According to the motion, the proposed settlement provides the holders of general unsecured claims, which was “out of the money” when Constellation’s cases began, with a share of $1.25 million and the potential of additional recoveries based on the outcome of prosecution of transferred claims and causes of action.

Specifically, the company said a general unsecured claims trust will be established and will be funded with a $1.25 million cash payment to be distributed to the unsecured creditors and a $1 million cash payment to be used as initial seed money to fund the prosecution of causes of action.

Constellation said both transfers to the trust will be made by the purchaser, with no cost to the company.

Constellation said the settlement also helps clear a path to a final disposition of its cases, as it eliminates potential and actual objections to asset sale motion and resolves the committee’s objections to the company’s debtor-in-possession financing motion.

The company said the parties also agreed to move forward on a means to close out the Chapter 11 cases under a separate motion to be filed in the future.

“While the parties have not finalized the exact parameters of any such resolution mechanic, the settlement ensures that the parties will work productively to achieve a result that is best for these estates,” Constellation said.

A hearing is scheduled for Oct. 6.

Constellation Enterprises is based in Youngstown, Ohio. Its divisions manufacture tank head and tank head accessories, highly engineered, specialty alloy, open die forgings and steel alloy materials and deep-drawn and fabricated aluminum cases, molded plastic cases, enclosures and assemblies. The company filed for bankruptcy on May 16 under Chapter 11 case number 16-11213.

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