Allied Systems unsuccessful bidder objects to proposed asset sale

By Jim Witters

Wilmington, Del., Sept. 4 - Allied Systems Holdings, Inc.'s proposed sale of substantially all of its assets to a new company formed by its requisite lenders drew an objection from an unsuccessful bidder, who called the August auction "a sham" in documents filed Sept. 3 with the U.S. Bankruptcy Court for the District of Delaware.

Attorneys for Jack Cooper Holdings Corp. claim their client's $95 million cash bid represented the best value for the debtors' estates and the successful bid by New Allied Acquisition Co. LLC is "designed to facilitate the future liquidation of the acquired 'hard' assets of the debtors to the detriment of its customers and employees."

Cooper says the proposed sale "makes a mockery of an ostensible 'going concern' sale process."

Cooper's offer was for a going-concern sale that would "maintain uninterrupted service to the debtors' customers and preserve almost 2,000 jobs."

New Allied submitted an "all cash bid with the maximum cash value of only $45 million by the bid deadline of August 8," according to the filing.

At the auction, New Allied - formed by BDCM Opportunity Fund II, Black Diamond CLO 2005-1 and Spectrum Investment Partners - "abandoned their all cash bid and verbally submitted a credit bid in their capacity as the requisite lenders," Cooper says.

The Black Diamond/Spectrum bid "was premised on financing derived through a yet-to-be-determined rights offering and splitting the debtors' assets into two companies," Cooper states.

The hard assets, such as vehicles, equipment and real property, would be in one company controlled by Black Diamond/Spectrum.

The other - owned by lenders holding claims under the pre-petition first-lien credit agreement - would retain only the current accounts receivable and the debtors' liabilities under customer contracts and claims under collective bargaining agreements and a pension plan, the objection states.

The official committee of unsecured creditors, Yucaipa Co. and union representatives attending the auction agreed that Cooper's all-cash bid was highest and best, but the debtors named New Allied the successful bidder, Cooper says in the filing.

Cooper has obtained an extension of committed financing through Sept. 13 and is asking the court to reject the New Allied bid and reopen the auction.

The sale hearing is scheduled for noon ET on Sept. 10.

Allied Systems is a Decatur, Ga.-based distributor of new and used vehicles. The company filed for bankruptcy on June 11, 2012 under Chapter 11 case number 12-11564.

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