Hayes Lemmerz asks court to clear up euro note guarantee dispute

By Caroline Salls

Pittsburgh, July 27 - Hayes Lemmerz International Inc. filed a lawsuit Friday against euro notes indenture trustee U.S. Bank NA that asks the U.S. Bankruptcy Court for the District of Delaware to interpret some provisions of the notes indenture and keep the company from an "unnecessary liquidation."

Under the notes indenture, Hayes Lemmerz said confirmation of its plan of reorganization will trigger a release of euro note guarantees.

However, the indenture trustee does not agree that the note guarantees would be released upon confirmation of the plan.

The company said its debtor-in-possession financing agreement requires the euro note guarantees to be released before its plan can take effect.

Hayes Lemmerz said it would be in default on the DIP facility if the plan does not take effect within the time periods set in the DIP agreement, forcing the company closer to liquidation.

As a result of the disagreement and the DIP lenders' requirement, Hayes Lemmerz said it will not be able to consummate its plan until the court rules on the proper interpretation of the indenture.

"Timely consummation of the plan will enable the debtors to successfully reorganize and avoid a liquidation that would provide minimal compensation for their secured lenders and completely freeze out their unsecured lenders, including the holders of the euro notes," the company said in the complaint.

Hayes Lemmerz is a Northville, Mich., maker of automotive and commercial highway wheels that filed for bankruptcy on May 12. Its Chapter 11 case number is 09-11655.

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