Horsehead creditors balk at extension, claim plan ‘vehemently opposed’

By Caroline Salls

Pittsburgh, June 10 – Horsehead Holding Corp.’s official committee of unsecured creditors objected to the company’s proposed extension of its exclusive periods for filing and soliciting votes on a plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said Horsehead is seeking a roughly 150-day extension “at a time when the debtors are proceeding with confirmation of a plan that is vehemently opposed by numerous creditor and equity constituencies participating in these Chapter 11 cases.”

The committee said the plan constitutes an attempt by the lenders, led by Greywolf Capital Management, LP, with the cooperation and consent of the Horsehead debtors, “to run roughshod over the rights of unsecured creditors” without any sale or marketing process for the company’s valuable assets and businesses and to extract the substantial inherent value in the Horsehead estates for themselves by obtaining the majority of the equity interests, while unsecured creditors are left with little to no recovery.

“The committee is prepared to establish at the confirmation hearing that the debtors’ plan woefully undervalues the debtors’ assets and therefore is non-confirmable,” the objection said. “However, it would be highly prejudicial to allow the debtors and lenders to ‘hedge their bets’ and allow the debtors to continue to tie the committee’s and other creditors’ hands with an exclusivity extension until December.

“Such an extension would hamstring the ability of the committee or other parties to pursue alternative plan structures that may unlock substantial additional value and provide for substantially increased recoveries to all parties.”

The committee said the extension motion should be denied or limited to 45 days.

A hearing is scheduled for June 20.

Pittsburgh-based Horsehead Holding is the parent company of Horsehead Corp., a U.S. producer of specialty zinc and zinc-based products and a recycler of electric arc furnace dust. The company filed for bankruptcy on Feb. 2 under Chapter 11 case number 16-10287.

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