iGPS depot dispute settled; final approval pending for asset sale

By Jim Witters

Wilmington, Del., July 29 - The sale of iGPS Co. LLC's assets to iGPS Logistics LLC cleared its final hurdle when the parties involved worked out a deal with the depot operators who handle the company's pallets, according to an attorney involved in the case.

The parties met in Atlanta and worked out a deal whereby the contract with depot facility service provider Belacon Pallet Services, LLC was rejected in return for an agreed allowed unsecured claim for Belacon, as well as a new contract with the purchaser going forward, the attorney said.

"With that, there was some discussion of the sale order with the judge, and the debtor agreed to circulate a new form of sale order today (July 29) and to file it under certification with the court," the attorney said.

Judge Kevin Gross approved the sale during a July 23 hearing to allow the parties time to resolve the Belacon issue.

Belacon claimed that language in the proposed sale order would have inserted the bankruptcy court into a third-party contract between Belacon and its depot services suppliers, none of whom are parties to the bankruptcy proceeding.

Many of the debtor's pallets are housed at depots under contract with Belacon, and the buyer had stated that it had no intention of assuming the Belacon contract.

Attorneys for the debtor and the buyer called the Belacon contract "onerous" and said the buyer does not need "this expensive middle man."

The debtors and the buyer wanted to negotiate directly with the depot owners concerning fees for storing and transporting the pallets, but the contract between the depots and Belacon prohibited direct contact.

The agreement and the resulting changes in the sale order resolved all those issues, the attorney said.

iGPS Logistics was the lone bidder for the debtor's assets.

The total deal is worth about $165 million, including a credit bid, the waiver of a $150 million deficiency claim, the buyer's contribution of $2.5 million to a recovery pool for general unsecured creditors and the buyer's commitment to pay off the $12 million debtor-in-possession financing facility.

iGPS, an Orlando-based operator and owner of a global pallet rental pool with embedded RFID tags, filed for bankruptcy on June 4. The Chapter 11 case number is 13-11459.

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