Indalex trustee inks settlement of $213 million noteholder claims

By Jim Witters

Wilmington, Del., June 5 - The Chapter 7 trustee for the former Indalex Finance Corp. - now IH 1, Inc. - is seeking approval of a settlement with noteholders who assert claims of about $213 million, according to documents filed June 4 with the U.S. Bankruptcy Court for the District of Delaware.

Chapter 7 trustee George L. Miller wants court authority to use the proceeds from two adversary actions to fund a recovery for U.S. Bank, NA, as indenture trustee to the holders of certain 11.5% second priority senior secured notes due in 2014.

U.S. Bank filed a proof of claim in each of the debtors' cases asserting a secured claim of at least $212.61 million and an administrative claim of $434,497, according to court documents.

The trustee wants to fund the settlement with the proceeds from actions against Sun Capital Partners, Sun Indalex and Sun Indalex Finance and against Kirkland & Ellis.

Under the terms of the proposed agreement, U.S. Bank is to receive 50% of the first $10 million of net proceeds; 40% of the next $10 million and 30% of any additional proceeds.

A hearing to approve the settlement is scheduled for 2 p.m. ET on July 25.

Indalex, a Chicago-based aluminum extruder and producer of soft alloy extrusion products, filed for bankruptcy on March 20, 2009. Its Chapter 11 case number is 09-10982.

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