Former Indalex 11˝% notes trustee objects to distribution calculation

By Caroline Salls

Pittsburgh, Nov. 28 – The indenture trustee for IH 1, Inc.’s 11˝% second-priority senior secured notes due 2014 objected to the amount to be distributed to the notes trustee by the company’s Chapter 7 trustee, according to Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, indenture trustee U.S. Bank NA said under the Chapter 7 trustee’s interpretation of an amended proceeds agreement, only about $3 million of the more than $21 million of settlement proceeds would be paid to the indenture trustee.

However, U.S. Bank said the agreement calls for the indenture trustee and the Chapter 7 trustee to evenly split the first $10 million of the net proceeds of the settlement in question and to split the second $10 million on a 40/60 basis.

According to the objection, the Chapter 7 trustee omitted roughly $62 million of notes that were to be transferred to the company’s estate in connection with the settlement and deducted from the gross proceeds $5.9 million of payments made during the bankruptcy case.

U.S. Bank said because of a lien waiver, the $5.9 million should not be deducted from the net proceeds, meaning the distribution should be increased by roughly $2 million, plus 40% of the value of the notes that were to be transferred.

IH 1, formerly Indalex Holdings Finance, Inc., 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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