Intermet creditors committee looks to force company to hold $2.6 million for recoveries

By Jennifer Lanning Drey

Portland, Ore., Aug. 28 - Intermet Corp.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Delaware to require the company to segregate $2.6 million for recoveries already approved by the court, according to a Friday filing.

According to the filing, Intermet's previously approved plan support agreement provided the official committee of unsecured creditors with $500,000 in cash regardless of whether the effective date of the plan ever occurred and whether the case was converted to Chapter 7.

Additionally, they said Intermet should be ordered to segregate $2.1 million to cover the estimated fees required to be paid under the pipeline and carve-out included in a previously approved cash collateral agreement between the committee, the company and its lenders.

The creditors said they no longer believe Intermet's plan will become effective, and the company's losses continue to accrue as it rapidly burns cash.

The committee said if the funds are not immediately segregated into separate accounts held for the general unsecured creditors and professionals, the beneficiaries will suffer irreparable harm.

"By failing to enforce these contractual rights, hard-fought recoveries will be rendered illusory as the debtors are rapidly dissipating what little cash they have remaining," the creditors said.

A hearing is scheduled for Aug. 31.

Intermet, a Fort Worth, Texas-based automotive cast component supplier, filed for bankruptcy on Aug. 12, 2008. Its Chapter 11 case number is 08-11859.

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