International Aluminum committee objects to plan, proposes new terms

By Caroline Salls

Pittsburgh, April 16 - International Aluminum Corp.'s official committee of unsecured creditors objected to the company's plan of reorganization and said it has proposed an alternate plan term sheet, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the company's proposed plan does not meet the best interests test, was not proposed in good faith, is not fair and equitable and grants illegal third-party releases.

Meanwhile, the creditor group said its plan satisfies all claims against International Aluminum's estates, "provides a materially superior recovery to all creditors" and increases the company's liquidity with a substantial cash contribution by its mezzanine lenders.

The terms of the committee's plan proposal include:

• A $15 million new equity contribution from the mezzanine lenders;

• A $38 million new first-lien term loan to be held by senior lenders at market rates and terms to be determined;

• A new second-lien debt instrument, which would bridge the senior lenders to a full recovery based on cash received, the new first-lien term loan and the second-lien instrument. This instrument would include payment-in-kind interest only;

• The company's liquidity will consist of $5 million of existing cash and $15 million from the mezzanine lender contribution;

• All trade and general unsecured creditors other than the mezzanine lenders will be paid in full; and

• Mezzanine lenders would own 100% of the equity of the reorganized company.

The committee said the company has ignored its plan proposal and has "instead focused exclusively on [its] own flawed plan, which gives the company away to the senior lenders."

"This effort is based on a flawed valuation offered by the debtors, which, if it is believed, shows the reorganized company is worth less than its liquidation value," the committee said in the objection.

"The purpose of this artificially depressed valuation is to disguise the fact that the debtors' plan provides the senior lenders with more than a 100% recovery, thereby depriving the largest group of unsecured creditors of the debtors (the mezzanine lenders are owed more than $50 million) a recovery to which they are entitled."

The plan confirmation hearing is scheduled for April 19.

International Aluminum, a Monterey Park, Calif., manufacturer of diversified lines of aluminum and vinyl products, filed for Chapter 11 bankruptcy on Jan. 4. Its case number is 10-10003.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.