Lexington Precision secured lenders file plan of reorganization

By Caroline Salls

Pittsburgh, Sept. 2 - Lexington Precision Corp.'s pre-bankruptcy secured lenders filed a plan of reorganization and related disclosure statement for the company's bankruptcy case Tuesday designed to provide a "rapid recovery of value" through a sale process, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The lenders said they filed the plan "in light of the significant delays in the debtors' development of a reasonable exit strategy."

Under the lenders' plan, the sale process will be conducted by a post-confirmation trustee in consultation with sale agent Gordian Group, LLC, which has served as investment banker to the pre-bankruptcy lenders.

The trustee and Gordian will market Lexington's assets for up to 100 days after entry of the plan confirmation order.

The lenders said they may be the initial stalking horse bidders for the company's assets, but they would credit bid only to provide a floor for bidding and would not bid beyond their initial offer.

Creditor treatment

Treatment of creditors will include:

• Holders of other priority claims will be paid in full in cash;

• Holders of CapitalSource secured claims and CSE secured claims will receive a first-priority beneficial interest in the company's post-confirmation trust and a limited first-priority interest in a litigation trust;

• Holders of secured tax claims will receive a second-priority interest in the post-confirmation trust;

• Holders of other secured claims will receive a third-priority interest in the post-confirmation trust;

• Holders of general unsecured claims, including senior subordinated note claims, will receive a fourth-priority interest in the post-confirmation trust and a first-priority interest in the litigation trust;

• Holders of asbestos-related claims will receive insurance proceeds and, to the extend the insurance proceeds are insufficient, a fourth-priority interest in the post-confirmation trust and first-priority interest in the litigation trust;

• Holders of junior subordinated note claims will receive a fifth-priority interest in the post-confirmation trust and a second-priority interest in the litigation trust;

• Holders of series B preferred stock interests will receive a sixth-priority interest in the post-confirmation trust and a third-priority interest in the litigation trust;

• Holders of common stock interests will receive a seventh-priority interest in the post-confirmation trust and a fourth-priority interest in the litigation trust; and

• Holders of other equity interests will receive no distribution.

Lexington Precision, a New York-based manufacturer of rubber and metal components for the automobile and medical devices industries, filed for bankruptcy on April 2, 2008. Its Chapter 11 case number is 08-11153.

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