Manchester emerges from bankruptcy

By Caroline Salls

Pittsburgh, July 9 - Manchester Inc. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on June 23, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Under the plan, the company's secured lenders will receive 100% of the new common stock in the reorganized company, as well as new subsidiary interests.

The plan is based on terms proposed by Palm Beach Multi-Strategy Fund LP.

A $3 million deposit will be used to satisfy the claims of unsecured creditors.

In addition, claims asserted by Manchester against Palm Beach in cases pending in the U.S. Bankruptcy Court and in the District Court, 101st Judicial District, Dallas County and claims asserted by the fund against the current officers and directors of the company were resolved through the plan.

Alex D. Moglia has been appointed as the company's litigation trustee.

Creditor treatment

Treatment of creditors under the amended plan will include:

• Holders of $200,000 in priority tax claims and $3.74 million in priority non-tax claims will recover 100% in cash;

• Holders of $423,000 in M&I secured bank claims will have their claims reinstated;

• Holders of senior lender secured claims will receive 100% of the new common stock and new subsidiary interests in the reorganized company for a 100% recovery;

• Holders of $23.38 million in general unsecured claims will recover 12.6% in plan cash and leftover cash after priority and administrative claims are paid in full, and these creditors will receive litigation trust funds after all expenses are paid in full and the company's senior lender is reimbursed for leftover cash, seed cash and $2.5 million in plan cash;

• Holders of senior lender unsecured claims will receive a share of any litigation trust funds remaining after payment of litigation trustee fees and expenses, senior lender reimbursement and payment to general unsecured creditors;

• Holders of $2.84 million in Lancelot settlement claims will be treated either as secured claims or general unsecured claims;

• Holders of parent common stock interests will receive a share of liquidation trust funds after payment of trust fees and expenses, senior lender reimbursement, payment in full to general unsecured and unsecured lender claims and an additional $500,000 reimbursement of plan cash; and

• Holders of subsidiary equity interests will receive no distribution under the plan.

Manchester, a Dallas-based auto dealership that sells and finances used cars to buyers with limited credit histories or past credit problems, filed for bankruptcy on Feb. 7, 2008. Its Chapter 11 case number is 08-30703.

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