OM Industries gets court approval on settlement agreement with General Electric Capital

By Reshmi Basu

New York, July 11 - OM Industries, Inc. obtained court approval for a settlement agreement with debtor-in-possession lender General Electric Capital Corp., under which GE Capital will receive a $59.21 million claim against the company in exchange for extending $500,000 in additional cash collateral, according to a Wednesday filing with U.S. Bankruptcy Court for the District of Massachusetts.

The agreement was the "result of arms length, good faith negotiation," judge Joel B. Rosenthal said in the order.

As previously reported, the extra cash collateral can be used for any purpose in OM's bankruptcy case, including for distribution to unsecured creditors.

All claims against GE Capital also would be released under the agreement.

In addition, with the exception of a $622,000 wind-down amount, the $500,000 settlement payment and a $4.69 million reserve for administrative expenses, all proceeds from OM's asset sale and collateral proceeds would be applied to GE Capital's secured claim.

OM Industries, formerly Malden Mills, is a Lawrence, Mass.-based textile company that filed for bankruptcy on Jan. 10, 2007 in the U.S. Bankruptcy Court for the District of Delaware. The case was transferred to the Massachusetts court on Jan. 16. Its Chapter 11 case number is 07-40124.

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