Plastech business sale settlements approved

By Caroline Salls

Pittsburgh, June 30 - Plastech Engineered Products, Inc. obtained court approval of a series of settlements that clear the way for completion of the sales of its interiors and exteriors businesses, according to Friday filings with the U.S. Bankruptcy Court for the Eastern District of Michigan.

As previously reported, JCIM, LLC and Goldman Sachs Credit Partners, LP, as collateral agent for the first-lien term lender parties, were the stalking horse bidders for the interiors business sale.

Decoma International of America, Inc. and Goldman Sachs Credit Partners, as collateral agent for the first-lien term loans, submitted a stalking horse for the sale of the exteriors business.

The sales were approved on June 18.

The first agreement approved Friday includes three separate settlements that resolve sale-related disputes involving the company's official committee of unsecured creditors and steering committee and chief executive officer Julie N. Brown, as well as an intercreditor settlement involving the company's lenders.

First, under the committee settlement, Plastech's lenders have agreed to contribute $14 million from the interiors business sale proceeds to benefit the company's unsecured creditors.

In addition, the first-lien term lenders will make up to $17 million available to Plastech's estates to cover 50% of the expenses associated with a plan of liquidation and the wind down of the estates after the closing of the sales, as well as up to $8.5 million to cover 50% of allowed claims.

The lenders will also waive their right to receive any first-lien lender contribution and any proceeds of avoidance actions.

Under the Brown settlement, Brown will receive a $9.25 million fee from the interiors business sale, to be paid over five years.

Additionally, the steering committee said it will consent to Brown retaining proceeds from a separate T-Ink settlement, other than $175,000 in fees payable to Plastech under that related settlement, provided that the proceeds are held in escrow until the later of the closing of the interiors sale and the closing of the exteriors sale.

Under the intercreditor settlement, Plastech's first-lien term lenders and second-lien term lenders resolved potential disputes arising from an intercreditor agreement.

The term lenders have agreed to support the sales, the committee settlement and the Brown settlement.

The intercreditor settlement also provides for an allocation of proceeds from the interiors business and exteriors business sales and from the sale of other fixed collateral.

Plastech also received court approval of a separate settlement with its term lenders, under which the company confirmed that its $265 million in first-lien debt and $100 million in second-lien debt are allowed and fully secured claims for the purposes of submitting a credit bid for the interiors business or exteriors business.

In exchange for the term lenders' concessions under the other sale and wind down related settlements, Plastech has agreed that its pre-bankruptcy debt may not be subject to offset, counterclaim, recoupment, avoidance, recharacterization or equitable subordination.

UAW closure agreement

The company has also secured court approval of an exteriors business sale-related closure agreement with the United Auto Workers.

According to the UAW settlement, the buyer of the interiors business has committed to assume all related collective bargaining agreements, but the exteriors business buyer does not intend to purchase any of the exteriors business facilities and has not offered employment to any existing exteriors business employees.

As a result, the UAW closure agreement was designed to lessen the hardship on the exteriors business workers and to provide severance, health insurance and other assistance to the employees.

Specifically, Plastech has agreed to:

• Provide one week of severance pay to employees with fewer than five years of service and two weeks of severance pay to employees with five or more years of service;

• Continue to pay some employees released before July 13 at their normal pay from the time of their release until July 13;

• Continue coverage of all employees that are permanently laid off and were actively enrolled under its health and life insurance plans for the balance of the month of July and for one additional month, subject to each employee's payment of his or her share of the monthly health insurance premium for August, as well as applicable co-pays and deductibles;

• Pay employees for accrued but unused vacation days as of the date of the permanent layoff;

• Make or assist the UAW in making applications to state or local governmental agencies for any benefits intended to aid workers affected by the plant closings; and

• Promptly consider any outstanding grievances and process any disputes that cannot be resolved to arbitration on an expedited basis.

In exchange, the union has agreed not to strike and to fully cooperate with the exteriors business wind down.

Plastech, a Dearborn, Mich.-based auto parts supplier, filed for bankruptcy on Feb. 1. Its Chapter 11 case number is 08-42417.

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