Tower Automotive creditors' committee objects to Milwaukee facility union, retiree settlements

By Caroline Salls

Pittsburgh, April 24 - Tower Automotive Inc.'s official committee of unsecured creditors objected to the company's request for court approval of settlements with two current and future retiree groups that modify retiree health-care benefits, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the objection, the company is seeking court ratification of deals recently cut with the closed Milwaukee facility unions and retiree committee that seek to favor one class of creditors, retirees, at the expense of other unsecured creditors.

The committee said the company fosters "a race to the courthouse mentality by favoring the first class of creditor to settle."

Also, the committee said the proposed settlements attempt to dictate elements of the terms of a future plan of reorganization and are thus impermissible under bankruptcy law.

The Novi, Mich.-based auto parts maker filed for bankruptcy on Feb. 1, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-10578.

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