Union Acceptance obtains court approval for reorganization plan

By Carlise Newman

Chicago, Aug. 14 - Union Acceptance Corp. said it has received court approval for its reorganization plan.

The second amended plan reflects non-material modifications to the first amended plan of reorganization, which was circulated to Union Acceptance's creditors. The plan received acceptance of from creditors of each class and no objections were made.

The plan calls for the use of available cash resources and cash flows to be released over time from the retained interest to repay creditors in order of priority, Union Acceptance said. Senior and senior subordinated noteholders will receive new restructured notes reflecting these rights. Unsecured creditors are entitled to elect a discounted repayment in exchange for early payout for convenience.

The bankruptcy court approved the plan on Aug. 8. The effective date of the plan has not yet been fixed, but will occur in the coming few weeks.

Union Acceptance also announced a reduction in the size of its board of directors. The directors continuing on the board are the chairman John Eggemeyer III, Richard Waterfield, Donald Sherman and Thomas West.

Stepping down from the board are John Davis, Tom Haegy, Bill McKnight, Mike Stout and Lee Ervin, whose service as chief executive officer ended in June.

Eggemeyer has assumed the responsibilities of chief executive officer, along with his responsibilities as chairman. Mark Ruh has been appointed president and chief financial officer. Ruh is a vice president with Castle Creek Capital LLC, a private investment firm.

Upon the effective date of the reorganization plan, Union Acceptance's shareholders' rights plan will be rejected and all related share purchase rights will terminate. The shareholders' rights plan is a contractual arrangement intended to induce parties seeking to acquire a controlling interest in the company to negotiate any such transaction with the board of directors.

Union Acceptance Corp. is a financial services company headquartered in Indianapolis.

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