Energy Conversion Devices creditors committee objects to bid procedures

By Jim Witters

Wilmington, Del., March 13 - The official committee of unsecured creditors for Energy Conversion Devices, Inc. and United Solar Ovonic LLC objects to the proposed bid procedures for the sale of the companies' assets or stock, according to documents filed Monday with the U.S. Bankruptcy Court for the Eastern District of Michigan.

The unsecured creditors are the only "real parties in interest" in the cases, because "there is essentially no secured debt" and the debtors have stated that equity holders are unlikely to receive any recovery," the documents state.

The creditors committee is concerned that the companies proposed $12.6 million operating budget for Feb. 14 through May 15 will significantly erode the $145 million in unrestricted cash the companies hold, the documents state.

The debtors ceased manufacturing operations.

The committee supports the debtors' goal of an expeditious sale of the assets to maximize the value of the estate, "provided that it is cost effective given the significant cash burn associated with operating the Debtors during a sale process," the objection states.

"If the debtors ceased operations today, all of that money, less administrative expenses to date, would be available for the unsecured creditors of one or more of the estates, depending on issues including substantial consolidation. Thus, it is imperative that the sale produce a recovery that exceeds the cost of operating the debtors until the sale, plus the additional fees associated with the sale," the objection states.

Specific demands

The creditors committee seeks:

• Committee approval in selecting a stalking horse bidder;

• Committee approval in selecting the best qualified bid;

• Committee approval in adopting the rules for an auction;

• Committee approval in determining when a bid is beaten at the auction;

• Committee approval in selecting the successful bid;

• Committee approval in accepting or rejecting qualified bids;

• Committee approval in selecting and approving a transaction with the next highest bidder, if necessary;

• A weekly update on status of the sale process;

• A requirement that a qualified bid for the sale of the United Solar Ovonic stock, rather than its assets, provides that no creditors of United Solar will be impaired; and

• A clear definition of the term "solar business unit" in the bidding procedures motion and order, including the "identity of the entity whose assets or equity is proposed to be sold."

Proposed procedures

As previously reported, the proposed bid procedures allow for a stalking horse agreement and a stalking horse bidder, as well as a breakup fee of 2.5% of the total cash consideration offered for the assets plus expenses up to $300,000 if the stalking horse bidder is not the winning bidder at auction.

Qualified bids will be due by 5 p.m. ET on April 17, and the auction will be April 24.

A hearing on the bid procedures motion is scheduled for March 14.

Rochester Hills, Mich.-based Energy Conversion Devices makes thin-film flexible solar laminate products for buildings. The company filed for bankruptcy on Feb. 14 in the U.S. Bankruptcy Court for the Eastern District of Michigan. The Chapter 11 case number is 12-43166.

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