Energy Conversion Devices receives preliminary disclosure statement OK

By Jim Witters

Wilmington, Del., June 1 - Energy Conversion Devices, Inc. and United Solar Ovonic LLC received preliminary approval for their disclosure statement associated with their second amended joint Chapter 11 plan, according to documents filed May 31 with the U.S. Bankruptcy Court for the Eastern District of Michigan.

Also on May 31, the official committee of unsecured creditors filed a motion to terminate the debtors' exclusive periods for filing a Chapter 11 plan and soliciting acceptances and a motion to adjourn solicitation and voting on the plan.

The creditors committee hopes to file its own plan of liquidation, according to court documents.

As previously reported, Energy Conversion Devices and United Solar filed a plan of liquidation and a disclosure statement on May 23. An amended plan and disclosure statement were filed May 31.

The debtors are in the process of selling their assets, and the debtors or a liquidation trustee will continue to sell any remaining assets under the plan and a liquidation trust agreement until all assets are fully liquidated or abandoned.

The liquidation trustee will distribute liquidation proceeds to creditors.

The court is scheduled to consider solicitation of votes for the plan and disclosure statement during a hearing at noon ET on June 6.

Plan changes

The disclosure statement that received preliminary approval included changes to the proposed plan of liquidation affecting secured creditors.

Under the revised plan, Energy Conversion Devices' secured claims of about $5 million attributable to United Solar will be eliminated on the plan effective date.

This claim results from an intercompany loan secured by property in which United Solar holds an interest.

"If the estates are substantively consolidated, this intercompany secured loan will be eliminated. If the estates are not substantively consolidated, the characterization of this intercompany secured loan may be litigated and, if allowed, will be paid prior to any other claims against USO,"stated the amended disclosure statement.

The Wieland-Davco Corp.'s secured claims of about $62,740 attributable to United Solar will receive cash in the amount of the claim or the collateral securing the claim.

This claim is secured by a lien on United Solar's Battle Creek, Mich., property.

Other creditor treatment

Under the amended plan, treatment of other creditors will include the following:

• Holders of administrative expense claims and priority tax claims will be paid in full in cash;

• Priority claims are expected to be paid in full in cash;

• Holders of general unsecured claims will receive all remaining estate assets after administrative, priority and secured claims have been paid in full and required assets have been transferred to a warranty trust;

• Holders of warranty claims will receive a beneficial interest in the warranty trust and any proceeds of distributions on account of that interest after administrative, priority and secured claims have been paid in full; and

• To the extent funds remain after payment in full of all claims, holders of equity interests will receive payment of any surplus.

Energy Conversion's equity interests in United Solar Ovonic will vest in Energy Conversion's liquidation trust.

Exclusivity termination

The creditors committee is seeking to end the debtors' exclusive period for filing a plan and soliciting plan acceptances, claiming that the debtors have been hindered throughout the process by a plan support agreement reached with the ad hoc consortium of noteholders.

"Because of the debtors' constraints,...fruitful negotiations with the committee regarding its joint plan of liquidation have been stunted. Therefore, the committee that represents the interests of all creditors of both estates filed this motion in order to provide the creditors the option the committee believed appropriate throughout its negotiations with the debtors - an alternate plan of liquidation," the motion states.

"Because of the changes in the amended plan, the committee believes that it should be allowed to propose a competing plan, which, if presented with the amended plan, will allow creditors the most meaningful choice and a quick resolution to the case," the committee argued in its filing.

Voting adjournment

The creditors committee is seeking a "limited adjournment of solicitation of voting" on the liquidation plan.

"Though this case is nearing its final stages, there are still several contingencies which need to be resolved in order for the committee and/or its ECD and USO sub-committees to be able to recommend whether its constituents should vote in favor of the debtors' amended plan," the motion states.

The debtors' solar business is being liquidated, with a final auction to occur before June 30, absent a private sale before that, court documents state.

"Once the committee and the other parties know both the extent of the claims and the value of the solar assets, the committee and the sub-committees will be better able to determine whether to recommend that creditors vote in favor of the amended plan" or vote for an alternative liquidation plan solicited simultaneously with the debtors' plan or separately, according to the motion.

Rochester Hills, Mich.-based Energy Conversion Devices makes thin-film flexible solar laminate products for buildings. The company filed for bankruptcy on Feb. 14 under Chapter 11 case number 12-43166.

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