Energy Conversion creditors committee favors plan, opposes releases

By Jim Witters

Wilmington, Del., June 29 - The official committee of unsecured creditors for Energy Conversion Devices, Inc. and United Solar Ovonic LLC is urging creditors to vote in favor of the companies' proposed second amended joint liquidating plan, but against the releases provided on the ballot, according to documents filed June 29 with the U.S. Bankruptcy Court for the Eastern District of Michigan.

In its letter to general unsecured creditors and warranty claimants, the seven-member committee said the proposed plan offers the best recovery to the creditors of both companies.

However, the committee believes the creditors should vote against the releases on the ballot to preserve their right to bring claims against present and former directors and officers and others in connections with actions or omissions that occur prior to the plan effective date.

"The debtors have purchased insurance coverage for certain acts or omissions of their present and former directors and officers. The plan contemplates the appointment of a liquidating trustee, who has a fiduciary duty to all creditors. This liquidating trustee will have standing to bring claims on behalf of the estates and the creditors, and will evaluate whether such claims should be litigated. If such claims are brought, the insurance policy the debtors have purchased will pay for these claims," the letter states.

A plan confirmation hearing is scheduled for noon ET on July 18.

Plan details

As previously reported, 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," according to the disclosure statement.

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 proposed plan, treatment of other creditors will include:

• 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.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.