Lee Steel creditor committee objects to bid procedures for asset sale

By Kali Hays

New York, May 26 – Lee Steel Corp.’s official committee of unsecured creditors objected to proposed bid procedures for a sale of substantially all company assets, according to a May 26 filing with the U.S. Bankruptcy Court for the Eastern District of Michigan.

The committee said its two “overarching concerns” related to the proposed bid procedures are that Lee Steel is pursuing a sale without a designated stalking horse bidder, “which may suppress the price a stalking horse is willing to pay,” and that the procedures “fail to ensure that a sale of assets will result in the highest and best price achievable.”

As previously reported, Lee Steel said it received “many unsolicited expressions of interest from potential strategic and financial buyers interested in purchasing substantially all of their assets on a going-concern basis, as well as equipment dealers and liquidators interested in acquiring all of their assets.”

With such a high level of interest, Lee said it is likely to enter a stalking horse agreement prior to any auction.

Under the proposed procedures, a baseline bid for the assets has not been set, but any qualified bidder must sign a confidentially agreement, agree to a going-concern purchase of the debtor’s business and submit a bid by 5 p.m. ET on Aug. 8 accompanied by a cash deposit equal to 10% of the purchase price.

If Lee receives one or more qualified bids by the deadline, an auction will be held on Aug. 11 and a sale hearing will follow no later than Aug. 14.

Bids at auction are to be made in increments of $100,000.

The committee said that the bidding procedures “as proposed do not promote the maximization of value” and if left unmodified based on its objection, should be denied approval by the court.

Lee is a Novi, Mich., steel maker that filed for bankruptcy on April 13. The Chapter 11 case number is 15-45784.

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