Cadence Innovation's liquidation confirmation plan approved by court

By Jim Witters

Wilmington, Del., Aug. 17 - Cadence Innovation LLC's liquidation plan received approval Wednesday during a hearing in the U.S. Bankruptcy Court for the District of Delaware.

Norman L. Pernick, debtors' counsel, said the resolution of several objections through negotiations, coupled with news that Cadence will receive $2.5 million to $5 million in the settlement of a claim in Michigan, resulted in an increase in the projected recovery range to 7% to 21% from a range of 3% to 10%.

Treatment of creditors includes the following:

• Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of miscellaneous secured claims will receive either cash equal to the lesser of the amount of the claim or the value of the property securing the claim or receive the property securing the claim. Pernick said the decision will be left to the liquidating trustee as to whether to sell the properties to pay the taxes or relinquish the properties to the taxing authorities in settlement of their claims.

• Holders of general unsecured claims will receive a share of cash remaining after payment of administrative, priority and miscellaneous secured claims; and

• Holders of equity interests will receive no distribution, and the interests will be canceled.

Pernick said most of the debtors' assets have been liquidated. Remaining assets will be transferred to the liquidating trust around Sept. 1. The remaining assets include three properties, one of which is under contract; cash; the interests in Cadence Europe and the proceeds from the litigation settlement in the U.S. Bankruptcy Court for the District of Eastern Michigan.

James P. Carroll was named liquidating trustee. Robert Gordon, counsel for the official committee of unsecured creditors, said the roster of the liquidating trust oversight committee is not complete but should be final within a few days.

Judge Kevin Gross said the plan represents good faith efforts by all the parties and "everything that could be done in this case was done." He described the case as "hard-fought," and said he derived "satisfaction and reassurance that everyone is being very careful and attentive to the case."

"We all hoped for a better outcome, a true reorganization, but that just wasn't to be," Gross said.

Cadence, a Troy, Mich.-based auto parts supplier, filed for bankruptcy on Aug. 26, 2008. Its Chapter 11 case number is 08-11973.

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