Fedders disclosure statement approved; plan confirmation hearing set for Aug. 21

By Caroline Salls

Pittsburgh, July 16 - Fedders Corp. received court approval of the disclosure statement for its plan of liquidation, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for Aug. 21.

As previously reported, the plan is based on a settlement with plan lenders and would establish a term lenders liquidating trust and a GUC liquidating trust.

Under the term lender settlement, the lenders have agreed to make available from the term lenders' collateral the amounts needed to pay the administrative expense claims and other priority claims in full.

The term lender claims will be allowed as secured claims secured by a first-priority lien on Fedders' estates, other than the unencumbered assets allocation amount and GUC liquidating trust assets.

On the plan effective date, the beneficial interests in a term lenders liquidating trust will be distributed to the lenders.

The settlement is intended to avoid "complex, expensive litigation," which, the company and the term lenders believe would result in there being no funds available to pay administrative, priority and general unsecured claims.

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative expense claims, priority tax claims and priority non-tax claims will receive a full cash recovery;

• Holders of term lender claims will receive a distribution of beneficial interests from the term lenders liquidating trust for an estimated 55.9% recovery.

• Holders of other secured claims will receive a full recovery through proceeds raised from the sale of any collateral securing their claim or the collateral securing their claim, The estimated recovery is 100%;

• Holders of general unsecured claims will receive their share of beneficial interests in the GUC liquidating trust for an unknown recovery amount. The percentage recovery depends primarily on the outcome of lawsuit and avoidance actions; and

• Equity securities will be cancelled on the effective date.

Fedders, a Liberty Corner, N.J., producer and marketer of air treatment products, filed for bankruptcy on Aug. 21, 2007. Its Chapter 11 case number is 07-11176.

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