Fedders exits Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Sept. 5 - Fedders Corp. emerged from bankruptcy Friday when its plan of liquidation took effect, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Aug. 22.

As previously reported, the plan is based on a settlement with plan lenders and establishes 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.

The beneficial interests in a term lenders liquidating trust will be distributed to the lenders.

Creditor treatment

Treatment of creditors under the plan includes:

• 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.

In connection with the plan effective date, Fedders' common stock will no longer be traded on the Over the Counter Bulletin Board, according to a Finra announcement.

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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