Intermet has met conditions to completing Chapter 11 plan, court says

By Alice Popovici

New York, Sept. 1 - Intermet Corp. has met all conditions needed for consummation of its confirmed plan of reorganization, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The ruling came in response to an emergency motion from the company requesting a finding that the conditions had been met.

Intermet's motion came in response to another emergency motion, this one from creditor CapitalSource Finance LLC, asking the court to convert the company's case to a Chapter 7 liquidation.

But the court sided with the company and ordered that the plan be completed and the liqudating trust set up with Souler & Co. as trustee.

In requesting the ruling, Intermet said that other motions being filed "merely show the disarray that has resulted amongst the creditor body since Intermet's planned sale of substantially all of its assets to Revstone was terminated."

However, the company continued, its Chapter 11 plan was drawn up with "sufficient flexibility to address such a situation and provide an orderly Chapter 11 liquidation" as long as the conditions to effectiveness were satisfied.

In its motion to convert to Chapter 7, CapitalSource argued that despite eight months of marketing its business and assets Intermet's preferred option of selling all its assets to a proposed purchaser "has been a complete failure" and no replacement has come forward.

In addition, the lender said, "there is uncertainty regarding the administrative solvency of Debtors' estates."

In these circumstances, the expenses currently being run up and the additional costs of the Chapter 11 plan will only diminish the return to secured creditors.

As previously reported, on July 15 the company received court approval for the plan, which was based on the $11 million sale of substantially all of Intermet's assets to Revstone Industries, LLC.

Treatment of creditors under the plan will include:

• The holders of priority non-tax claims and other secured debt claims will recover 100% in cash;

• Holders of administrative expense claims will recover 35% to 50% in cash, depending on the outcome of the asset sale, and the remaining portion of the claims will be treated as general unsecured claims;

• Holders of first-lien term loan claims will receive a share of the sale proceeds;

• Holders of second-lien term loan claims will recover 1% to 2% through their share of cash and lender liquidating trust B interests;

• Holders of general unsecured claims will recover 1% to 2% in cash in an amount that depends on the outcome of the asset sale, proceeds from excluded assets and trust C interests in the lender liquidating trust; and

• Holders of equity interests and related claims and intercompany claims will receive no distribution.

Intermet, a Fort Worth, Texas-based automotive cast component supplier, filed for bankruptcy on Aug. 12, 2008. Its Chapter 11 case number is 08-11859.

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