Protected Vehicles, creditors committee resolve conversion issues, to file joint liquidation plan

By Caroline Salls

Pittsburgh, July 31 - Protected Vehicles, Inc. and its official committee of unsecured creditors have resolved the issues surrounding the committee's motion for conversion of the company's bankruptcy case to Chapter 7 bankruptcy, according to a Thursday filing with the U.S. Bankruptcy Court for the District of South Carolina.

At the case conversion hearing, the court found that the committee had proved that cause existed for converting the case, but judge David Duncan said he needed to consider whether conversion would be in the best interest of Protected's estates.

However, the committee and the company subsequently agreed to the court's suggestion to discuss the possibility of resolving the motion and subsequent objections.

In Thursday's order approving the agreement, the judge said the resolution is in the best interest of Protected's creditors and estates.

Specifically, the company and the committee have agreed on a plan confirmation process for resolution of the remaining claims against Protected, potential collection of intangible assets and administration of the estate.

Under the agreement:

• The company will attempt to have its asset sale motion approved by Aug. 21, with the sale to close by Sept. 3;

• The company and the committee will file a joint plan of liquidation in the next 17 days;

• The joint plan will call for either a liquidating trustee, to be appointed by the committee, to take control of all of the estate's assets upon plan confirmation or it will call for the company's management to resign on the plan effective date and a new manager or management team to take control of the company and the liquidation, winding up and distribution process;

• Members of the committee will form an advisory committee on the plan effective date for the review and approval of settlements and other limited matters;

• All proceeds from the asset sale will be placed in an escrow account subject to further court order, and allowed administrative claims for reimbursement of legal fees and costs incurred by counsel for the company, the committee and other professionals will be paid from the proceeds of the sale;

• Protected will continue to operate its business as a debtor in possession until the earlier of a court order directing otherwise or the plan effective date;

• Employment of all company officers, except for chief executive officer Garth Barrett, will terminate by Sept. 3. Barrett will continue as representative/officer of the company from the sale closing date until the plan effective date, when his employment will terminate; and

• The company will cease its operations as of the sale closing date. Protected's post-bankruptcy payroll liabilities will be paid up through the sale closing date out of cash on hand before the sale.

As previously reported, the committee argued in its conversion motion that the case should be converted because the company continues to suffer substantial losses and had not been able to find additional funding sources, a buyer or an investor.

The creditors committee further claimed that Protected Vehicles' estate has been mismanaged because a motion filed by the company for permission to use cash collateral contained significant errors.

Protected Vehicles, a North Charleston, S.C., designer and manufacturer of mine and ballistic protected vehicles, filed for bankruptcy on Feb. 5, 2008. Its Chapter 11 case number is 08-00738.

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