Stanadyne creditors committee files Chapter 11 plan of liquidation

By Sarah Lizee

Olympia, Wash., Sept. 11 – Stanadyne LLC’s official committee of unsecured creditors filed a Chapter 11 plan of liquidation and related disclosure statement on Friday with the U.S. Bankruptcy Court for the District of Delaware.

The plan contemplates the establishment of a trust through which a trustee will liquidate the debtors’ remaining assets, either through collection, or litigation and collection, for distribution to holders of allowed claims.

As previously reported, Stanadyne closed the sale of all of its assets to stalking horse bidder S-PPT Acquisition Co., an entity formed by the company’s prepetition secured lenders, on July 31.

Additional provisions in the sale order protect a wind-down funding amount, as defined in a settlement term sheet, which was included in the official committee of unsecured creditors’ statement supporting the sale.

The committee, Cerberus Business Finance, LLC (as agent for the prepetition lenders) and the purchaser reached an agreement under which S-PPT will fund a total of $4 million in the following three tranches: a wind-down budget of $1 million; $375,000 to fund a liquidating trust; and $2.63 million for distribution to general unsecured creditors of the debtors’ estates from which the prepetition secured parties will not receive any distribution on account of their deficiency claim, which will enhance recoveries for other general unsecured creditors.

The purchaser also agreed to assume material liabilities of the debtors, including all “core liabilities” and all critical vendors’ claims.

Taking into account the material increase in assumed liabilities, the parties agreed to reduce the prepetition debt bid amount portion of the purchase price to $205 million from $225 million.

S-PPT also agreed to purchase and waive avoidance actions and commercial tort claims that the estates may have against purchaser’s go-forward creditors.

The purchaser also agreed that it will not pursue affirmative recovery from avoidance actions against non-insiders that are not go-forward creditors, although it may use those claims defensively to offset against assumed liabilities.

And as additional potential material recoveries, the purchaser agreed to exclude from its purchase and transfer to the liquidating trust the estates’ claims and causes of action against insiders, including avoidance actions and commercial tort claims.

The net proceeds of those claims and causes of action will be used for additional distribution to unsecured creditors, including on account of the deficiency claim of the prepetition secured lenders.

Under the plan, priority non-tax claims and secured claims are unimpaired.

The holder of the Cerberus deficiency claim will receive a pro rata share of all distributions made from the unsecured claim distribution fund.

Holders of general unsecured claims will receive a pro rata distribution from the initial distribution fund after payment in full of all allowed administrative expenses, priority tax claims, non-tax priority claims and secured claims, and after the distribution to convenience class claims. After that, holders will receive their pro rata share of all subsequent distributions made to holders of allowed general unsecured claims from the liquidating trust.

Holders of convenience class claims, which are unsecured claims that have been asserted in the amount of $20,000 or less, will receive a distribution of 10% of the amount of their claims after higher-priority claims and expenses are paid in full.

Interests will be deemed canceled with no distribution.

Holders of class 4 general unsecured claims may elect to opt into the class 4 convenience claim class, and vice versa. If class 4 claimholders opt into class 5, their claims will be reduced to $20,000.

Stanadyne is an automotive parts manufacturer based in Jacksonville, N.C. The company filed bankruptcy on Feb. 16, 2023 under Chapter 11 case number 23-10207.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.