Custom
Food unsecureds to get 3% recovery
by Jamie Mason Posted 04:24 EST, 9, Aug 2007
A Delaware judge has conditionally OK'd a plan
for Custom
Food Products Inc. that would pay the unsecured
creditors of the bankrupt maker of precooked meat and poultry products a 3%
recovery on their claims.
After approving the
liquidation plan's disclosure statement on Tuesday, Aug. 7, Judge Peter Walsh
of the U.S. Bankruptcy Court for the District of Delaware in
Wilmington set a confirmation hearing for
Sept. 10, documents show.
According to debtor
counsel Laura Davis Jones of Pachulski Stang Ziehl Young Jones &Weintraub LLP, "the court approved the disclosure statement
subject to a change being made to the [voting] ballots."
Left unresolved,
however, was an objection by Blue Ribbon Commodity Traders Inc., an unsecured creditor, regarding the releases proposed for
Custom Food's officers and employees, court documents state. The objectionwill also be discussedat the Sept. 10 hearing, said Custom
Food president and CEO EricEk.
Under the plan, Custom
Foods' unsecured creditors are due to recover about 3 cents on the dollar under
a previously arranged settlement included in its liquidation plan.
The Carson,
Calif.-based debtor owes unsecured creditors approximately $15.3 million,
consisting of about $12 million in 8% notes that matured Feb. 1 and $3 million
in unsecured non-note claims.
Unsecured creditorsare guaranteed$500,000 in cash thanks to a settlement in
June, when Contrarian
Capital Management LLC's CML NewMeatcoLLC purchased Custom
Food.
CML paid
$41.5 million, including assumed liabilities, for Custom Food, which was then
able to pay off its $25 million debtor-in-possession loan from Wachovia Capital Finance
Corp.
Custom Food continued
operating under new ownership.
Secured creditors
Wachovia and Contrarianwon'treceive any recovery
under the liquidation plan because they were paid off with the sale proceeds,
saidEk.
The liquidation plan
calls for any assets remaining in the bankruptcy estate tobe
putinto a trust and a liquidation trustee to be appointed to oversee
the wind-down.
Custom Food made its
second Chapter 11 petition on April 13 in the
Delaware court, after having first filed on
Feb. 1, 2001, and emerging on July 17, 2002, when an investment group led by William E. Simon &
Sons Private Equity Partners LP and Triton Partners Special
Situations LLP bought it for $54 million.
In addition to Jones,
BruceGrohsgaland Timothy Cairns atPachulskiStangare debtor
counsel.
Daniel Austin, Michael Viscount
and Seth Niedermanof Fox Rothschild LLP are counsel to the committee of unsecured
creditors. Fox Rothschild refused to comment.
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