The creditor committee of Anchor Glass Container Corp. has reached a deal with the company“s former debtor-in-possession (DIP) lender, Wachovia Capital Finance Corp., which calls for the return of US…
The creditor committee of Anchor Glass Container Corp. has reached a deal with the company“s former debtor-in-possession (DIP) lender, Wachovia Capital Finance Corp., which calls for the return of USD 262,500 in lender fees. The settlement arrived during negotiations on a turnaround plan with the creditor committee. Harley Riedel, a lawyer for the committee, described ongoing talks between the company and creditors as “good and productive,” but said he did not expect that they will conclude until the eve of the company“s 15 February 2006 deadline for filing a revised plan. The US Bankruptcy Court in Tampa, Florida was set to consider approval of the disclosure statement detailing the company“s Chapter 11 plan at a 26 January 2006 hearing. The company, however, asked the court for more time to negotiate and file an amended plan and disclosure statement. Anchor Glass has through 15 February 2006 to file an amended plan, and the disclosure statement hearing is now scheduled for 28 February 2006 according to Riedel. At the 28 February 2006 hearing, the court will also consider approval of the settlement the committee reached with Wachovia. The settlement, outlined by the committee in a court filing on 31 January 2006, allows Wachovia to retain the USD 25,000 balance of its early termination fee, as well as the full USD 575,000 facility fee it received from the firm early on in the Chapter 11 case, which dates back to August 2005. The committee said that the settlement ends the “risks and uncertainty of litigation” and decreases the professional and expert fees the parties would have incurred in connection with their litigation over the lender“s fees. With the Anchor Glass Chapter 11 plan process at a crucial point, the settlement also avoids the extensive time commitments of committee professionals and Anchor Glass, whose officers and directors would have been involved as witnesses in the litigation, the committee said. Wachovia led a group of lenders in rolling over a revolver loan that existed before the company“s Chapter 11 filing into a DIP facility so that Anchor Glass could continue operating during the bankruptcy case. The company soon afterwards obtained a USD 125 million replacement DIP loan from a group of noteholders led by Wells Fargo Bank that allowed it to pay off about USD 79 million in debt to the Wachovia-led group. The committee has been trying since September 2005 to disallow the fees received by Wachovia in connection with its brief period as DIP lender. If the settlement is approved by the court, Wachovia will transfer USD 262,500 to an escrow account for the benefit of the unsecured creditors. If a reorganization plan to which the committee consents is approved by the court, then the funds in escrow will be released to the company.