Anchor Glass: GE Capital to get cash in Chapter 11 plan

The amended disclosure statement that Anchor Glass Container Corp. filed on 16 February 2006 will pay General Electric Capital Corp.“s whole USD 9.7 million claim in cash instead of the debt-for-equi…

The amended disclosure statement that Anchor Glass Container Corp. filed on 16 February 2006 will pay General Electric Capital Corp.“s whole USD 9.7 million claim in cash instead of the debt-for-equity swap originally proposed. As a result of the amendment, GE Capital is now listed as an unimpaired creditor and will not be eligible to vote on the disclosure statement. The recovery for other creditors remains virtually unchanged. Unsecured creditors will recover about 7% of their USD 120 million in claims while senior noteholders will receive a portion of new common stock to fulfill their USD 368.3 million in claims. GE Capital had been unhappy with the original debt-for-equity swap and filed an objection to the original Anchor Glass disclosure statement in January 2006 criticizing the swap and saying the reorganization plan could not be confirmed. The equity was “difficult, if not impossible to value, is not completely compensatory, gives no assurance that the secured creditor will be able to realize the value of its claim and improperly shifts the risks of reorganization to the secured creditor,” GE Capital said in its objection. Companies operating under Chapter 11 bankruptcy protection must file a disclosure statement alongside a plan of reorganization. The disclosure statement outlines in non-legal terms how creditors will be paid, helping parties decide whether to support the plan. As of 16 February 2006, a hearing on the amended disclosure statement had not yet been scheduled for the US Bankruptcy Court in Tampa.