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Anchor Glass: objection filed to Chapter 11 plan

General Electric Capital Corp. put an obstacle in the path of Anchor Glass Container Corp.“s emergence from bankruptcy by March 2006 when it filed an objection on 19 January 2006 to Anchor“s Chapter…

General Electric Capital Corp. put an obstacle in the path of Anchor Glass Container Corp.“s emergence from bankruptcy by March 2006 when it filed an objection on 19 January 2006 to Anchor“s Chapter 11 plan disclosure statement. GE, which said it has USD 9.7 million in secured claims against Anchor Glass, criticized the debt-for-equity swap proposed in the company“s Chapter 11 plan as a way of repaying creditors. GE called on the US Bankruptcy Court in Tampa not to approve the plan“s disclosure statement. Court approval of the statement is a needed before Anchor Glass can send its reorganization plan to creditors for a vote. “The plan cannot be confirmed and (Anchor Glass) should not be permitted to undertake the costly and time consuming process of soliciting votes on an unconfirmable plan as it would amount to nothing more than a fool“s errand,” GE said in its objection. Under the proposed reorganization plan, GE and other senior secured noteholders will be compensated through a debt-for-equity swap. Anchor Glass described these creditors as impaired in the disclosure statement because the value of the equity is uncertain. GE criticized the suitability of the plan because the equity “is 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”. The disclosure statement, which explains the reorganization plan in non-legal terms, is the subject of a hearing on 26 January 2006. GE also argued the bankruptcy court should not approve the disclosure statement because it does not contain enough information to help creditors decide whether to approve the plan.

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