Articles tagged with: bankruptcy creditor rights

articles addressing right of bankruptcy creditors in a customer bankruptcy – reclamation, 503b9 administrative expenses, assumption cure costs

Grede Foundries – First Day Bankruptcy Motions Offer Suppliers No Relief

Grede Foundries has filed 10 first day motions (3 procedural and 7 substantive). The 7 substantive motions are listed below.  The one of special interest is item 6, which deals authorization of Grede to enter into accomodation agreements with customers.  The presence of these agreements in an automotive supplier bankruptcy is a pretty good indication that there was a major supply disruption risk.

Grede has filed a 503(b)(9) procedural motion (which was not filed as a motion to be heard at the first day hearing) that seeks to preclude suppliers from filing 503(b)(9) motions and only permit the use of the general claims procedure.  This motion affords suppliers no substantive relief in terms of accelerated payment of 503(b)(9) claims.   The motion is actually anti-supplier.  It seeks to postpone and procedurally restrict the exercise by suppliers of their rights under 503(b)(9).

GM Bankruptcy – Selective Cure List and Substantive Objections

There were approximately 479 objections filed by the June 15, 2009 deadline by suppliers and other trade creditors to GM’s proposed cure costs (click link to see list). An additional 75 objections were filed after the deadline and on or before June 20, 2009.  As in the case of Chrysler, the majority of the objections were to cure cost amounts.  However, as noted in our prior post, the cure cost procedures also provided a frequent basis for objection. As a final irony, Chrysler’s objection was among the most vehement (as well as apparently a day late).  In the following post, we discuss the substantive objections and provide a sampling of the differences between GM’s cure costs and cure costs computed by suppliers. 

GM Bankruptcy – Cure Costs Procedures Catastrophic Failures

Automotive suppliers can only hope that GM will make better cars than they do cure cost procedures.  Based on the cure cost objections (“Cure Cost Objections”) filed, the procedures approved by the Bankruptcy Court either were flawed from the beginning or improperly executed. The net result is to cast a shadow on the entire contract assignment and assumption process pursuant to the proposed 363 sale to New GM. In the following post we discuss the problems experienced by suppliers.  In a later post, we summarize the substantive objections that were filed and give a sampling of the differences between the GM cure costs and the Supplier cure amounts.

Six Flags Bankruptcy – First Day Motions Docket and Affidavit

The Six Flags Agenda for First Day Hearing looks straight forward enough. The first day motions reveal nothing startling. But when you read the Affidavit of Jeffrey Speed in Support of First Day Pleadings (the “Speed Affidavit”), you get the sense that this bankruptcy has the potential to have twists and turns rivaling a Six Flags roller coaster. 

GM Bankruptcy – For Suppliers Chrysler Bankruptcy Lesson 1

(Update: Since the original post date we have added two additional posts on the GM Cure Cost Procedure and the Supplier Objections that were filed to GM Cure Costs. Please Click the preceding link to see those posts.)

The Chrysler bankruptcy taught suppliers several lessons.  Lesson 1 –  SUPPLIERS, BE READY TO CONFIRM THE CURE AMOUNT FOR THE ASSIGNMENT OF GM SUPPLY CONTRACTS. Consider the years that your company has worked with GM. If your company got a cure cost notice from GM today, would it be ready to say “If GM pays my company this amount, my company has no further claims against GM, and if it does have additional claims, we give them up?” A lot of suppliers in the Chrysler bankruptcy found out the hard way that they were not ready to respond; the pain just has not hit yet.

Metaldyne Bankruptcy – Largest Unsecured Bankruptcy Creditors

Metaldyne requested and was granted authority to file a consolidated list of the 50 largest unsecured creditors of the Metaydyne Corporation and its 30 affiliated Debtors (the “Top Unsecured Creditor List”) in lieu of a separate list for each of the Debtors. The amounts owed to each of the unsecured suppliers is listed as trade debt. We are seeing several very familiar automotive parts supplier names on this list. We are also seeing some of the listed debt to automotive parts suppliers as “disputed.” This is probably an indication of a claim of set off.

Visteon Bankruptcy – First Day Motions

Visteon Corp. has filed 13 first day motions and the Affidavit of Willaim G. Quigley, III, Chief Financial Officer in Support. The motions include one critical vendor motion to authorize payment of certain pre-petition claims of suppliers.  (Item 4 Below) The first day motions are:

Chrysler LLC Bankruptcy – Supplier Contract Cure Costs Horrors

A scanning of the “Cure Costs” objections shows a brewing mess that might hamper (depending on how the various objections are handled by the judge) the planned speedy sale to new Chrysler.  Whether the extent of the problems raises a red flag for Fiat has yet to be seen.  For any Merger and Acquisition lawyer these problems certainly would yield sleepless nights.

The Primary Objection – Cure Cost Amounts

The objection common to the vast majority of filings is that the cure amount is incorrect. This was to be expected. What was not expected and what is somewhat alarming is the magnitude of several of the alleged Chrysler understatements of Cure Costs.

Sample Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. Section 503(b)(9)

We have included a simple sample of  Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. Section 503(b)(9). You can access this sample by clicking the preceding link.

We stress that this is a sample and a simple one at that. There are several ancillary provisions that could be included depending upon the circumstances of a particular case.

We provide an extensive discussion Section 503(b)(9) administrative expense request process in the article: Bankruptcy Creditor 503(b)(9) Administrative Expense