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First Brands can solicit votes on new bankruptcy plan. Bankrupt auto-parts supplier First Brands Group won court approval Friday to seek creditor votes on its new bankruptcy plan.
Houston bankruptcy judge Christopher Lopez denied a motion from the Justice Department’s bankruptcy watchdog to convert the company’s case to chapter 7 and wind down its operations. He approved First Brands’ disclosure statement on a conditional basis, paving the way for the company to seek votes on its proposed restructuring plan.
According to Judge Lopez, the plan on file has a “possibility of confirmation,” which is all that is required for him to rule against the Office of the U.S. Trustee and in favor of First Brands. In May, First Brands proposed an earlier iteration of its current restructuring plan, which prioritizes repaying its bankruptcy lenders and bypasses most of its administrative claims from the businesses supplying the company goods and services during the case.
At Friday’s hearing, the U.S. Trustee said the latest version of the plan, filed earlier the same day, still doesn't give “any assurances” that the administrative claims will be repaid.
According to Charles Moore, the interim chief executive officer at First Brands and managing director at Alvarez & Marsal, winding down the case through a chapter 7 would have presented challenges for the company. The funding secured by the restructuring plan for litigation would no longer be available, he said. –Alicia McElhaney
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