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Bernstein Burkley
  • Practice Areas
    • Overview
    • Bankruptcy & Restructuring
    • Business and Corporate Transactions
    • Creditors’ Rights
    • Litigation
    • Oil & Gas and Energy
    • Real Estate
  • Our Attorneys
  • About Us
    • Our Approach
    • History
    • Law Lists
    • Professional Memberships
    • Careers
  • Resources
    • Bernstein’s Dictionary of Bankruptcy Terminology
    • Links
    • Five Minute Legal Master videos
    • Blog
    • Legal Publications
  • News
    • Cases Archive
    • Firm News
    • In the News
    • Industry News
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Cases

First Century Corporation

Representation: Committee of Unsecured Creditors

Bankruptcy – Middle District of Pennsylvania

Situation: First Century Corporation was a holding company for two strip mining subsidiaries. Both First Century and the two subsidiaries filed for Chapter 11 protection. A consolidated committee consisting of creditors of all three corporations was formed. The creditors’ committee retained Bernstein and Bernstein, P.C. to represent it.

Action: The bankruptcy case was relatively complex. The normal problems encountered in any bankruptcy case were exacerbated in this case by the intercompany relations and certain regulatory issues, including environmental concerns created by the strip mining operations.

The intention of the debtors was to rehabilitate the business and to pay creditors out of future earnings. Creditors, on the other hand, had little confidence in the ability of debtors’ management to profitably operate the business and, instead, preferred a sale. Ultimately, a sale of the debtors’ assets was effected.

The sale involved a certain lump-sum payment together with royalties to be paid from the future utilization of the assets. Once the asset sale closed, the debtors’ operations essentially ceased. However, cash flow into the Debtor companies continued. Accordingly, the need remained for a plan to distribute those proceeds. The committee and the Debtors disagreed on how the funds should be distributed.

Working with the committee, Bernstein and Bernstein, P.C. prepared and filed a Plan which provided for a distribution favoring the trade creditors. The debtors objected. Instead of wasting estate assets in the fight over the plans, a consensual plan, utilizing the committee plan as a base, was negotiated and ultimately approved by all the constituencies in the case.

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