Representation: Creditors’ Committee
Bankruptcy – Western District of Pennsylvania
Situation: Uniflow Manufacturing Company, Inc., the maker of Koldraft ice machines, filed a Chapter 11 petition in Erie, Pennsylvania on November 20, 1991. The creditors’ committee selected Bernstein and Bernstein, P.C. as the committee’s counsel.
Action: During the initial stages of the case, the committee negotiated and litigated with the debtor and others on issues including: termination of pension plans; rejection of collective bargaining agreements with the union representing employees; disputes with vendors and distributors over trademark infringement; maintaining the company’s 70- member distributor network and treatment of the company’s 20,000 creditors. In addition, the committee considered whether selling the company would be in the best interests of the creditors.
The first offer by the company was 70% without interest (and without security) over a 12-year period. The committee located an interested party who offered creditors cash of 10% or payments of 20% over three years.
Strong negotiating by the committee and its counsel has resulted in a plan proposal by the debtor of 11% cash or 22 1/2% plus interest over three years for creditors.
Since the committee negotiated cash (or secured) guarantees for the payout, the plan was approved by the creditors and the court within 19 months of the bankruptcy filing.