Bankrupt Ormet Fails To Win OK For $47M In Asset Sales Share us on:TwitterFacebookLinkedInBy Matt Chiappardi Law360, Wilmington (June 30, 2014, 8:51 PM ET) -- A Delaware bankruptcy judge on Monday would not approve Ormet Corp.s $25 million sale of a shuttered aluminum plant or a $22 million transaction for the sites mineral rights, citing concerns about waived pension liability for the former and a rival suitor for the latter. U.S. Bankruptcy Judge Mary F. Walrath said she was “uncomfortable” approving the sale of the defunct aluminum companys plant in Ohio to property developer Niagara Worldwide LLC after a representative from the Steelworkers Pension Trust objected to the transaction, arguing that the deal would wipe out $5.5 million in pension liability owed under the U.S. Employee Retirement Income Security Act of 1974. Arguing for the steelworkers, Neil J. Gregorio of Tucker Arensberg PC told the judge that the pension liability would essentially disappear because neither the buyer nor the estate would be liable anymore because of the way the sale order was tailored. That gave Judge Walrath some pause about approving the transaction, and she directed the parties to submit further briefs about the controlling law governing the pension claims if Ormet wanted to have the sale approved with the liability release intact. “I would be prepared to enter an order today without the pension liability waiver,” the judge said from the bench. “But if you want to have it, then youre going to have to brief it.” Legal briefs on the matter are due to the court by July 11, Judge Walrath said. The judge also refused to approve Ormets separate and private $22 million sale of the mineral rights on the site to Triad Hunter LLC — which already has operations on site under an existing oil and gas lease through an affiliate — but for different reasons. In that instance, a rival suitor called Viper Energy Partners LP came to court saying it was prepared to best the offer Triad was making, and wanted the debtor hold an open auction for the assets. Ormet resisted Vipers overtures, arguing that there was no guarantee Viper would make good on its promise, and the proposed buyer could walk away from the deal if a sale order was not approved by Tuesday. Viper could simply be trying to take a peek under the hood of assets for free and a bid might not materialize, while a near sure source of proceeds in the Triad deal would vanish, attorneys for Ormet said in court. But the landscape changed somewhat when Viper said it would be prepared to make a stalking horse offer for the mineral rights, complete with bid protections. Judge Walrath allowed Viper until noon Tuesday to make its offer after Triad agreed to extend the time until it would walk away until the end of the business day. The unapproved asset sales are yet another hiccup in Ormets long bankruptcy process that began when the company sought court protection in February 2013, citing the falling price of aluminum and rising electricity costs that accounted for one-third of its operating expenses. Ormet had planned to sell itself as a going concern to private equity firm Wayzata Investment Partners LLC, but the conditional $130 million deal — approved by the court in June 2013 and designed to close the following month — fell apart in October after an Ohio regulatory board did not grant Ormets request for cheaper electricity at its facility in the state. Production at the smelter has since ceased and the debtor sold off raw materials in a series of deals that have brought in more than $32.5 million, according to court records. The final purchase price for the aluminum plant deal Ormet presented the court on Monday had actually grown by $10 million since the debtor first had its bid procedures approved earlier in June, with CCP ORMT Acquisition LLC acting as stalking horse with a $15.3 million bid. Niagara wound up winning the auction with an all-cash $25.3 million offer, Ormet said Friday. Founded in 1956, Ormet owned and operated two facilities: an aluminum smelter in Ohio, and a refinery in Louisiana that produced alumina, one of the key raw materials needed for the smelter. Judge Walrath approved a $39.4 million sale of the Louisiana facility as a going concern to Almatis Inc. in November. Ormet is represented by Kim Martin Lewis and Patrick D. Burns of Dinsmore & Shohl LLP and Robert J. Dehney, Daniel B. Butz and Erin R. Fay of Morris Nichols Arsht & Tunnell LLP. The Steelworkers Pension Trust is represented by Ayesha Chacko Bennett of Campbell and Levine LLC, and Neil J. Gregorio, Beverly Weiss Manne and Michael A. Shiner of Tucker Arensberg PC. Viper is represented by Adam G. Landis and Joseph D. Wright Landis Rath & Cobb LLP. The case is In re: Ormet Corp., case number 1:13-bk-10334, in the U.S. Bankruptcy Court for the District of Delaware. Additional reporting by Maria Chutchian, Lance Duroni and Jamie Santo. Editing by Emily Kokoll.
Posted on: Mon, 07 Jul 2014 23:21:13 +0000
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