The Wall Street Journal-20080130-Judge Backs Dura-s Plan For Chapter 11
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Judge Backs Dura's Plan For Chapter 11
Full Text (323 words)WILMINGTON, Del. -- A bankruptcy judge said he would approve Dura Automotive Systems Inc.'s bid to revamp its Chapter 11 finance package with a new $170 million loan from Cerberus Capital Management.
Judge Kevin Carey said he will sign off on the new loan from Cerberus's Ableco Finance LLC unit, money the struggling car-parts maker needs to pay off existing lenders.
Dura is also revising a $90 million portion of its existing Chapter 11 loans, stretching out the term to buy the company more time to negotiate a Chapter 11 restructuring. Judge Carey said he will approve both the new loan and the revision, after getting assurances from Dura that it's not just prolonging its stay in bankruptcy.
"My concern was that you weren't just buying more time for the sake of buying time, with no hope on the horizon," Judge Carey commented, in an exchange with Durc Savini, financial adviser to the Rochester Hills, Mich. company.
The company's existing finance package comes due tomorrow, and the money from the new financing will go to pay off some of the existing bank debt. Dura said the money will buy time to negotiate a new Chapter 11 plan, one that will replace a plan scrapped in December when the company failed to land $425 million in exit loans.
Mr. Savini, who is with the firm of Miller Buckfire, told Judge Carey that Dura has reined in its expectations. The new plan being negotiated, he said, isn't based on hope of finding more debt financing.
"There is not a market deep enough," Mr. Savini said.
According to Mr. Savini, Dura's new plan will be pinned to the debt at the level the company is carrying now, including the $260 million in bank loans and $225 million in senior notes.
Banks led by Goldman Sachs and Barclays Capital have been funding Dura's bankruptcy restructuring, which began with the filing of a bankruptcy-court petition in October 2006.
