U.S. Bankruptcy Judge Christopher Sontchi approved the proposal today, saying at a hearing in Wilmington, Delaware, that he is “very pleased to confirm the plan.”
“The plan has been overwhelmingly accepted by all classes” of creditors that voted on it, Robin Spigel, a lawyer for the company, told the judge.
The company, based in Lincolnshire, Illinois, was forced to seek protection from creditors after demand for its products fell and its bank cut off access to a credit line, causing a cash crisis, Chief Financial Officer Jon Smith said in court papers. The company listed assets of about $305 million and debt of about $319 million in court documents filed July 13.
RathGibson dropped one restructuring proposal and crafted another to incorporate the sale and a settlement with creditors opposed to the first version. The original plan would have swapped debt for equity in a reorganized company.
The tubemaker was bought by a group consisting of certain lenders and some of its senior noteholders for about $93 million cash, court papers show.
The proceeds will be used to repay the company’s bankruptcy loan of about $83.6 million. The remainder will be used to wind down the company and make payments to noteholders and other unsecured creditors. The wind-down is expected to cost about $1 million, according to Spigel.
Secured Lenders Paid
The company already used some of the bankruptcy loan to fully repay secured lenders, owed about $53.3 million, according to court documents.
Unsecured creditors of RathGibson, predominately noteholders with claims of about $209.5 million, will see a recovery of about 1.2 percent, court papers show. Unsecured creditors of affiliate Greenville Tube Co., which guaranteed the notes, will recoup about 0.2 percent of their claims. Holders of affiliate RGCH Holdings Corp.’s “payment-in-kind” notes, owed about $152.24 million, will also see a recovery of 0.2 percent.
RathGibson was formed in 1999 when Rath Manufacturing Company Holdings Inc. merged with Gibson Tube Co., according to court papers. In 2007, DLJ Merchant Banking Partners bought the company from a unit of Castle Harlan Partners IV LP. DLJ is a unit of Credit Suisse Group AG.
The company’s products are used by companies such as Exxon Mobil Corp, Royal Dutch Shell Plc, DuPont Co. and Monsanto Co.
The case is In re RathGibson Inc., 09-12452, U.S. Bankruptcy Court, District of Delaware (Wilmington).