American Roads LLC, operator of the Detroit Windsor Tunnel linking the U.S. with Canada, moved closer to shedding $830 million in debt from swaps and bonds after a judge denied a bondholder group’s bid to join the case.
U.S. Bankruptcy Judge Burton R. Lifland in Manhattan ruled today that an ad-hoc group of investors didn’t have legal standing in the case and therefore couldn’t object to American Roads’ proposed reorganization. Under the plan, holders of $496 million in bonds will receive nothing and ownership of the company will change hands.
Lifland approved the company’s materials explaining the plan to creditors -- a key step in advancing a Chapter 11 case through court, and said he would decide later whether to approve the plan, allowing American Roads to exit court protection.
American Roads, based in Detroit, is owned by the private-equity company Alinda Capital Partners LLC, which negotiated the July 25 bankruptcy petition because American Roads couldn’t meet obligations under the swaps and bonds, which were issued in 2006 as part of a financial restructuring.
The plan calls for $334 million in swap liability to be exchanged for sole ownership of American Roads by Bermuda-based Syncora Guarantee Inc., which backed the swap debt.
The case is In re American Roads LLC, 13-bk-12412, U.S. Bankruptcy Court, Southern District of New York (Manhattan).