Friday, July 25, 2014

Forward Motions: Judge to Review Fisker Payment Plan

A Delaware bankruptcy judge next week could approve the creditor-payment plan that would distribute money from the $149.2 million sale of failed hybrid auto maker Fisker Automotive Inc.


On Monday, Judge Kevin Gross has the power to approve the distribution plan for proceeds from the company’s sale to China’s Wanxiang Group. Wanxiang America has said it will revive Fisker’s car-making operations, and the plan offers old company’s trade vendors and other unsecured creditors a chance to share in the profits through a 20% ownership stake in the reorganized company.


Unsecured creditors, which include dealers and some owners of Fisker’s Karma cars, are also supposed to split $20 million of the sale proceeds, according to court papers. The group is owed between $75 million to $250 million.


Hong Kong billionaire Richard Li, who bought the U.S. Department of Energy’s $168 million loan to Fisker prior to the company’s bankruptcy auction, would collect about $100 million under the plan.


In court papers, lawyers who drafted the plan said that it got supporting votes “from every voting class by an overwhelming margin, including approximately 95% of all voting creditors by number and more than 99% by value.”


Founded in 2007 with the goal of launching a luxury plug-in hybrid vehicle, Fisker filed for Chapter 11 protection last year.


On Monday, James River Coal Co.'s mining operations for could finally be auctioned off.


The company’s bankruptcy lawyers are scheduled to hold an auction—an event that has been postponed three times since its original July 8 auction date. The company hasn’t identified potential bidders or a possible sale price in documents filed with the Richmond, Va., bankruptcy court.


James River Coal employed more than 1,000 people and operated several mines in Kentucky, West Virginia and Indiana when it filed for Chapter 11 protection on April 7.


The company turned to bankruptcy after skipping an interest payment on its debt. James River Coal, which ships coal to electricity generators, industrial users and steel companies, entered bankruptcy with more than $800 million in overall debt.


On Tuesday, combat-boot maker Wellco Enterprises Inc. is headed to the auction block with a $6.9 million starting bid for its collection of footwear lines that include Altama Delta Corp., Ro-Search Inc., and Mo-Ka Shoe Corp.


Original Footwear Holding Inc. has agreed to kick off the bidding with a $6.9 million cash offer that would keep the businesses operating, according to court papers filed with the Wilmington, Del., bankruptcy court, where the company filed for Chapter 11 protection on July 8.


Original Footwear sells boots and shoes under the Original SWAT brand name to law-enforcement agencies, emergency medical technicians, Homeland Security personnel, and others, Original Footwear President Kevin Cole said.


Judge Gross is expected to review the winning bid at a court hearing Wednesday.


Wellco filed for Chapter 11 after a cutback in government spending and a series of federal investigations into the sourcing of Wellco boots left the company financially crippled. The sale of the footwear business doesn’t include more than 40,000 pairs of boots that have been quarantined as part of an investigation by the Department of Homeland Security, Defense Department and military investigators into the country of origin for Wellco boots produced between 2008 and 2012, according to court filings.


An earlier investigation into the company involved a transaction between Wellco and “an entity allegedly located in Zimbabwe,” court papers say. The Office of Foreign Assets Control, which enforces trade sanctions, imposed nopenalties at the conclusion of the investigation but Wellco says it is still working to retrieve boots and funds seized during the probe.


-Peg Brickley and Sara Randazzo contributed to this post.


Write to Katy Stech at katy.stech@wsj.com . Follow her on Twitter at @KatyStech .






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