Bankruptcy

When Children and Parents Fight

By John Pottow

Asarco's bankruptcy reorganization is moving along nicely.  (I don't have a link to the pleadings, but here's a background link on the company here -- one of our delightfully nerdy and more internet-savvy followers should feel free to post them.)

What makes this case curious?  Apart from being an asbestos one (requiring approval by the D. Ct.), it's one where two rival, but confirmable plans were submitted, requiring the B. Ct. to make a choice (I guess "recommendation" to D. Ct.).  Here's the kicker: the rival plans are from the debtor (no surprise) and the debtor's corporate parent, Grupo Mexico!  The debtor wanted to sell to a company called Vedanta Resources, but Grupo Mexico wants, basically, to buy back its own sub (there'll be a cash injection).  Apparently the debtor's stakeholders (unions, etc.) wanted the debtor's plan, but the judge said no, the cash-in-hand under the parent's plan is better for creditors and the company itself.  Great case for seeing that bankruptcy judges do get independently involved in business cases and don't just roll over to DIP.

Full post as published by Credit Slips on September 01, 2009 (boomark / email).