Court Denies Oldcastle Glass Motion to be Considered
as Bidder for Arch Aluminum's Assets
January 8, 2010
Judge John K. Olson of the U.S. Bankruptcy Court Southern District
of Florida has denied an emergency motion filed by Oldcastle Glass
Inc. on January 7 that would have authorized the company "to
Participate in the Bid Process and Extending Due Diligence and Bid
Deadline" in the sale of the assets of Arch Aluminum &
Glass Co. Inc. (CLICK
HERE to read the emergency motion). Oldcastle Glass had requested
that the court extend the due diligence and bid deadline of January
8, 2010, by at least two business days due to "the delay imposed
by the Debtors' refusal to allow Oldcastle Glass access to the diligence
materials and thus to participate in the bidding process."
A hearing was held late yesterday afternoon at the U.S. Courthouse
in Ft. Lauderdale, Fla., to consider Oldcastle Glass' emergency
HERE to review the court's order).
The Oldcastle Glass motion had been filed "based on the grounds
that Oldcastle Glass has a serious interest in bidding on the assets
of the Debtors' estates, has substantially complied with the bidding
procedures approved by order of this Court and is not being afforded
fair and impartial treatment by the Debtors and their representatives
in the context of the Bid Process for the Debtors' assets."
Arch's defense, meanwhile, quickly filed an objection to the motion
that called it "a thinly veiled ploy by its largest competitor
to de-rail the sale process." (CLICK
HERE to read the objection.)
In the emergency motion, Oldcastle Glass alleged that it has been
denied an opportunity to participate based "on the grounds
that on January 4, 2010, only two minutes after the 5 pm (Eastern)
deadline set forth in the Order, Oldcastle Glass submitted its Participation
Despite complying with the requirements of the
Order, Oldcastle Glass has been denied the opportunity to participate
in the bidding process and has been denied the opportunity to conduct
any due diligence. In fact, the Debtors have made clear that they
do not intend to allow Oldcastle Glass the same access to due diligence
materials as was provided to the current stalking horse bidder and
provided to the other potential bidders."
The motion explained that Oldcastle Glass received an email notice
on December 7, 2009, of the sale, along with "Information on
Proposed Bidding Procedures." On December 23, 2009, the company
received a final notice of sale. On January 4, 2010, at 5:02 p.m.
EST, Daipayan Bhattacharya, vice president of business development
and technology at Oldcastle Glass, emailed the company's participation
materials to Michael R. Dillahunt and Garry Vaynberg of Piper Jaffray
& Co., the debtors' investment bankers, "in substantial
compliance with the Bid Procedures," according to the motion.
That emailed included "(i) a letter indicating Oldcastle Glass's
bona fide interest [in] purchasing all the Purchased Assets from
the Debtors, identifying Oldcastle Glass as the proposed purchaser
and acknowledging receipt of the Bid Procedures and agreeing to
be bound by such Bid Procedures and (ii) an executed confidentiality
agreement." Email receipt was shortly confirmed by Dillahunt,
However, on January 5, Dillahunt sent an e-mail to Bhattacharya
informing him that Oldcastle Glass' submission of its materials
"did not meet the court-approved requirements as set forth
in the Final Sale Notice, including the requirement to submit the
requisite materials by 5 pm Eastern and executing a confidentiality
agreement in form and substance satisfactory to the Debtors."
Dillahunt added that "the Debtors are prepared to allow [Oldcastle
Glass] to move forward in the process if [Oldcastle Glass] submit[s]
the following: (i) a letter from the CEO or CFO of Oldcastle, Inc.
indicating that Oldcastle Glass has received the requisite internal
corporate approvals to execute, by January 8, 2010, a binding purchase
agreement substantially in the same form as the asset purchase agreement
entered into by the stalking horse bidder and consummate the transaction
on the timeline, at the required purchase price, and on the other
terms set forth in the Final Sale Notice; and (ii) the form of confidentiality
agreement previously provided to Oldcastle Glass, without Oldcastle
Glass' proposed changes."
Those changes, according to the motion, included what Oldcastle
Glass referred to as a "minor revision" that states "that
only those representatives of Oldcastle Glass who receive the Evaluation
Material will not solicit any current or former employees of the
According to Oldcastle Glass, the company "merely wished to
avoid the unnecessary burden of executing an unenforceable agreement
that would clearly lead to unnecessary litigation and, as previously
noted, has no relationship to any information Oldcastle Glass might
obtain through the information provided to Oldcastle Glass in the
Oldcastle Glass motioned that it "substantially complied with
the Court's Order and, therefore, should not be required to do anything
further, as requested by Mr. Dillahunt's January 5 email."
The motion further stated, "The citation in Mr. Dillahunt's
January 5 email to the two minutes the Participation Material was
late (it was delivered at 5:02 on January 4) as partial grounds
for declaring Oldcastle Glass out of compliance with the Bid Procedures
reveals just how frivolous the response and objections are."
Arch's objection to the motion responded, "Oldcastle did not
comply with the very basic terms of the Bid Procedures Order in
respect of the submission of the Participation Materials, which
clearly evidences a last minute decision to 'get involved' in the
process." It further states, "Contrary to Oldcastle's
assertion, the Debtors have not imposed any additional bidding requirements
on Oldcastle. Rather, the Debtors have required the same confidentiality
agreement from each bidder and have not agreed to the change that
Oldcastle has demanded for any other bidder."
The emergency motion from Oldcastle Glass also said that Dillahunt
advised that Oldcastle Glass' access to the electronic data room
be restricted, "given the concerns about the bona fides of
your interest, such access [to data room] will recognize that there
is certain sensitive and confidential information that should not
be provided to the Debtors' largest competitor."
Oldcastle Glass pointed to this requirement-that it would not have
the same access to the data room as other potential bidders-as partial
evidence "that the sale process as executed by the Debtors
and its advisors is flawed."
The Arch objection responded, "Oldcastle argues that it has
a serious interest in purchasing the assets of the Debtors. Similarly,
Oldcastle seemingly demands that it be given immediate unfettered
access to the Debtors' data room, which contains numerous documents
and information, certain of which are highly sensitive and confidential.
Notwithstanding Oldcastle's protestations to the contrary and for
the reasons stated below, the Debtors have very serious concerns
about Oldcastle's bona fide interest in purchasing the Debtors'
As to Oldcastle's bona fide interests, the Debtors
have credible information that Oldcastle has engaged in a continuous
effort since the filing of these Bankruptcy Cases to interfere with
the Debtors' vendors and customers by informing them, among other
things, not to do business with the Debtors because the Debtors
are 'going out of business.' Such conduct is clearly prohibited
and actionable under applicable law."
The Arch objection continues, "In addition to the above, each
of which by itself provides clear support for the Debtors' concerns
over Oldcastle's bona fides, Oldcastle now proposes to enter into
an auction for the purchase of the Debtors' assets for a total consideration
of over $62 million at the last minute without performing any due
diligence whatsoever. Moreover, Oldcastle refuses to sign a standard
confidentiality agreement, but instead insists on the right to solicit
the Debtors' employees. Moreover, Oldcastle did not comply with
the very basic terms of the Bid Procedures Order in respect of the
submission of the Participation Materials, which clearly evidences
a last minute decision to 'get involved' in the process. Still further,
Oldcastle is the Debtors' principal competitor in this industry.
Lastly, Oldcastle refuses to provide basic evidence of its commitment
to actually consummate the purchase of the Debtors' assets in accordance
with the Bid Procedures Order."
Stay tuned to USGNN.com for updates as they become available.
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