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 motion (CLICK 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 Materials … 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, Bhattacharya reports.

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 Debtors."

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 diligence process."

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' assets … 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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