PPG Files Objection in Vitro Case
June 6, 2011
PPG Industries Inc. submitted a limited objection today to Vitro America LLC’s motion to approve the sale of its assets to American Glass Enterprises LLC. The objection was filed in U.S. Bankruptcy Court for the Northern District of Texas.
According to court documents, based on the Debtors’ Notice to Parties in Interest of Each Bidder’s (I) List of Assigned Contracts; and (II) List of Assumed Liabilities, “PPG understands that the Successful Bidder may wish to have the Debtors assume and assign certain contracts with PPG in connection with its purchase of the Debtors’ assets. Under the Bankruptcy Code, however, before such an assumption and assignment can occur, the Debtors must, at a minimum: (1) cure all outstanding defaults under the assumed contracts; and (2) provide adequate assurance that the Successful Bidder will perform all of the Debtors’ future obligations under any assigned contracts.”
The documents also say that based on the “limited information that is currently available about the terms of the Successful Bidder’s offer, the Successful Bidder has not yet definitively committed to assume the Debtors’ contracts with PPG since the Successful Bidder has not yet filed its asset purchase agreement with the Debtors.”
According to the documents, American Glass Enterprises has likewise not yet committed to perform Vitro America’s future obligations under its contracts with PPG by agreeing to assume and pay: (1) the substantial amounts owing under PPG’s contracts with the Debtors, but which have not yet come due, and (2) the substantial additional sums that PPG expects the Debtor to incur for purchases made between the time of the sale hearing and the date of any closing between the Debtors and the Successful Bidder.
Finally, the documents allege that the Debtors’ Notice to Contract Counterparties to any Contract that May Be Assumed And Assigned by the Debtors in Connection with the Proposed Sale of Substantially All of the Debtors’ Assets and Associated Proposed Cure Amounts understates the cure amount presently owed to PPG as $2,314,000 and misidentifies several of Vitro America’s contracts with PPG by referring to the wrong date or suggesting that the contracts have already terminated. Court documents also allege that PPG’s records reflect that, as of June 2, 2011, the Debtors are already in default in the amount of $2,403,223.77, “a number that exceeds the Debtor’s proposed cure amount and which can be expected to grow substantially between the date of this pleading and the closing of any sale with the Successful Purchaser since PPG’s records also reflect that the total outstanding receivables [owed] by the Debtors to PPG, including with respect to post-petition purchases that are not yet due, is $5,531,185.05 as of June 2, 2011.
Through its objection, PPG is requesting the court “condition any assumption or assignment of its contracts with the Debtors on: (i) the prompt payment of all sums that may then be due and owing at the time of such assumption or assignment; (ii) the unequivocal assumption by the Successful Purchaser (or any other party to whom the Debtor may seek to assign PPG’s contracts) of the obligation to satisfy all of the Debtors’ outstanding obligations under such contracts, including, without limitation, the obligation to pay for any postpetition purchases of goods that are not yet due; and (iii) granting such other and further relief as this Court may deem just and proper.”
Stay tuned to USGNN.com™ for more news and updates as they are made available.
Need more info and analysis about the issues?
CLICK HERE to subscribe to USGlass magazine.