 
Court Approves Sale of Vitro America Assets
June 14, 2011
The U.S. Bankruptcy Court for the Northern District of Texas
Dallas Division on June 13 authorized and approved the sale
of Vitro America's assets to American Glass Enterprises LLC,
an affiliate of private equity firm Sun Capital. The auction
of Vitro America's assets took place on June 1.
Court documents state, "After a robust bidding process,
the Purchaser's bid was selected as the highest and best offer
for the Purchased Assets." The court found adequate notice
of the sale was provided, sale conditions are fair and reasonable
and the highest offer is in the best interest of the debtor.
The approval comes after a bevy of objections in the days following
the auction. On June 6, Oldcastle BuildingEnvelope issued an
objection to the sale, noting, among other things, "It
appears that after payment in full of secured bank debt and
administrative claims, there will only be $9 million left over
for payment of gap claims. According to the Vitro America Schedule
E, there are approximately $19 million in gap claims. If this
number is correct, gap creditors could receive 47 cents on the
dollar."
Bank of America issued its own objection, noting its concern
that "the net cash proceeds of the sale … are insufficient
to provide for Full Payment (as defined in the DIP Loan Agreement)
of the Pre-Petition Obligations."
Vitro America replied in support of the sale, "Most objections
concern the alleged cure amounts for contracts to be assumed
and assigned to Sun and additional information regarding adequate
assurance that Sun can perform obligations under the assigned
contracts. The Debtors have resolved many of these cure objections.
For outstanding objections, the Debtors will retain a reserve
in the amount of the alleged outstanding cure amounts pending
resolution of the objection. Other objections concern how the
Sale proceeds will be distributed to creditors. The Debtors'
proposed sale order does not seek to establish a distribution
scheme for the Sale Proceeds. Other than certain claims of Bank
of America under the Court's Order approving DIP financing agreement
between the Debtors and Bank of America, the Sale proceeds and
the Debtors' other assets will be paid pursuant to the Bankruptcy
Code's priority scheme and under a chapter 11 plan."
The court approval documents authorizes the Debtor to set aside
funds for Bank of America, lawyer fees pension funds. The document
notes: "With respect to the Trustee of the Glazier's Joint
Trust Funds objection, (i) the collective bargaining agreement
is not being rejected or assumed pursuant to this Order and
(ii) Glazier's retains whatever rights it holds to assert claims
against the Debtors." In addition, "With respect to
the International Painters and Allied Trade Industry Pension
Fund or the Northern California Glaziers, Architectural, Metal
and Glass Workers Pension Fund, nothing contained in this Order
or the Agreement shall be interpreted to constitute a waiver
or any relinquishment of the rights of the Pension Funds …
with respect to any agreements with the Debtors under any theory
of law or equity; except further, that nothing in this Order
or the Agreement or as a consequence of the Sale shall impose
liability on the Purchaser as a claimed successor to the Debtors,
limit the transfer of the Purchased Assets free and clear of
any such claims and rights as provided, without limitation…"
In response to an objection issued by former parent company
Vitro SAB, court documents note that the purchased assets do
not include the right to "the name, word, or mark 'VITRO'
or 'VITRO AMERICA' … or any variation thereof … unless
and until the Purchaser obtains a valid license to do so from
Vitro SAB."
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