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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