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HomeMy WebLinkAbout133-01 RESOLUTION• • RESOLUTION NO. 133-01 A RESOLUTION TO AUTHORIZE THE MAYOR TO ACCEPT A POSSIBLE OFFER TO PAY THE CITY A PERCENTAGE OF ITS REMAINING DEBT OWED BY VLASIC, INC. THROUGH THE BANKRUPTCY COURT BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby authorizes the Mayor to accept a cash payment at the "Redemption Percentage" determined by the LLC Manager in the Vlasic, Inc. Bankruptcy Case in complete settlement of the City's allowed claim ($57,756.93) currently owed the City for pre petition water and sewer services provided to Vlasic. PASSED and APPROVED this the 2nd day of October, 2001. By. fJmc %% / erWoodruff, City C rk APPROVED: By: • AN COODY, May • NAME OF FILE: CROSS REFERENCE: • Resolution No. 133-01 • 10/02/01 Resolution No. 133-01 09/17/01 Memo to Mayor Coody & City Council Members from Kit Williams, City Attorney, regarding Vlasic Bankruptcy Case-Distibution of Bankruptcy Estate 10/02/01 Staff Review Form 10/11/01 Memo to Kit Williams, City Attorney, from Heather Woodruff, City Clerk NOTES: FAYETTEVA.LE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Dan Coody, Mayor City Council Members FROM: Kit Williams, City Attorne DATE. September 17, 2001 RE: Vlasic Bankruptcy Case - Distribution of Bankruptcy Estate As you remember, Vlasic filed for Bankruptcy protection in late January or early February this year. Accordingly a check payable to Fayetteville in the amount of $71,677.66 had its payment stopped The City was also owed $55,964 21 for an unbilled balance on the date of bankruptcy filing. In short, Fayetteville was out $127,474.27. Frequently, unsecured creditors like Fayetteville get little if anything when a debtor goes bankrupt. We received some unsolicited offers to pay us 12 or 17 cents on the dollar for our $127,756.93 claim if we would assign our rights to these speculators. I did not accept these offers of $15,330.83 (Argo Partners) and $21,718.68 (Newstart Factors, Inc.), but instead filed a long shot Request For Adequate Assurance with the Bankruptcy Court Happily, the City received a check for $70,000.00 as a result of my Motion and subsequent negotiations with the Trustee. M c. (V • • That reduced our Claim to $57,756.93. I filed a Proof of Claim in that amount and have waited for the preparation of the Joint Plan of Distribution of VF Brands, Inc. and Affiliates which I finally received today. I have also received another solicitation to assign our $57,756.93 claim to Liquidity Solutions, Inc. for $8,663.54 (or 15% of our remaining claim). Attached are copies of page Plan -10 of the First Amended Joint Plan of Distribution and page 11 of the Disclosure Statement and Summary of Plan Distribution. The proposed plan states that the LLC Manager may offer to pay between 20% - 25% of each Allowed Claim. There is a limit on how large a claim the LLC Manager would pay (but smce ours was reduced by $70,000.00 for the initial payment, we should not be effected by that limitation). We must agree in writing to accept this offer and not pursue any further claims against the debtor. I recommend we do NOT object to the Amended Joint Plan and do accept the 20-25% offer on our remaining claim. If the offer were 20%, we would receive $11,551.38. However since we already have received $70,000.00 our actual payments have been $81,551.38 out of the initial debt of $127,756.93. Thus instead of receiving only 20%, we actually have received 63.8% of the full debt owed at the time of Vlasic's bankruptcy filing. I believe the Mayor can decide upon my advice not to object to the Amended Joint Plan. (Any objection would probably be futile anyway.) However, I will prepare a Resolution for your first meeting in October to accept an offer by the LLC Manager to pay 20-25% of our Allowed Claim. • • c. Post -Confirmation Redemption of Certain Claims. Notwithstanding anything contained herein, the VFI LLC M embers' Agreement sh all provide that on or from time to time after the Effective D ate until the date that is ninety days after the Effective Date, the LLC Manager may, in its sole discretion, offer all holders of Class 5 Claims whose Allowed Claims do not exceed an amount to be determined by the LL C Manager (the "Offer Amount"), in its sole discretion, a Cash payment equal to between 20% and 25% (the exact amount within that range to be determined by the LLC Manager, the "Redemption Percentage") of each such holder's Allowed Claim. No distribution pursuant to this offer shall be made to any holder of a Class 5 Cla im who does not accept such offer in writing, and no such holder may accept the offer with respect to any amount less than the entire amount of such holder's Claim. In the event that any such offer is oversubscribed as determined by the LLC Manager in its sole discretion, the LLC Manager may choose to either reduce the Offer Amount and recognize acceptances corresponding to such reduced Offer Amount, or pay the Redemption Percentage of a prorated amount of each such holder's Class 5 Claim while leaving the balance of each such Class 5 Claim intact. 6. Class 6 -Subordinated Claims a. Interests in Class: Class 6 consists of all Subordinated Claims against the Debtors. b. Treatment: Each holder of an allowed Class 6 Subordinated Claim shall not receive or retain any property or interest in property on account of their Class 6 Subordinated Claim. 7. Class 7 - Interests a. Interests in Class: Class 7 consists of all Interests in the Debtors. b. Treatment On the Effective Date, all Class 7 Interests shall be cancclkd and the Interest holders shall not receive or retain any property or interest in property on account of their Class 7 Interests. D. Allowed Claims Notwithstanding any provision herein to the contrary, the VFI LLC shall only make distributions to holders of Allowed Claims. No holder of a Disputed Claim will receive any distribution on account thereof until and to the extent that its Disputed Claim becomes an Allowed Claim. The LLC Manager may, in its sole discretion, withhold distributions otherwise due hereunder to the holder of a C laim until the Claims Objection Deadline, to enable the LLC Manager to File a timely objection thereto. The LLC Manager will establish a reserve for Disputed Claims in accordance with Article V I.B hereof. The presence of a Disputed Claim in any Class w ill not be a cause to delay d istribution to Allowed Claims in that Class or in junior Classes, so long as a reserve is created for the Disputed Claim in accord ance herew ith. Any holder of a Disputed Claim that becomes an Allowed Claim after the Distribution Date will receive its distribution, without Postpetition interest (except as otherwise expressly provided in the Plan), on the next Periodic Distribution Date in accordance with the provisions of this Plan. E. Full Satisfaction The VFI LLC shall make, and each holder of an allowed Claim shall receive, the distributions provided for in the foregoing provisions of this Article III in full satisfaction and discharge of all Claims against the Debtors. F. Postpetition Interest In accordance with section 502(6)(2) of the Bankruptcy Code, the amount of all Claims against the Debtors shall be calculated as of the Petition Date. Except as otherwise explicitly provided herein, no holder of aClaim shall be entitled to or receive Postpetition interest. C. Alternative Treatment Notwithstanding any provision herein to the contrary, any holder of an Allowed Claim may receive, instead of the distribution or treatment to which it is entitled hereunder, any other distribution or treatment to which it and, prior to the Effective Date, the Debtor obligated on its Claim or, on or after the Effective Date, the LLC Manager, may agree in writing. PLAN -10 Classes 2A, 2B, 2C, eta -- Secured Claims Unimpaired • On the later of (i) the Distribution Date, and (ii) the date on which the Secured Claim becomes due under any agreement governing its payment, each holder of an Allowed S ecured C laim will either (a) receive deferred Cash payments totaling at least the allowed amount of such Secured Claim, ofa value, as of the Effective Date, of at least the value of such holder's interest in the respective Debtors interest in such Collateral, (b) receive the subject Collateral upon abandonment by a Debtor, (c) receive payments or liens amounting to the indubitable equivalent of the value of such holder's interest in the respective Debtor's interest in such Collateral, (d) be Reinstated, meaning that the Claim will not be impaired (as defined in section 1124 of the Bankruptcy Code), or (e) receive such other treatment as the respective Debtor and such holder shall agree upon in writing. To the extent that the value of any Collateral securing a Secured Claim exceeds the amount of the Secured Claim, its holder shall receive interest, fees,costs, and charges as may be payable under section 506(b) of the Bankruptcy Code. Class 3 -- Intercompany Claims Impaired • On the Effective Date, Intercompany Claims will be cancelled and holders of Intercompany Claims will not receive any distribution on account of their Claims. Class4 -- Convenience Claims Impaired • Each holder of a General Unsecured Claim that is Allowed in an amount that is less than or equal to the Convenience Cap Amount shall be deemed to have elected to treat such Claim as a Convenience Claim. On the Distribution Date, each holder of an Allowed Convenience Claim will receive Cash equal to 40% of its Allowed Claim. Class 5 -- General Unsecured Claims Impaired • Class 5 consists of Senior Subordinated Note Claims and General Unsecured Claims, other than Convenience Claims and Intercompany Claims. Each holder of an Allowed Class 5 Claim will receive its Pro Rata share of the LLC Membership Interests. • The VFI LLC Members' Agreement will provide that on or fmm time to time after the Effective Date until the date that is ninety days after the Effective Date, the LLC Manager may, in its sole discretion, offer all holders of Class 5 Claims whose Allowed Claims do not exceed an amount to be determined by the LLC Manager (the "Offer Amount"), in its sole discretion, a Cash payment equal to between 20% and 25% (the exact amount within that range to be determined by the LLC Manager, the "Redemption Percentage") of each such holder's Allowed Claim. No distribution pursuant to this offer shall be made to any holder ofa Class 5 Claim who does not accept such offer in writing, and no such holder may accept the offer with respect to any amount less than the entire amount of such holder's Claim. In the event that any such offer is oversubscribed as determined by the LLC Manager in its sole discretion, the LLC Manager may choose to either reduce the Offer Amount and recognize acceptances corresponding to such reduced Offer Amount, or pay the Redemp- tion Percentage ofa prorated amount of each such holder's Class 5 Claim while leaving the balance of each such Class 5 Claim intact. Class 6 -- Subordinated Claims Impaired • A holder ofa Class 6 Subordinated Claim shall not receive or retain any property or interest in property on account of such Class6 Subordinated Claim. Class 7 -- Interests Impaired • All Class 7 Interests shag be cancelled and the Interest holders shall receive or retain any property or interest in property on account of such Class 7 Interests. 2511132.Wih"npw SIA r • • • STAFF REVIEW FORM • _X_ AGENDA REQUEST SI CONTRACT REVIEW R GRANT REVIEW F` FOR: COUNCIL MEETING OF OCTOBER 2, 2001 MAYOR'S APPROVAL FROM: Kit Williams Legal City Attorney Name Division Department ACTION REQUIRED: Approval of A Resolution To Approve An Offer From The LLC Manager In The Vlasic Bankruptcy Case COST TO CITY: Alb e. Cost of this Request Account Number Project Number BUDGET REVIEW: Category/Project Budget Category/Project Name Funds Used to Date Program Name Remaining Balance Fund Budgeted Item Budget Adjustment Attached Budget Coordinator Administrative Services Director CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY: A� c"�luing Man er Date Internal Auditor Date �t� Di(I'7101 City Attorney Date ADA Coordinator Date Purchasing Officer Date STAFF RECOMMENDATION: Division Head Depapfnent Director Date Date C Mayor Date D CROSS REFERENCE New Item: Yes No Previous Ordinance/Resolution No.: • FAYETTEVILLE THE CITY OF FAYETTEVILLE. ARKANSAS DEPARTMENTAL CORRESPONDENCE • To: Kit Williams, City Attorney From: Heather Woodruff, City Clerk Date: October 11, 2001 Attached is a copy of the signed resolution regarding the Vlasic Bankruptcy. The original will be microfilmed and filed with the City Clerk. cc: Nancy Smith, Internal Auditor Mt Cir