Allen Park, Mich.-based Meridian Automotive Systems Inc. said June 27 it has reached agreements with all of its major creditors groups and plans to file an amended reorganization plan soon in U.S. Bankruptcy Court in Delaware.
``We are extremely pleased to have achieved a consensual plan supported by our major creditor constituencies,'' said Richard Newsted, Meridian's president and chief executive officer, in a statement. ``This will enable us to emerge from Chapter 11 in a quick, uncontested and orderly manner.''
The auto parts supplier filed its original plan of reorganization March 30, but did not have the support of all of its creditors.
Meridian did not say when it will exit bankruptcy, and a company spokesman did not return phone calls.
David Neier, a lawyer representing Meridian's unsecured creditors, said Meridian could emerge by August or September. To emerge, Meridian's plan must be voted on by creditors and approved by a bankruptcy judge.
``Now there has been a settlement with every important creditor constituency out there in the case,'' Neier said. ``This case needed to get out of bankruptcy and go forward. This is a good company.''
Meridian filed for Chapter 11 bankruptcy protection April 26, 2005, after suffering from rapid price increases of steel and plastic, pricing pressures from its customers and customers' declining market share.
Since then, Meridian has revamped its management team, closed several plants, reduced its employee count and addressed pricing issues with its customers, according to a disclosure statement it filed with the court in May.
Meridian also moved its headquarters from Dearborn to Allen Park in March, the statement said.
Meridian plans to exit Chapter 11 bankruptcy by restructuring its balance sheet, paying some creditors in full and issuing new stock to satisfy the debts claimed by other creditors.
Cash to fund payments to creditors could come from the sale of Meridian's interiors division. Investment banker Lazard Freres & Co. LLC has been marketing Meridian's interior division, which includes two plants in Grand Rapids, and plants in Brantford, Ontario, and Muzquiz, Mexico.
However, Neier said a sale of the interiors division is not crucial for the reorganization plan to work.
Meridian also expects to gain $18.3 million from the sale of its Fowlerville plant to Chicago-based First Industrial Acquisitions Inc., according to the reorganization plan, but then will lease the plant and continue to operate it.
Meridian's first reorganization plan was proposed by three investment funds that hold portions of Meridian's secured debt and will own part of the reorganized company. They are Camulos Master Fund LP, DK Acquisition Partners LP and Stanfield Capital Partners LLC.
Meridian supplies front and rear modules and exterior plastic lighting to automobile and truck makers. Meridian reported $1 billion in 2004 sales and employed 5,400 when it filed for bankruptcy.