LaSalle Attorney Says Bank Recommends Sirva Extension (Update1)
By Tiffany Kary
April 18 (Bloomberg) -- Sirva Inc., the bankrupt moving company, should be given an extra two weeks of financing to avoid what a federal judge warned was a risk of collapse, said a lawyer for LaSalle Bank, an agent for secured lenders.
U.S. Bankruptcy Judge James Peck in Manhattan said today he is unlikely to approve Sirva's reorganization plan by the April 30 deadline originally imposed by LaSalle. He asked the banks to extend the date to May 14.
Sirva, which does business as Allied Van Lines Inc. and North American Van Lines Inc., is seeking to modify and confirm a plan accepted by creditors before it filed for bankruptcy. Sirva is funding its operations through a securitization program from LaSalle that gives it access to as much as $182.5 million in funding at any one time.
``There must be a plan b because you are not going to put a gun to my head to decide this by April 30,'' the judge said at the hearing, which is scheduled to continue through the evening.
Bojan Guzina, a lawyer for LaSalle, said the bank made a recommendation to the lenders to extend the financing to May 14.
``We don't think it will be a problem and will be resolved early next week,'' the lawyer said.
If the lenders pull the financing, Sirva may be forced to borrow more money under its exit loan.
According to court documents, Sirva has $9 million in equity in the LaSalle securitization, and the bank has a $19 million priority claim from Sirva.
Sirva, based in Westmont, Illinois, listed assets of $924 million and debt of $1.23 billion when it filed for bankruptcy in February. It has said it plans to turn a profit in 2010 based on projections for its value after reorganization.
Unsecured creditors objected to Sirva's plan, saying in court documents filed Feb. 27 that it returns nothing to general unsecured claim holders.
The case is In re DJK Residential LLC, 08-10375, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Tiffany Kary in New York bankruptcy court at tkary@bloomberg.net.
Last Updated: April 18, 2008 15:50 EDT
