Article from DOW JONES DAILY
By Rachel Feintzeig
Of DOW JONES DAILY BANKRUPTCY REVIEW
WILMINGTON, Del. (Dow Jones)--Manufactured-home builder Champion Enterprises Inc. (CJHBQ) received permission to place its assets on the auction block next month.
Judge Kevin Gross of the U.S. Bankruptcy Court in Wilmington, Del., Monday approved the company's request to proceed with a sale to its lenders and a trio of private-equity funds, subject to higher bids at the March 1 auction.
Centerbridge Partners LP, MAK Capital Fund LP and Sankaty Advisors LLC are offering to pump $50 million in cash into the ailing homebuilder, which attorneys said will face "severe liquidity needs" by the end of next month. In exchange, they will receive 60% of the reorganized company's stock.
Also as part of the deal, the company's secured lenders, led by Credit Suisse (CS), are offering up credit, namely the $80 million bankruptcy loan they provided Champion.
The sale proposal initially came under fire from unsecured creditors, which argued that the swift sale process wasn't in the company's best interests. They said that individual sales of some of Champion's business units would bring more value to creditors and sought to bar the lenders from credit bidding.
But Laura Davis Jones, an attorney for Champion who's with Pachulski Stand Ziehl & Jones, said the company had settled the dispute with the committee by promising them a greater voice during the sale process. The resolution struck a chord with Gross.
"I...take great comfort in the fact that it's a consensual proposal," he said before approving the rules set to govern the auction.
The creditors, the company and lender Credit Suisse also agreed to extend the time the creditors have to conduct a probe of the lender. They now have until Feb. 18 to investigate Credit Suisse's liens and prepare for a possible lawsuit.
Gross is set to consider approving the sale at a hearing March 2, one day after the auction. Champion must close a transaction by March 18 to avoid violating the terms of its bankruptcy loan.
Champion, based in Troy, Mich., sought bankruptcy protection in November, weighed down by $521.3 million in debt. The company said its earnings suffered as the credit crisis hindered its home-buying customers' ability to secure financing.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
Only 60% goes to the lenders.
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