U.S. Bankruptcy Court Rejects Lenders’ Plans to Buy Allied

A U.S. Bankruptcy Court Judge has rejected the motions by Allied Systems Holdings’ to authorize two of its lenders—Black Diamond and Spectrum—to finance and purchase Allied.

A hearing took place on Friday, May 31 in the Bankruptcy Court, District of Delaware, where Judge Christopher S. Sontchi stated that the motions filed by Allied were “dead on arrival.” 

With the proposals “dead on arrival” Judge Sontchi encouraged the parties to meet to find a path forward for Allied that is more balanced and appropriate. The next step is another court-ordered mediation scheduled for later this week.

The Teamsters Union and the Unsecured Creditors Committee (“UCC”), (of which the Teamsters are a member), both objected to the financing and sales motions submitted by Allied for a variety of reasons not the least of which was the sales bid from Black Diamond/Spectrum bid does NOT offer to assume the current collective bargaining agreement or commit to participate in the pension funds. 

See committee’s objection to the DIP.

See Teamsters’ objection to the DIP.

The court agreed with the substance of the UCC’s and the union’s objections. In rejecting the motions Sontchi further added that Allied’s lenders were “not acting in a responsible way.”

“As this bankruptcy case moves forward, we, along with our team of bankruptcy experts, will continue to watch developments closely, said Roy Gross, Co-Director of the Teamsters Carhaul Division. “Our top priorities are protecting our members’ jobs and hard-fought benefits.”

For the latest information, visit www.teamster.org and click on the “Allied Systems Holdings Bankruptcy” button under “Top Issues.”