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Teamsters Union Closely Monitors Possible Sale of Allied
A hearing is scheduled Friday, May 31 in U.S. Bankruptcy Court which could set in motion a plan by two of Allied Systems Holdings’ lenders—Black Diamond and Spectrum—to possibly purchase Allied.
The Teamsters Union has assembled a team of legal, financial, and bankruptcy experts that have been actively monitoring the bankruptcy to best protect our Allied carhaul members.
“We will do whatever it takes to make sure the current collective bargaining agreement is honored and we will fight to make sure our members’ livelihoods are protected,” said Roy Gross, Co-Director of the Teamsters Carhaul Division. “As this case moves forward, our top priorities are protecting our members’ jobs and hard-fought benefits.”
The Teamsters Union is carefully reviewing the recent motions documents that have been filed in this bankruptcy case. Those motions filed by Allied with the support of Black Diamond/Spectrum propose an auction process to sell Allied and financing to fund the company’s stay in bankruptcy until the sales process is complete. In addition to the proposed auction, Black Diamond/Spectrum submitted terms of an initial bid that set the amount that any other potential bidders would need to surpass.
Particularly troubling and a notion we reject outright is the fact that the Black Diamond/Spectrum bid does NOT offer to assume the current collective bargaining agreement or commit to participate in the pension funds. Specifically, the motion filed in the case states that as a condition of the sale Black Diamond must negotiate a new collective bargaining agreement (CBA) with the Teamsters. There are no further details about Black Diamond or Spectrum’s intent with regard to a new CBA. Neither Allied or Black Diamond/Spectrum had the professional courtesy to review the bid to the Teamsters prior to filing this motion.
Allied CEO Mark Gendregske makes no mention of any proposed contract modifications in the rosy statement he issued to employees dated May 17. Gendregske needs to revisit and honor his statement when Allied filed the voluntary bankruptcy filing in June of 2012 where he said “There will be no reduction in your pay and comprehensive benefits package.”
There will be a lot of activity in this case now that these motions have been filed. For the past year, this case has primarily been a battle between two groups of sets of lenders – Yucaipa and Black Diamond/Spectrum. With an initial ruling in Black Diamond/Spectrum’s favor by the New York State Court, they have assumed the role of majority or requisite lender. These two motions filed on Friday, May 17th could lead to Black Diamond and Spectrum taking control of the case.
Once the hearing takes place, the Teamsters will provide another update. For the latest information, visit www.teamster.org and click on the “Allied Systems Holdings Bankruptcy” button under “Top Issues.”
Bid Procedures Motion: Spells out the terms, procedures, and timelines for a sale of the company during the bankruptcy case. The sale process would be set up like an auction and the motion proposes that the opening bid (“stalking horse bid”) be a bid submitted by Black Diamond and Spectrum. Pursuant to that proposed stalking horse bid, a sale would happen pursuant to an asset purchase agreement (“APA”) where the lenders (Black Diamond and Spectrum) largely use their existing secured loans to Allied as a credit to purchase the company (this type of bid is also known as a “credit bid”). Other bidders would have to submit terms superior to the Black Diamond/Spectrum bid to be able to purchase Allied. The proposed bid procedures set a bid date of no later than August 8, 2013.
Replacement DIP Motion: Debtor-in-Possession (“DIP”) financing funds companies while they are in bankruptcy. The current DIP is provided to Allied by Yucaipa and is set to expire in June. This motion proposes to replace the Yucaipa provided DIP with a larger amount of DIP financing provided by Black Diamond/Spectrum. The proposed DIP motion would give Allied an additional $11.5 million to operate this summer during the slow season and while the auction takes place.