Court Ruling Expected Soon to Clarify How Allied Bankruptcy Will Proceed
A U.S. Bankruptcy Court judge will issue a ruling soon which will clarify how the Allied Systems Holding bankruptcy case will proceed.
Allied’s second venture into bankruptcy is largely about who controls the company. Yucaipa asserts it is the “requisite” or “majority lender” in Allied’s capital structure. This is important because the majority lender has strong controls over a company, including in a bankruptcy proceeding.
Two hedge funds, Black Diamond and Spectrum Investment Partners, are challenging Yucaipa’s assertion to having majority lender status. In other words, the hedge funds want more control or say as the case proceeds.
On Tuesday, November 13, the Bankruptcy Court heard arguments to decide whether the Bankruptcy Court or New York state court will decide majority lender issues.
After hearing several hours of oral argument on November 13, the judge indicated he will read his decision into the record at a status conference in mid-December. However, a similar hearing in state court over the majority lender issue is scheduled on Monday, November 19.
The Teamsters Union will update Allied members on any developments once more information is known.