Belron US Files Limited Objection to Diamond's Motion for $8.2 Million Settlement with Levine
Belron US has filed a limited objection in the bankruptcy case of Diamond Glass, opposing the latter's motion to reach an $8.1 million settlement with former Diamond chairperson Ken Levine.
In Diamond's motion, filed on October 3, the company (now known as DG Liquidation Corp.) details an agreement made with Levine to reduce his claims from approximately $10.6 million to $8.1 million and to create a mechanism to pay all administrative expenses associated with the approval of the motion, "so that the estates receive a benefit, net of the costs associated with this motion, of over $2 million."
According to the motion, if the agreement is allowed by the court, approximately $2.7 million would then be available for distribution to unsecured creditors.
"The Settlement Agreement with Levine is in the best interests of the estates and falls well above the lowest point in the range of reasonableness," writes Diamond. "Therefore, this motion should be approved."
The motion also cites the recent complaint of Plainfield, a Diamond creditor, which objected to the filing of Levine's claim and "[sought] to have Levine's claim be re-characterized as equity" and that it be disallowed (CLICK HERE for related story). Plainfield also alleged that Levine sought to delay Diamond's filing for bankruptcy in the interest of his own estate.
However, Diamond cites the seven factors in determining whether a debt should be re-characterized as equity (the name given to the debt, the intent of the parties, the presence or absence of a fixed maturity date, the right to enforce payment of principal and interest, the presence or absence of voting rights, the status of the contribution in relation to regular corporate contributors and the certainty of payment in the event of the corporation's insolvency or liquidation), and writes, "It is doubtful that Plainfield will be able to satisfy its burden of proof on these issues."
Diamond also disputes the allegations that Levine "acted on [a] motive to the detriment of the creditors."
In the Belron objection, the company writes as part of the objection overview that it "believed that Kenneth Levine, the Debtors' former president and chief executive officer, had taken in appropriate actions in seeking to establish a competing business."
The objection goes on to say that Belron US as reached an agreement with Levine "regarding the terms to which the parties will settle their issues, including the terms on which Levine may operate a competing business, among other things."
"Belron is concerned that, if the parties do not reach agreement on the further documentation contemplated by the mediation document, Levine may claim that the Settlement Agreement's release provision precludes claims against him by Belron or the Debtors," reads the limited objection. "Belron has requested that the Settlement Agreement be modified to clarify that the releases do not apply to Belron's invocation of Section 7.2(b) of the Belron [Asset Purchase Agreement], but the Debtors have been unwilling to provide such clarification."
Belron is requesting that the court modify the Settlement Agreement as requested or deny the motion to approve the Settlement Document.
CLICK HERE for full text of Diamond motion.
CLICK HERE for full text of Settlement agreement.
CLICK HERE for full text of Belron US objection.
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