Forward Motions: Fisker Automotive Moves Toward Bankruptcy Exit

After reaching an agreement with unsecured creditors, Fisker Automotive Inc. will move forward with its bankruptcy-exit plan on Monday, when it will ask the court to approve the plain-language outline of that plan.

The agreement with creditors, reached earlier this week on the terms of a cash-sharing plan, headed off the threat of a major clash during the hearing. An approval from Judge Kevin Gross of the U.S Bankruptcy Court in Wilmington, Del., would allow Fisker to begin soliciting votes on the plan from creditors ahead of requesting final exit-plan approval.

China’s Wanxiang Group bought the former hybrid auto maker during a bankruptcy auction, leaving $149.2 million in cash and stock to be distributed among Fisker creditors.

Fisker’s creditors have agreed to support the plan, but it still faces a challenge from a former company backer, which says the bankruptcy voting scheme plan could improperly shield former leaders from an ongoing federal court lawsuit over the auto maker’s failure.

Speaking for investors in Fisker’s preferred stock, Atlas Capital Management LP questioned the voting mechanics, warning that creditors might unknowingly sign away their rights to sue former leaders.

Fisker collapsed after a series of operational mishaps, never selling enough luxury hybrid autos to justify the money investors put in.

On Thursday and continuing on Friday, Genco Shipping & Trading Ltd. will begin the first half of its confirmation trial.

Last month, Judge Sean Lane agreed to slow Genco’s Chapter 11 case at the request of the official committee representing equity security holders, a group that says there’s enough value in Genco to offer them a substantial recovery.  A one-day hearing was originally scheduled for June 3.

During the trial, the committee representing equity security holders—composed of Aurelius Capital Partners LP, Och-Ziff Capital Management Group and Mohawk Capital LLC—will call experts and witnesses in an attempt to prove that Genco is solvent and that there is value to compensate equity holders.

Genco will argue the opposite—that the company is insolvent and lenders are accepting less than they’re owed under the current plan, meaning any current recovery for equity holders is a gift.

The second half of the trial is scheduled to resume on June 23 after a weeklong break.

Genco’s prepackaged plan of reorganization would slash $1.2 billion in debt from Genco’s balance sheet by swapping more than $1 billion of senior debt for 81.1% equity in the restructured company. Current equity would be canceled, and holders would receive seven-year warrants for 6% of Genco’s new equity struck at a $1.295 billion valuation, which Genco said are worth $32.9 million.

James River Coal Co. will on Wednesday ask for bankruptcy-court approval to pay up to $2.7 million to executives as bonuses, based on the results of its upcoming July auction.

Details of how the proposed bonuses would be divided among nine top-ranking insiders weren’t disclosed by the coal company, which filed for Chapter 11 bankruptcy protection on April 7 loaded down with more than $800 million in debt.

The plan links pay to auction price ranging from $2.7 million to executives if the auction yields a high price for the assets to $892,000 if the auction produces lower offers, court papers say. James River says the extra pay is key to getting a good result at a July auction.

A second bonus plan could pay out up to $1.4 million to 39 people James River says aren’t executives or other insiders, but people who are necessary to the continued operation of the company as it heads toward either a sale or a restructuring.

A supplier of coal to electric plants and industrial users, James River filed for Chapter 11 bankruptcy protection as mounting losses squeezed its cash supply. The coal industry has been pressed by falling prices for natural gas. The company has eight mining operations, with 16 active mines in Indiana, Kentucky and West Virginia.

-Peg Brickley contributed to this article.

Write to Stephanie Gleason at [email protected]. Folow her on Twitter at @stephgleason.