(Bloomberg) -- Aerospace supplier Incora will know by Christmas whether it can exit bankruptcy after years of acrimony among its top creditors, a judge said in setting a new reorganization deadline for the company.
The company’s top creditors have just days left to decide among themselves how Incora will be run should US Bankruptcy Judge Marvin Isgur decide to approve the company’s reorganization plan in the coming weeks. Incora has repeatedly delayed asking Isgur to rule on the proposal in order to give creditors a chance to work out their differences after months of confidential mediation sessions.
On Thursday, Incora said the two sides were still split over key “governance” issues, which means the creditors cannot agree on how they will run the company should Isgur approve a reorganization proposal to hand ownership to debt holders. In reaction, Isgur set Dec. 16 as the new date for a hearing on the proposal.
“We are moving ahead and we will get this case done before Christmas,” Isgur said.
An infamous financing package from 2022 has pitted lenders, including Silver Point Capital and bond giant Pacific Investment Management Co., against disgruntled bondholders including JPMorgan Chase & Co., BlackRock Inc. and hedge fund King Street Capital Management.
In July, Isgur ruled that Silver Point and Pimco wrongly stripped collateral rights from other investors as part of the $250 million rescue plan for Incora, which is backed by private equity firm Platinum Equity LLC. The ruling was a partial victory for JPMorgan, BlackRock and King Street.
Since then the two sides have been unable to end their fighting. Isgur’s ruling is expected to be appealed, a process that could take years to be resolved. In the meantime, Incora has been trying to get the creditors to agree to let the company exit bankruptcy while the debt dispute continues winding its way through the federal court system.
In the next few days, all sides will try, again, to resolve the governance dispute, which is the last major issue blocking an agreement to end the bankruptcy, Incora attorney Andrew Leblanc told Isgur.
Under the original reorganization plan, Incora would cut about $2 billion in debt and be worth about $1.65 billion, according to court records. The new plan keeps the same creditor payouts, but does not yet include a deal on how Incora will be governed under its corporate charter, Leblanc said.
Lawyers for the two creditor factions told Isgur that they are working to resolve their differences in time for the Dec. 16 court hearing.
If there is no deal, Isgur could reject the plan, throwing Incora’s reorganization effort into chaos. Or Isgur could approve the proposal by imposing governance rules favored by one side or the other.
The case is Wesco Aircraft Holdings Inc., 23-90611, US Bankruptcy Court for the Southern District of Texas (Houston).
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