A federal judge today essentially split the difference between requests by Building Materials Holding Corp. (BMHC) and the LBM giant's creditors by delaying until Oct. 22 a hearing on key parts of BMHC's plan to reorganize and emerge from Chapter 11 bankruptcy law protection.
BMHC wanted U.S. Bankruptcy Judge Kevin Carey to act today on the Boise, Idaho-based dealer's twice-amended disclosure statement, which lays out current conditions and future plans at America's No. 6 building materials operation. But creditors had filed a prickly worded request to Judge Kevin Carey to delay until at least Nov. 19, saying BMHC was attempting to "ram through" the court a plan that the creditors hadn't had a chance to analyze. (Story.)
Carey declined to sway either way, issuing an order setting a 2 p.m. ET Oct. 22 hearing in Wilmington, Del., on the disclosure statement.
BMHC, the No. 6 dealer on this year's ProSales 100 with total sales in 2008 of $1.3 billion, filed for Chapter 11 protection in Wilmington, Del., on June 16.
On Oct. 1, BMHC announced that a group of lenders led by Wells Fargo has committed at least $83.5 million and possibly $103.5 million in financing. At the same time, it filed an amended reorganization plan that provides for BMHC's secured lenders to convert debt into equity, becoming majority owners of the company upon emergence. Current shares will be extinguished and thus current shareholders have lost all their investments.
BMHC anticipates that, under its reorganization plan, the prepetition lenders (principally Wells Fargo) would recover 72.4% of what they put into BMHC, while general unsecured claimants would get back only 13.1%--and that would occur only if they approved the reorganization agreement; otherwise, they could get nothing.
BMHC had hoped to emerge from Chapter 11 bankruptcy protection by year-end. This is now looking increasingly unlikely.
In a related development this week, the press began reporting that a group of laborers that had sued BMHC over overtime and wage payments announced BMHC will pay nearly $475,000 to the group. A $244,000 settlement will be shared among 85 workers who accused the firm and several subsidiaries of withholding workers' overtime and other wage payments in a lawsuit filed last year, lawyer Eve Cervantez told the AP. Another $231,000 would also go toward legal fees, she said. (Here is the court document for that settlement.) Eleven additional workers opted out of the settlement and still have claims pending in bankruptcy court.
According to the AP story, the lawsuit had accused the company and its subsidiaries, including SelectBuild, of violating state and federal law by not paying laborers higher rates for overtime work and by withholding payment for time spent in transit between job sites.