A group of unsecured creditors has objected to the next steps in Building Materials Holding Corp.'s reorganization plan under Chapter 11 of the federal bankruptcy code, according to a recent filing in U.S. Bankruptcy Court in Wilmington, Del.
The Sept. 4 filing describes the creditors as "not comprised of sophisticated, financially savvy investors capable of understanding the complex financial transactions in the disclosure statement," referring to BMHC's plan to fully exit bankruptcy protection later this year.
"Rather, a large percentage of the unsecured claims are held by individual creditors, many of them retirees, or small businesses," the document goes on to read.
BMHC, the No. 6 company on the 2009 ProSales 100 with total sales in 2008 of $1.3 billion, filed for Chapter 11 bankruptcy protection from creditors on June 16. In court filings, the Boise, Idaho-based LBM dealer and turnkey provider said it expects to receive exit financing from a revolving credit agreement of $100 million. BMHC management also looks to enter into a long-term credit agreement of $135 million that can be increased to as much as $190 million.
But to the unsecured creditors, "the description of the availability and uses of such funds is so complex and confusing as to be meaningless to the average creditor," the group's objection states.
BMHC's next appearance in bankruptcy court is slated for 3 p.m. ET Friday, Sept. 10, in Wilmington. BMHC has said in filings that it expects to remain in Chapter 11 through the rest of this year.
In a separate Chapter 11 filing by BMHC last month, the company reported that it incurred a $9.4 net loss in July on $66.3 million in sales and its operating loss totaled $5.7 million. Most of the rest of what figured in its net loss stemmed from nearly $3.5 million in professional fees related to its reorganization under Chapter 11.
For this year, the company has forecast a pretax loss of $43 million this year on sales of $748.5 million. If BMHC emerges from Chapter 11 in 2009 it expects to move into the black starting in the second quarter and end this year with 2010.