Trailer Bridge Inc. filed court documents Thursday indicating that the company apparently cleared the last hurdle toward getting its Chapter 11 bankruptcy reorganization plan approved.
In an updated disclosure statement filed in U.S. Bankruptcy Court in Jacksonville, Trailer Bridge said it reached agreement with a group of potential plaintiffs who have threatened to file antitrust lawsuits against the company. Their claims against the company could have held up confirmation of the reorganization plan.
Attorneys for those plaintiffs, who include several Fortune 500 companies, said in a court hearing last month that their claims could be worth hundreds of millions of dollars.
But the new disclosure statement says the company reached an agreement to settle those claims for just $275,000.
Trailer Bridge, which filed for Chapter 11 in November, is hoping to exit bankruptcy quickly and has reached agreement on its reorganization plan with most of its creditors. The group of “antitrust customer creditors” was the one party which had still opposed the plan.
The potential antitrust claims involve an ongoing investigation started in 2008 by the U.S. Department of Justice into companies that provide shipping services to Puerto Rico, including Trailer Bridge.
Trailer Bridge has not faced any charges from the Justice Department and a federal court dismissed the company from a class-action lawsuit. Trailer Bridge still was facing lawsuits from plaintiffs who opted out of the class action.
But instead of filing additional lawsuits, the company’s amended disclosure statement says that those plaintiffs have agreed to settle for a total of $275,000.
“The company vigorously denies any liability,” said Gardner Davis, an attorney at Foley & Lardner in Jacksonville who represents Trailer Bridge in the bankruptcy case.
“However, it would have cost more than $275,000 and delayed the company’s exit from bankruptcy, so the settlement made sense,” he said.
U.S. Bankruptcy Judge Jerry Funk has scheduled a confirmation hearing for March 16 on both the disclosure statement and the reorganization plan. Normally, there would be a separate hearing on the disclosure statement before the plan is sent to creditors for approval.
Trailer Bridge asked for the combined hearing so it can expedite its exit out of Chapter 11.
The reorganization plan calls for Trailer Bridge’s senior noteholders to receive 91 percent of the company’s stock. The remaining 9 percent would be issued to certain unsecured creditors, unless they are paid at least 85 percent of their claims in cash. If that happens, Trailer Bridge’s existing stockholders would be entitled to the 9 percent.
Trailer Bridge originally filed a plan that would have given existing stockholders the option of receiving stock or cash for their shares. But the plan was amended when the unsecured creditors objected.
The agreement to give those creditors stock if their claims are not paid in cash resolved the objection. If the 9 percent is issued to unsecured creditors, the amended plan calls for existing stockholders to get nothing.
356-2466