In Re White Motor Credit Corp.

50 B.R. 885, 1985 Bankr. LEXIS 5884
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedJune 24, 1985
Docket19-60081
StatusPublished
Cited by29 cases

This text of 50 B.R. 885 (In Re White Motor Credit Corp.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re White Motor Credit Corp., 50 B.R. 885, 1985 Bankr. LEXIS 5884 (Ohio 1985).

Opinion

*886 MEMORANDUM AND ORDER

WILLIAM J. O’NEILL, Bankruptcy Judge.

On September 4, 1980, White Motor Corporation and its wholly-owned subsidiaries, White Farm Equipment Company, The White Motor Credit Corporation, Gemini Manufacturing Co., White Motor Corporation of Canada Limited and The White Motor Credit Corporation of Canada Limited, filed voluntary petitions under Chapter 11 of the Bankruptcy Code.

White Motor Corporation (WMC), formerly one of the world’s leading manufacturers of heavy duty trucks and farm equipment, is one of the largest Chapter 11 reorganizations ever filed. In the last fiscal year prior to commencement of these proceedings, WMC and affiliates operated internationally, had consolidated sales of 1.2 billion dollars and employed approximately 10,000 hourly and salaried workers. More than 40,000 entities asserted claims or interests in this vast reorganization. The administration of this industrial giant presented innumerable diverse, complex business and legal issues requiring expert services of scores of professionals from the highest echelon in their respective specialized fields. Currently at issue are final applications of the professionals for allowance of compensation and reimbursement of expenses in WMC, Gemini Manufacturing Co. (Gemini) and The White Motor Credit Corporation (WMCC). These 48 applicants request in excess of 24 million dollars. Due to adjustments and amendments made at the evidentiary hearings, however, the figures requested herein may differ from those appearing in the written applications.

The deadline for filing final applications was January 17, 1984. By order dated November 21, 1984, supplemental applications were to be filed by December 7, 1984 and any objections thereto by January 11, 1985. The Disposition Assets Trustee (DAT), as successor to WMC, filed a summary and statement of position on all applications. Objections were filed to some of the interim fee applications by the Securities and Exchange Commission (SEC), the Bank Creditors and the Official Creditors’ Committees of WMC and WMCC. The Pension Benefit Guaranty Corporation (PBGC) also filed an objection which was subsequently withdrawn.

By prior orders, interim fee applications of professionals employed under Sections 327, 1103 and 1104 of the Bankruptcy Code were paid 70% of the requested fees subject to the final evidentiary hearings on January 22nd through the 31st, 1985. By order of March 27, 1984, 85% of interim compensation requests was paid to Levin and Weintraub and Crames; Squire, Sanders and Dempsey and Hahn, Loeser, Freed-heim, Dean and Wellman. Pursuant to the May 28, 1981 order, all professionals were paid 100% of their expenses on a monthly basis.

HISTORY

WMC was incorporated in Ohio in 1915 as successor to the business of White Com *887 pany organized in 1905. At commencement of these proceedings, WMC was principally engaged in the manufacture and sale of heavy duty trucks and farm equipment. Review of the entire history is unnecessary except to state that serious financial difficulties encountered in the 1970’s, intensified in 1979 and 1980 and ultimately precipitated filing of the reorganization proceedings. Reference to some of the salient events, issues and outstanding accomplishments, however, which produced the highly successful results in reorganization is important and, indeed, one of the vital concerns in determining allowance of reasonable compensation.

One of the primary interests of WMC in these proceedings was disposing of various corporate businesses and assets. In the relatively short span of three years under extremely difficult circumstances, WMC was substantially liquidated to the ultimate benefit of all creditors. Major dispositions included the sale of White Farm Equipment Company (WFE) to White Farm U.S.A., Inc., a subsidiary of TIC Investment Corporation. This sale avoided 250 million dollars in claims that would have forced liquidation of the farm business. The WMC truck transaction with A.B. Volvo’s subsidiary, Volvo White Truck Corporation, for approximately 70 million dollars was monumental. Disposition of the Canadian farm and truck businesses and sale of WMC stock were invaluable and highly productive. To the benefit of creditors, sales of subsidiaries and real estate holdings were also effected. All sales were negotiated at terms most favorable to the debtor thereby relieving the estate of sizeable liability. Further, a number of these transactions served as precedent under the then relatively new Bankruptcy Code. For example, sale of the truck business to A.B. Volvo of substantially all the operating assets without benefit of a formal disclosure statement and plan was a landmark decision.

Although the following data will subsequently be discussed, a recap at this juncture will serve to emphasize the import of these sales. The reorganization proceedings involved 7 major corporate dispositions, 5 of which were accomplished within the first year of the filing. These transactions were effected during a period of deep depression in the heavy truck and farm machinery businesses. They were accomplished under rigid time schedules which required extraordinary effort to satisfy unreasonable deadlines. The transactions still produced recoveries far in excess of estimated liquidation values. These valiant efforts accounted for thousands of claimants receiving substantial distributions. Gemini creditors were paid 70% of allowed claims, those in WMCC received consideration equal to 100% while White Motor Canada creditors were paid 85%. In WMC in excess of 125 million dollars (47.4%) has been distributed to date with an additional 5% contemplated. Considering the 10% to 20% initial projections by some creditors, these results are indeed spectacular.

Another area of considerable importance was resolution of outstanding product liability claims. WMC was named defendant in numerous lawsuits alleging damages caused by defects in products manufactured or distributed. A Special Master was appointed to assist in disposing of these claims totaling hundreds of millions of dollars. A product liability claim program was developed and implemented, and though ultimately nullified it was, nonetheless, innovative and provided a mechanism for the successful settlement of a vast number of claims.

Employee related claims also posed an enormous problem of considerable significance. When the petition was filed, WMC employed a work force of thousands of union and salaried personnel. In addition, there were thousands of retired employees entitled to benefits. Sale of the truck operations and closing the East 79th Street facility in Cleveland resulted in rejection of collective bargaining agreements and additional employee claims.

Retiree claims raised myriad legal, actuarial and practical problems which impeded their resolution. Benefits were maintained for retirees after the filing date while at *888 tempts were made to quantify the extent and priority of retiree claims for health and related benefits. These claims were negotiated and ultimately settled under Class 6 of the plan which provided an innovative, responsive treatment of claims inadequately dealt with by a cash payment. The claims were treated as an aggregate allowed claim of 60 million dollars on which payment was made to a Retiree Trust to provide continuing benefits to claimants.

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Bluebook (online)
50 B.R. 885, 1985 Bankr. LEXIS 5884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-white-motor-credit-corp-ohnb-1985.