--Marissa Capodanno
A vote in the legal battle over $8 billion in collateralized loan obligations and other assets connected with GSC Partners’ Chapter 11 bankruptcy filing has been postponed indefinitely, according to court filings.
An interim hearing June 29 will determine if the Chapter 11 plan GSC’s minority lenders proposed (TS, 5/19) will survive the May 25 development that trustee James Garrity and GSC’s senior lender Black Diamond Capital Management have executed a sale agreement and plan to submit a sale motion before the court.
Should Judge Arthur Gonzalez of the US Bankruptcy Court, Southern District
of New York, allow the motion to go forward, it could be a game changer, officials say. The hearing is designated to settle whether the sale should proceed before, after or in conjunction with the Chapter 11 plan, but it could squash the minority lenders’ proposal entirely.
“The sale would essentially defeat the non-controlling group’s plan,” said an official close to the proceedings. “The train has already begun to leave the trustee’s station, and once it’s out there it’s going to continue,” he added.
A sale hearing is tentatively slated for July 6, with an objection period ending July 1.
GSC filed for bankruptcy protection in August (TS, 9/1/10) and auctioned its CLO contracts in October (TS, 11/5/10). The minority lender group disputed Black Diamond’s winning bid on the portfolio and proposed a new plan April 25. It would install another of GSC’s creditors, Sankaty Advisors, as sub-advisor on the contracts. Garrity and Black Diamond submitted objections to the plan late May (TS, 5/27). The vote would have sought approval of the plan from GSC’s creditors.
Calls to Latham & Watkins, representing Black Diamond, and to Shearman & Sterling, representing the trustee, were not returned. Garrity declined to comment, as did officials at White & Case, representing the minority lender group.