Exhibit 99.2
THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT
BEEN APPROVED BY THE BANKRUPTCY COURT. THIS IS NOT A SOLICITATION OF
ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCE OR REJECTION MAY NOT
BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE
BANKRUPTCY COURT. THE INFORMATION IN THE DISCLOSURE STATEMENT IS
SUBJECT TO CHANGE. THIS DISCLOSURE STATEMENT IS NOT AN OFFER TO SELL
ANY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY ANY SECURITIES.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
|
|
|
|
|
|
|
|
|
|
) |
|
|
In re: |
|
) |
|
Chapter 11 |
|
|
) |
|
|
VISTEON
CORPORATION, et al.,1 |
|
) |
|
Case No. 09-11786 (CSS) |
|
|
) |
|
|
|
|
) |
|
Jointly Administered |
Debtors. |
|
) |
|
|
|
|
) |
|
|
|
|
|
DEBTORS FOURTH AMENDED DISCLOSURE STATEMENT FOR THE FOURTH
AMENDED JOINT PLAN OF REORGANIZATION OF VISTEON CORPORATION
AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE UNITED
STATES BANKRUPTCY CODE
|
|
|
PACHULSKI STANG ZIEHL & JONES LLP
|
|
KIRKLAND & ELLIS LLP |
Laura Davis Jones (DE Bar No. 2436)
|
|
James H. M. Sprayregen, P.C. (IL 6190206) |
James E. ONeill (DE Bar No. 4042)
|
|
James J. Mazza, Jr. (IL 6275474) |
Timothy P. Cairns (DE Bar No. 4228)
|
|
Sienna R. Singer (IL 6287154) |
919 North Market Street, 17th Floor
|
|
300 North LaSalle |
Wilmington, Delaware 19899-8705
|
|
Chicago, Illinois 60654 |
Telephone: (302) 652-4100
|
|
Telephone: (312) 862-2000 |
|
|
|
|
|
Marc Kieselstein, P.C. (IL 6199255) |
|
|
Brian S. Lennon (NY 4215083) |
|
|
601 Lexington Avenue |
|
|
New York, New York 10022-4611 |
|
|
Telephone: (212) 446-4800 |
Attorneys for the Debtors and Debtors in Possession |
|
|
Dated: June 14, 2010 |
|
|
|
|
|
1 |
|
The Debtors in these chapter 11 cases, along with the last
four digits of each Debtors federal tax identification number, are: Visteon
Corporation (9512); ARS, Inc. (3590); Fairlane Holdings, Inc. (8091);
GCM/Visteon Automotive Leasing Systems, LLC (4060); GCM/Visteon Automotive
Systems, LLC (7103); Infinitive Speech Systems Corp. (7099); MIG-Visteon
Automotive Systems, LLC (5828); SunGlas, LLC (0711); The Visteon Fund (6029);
Tyler Road Investments, LLC (9284); VC Aviation Services, LLC (2712); VC
Regional Assembly & Manufacturing, LLC (3058); Visteon AC Holdings Corp.
(9371); Visteon Asia Holdings, Inc. (0050); Visteon Automotive Holdings, LLC
(8898); Visteon Caribbean, Inc. (7397); Visteon Climate Control Systems Limited
(1946); Visteon Domestic Holdings, LLC (5664); Visteon Electronics Corporation
(9060); Visteon European Holdings Corporation (5152); Visteon Financial
Corporation (9834); Visteon Global Technologies, Inc. (9322); Visteon Global
Treasury, Inc. (5591); Visteon Holdings, LLC (8897); Visteon International
Business Development, Inc. (1875); Visteon International Holdings, Inc. (4928);
Visteon LA Holdings Corp. (9369); Visteon Remanufacturing Incorporated (3237);
Visteon Systems, LLC (1903); Visteon Technologies, LLC (5291). The location of
the Debtors corporate headquarters and the service address for all the Debtors
is: One Village Center Drive, Van Buren Township, Michigan 48111. |
TABLE OF CONTENTS
|
|
|
|
|
ARTICLE I. INTRODUCTION |
|
|
4 |
|
A. Rules of Interpretation |
|
|
4 |
|
|
|
|
|
|
ARTICLE II. OVERVIEW OF THE PLAN |
|
|
5 |
|
A. General Structure of the Plan |
|
|
5 |
|
B. Treatment of Claims and Interests |
|
|
9 |
|
C. Treatment of Claims and Interests Under the Plan |
|
|
10 |
|
D. Liquidation and Valuation Analyses |
|
|
16 |
|
E. Certain Factors to Be Considered Prior to Voting |
|
|
16 |
|
|
|
|
|
|
ARTICLE III. VOTING AND RIGHTS OFFERING SUBSCRIPTION PROCEDURES |
|
|
17 |
|
A. Vote Required for Acceptance by a Class |
|
|
18 |
|
B. Classes Not Entitled to Vote |
|
|
18 |
|
C. Solicitation Procedures |
|
|
19 |
|
D. Voting Procedures |
|
|
20 |
|
E. Rights Offering Subscription Procedures |
|
|
21 |
|
F. Confirmation Hearing |
|
|
22 |
|
G. Confirmation and Consummation of the Plan |
|
|
22 |
|
|
|
|
|
|
ARTICLE IV. GENERAL INFORMATION |
|
|
22 |
|
A. Overview of the Debtors History and Industry |
|
|
22 |
|
B. Visteons Products and Services |
|
|
23 |
|
C. Visteons Customers |
|
|
25 |
|
D. Visteons Corporate Structure |
|
|
26 |
|
E. Visteons Competition |
|
|
27 |
|
F. Executive Officers of the Debtors |
|
|
27 |
|
G. Employees |
|
|
27 |
|
H. Benefit Plans |
|
|
28 |
|
I. The Debtors Prepetition Capital Structure |
|
|
32 |
|
|
|
|
|
|
ARTICLE V. THE CHAPTER 11 CASES |
|
|
36 |
|
A. Events Leading to the Commencement of the Chapter 11 Cases |
|
|
36 |
|
B. Stabilization of Operations |
|
|
37 |
|
C. Appointment of Committees |
|
|
41 |
|
D. Operational Restructuring Activity, Liquidity Enhancements,
and Business Plan Development and Implementation |
|
|
43 |
|
E. Postpetition Financing |
|
|
48 |
|
F. Addressing Legacy Liabilities |
|
|
50 |
|
G. Analyzing Executory Contracts and Unexpired Leases |
|
|
51 |
|
H. Employee Incentive, Severance, and Retention Programs |
|
|
52 |
|
I. Analysis and Resolution of Claims |
|
|
54 |
|
J. Negotiations Relating to the Development of the Plan |
|
|
61 |
|
K. Alternative Plan Proposals |
|
|
64 |
|
|
|
|
|
|
ARTICLE VI. PLAN SUMMARY |
|
|
65 |
|
A. Overview of Chapter 11 |
|
|
65 |
|
B. Overall Structure of the Plan |
|
|
67 |
|
C. Administrative and Priority Claims |
|
|
70 |
|
D. Sub Plans |
|
|
72 |
|
E. Classification of Claims and Interests |
|
|
72 |
|
F. Treatment of Classes of Claims and Interests |
|
|
73 |
|
G. Special Provision Governing Unimpaired Claims |
|
|
80 |
|
H. Provisions for Implementation of the Plan |
|
|
81 |
|
I. Rights Offering |
|
|
88 |
|
J. Entitlement to Funding of Cash Amount Recoveries |
|
|
91 |
|
K. Treatment of Executory Contracts and Unexpired Leases |
|
|
92 |
|
L. Procedures for Resolving Disputed Claims and Interests |
|
|
96 |
|
M. Provisions Governing Distributions |
|
|
98 |
|
N. Effect of Confirmation of the Plan |
|
|
106 |
|
O. Conditions Precedent to Consummation of the Plan |
|
|
110 |
|
P. Retention of Jurisdiction |
|
|
111 |
|
Q. Miscellaneous Provisions |
|
|
114 |
|
|
|
|
|
|
ARTICLE VII. SECURITIES LAW MATTERS |
|
|
119 |
|
A. Securities Law Matters Under the Rights Offering Sub Plan |
|
|
119 |
|
B. Securities Law Matters Under the Claims Conversion Sub Plan |
|
|
119 |
|
C. Section 1145 of the Bankruptcy Code |
|
|
120 |
|
D. Section 4(2) of the Securities Act/Regulation D |
|
|
121 |
|
E. Resales of New Common Stock/Rule 144 and Rule 144A |
|
|
121 |
|
|
|
|
|
|
ARTICLE VIII. STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN |
|
|
123 |
|
A. The Confirmation Hearing |
|
|
123 |
|
B. Confirmation Standards |
|
|
123 |
|
C. Liquidation Analyses |
|
|
125 |
|
D. Valuation Analysis |
|
|
125 |
|
E. Financial Feasibility |
|
|
133 |
|
F. Acceptance by Impaired Classes |
|
|
133 |
|
G. Confirmation Without Acceptance By All Impaired Classes |
|
|
134 |
|
|
|
|
|
|
ARTICLE IX. PLAN-RELATED RISK FACTORS AND ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF
THE PLAN |
|
|
135 |
|
A. General |
|
|
135 |
|
B. Certain Bankruptcy Law Considerations |
|
|
135 |
|
C. Risk Factors That May Affect the Value of the Securities to Be Issued
Under the Plan |
|
|
138 |
|
D. Risk Factors That Could Negatively Impact the Debtors Business |
|
|
140 |
|
E. Risks Associated with Forward Looking Statements |
|
|
149 |
|
F. Disclosure Statement Disclaimer |
|
|
150 |
|
G. Liquidation Under Chapter 7 |
|
|
153 |
|
3
|
|
|
|
|
ARTICLE X. CERTAIN FEDERAL INCOME TAX CONSEQUENCES |
|
|
153 |
|
A. Consequences to Holders of Allowed Class E Term Loan Facility Claims,
Class F 7.00% Senior Notes Claims and 8.25% Senior Notes Claims, and Class G
12.25% Senior Notes Claims |
|
|
154 |
|
B. Certain United States Federal Income Tax Consequences to the
Reorganized Debtors |
|
|
157 |
|
|
|
|
|
|
ARTICLE XI. RECOMMENDATION |
|
|
160 |
|
4
EXHIBITS
|
|
|
Exhibit A
|
|
Fourth Amended Joint Plan of Reorganization of Visteon
Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of
the United States Bankruptcy Code |
|
|
|
Exhibit B
|
|
Approved Disclosure Statement Order [To Be Filed] |
|
|
|
Exhibit C
|
|
The Reorganized Debtors Financial Projections |
|
|
|
Exhibit D
|
|
Liquidation Analyses |
|
|
|
Exhibit E
|
|
Term Loan Lender Proposal, Dated April 16, 2010 |
|
|
|
Exhibit F
|
|
Term Loan Lender Proposal, Dated May 7, 2010 |
5
DISCLAIMER
THE DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE DEBTORS PLAN AND
CERTAIN OTHER DOCUMENTS AND FINANCIAL INFORMATION. THE INFORMATION INCLUDED IN THE DISCLOSURE
STATEMENT IS PROVIDED FOR THE PURPOSE OF SOLICITING ACCEPTANCES OF THE PLAN AND SHOULD NOT BE
RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER AND HOW TO VOTE ON THE PLAN. THE
DEBTORS BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE. THE SUMMARIES OF THE FINANCIAL
INFORMATION AND THE DOCUMENTS WHICH ARE ATTACHED TO, OR INCORPORATED BY REFERENCE IN, THE
DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH INFORMATION AND
DOCUMENTS. IN THE EVENT OF ANY INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THE
DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN OR THE OTHER DOCUMENTS AND FINANCIAL
INFORMATION INCORPORATED IN THE DISCLOSURE STATEMENT BY REFERENCE, THE PLAN OR THE OTHER DOCUMENTS
AND FINANCIAL INFORMATION, AS THE CASE MAY BE, SHALL GOVERN FOR ALL PURPOSES.
THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED IN THE DISCLOSURE STATEMENT HAVE BEEN MADE
AS OF THE DATE OF THE DISCLOSURE STATEMENT UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND
INTERESTS REVIEWING THE DISCLOSURE STATEMENT SHOULD NOT ASSUME AT THE TIME OF SUCH REVIEW THAT
THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH IN THE DISCLOSURE STATEMENT SINCE THE DATE OF THE
DISCLOSURE STATEMENT. EACH HOLDER OF A CLAIM ENTITLED TO VOTE ON THE PLAN SHOULD CAREFULLY REVIEW
THE PLAN, THE DISCLOSURE STATEMENT, AND THE PLAN SUPPLEMENT IN THEIR ENTIRETY BEFORE CASTING A
BALLOT. THE DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE.
ANY ENTITIES DESIRING ANY SUCH ADVICE SHOULD CONSULT WITH THEIR OWN ADVISORS.
NO ONE IS AUTHORIZED TO PROVIDE ANY INFORMATION WITH RESPECT TO THE PLAN OTHER THAN THAT WHICH
IS CONTAINED IN THE DISCLOSURE STATEMENT. NO REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE
OF THEIR PROPERTY HAVE BEEN AUTHORIZED BY THE DEBTORS OTHER THAN AS SET FORTH IN THE DISCLOSURE
STATEMENT AND THE DOCUMENTS ATTACHED TO THE DISCLOSURE STATEMENT. ANY INFORMATION, REPRESENTATIONS,
OR INDUCEMENTS MADE TO OBTAIN AN ACCEPTANCE OF THE PLAN WHICH ARE OTHER THAN AS SET FORTH, OR
INCONSISTENT WITH, THE INFORMATION CONTAINED IN THE DISCLOSURE STATEMENT, THE DOCUMENTS ATTACHED TO
THE DISCLOSURE STATEMENT, AND THE PLAN SHOULD NOT BE RELIED UPON BY ANY HOLDER OF A CLAIM OR
INTEREST.
WITH RESPECT TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER PENDING, THREATENED, OR
POTENTIAL LITIGATION OR OTHER ACTIONS, THE DISCLOSURE STATEMENT DOES NOT CONSTITUTE, AND MAY NOT
1
BE CONSTRUED AS, AN ADMISSION OF FACT, LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A
STATEMENT MADE IN THE CONTEXT OF SETTLEMENT NEGOTIATIONS PURSUANT TO RULE 408 OF THE FEDERAL RULES
OF EVIDENCE.
THE SECURITIES DESCRIBED IN THE DISCLOSURE STATEMENT TO BE ISSUED PURSUANT TO THE PLAN WILL BE
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, AS AMENDED, OR ANY SIMILAR FEDERAL, STATE, OR
LOCAL LAW, GENERALLY IN RELIANCE ON THE EXEMPTIONS SET FORTH IN SECTION 4(2) OF THE SECURITIES ACT
AND/OR SECTION 1145 OF THE BANKRUPTCY CODE.
THE DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION COMMENTED UPON THE ACCURACY OR ADEQUACY OF THE
STATEMENTS CONTAINED IN THE DISCLOSURE STATEMENT.
THE FINANCIAL INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO THE DISCLOSURE
STATEMENT HAS NOT BEEN AUDITED, EXCEPT AS SPECIFICALLY INDICATED OTHERWISE.
THE FINANCIAL PROJECTIONS, ATTACHED HERETO AS EXHIBIT C AND DESCRIBED IN THE
DISCLOSURE STATEMENT, HAVE BEEN PREPARED BY THE DEBTORS MANAGEMENT TOGETHER WITH THEIR ADVISORS.
THE FINANCIAL PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A
VARIETY OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY THE DEBTORS MANAGEMENT
AND THEIR ADVISORS, MAY NOT ULTIMATELY BE REALIZED, AND ARE INHERENTLY SUBJECT TO SIGNIFICANT
BUSINESS, ECONOMIC, COMPETITIVE, INDUSTRY, REGULATORY, MARKET, AND FINANCIAL UNCERTAINTIES AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE DEBTORS CONTROL. THE DEBTORS CAUTION THAT NO
REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE PROJECTIONS OR TO THE ABILITY TO ACHIEVE
THE PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE. FURTHER, EVENTS AND
CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THE FINANCIAL PROJECTIONS WERE PREPARED MAY
BE DIFFERENT FROM THOSE ASSUMED OR, ALTERNATIVELY, MAY HAVE BEEN UNANTICIPATED, AND, THUS, THE
OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN A MATERIALLY ADVERSE OR MATERIALLY
BENEFICIAL MANNER. THEREFORE, THE FINANCIAL PROJECTIONS MAY NOT BE RELIED UPON AS A GUARANTEE OR
OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR.
PLEASE REFER TO ARTICLE IX OF THE DISCLOSURE STATEMENT, ENTITLED PLAN-RELATED RISK FACTORS
AND ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN FOR A DISCUSSION OF CERTAIN FACTORS
THAT A CREDITOR VOTING ON THE PLAN SHOULD CONSIDER.
2
FOR A VOTE ON THE PLAN TO BE COUNTED, THE BALLOT INDICATING ACCEPTANCE OR REJECTION OF THE
PLAN MUST BE RECEIVED BY KURTZMAN CARSON CONSULTANTS, LLC, THE DEBTORS CLAIMS AND SOLICITATION
AGENT (KCC) NO LATER THAN 5:00 P.M. PREVAILING PACIFIC TIME, ON [], 2010. SUCH BALLOTS
SHOULD BE CAST IN ACCORDANCE WITH THE SOLICITATION PROCEDURES DESCRIBED IN FURTHER DETAIL IN
ARTICLE III OF THE DISCLOSURE STATEMENT. ANY BALLOT RECEIVED AFTER THE VOTING DEADLINE SHALL NOT BE
COUNTED UNLESS OTHERWISE DETERMINED BY THE DEBTORS IN THEIR SOLE AND ABSOLUTE DISCRETION.
THE CONFIRMATION HEARING WILL COMMENCE ON [], 2010 AT [] A.M./P.M. PREVAILING EASTERN TIME,
BEFORE THE HONORABLE CHRISTOPHER S. SONTCHI, UNITED STATES BANKRUPTCY JUDGE, IN THE UNITED STATES
BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 NORTH MARKET STREET, WILMINGTON, DELAWARE 19801.
THE DEBTORS MAY CONTINUE THE CONFIRMATION HEARING FROM TIME TO TIME WITHOUT FURTHER NOTICE OTHER
THAN AN ADJOURNMENT ANNOUNCED IN OPEN COURT OR A NOTICE OF ADJOURNMENT FILED WITH THE BANKRUPTCY
COURT AND SERVED ON THE MASTER SERVICE LIST AND THE ENTITIES WHO HAVE FILED AN OBJECTION TO THE
PLAN, WITHOUT FURTHER NOTICE TO PARTIES IN INTEREST. THE BANKRUPTCY COURT, IN ITS DISCRETION AND
BEFORE THE CONFIRMATION HEARING, MAY PUT IN PLACE ADDITIONAL PROCEDURES GOVERNING THE CONFIRMATION
HEARING. THE PLAN MAY BE MODIFIED, IF NECESSARY, PRIOR TO, DURING, OR AS A RESULT OF THE
CONFIRMATION HEARING, WITHOUT FURTHER NOTICE TO PARTIES IN INTEREST.
THE PLAN OBJECTION DEADLINE IS [], 2010, AT 5:00 P.M. PREVAILING EASTERN TIME. ALL PLAN
OBJECTIONS MUST BE FILED WITH THE BANKRUPTCY COURT AND SERVED ON THE DEBTORS AND CERTAIN OTHER
PARTIES IN INTEREST IN ACCORDANCE WITH THE DISCLOSURE STATEMENT ORDER SO THAT THEY ARE RECEIVED ON
OR BEFORE THE PLAN OBJECTION DEADLINE.
3
ARTICLE I.
INTRODUCTION
On May 28, 2009, (the Petition Date), the above captioned debtors and debtors in
possession (collectively, the Debtors, and with their non-Debtor affiliates,
Visteon) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware (the Chapter 11 Cases).
On May 29, 2009, the Bankruptcy Court entered an order jointly administering the Chapter 11 Cases
pursuant to Bankruptcy Rule 1015(b) under the lead case: Visteon Corporation; Case No. 09-11786.
The Debtors are operating their business and managing their properties as debtors in possession
pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee has been appointed in the
Chapter 11 Cases. On June 8, 2009, the United States Trustee for the District of Delaware (the
United States Trustee) appointed an official committee of unsecured creditors
(the Creditors Committee) pursuant to section 1102 of title 11 of the United States
Code, 11 U.S.C. §§ 101-1532 (the Bankruptcy Code) [Docket No. 178].
The Debtors filed a plan of reorganization and accompanying disclosure statement with the
Bankruptcy Court on December 17, 2009 [Docket Nos. 1475, 1476], a first amended plan of
reorganization and accompanying disclosure statement with the Bankruptcy Court on March 15, 2010
[Docket Nos. 2544, 2545], a second amended plan of reorganization and accompanying disclosure
statement with the Bankruptcy Court on May 7, 2010 [Docket Nos. 3011, 3012], and a third amended
plan of reorganization and accompanying disclosure statement with the Bankruptcy Court on May 24,
2010 [Docket Nos. 3191, 3192]. The Debtors submit this fourth amended disclosure statement (the
Disclosure Statement) pursuant to section 1125 of the Bankruptcy Code for purposes of
soliciting votes to accept or reject the Fourth Amended Joint Plan of Reorganization of Visteon
Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the
Plan), a copy of which is attached to the Disclosure Statement as Exhibit A.2
This Disclosure Statement sets forth certain information regarding the Debtors
prepetition operations and financial history, their reasons for seeking protection under chapter
11, and significant events that have occurred during the Chapter 11 Cases. This Disclosure
Statement also describes certain terms and provisions of the Plan, certain effects of Confirmation
of the Plan, certain risk factors associated with the Plan and the securities to be issued under
the Plan, and the manner in which distributions will be made under the Plan. In addition, this
Disclosure Statement discusses the requirements for Confirmation of the Plan and the voting
procedures that holders of Claims and Interests entitled to vote on the Plan must follow for their
votes to be counted.
A. |
|
Rules of Interpretation |
The following rules for interpretation and construction shall apply to the Disclosure
Statement: (1) whenever from the context it is appropriate, each term, whether stated in the
singular or the plural, shall include both the singular and the plural, and pronouns stated in the
|
|
|
2 |
|
Capitalized terms used in the Disclosure Statement and not
otherwise defined shall have the meanings ascribed to such terms in Article I.A
of the Plan. |
4
masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter
gender; (2) unless otherwise specified, any reference in the Disclosure Statement to a contract,
instrument, release, indenture, or other agreement or document being in a particular form or on
particular terms and conditions means that such document shall be substantially in such form or
substantially on such terms and conditions; (3) unless otherwise specified, any reference in the
Disclosure Statement to an existing document, schedule, or exhibit, whether or not filed, shall
mean such document, schedule, or exhibit, as it may have been or may be amended, modified, or
supplemented; (4) any reference to an Entity as a holder of a Claim or Interest includes that
Entitys successors and assigns; (5) unless otherwise specified, all references in the Disclosure
Statement to Articles are references to Articles of the Disclosure Statement; (6) unless otherwise
specified, all references in the Disclosure Statement to exhibits are references to exhibits to the
Disclosure Statement; (7) the words herein, hereof, and hereto refer to the Disclosure
Statement in its entirety rather than to a particular portion of the Disclosure Statement;
(8) captions and headings to Articles are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of the Disclosure Statement; (9) unless
otherwise set forth in the Disclosure Statement, the rules of construction set forth in section
102 of the Bankruptcy Code shall apply; (10) any term used in capitalized form in the Disclosure
Statement that is not otherwise defined in the Disclosure Statement, Plan, or exhibits to the
Disclosure Statement Order, but that is used in the Bankruptcy Code or the Bankruptcy Rules shall
have the meaning assigned to such term in the Bankruptcy Code or the Bankruptcy Rules, as
applicable; (11) all references to docket numbers of documents filed in the Chapter 11 Cases are
references to the docket numbers under the Bankruptcy Courts CM/ECF system; (l2) all references to
statutes, regulations, orders, rules of courts, and the like shall mean as amended from time to
time, unless otherwise stated; (13) in computing any period of time prescribed or allowed, the
provisions of Bankruptcy Rule 9006(a) shall apply, and if the date on which a transaction may occur
pursuant to the Disclosure Statement shall occur on a day that is not a Business Day, then such
transaction shall instead occur on the next succeeding Business Day; and (14) unless otherwise
specified, all references in the Disclosure Statement to monetary figures shall refer to currency
of the United States of America.
ARTICLE II.
OVERVIEW OF THE PLAN
A. |
|
General Structure of the Plan |
The Plan is comprised of two mutually exclusive sub plansthe Rights Offering Sub Plan and the
Claims Conversion Sub Plan (together, the Sub Plans). The Plan Support Agreement has
been executed and delivered by holders of more than two-thirds in amount of the 12.25% Senior Notes
Claims and two-thirds in aggregate amount of the 7.00% Senior Notes Claims and the 8.25% Senior
Notes Claims. A separate plan support agreement has also been executed with the Creditors
Committee (the Committee Plan Support Agreement), pursuant to which the Creditors
Committee will support the Plan, except in certain limited circumstances. Following is a general
description of each Sub Plan.
5
|
1. |
|
The Rights Offering Sub Plan |
The Debtors will seek to consummate the Rights Offering Sub Plan in the event the following
new capital is raised: (a) $950.0 million through a Rights Offering of New Visteon Common Stock to
holders of 12.25% Senior Notes Claims, 7.00% Senior Notes Claims, and 8.25% Senior Notes Claims
(collectively, the Note Holders), who qualify as accredited investors, as such term is
defined in Rule 501(a) of Regulation D of the Securities Act (the Eligible Holders),
through a private placement under section 4(2) of the Securities Act; (b) a $300.0 million direct
purchase commitment from the Investors; and (c) the Exit Financing Facility. If the Term Loan
Lenders vote as a Class to accept the Plan, the Term Loan Facility Claims will be paid in full in
Cash. If the Term Loan Lender Class votes to reject the Plan, the Debtors shall have the option
to seek reinstatement of the Term Loan Facility pursuant to section 1124(2) of the Bankruptcy Code,
subject to the reasonable consent of the Requisite Investors, and thereafter pay each holder of the
Allowed Term Loan Facility Claims its Pro Rata portion of an amount in Cash to be determined by the
Debtors (subject to the reasonable consent of the Requisite Investors) (the Reinstatement
Recovery). Reinstatement of the Term Loan Facility could provide the Estates with significant
savings through retroactive application of the non-default, LIBOR plus 3.0% interest rate in lieu
of the default interest rate during the pendency of these Chapter 11 Cases. The Debtors would also
have the option to reduce the amount of the Exit Financing Facility dollar-for-dollar by the amount
of the Term Loan Facility that is permanently reinstated under the Plan. If the Debtors are not
successful in reinstating the Term Loan Facility Claims, the Debtors shall satisfy the Term Loan
Facility Claims in full in Cash. Under either scenario, the Term Loan Facility Claims would be
Unimpaired.
Under the Rights Offering Sub Plan, all Note Holders shall be entitled to receive a Pro Rata
distribution of 5.0% of the Distributable Equity, or 4.9% of the Distributable Equity if Class J
votes to accept the Plan, and all Eligible Holders shall be entitled to participate in a Rights
Offering for the remaining 95.0% of New Visteon Common Stock, or 93.1% of New Visteon Common Stock
if Class J votes to accept the Plan.3 Each Non-Eligible Holder, (i.e., a Note Holder not
permitted to participate in a rights offering under section 4(2) of the Securities Act) shall also
receive the lesser of (i) its Pro Rata share of $50.0 million in Cash or (ii) 40.0% of the amount
of such holders Allowed Claim in Cash, on account of the value of the Subscription Rights which
such Non-Eligible Holder would have been entitled to had such Non-Eligible Holder been an Eligible
Holder. Holders of the 12.25% Senior Notes Claims will receive additional consideration on
account of guarantees from Visteon Corporations wholly-owned domestic operating subsidiaries (the
Domestic Subsidiary Guarantees) in the form of their Pro Rata share of warrants to
purchase New Visteon Common Stock on terms described in the warrant agreement attached as
Exhibit B to the Plan (the Warrant Agreement). The Cash Recovery Backstop
Investors, a subset of the Investors, shall fund the aggregate Cash Amount provided to Non-Eligible
Holders and, therefore, such Cash distribution will have no impact on the Debtors Cash
availability. The Equity Commitment Agreement entered into by the Debtors
|
|
|
3 |
|
Under the Rights Offering Sub Plan, Note Holders shall
receive 4.9% of New Visteon Common Stock if Class J votes to accept the Plan or
5.0% of New Visteon Common Stock if Class J votes to reject the Plan. The 4.9%
or 5.0% of New Visteon Common Stock distributed to the Note Holders shall be
subject to dilution from the Management Equity Incentive Program, and if
applicable, the Old Equity Warrants and the 93.1% or 95.0% of New Visteon
Common Stock offered through the Rights Offering shall be subject to dilution
from the Guaranty Equity Amount and the Management Equity Incentive Program,
and if applicable, the Old Equity Warrants. |
6
and Investors in connection with the Rights Offering Sub Plan provides that any shares of New
Visteon Common Stock that are not purchased through the Rights Offering, or distributed to holders
of the 12.25% Senior Notes Claims, as described above, shall be purchased by the Investors subject
to the terms and conditions of the Equity Commitment Agreement.
Holders of General Unsecured Claims against the Debtor Entity Visteon International Holdings,
Inc. (VIHI) will be paid in full in Cash due to VIHIs interest in valuable foreign stock
holding companies and position in the Debtors corporate structure, which makes direct Claims
against VIHI structurally superior to other General Unsecured Claims.4 Each remaining
holder of a General Unsecured Claim will receive a Cash recovery equal to the lesser of (x) such
holders Pro Rata share of $141.0 million in Cash or (y) 50.0% recovery of the amount of such
holders Allowed Class H Claim.
Allowed Class J Interests are not entitled to receive a distribution and shall be deemed
automatically cancelled under the Rights Offering Sub Plan, provided, however, if Class J votes to
accept the Plan, each holder of an Allowed Class J Interest shall receive its Pro Rata portion of
2.0% of the Distributable Equity and Old Equity Warrants to purchase shares of New Visteon Common
Stock at an exercise price of $58.80 per share. Thus, only if Class J Interests accept the
Plan as a Class will Class J Interests receive a distribution. The Rights Offering Sub Plan
also contemplates Reorganized Visteons entry into a new $300.0 million working capital facility,
which is projected to be undrawn upon emergence from chapter 11.
|
2. |
|
The Claims Conversion Sub Plan |
The Plan shall toggle from the Rights Offering Sub Plan to the Claims Conversion Sub Plan in
the event sufficient capital is not raised under the Rights Offering Sub Plan to satisfy the Term
Loan Facility Claims in full in Cash. Under the Claims Conversion Sub Plan, Reorganized Visteon
shall issue New Visteon Common Stock to the Term Loan Lenders and the Note Holders in the following
percentages based on their relative priorities and positions in the Debtors capital structure:
84.9% to 86.2% the holders of the Term Loan Facility Claims; 6.3% to 6.5% to the holders of the
12.25% Senior Notes Claims; and 7.5% to 8.6% to the holders of the 7.00% Senior Notes Claims and
8.25% Senior Notes Claims. Under the Claims Conversion Sub Plan, holders of General Unsecured
Claims will receive the same recovery provided under the Rights Offering Sub Plani.e., the lesser
of (a) such holders Pro Rata share of $141.0 million in Cash or (b) 50.0% recovery of the amount
of such holders Allowed Class H Claim. General Unsecured Claims against VIHI also will be paid in
Cash in full, subject to a $20.0 million cap.5
Under the Claims Conversion Sub Plan, holders of the Term Loan Facility Claims would receive
the highest percentage of New Visteon Common Stock based on the first Lien they hold against the
Debtors most valuable assets, including certain Debtor foreign stock holding
|
|
|
4 |
|
The Debtors estimate that there will be a total of $3.4
million in Allowed General Unsecured Claims against VIHI. If however, Allowed
General Unsecured Claims against VIHI exceed $20.0 million, then holders of
such Claims shall receive their Pro Rata share of $20.0 million in Cash.
Article IV.D herein contains a chart which illustrates the structural
superiority of Claims against VIHI as compared to other General Unsecured
Claims that do not have the Domestic Subsidiary Guarantees. |
|
5 |
|
General Unsecured Claims against VIHI shall be satisfied
first, up to $20.0 million, under both the Rights Offering Sub Plan and Claims
Conversion Sub Plan. |
7
companies (the Foreign Stock Holding Companies) and at least 65.0% of the Foreign
Stock Holding Companies equity interests in their foreign subsidiaries. After the Term Loan
Facility Claims are satisfied in full (including postpetition default interest and fees),6
the Note Holders shall receive the remaining shares of New Visteon Common Stock. Holders of 12.25%
Senior Notes Claims will receive a higher Pro Rata percentage of New Visteon Common Stock than
holders of 7.00% Senior Notes Claims and 8.25% Senior Notes Claims on account of the Domestic
Subsidiary Guarantees. Holders of Interests in Class J will not receive a recovery under the
Claims Conversion Sub Plan and shall be deemed to reject the Plan if the Debtors pursue
Confirmation of the Claims Conversion Sub Plan. The Claims Conversion Sub Plan contemplates
Reorganized Visteons entry into a new $150.0 million working capital facility, which is projected
to be undrawn upon emergence from chapter 11.
|
3. |
|
The Plan Support Agreement |
The Plan Support Agreement entered into in connection with the Plan by and among the Debtors
and the Consenting Note Holders (in sufficient number and holdings to assure their respective
Classes acceptance of the Plan) provides that the parties thereto shall support the Plan in all
aspects, including the findings of the valuation analysis prepared by the Debtors and their
advisors, as described in further detail in Article VIII.D (the Valuation Analysis).
In certain limited circumstances, the Consenting Note Holders have the right to terminate the
Plan Support Agreement and withdraw their support for the Plan. Those termination rights are
enumerated in Section 7.1 of the Plan Support Agreement. For example, under Section 7.1(e)(2) of
the Plan Support Agreement, the Consenting Note Holders may terminate the Plan Support Agreement
and shall not be required to support the Plan if (a) the representations and warranties made by the
Debtors in connection with the Equity Commitment Agreement fail to be true and correct so as to be
reasonably expected to result in a Material Adverse Effect, as such term is defined in the Equity
Commitment Agreement, or (b) the Debtors fail to materially perform or comply with any covenants
contained in the Equity Commitment Agreement. The Plan Support Agreement permits the Debtors to
commence expedited proceedings in the Bankruptcy Court to determine whether a termination event has
actually occurred under the Plan Support Agreement. Furthermore, if the Consenting Note Holders
were to terminate the Plan Support Agreement pursuant to Section 7.1(e) thereof after the Debtors
have solicited votes on the Plan, the Debtors shall not be required to re-solicit, but the
Consenting Note Holders shall be deemed to have rejected the Plan and may also formally object to
Confirmation of the Plan.
On the other hand, if the representations and warranties made by the Investors in connection
with the Equity Commitment Agreement fail to be true and correct so as to be reasonably expected to
prohibit, materially delay or materially and adversely impact the Investors performance of their
obligations under the Equity Commitment Agreement, or the Investors fail to materially perform or
comply with any covenants contained in the Equity Commitment Agreement, the Debtors may terminate
the Equity Commitment Agreement and proceed with Confirmation of the Claims Conversion Sub Plan.
The Debtors may also terminate
|
|
|
6 |
|
The estimated Allowed amount of the Term Loan Facility
Claims is $1.629 billion, including postpetition interest at the default rate.
To the extent Class E votes to reject the Plan and the Debtors succeed in
reinstating the Term Loan Facility Claims, the Allowed amount of the Term Loan
Facility Claims may be calculated at the non-default interest rate in lieu of
the default interest rate. |
8
the Equity Commitment Agreement and proceed with Confirmation of the Claims Conversion Sub
Plan if the Investors, together with the proceeds from the Rights Offering, do not deliver the
capital contemplated by the Rights Offering Sub Plan. Under the circumstances described above, the
Consenting Note Holders would remain bound by the Plan Support Agreement and would thus be required
to support Confirmation of the Claims Conversion Sub Plan. Lastly, if the Equity Commitment
Agreement fails to close within the timeframe specified in section 10.1(b)(iii) of the Equity
Commitment Agreement, the Debtors may terminate the Equity Commitment Agreement and proceed with
Confirmation of the Claims Conversion Sub Plan with the Consenting Note Holders support secured
pursuant to the Plan Support Agreement.
|
4. |
|
The Committee Plan Support Agreement |
The Committee Plan Support Agreement obligates the Creditors Committee, subject to its
exercise of a fiduciary out and certain conditions, to (a) support entry of an order approving the
Disclosure Statement; (b) prepare a recommendation letter supporting the Plan for inclusion in
Visteons solicitation package; and (c) support confirmation of the Plan. However, the Creditors
Committee may terminate the Committee Plan Support Agreement if (i) the Debtors chapter 11 cases
are dismissed or converted to chapter 7 cases, (ii) an examiner with expanded powers or a trustee
under chapter 7 or chapter 11 is appointed, (iii) the Debtors withdraw the Plan, (iv) any court has
by final, non-appealable order declared the Committee Plan Support Agreement unenforceable, or (v)
there is a materially adverse change or modification to the Plan or a related document without the
Creditors Committees consent. Also, the Committee Plan Support Agreement terminates
automatically if the Note Holder Plan Support Agreement is terminated under certain conditions.
The Term Loan Lenders believe the proposed agreements (x) contain no definitive date by which
the new capital must be delivered, (y) excuse the Investors from any liability for breach of their
commitments, and (z) would likely suspend confirmation in the event the Investors or Note Holders
litigate regarding the toggle. The Debtors believe the Term Loan Lenders completely misinterpret
the Equity Commitment Agreement and Plan Support Agreement and disagree with the Term Loan Lenders
assertions.
B. |
|
Treatment of Claims and Interests |
The Plan divides all Claims (except Administrative Claims, Professional Claims, DIP Facility
Claims, and Priority Tax Claims) and all Interests into various Classes. Listed below is a summary
of the Classes of Claims and Interests under the Plan.
|
|
|
Class |
|
Claim or Interest |
A
|
|
ABL Claims |
B
|
|
Secured Tax Claims |
C
|
|
Other Secured Claims |
D
|
|
Other Priority Claims |
E
|
|
Term Loan Facility Claims |
F
|
|
7.00% Senior Notes Claims and 8.25% Senior Notes Claims |
G
|
|
12.25% Senior Notes Claims |
9
|
|
|
Class |
|
Claim or Interest |
H
|
|
General Unsecured Claims |
I
|
|
Intercompany Claims |
J
|
|
Interests in Visteon Corporation |
K
|
|
Intercompany Interests |
L
|
|
Section 510(b) Claims |
2. Unclassified Claims
In accordance with section 1123(a)(1) of the Bankruptcy Code, the Plan does not classify
Administrative Claims, Professional Claims, DIP Facility Claims, or Priority Tax Claims. These
Claims are therefore excluded from the Classes of Claims set forth in Article III of the Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Aggregate |
|
Estimated Aggregate |
|
Projected |
|
|
|
|
Amount of Allowed |
|
Amount of Allowed |
|
Recovery |
|
|
|
|
Claims Under Rights |
|
Claims Under Claims |
|
Under the |
Claim |
|
Plan Treatment |
|
Offering Sub Plan |
|
Conversion Sub Plan |
|
Plan |
|
Administrative and |
|
Paid in full in Cash. |
|
$225.0
million7 |
|
$105.0 million |
|
100% |
Professional Claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIP Facility |
|
Paid in full in |
|
$75.0 million |
|
$75.0 million |
|
100% |
Claims |
|
Cash, unless otherwise |
|
|
|
|
|
|
|
|
agreed. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priority Tax |
|
Paid in full in Cash. |
|
$5.3 million |
|
$5.3 million |
|
100% |
Claims |
|
|
|
|
|
|
|
|
C. Treatment of Claims and Interests Under the Plan
The table below summarizes the Classes of Claims and Interests under the Plan, the treatment
of such Classes, the voting rights of such Classes, and the projected recovery, if any, under each
Sub Plan for such Classes. To the extent of any inconsistency between the summaries contained in
the Disclosure Statement and those set forth in the Plan, the Plan shall govern. These projected
recoveries are based upon certain assumptions contained in the Valuation Analysis. As more fully
described below, the Debtors assumed reorganization value of the New Visteon Common Stock was
derived from commonly accepted valuation techniques and is not an estimate of the trading value for
such securities.
|
|
|
7 |
|
The estimate of Allowed Administrative Claims and
Professional Claims does not include amounts paid by the Debtors in the
ordinary course of business during the Chapter 11 Cases. Included within the
estimate of Administrative Claims and Professional Claims under the Rights
Offering Sub Plan are approximately $120.0 million in fees that would be
incurred in connection with the Rights Offering, which include fees to be paid
pursuant to the Equity Commitment Agreement together with other professional
fees to be paid by the Debtors, $50.0 million in Professional Claims, $25.0
million in Cure payments, and $30.0 million in 503(b)(9) Claims. Included
within the estimate of Administrative Claims and Professional Claims under the
Claims Conversion Sub Plan are $50.0 million in Professional Claims, $25.0
million in Cure payments, and $30.0 million in 503(b)(9) Claim. |
10
The Debtors have not completed full reconciliation of the Class H General Unsecured Claims and
have accordingly developed low and high-end ranges of estimates for the ultimate amount of Allowed
General Unsecured Claims, as set forth below. The amount of Allowed General Unsecured Claims will
impact the Cash availability of the Debtors and, in turn, the value of the New Visteon Common Stock
to be distributed to the Note Holders under the Rights Offering Sub Plan and the Note Holders and
Term Loan Lenders under the Claims Conversion
Sub Plan. The range of estimates for the Class H General Unsecured Claims is based upon a
number of assumptions, including, the following.
1. Low-End Claims Estimate
The Debtors low-end estimate of Allowed Class H General Unsecured Claims assumes, among other
things, that: (a) no Claims will be Allowed against the Debtors on account of the Visteon UK
Pension Plan (the VUK Pension Plan), as such Claims have been withdrawn by the claimants,
or the Visteon Engineering Services Pension Plan (the VES Pension Plan); (b) no Claims
will be Allowed against the Debtors on account of the termination of the Visteon Corporation
Supplemental Executive Retirement Plan (the SERP), the Visteon Corporation Pension Parity
Plan (the PPP), and the Visteon Corporation Executive Separation Allowance Plan (the
ESAP); (c) certain customer Claims, including warranty and services contract Claims, will
not ultimately be Allowed based on mutually agreed to contractual amendments or Claim waivers; and
(d) contingent litigation Claims will be resolved in amounts at the low-end of possible litigation
outcomes.
8
2. High-End Claims Estimate
In contrast, the high-end estimates for Allowed Class H General Unsecured Claims assume
maximum liability for a number of contingent, unliquidated, and Disputed Claims including (a)
Allowed Claims for approximately $30.9 million against the Debtors on account of the termination of
the SERP, PPP, and ESAP and (b) certain litigation related Claims will be Allowed at the high-range
of possible litigation outcomes (but not at the face amount stated on the relevant Proof of
Claim).9
Neither the high nor the low-end estimates on which the recoveries stated below
are based project allowance of any Claims on account of the VUK Pension Plan, the VES Pension Plan,
and certain customer contract and warranty Claims.
Holders of Class H General Unsecured Claims are projected to receive a 50.0% recovery on their
Claims based on the Debtors Claims estimate. However, to the extent the amount of Allowed Class
H General Unsecured Claims exceeds $282.0 million, a 69.0% increase over the Debtors high-end
Claims projection, holders of Allowed Class H General Unsecured Claims would receive less than a
50.0% recovery on their Claims.
|
|
|
8 |
|
The VUK Pension Plan and VES Pension Plan are discussed
further in Article V.I. The SERP, PPP, and ESAP are discussed further in Article IV.H. |
|
9 |
|
The Claims arising from agreements with Ford are discussed further in Article V.F. |
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights Offering Sub Plan |
|
Claims Conversion Sub Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Range of |
|
|
|
|
Estimated Range |
|
|
|
Range of % |
|
|
|
% |
|
|
Type of Claim |
|
of Allowed |
|
|
|
Recovery of |
|
|
|
Recovery |
|
|
or Equity |
|
Claims or |
|
Treatment of |
|
under the |
|
Treatment of |
|
of under |
Class |
|
Interest |
|
Interests |
|
Claim/Interest |
|
Plan |
|
Claim/Interest |
|
the
Plan10 |
A
|
|
ABL Claims
|
|
$127.15 million
|
|
Paid in full in Cash.
|
|
|
100 |
% |
|
Paid in full in
Cash.
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B
|
|
Secured Tax Claims
|
|
$2.5 million
|
|
Paid in full in Cash.
|
|
|
100 |
% |
|
Paid in full in
Cash.
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C
|
|
Other Secured Claims
|
|
$2.85 million
|
|
Paid in full in Cash.
|
|
|
100 |
% |
|
Paid in full in
Cash.
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D
|
|
Other Priority
Claims
|
|
$0.01 million
|
|
Paid in full in Cash.
|
|
|
100 |
% |
|
Paid in full in
Cash.
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E
|
|
Term Loan Facility
Claims
|
|
$1.629 billion11
|
|
Paid in full in
Cash if Class E
accepts the Plan.
|
|
|
100 |
% |
|
Pro Rata share of
85.0% 86.2% of
shares of New
Visteon Common Stock.
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to the
Reinstatement
Recovery if Class E
rejects the Plan. |
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
The estimated Claim recoveries provided in this Disclosure
Statement do not account for dilution by the Management Equity Incentive Program. |
|
11 |
|
The estimated Allowed amount of the Term Loan Facility
Claims includes postpetition interest at the default rate. To the extent Class
E votes to reject the Plan and the Debtors succeed in reinstating the Term Loan
Facility Claims, the Allowed amount of the Term Loan Facility Claims may be
calculated at the base interest rate in lieu of the default interest rate. |
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights Offering Sub Plan |
|
Claims Conversion Sub Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Range of |
|
|
|
|
Estimated Range |
|
|
|
Range of % |
|
|
|
% |
|
|
Type of Claim |
|
of Allowed |
|
|
|
Recovery of |
|
|
|
Recovery |
|
|
or Equity |
|
Claims or |
|
Treatment of |
|
under the |
|
Treatment of |
|
of under |
Class |
|
Interest |
|
Interests |
|
Claim/Interest |
|
Plan |
|
Claim/Interest |
|
the
Plan |
F
|
|
7.00% Senior Notes Claims and
8.25% Senior Notes Claims
|
|
$668.23 million
|
|
For Eligible
Holders, (i) Pro
Rata Allocation of
4.9% or 5.0% of the
Distributable Equity
and (ii) Pro Rata
Allocation of
Subscription
Rights.12
|
|
7.9% 8.2%
(for Eligible
Holders)
|
|
Pro Rata share of
7.5% 8.6% of
shares of New
Visteon Common
Stock.
|
|
21.0% 25.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
Non-Eligible
Holders, (i) Pro
Rata Allocation of
4.9% or 5.0% of the
Distributable Equity
and (ii) the Cash
Amount.
|
|
48.16% 48.2%
(for Non-Eligible
Holders) |
|
|
|
|
|
|
|
12 |
|
The estimated range of recovery for Eligible Holders in
Class F reflects an approximate $0.34 per share discount to $0.15 per
share premium (if Class J Interests vote to accept the Plan) or $0.41 to
$0.91 per share discount (if Class J Interests vote to reject the Plan) at
which New Visteon Common Stock may be purchased upon an Eligible Holders
exercise of Subscription Rights at $27.69 per share as compared to the
Plans valuation of the New Visteon Common Stock at $27.54 per share under
the high-end Claims estimate and $28.03 per share under the low-end Claims
estimate, or $28.10 per share under the high-end Claims estimate and
$28.60 per share under the low-end Claims estimate (depending on whether
Class J Interests vote to accept the Plan). If Class J votes to reject
the Plan, holders of Allowed Class F Claims would receive 5.0%, instead of
4.9%, of the Distributable Equity Value in Reorganized Visteon. |
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights Offering Sub Plan |
|
Claims Conversion Sub Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Range of |
|
|
|
|
Estimated Range |
|
|
|
Range of % |
|
|
|
% |
|
|
Type of Claim |
|
of Allowed |
|
|
|
Recovery of |
|
|
|
Recovery |
|
|
or Equity |
|
Claims or |
|
Treatment of |
|
under the |
|
Treatment of |
|
of under |
Class |
|
Interest |
|
Interests |
|
Claim/Interest |
|
Plan |
|
Claim/Interest |
|
the
Plan |
G
|
|
12.25% Senior Note Claims
|
|
$202.36 million
|
|
For Eligible
Holders, (i) Pro
Rata Allocation of
4.9% or 5.0% of the
Distributable
Equity, (ii) Pro
Rata Allocation of
Subscription Rights,
and (iii) Pro Rata
portion of the
Guaranty Equity
Amount.13
|
|
28.7% 30.3%
(for Eligible
Holders)
|
|
Pro Rata share of
6.3% 6.5% shares
of New Visteon
Common Stock.
|
|
|
58.0 62.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
Non-Eligible
Holders, (i) Pro
Rata Allocation of
4.9% or 5.0% of the
Distributable
Equity, (ii) the
Cash Amount, and
(iii) the Pro Rata
portion of the
Guaranty Equity
Amount.
|
|
69.5% 70.3%
(for Non-Eligible
Holders)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H
|
|
General Unsecured Claims
|
|
$107.96 million
$166.76 million
|
|
The lesser of: (i)
the Pro Rata share
of $141.0 million or
(ii) 50.0% recovery
of the amount of
such holders
Allowed Class H
Claim.14
|
|
|
50.0 |
% |
|
The lesser of: (i)
the Pro Rata share
of $141.0 million
or (ii) 50%
recovery of the
amount of such
holders Allowed
Class H Claim.
|
|
|
50.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I
|
|
Intercompany Claims
|
|
$16.39 billion
|
|
No recovery, but may
be reinstated in the
discretion of the
Reorganized Debtors.
|
|
|
N/A |
|
|
No recovery, but
may be reinstated
in the discretion
of the Reorganized
Debtors.
|
|
|
N/A |
|
|
|
|
13 |
|
The estimated range of recovery for Eligible Holders in
Class G reflects an approximate $0.34 per share discount to $0.15 per share
premium (if Class J Interests vote to accept the Plan) or $0.41 to $0.91 per
share discount (if Class J Interests vote to reject the Plan) at which New
Visteon Common Stock may be purchased upon an Eligible Holders exercise of
Subscription Rights at $27.69 per share as compared to the Plans valuation of
the New Visteon Common Stock at $27.54 per share under the high-end Claims
estimate and $28.03 per share under the low-end Claims estimate, or $28.10 per
share under the high-end Claims estimate and $28.60 per share under the low-end
Claims estimate (depending on whether Class J Interests vote to accept the
Plan). If Class J votes to reject the Plan, holders of Allowed Class G Claims
would receive 5.0%, instead of 4.9%, of the Distributable Equity Value in
Reorganized Visteon. |
|
14 |
|
General Unsecured Claims against VIHI shall be satisfied
first, up to $20.0 million, under both the Rights Offering Sub Plan and Claims Conversion Sub Plan. |
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights Offering Sub Plan |
|
Claims Conversion Sub Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
|
|
Estimated |
|
|
|
Range of |
|
|
|
|
Estimated Range |
|
|
|
Range of % |
|
|
|
% |
|
|
Type of Claim |
|
of Allowed |
|
|
|
Recovery of |
|
|
|
Recovery |
|
|
or Equity |
|
Claims or |
|
Treatment of |
|
under the |
|
Treatment of |
|
of under |
Class |
|
Interest |
|
Interests |
|
Claim/Interest |
|
Plan |
|
Claim/Interest |
|
the
Plan |
J
|
|
Interests in Visteon
Corporation15
|
|
N/A
|
|
Cancelled, provided,
however, if Class J
accepts the Plan,
Pro Rata share of
(i) 2.0% of the
Distributable Equity
and (ii) the Old
Equity Warrants.
|
|
|
N/A |
|
|
Cancelled.
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K
|
|
Intercompany Interests
|
|
N/A
|
|
No recovery, but may
be reinstated in the
discretion of the
Reorganized Debtors.
|
|
|
N/A |
|
|
No recovery, but
may be reinstated
in the discretion
of the Reorganized
Debtors.
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L
|
|
Section 510(b) Claims
|
|
N/A
|
|
No recovery.
|
|
|
0.0 |
% |
|
No recovery.
|
|
|
0.0 |
% |
The Debtors Claims and Solicitation Agent has received approximately 3,300 Proofs of
Claim totaling approximately $7.9 billion (excluding Intercompany Claims). Approximately 55 Proofs
of Claim, totaling approximately $5.9 billion, represent the Term Loan Facility Claims, the 7.00%
Senior Notes Claims, the 8.25% Senior Notes Claims, and the 12.25% Senior Notes Claims for which
the Debtors have recorded approximately $2.5 billion in aggregate liability. The Debtors believe
the Claim amounts in excess of $2.5 billion are duplicative and will ultimately be resolved through
the Plan or omnibus objections to Claims. Additionally, Proofs of Claims in the amount of $1.064
billion, which were filed on account of pension termination liabilities will be disallowed because
the Pension Plans are to be maintained by the Reorganized Debtors. Lastly, the Debtors believe that
approximately 530 Proofs of Claim, totaling approximately $240.0 million, will ultimately be
disallowed by the Bankruptcy Court primarily because these Claims appear to be duplicative or
unsubstantiated. While the Debtors have not reconciled all filed Proofs of Claim against their
books and records, they believe that many of the remaining filed Proofs of Claim are invalid,
untimely, duplicative, or overstated, and, therefore, have assumed for purposes of estimating
recoveries that such Claims shall be reduced in amount or expunged from the Claims Register. On
the other hand, additional Proofs of Claim may be filed after the Bar Date, which could be Allowed
by the Bankruptcy Court. Accordingly, the ultimate number and Allowed amount of Claims asserted
against the Debtors are not presently known and the final resolution of such Claims could result in
a material adjustment to the recoveries and Claim estimates provided above.
|
|
|
15 |
|
Two percent of the Distributable Equity equates to
approximately $27.3 million to $27.7 million in value to be distributed to
Class J Interests at the Plans value, if Class J accepts the Plan. In
addition, the Old Equity Warrants also are estimated to be worth approximately
$7.2 million based on Black-Scholes calculation. |
15
D. Liquidation and Valuation Analyses
The Debtors believe that each of the Sub Plans provides the same or a greater recovery for
holders of Allowed Claims and Interests as would be achieved in a liquidation pursuant to chapter 7
of the Bankruptcy Code because of, among other things, the additional Administrative Claims
generated by conversion to a chapter 7 case, the administrative costs of liquidation and associated
delays in connection with a chapter 7 liquidation, and the negative impact on the
market for the Debtors assets caused by attempting to sell a large number of assets in a
short time frame, each of which likely would diminish the value of the Debtors assets available
for distributions.
The Debtors have prepared liquidation analyses, attached hereto as Exhibit D and
discussed in Article VIII.C (the Liquidation Analyses), and a Valuation Analysis to
assist holders of Claims and Interests in evaluating each of the Sub Plans. The Liquidation
Analyses were prepared in connection with the filing of the plan of reorganization on March 15,
2010 but have been updated to reflect a later Effective Date and other variables dependent upon
timing. The Liquidation Analyses compare the Creditor recoveries to be realized if the Debtors
were to be liquidated in a hypothetical case under chapter 7 of the Bankruptcy Code with the
distributions to holders of Allowed Claims and Interests under each of the Sub Plans. The analyses
are based upon the value of the Debtors assets and liabilities as of a certain date, and
incorporate various estimates and assumptions, including a hypothetical conversion to a chapter 7
liquidation as of a certain date. Further, each analysis is subject to potentially material
changes including with respect to economic and business conditions and legal rulings. Therefore,
the actual liquidation value of the Debtors could vary materially from the estimates provided in
the Liquidation Analyses, and the actual total enterprise value and reorganization equity value of
the Reorganized Debtors could vary materially from the estimates contained in the Valuation
Analysis.
E. Certain Factors to Be Considered Prior to Voting
There are a variety of factors that all holders of Claims entitled to vote on the Plan should
consider prior to voting to accept or reject the Plan. Some of these factors, which are described
in more detail in Article IX and Article X, are as follows and may impact recoveries under the
Plan:
|
|
|
Unless otherwise specifically indicated, the financial information contained in
the Disclosure Statement has not been audited and is based on an analysis of data
available at the time of the preparation of the Plan and Disclosure Statement. |
|
|
|
|
Article X describes certain significant federal tax consequences of the
transactions contemplated by the Plan that may affect the Debtors, including the
realization of cancellation of indebtedness income, reduction of net operating loss
(NOL) carryforwards and unrealized built-in losses, and the limitations that
may apply to the Debtors usage of those NOLs and unrealized built-in-losses. Article
X also describes the federal tax consequences of the transactions contemplated by the
Plan that may affect holders of Claims and Interests, including the recognition of
taxable income by such holders. Holders of Claims and Interests are urged to |
16
|
|
|
consult
with their own tax advisors regarding the federal, state, local, and foreign tax
consequences of the Plan. |
|
|
|
Although the Debtors believe that the Plan complies with all applicable
provisions of the Bankruptcy Code, the Debtors cannot assure such compliance nor that
the Bankruptcy Court will confirm the Plan. |
|
|
|
|
The Debtors may request Confirmation without the acceptance of all Impaired
Classes entitled to vote in accordance with section 1129(b) of the Bankruptcy Code. |
|
|
|
|
Any delays of either Confirmation or Consummation could result in, among other
things, increased Administrative Claims and Professional Claims. |
|
|
|
|
Only if Class J Interests vote as a Class to accept the Plan, and the Debtors
pursue Confirmation of the Rights Offering Sub Plan, will Class J Interests receive a
distribution under the Plan. |
|
|
|
|
If holders of Class E Term Loan Facility Claims vote as a Class to reject the
Plan, and the Debtors pursue Confirmation of the Rights Offering Sub Plan, the Term
Loan Facility Claims may be subject to the Reinstatement Recovery at the Debtors
discretion and subject to the reasonable consent of the Requisite Investors. |
While these factors could affect distributions available to holders of Allowed Claims under
the Plan, the occurrence or impact of such factors will not necessarily affect the validity of the
vote of the Impaired Classes entitled to vote to accept or reject the Plan (the Voting
Classes) or necessarily require a re-solicitation of the votes of holders of Claims in such
Voting Classes.
AS DESCRIBED FURTHER IN ARTICLE VI.M.1.I HEREIN, HOLDERS OF ALLOWED CLAIMS THAT WOULD BE IN
VIOLATION OF ANY APPLICABLE LAWS OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL UNIT AS A RESULT OF
THE RECEIPT OF SHARES OF NEW VISTEON COMMON STOCK PURSUANT TO THE PLAN SHALL NOT BE ENTITLED TO
RECEIVE SUCH SHARES UNLESS AND UNTIL SUCH HOLDERS ARE IN COMPLIANCE WITH ANY SUCH APPLICABLE LAWS
OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL UNIT.
17
ARTICLE III.
VOTING AND RIGHTS OFFERING SUBSCRIPTION PROCEDURES
The following Classes are the only Classes entitled to vote to accept or reject the Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
Status Under the |
|
|
|
|
Status Under Rights |
|
Claims Conversion |
Class |
|
Claim or Interest |
|
Offering Sub Plan |
|
Sub Plan |
E
|
|
Term Loan Facility Claims
|
|
Unimpaired
|
|
Impaired |
F
|
|
7.00% Senior Notes Claims and
8.25% Senior Notes Claims
|
|
Impaired
|
|
Impaired |
G
|
|
12.25% Senior Notes Claims
|
|
Impaired
|
|
Impaired |
H
|
|
General Unsecured Claims
|
|
Impaired
|
|
Impaired |
J
|
|
Interests in Visteon Corporation
|
|
Impaired
|
|
Impaired |
If your Claim or Interest is not included in these Classes, you are not entitled to vote
and you will not receive a Solicitation
Package.16
A. Vote Required for Acceptance by a Class
Under the Bankruptcy Code, acceptance of a plan of reorganization by a Class of Claims or
Interests is determined by calculating the number and the amount of Claims or Interests voting to
accept, based on the actual total Allowed Claims or Interests voting on the Plan. Acceptance by a
Class requires more than one-half of the number of total Allowed Claims or Interests in the Class
to vote in favor of the Plan and at least two-thirds in dollar amount of the total Allowed Claims
or Interests in the Class to vote in favor of the Plan.
B. Classes Not Entitled to Vote
Under the Bankruptcy Code, Creditors are not entitled to vote if their contractual rights are
Unimpaired by the Plan or if they will receive no distribution of property under the Plan. All
non-voting Classes of Claims or Interests shall receive the same recovery under the Rights Offering
Sub Plan and Claims Conversion Sub Plan. Based on this standard, the following Classes will not be
entitled to vote on the Plan:
|
|
|
|
|
|
|
Class |
|
Claim or Interest |
|
Status |
|
Voting Rights |
A
|
|
ABL Claims
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
B
|
|
Secured Tax Claims
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
C
|
|
Other Secured Claims
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
D
|
|
Other Priority Claims
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
I
|
|
Intercompany Claims
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
K
|
|
Intercompany Interests
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
L
|
|
Section 510(b) Claims
|
|
Impaired
|
|
Deemed to Reject |
|
|
|
16 |
|
Capitalized terms used in this Article III but not defined
in the Disclosure Statement or the Plan shall have the meanings ascribed to
them in the Solicitation Procedures attached as Exhibit 5 to the
Disclosure Statement Order, to be attached hereto as Exhibit B once
approved. |
18
C. Solicitation Procedures
|
1. |
|
Claims and Solicitation Agent |
The Debtors retained KCC to, among other things, act as Claims and Solicitation Agent in
connection with the solicitation of votes to accept or reject the Plan.
The following materials shall constitute the Solicitation Package:
|
|
|
the Notice of (A) Approval of Adequacy of Disclosure Statement, (B)
Solicitation and Voting Procedures, (C) the Objection and Voting Deadlines, and (D) the
Hearing to Confirm the Debtors Fourth Amended Plan of Reorganization; |
|
|
|
|
the appropriate Ballot(s) and Master Ballots and applicable voting
instructions, together with a pre-addressed, postage pre-paid return envelope; |
|
|
|
|
the Disclosure Statement, as approved by the Bankruptcy Court (with all
appendices thereto, including the Plan); |
|
|
|
|
the Order (A) Approving the Adequacy of the Debtors Fourth Amended Disclosure
Statement; (B) Approving Solicitation and Notice Procedures with Respect to
Confirmation of the Debtors Proposed Plan of Reorganization; (C) Approving the Form of
Various Ballots and Notices in Connection Therewith; and (D) Scheduling Certain Dates
with Respect Thereto (the Disclosure Statement Order), which shall be
attached hereto as Exhibit B, without exhibits except for Exhibit 1
thereto, once approved by the Bankruptcy Court; |
|
|
|
|
a letter from the Debtors to the Voting Classes recommending that holders of
Claims in such Classes vote to accept the Plan; and |
|
|
|
|
any supplemental solicitation materials the Debtors may file with the
Bankruptcy Court. |
|
|
3. |
|
Distribution of the Solicitation Package and Plan Supplement |
Through the Claims and Solicitation Agent and Financial Balloting Group LLC (the Special
Voting Agent), the Debtors intend to distribute the Solicitation Packages within five Business
Days after entry of the Disclosure Statement Order, a date approximately 30 days in advance of the
Voting Deadline.
The Solicitation Package will be distributed in accordance with the Solicitation Procedures,
which shall be attached as Exhibit 5 to the Disclosure Statement Order. The Solicitation
Package (except the Ballots and Master Ballots) may also be obtained from the Claims and
Solicitation Agent by: (a) calling the Debtors restructuring hotline at (866) 967-0260 within the
U.S. or Canada or, outside of the U.S. or Canada, by calling (310) 751-2660; (b) visiting the
Debtors restructuring website at: http://www.kccllc.net/visteon;
19
and/or (c) writing to Visteon Corporation, c/o Kurtzman Carson Consultants LLC, 2335 Alaska Avenue, El Segundo, California 90245.
You may also obtain copies of any pleadings filed in these Chapter 11 Cases for free by visiting
the Debtors restructuring website at http://www.kccllc.net/visteon or for a fee via PACER at
http://www.deb.uscourts.gov.
Prior to the Confirmation Hearing, the Debtors intend to file a Plan Supplement that includes,
among other things, the list of assumed Executory Contracts (with associated Cure Amounts, if any),
and a description of retained Causes of Action. As the Plan Supplement is updated or otherwise
modified, such modified or updated documents will be made available on the Debtors restructuring
website. The Debtors will not serve paper or CD-ROM copies of the Plan Supplement; however,
parties may obtain a copy of the Plan Supplement from the Claims and Solicitation Agent by: (a)
calling the Debtors restructuring hotline at (866) 967-0260 within the U.S. or Canada or, outside
of the U.S. or Canada, calling (310) 751-2660; (b) visiting the Debtors restructuring website at:
http://www.kccllc.net/visteon; and/or (c) writing to Visteon Corporation, c/o Kurtzman Carson
Consultants LLC, 2335 Alaska Avenue, El Segundo, California 90245.
D. Voting Procedures
The Voting Record Date is [] 2010. The Voting Record Date is the date for determining (1)
which holders of Claims or Interests are entitled to vote to accept or reject the Plan and receive
the Solicitation Package in accordance with the Solicitation Procedures and (2) whether Claims or
Interests have been properly assigned or transferred to an assignee pursuant to Bankruptcy Rule
3001(e) such that the assignee can vote as the holder of a Claim. The Voting Record Date and all
of the Debtors solicitation and voting procedures shall apply to all of the Debtors Creditors and
other parties in interest.
Under the Plan, holders of Claims or Interests in the Voting Classes are entitled to vote to
accept or reject the Plan. In order for the holder of a Claim or Interest in the Voting Classes to
have such holders Ballot counted as a vote to accept or reject the Plan, such holders Ballot must
be properly completed, executed, and delivered by using the return envelope provided by: (a) first
class mail; (b) courier; or (c) personal delivery to Visteon Corporation Balloting Center c/o
Kurtzman Carson Consultants LLC 2335 Alaska Avenue, El Segundo, CA 90245, so that such holders
Ballot or the Master Ballot incorporating the vote cast by such Ballot, as applicable, is
actually received by the Claims and Solicitation Agent prior to 5:00 p.m. prevailing
Pacific Time on [], 2010 (the Voting Deadline).
IF A BALLOT IS RECEIVED AFTER THE VOTING DEADLINE, IT WILL NOT BE COUNTED UNLESS THE DEBTORS
DETERMINE OTHERWISE IN THEIR SOLE AND ABSOLUTE DISCRETION.
ANY BALLOT THAT IS PROPERLY EXECUTED BY THE HOLDER OF A CLAIM OR INTEREST BUT THAT DOES NOT
CLEARLY INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN OR ANY BALLOT THAT INDICATES BOTH AN
20
ACCEPTANCE AND A REJECTION OF THE PLAN WILL NOT BE COUNTED FOR PURPOSES OF ACCEPTING OR REJECTING
THE PLAN.17
EACH HOLDER OF A CLAIM OR INTEREST MUST VOTE ALL OF ITS CLAIMS OR INTERESTS WITHIN A
PARTICULAR CLASS EITHER TO ACCEPT OR REJECT THE PLAN AND MAY NOT SPLIT SUCH VOTES. BY SIGNING AND
RETURNING A BALLOT, EACH HOLDER OF A CLAIM OR INTEREST WILL CERTIFY TO THE BANKRUPTCY COURT AND THE
DEBTORS THAT NO OTHER BALLOTS WITH RESPECT TO SUCH CLAIM OR INTEREST HAVE BEEN CAST OR, IF ANY
OTHER BALLOTS HAVE BEEN CAST WITH RESPECT TO SUCH CLASS OF CLAIMS OR INTEREST, SUCH OTHER BALLOTS
INDICATED THE SAME VOTE TO ACCEPT OR REJECT THE PLAN.
IT IS IMPORTANT THAT THE HOLDER OF A CLAIM OR INTEREST IN THE VOTING CLASSES FOLLOW THE
SPECIFIC INSTRUCTIONS PROVIDED ON SUCH HOLDERS BALLOT AND THE ACCOMPANYING INSTRUCTIONS.
E. Rights Offering Subscription Procedures
On or about [], 2010, the Debtors will deliver an Election Form to each Note Holder to
determine which Note Holders will be considered Eligible Holders. The Election Form is due by the
Election Form Deadline.
The Debtors will mail a Subscription Form to each Note Holder who completes and returns an
Election Form evidencing that it is an Eligible Holder by the Election Form Deadline. The
Subscription Form will be mailed with instructions for the proper completion, due execution, and
timely delivery of such Subscription Form, as well as instructions for payment. Each Eligible
Holder that validly exercises in full its Subscription Rights shall be entitled to elect on the
Subscription Form to purchase Rights Offering Shares not otherwise subscribed for pursuant to
validly exercised Subscription Rights by indicating the number of such unsubscribed shares such
Eligible Holder desires to purchase. To exercise its Subscription Rights and, if applicable,
Oversubscription Rights, an Eligible Holder must: (1) return a duly completed Subscription Form to
the Rights Offering Agent so that such Subscription Form is actually received by the Rights
Offering Agent on or before the Subscription Expiration Date, and (2) pay to the Rights Offering
Agent on or before the Subscription Expiration Date the Subscription Price multiplied by the number
of shares of New Visteon Common Stock such Eligible Holder has elected to purchase, in accordance
with the wire instructions set forth on the Subscription Form.
IF THE RIGHTS OFFERING AGENT FOR ANY REASON DOES NOT RECEIVE ON OR PRIOR TO THE ELECTION FORM
DEADLINE BOTH A DULY COMPLETED SUBSCRIPTION FORM AND IMMEDIATELY AVAILABLE FUNDS AS SET FORTH ABOVE FROM AN ELIGIBLE HOLDER,
SUCH ELIGIBLE HOLDER SHALL BE DEEMED TO HAVE RELINQUISHED AND WAIVED ITS RIGHT TO PARTICIPATE IN
THE
|
|
|
17 |
|
Holders who return Ballots that do not indicate a vote to
accept or reject the Plan may still opt-out of the third party release
provisions set forth in the Plan. |
21
RIGHTS OFFERING. THE DEBTORS SHALL NOT BE OBLIGATED TO HONOR ANY PURPORTED EXERCISE OF
SUBSCRIPTION RIGHTS OR OVERSUBSCRIPTION RIGHTS RECEIVED BY THE RIGHTS OFFERING AGENT AFTER THE
SUBSCRIPTION EXPIRATION DATE REGARDLESS OF WHEN THE DOCUMENTS RELATING TO SUCH EXERCISE WERE SENT.
ONCE THE ELIGIBLE HOLDER HAS VALIDLY EXERCISED ITS SUBSCRIPTION RIGHTS AND, IF APPLICABLE,
OVERSUBSCRIPTION RIGHTS, SUCH EXERCISE WILL NOT BE PERMITTED TO BE REVOKED.
F. Confirmation Hearing
Pursuant to section 1128(a) of the Bankruptcy Code, the Bankruptcy Court, after notice, may
hold a hearing on Confirmation of the Plan. Section 1128(b) of the Bankruptcy Code provides that
any party in interest may object to Confirmation of the Plan.
The Confirmation Hearing will commence on [], 2010 at [] a.m./p.m. prevailing Eastern Time,
before the Honorable Christopher S. Sontchi, United States Bankruptcy Judge, in the United States
Bankruptcy Court for the District of Delaware, 824 North Market Street, Wilmington, Delaware 19801.
The Confirmation Hearing may be continued from time to time without further notice other than an
adjournment announced in open court or a notice of adjournment filed with the Bankruptcy Court and
served on the master service list and the Entities who have filed an objection to the Plan
(Plan Objection), without further notice to parties in interest. The Bankruptcy Court,
in its discretion and prior to the Confirmation Hearing, may put in place additional procedures
governing the Confirmation Hearing. The Plan may be modified, if necessary, prior to, during, or
as a result of the Confirmation Hearing, without further notice to parties in interest.
The deadline to file Plan Objections is 5:00 p.m. prevailing Eastern Time on [], 2010. All
Plan Objections must be filed with the Bankruptcy Court and served on the Debtors and certain other
parties in interest in accordance with the Disclosure Statement Order so that they are received on
or before the deadline to file Plan Objections.
G. Confirmation and Consummation of the Plan
The Confirmation Order shall approve all provisions, terms, and conditions of the Plan unless
such provisions, terms, or conditions are otherwise satisfied or waived pursuant to the Plan
provisions described in Article VI.O.2 herein.
ARTICLE IV.
GENERAL INFORMATION
A. Overview of the Debtors History and Industry
Visteon Corporation was incorporated in Delaware in January 2000 as a wholly-owned subsidiary
of Ford. Subsequently, Ford transferred the assets and liabilities comprising its automotive
components and systems business to Visteon Corporation. Visteon Corporation
separated from Ford on June 28, 2000, when all of Visteon Corporations common stock was
distributed by Ford to Fords shareholders. In 2005, Visteon Corporation negotiated for Ford to
reacquire some of the assets spun off to Visteon Corporation in 2000 at their then current fair
22
values. As a result of these negotiations, in September 2005, Visteon Corporation transferred 23
of its North American facilities and certain other related assets and liabilities to Automotive
Component Holdings, LLC (ACH), an indirect, wholly-owned subsidiary of Visteon
Corporation at the time. On October 1, 2005, Visteon Corporation sold ACH to Ford for cash
proceeds of approximately $300.0 million, as well as the forgiveness of certain employee and
retiree welfare benefit liabilities and the assumption of certain other liabilities (together, the
ACH Transactions).
Through the ACH Transactions, Visteon transformed itself into a leaner company focused on a
smaller set of core competencies and with a much improved labor cost position. Through the ACH
Transactions, Visteon Corporation ceased leasing, or transferred, 18,000 hourly employees,
including those employees covered by an uncompetitive master agreement with the International Union
of United Automobile, Aerospace and Agricultural Implement Workers of America (the UAW).
Eliminating Visteons highest cost employees through the ACH Transactions reduced Visteons average
hourly wage from $38.00 per hour in the third quarter of 2005 to $18.00 per hour in the fourth
quarter of 2005.
In addition, Ford agreed to place $400.0 million in an escrow account to assist with Visteons
ongoing restructuring efforts, which included, among other things, costs associated with divesting
facilities. Ford agreed to reimburse Visteon Corporation for its restructuring costs on a
dollar-for-dollar basis up to the first $250.0 million out of the escrow account and to reimburse
Visteon Corporation for one half of the next $300.0 million of its restructuring costs. On August
14, 2008, Ford placed another $50.0 million in the escrow account bringing the total amount placed
in escrow to $450.0 million. In connection with the ACH Transactions, Visteon Corporation and Ford
also entered into an agreement pursuant to which Ford agreed to reimburse Visteon Corporation for
certain separation costs, including severance costs, COBRA health continuation and life insurance
premiums, certain pension related costs, and costs of outplacement services, for salaried employees
leased to ACH from Visteon Corporation who are terminated by Visteon Corporation.
From January 2006 until the fall of 2008, the Debtors undertook an ambitious restructuring
initiative to streamline and improve their business operations. However, as discussed in greater
detail below, the Debtors have not been immune to the virtual freeze of the credit and capital
markets and global economic recession, which has been particularly acute in the automotive sector.
Prior to the Petition Date, these conditions resulted in significant operating losses and cash flow
usage, and made filing for chapter 11 protection the best option for the Debtors to right-size
their capital structure and operating footprint.
B. Visteons Products and Services
Visteon has three core product groupsa climate group, an electronics group, which includes a
significant lighting subset, and an interior systems group. Visteon also provides various
transition services to ACH and other parties in connection with divestiture transactions.
Based on independent market studies and the Debtors internal estimates, Visteon is a market
leader in each of its core product groups. In 2009, Visteons climate product group had revenue of
approximately $2.5 billion. Visteon also sold $2.1 billion in electronic component
23
parts (which includes lighting component parts) and generated $1.9 billion in revenue from its interiors product
group in 2009. Visteon employs its design and engineering capabilities to create award winning and
market leading products. Visteon has invested considerably in research and development and capital
improvements, and has gained industry-wide recognition for its products. Visteons investments in
research and development have producedand are expected to continue to producethe innovative
products needed by the automotive industry in the 21st century. In recent years, Visteons
significant new products include the Hyundai Genesis Climate Control System, which was featured in
the 2009 North American International Auto Show Car of the Year, and the reconfigurable instrument
cluster for the 2010 Land Range Rover. Additionally, Visteon has received many awards for
outstanding products and manufacturing, including the 2009 Shingo Bronze Medallion for operational
excellence, the Best Overall Performance award from Hyundai Motor India, and selection as a PACE
award finalist for its two-color, two-shot injection molding manufacturing process.
Visteon designs and manufactures fully integrated heating, ventilation, and air conditioning
systems, such as air induction and HVAC systems, that help ensure a comfortable interior climate
for automobiles. Some examples of climate products produced by Visteon are heat exchangers,
climate controls, compressors, and fluid transport systems. In addition, using power train cooling
technologies, Visteon manufactures cooling functionality and thermal management for vehicles power
train systems. As of December 31, 2009, Visteon produced goods for its climate product group at
approximately 27 facilities worldwide.
|
2. |
|
Electronics Product Group |
Visteon also designs and manufactures advanced in-vehicle entertainment, driver information
systems, wireless communication, climate control, body and security electronics, and lighting
technologies and products, such as headlamps and tail lamps. For in-vehicle driver and passenger
entertainment, Visteon offers a wide variety of audio systems and components, such as MACH(R) Voice
Link Technology, connectivity solutions for portable devices, and a variety of family entertainment
systems. As of December 31, 2009, Visteon produced goods for its electronics product group at
approximately 14 facilities worldwide.
|
3. |
|
Interiors Product Group |
Additionally, Visteon produces cockpit modules, instrument panels, a variety of door and
console modules, and interior trim components. Visteon designs its cockpit modules around the
instrument panels, which offer optional assemblies like ducts, registers, passenger airbag systems,
finished panels, and a glove box. As of December 31, 2009, Visteon produced goods for its
interiors product group at approximately 27 facilities worldwide.
Visteons service operations provide various transition services in support of divestiture
transactions, principally related to the ACH Transactions. Services to ACH are provided at a rate
intended to equal Visteons cost until such time as the services are no longer required by ACH or
the expiration of the related agreement. In addition to services provided to ACH,
24
Visteon has also agreed to provide certain transition services related to other divestiture transactions. These
services are subject to agreements with ACH and Ford that the Debtors intend to exit during the
Chapter 11 Cases.
C. Visteons Customers
Visteons customers include most of the worlds largest original equipment manufacturers
(OEMs). Given its historical relationship with Ford, Ford initially accounted for the
majority of Visteons sales. However, over the last few years, Visteon has diversified its
customer base. In 2000, Ford accounted for 84% of Visteons sales. By 2005, that number was
reduced to 62%, and in 2009, that number was only 28%. Today, Visteon makes substantial sales to
almost every major OEM in the world. In the first quarter of 2009, Visteon sold its products
primarily to global automotive OEMs. In addition, Visteon sells certain of its products to other
Tier 1 suppliers and the aftermarket (i.e., consumers and business customers) for use as
replacement or enhancement parts. The table below depicts OEM sales made as a percentage of total
product sales (by dollar amount) in 2009, which OEM sales collectively account for approximately
86% of Visteons total product sales:
|
|
|
Customer |
|
Percentage of Total Sales Volume |
Ford |
|
28% |
Hyundai/Kia |
|
27% |
Nissan/Renault |
|
9% |
PSA Peugeot Citroën |
|
7% |
Chrysler |
|
3% |
General Motors |
|
3% |
Volkswagen |
|
2% |
Mazda |
|
2% |
BMW |
|
1% |
Fiat |
|
1% |
Honda |
|
1% |
Jaguar/Land Rover |
|
1% |
Toyota |
|
1% |
25
D. Visteons Corporate Structure
Visteons business is an interconnected, global operation comprised of the 30 Debtors in the
Chapter 11 Cases and more than 100 non-Debtor, foreign Affiliates located throughout the world
(e.g., Germany, France, Mexico, Brazil, Argentina, Spain, Netherlands, Portugal, Czech Republic,
China, and Korea). Visteon Corporation is the direct parent of 18 domestic Affiliates, including a
joint venture that is not a Debtor in the Chapter 11 Cases, Toledo Molding & Die, Inc. Many of
Visteon Corporations direct subsidiaries have subsidiaries of their own.
The corporate structure chart above depicts the Debtors corporate structure and demonstrates
the structural superiority of certain Claims against the Debtors. As explained above, the 12.25%
Senior Notes Claims have Domestic Subsidiary Guarantees against a number of Visteon entities
against which other Creditors do not have Claims. To provide a recovery on account of the Domestic
Subsidiary Guarantees, holders of the 12.25% Senior Notes Claims will receive (1) a Pro Rata
portion of warrants to purchase New Visteon Common Stock on terms described in the Warrant
Agreement under the Rights Offering Sub Plan and (2) a greater percentage of New Visteon Common
Stock than other Note Holders under the Claims Conversion Sub Plan.
Only the Term Loan Lenders and certain General Unsecured Creditors have Claims against VIHI,
the direct parent of over 40 foreign Affiliates. Key assets of VIHI include its 70.0% equity stake
in Halla Climate Control Corporation (Halla Korea), a publicly traded company in South
Korea, and a Chinese joint venture, Yanfeng Visteon Automotive Trim Systems Company Ltd., in which
VIHI owns 50.0% of the equity. Visteon European Holdings Corporation, a Debtor in the Chapter 11
Cases, owns a number of European foreign Affiliates
26
and Visteon Automotive Holdings, LLC and Visteon Holdings, LLC, also Debtors in the Chapter 11 Cases, own a number of South American,
Central American, and Asian Affiliates. The Term Loan Lenders will receive a 100% recovery on
their Claims, either through Cash generated from the Rights Offering and the Exit Financing
Facility under the Rights Offering Sub Plan or through New Visteon Common Stock under the Claims
Conversion Sub Plan. Thus, under either Sub Plan, holders of Allowed General Unsecured Claims
against VIHI shall be entitled to receive distributions from VIHIs assets before any such value is
shared with holders of other General Unsecured Claims. Given the estimated value of VIHIs
assets, holders of Allowed General Unsecured Claims against VIHI are expected to receive a full
recovery on account of such Claims. If however Allowed General Unsecured Claims against VIHI
exceed $20.0 million, holders of such Claims shall receive their Pro Rata share of $20.0 million in
Cash.
E. Visteons Competition
Visteons primary competitors vary by product group and region. Overall, Visteons primary
independent competitors include Alpine Electronics, Inc., Automotive Lighting Reutlingen GmbH, Behr
GmbH & Co. KG, Continental AG, Delphi Automotive LLP, Denso Corporation, Faurecia Group, Harman
International AKG, Hella KGaA, International Automotive Components Group, Johnson Controls, Inc.,
Koito Manufacturing Co., Ltd., Magna International Inc., Robert Bosch GmbH, and Valéo S.A.
F. Executive Officers of the Debtors
The executive management team of the Debtors is composed of highly capable professionals with
substantial experience in the automotive industry. The Debtors executive management team consists
of the following individuals:
|
|
|
Name |
|
Position |
Donald J. Stebbins
|
|
Chairman, President and Chief Executive Officer |
William G. Quigley III
|
|
Executive Vice President and Chief Financial Officer |
Robert C. Pallash
|
|
Senior Vice President and President, Global Customer
Group |
Dorothy L. Stephenson
|
|
Senior Vice President, Human Resources |
Julie A. Fream
|
|
Vice President, North American Customer Groups
Strategy, and Communications |
Joy M. Greenway
|
|
Vice President and President, Climate Products Group |
Steve Meszaros
|
|
Vice President and President, Electronics Product Group |
Michael K. Sharnas
|
|
Vice President and General Counsel |
James F. Sistek
|
|
Vice President and Chief Information Officer |
G. Employees
As of the Petition Date, Visteon employed approximately 30,400 employees worldwide, 5,856 of
which the Debtors employed, consisting of 5,218 salaried employees and 2,313 hourly employees.
Visteon Corporation leased 1,306 of the salaried employees and 1,416 of the hourly employees to
ACH. As of the Petition Date, the Debtors had approximately 1,800 employees whose employment was
governed by a collective bargaining agreement (CBA). As of the date of this Disclosure
Statement, one or more of the Debtors is party to the following CBAs: (1) the
27
Agreements between the UAW and the Visteon Corporation, dated June 29, 2000, which cover hourly employees leased to
ACH; (2) the Agreements between Visteon Corporation and the UAW Nurse Bargaining Unit, dated March
1, 2008, which cover salaried nurses leased to ACH; and (3) the 2004 Collective Bargaining
Agreement between Visteon Corporation Regional Assembly and Manufacturing LLC Bellevue Plant and
United Auto Workers Local 1216, which covers certain hourly employees leased to ACH.
H. Benefit Plans
As of the Petition Date, the Debtors sponsored the following material employee benefit plans,
each of which is governed by provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA) and the Internal Revenue Code:
|
a. |
|
Single-Employer Pension Plans |
Visteon Corporation, Visteon Systems, LLC (Visteon Systems), and Visteon Caribbean,
Inc. (Visteon Caribbean), each sponsor one or more of the Pension Plans. The Pension
Plans are covered by the termination insurance program described in Title IV of ERISA. The PBGC is
a wholly-owned United States government corporation created by ERISA to administer the mandatory
pension plan termination insurance program. The PBGCs principal purpose is to guarantee the
payment of certain pension benefits to participants upon termination
of a pension
plan.18
The Visteon Pension Plan (VPP), sponsored by Visteon Corporation, accounts for
the vast majority of the Debtors total projected unfunded benefit obligations of approximately
$460.0 million on a PBGC termination liability basis. As of January 1, 2009, the VPP provided
pension benefits to approximately 3,760 employees and 11,990 retirees and deferred vested plan
participants.19 Participants in the VPP include approximately ten salaried employees
represented by the UAW and approximately 1,200 non-union, salaried employeesall of whom are
leased to ACH. Under that certain Visteon Salaried Employee Lease Agreement, dated October 1,
2005, by and between Visteon Corporation and ACH (the Salaried Employee Lease Agreement),
ACH pays Visteon Corporation on a monthly basis an amount that is intended to reflect Visteon
Corporations liability for providing pension benefits to ACH employees. Under this agreement,
ACHs pension-related payment obligation is equal to Visteon Corporations reported accounting
expense attributable to benefits accrued by these leased employees and not the actual cash
contributions that are required to satisfy the periodic pension funding obligations with respect to
such benefits.
The Debtors estimated that the VPP was underfunded by approximately $383.0 million on a PBGC
termination liability basis as of December 31, 2009. As a result of the Worker, Retiree, and
Employer Recovery Act (WRERA), the only contributions due to the VPP during the Chapter
11 Cases were the catch-up contributions on account of the 2008 plan year, due
|
|
|
18 |
|
See 29 U.S.C. § 1302. |
|
19 |
|
A deferred vested plan participant is a plan participant
who is no longer actively employed and has a vested right to a pension benefit
under the terms of the Plan, but who has not yet started to receive payment of
that pension benefit. |
28
September 15, 2009, for the VPP itself and for the North Penn Pension Plan, which merged into the VPP on December 31,
2008.20 In their business judgment, the Debtors decided to forgo making these catch-up
contributions. Accordingly, $723,221.00 of the catch-up contributions, in the aggregate, for the
VPP and the North Penn Pension Plan for the 2008 plan year remain unpaid. The Debtors will pay
this amount plus any interest and any penalties prior to the Effective Date. The Debtors estimate
that approximately $268.0 million will be due in contributions for calendar years 2010 through 2015
based on current economic conditions.
Visteon Corporation also sponsors the UAW Visteon Pension Account Plan (the UAW
Plan), which as of January 1, 2009 provided pension benefits to approximately 1,820 hourly
employees and 270 retirees and deferred vested participants who are, or were, represented by the
UAW and leased to ACH. Under that certain Visteon Hourly Employee Lease Agreement, dated October
1, 2005, by and between Visteon Corporation and ACH (the Hourly Employee Lease
Agreement), ACHs pension-related payment obligation with respect to the UAW Plan participants
is equal to a portion of Visteon Corporations reported accounting expense and not the actual
funding contributions to the UAW Plan. The Debtors estimated that the UAW Plan was underfunded by
$5.0 million on a PBGC termination liability basis as of December 31, 2009. The Debtors also
estimate that approximately $5.0 million will be due in contributions for calendar years 2010
through 2015 based on current economic conditions.
Visteon Systems sponsors the Pension Plan of Visteon Systems, LLC Connersville and Bedford
Plants (the Visteon Systems C&B Plan), which as of January 1, 2009 provided pension
benefits to approximately 5,180 retirees and deferred vested participants of the Visteon Systems
C&B Plan who were represented by the International Union of Electrical Workers (the
IUE-CWA). The Connersville and Bedford plants were shut down on December 31, 2007 and
June 30, 2008, respectively. The Visteon Systems C&B Plan is closed, meaning that no active
employees are accruing benefits under the plan. The Debtors estimated that the Visteon Systems C&B
Plan was underfunded by approximately $120.0 million on a PBGC termination liability basis as of
December 31, 2009. As a result of WRERA, the only contribution due to the Visteon Systems C&B Plan
during the Chapter 11 Cases was the catch-up contribution on account of the 2008 plan year, due
September 15, 2009, in the amount of $730,795.00. The Debtors, in their business judgment, decided
to forgo making such contribution. The Debtors will pay this amount plus any interest and any
penalties prior to the Effective Date. The Debtors estimate that approximately $57.0 million will
be due in contributions for calendar years 2010 through 2015 based on current economic conditions.
When an employer ceases operations at a location that results in more than 20% of a pension
plans participants being separated from employment, the PBGC can require the plan sponsor and its
controlled group members to pay the PBGC an amount, to be held in escrow for up to five years,
equal to the percentage of unfunded benefit liabilities that is the same as the percentage of
active employees separated as a result of the cessation of
operations.21 In lieu of such
payment, when the Connersville and Bedford plants were shutdown, the parties reached an agreement,
effective as of January 9, 2009 (the PBGC Agreement), requiring: (i) Visteon Systems to
make an additional $10.5 million contribution to the Visteon Systems C&B Plan; (ii)
|
|
|
20 |
|
Worker, Retiree, and Employer Recovery Act of 2008, Pub.
L. No. 110-458, 122 Stat. 5092. |
|
21 |
|
See 29 U.S.C. § 1362(e), 1363. |
29
Visteon Corporation to provide a $15.0 million letter of credit in favor of the PBGC (the
L/C); and (iii) Visteon Systems and Visteon Corporation to procure from certain foreign
AffiliatesVisteon Portuguesa, Ltd., Cadiz Electronica S.A., and Visteon Hungaria K.F.Ta
guarantee of up to $30.0 million for unfunded benefit liabilities upon termination of the Visteon
Systems C&B Plan (the PBGC Guarantee).22 In accordance with the PBGC Agreement,
on September 21, 2009, the PBGC drew from the L/C in an amount equal to the Debtors $730,795.00
missed funding contribution related to the Visteon Systems C&B Plan. On October 29, 2009, the PBGC
drew the remaining balance of $14,269,205.00 from the L/C pursuant to the PBGC Agreement. Because
the Plan contemplates maintenance of the Pension Plans, the Debtors reserve any and all rights they
may have with respect to the amounts drawn under the L/C.
Lastly, Visteon Caribbean sponsors a pension plan (the Caribbean Plan) that provides
pension benefits to approximately 255 retirees and deferred vested participants, including retirees
who were represented by the UAW prior to the shut-down of Visteons Puerto Rico plant in 2005. The
Caribbean Plan is a closed plan. The only required contribution to the Caribbean Plan on account
of the 2009 plan year was made on January 15, 2009 in the amount of $0.2 million. The Debtors
estimated that the Caribbean Plan was underfunded by approximately $2.0 million on a PBGC
termination liability basis as of December 31, 2009, with approximately $2.0 million due in
contributions for calendar years 2010 through 2015 based on current economic conditions.
On or about October 9, 2009, the PBGC filed 16 separate Proofs of Claim against the Debtors.
In accordance with the Order Approving Stipulation Permitting Pension Benefit Guaranty Corporation
To File Consolidated Claims Under A Single Case Number, [Docket No. 1024], a single Proof of Claim
was deemed to constitute the filing of a Proof of Claim against each and every Debtor in the
Chapter 11 Cases. Specifically, the PBGC filed a Claim for each of the Pension Plans for:
|
o |
|
the estimated amount of the Pension Plans unfunded benefit liabilities if the
Pension Plans were to terminate (Unfunded Liability Claims);23 |
|
|
o |
|
the estimated amount of unpaid minimum funding contributions that may be owed to the
Pension Plans (the Funding Claims);24 |
|
|
|
22 |
|
The $10.5 million additional contribution was made to the
Visteon Systems C&B Plan on January 16, 2009. The PBGC Guarantee was executed
in January 2009. |
|
23 |
|
Specifically, the PBGC filed Claims for the unfunded
benefit liabilities of the: (a) VPP in the amount of $438.1 million;
(b) Systems C&B Plan in the amount of $127.8 million; (c) UAW Plan in the
amount of $4.4 million; and (d) Caribbean Plan in the amount of $1.8 million.
The PBGC asserted a portion of these amounts is entitled to Administrative
Claim or Priority Claim status. |
|
24 |
|
Specifically, the PBGC filed Claims for unpaid minimum
funding contributions that may be owed to the: (a) VPP in the amount of
$490,943.00; (b) Systems C&B Plan in the amount of $728,974.00; (c) UAW Plan in
an unliquidated amount; and (d) Caribbean Plan in an unliquidated amount. The
PBGC asserted a portion of these amounts is entitled to Administrative Claim or
Priority Claim status. |
30
|
o |
|
the estimated amount of insurance premiums, including termination premiums under 29
U.S.C. 1306(a)(7) (DRA Premiums), interest, and penalties that may be owed to
PBGC if the Pension Plans were to terminate or be terminated;25 and |
|
|
o |
|
the shortfall and waiver amortization charges that may be owed to the Pension
Plans, in unliquidated amounts. |
As described above, the Plan contemplates maintenance of the Debtors Pension Plans. Because
the Unfunded Liability Claims and DRA Premiums only arise upon termination of the Pension Plans,
such Claims will not arise and shall not be entitled to any distribution under the Plan. The
Debtors intend to pay the amounts owed on account of the Funding Claims to the applicable Pension
Plan prior to the Effective Date in satisfaction of such Funding Claims or reach an agreement with
the PBGC whereby the amounts drawn under the L/C shall be used to satisfy the Funding Claims.
b. Multiemployer Pension Plans
The Debtors withdrew from the Central States, Southeast and Southwest Areas Pension Plan prior
to the Petition Date and were assessed total withdrawal liability of approximately $2.3 million,
the unpaid amount of which had a present value of approximately $1.2 million as of the Petition
Date. In addition, there were three union employees at the Debtors North Penn plant who
participated in another multiemployer pension plan, the Teamsters Pension Trust Fund of
Philadelphia and Vicinity. The shutdown of the Debtors North Penn facility triggered withdrawal
liability of approximately $1.1 million. The bulk of this liability is related to prepetition
service and is a General Unsecured Claim. The balance of the liability, related to postpetition
service will be paid as an Administrative Claim. The Central States, Southeast, and Southwest
Areas Pension Plan and the Teamsters Pension Trust Fund of Philadelphia and Vicinity hold Claims
against all of the Debtors, including VIHI, on account of the withdrawal liability from the
multiemployer plans pursuant to Section 4201 of ERISA. These claimants are entitled to recover
from the assets of VIHI before any such value is upstreamed to satisfy other General Unsecured
Claims. Therefore, the Central States, Southeast, and Southwest Areas Pension Plan and the
Teamsters Pension Trust Fund of Philadelphia and Vicinity will receive a 100% recovery on their
Claims under the Plan.
2. Nonqualified Plans
Visteon Corporation maintains the Visteon Corporation Deferred Compensation Plan, as amended
and restated effective January 1, 2009 (the DCP), an account balance nonqualified
deferred compensation plan covering selected employees of Visteon. The DCP ceased accepting
employee deferrals on January 1, 2006. Visteon Corporation also maintains the PPP, a defined
benefit nonqualified deferred compensation plan. Under the PPP, participating employees are
generally paid the excess of the amount payable under the applicable Pension Plan without
application of the limitations of the Internal Revenue Code. Visteon Corporation also sponsors
|
|
|
25 |
|
Specifically, the PBGC filed Claims for premiums that may
be owed to the PBGC in respect of the: (a) VPP in the amount of $59.07 million;
(b) Systems C&B Plan in the amount of approximately $19.41 million; (c) UAW
Plan in the amount of $8.16 million; and (d) Caribbean Plan in the amount of
$990,00.00. The PBGC asserted a portion of these amounts is entitled to
Administrative Claim or Priority Claim status. |
31
the SERP, which is a defined benefit nonqualified deferred compensation plan that provides
supplemental retirement benefits to certain employees of Visteon Corporation and certain of Visteon
Corporations designated Affiliates who participate in the VPP. For employees who participate in
the contributory/non-contributory component of the SERP, benefits are payable under a final
average pay formula, based on years of service and the employees covered employment
classification. For employees who participate in the cash balance component of the SERP,
benefits are payable based on the excess of what would be payable under the applicable qualified
defined benefit plan cash balance and pension equity formulas without limitations of the Internal
Revenue Code and with certain other modifications over the sum of the amount actually payable under
the VPP plus the amount actually payable to the employee under the PPP. The Debtors also maintain
the ESAP. The ESAP is a defined benefit nonqualified deferred compensation plan that provides
supplemental retirement benefits to certain eligible senior executives of Visteon who separate
employment at age 55 or later. Benefits are payable under the ESAP as a monthly benefit equal to a
percentage of base salary, at a maximum of 60.0%, based on the participants age and service.
Lastly, Visteon Corporation maintains the Visteon Corporation Deferred Compensation Plan for
Non-Employee Directors, an account balance nonqualified deferred compensation plan for non-employee
directors (the Directors DCP), as amended through June 10, 2009. Under the Directors
DCP, non-employee directors may voluntarily defer any cash remuneration they receive for services
as a director.
The Debtors will amend the SERP, PPP, and ESAP to eliminate any and all future benefit
payments for all participants in those plans. Immediately prior to the Effective Date, the Debtors
shall reject the SERP, the PPP, and the ESAP, all as amended. As a result of these actions, the
Debtors do not believe that there will be any Allowed General Unsecured Claims on account of
approximately $30.9 million in eliminated accrued benefits under the SERP, the PPP, and the ESAP.
If General Unsecured Claims are ultimately Allowed on account of eliminated accrued benefits,
recoveries for General Unsecured Claims will be diluted as reflected in the high range estimates
contained in this Disclosure Statement. The Debtors shall also reject the DCP on or prior to the
Effective Date.
Without further action of the New Board, the Reorganized Debtors shall establish a new
supplemental executive retirement plan and pension parity plan, each of which shall be
substantially in the form contained in the Plan Supplement, and shall provide benefits to eligible
employees of the Reorganized Debtors that are at least equal to the benefits accrued by such active
employees under the SERP and PPP as of one Business Day prior to the date of any amendment of such
plan.
I. The Debtors Prepetition Capital Structure
As of the Petition Date, the Debtors had approximately $2.5 billion of outstanding debt on a
consolidated basis, of which: approximately $1.5 billion consisted of loans, interest, and other
amounts owed under the Term Loan Facility; approximately $89.0 million consisted of draws on the
ABL Facility and interest and other fees with regard thereto; approximately $862.0 million
consisted of unsecured U.S. bond debt; and approximately $21.0 million consisted of debt on account
of other credit facilities, capital leases for Affiliates, swaps, and
32
other miscellaneous debt obligations. The Debtors principal debt obligations, as of the Petition Date, were as follows:
1. Secured Debt
a. Term Loan Facility
On April 10, 2007, Visteon Corporation, as borrower, entered into the Term Loan Facility with
several banks and the Term Loan Lenders, and Wilmington Trust FSB, as administrative agent for the
Term Loan Lenders and successor to JPMorgan Chase Bank, N.A. (together with any security
agreements, mortgages, pledge agreements, guaranties, other collateral agreements, certificates,
financing statements and related assignments and transfer powers and additional documents and
ancillary agreements entered into by Visteon Corporation or any of its subsidiaries in connection
therewith, each as amended from time to time, the Term Loan Documents).
As part of the Term Loan Facility, the Term Loan Lenders agreed, subject to the terms and
conditions set forth in the Term Loan Documents, to make certain loans to Visteon Corporation,
including a $1.5 billion senior secured term loan. The obligations of Visteon Corporation under
the Term Loan Documents are guaranteed by each of the Debtors and certain non-Debtor Affiliates,
except for Visteon Electronics Corporation (VEC), AutoNeural Systems, LLC, Toledo Mold &
Die, Inc., any subsidiary thereof, and any person with capital stock of Toledo Mold & Die, Inc. as
its principal assets. To secure its obligations under the Term Loan Facility, Visteon Corporation
granted to the Term Loan Lenders (i) a first priority Lien on certain assets of Visteon Corporation
and of most of Visteon Corporations domestic subsidiaries, including intellectual property,
intercompany debt, capital stock of nearly all domestic subsidiaries of Visteon Corporation and
65.0% of the stock of certain foreign subsidiaries of Visteon Corporation (collectively, the
Term Loan Priority Collateral), including Halla Korea, in which VIHI holds a 70.0%
ownership interestleaving 5.0% of the value of Halla Korea unencumbered and (ii) a second
priority Lien on substantially all other assets of Visteon Corporation and of Visteon Corporations
domestic subsidiaries.
The Term Loan Facility bears interest at either (x) a rate per annum equal to the Eurodollar
rate plus 3.00% or (y) a rate per annum equal to the greater of the Prime Rate or the Federal Funds
Effective Rate plus 50 bps, plus 2.00%, until the final maturity date of December 13, 2013. As of
the Petition Date, approximately $1.5 billion remained outstanding under the Term Loan Facility.
In accordance with the Term Loan Documents, interest was calculated on a Eurodollar Rate basis
through July 12, 2009, and has been accruing on a base rate basis since July 13, 2009. The default
interest rate under the Term Loan Facility is 2.00% above the applicable rate. The Debtors have
not paid interest on the Term Loan Facility during the Chapter 11 Cases.
On May 29, 2009, Wilmington Trust FSB, as administrative agent for the Debtors Term Loan
Lenders, filed a motion with the Bankruptcy Court seeking adequate protection for use of the Term
Loan Lenders cash collateral including, but not limited to, cash collateral related to the Term
Loan Priority Collateral [Docket No. 70]. The parties reached a stipulation pursuant to which the
Debtors would provide the Term Loan Lenders with adequate protection in exchange
33
for use of the Term Loan Lenders cash collateral in the form of adequate protection Liens and a superpriority
Claim as well as the payment of Professional Fees. The Bankruptcy Court approved the stipulation
on July 16, 2009 [Docket No. 598].
b. The ABL Facility
On August 14, 2006, Visteon Corporation and each of its subsidiaries from time to time party
thereto, as borrowers, the Bank of New York Mellon, as administrative agent and successor to
JPMorgan Chase Bank, N.A., issuing bank and swingline lender, and the ABL Lender entered into the
ABL Facility (together with any security agreements, mortgages, pledge agreements, guarantees,
other collateral agreements, certificates, financing statements and related assignments and
transfer powers and additional documents and ancillary agreements entered into by Visteon
Corporation or any of its subsidiaries in connection therewith, each as amended from time to time,
the ABL Loan Documents). The ABL Facility is a borrowing-base facility in the aggregate
principal amount of $350.0 million that includes a letter of credit subfacility in an amount not to
exceed $250.0 million. Visteon Corporations obligations under the ABL Loan Documents are
guaranteed by each of the Debtors, except for VEC, VIHI, AutoNeural Systems, LLC, Toledo Mold &
Die, Inc., any subsidiary thereof, and any person with capital stock of Toledo Mold & Die, Inc. as
its principal assets. To secure its obligations under the ABL Facility, Visteon Corporation
granted to the ABL Lenders (i) a first priority Lien on certain assets of Visteon, its domestic
subsidiaries, and a limited number of foreign subsidiaries, and (ii) a second priority Lien on all
Term Loan Priority Collateral.
The ABL Facility bears interest at either a rate per annum equal to the Eurodollar rate plus
4.0% or a rate per annum equal to the greatest of (x) the Prime Rate, (y) the Federal Funds
Effective Rate plus 1/2 of 1.0%, or (z) the adjusted LIBOR rate for a one month interest period
plus 1.0%, until the final maturity date of August 14, 2011.
On May 13, 2009, Ford purchased, assumed, and took an assignment of all of the outstanding
loans, obligations, and other interests of the lenders under the ABL Facility. As of the Petition
Date, there was approximately $89.0 million outstanding under the ABL Facility and approximately
$59.0 million had been issued under various letters of credit. During the Chapter 11 Cases,
approximately $38.5 million has been drawn under letters of credit under the ABL Facility.
c. Prepetition Waivers
Effective March 31, 2009, Visteon Corporation entered into limited waivers to the Term Loan
Facility and ABL Facility until May 30, 2009 with respect to a potential default relating to the
inclusion of an explanatory paragraph in the report of Visteon Corporations independent registered
public accounting firm indicating substantial doubt about Visteon Corporations ability to continue
as a going concern.
d. The Intercreditor Agreement
The ABL Lenders and the Term Loan Lenders are party to that certain Intercreditor Agreement,
dated June 13, 2006 (the Intercreditor Agreement). The Intercreditor Agreement
34
governs the relative contractual rights of the parties, including their rights to object to the Debtors
use of cash collateral from each facility.
2. Unsecured Debt
a. 8.25% Senior Notes Due August 1, 2010
On August 3, 2000, Visteon Corporation issued $700.0 million of the 8.25% Senior Notes under
an indenture, dated as of June 23, 2000, among itself, as issuer, and Bank One Trust Company, N.A.,
as trustee. On June 4, 2009, the Law Debenture Trust Company of New York was appointed as the
successor trustee. The 8.25% Senior Notes provide for interest payments by Visteon Corporation
semi-annually on February 1st and August 1st of each year, commencing on February 1, 2001, at a
rate of 8.25% per year. The 8.25% Senior Notes are general unsecured obligations of Visteon
Corporation that mature on August 1, 2010. As of the Petition Date, approximately $206.0 million
in principal amount remained outstanding under the 8.25% Senior Notes, excluding interest
obligations.
b. 7.00% Senior Notes Due March 10, 2014
On March 10, 2004, Visteon Corporation issued $450.0 million of the 7.00% Senior Notes under a
supplemental indenture, dated as of March 10, 2004, among itself, as issuer, and J.P. Morgan Trust
Company, N.A., as trustee. On June 4, 2009, the Law Debenture Trust Company of New York was
appointed as the successor trustee. Visteon Corporation agreed to pay interest semi-annually on
March 10th and September 10th of each year, commencing on September 10, 2004, at a rate of 7.00%
per year. The 7.00% Senior Notes are general unsecured obligations of Visteon Corporation that
mature on March 10, 2014. As of the Petition Date, approximately $450.0 million in principal
amount remained outstanding under the 7.00% Senior Notes, excluding interest obligations.
c. 12.25% Senior Notes Due December 31, 2016
On June 18, 2008, Visteon Corporation issued approximately $206.4 million of 12.25% Senior
Notes under a second supplemental indenture, dated June 18, 2008, among itself, as issuer, the
guarantors party thereto, and The Bank of New York Trust Company, N.A., as trustee. On June 4,
2009, the Law Debenture Trust Company of New York was appointed as the successor trustee. The
12.25% Senior Notes provide for interest payments by Visteon Corporation semi-annually on June 30th
and December 31st of each year, commencing on December 31, 2008, at a rate of 12.25% per year. The
12.25% Senior Notes mature on December 31, 2016. The 12.25% Senior Notes are general unsecured
obligations of Visteon Corporation that are guaranteed by certain wholly-owned domestic
subsidiaries that guarantee debt under the ABL Facility.26 As of the Petition Date,
approximately $206.4 million in
|
|
|
26 |
|
The guarantors of the 12.25% Senior Notes are the
following wholly-owned domestic subsidiaries of Visteon Corporation: Tyler
Road Investments, LLC, Infinitive Speech Systems Corp., MIG-Visteon Automotive
Systems, LLC, GCM/Visteon Automotive Systems, LLC, GCM/VIsteon Automotive
Leasing Systems, LLC, Fairlane Holdings, Inc., Visteon International Business
Development, Inc., Visteon Domestic Holdings, LLC, Visteon Global Technologies,
Inc., Visteon Technologies, LLC, ARS, Inc., VC Aviation Services, LLC, SunGlas,
LLC, VC Regional Assembly & Manufacturing, LLC, Visteon Financial Corporation,
Visteon Remanufacturing Incorporated, Visteon LA Holdings Corp., Oasis Holdings
Statutory Trust, and Visteon Systems, LLC. |
35
principal amount remained outstanding under the 12.25% Senior Notes, excluding interest obligations. The holders of the 12.25% Senior Notes Claims are entitled
to a greater distribution under the Plan than General Unsecured Creditors, given that the 12.25% Senior Notes Claims may be
asserted against each guarantor party to the 12.25% Senior Notes Indenture. Other unsecured
Creditors, including holders of the General Unsecured Claims, do not hold Claims against several of
these guarantor Entities.
3. Visteon Corporation Common Stock
Visteon Corporations common stock was publicly-traded on the New York Stock Exchange
(NYSE) under the symbol VC. On March 4, 2009, the NYSE notified Visteon Corporation that
its common stock would be delisted from the NYSE and that trading in Visteon Corporations common
stock would be suspended effective March 6, 2009. Since March 6, 2009, Visteon Corporations
common stock has traded on the over-the-counter market, also known as the Pink Sheets, under the
symbol VSTNQ. As of June 11, 2010, Visteon Corporations common stock traded at a price of $1.12
per share.
ARTICLE V.
THE CHAPTER 11 CASES
The following is a general summary of the Chapter 11 Cases, including certain events preceding
the Chapter 11 Cases, the stabilization of the Debtors operations, and the Debtors restructuring
initiatives implemented since the Petition Date.
A. Events Leading to the Commencement of the Chapter 11 Cases
During 2008 and 2009, the global automotive industry suffered an unprecedented downturn that
has significantly strained and materially and adversely affected the operations of OEMs, Tier I
automotive suppliers (such as Visteon), and all lower tiered automotive suppliers across the supply
chain. The seasonally adjusted annual rate of automotive sales declined rapidly, dropping over
35.0% from its January 2008 level to 9.5 million in January 2009. Lower sales volumes continued
through 2008, resulting in a 24.0% decrease in U.S. industry-wide automobile sales through November
2009 compared to the same time frame in 2008. This amount represents the lowest sales levels in
nearly three decades. The severe decline in global automobile sales resulted in numerous
automotive suppliers and OEMs receiving going concern opinions and filing for bankruptcy.27
|
|
|
27 |
|
On April 30, 2009, Chrysler filed for chapter 11 protection in the United States Bankruptcy Court for the Southern District of
New York. On May 11, 2009, Hayes Lemmerz International, Inc. filed for chapter
11 protection in the United States Bankruptcy Court for the District of
Delaware. On May 27, 2009, Metaldyne Corporation filed for chapter 11
protection in the United States Bankruptcy Court for the Southern District of
New York. On June 1, 2009, General Motors Corporation filed for chapter 11
protection in the United States Bankruptcy Court for the Southern District of
New York. On July 7, 2009, Lear Corporation filed for chapter 11 protection in
the United States Bankruptcy Court for the Southern District of New York. On
February 20, 2009, the independent auditors of TRW Automotive Holdings Corp.
expressed substantial doubt about the companys ability to continue as a going
concern. On March 4, 2009, General Motors Corporation received a qualified
going concern opinion from its auditors. Likewise, on March 12, 2009, American
Axle & Manufacturing Holdings Inc. received a going concern opinion from its
auditors and on March 17, 2009, Lear Corporation received a qualified going
concern opinion. |
36
However, despite the poor economic conditions, in 2008, the Debtors successfully
completed a comprehensive multi-year improvement plan that was designed to sell, fix, or close
30 unprofitable or non-core facilities. The Debtors successfully restructured, sold, or
exited 38 facilitiesexceeding targeted goals and resulting in cumulative gross savings of
approximately $500.0 million.
Unfortunately, these actions were simply not enough to off-set the substantial decreases in
vehicle sales and production. Indeed, as a result of plummeting sales volumes, in the fourth
quarter of 2008, Visteon reported a net loss of $346.0 million on net sales from continuing
operations of $1.7 billion.28 The confluence of the industry downturn and other factors
also led Visteons public accounting firm to include a statement in Visteon Corporations 2008
annual report on Form 10-K that it had substantial doubt about Visteons ability to continue as a
going concern. This qualified going concern opinion, which numerous suppliers also received from
their public accountants upon issuance of their annual reports, would have violated the terms of
the ABL Facility and the Term Loan Facility. As noted above, Visteon Corporation was able to
negotiate limited waivers under the ABL Facility and the Term Loan Facility. The impending
expiration of these waivers on May 30, 2009, along with the Debtors need to restructure their
capital structure and legacy costs, led the Debtors to ultimately file for chapter 11 protection on
May 28, 2009.
B. Stabilization of Operations
Upon commencing the Chapter 11 Cases, the Debtors sought and obtained a number of orders from
the Bankruptcy Court to ensure a smooth transition of their operations into chapter 11 and
facilitate the administration of the Chapter 11 Cases. Several of these orders are briefly
summarized below.
1. Administrative Motions
To facilitate a smooth and efficient administration of these Chapter 11 Cases and to reduce
the administrative burden associated therewith, the Bankruptcy Court entered the following
procedural orders: (a) authorizing the joint administration of the Debtors Chapter 11 Cases
[Docket No. 78] and (b) granting the Debtors an extension of time to file their Schedules [Docket
No. 362]. On August 26, 2009, the Debtors filed their Schedules with the Bankruptcy Court.
2. Motion for Authority to Use Cash Collateral [Docket No. 18]
On May 28, 2009, the Debtors filed a motion with the Bankruptcy Court seeking an order
authorizing them to provide Ford, the sole ABL Lender under the ABL Facility, certain forms of
adequate protection in exchange for the consensual use of Fords cash collateral. On May 29, 2009,
the Bankruptcy Court entered an interim order [Docket No. 93] (the first in a series of such
orders) authorizing the Debtors use of Fords cash collateral and certain other prepetition
collateral. The cash collateral order also granted adequate protection to Ford for any
|
|
|
28 |
|
Although Visteon reported a 2009 first quarter net income
of $2.0 million, such amount included a one-time, non-cash gain of $95.0
million related to the deconsolidation of the net assets associated with
Visteon UK Ltd., an entity that filed for administration with the English High
Court of Justice under the Insolvency Act of 1986. |
37
diminution in the value of its interests in its collateral, whether from the use of the cash collateral or the
use, sale, lease, depreciation, or other diminution in value of its collateral, or as a result of
the imposition of the automatic stay under section 362(a) of the Bankruptcy Code. Specifically,
subject to certain conditions, adequate protection provided to Ford includes, among other things, a
first priority, senior, and perfected Lien on certain post-petition collateral of the same nature
as Fords prepetition collateral, a second priority, junior perfected Lien on Term Loan Priority
Collateral, and payment of accrued and unpaid interest and fees owing Ford on prepetition ABL
obligations.
On June 19, 2009, the Bankruptcy Court entered a first supplemental interim order authorizing
the use of Fords cash collateral and granting adequate protection on substantially the same terms
as those set forth in the interim cash collateral order previously entered [Docket No. 380].
Thereafter, the Debtors sought, and the Bankruptcy Court approved, eleven supplemental interim
orders extending the consensual use of ABL cash collateral, generally on a monthly basis and
materially consistent with the terms of preceding interim cash collateral orders.29
3. Motion to Continue Using Existing Cash Management System [Docket No. 15]
The Bankruptcy Court authorized the Debtors to continue using their cash management systems
and their respective bank accounts, business forms, and investment practices by a Final Order dated
July 17, 2009 [Docket No. 605]. The cash management order also approved the Debtors investment
and deposit guidelines and permitted the Debtors to set off both prepetition and postpetition
intercompany obligations between Debtors, or between Debtors and non-Debtor Affiliates.
4. Motion to Pay Shippers and Lienholder Prepetition Claims [Docket No. 5]
The Bankruptcy Court authorized the Debtors to pay the prepetition Secured Claims of, among
other parties, shippers, warehousemen, and lienholders up to $21.3 million. As of March 9, 2010,
the Debtors had paid approximately $10.4 million under this order.
5. Motion to Continue Funding Foreign Affiliates [Docket No. 10]
As a result of the global practice of the Debtors business, the Debtors heavily rely on the
relationship with their foreign Affiliates. The Debtors have interests in each of the foreign
Affiliates, and such interests are valuable assets of the Debtors Estates. Three programs central
to the foreign Affiliates business operations are as follows: (a) the cash pooling system in
Europe (the European Cash Pool); (b) the Legal Entity Restructuring Activity program (the
|
|
|
29 |
|
The Bankruptcy Court entered the: (a) second supplemental
interim cash collateral order on July 1, 2009 [Docket No. 481]; (b) third
supplemental interim cash collateral order on July 16, 2009 [Docket No. 599];
(c) fourth supplemental interim cash collateral order on July 28, 2009 [Docket
No. 689]; (d) fifth supplemental interim cash collateral order on August 13,
2009 [Docket No. 792]; (e) sixth supplemental interim cash collateral order on
September 9, 2009 [Docket No. 952]; (f) seventh supplemental interim cash
collateral order on October 7, 2009, October 21, 2009, and November 12, 2009
[Docket Nos. 1110, 1161, 1242]; (g) eighth supplemental interim cash collateral
order on November 12, 2009 [Docket No. 1303]; (h) ninth supplemental interim
cash collateral order on December 10, 2009 [Docket No. 1445]; (i) tenth
supplemental interim cash collateral order on January 21, 2010 [Docket No.
1710]; and (j) eleventh supplemental interim cash collateral order on
February 23, 2010 [Docket No. 2368]. |
38
LERA Program); and (c) the Maquiladora program (the Maquiladora Program). The
European Cash Pool involves Visteon Corporation and various foreign Affiliates making revolving
loans to and, in the case of the foreign Affiliates, borrowing from Visteon Netherlands
Holdings B.V., which acts as an internal banker for such transactions among the foreign
Affiliates.30 Under the LERA Program, VEC, a Debtor, contracts with European customers for
the delivery of finished goods while a foreign Affiliate actually delivers the finished goods to
such customer. VEC collects payment directly from the customer, pays the foreign Affiliate its
costs plus 5%, and retains the excess as profit.31 Visteon also participates in a program
similar to LERA with its foreign Affiliates in Mexico, which is called the Maquiladora
Program.32
On July 28, 2009, the Bankruptcy Court entered a Final Order authorizing the Debtors to
continue, in the ordinary course of business, the European Cash Pool, LERA Program, and Maquiladora
Program and to honor prepetition obligations under the LERA and Maquiladora Programs up to $92.0
million. On July 28, 2009, the Bankruptcy Court authorized the Debtors to pay an additional $46.0
million in prepetition Claims of certain foreign Affiliates, for an aggregate amount of $138.0
million [Docket No. 690]. As of March 9, 2010, the Debtors had paid approximately $125.0 million
under this Final Order.
Additionally, on October 7, 2009, the Bankruptcy Court approved a motion to provide
approximately $38.0 million in capital to foreign Affiliates in Argentina and Poland [Docket No.
1098]. The Debtors have an interest in these foreign Affiliates and without access to additional
capital, the Affiliates could have been subject to mandatory insolvency proceedings under Argentine
and Polish law.
6. Motion to Pay Employee Wages and Benefits [Docket No. 7]
The Debtors obtained authorization from the Bankruptcy Court to pay all prepetition
compensation (including all wages, salaries, overtime pay, and vacation pay) to, all prepetition
business expenses of, and all prepetition payroll deductions and prepetition withholdings, all
prepetition contributions to, and benefits under medical and insurance benefit plans, and
postpetition severance benefits for salaried employees leased to ACH. As of March 9, 2010, the
Debtors had paid approximately $15.5 million in prepetition Claims under this order.
7. Motion to Pay Critical Trade Vendors [Docket No. 13]
By interim order granted on May 29, 2009 [Docket No. 102], and Final Order granted on June 19,
2009 [Docket No. 374], the Bankruptcy Court authorized the Debtors to pay prepetition Claims of
certain suppliers. Specifically, the Debtors were authorized to pay certain prepetition
|
|
|
30 |
|
The following foreign Affiliates participate in the
European Cash Pool: Visteon Netherlands, Cadiz Electronica S.A.U., Visteon
Sistemas Interiores Espana S.L.U., Visteon Autopal S.R.O., Visteon Hungary KFT,
Visteon Ardennes Industries S.A.S., Visteon Systemes Interieurs S.A.S., Visteon
Interior Systems Holding France S.A.S., Visteon Holdings France S.A.S., Visteon
Portuguesa Ltd., Visteon Slovakia s.r.o., Visteon Philippines Inc., and Visteon
Deutschland GmbH. |
|
31 |
|
The following foreign Affiliates participate in LERA
Program: Visteon Portuguesa Ltd., Cadiz Electronica S.A.U., Visteon Sistemas
Interiores Espana S.L.U., Visteon Hungary KFT, and Visteon Autopal S.R.O. |
|
32 |
|
The following foreign Affiliates participate in the
Maquiladora Program: Coclisa S.A. de C.V., Carplastic S.A. de C.V., Altec
Electronica Chihuahua, S.A. de C.V., Aeropuerto Sistemas Automotrices S. de
R.L. de C.V., Climate Systems Mexicana, S.A. de C.V., Visteon de Mexico S. de
R.L., and Grupo Visteon S. de R.L. de C.V. |
39
nonpriority Claims of: (a) certain suppliers of the Debtors that are not party to Executory
Contracts; (b) certain financially distressed suppliers; and (c) on a provisional basis, certain
suppliers that may seek to discontinue supplying products or providing services in breach of their
agreements with the Debtors, and approving procedures related thereto. The Debtors are
authorized to pay prepetition Claims of those suppliers that are not party to Executory Contracts
and those financially distressed suppliers up to $33.9 million. With respect to suppliers that
refuse to perform postpetition obligations pursuant to an Executory Contract unless their
prepetition Claims are satisfied, the Debtors are authorized to pay such suppliers Claims on a
provisional basis up to $15.0 million. As of March 9, 2010, the Debtors had paid approximately
$28.8 million under this order.
8. Motion to Pay Foreign Trade Vendors [Docket No. 11]
By interim order granted on May 29, 2009 [Docket No. 82], and Final Order granted on June 19,
2009 [Docket No. 367], the Bankruptcy Court authorized the Debtors to pay prepetition Claims of
certain vendors, service providers, regulatory agencies, and governments located in foreign
jurisdictions up to $5.1 million. As of March 9, 2010, the Debtors had paid approximately $3.9
million under this order.
9. Motion to Authorize Maintenance of Customer Programs [Docket No. 8]
By interim order granted on June 3, 2009 [Docket No. 145], and Final Order granted on July 17,
2009 [Docket No. 600], the Bankruptcy Court authorized the Debtors to continue their customer
programs, including all obligations to ACH pursuant to a master services agreement, the OEM
warranty program, and the aftermarket warranty program up to $92.1 million. As of March 9, 2010,
the Debtors had paid approximately $8.6 million under this order.
10. Motion to Establish Notification and Hearing Procedures for Trading in Equity Securities [Docket No. 12]
As of the Petition Date, the Debtors NOLs and certain other tax attributes were estimated to
be approximately $1.95 billion. Under the Internal Revenue Code, NOLs that accumulate prior to
emergence from bankruptcy may be used to offset post-emergence taxable income. Under the
applicable federal tax laws, however, the Debtors would lose the ability to utilize a significant
portion of their NOLs if an ownership change were to occur prior to completion of the Chapter 11
Cases. Consequently, trading in the equity securities of the Debtors could have jeopardized the
Debtors ability to use those NOLs. To protect these valuable NOL carryforwards for future use to
offset taxable income, the Debtors sought and obtained an interim order from the Bankruptcy Court
on May 29, 2009 [Docket No. 89], and a Final Order on June 19, 2009 [Docket No. 361] restricting
trading of their equity securities. In particular, the Debtors sought to institute restrictions on
trading by shareholders who own, or would own, at least 6.4 million shares, including options to
acquire shares of Visteon Corporation stock during the pendency of the Chapter 11 Cases, so that
the Debtors would be able to monitor trading and prevent the loss of their NOLs and other tax
attributes.
40
11. Motion Determining Adequate Assurance of Payment for Future Utility Services [Docket No. 6]
By interim order granted on May 29, 2009 [Docket No. 87], and Final Order granted on June 19,
2009 [Docket No. 376], the Bankruptcy Court established procedures for determining
adequate assurance of payment for future utility service in recognition of the severe impact
even a brief disruption of utility services would have on the Debtors.
12. Motion to Pay Prepetition Sales, Use, and Franchise Taxes [Docket No.4]
On May 29, 2009 [Docket No. 88], the Bankruptcy Court authorized the Debtors to pay up to $6.0
million for prepetition sales, use, franchise, income, property, and other taxes and any
tax-related fees charges, and assessments accrued prepetition. As of March 9, 2010, the Debtors
had paid approximately $4.4 million under this order.
13. Applications for Retention of Debtors Professionals
Throughout the Chapter 11 Cases, the Bankruptcy Court has approved the Debtors retention of
certain Professionals to represent and assist the Debtors in connection with the Chapter 11 Cases.
These Professionals include, among others: (a) Kirkland & Ellis LLP as counsel for the Debtors
(order granted June 19, 2009) [Docket No. 366]; (b) Pachulski, Stang, Ziehl & Jones LLP as
co-counsel for the Debtors (order granted June 19, 2009) [Docket No. 363]; (c) Rothschild, Inc.
(Rothschild), as financial advisors and investment bankers for the Debtors (order granted
July 1, 2009) [Docket No. 474]; (d) Alvarez & Marsal North America, LLC as restructuring advisor to
the Debtors (order granted June 19, 2009) [Docket No. 365]; (e) KCC as Claims and Solicitation
Agent for the Debtors (order granted May 29, 2009) [Docket No. 79]; (f) Dickinson Wright PLLC as
special counsel to the Debtors (order granted July 14, 2009) [Docket No. 546]; (g) Crowell & Moring
LLP as special antitrust counsel to the Debtors (order granted July 14, 2009) [Docket No. 545]; (h)
Alston & Bird LLP as special litigation counsel to the Debtors (order granted September 9, 2009)
[Docket No. 942]; (i) Ernst & Young LLP as risk management service providers to the Debtors (order
granted September 2, 2009) [Docket No. 921]; (j) Hammonds LLP as UK counsel (order granted March
16, 2010) [Docket No. 2556]; and (k) Plews Shadley Racher & Bruan LLP as special environmental
counsel to the Debtors (order granted April 12, 2010) [Docket No. 2774].
C. Appointment of Committees
1. The Creditors Committee
On June 8, 2009, the United States Trustee appointed the Creditors Committee pursuant to
section 1102 of the Bankruptcy Code [Docket No. 178]. On January 8, 2010, the Bankruptcy Court, on
its own initiative, entered an order scheduling a status conference for January 21, 2010 regarding
whether an official committee of participants in the Debtors Pension Plans should be appointed
[Docket No. 1566]. The Debtors filed a statement in advance of the status conference, which stated
the Debtors opposition to an official committee of pensioners [Docket No. 1649]. The United
States Trustee, the ad hoc committee of pensioners, and the IUE-CWA filed statements in support of
the appointment of an official committee of pensioners [Docket Nos. 1696, 1699, 1702]. After
hearing arguments at the January 21, 2010 status conference, the
41
Bankruptcy Court ordered the United States Trustee to either: (a) appoint one or more participants of the Pension Plans to the
Creditors Committee or (b) pursuant to section 1102 of the Bankruptcy Code, appoint a separate
official committee comprised of participants of the Pension Plans [Docket No. 1730] (the
Pension Committee Order). Pursuant to the Pension
Committee Order, on February 1, 2010, the United States Trustee appointed three individuals to
the Creditors Committee to represent participants in the Pension Plans [Docket No. 1779].
On February 3, 2010, the Debtors filed the Motion of the Debtors for Reconsideration of the
Courts Order Appointing Pension Plan Participants to an Official Committee [Docket No. 1831]. The
crux of the Debtors argument to reconsider the Pension Committee Order was that there is no
scenario under which the pensioners would have a right to payment from the Debtors and thus the
pensioners cannot be considered Creditors of the Estatesa requirement for the appointment of an
official committee under section 1102 of the Bankruptcy Code. On May 10, 2010, the Bankruptcy
Court entered an order granting the Debtors motion to reconsider the Pension Committee Order and
vacating the Pension Committee Order. See Order Granting Debtors Motion for
Reconsideration of the Courts Order Appointing Pension Plan Participants to an Official Committee
[Docket No. 3035] (the Reconsideration Order). The Debtors have accordingly requested
that the United States Trustee reconstitute the Creditors Committee to exclude the pension
participants. In response, the United States Trustee has asked the Bankruptcy Court to schedule a
status conference to clarify interpretation of the Reconsideration Order. See United
States Trustees Request for Status Conference to Clarify Order Granting Debtors Motion for
Reconsideration of the Courts Order Appointing Pension Plan Participants to an Official Committee
[Docket No. 3167]. However, no date for the status conference has been set. Thus, the current
members of the Creditors Committee are: the PBGC; the Law Debenture Trust Company of New York;
Freescale Semiconductor; Central States Southeast and Southwest Areas Pension Fund; Siemens Product
Lifecycle Management Software, Inc.; Nissan Trading Corp., USA; CQS Directional Opportunities
Master Fund, Ltd;33 Chris A. Hensel, an active employee of Visteon Corporation; Robert
Leiss, a former employee of the Debtors North Penn plant and former president of Local UAW 1695;
and Michael Lostutter, the director of the IUE-CWA pension and 401(k) fund.
The Creditors Committee has retained the following Professionals: (i) KCC as website
administration agent (order granted July 16, 2009) [Docket No. 585]; (ii) Ashby & Geddes, P.A. as
Delaware counsel (order granted August 11, 2009) [Docket No. 766]; (iii) Brown Rudnick LLP as
co-counsel (order granted August 13, 2009) [Docket No. 786]; (iv) FTI Consulting, Inc. as
restructuring and financial advisors (order granted September 11, 2009) [Docket No. 967]; and (v)
Chanin Capital Partners, LLC as restructuring and financial advisors (order granted September 11,
2009) [Docket No. 966].
2. Ad Hoc Equity Committees Request for Appointment of an Examiner
On April 2, 2010, the ad hoc equity committee filed a motion for an order directing the
appointment of an examiner in these cases [Docket No. 2720], and a motion to shorten the notice
|
|
|
33 |
|
CQS Directional Opportunities Master Fund Ltd. was
appointed to the Creditors Committee on November 30, 2009 [Docket No. 1364]
after K&S Wiring resigned from the Creditors Committee on November 6, 2009
[Docket No. 1238]. |
42
period for hearing the motion on the appointment [Docket No. 2721]. On May 19, 2010, the
Bankruptcy Court denied the ad hoc equity committees motion [Docket No. 3159].
3. Certain Equity Holders Request for Appointment of an Official Committee of
Equity Holders
On April 16, 2010, certain equity holders filed a motion for an order appointing an official
committee of equity holders in these cases [Docket No. 2834], to which the Debtors, the Term Loan
Lenders, United States Trustee, and Creditors Committee filed objections on April 23, 2010 [Docket
Nos. 2880, 2868, 2889, 2872]. On May 19, 2010, the Bankruptcy Court denied the equity holders
motion to appoint an official committee of equity holders [Docket No. 3158].
4. Certain Trade Creditors Request for Appointment of an Official Committee
of Trade Creditors
On June 10, 2010, certain holders of General Unsecured Claims filed a motion for an order
appointing an official committee of trade claimants in these cases [Docket No. 3315]. The Debtors
believe the request lacks merit and plan to oppose the motion. While the trade claimants requested
the Bankruptcy Court hear the motion on June 14, 2010, no hearing date has yet been scheduled.
D. Operational Restructuring Activity, Liquidity Enhancements, and Business Plan Development and Implementation
Prior to filing the Chapter 11 Cases, the Debtors were in the process of executing a
comprehensive three year restructuring plan to ensure their competitiveness in a troubled
automotive supplier sector. Under that restructuring plan, the Debtors sold, restructured, or
closed approximately 38 unprofitable facilities, and also significantly reduced overhead and
operating costs. Upon filing for chapter 11, the Debtors continued to execute their restructuring
plan by exiting non-core lines of business and preserving their customer relationships for the
future. In particular, during the Chapter 11 Cases, the Debtors entered into a number of
agreements designed to enhance their liquidity, right-size their operations, and support future
sustainability. Negotiations over these initiatives originally took place in the context of a
proposed debtor-in-possession (DIP) financing arrangement to be provided by the Debtors
North American customers. However, given the complexity of negotiating a DIP credit agreement
satisfactory to these natural competitorsand unnatural lendersas well as the Debtors improved
cash flow performance during the Chapter 11 Cases, the Debtors ultimately determined that a
customer club DIP facility was not a viable solution to supplement their liquidity. Instead, the
Debtors used the momentum of the customer DIP discussions to negotiate and execute individualized
asset sales and Accommodation Agreements with their customer base, which did not require the
Debtors to take on any additional debt. The following is a description of the key restructuring
initiatives undertaken by the Debtors during the Chapter 11 Cases to accomplish the above-mentioned
goals.
43
1. Halla Alabama Asset Sale
In July 2009, Visteon Domestic Holdings, LLC sold its 80% equity interest in Halla Climate
Systems Alabama Corp. (Halla Alabama) to Halla Korea, a publicly-traded Korean
company in which VIHI holds a 70% equity stake.34 Halla Korea paid a total of
approximately $63.0 million, including $26.0 million in settlement of certain Intercompany Claims,
which brought cash into Visteons U.S. enterprise and enhanced the value of Halla Korea by
preserving the key customer relationship with Hyundai/Kia Motors (Hyundai). The sale
closed on July 31, 2009 [Docket No. 723]. Consummation of the sale to a non-Debtor Entity gave
Hyundai the assurances it needed to continue to do business with Halla Alabama going forward.
Without the support of Hyundai, which accounts for 100% of Halla Alabamas business, the enterprise
value of Halla Alabama would have been lost, which would have diminished the value of VIHIs
interest in Halla Korea. The sale also took advantage of synergies that would not have been
available to a buyer outside of the Visteon corporate family, e.g., Halla Alabama had already
licensed intellectual property from Halla Korea and had a well-established supply chain to meet
Hyundais needs. Moreover, the transaction furthered the consolidation of Visteons global climate
business with Halla Korea, which functions as the hub of Visteons global climate division. Since
executing this transaction, Hyundai has continued its commitment to Visteon.
2. Connersville Property Sale
On December 10, 2009, the Bankruptcy Court authorized the Debtors to sell their Connersville,
Indiana property, free and clear of all liens, claims, encumbrances, and other interests to the
City of Connersville, Indiana [Docket No. 1437]. The Connersville property is located on
approximately 186 acres of real property and includes various buildings, facilities, and other
improvements, including a manufacturing facility that was used for Visteon Systems climate
business. The Debtors had previously ceased all manufacturing activities at the Connersville
facility in 2007 and listed the property for sale in 2008. Due to some potential outstanding
environmental liability related to the Connersville property, the Debtors agreed to sell the
property to the City of Connersville for the nominal consideration of $500.00 and to pay up to
$500,000.00 towards the cost of any statutorily required remediation of the property. In exchange
for this consideration the City of Connersville agreed to assume, pay for, and complete any
remediation of the property and assume liability for the settlement and resolution of all potential
claims against the Debtors on account of obligations imposed on the property. Additionally, the
City of Connersville and the Indiana Department of Environmental Management executed releases and
covenants not to sue the Debtors in connection with the Connersville property.
By entering into the purchase and sale agreement with the City of Connersville, the Debtors
eliminated annual expenses attributed to property taxes, insurance, utilities, and general
maintenance of the Connersville property and avoided significant future costs associated with
remediation of the property.
|
|
|
34 |
|
Halla Alabama was a Debtor in the Chapter 11 Cases, but
Halla Alabamas case was dismissed upon the closing of the sale to Halla Korea. |
44
3. General Motors Company Accommodation Agreement
On October 7, 2009, the Bankruptcy Court authorized the Debtors and their non-Debtor Affiliate
Carplastic, S.A. de C.V. (Carplastic) to enter into an Accommodation Agreement (the
GM Accommodation Agreement) with General Motors Company (GM) [Docket No. 1102].
The GM Accommodation Agreement allowed the Debtors to address certain liquidity needs, exit
lines of business that no longer fit into the Debtors strategic business plan, and maintain a
business relationship with GM with respect to other promising lines of business. The GM
Accommodation Agreement provided for, among other things: (a) an $8.0 million surcharge payment to
Visteon Corporation; (b) payment to Visteon Corporation of up to $10.0 million to fund the
consolidation of Visteons InterAmerican and Carplastic facilities in Mexico; (c) payment to
Visteon Corporation of $4.425 million to reimburse the Debtors for certain upfront engineering,
design, and development support costs; (d) acceleration of payment terms on outstanding GM purchase
orders; (e) GMs purchase from Visteon of certain inventory at original cost, and the option to
purchase certain equipment and tooling relating to re-sourced component parts at the greater of the
net book value of such assets or the orderly liquidation value, for all assets purchased in the
last three years; (f) reimbursement of certain costs associated with the wind-down of GM interior
and fuel tank component part production; and (g) an $8.2 million cure payment in connection with
the assumption and assignment to GM by Motors Liquidation Company of certain purchase orders with
the Debtors in GMs chapter 11 case.35
In exchange for these benefits, the Debtors agreed to continue to produce and deliver
component parts to GM during the term of the Accommodation Agreement as well as provide
considerable assistance to GM in resourcing certain unprofitable production to other suppliers. As
is customary, the GM Accommodation Agreement also provided GM with an access right to certain
Visteon facilities if the Debtors or Carplastic ceased production in violation of the GM
Accommodation Agreement.
4. Chrysler Accommodation Agreement
On November 12, 2009, the Bankruptcy Court authorized the Debtors and Carplastic to enter into
an Accommodation Agreement (the Chrysler Accommodation Agreement) with Chrysler Group LLC
(Chrysler) [Docket No. 1305], similar in its terms to the GM Accommodation Agreement.
Specifically, the Chrysler Accommodation Agreement provided for: (a) a $13.0 million surcharge
payment to Visteon Corporation; (b) acceleration of payment terms on outstanding Chrysler purchase
orders; (c) a cure payment to Visteon Corporation of approximately $13.0 million in connection with
the assumption and assignment to Chrysler by Old Carco LLC (f/k/a Chrysler LLC) of certain purchase
orders with Debtors in the Old Carco LLC chapter 11 case; and (d) reimbursement of certain Visteon
costs associated with Visteons wind-down of production for certain lines of Chrysler component
parts.36 The Chrysler Accommodation Agreement also contemplated a number of asset sales,
including a mandatory
|
|
|
35 |
|
While GM assumed and assigned its purchase orders with
Visteon in its own chapter 11 case, the Debtors did not assume any purchase
orders with GM in the Chapter 11 Cases under the GM Accommodation Agreement. |
|
36 |
|
While Chrysler assumed and assigned its purchase orders
with Visteon in its own chapter 11 case, the Debtors did not assume any
purchase orders with Chrysler in the Chapter 11 Cases under the Chrysler
Accommodation Agreement. |
45
purchase by Chrysler (or an acceptable third party) of certain equipment and
tooling used at Visteons Highland Park, Michigan and Saltillo, Mexico facilities at the greater of
the net book value of such assets or the orderly liquidation value, for all such assets acquired by
Visteon during the previous three years. Chrysler also purchased Visteons excess inventory
relating to re-sourced Chrysler business at 100% of Visteons actual and documented costs for raw
materials and 100% of the purchase order price for finished goods.
In exchange, the Debtors and Carplastic provided Chrysler with commitments for continuity of
supply, a customary access and security agreement, and agreements for Visteons cooperation and
assistance in the resourcing of Chrysler component parts to other suppliers.
5. Nissan North America Asset Sale and Accommodation Agreement
On November 12, 2009, the Bankruptcy Court approved the sale of certain manufacturing
facilities and other assets primarily related to the Debtors module and interior business to Haru
Holdings, LLC (Haru), an acquisition subsidiary of Nissan North America
(Nissan), free and clear of all Liens and other interests pursuant to section 363 of the
Bankruptcy Code [Docket No. 1298]. Haru paid, or will pay, the Debtors approximately $31.0 million
in cash plus the (a) value of certain off-site tooling and inventory dedicated to Nissan
production, (b) approximately $2.5 million in wind-down costs; and (c) the amount of certain
receivables from Nissan being acquired under the purchase agreement, less the amount of certain
payables to Nissan and Nissan Affiliates assumed by Nissan. The Bankruptcy Court also approved
certain cure and notice procedures related to the assumption and assignment of Executory Contracts
related to the module and interior business and an Accommodation Agreement that essentially served
as a back-stop in the event that the Debtors violated the terms of the purchase agreement.
The assets sold to Haru were primarily used for the production and assembly of automobile
cockpit module, front end module, and interior parts for Nissan. The majority of these assets were
located at the Debtors LaVergne, Tennessee, Smyrna, Tennessee, Tuscaloosa, Alabama, and Canton,
Mississippi plants. The sale was a result of the Debtors comprehensive strategic review of their
operational restructuring strategy, including an evaluation of the profitability and performance of
their operating subsidiaries and business divisions. After such review, the Debtors determined
that the module and interior business was an unprofitable business segment that should be divested.
The sale allowed the Debtors to maximize the module and interior business contribution to the
Debtors Estates, enhance liquidity, and help ensure that Nissanan important, long-term customer
vital to the Debtors post-emergence business planmaintains its continuity of supply.
6. Ford Motor Company Accommodation Agreement
On December 8, 2009, the Bankruptcy Court approved a motion authorizing the Debtors and
Carplastic to enter into an Accommodation Agreement (the Ford Accommodation Agreement)
with Ford and ACH [Docket No. 1422]. Pursuant to the Ford Accommodation Agreement, Ford and ACH
have agreed to pay Visteon an exit fee of $8.0 million in two equal installments. Under the Ford
Accommodation Agreement, the majority of Ford electronic component parts formerly manufactured at
the Debtors North Penn facility will be re-sourced to Cadiz Electronica S.A., the Carplastic
facility will continue to produce the majority of
46
component parts it currently manufactures for Ford, and the Debtors will discontinue Ford production at the Debtors Springfield, Ohio facility.
In connection with the resourcing or transitioning of these Ford and ACH product lines, Ford and
ACH have agreed to purchase certain inventory at cost, and have the option to purchase certain
equipment and tooling related to the manufacturing of their component parts at the greater of the
net book value of such assets or the orderly liquidation value, for all assets purchased in the
last three years, or for older tooling or equipment an amount equal to the orderly liquidation
value of such assets. Additionally, Ford and ACH agreed to reimburse the costs that the Debtors have, or will, incur
in connection with resourcing production lines at their North Penn and Springfield facilities.
7. Honda Accommodation Agreement
On December 10, 2009, the Bankruptcy Court approved a motion authorizing the Debtors to enter
into an Accommodation Agreement (the Honda Accommodation Agreement) with Honda of America
Mfg., Inc. (Honda), which provides the Debtors with certain strategic and financial
benefits in connection with the resourcing of Honda component parts produced at the Debtors
Highland Park, Michigan facility [Docket No. 1446] in accordance with the Debtors strategic
business plan. As consideration for the Debtors assistance in the resourcing process and to
provide incremental liquidity, Honda will provide the Debtors with a surcharge payment in the
approximate amount of $0.2 million, as well as an acceleration of payment terms. In addition,
Honda has agreed to purchase equipment dedicated to the production of Honda component parts for
approximately $2.0 million, as well as to purchase certain inventory, and to cover the costs that
the Debtors will incur in connection with resourcing Honda production lines to other suppliers,
including wind-down costs in the approximate amount of $0.8 million and any cure costs required to
be paid in connection with the Debtors assumption and assignment of supply contracts with raw
materials or subcomponent suppliers at Hondas request.
8. Atlantic Automotive Components, LLC Sale
On February 23, 2010, the Bankruptcy Court approved a sale of the Debtors interest in
Atlantic Automotive Components, LLC (Atlantic) to the joint ventures majority owner
[Docket No. 2366]. The component parts produced by Atlantic were resourced to other suppliers
pursuant to the Accommodation Agreements entered into with the Debtors key customers. In
consideration for the Debtors interest in the joint venture, the purchaser: (a) paid $3.1 million
in cash; (b) assumed substantially all of the liabilities of Atlantic; (c) released the Debtors
from all obligations to Atlantic related to accounts payable for goods delivered or services
provided prior to the Petition Date, which obligations are estimated to equal approximately $3.9
million; and (d) agreed to the resourcing of certain Atlantic business to a Visteon facility in
Mexico.
9. North Penn Plant Closure
On February 28, 2010, the Debtors closed their North Penn plant located in Lansdale,
Pennsylvania. Pursuant to this closure, the Debtors entered into a closure agreement with the UAW
and its local union 1695 to provide for the early expiration of the CBA governing the North Penn
employees on February 28, 2010, instead of the original expiration date of March 13, 2011. On
February 23, 2010, the Bankruptcy Court authorized entry into the closure agreement [Docket No.
2365]. The early expiration of the North Penn CBA will generate
47
substantial savings for the Debtors estates as a result of the discontinuation of post-employment health care benefits
provided to North Penn retirees and employees as early as May 31, 2010. The Debtors also rejected
the lease of the North Penn property on March 14, 2010 [Docket No. 2455]. As noted above, in
connection with the Ford Accommodation Agreement, Ford has or will cover the vast majority of the
costs associated with the North Penn plant closure.
10. Highland Park and Saltillo Plant Sales
On April 13, 2010, the Bankruptcy Court approved the sale of Debtors Highland Park, Michigan
and Saltillo, Mexico facilities to Johnson Controls Interiors LLC and Johnson Controls Automotriz
Mexico, S.de R.L. de C.V. (collectively, Johnson Controls) [Docket No. 2799]. Pursuant
to the sale, Johnson Controls assumed a CBA with UAW Local 400 governing the hourly employees
working at the Highland Park facility. Pursuant to the Chrysler Accommodation Agreement, Chrysler
was given the ability to market and sell the Highland Park and Saltillo plants to a purchaser
willing to pay at least a minimum threshold price for the assets and inventory of the plants.
Under the purchase agreement governing the sale of the Highland Park and Saltillo plants, Johnson
Controls will pay the Debtors $17,086,475.00 in Cash (plus an additional amount related to
inventory as of the closing of the plants) and assume certain liabilities of the Debtors related to
the plants. Additionally, Chrysler will pay any additional costs to wind down operations at the
Highland Park and Saltillo plants to the extent that the proceeds from the sale to Johnson Controls
do not cover such costs. Importantly, the sale of the Highland Park and Saltillo facilities
permitted the Debtors to fulfill their obligations under the Chrysler Accommodation Agreement and
exit the manufacturing of certain unprofitable component part production lines.
E. Postpetition Financing
1. DIP Financing
As noted above, at the outset of the Chapter 11 Cases, the Debtors focused on negotiating a
club DIP financing facility with their largest North American OEM customers to ensure sufficient
liquidity to supply their customers with parts and fund these cases. The multi-faceted customer
DIP negotiations were complicated because the proposed lenders were all competitors with competing
interests. Ultimately, in September 2009, the Debtors abandoned these customer DIP negotiations.
In early October 2009, the Debtors began negotiations with a subset of the Term Loan Lenders
(the DIP Facility Lenders) over the terms of a DIP financing arrangement. On October 28,
2009, the Debtors filed a motion for approval of the $150.0 million DIP Facilitywith a $75.0
million initial draw and option to draw an additional $75.0 millionon a superpriority
Administrative Claim and first priority priming Lien basis [Docket No. 1200]. Importantly, the
Term Loan Lenders and ABL Lender consented to the priming of their prepetition Liens by the DIP
Facility in exchange for the adequate protection described below. The Creditors Committee and the
PBGC filed objections to the motion. The Debtors were able to resolve the majority of issues
raised by the Creditors Committee and PBGC through modifications to the terms of the DIP Facility.
The Bankruptcy Court approved the DIP Facility,
48
as modified, on November 12, 2009 over ruling the
remaining objections of the Creditors Committee and the PBGC [Docket No. 1297].
As approved, the DIP Facility provides the Debtors with up to $150.0 million in financing on a
superpriority Administrative Claim and first priority priming Lien basis. The initial draw of
$75.0 million occurred upon the closing of the DIP Facility. The Debtors have an option to draw an
additional $75.0 million, subject to the condition that they have not filed a plan
of reorganization that does not provide for full payment of obligations under the DIP
Facility. Obligations under the DIP Facility are entitled to superpriority Administrative Claim
status pursuant to section 364(c)(1) of the Bankruptcy Code and secured by: (a) a first priority
priming Lien on all Term Loan Priority Collateral; (b) a second priority Lien on all ABL Priority
Collateral; and (c) a first priority lien on proceeds of Avoidance Actions under section 549 of the
Bankruptcy Code and the Debtors rights under section 506(c) of the Bankruptcy Code. The Term Loan
Lenders and ABL Lender consented to the granting of priming Liens under the DIP Facility in
exchange for adequate protection to the extent of the diminution in value of their
collateralcalculated from November 12, 2009, the date of entry of the order approving the DIP
Facilityin the form of: (i) junior replacement Liens on Term Loan Priority Collateral; (ii) a
junior Lien on the proceeds of Avoidance Actions under section 549 of the Bankruptcy Code and the
Debtors rights under section 506(c) of the Bankruptcy Code; (iii) a first priority Lien on assets
of VEC; and (iv) a superpriority Administrative Claim against all the Debtors. The DIP Facilitys
extended maturity date is August 18, 2010.
2. Other Postpetition Financing
On November 12, 2009, the Bankruptcy Court also approved Visteons entry the U.S. Bank L/C
Facility Documents with U.S. Bank National Association (U.S. Bank) for an amount of $40.0
million, which replaced the letter of credit facility under the ABL Facility [Docket No. 1296].
Visteon makes reimbursement payments on any payments made by U.S. Bank under the U.S. Bank L/C
Facility Documents, plus certain agreed fees, and any unpaid obligations bear interest at a rate
per annum equal to the Prime Rate plus 5.00%. Visteon granted U.S. Bank a security interest in
certain collateral held in a segregated account under the U.S. Bank L/C Facility Documents. On
November 12, 2009, the Bankruptcy Court also approved the Debtors entry into various Currency
Contracts.
Notwithstanding any provision in the Plan to the contrary or section 1141(c) of the Bankruptcy
Code, the U.S. Bank L/C Facility Documents and the Currency Contracts, and all rights and
obligations of, and Liens held by, the parties thereunder in connection therewith, shall survive
and remain in full force and effect on and after the Effective Date in accordance with the terms of
the U.S. Bank L/C Facility Documents and the Currency Contracts, respectively, and the Final Orders
entered on November 12, 2009 [Docket Nos. 1296 and 1297]. On the Effective Date, any and all
rights and obligations of the Debtors under the U.S. Bank L/C Facility Documents and the Currency
Contracts shall vest in, or become the obligations of, the applicable Reorganized Debtors.
49
F. Addressing Legacy Liabilities
In addition to restructuring their capital structure and operational footprint, the Debtors
have also analyzed opportunities to reduce their legacy cost structure. As of the Petition Date,
the Debtors had substantial liabilities associated with certain post-employment health care and
life insurance benefits (OPEB) provided to their retirees.
1. OPEB
As of June 2009, the Debtors determined that their OPEB liability would be $310.0 million by
the end of 2009, with projected cash outlays of $31.0 million in 2009 alone. On June
26, 2009, the Debtors filed a motion for authorization to terminate OPEB for approximately
6,650 retirees or employees and their spouses and dependents [Docket No. 432]. In the motion, the
Debtors asserted that they had the unilateral right to terminate the benefits pursuant to relevant
plan documents and CBAs. The IUE-CWA, UAW, and certain individual retirees filed objections to the
Debtors motion arguing that active employees and retirees have vested OPEB rights under the terms
of the applicable plan documents and CBAs, and thus, the Debtors are not entitled to terminate
their obligations to provide OPEB unless and until authorized to do so under section 1114 of the
Bankruptcy Code. The Bankruptcy Court granted the OPEB motion on December 22, 2009 in all
respects, except as the motion applied to (a) former hourly employees at the North Penn plant who
retired during the term of the North Penn CBA, dated April 2, 2005 and (b) current active hourly
employees who will retire at the North Penn plant during the term of the North Penn CBA [Docket No.
1491]. On February 23, 2010, the Bankruptcy Court authorized entry into the North Penn closure
agreement, which allowed the Debtors to eliminate OPEB for North Penn employees and retirees as
early as May 31, 2010[Docket No. 2365].
The IUE-CWA appealed the Bankruptcy Courts order [Docket No. 1512] and filed a motion on
February 26, 2010 seeking stay of the order pending such appeal [Docket No. 2407]. On March 16,
2010, the Bankruptcy Court heard testimony on the motion for a stay, and entered an order denying
the stay motion on March 29, 2010 [Docket No. 2691]. The IUE-CWA appealed this denial to the
District Court on March 18, 2010. The District Court entered an order denying the appeal, denying
the motion for a permanent stay pending appeal, and granting a limited stay until April 30, 2010,
requiring the Debtors to reimburse or pay the cost of OPEB for the IUE-CWA retirees not eligible
for Medicare during April 2010. On April 1, 2010, the IUE-CWA filed a notice of appeal to the
Third Circuit Court of Appeals, a motion to continue the stay beyond April 30, 2010 pending the
resolution of the appeal, and a motion to expedite the appeal. The Third Circuit Court of Appeals
denied the IUE-CWAs motion to continue the stay beyond April 30, 2010 and granted the motion to
expedite the appeal. The Third Circuit heard oral argument on the IUE-CWAs motion on May 28, 2010
and its decision is currently pending.
2. Other Legacy Liabilities Related to the Ford Transactions
As a result of the historical transactions with Ford described in Article IV, the Debtors also
have certain legacy liabilities relating to, among other things, retiree benefits, warranties, and
indemnity obligations. For example, as part of the 2000 spin-off transaction, Ford and Visteon
Corporation entered into that certain Employee Transition Agreement (the Transition
50
Agreement), dated April 1, 2000, amended and restated as of December 19, 2003, to govern the
assumption or transfer of certain employee and retiree benefits.
Under the Transition Agreement, Visteon Corporation is responsible for reimbursing Ford for
certain OPEB and pension costs that Ford provides directly to retirees. With respect to pension
obligations, Ford agreed to provide pension benefits for certain employees for such employees
service with Ford through June 1, 2000. Visteon Corporation is required to reimburse Ford for
pension related amounts as follows: (a) the costs of benefit increases that occur after June 1,
2000, including changes in the benefit accrual rate, but not changes in the benefit accrual rate
resulting from promotions by Visteon after June 1, 2000; (b) the effect on projected benefit
obligation for any Visteon average merit salary increase which exceeds the average Ford merit
increase by one-half percent in a given year, provided that Visteon shall
receive credit if the Visteon average merit salary increase is less than the average Ford
merit increase by one-half percent in any given year; and (c) for the effect on projected benefit
obligation related to the employees covered by Fords pension plans as a result of Visteons
implementation of any early separation incentive programs or reductions in force, provided that
Visteon shall receive a credit if such programs reduce the projected benefit obligation. Pursuant
to the Transition Agreement, Visteon Corporation also provides and funds pension benefits for
another group of employees, including those whom Visteon Corporation leases to ACH under the
Salaried Employee Lease Agreement and Hourly Employee Lease Agreement. Although ACH pays Visteon
Corporation for a portion of these benefits, as mentioned above, ACHs payment obligation is tied
to Visteon Corporations reported accounting expense and not the actual amount of cash funding
contribution attributable to the employees assigned to ACH.
With respect to OPEB obligations, the Transition Agreement provides that Visteon Corporation
shall pay the costs of OPEB provided to certain employees under Fords OPEB plans. Quarterly OPEB
reimbursements are determined based upon Fords average per contract claims cost multiplied by the
number of retirees that Visteon is required to reimburse Ford for each month. Visteon Corporation
is also required to pre-fund a VEBA or other tax-advantaged funding vehicle beginning in 2011.
These reimbursement obligations result in a balance sheet liability of approximately $116.0
million and annual cash payments to Ford of approximately $10.0 million. The Debtors are currently
negotiating for a termination of the Transition Agreement with Ford as part of their overall
efforts to reduce legacy liabilities and restructure their relationship with Ford. The Debtors
believe that any Claims asserted under the Transition Agreement will be significantly reduced or
eliminated through the negotiated termination of the agreement.
G. Analyzing Executory Contracts and Unexpired Leases
The Bankruptcy Code authorizes a debtor, subject to the approval of the Bankruptcy Court, to
assume and assign, or reject Executory Contracts and Unexpired Leases. In conjunction with their
overall asset rationalization efforts, the Debtors have engaged in a comprehensive evaluation of
their Executory Contracts and Unexpired Leases.
On July 16, 2009, the Debtors sought and received approval of streamlined procedures to reject
Executory Contracts and Unexpired Leases that were unnecessary or burdensome to their
51
Estates [Docket No. 596]. During the course of the Chapter 11 Cases, the Debtors and their Professionals
have evaluated Executory Contracts and Unexpired Leases in the context of the Debtors business
plan. For each of these Executory Contracts and Unexpired Leases, the Debtors determined, based on
the economics of the specific contract, whether the contract was a candidate for assumption,
rejection, or amendment and assumption.
As of the Petition Date, the Debtors were party to 13 Unexpired Leases of non-residential real
property. By order dated September 9, 2009 [Docket No. 944], the Bankruptcy Court extended the
time within which the Debtors have to assume or reject Unexpired Leases of non-residential real
property pursuant to section 365(d)(4) of the Bankruptcy Code through and including December 24,
2009.
H. Employee Incentive, Severance, and Retention Programs
1. Visteon Incentive Program
Prior to the Petition Date, the Debtors maintained, in the ordinary course of their business
the Incentive Program, which is comprised of an annual incentive program and a long term incentive
plan, under which the Debtors make awards based on annual performance metrics achieved over a three
year performance period (the Long Term Incentive Plan). On June 30, 2009, the Debtors
filed a motion requesting authority to honor certain components of the Incentive Program and also
implement an incentive plan designed to motivate certain key employees to achieve superlative
results during the Chapter 11 Cases [Docket No. 451]. Certain parties filed written objections to
the motion. In response, the Debtors adjourned the hearing on the motion and after significant
negotiations with the various constituencies in the Chapter 11 Cases, the Debtors proposed an
amended incentive program.
Under the amended incentive program, the Debtors sought to implement a key employee incentive
plan (the Key Employee Incentive Plan) for the Debtors board-elected officers, and honor
the Long Term Incentive Plan with respect to non-Insider employees. On October 7, 2009, the
Bankruptcy Court approved the Long Term Incentive Plan, as proposed in the motion, but denied the
Key Employee Incentive Plan. The Bankruptcy Court authorized the Debtors to pay approximately $1.8
million for the achievement of the 2007 and 2008 metrics under the Long Term Incentive Plan and up
to approximately $1.5 million if the Debtors achieved a 21.9% reduction in administrative and
engineering costs and obtain $1.0 billion in new business wins and gross re-wins in 2009.37
Achievement of these performance metrics has resulted in significant operational cost savings
and increased earningsboth of which are key to the Debtors long-term vitality and ability to
successfully emerge from chapter 11.
On February 2, 2010, the Debtors filed a motion to implement their ordinary course annual
incentive plan (the Annual Incentive Plan) [Docket No. 1805]. The Annual Incentive Plan
will provide incentive awards to over 1,300 employees, including the Debtors Insiders, in March of
2011 if a challenging adjusted EBITDA target of $450.0 million is achieved in 2010. The United
States Trustee, IUE-CWA, and UAW filed objections to the motion. On February
|
|
|
37 |
|
The $1.8 million payment relates to the achievement of:
(a) six targeted restructuring goals in 2007 and seven targeted restructuring
goals in 2008; (b) incremental consolidated new business wins totaling $750.0
million in 2007; and (c) improvement in total administrative staff and
engineering staff cost by 10.6% in 2008. |
52
18, 2010, the Bankruptcy Court approved the motion over the objections of those parties and held that the
Debtors Annual Incentive Plan is both ordinary course and primarily incentivizing [Docket No.
2349].
Pursuant to the Plan, the Reorganized Debtors intend to honor obligations under the Incentive
Program, as amended, which includes the Long Term Incentive Plan and Annual Incentive Plan, as it
applies to all participants, including Insiders, and the Key Employee Incentive Plan. The Incentive
Program and Key Employee Incentive Plan shall be deemed approved and authorized without further
action of the New Board. Also, on the Effective Date, Reorganized Visteon shall adopt, approve,
and authorize change in control agreements with respect to certain of Reorganized Visteons
officers, in the form contained in the Plan Supplement, without further action, order, or approval
of the New Board.
2. Management Equity Incentive Program
Certain of the Debtors management employees will be entitled to participate in the Management
Equity Incentive Program, designed to keep the Reorganized Debtors competitive in attracting and
retaining talented and motivated employees upon their emergence from bankruptcy. The Management
Equity Incentive Program shall have an aggregate share reserve of up to 9.55% or 10.00% of New
Visteon Common Stock issued under the Rights Offering Sub Plan (depending on whether Class J
Interests vote to accept the Plan) and 10.00% under the Claims Conversion Sub Plan, in accordance
with the Plan, on a fully diluted basis. The Management Equity Incentive Program, as set forth in
the Plan Supplement, shall be deemed approved and authorized without further action by the New
Board.
Under the Rights Offering Sub Plan, restricted stock grants equal to 2.87% or 3.0% (depending
on whether Class J Interests vote to accept the Plan) of the New Visteon Common Stock, on a
fully-diluted basis, shall be granted to the Management Equity Incentive Program participants on
the Effective Date. Future awards of the New Visteon Common Stock will be granted at such time(s)
as the New Board shall determine. The initial grants under the Rights Offering Sub Plan shall vest
as follows: (a) one-sixth on the Effective Date; (b) one-sixth upon the first anniversary of the
Effective Date; (c) one-third upon the second anniversary of the Effective Date; and (d) one-third
upon the third anniversary of the Effective Date.
Under the Claims Conversion Sub Plan, restricted stock grants equal to 2.5% of the New Visteon
Common Stock, on a fully-diluted basis, shall be granted to the Management Equity Incentive Program
participants on the Effective Date. Future awards of the New Visteon Common Stock will be granted
at such time(s) as the New Board shall determine. The initial grants under the Claims Conversion
Sub Plan shall vest as follows: (i) one-third upon the first anniversary of the Effective Date;
(ii) one-third upon the second anniversary of the Effective Date; and (iii) one-third upon the
third anniversary of the Effective Date.
Based on the Valuation Analysis, the initial restricted stock grants of New Visteon Common
Stock under the Rights Offering Sub Plan and Claims Conversion Sub Plan, respectively, would be
worth between $40.27 million and $48.00 million after the three-year vesting period. Under both the
Rights Offering Sub Plan and Claims Conversion Sub Plan, approximately 22.0% of the initial
restricted stock grant will be distributed to the Debtors Chief
53
Executive Officer, which would equate to an approximate value of $8.87 million to $10.56 million after the three year vesting
period. The remaining New Visteon Common Stock that the New Board may allocate to the Management
Equity Incentive Program in its discretion would be worth between $93.91 million and $144.00
million after the three-year vesting period. Aurelius Capital Master, Ltd., ACP Master, Ltd., and
Aurelius Convergence Master, Ltd. (together, Aurelius), each of which are holders of
Visteon Corporations common stock, believe that the Distributable Equity is substantially higher
than the Debtors estimate of $1.405 billion to $1.920 billion and accordingly believe that the
9.55% or 10.0% of New Visteon Common Stock that could be issued under the Management Equity
Incentive Program is worth substantially more than $134.2 million to $192.0 million, the value
based on the Debtors Valuation Analysis. The Debtors believe their Valuation Analysis is
accurate, and reflects the value of the Management Equity Incentive Program, and dispute Aurelius
valuation conclusions.
3. Non-Insider Severance and Retention Programs
Prior to the Petition Date, the Debtors provided certain of their employees severance benefits
under the Visteon Corporation Transition Program and the Visteon Executive Severance Plan. On July
28, 2009, the Bankruptcy Court authorized the Debtors (a) to provide severance benefits to
full-time, salaried, non-Insider employees severed postpetition and (b) implement a non-Insider
retention program (Non-Insider Retention Program) [Docket No. 691]. The Non-Insider
Retention Program, as approved, permits the Debtors to pay up to $3.0 million to certain critical
employees identified by the Debtors departmental managers for the significance of their
contribution to the Debtors ongoing operations and reorganization and/or the potential risk of
such employees seeking alternative employment.
I. Analysis and Resolution of Claims
The Debtors Schedules provide information pertaining to the Claims against the Estates. On
August 26, 2009, the Debtors filed their Schedules with the Bankruptcy Court. Interested parties
may review the Schedules at the office of the Clerk of the United States Bankruptcy Court for the
District of Delaware, 824 North Market Street, Wilmington, Delaware 19801 or online at
http://www.kccllc.net/visteon.
1. Claims Bar Date
On September 11, 2009, the Bankruptcy Court entered an order (the Bar Date Order)
[Docket No. 970] requiring all Entities holding or wishing to assert a Claim that arose or is
deemed to have arisen prior to the Petition Date against any of the Debtors to submit a Proof of
Claim so as to be actually received by KCC, the Debtors Claims and Solicitation agent, before the
applicable Bar Date, and approving the form and manner of the Bar Date notice for all Debtors. The
Bar Date Order established: (a) October 15, 2009 at 5:00 p.m. prevailing Pacific Time as the
deadline for submitting Proofs of Claims for non-governmental Entities and requests for payment
under section 503(b)(9) of the Bankruptcy Code; (b) November 24, 2009 at 5:00 p.m. prevailing
Pacific Time as the deadline for submitting Proofs of Claim for governmental Entities, (c)
deadlines for filing Claims based on amendments or supplements to the Debtors Schedules, and (d)
deadlines for rejection damages Claims.
54
KCC had received approximately 3,900 Proofs of Claim in the approximate aggregate amount of
$7.9 billion (excluding Intercompany Claims). Based upon a general reconciliation of the Debtors
books and records, the Debtors believe that many of the filed Proofs of Claim are invalid,
untimely, duplicative, or overstated, and, have therefore calculated the recoveries under the Plan
with the assumption that such Claims will be expunged from the Claims Register.
2. Omnibus Claim Objections
On February 18, 2010, the Bankruptcy Court approved the first and second omnibus claim
objections filed by the Debtors [Docket Nos. 2266, 2367]. Through the first omnibus objection, the
Debtors expunged duplicate Proofs of Claim totaling approximately $12.7 million. Through the
second omnibus objection, the Debtors expunged amended Proofs of Claim totaling approximately $14.0
million.
On March 16, 2010, the Bankruptcy Court approved the Debtors third and fourth omnibus claim
objections [Docket Nos. 2558, 2576]. Through the third omnibus objection, the Debtors expunged
duplicate, amended, and no documentation Proofs of Claim, and Proofs of Claim filed on account of
equity interests totaling approximately $31.5 million. Through the fourth omnibus objection the
Debtors expunged duplicate Proofs of Claim totaling approximately $50.0 million.
On April 13, 2010, the Court approved the Debtors fifth and sixth omnibus Claim objections
[Docket Nos. 2795, 2796]. Through the fifth omnibus objection, the Debtors expunged duplicate,
amended, and no documentation Proofs of Claim, Proofs of Claim filed on account of equity
interests, and Proofs of Claims filed against a non-Debtor entity totaling approximately $3.8
million. Through the sixth omnibus Claim objection, the Debtors expunged duplicate Proofs of Claim
and Proofs of Claims not based on any liability owed by the Debtors totaling approximately $130.8
million.
On May 12, 2010, the Court approved the Debtors seventh, eighth, ninth, and tenth omnibus
Claim objections [Docket Nos. 3125, 3124, 3093, 3091]. Through the seventh omnibus objection, the
Debtors seek to expunge duplicate Proofs of Claim totaling approximately $7.2 million. Through the
eighth omnibus Claim objection, the Debtors seek to reclassify Proofs of Claim to be asserted
against the proper Debtor Entity. Through the ninth omnibus Claim objection, the Debtors seek to
expunge amended Proofs of Claim and Proofs of Claim filed on account of equity interests totaling
approximately $7.0 million. Through the tenth omnibus Claim objection, the Debtors seek to
reclassify the priority of Proofs of Claim improperly asserted as administrative, secured, or
priority status to General Unsecured Claims.
3. De Minimis Settlement Procedures
On July 17, 2009, the Bankruptcy Court approved the Debtors motion seeking approval of
certain procedures for settling de minimis Claims [Docket No. 601]. Under the de
minimis settlement procedures, the Debtors may settle Claims for $0.5 million or less without
further notice or order of the Bankruptcy Court, provided that the Debtors give the Creditors
Committee, and agent to the Term Loan Facility notice within seven Business Days of any Claim
settled by one or more of the Debtors. For Claims settled for $0.5 million to $1.5 million the
55
Debtors may settle the Claim only if ten days notice is given to the United States Trustee,
Creditors Committee, and agent to the Term Loan Facility and no objection is received from such
parties within those ten days. If no objection is received, the Bankruptcy Court must approve the
proposed settlement.
4. Settlements
During the pendency of the Chapter 11 Cases, the Debtors have resolved numerous disputes with
Creditors through settlements. For instance, the Debtors have resolved each of the adversary
complaints filed by or against them through a settlement agreement and have also obtained
Bankruptcy Court approval to enter into various other settlements with Creditors during the Chapter
11 Cases. To date, three adversary complaints have been filed in the Chapter 11 Cases. The
Debtors have resolved each of these adversary complaints through a consensual settlement agreement.
First, on June, 29, 2009, Summit Polymers, Inc. filed an adversary
proceeding against Visteon Corporation seeking a declaratory judgment that it was entitled to
cash-in-advance payment terms as adequate assurance of the Debtors future performance.38
On September 2, 2009, Summit Polymers, Inc. withdrew its adversary proceeding. Second, on June,
29, 2009, Visteon Corporation filed an adversary case against Jabil Circuit, Inc. (Jabil)
seeking the turnover of certain specialized equipment and an injunction to compel Jabil to comply
with the automatic stay.39 On October 13, 2009, the Debtors adversary proceeding against
Jabil was dismissed without prejudice following the Bankruptcy Courts approval of a modified
supply agreement between the Debtors and Jabil. Lastly, on June 19, 2009, Calsonic Kansei North
America (Calsonic) filed an adversary case against Visteon Corporation, VC Regional
Assembly & Manufacturing LLC, and GCM Visteon Automotive Systems seeking a declaratory judgment
that it had a right to setoff certain amounts owed to Visteon Corporation against amounts that VC
Regional Assembly & Manufacturing LLC and GCM Visteon Automotive Systems, LLC owed
Calsonic.40 On February 18, 2010, the Bankruptcy Court signed an order authorizing the
Debtors to enter into a settlement agreement with Calsonic and dismissing the adversary proceeding
[Docket No. 2361]. The settlement allowed Calsonic to execute certain setoffs and obligated the
Debtors to pay Calsonics 503(b)(9) Claim in exchange for Calsonics agreement to assist the
Debtors with the removal of certain tooling equipment.
The Debtors have also sought and received Bankruptcy Court approval for entry into numerous
settlements pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. For example, on
February 18, 2010, the Bankruptcy Court approved a settlement between the Debtors and the Charter
Township of Van Buren [Docket No. 2244]. Pursuant to this settlement, the Debtors will pay the
township $2.2 million in Cash and allow the township a General Unsecured Claim for approximately
$9.8 million. This settlement resolved a tax dispute based on the value of the Debtors
headquarters located in the township and prevented potentially protracted and costly litigation
with an uncertain outcome. The Debtors expect significant tax benefits going-forward as a result
of the settlement.
|
|
|
38 |
|
Summit Polymers, Inc. v. Visteon Corp., No.
09-51131 (Bankr. D. Del. June 29, 2009). |
|
39 |
|
Visteon Corp. v. Jabil Circuit, Inc., No.
09-51139 (Bankr. D. Del. June 29, 2009). |
|
40 |
|
Calsonic Kansei North America v. Visteon Corp.,
No. 09-51069 (Bankr. D. Del. June 19, 2009). |
56
Also, on February 18, 2010, the Bankruptcy Court approved a settlement agreement between the
Debtors and International Business Machines Corporation (IBM) which provided for
beneficial amendments to a ten year outsourcing agreement with IBM under which Visteon outsources
most of its information technology needs on a global basis, including mainframe support services,
data centers, customer support centers, application development and maintenance, data network
management, desktop support, disaster recovery, and web hosting (IBM Outsourcing
Agreement) [Docket No. 2241]. Under the settlement agreement, the Debtors assumed the IBM
Outsourcing Agreement and agreed to the payment of cure amounts totaling approximately $11.0
million in connection therewith. The costs under the amended and assumed IBM Outsourcing Agreement
are expected to aggregate approximately $37.0 million during the remaining term of the agreement.
Expenses incurred under the IBM Outsourcing Agreement were approximately $80.0 million in 2009,
$100.0 million in 2008, and $200.0 million in 2007. Thus, the settlement agreement significantly
reduced the costs of the agreement going-forward and enhanced the value of the Debtors Estates.
5. UK Pension Claims
On March 31, 2009, Visteon UK Limited (VUK), a company organized under the laws of
England and Wales and an indirect, wholly-owned non-Debtor subsidiary of Visteon Corporation, filed
for administration under the United Kingdom Insolvency Act of 1986 with the High Court of Justice,
Chancery division in London, England. The United Kingdom (UK) administration was
initiated in response to continuing operating losses of VUK, mounting labor costs, and the related
demand on Visteons cash flows. The effect of VUKs entry into administration was to place the
management, affairs, business and property of VUK under the direct control of the certain
individuals from KPMG LLP (KPMG) as joint administrators of VUK.
VUK is the employer in respect of the VUK Pension Plan. As a result of VUKs administration
and the VUK Pension Plans funding liabilities, it is likely that the VUK Pension Plan will enter
the Pension Protection Fund (a fund established pursuant to the UK Pensions Act 2004 to pay pension
benefits to members of defined benefit pension plans, or schemes, of employers in respect of
which a qualifying insolvency event has occurred, as such term is defined in the UK Pensions Act
2004 (the PPF). The VUK Pension Plan is currently in a PPF assessment period to
determine whether it is eligible to enter the PPF.
On October 15, 2009, the Visteon UK Pension Trustees Limited, in its capacity as trustee of
the VUK Pension Plan and on behalf of the beneficiaries of the VUK Pension Plan, and the Board of
the PPF, filed Proofs of Claim against each of the Debtors asserting contingent and unliquidated
Claims pursuant to the UK Pensions Act 2004 and the UK Pensions Act 1995 for liabilities related to
a funding deficiency of the VUK Pension Plan. The Proofs of Claim allege that the VUK Pension Plan
had a funding deficiency of approximately $555.0 million as of March 31, 2009.
On June 26, 2009, the UK Pensions Regulator advised KPMG, as administrators of VUK, that it
was investigating whether there were grounds for regulatory intervention under section 38
57
(with respect to contribution notices)41 and/or section 43 (with respect to financial support
directions) of the UK Pensions Act 2004 in relation to the VUK Pension Plan. That investigation is
ongoing.42 The UK Pensions Regulator has also requested certain information from several
Visteon entities, including certain Debtors, as part of this investigation. The Debtors have been
cooperating with the UK Pensions Regulator and have provided the UK Pensions Regulator with
responsive information. The Debtors do not believe that there are grounds which would justify the
exercise of the UK Pensions Regulators moral hazard powers with respect to the VUK Pension Plan.
The Debtors therefore dispute that any basis exists for the UK Pensions Regulator to seek
contribution or financial support from any of the affiliated Visteon Entities outside the UK with
respect to these Claims.
Another non-Debtor wholly-owned subsidiary of VIHI located in the UK, Visteon Engineering
Services Limited (VES) sponsors the VES Pension Plan, a defined benefit plan, on account
of which the plans trusteeVisteon Engineering Services Pension Trustees Limitedsubmitted
Proofs of Claim against each of the Debtors asserting contingent and unliquidated claims pursuant
to the UK Pensions Act 2004 and the UK Pensions Act 1995 for liabilities related to an alleged
funding deficiency of the VES Pension Plan.43 As the plan sponsor of the VES Pension
Plan, VES is obligated to provide pension benefits that had previously accrued to certain of its
employees under the VUK Pension Plan. According to the Proofs of Claim filed on account of the
VES Pension Plan, the UK Pensions Regulator has advised the trustee for the VES Pension Plan that
it has begun investigating funding issues related to the VES Pension Plan. The Proofs of Claim
allege that the VES Pension Plan had a funding deficiency of approximately $118.1 million as of
March 31, 2009. The Debtors do not believe that there are grounds which would justify the exercise
of the UK Pensions Regulators moral hazard powers with respect to the VES Pension Plan and the
Debtors dispute that any basis exists for the UK Pensions Regulator to seek a contribution or
financial support from any of the affiliated Visteon Entities outside the UK with respect to these
Claims.
The financial support direction provisions of the UK Pensions Act 2004 may require a target
company (for example, one of the Debtors) to arrange financial support for an underfunded UK
defined benefit pension plan. The UK Pensions Regulator may issue a financial support direction to
a target company if the following factors are met: (a) the target company is associated or
connected with the employer; (b) the employer is insufficiently resourced or a service company; and
(c) it is reasonable under the circumstances to issue a financial support direction. First, a
target company may be associated or connected with the employer. In sum, under UK law a company is
associated with another company if the same person has control of it, meaning: (i) that the
companys directors follow his directions or instructions; or (ii) he can exercise or control
one-third or more of the votes in any general
|
|
|
41 |
|
A contribution notice is a notice requiring a person to
pay into a pension plan an amount of up to the Section 75 Debt (defined below)
due. The UK Pensions Regulator has the power to issue such a notice, under
section 38 and 38A of the UK Pensions Act 2004, in certain defined situations,
although it each case it is subject to a reasonableness test taking into
account the factors set out in the statute. |
|
42 |
|
As described below, the UK Pensions Regulator has
certain statutory moral hazard powers to protect the benefits of members of
work based pension plans, including by requiring a company to make payments to,
or otherwise financially support, such plans. |
|
43 |
|
It should be noted that VES also maintains a defined
contribution plan to provide benefits to employees for future services.
Visteon Engineering Services Pension Trustees Limited has not made a Claim
under the defined contribution plan. |
58
meeting of that company or a controlling company. Because VUK and VES are wholly owned companies of VIHI, they likely would be deemed to be
controlled by VIHI and Visteon Corporation. Second, an employer is considered to be insufficiently
resourced if the value of the employers resources is less than 50.0% of the amount due from an
employer to the pension plans under Section 75 of the U.K. Pensions Act 1995 (the Section 75
Debt) and an associated company (or more than one company) has resources that are greater than
the difference between the employer companys resources and 50.0% of the Section 75 Debt. The
Debtors continue to analyze whether VUK and VES were insufficiently resourced and reserve their
rights on this issue. An employer is considered to be a service company if it is a company
within the meaning of section 735(1) of the Companies Act 1985, it is a member of a group of
companies, and its turnover is solely or principally derived from amounts charged for the provision
of the services of its employees to other members of the group.44
With respect to the final prong, the Debtors do not believe the UK Pensions Regulator can
satisfy the reasonableness test for issuing a financial support direction. Factors that the UK
Pensions Regulator must consider in determining whether issuance of a financial support direction
is reasonable include: (a) the relationship between the target company and the employer; (b) the
value of any benefits received by the target company from the employer; (c) the target companys
connection or involvement with the relevant pension plan, if any; and (d) the financial
circumstances of the target company. The Debtors believe that each of these factors weigh against
the issuance of a financial support direction and thus, the UK Pensions Regulator does not have
legitimate grounds which would justify issuing a financial support direction.45
On April 9, 2010, the Debtors filed an objection to the Visteon UK Pension Trustees
Limiteds Proofs of Claim filed against the Debtors [Docket 2772]. The Creditors Committee also
filed an objection to the VUK pension Claims on May 5, 2010 [Docket No. 2997]. On May 11, 2010,
the Visteon UK Pension Trustees Limited, the Creditors Committee, and the Debtors entered in a
stipulation whereby the Visteon UK Pension Trustees Limited agreed to withdraw all Claims asserted
against the Debtors with prejudice [Docket No. 3078], which the Bankruptcy Court approved on May
12, 2010 [Docket No. 3089].
6. Ford Investigation and the Creditors Committees 2004 Discovery
Motions
The Debtors are in the process of analyzing the potential avoidance of prepetition transfers
under sections 362, 510, 542, 543, 547, and 548 of the Bankruptcy Code. During the Chapter 11
Cases, the Creditors Committee sought to prosecute certain Causes of Action against Ford as the
ABL Lender on behalf of the Debtors Estates, including seeking to avoid Fords Liens and security
interests in certain Estate property. See Motion of the Official Committee of
|
|
|
44 |
|
If the UK Pensions Regulator thinks it appropriate to
issue a financial support direction, it will issue a warning notice to all
those parties it feels may be directly affected by it. The warning notice will
subsequently be considered by the Determinations Panel, an independent panel of
the UK Pensions Regulator, that will determine whether a financial support
direction may be issued. If the Determinations Panel determines a financial
support direction may be issued, the target has a 28 day period to appeal to
the Pension Regulator Tribunal. |
|
45 |
|
If the UK Pensions Regulator issues a financial support
direction against one or more of the Visteon Entities and such financial
support direction is not complied with, pursuant to section 47 of the UK
Pensions Act 2004, the UK Pensions Regulator has the power, subject to a test
of reasonableness, to issue a contribution notice for the target entitys
failure to comply therewith. |
59
Unsecured Creditors Requesting Authorization to Prosecute Certain Claims on Behalf of the Debtors Estates
[Docket No. 988]. Thereafter, the Creditors Committee and Ford engaged in negotiations and the
parties agreed that all Liens and security interests of Ford in certain property, including certain
deposit accounts, motor vehicles, commercial tort claims and federally registered copyrights, were
avoided under section 544 of the Bankruptcy Code. See Stipulation on Motion of the Official
Committee of Unsecured Creditors Requesting Authorization to Prosecute Certain Claims on Behalf of
the Debtors Estates [Docket No. 1304].46 Pursuant to section 551 of the Bankruptcy Code,
this property is thus preserved for the benefit of the Debtors Estates. Both parties reserved
their rights with respect to Fords security interests in certain tax refunds received by the
Debtors.
In December, the Creditors Committee filed several motions for leave to seek discovery
pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. In addition to seeking leave
to take discovery from the Debtors, the Creditors Committee also sought to take discovery from:
(a) Ford, the Debtors largest customer; (b) PricewaterhouseCoopers LLP, the Debtors auditor; (c)
Halla Korea, one of the Debtors key Affiliates; and (d) Hyundai, another of the
Debtors largest customers [Docket Nos. 1459, 1465, 1503, 1517, 1522]. The Debtors worked
cooperatively with the Creditors Committee to satisfy the document production requests without
need for Bankruptcy Court intervention.
Ultimately, in connection with alternative plan structure negotiations with the Creditors
Committee that began in December, the Debtors were able to reach an agreement with the Creditors
Committee to twice continue the hearing on the Creditors Committees 2004 motions to conduct
discovery of the Debtors and PricewaterhouseCoopers LLP to the omnibus hearing scheduled for
February 18, 2010 and March 16, 2010, respectively [Docket Nos. 1635, 1915]. The Creditors
Committee also agreed to withdraw its 2004 motions to conduct discovery of Hyundai and Halla Korea
without prejudice [Docket No. 1635].
In the Debtors judgment, protracted litigation against Ford, PricewaterhouseCoopers LLP,
Halla Korea, or Hyundai could delay or prevent the Debtors emergence from bankruptcy and could put
the Debtors business plan at risk. The Plan includes a condition precedent for a resolution of
matters relating to Ford. In the event of such resolution, the Debtors would anticipate providing
Ford a release of liability pursuant to the Plan consistent with Federal Rule of Bankruptcy
Procedure 9019.
7. Maintaining Exclusive Right to File a Plan of Reorganization
Section 1121(b) of the Bankruptcy Code establishes an initial period of 120 days after the
Bankruptcy Court enters an order for relief under chapter 11 of the Bankruptcy Code during which
only the debtor may file a plan. Without further order of the Bankruptcy Court, the Debtors
initial exclusivity period to file a plan would have expired on September 25, 2009. By order dated
October 8, 2009, the Bankruptcy Court extended the Debtors exclusivity periods through and
including December 10, 2009 (to file a plan) and through and including
|
|
|
46 |
|
Avoidance of the ABL Lenders Liens and security
interests in the deposit accounts are subject to the ABL Lenders right to
prove that it had a perfected security interests in such accounts as of the
Petition Date. |
60
February 10, 2010 (to solicit acceptances) [Docket No. 1109]. The order authorizing these extensions reserved the
Debtors right to seek additional extensions of these exclusivity periods.
The Debtors filed a motion on December 9, 2009 requesting an additional extension of their
exclusive right to file a plan of reorganization through and including February 18, 2010 [Docket
No. 1431]. The scheduled hearing on this motion was set for January 21, 2010. On January 15,
2010, the Bankruptcy Court approved the Stipulation Resolving the Debtors Motion to Extend the
Debtors Exclusive Periods to File a Chapter 11 Plan and to Solicit Votes Thereon [Docket No.
1634]. The stipulation between the Debtors and the Creditors Committee extended the Debtors
exclusive periods to file a plan of reorganization through and including February 18, 2010, and
correspondingly, to solicit votes for the plan through and including April 22, 2010, and required
the Debtors to file a motion seeking a further extension of exclusivity by February 4, 2010. On
February 8, 2010, the Bankruptcy Court approved another stipulation between the Debtors and
Creditors Committee extending the exclusive period for the Debtors to file a plan of
reorganization to March 16, 2010 [Docket No. 1915].
On February 17, 2010, the Debtors filed their second motion to extend their exclusive periods
[Docket No. 2133]. On March 16, 2010, the Bankruptcy Court approved the motion and extended the
Debtors exclusive periods to file and solicit votes for their plan of reorganization to April 30,
2010 and July 30, 2010, respectively [Docket No. 2550].
On March 31, 2010, the Creditors Committee filed a motion to prematurely terminate the
Debtors exclusive periods [Docket No. 2704], which was subsequently joined by three informal
equity holder groupsthe ad hoc equity committee, Aurelius, and an equity group led by Cypress
Management Master, L.P. [Docket Nos. 2846, 2870, and 2877]. The Creditors Committees motion
asserted that terminating the Debtors exclusivity would move the Chapter 11 Cases forward and
allow the Creditors Committee and/or the Note Holders to file an alternative plan of
reorganization, which the Creditors Committee believes is superior to the plan of reorganization
filed by the Debtors on March 15, 2010. On April 7, 2010, the parties agreed to adjourn the
Creditors Committee motion to terminate exclusivity, along with the hearing on the first amended
disclosure statement, in an effort to reach consensus on the terms of the current Plan. However,
the Debtors agreed to treat the informal equity holder groups joinders as separate motions to be
heard at the May 12, 2010 omnibus hearing. On April 28, 2010, the Debtors filed a motion to extend
their exclusive periods to file a plan of reorganization and solicit votes thereon to June 29, 2010
and August 28, 2010, respectively. The three informal equity groups filed objections to the motion
[Docket Nos. 2993, 3000, and 3001]. On May 12, 2010, the Bankruptcy Court denied the informal
equity groups motions to terminate the Debtors exclusive periods and granted the Debtors motion
to extend their exclusive periods [Docket No. 3088].
J. Negotiations Relating to the Development of the Plan
1. The December 17, 2009 Plan of Reorganization
On December 17, 2009, the Debtors filed the Joint Plan of Reorganization of Visteon
Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the United States Bankruptcy Code
[Docket No. 1475]. Based on the valuation of the Debtors Estates as of December 17,
61
2009 and the Term Loan Lenders secured position in the Debtors capital and corporate structure, the plan
contemplated that the Term Loan Lenders would receive a 100% recovery on their Claims
(approximately 96.2% of the equity in Reorganized Visteon) and that the PBGC would receive a 12.0%
recovery on its Claims (approximately 3.8% of the equity in Reorganized Visteon). The plan was
predicated on the termination of certain of the Debtors Pension Plans in order to ensure the Term
Loan Lenders would consent to equitization of their Secured Claims. As explained above, a
substantial portion of the Debtors enterprise value is attributable to their interests in certain
non-Debtor foreign Affiliates, which flows upstream through the Foreign Stock Holding Companies,
against which the Term Loan Lenders hold the only Secured Claims. The only other potential Claims
against the Foreign Stock Holding Companies would have been the unsecured Claims the PBGC would
hold upon termination of the Pension Plans as a result of section 4062(a) of ERISA. Thus, after
satisfaction of the Term Loan Facility Claims from the assets of the Foreign Stock Holding
Companies, the PBGC would have been entitled to receive any further distributions from the Foreign
Stock Holding Companies assets, including from the Foreign Stock Holding Companies unencumbered
equity interests in their foreign subsidiaries. The remaining assets of the Foreign Stock Holding
Companies would not have fully satisfied the PBGCs Claims upon termination of the Pension Plans.
Accordingly, the December 17, 2009 plan of reorganization provided for no recovery for holders of
general unsecured Claims, including the Note Holders.
At the time of the December plan filing, the Debtors noted that they would be receptive to
alternatives that would not result in Pension Plan termination to the extent those alternatives
would not render the plan unconfirmable due to feasibility issues, lack of necessary creditor
consent, or other factors. Given their debt capacity limitations, the Debtors made clear that
absent a substantial junior capital infusion, a plan could not be confirmed without the consent of
the Term Loan Lenders, whose Claims would need to be equitized under the circumstances present at
that time. As of December 17, 2009, no party had presented the Debtors with any letters of intent,
commitment letters, term sheets, or illustrative proposals for a potential new junior capital
infusion. And no junior Creditor constituent had agreed to become restricted by signing a
non-disclosure agreement or conducted any due diligence other than through the advisors to the
Creditors Committee and the advisors to an ad hoc group of the Note Holders that formed in the
autumn of 2009.
2. Post-December 17 Plan Proposals
After the filing of the December 17, 2009 plan, certain Note Holders and their advisors
approached the Debtors regarding potential alternative plan proposals that would be more inclusive
of unsecured Creditors. In particular, the prospect of no recovery for Note Holders, the
freshening of the capital markets, the Debtors operational success (notwithstanding the pendency
of these chapter 11 cases), and signs of a potential rebound in the automotive sector precipitated
major institutions, who hold substantial amounts of the Debtors 7.00% Senior Notes, 8.25% Senior
Notes, and 12.25% Senior Notes to reach out to the Debtors and the Creditors Committee regarding
the possibility of entering into a backstopped rights offering to raise junior capital. On January
15, 2010, the Debtors, Ford, as ABL Lender, the Term Loan Lenders, and the Creditors Committee
reached a stand still agreement to allow each of the parties the opportunity to explore whether
alternative plan structures may be viable. On January 19, 2010, one of the Note Holders sent the
Debtors a proposed plan and rights offering term
62
sheet contemplating a fully backstopped $900.0 million equity commitment. On January 26,
2010, the Debtors and that Note Holder executed a confidentiality agreement to allow the Note
Holder to begin to conduct diligence in connection with its proposal.
On February 1, 2010, 30 of the Debtors Note Holder (including the Note Holder that submitted
the term sheets on January 19, 2010) putatively representing a majority in amount of the 7.00%
Senior Notes Claims, 8.25% Senior Notes Claims, and 12.25% Senior Notes Claims submitted a plan
term sheet premised on a backstopped $950.0 million rights offering along with a signed, but highly
conditional, equity commitment letter. On or around February 8, 2010, the Debtors and certain of
the Note Holders that had expressed a willingness to backstop a right offering (the Restricted
Backstop Parties) completed several weeks of negotiations and executed confidentiality
agreements to enable access to the comprehensive data room maintained by the Debtors. The Debtors
senior management team and their financial advisors have met with the Restricted Backstop Parties
and their advisors on several occasions to, among other things, provide them with a comprehensive
overview of the Debtors business plan and facilitate their diligence efforts. While the Debtors
fully engaged the Restricted Backstop Parties diligence efforts for months, the Debtors questioned
several potential shortcomings of the alternative plan proposal, including whether the funding
would actually materialize, whether the alternative plan would over-leverage the Debtors and result
in loss of customer business, whether reinstatement if any unpaid Term Loan Facility debt is
legally feasible, and the desirability of the proposed transaction in light of the related costs,
fees, and execution risks. Throughout discussions with the Restricted Backstop Parties, the
Debtors continued to negotiate with the Term Loan Lenders over amendments to the December 17 plan
that would, among other things, provide for maintenance of the Debtors Pension Plans and a
significant recovery for unsecured Creditors.
|
3. |
|
March 15, 2010 Plan of Reorganization |
Due to the conditionality of the Note Holder proposal and the Debtors long stated intention
to move these cases forward with a confirmable plan, on the March 15, 2010, the Debtors filed an
amended plan supported by the Term Loan Lenders that would preserve the Debtors Pension Plans and
split the equity of Reorganized Visteon among the Term Loan Lenders, holders of the 7.00% Senior
Notes, 8.25% Senior Notes, and 12.25% Senior Notes Claims, and other general unsecured
creditors.47 As explained in greater detail in Article VIII.D hereof, Rothschild, the
Debtors investment banker, updated the Valuation Analysis put forth in the December 17, 2009 plan
to take into account, among other things, adjustment of the Debtors business plan based on 2009
results, projected sales volumes and industry conditions going-forward, maintenance of the Debtors
Pension Plans, and stabilization of the credit markets. Taken together, these factors led to an increase in the distributable equity value of
Reorganized Visteon and allowed for improved recoveries for all constituencies under the March 15
plan compared to those recoveries proposed in the Debtors December 17 plan. Specifically, the
Term Loan Lenders would have received their Pro Rata share of 85% of New Visteon Common Stock (a
100% recovery on their Claims); holders of the 12.25% Senior Notes, which are guaranteed by the
Domestic Subsidiary Guarantees, would have received their Pro Rata share of
|
|
|
47 |
|
First Amended Joint Plan of Visteon Corporation and Its
Debtor Affiliates Pursuant to Chapter 11 of the United States Bankruptcy Code
[Docket No. 2544]. |
63
approximately 6% of New
Visteon Common Stock (a 50.0% recovery on their Claims). General unsecured trade creditors would
have received Cash in an amount equal to their Pro Rata share of $23.9 million (a 50.0% recovery on
their Claims). All other unsecured Creditors would have received their Pro Rata share of
approximately 9.0% of New Visteon Common Stock (a 20.0% recovery on their Claims).
|
4. |
|
Development and Negotiation of the Plan |
The Debtors negotiations with the Note Holders and the Creditors Committee over alternative
plan proposals continued after the filing of the March 15 plan. In mid-March the Debtors began to
formulate the terms of the current Plan. The Debtors believe that the Plans toggle feature will
sufficiently insulate their Estates from certain risks that were associated with both the March 15
plan of reorganization and the rights offering plan structure presented by the Note Holders. The
Debtors presented a term sheet of the Plan to counsel for: (a) the Creditors Committee, (b) Term
Loan Lenders, and (c) the Note Holders on March 31, 2010 and convened an in-person meeting with
such parties on April 7, 2010 to discuss the terms of the Plan. Through ongoing negotiations since
that date, the Debtors were able to finalize terms of the Plan that the Consenting Note Holders and
the Creditors Committee fully support. These parties have entered into the Plan Support
Agreements (which shall become effective only upon the Bankruptcy Courts approval), pursuant to
which the parties shall support the Plan in all aspects.
The Bankruptcy Court adjourned the May 24, 2010 hearing on the Debtors third amended
disclosure statement [Docket No. 3192] to June 14, 2010 to allow all stakeholders to negotiate
regarding a potentially consensual plan. During the adjournment the Debtors considered various
proposals, but ultimately determined in their business judgment that the Plan best serves their
reorganization goals and the interests of their Creditors and all other stakeholders. Moreover,
the Note Holders have agreed to amendment of the Debtors third amended plan to include a
distribution to holders of Equity Interests in Visteon Corporation, if Class J Interests vote as
Class to accept the Plan, in an effort to bring consensus to the plan process. In addition, and as
a further means to enhance the value of the Estates, the Debtors have amended the Plan to allow
them the option to reinstate the Term Loan Facility Claims.
K. |
|
Alternative Plan Proposals |
|
1. |
|
Proposals from the Term Loan Lenders |
The Debtors have received two proposals from the steering committee of the Term Loan Lenders.
The first proposal, made by letter dated April 16, 2010, proposes that the Debtors confirm the
Claims Conversion Sub Plan, modified to offer Eligible Holders of Allowed Senior Notes Claims the
option to purchase their respective pro rata shares of the equity that would
otherwise be distributed to the Term Loan Lenders. The fees payable to the Investors and
certain financial advisors under the Equity Commitment Agreement would not be payable under this
proposal and the Term Loan Lenders thus believe the proposal would result in significant fee
reductions payable by the Debtors Estates. A copy of the April 16, 2010 letter is attached to
this Disclosure Statement as Exhibit E. The Debtors have rejected this proposal and
believe the fees associated with the Rights Offering Sub Plan are appropriate given, among other
things, the
64
infusion of $1.250 billion in new capital from the Rights Offering, whereas the Claims
Conversion Sub Plan would not generate such capital.
The second proposal, made by letter dated May 7, 2010, proposed an alternative plan based on
the Rights Offering Sub Plan, whereby the Term Loan Lenders would serve as direct investors and
backstop parties for the Rights Offering, without the requirement of any fees, Debtor covenants,
conditions for financing or credit approvals. Under this proposal, Allowed Senior Notes Claims
would receive 15% of the Distributable Equity (subject to dilution as provided in the Plan), with
the Rights Offering otherwise fully available to Eligible Holders of Allowed Senior Notes Claims as
provided in the Rights Offering Sub Plan. A copy of the May 7, 2010 letter is attached to this
Disclosure Statement as Exhibit F.
|
2. |
|
Proposal from Johnson Controls |
On May 7, 2010, the Debtors received an unsolicited preliminary proposal from Johnson
Controls, Inc. (JCI) to purchase certain assets associated with the Debtors interiors
and electronics business. On May 17, 2010, the Debtors sent a letter to JCI seeking additional
information regarding the proposal. On May 20, 2010, JCI sent the Debtors a response that answered
some of the Debtors questions but still lacked certain essential information. The response did,
however, make clear that JCI would not assume liabilities for employee pension benefits, OPEB, any
long-term debt, or any liabilities or Claims that related to conduct or products of the business
prior to the closing date of the sale. The Debtors and their advisors analyzed the proposal and
concluded that without adjusting for the risks associated with the proposed acquisition, the sale
would accelerate certain costs to be paid by the Estates and would not enhance recoveries for
Visteons Creditors. The Creditors Committee also analyzed the sale proposal and reached an
initial determination that the implied recoveries under the proposal would offer less favorable
treatment to General Unsecured Creditors than the treatment provided under the Plan.48
Accordingly, Visteons board of directors unanimously concluded that Visteon and its stakeholders
were best served by moving forward towards confirmation of the Plan. On June 1, 2010, the Debtors
sent a letter to JCI informing JCI of their decision.
ARTICLE
VI.
PLAN SUMMARY
A. |
|
Overview of Chapter 11 |
Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. Under
chapter 11, a debtor can reorganize its business for the benefit of itself, its creditors, and
interest holders. Chapter 11 also strives to promote equality of treatment for similarly
situated creditors and similarly situated interest holders with respect to the distribution of a
debtors assets.
The commencement of a chapter 11 case creates an estate that is comprised of all of the legal
and equitable interests of a debtor as of the filing date. The Bankruptcy Code provides that
|
|
|
48 |
|
See Objection of the Official Committee of
Unsecured Creditors to the Motion for Order Scheduling an Expedited Hearing and
Shortening Notice on Motion for Apppointment of an Official Trade Creditors
Committee Pursuant to 11 U.S.C. § 1102(a)(2) [Docket No. 3334]. |
65
the debtor may continue to operate its business and remain in possession of its property as a
debtor-in-possession.
The consummation of a plan of reorganization is the principal objective of a chapter 11 case.
A plan of reorganization sets forth the means for satisfying claims against, and interests in, a
debtor. Confirmation of a plan of reorganization makes the plan binding upon the debtor, any
issuer of securities under the plan, any person or entity acquiring property under the plan, and
any creditor of or equity holder in the debtor, whether or not such creditor or equity holder is
impaired under or has accepted the plan, or receives or retains any property under the plan.
Subject to certain limited exceptions, and except as otherwise provided in the plan or the
confirmation order itself, a confirmation order discharges the debtor from any debt that arose
prior to the date of confirmation of the Plan and substitutes for those debts the obligations
specified under the confirmed plan.
A chapter 11 plan may specify that the legal, contractual, and equitable rights of the holders
of claims or interests in certain classes are to remain unaltered by the reorganization effectuated
by the plan. Such classes are referred to as unimpaired and, because of such favorable
treatment, are presumed to accept the plan. Accordingly, a debtor need not solicit votes from the
holders of claims or equity interests in such unimpaired classes. A chapter 11 plan also may
specify that certain classes will not receive any distribution of property or retain any claim
against a debtor. Such classes are deemed to reject the plan and, therefore, need not be solicited
to vote to accept or reject the plan. Any classes that are receiving a distribution of property
under the plan but are not unimpaired will be solicited to vote to accept or reject the plan.
Section 1123 of the Bankruptcy Code provides that a plan of reorganization shall classify the
claims of a debtors creditors and equity interest holders. In compliance therewith, the Plan
divides Claims and Interests into various Classes and sets forth the treatment for each Class. The
Debtors believe that the Plan has classified all Claims and Interests in compliance with section
1122 of the Bankruptcy Code, but it is possible that a holder of a Claim or Interest may challenge
the classification of Claims and Interests and that the Bankruptcy Court may find that a different
classification is required for the Plan to be confirmed. In such event, the Debtors intend, to the
extent permitted by the Bankruptcy Court and the Plan, to make such modifications of the
classifications under the Plan to permit Confirmation and to use the Plan acceptances received in
this solicitation for the purpose of obtaining the approval of the reconstituted Class or Classes
of which the accepting holder is ultimately deemed to be a member. Any such reclassification could
adversely affect the Class in which such holder was initially a member, or any other Class under
the Plan, by changing the composition of such Class and the vote required of that Class for
approval of the Plan.
THE REMAINDER OF THIS SECTION PROVIDES A SUMMARY OF THE STRUCTURE AND MEANS FOR IMPLEMENTATION
OF THE PLAN AND THE CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, THE PLAN SUPPLEMENT, AND THE EXHIBITS AND
DEFINITIONS CONTAINED IN EACH DOCUMENT.
66
THE STATEMENTS CONTAINED IN THE DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE PROVISIONS
CONTAINED IN THE PLAN AND IN THE DOCUMENTS REFERRED TO IN THE PLAN. THE STATEMENTS CONTAINED IN
THE DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE OR COMPLETE STATEMENTS OF ALL THE TERMS AND
PROVISIONS OF THE PLAN OR DOCUMENTS REFERRED TO IN THE PLAN, AND REFERENCE IS MADE TO THE PLAN AND
TO SUCH DOCUMENTS FOR THE FULL AND COMPLETE STATEMENT OF SUCH TERMS AND PROVISIONS OF THE PLAN OR
DOCUMENTS REFERRED TO IN THE PLAN.
THE PLAN ITSELF AND THE DOCUMENTS IN THE PLAN CONTROL THE ACTUAL TREATMENT OF CLAIMS AND
INTERESTS UNDER THE PLAN AND WILL, UPON THE OCCURRENCE OF THE EFFECTIVE DATE, BE BINDING UPON,
AMONG OTHER ENTITIES, ALL HOLDERS OF CLAIMS AND INTERESTS, THE REORGANIZED DEBTORS, ALL ENTITIES
RECEIVING PROPERTY UNDER THE PLAN, AND OTHER PARTIES IN INTEREST. IN THE EVENT OF ANY CONFLICT
BETWEEN THE DISCLOSURE STATEMENT AND THE PLAN OR ANY OTHER OPERATIVE DOCUMENT, THE TERMS OF THE
PLAN AND SUCH OTHER OPERATIVE DOCUMENT SHALL CONTROL.
B. |
|
Overall Structure of the Plan |
The Plan is comprised of two mutually exclusive sub plansthe Rights Offering Sub Plan and
the Claims Conversion Sub Plan. Pursuant to the Plan Support Agreement, the Plan has the support
of more than two-thirds in amount of the 12.25% Senior Note Claims and two-thirds in aggregate
amount of the 7.00% Senior Notes Claims and 8.25% Senior Notes Claims. The Debtors have also
executed the Committee Plan Support Agreement, pursuant to which the Creditors Committee will
support the Plan, except in certain limited circumstances. Following is a general description of
each Sub Plan.
|
1. |
|
The Rights Offering Sub Plan |
The Debtors will seek to consummate the Rights Offering Sub Plan in the event the following
new capital is raised: (a) $950.0 million through a Rights Offering of New Visteon Common Stock to
the Eligible Holders through a private placement under section 4(2) of the Securities Act; (b) a
$300.0 million direct purchase commitment from the Investors; and (c) the Exit Financing Facility.
If the Term Loan Lenders vote as a Class to accept the Plan, the Term Loan Facility Claims will be
paid in full in Cash. If the Term Loan Lender Class votes to reject the Plan, the Debtors shall
have the option to seek reinstatement of the Term Loan Facility pursuant to section 1124(2) of the
Bankruptcy Code, subject to the reasonable consent of the
Requisite Investors, and thereafter pay each holder of the Allowed Term Loan Facility Claims
its Pro Rata portion of an amount in Cash to be determined by the Debtors (subject to the
reasonable consent of the Requisite Investors) (the Reinstatement Recovery).
Reinstatement of the Term Loan Facility could provide the Estates with significant savings through
retroactive application of the non-default, LIBOR plus 3.0% interest rate in lieu of the default
interest rate during the pendency of these Chapter 11 Cases. The Debtors would also have the
option to reduce the amount of the Exit Financing Facility dollar-for-dollar by the amount of the
Term Loan Facility
67
that is permanently reinstated under the Plan. If the Debtors are not
successful in reinstating the Term Loan Facility Claims, the Debtors shall satisfy the Term Loan
Facility Claims in full in Cash. Under either scenario, the Term Loan Facility Claims would be
Unimpaired.
Under the Rights Offering Sub Plan, all Note Holders shall be entitled to receive a Pro Rata
distribution of 5.0% of Distributable Equity, or 4.9% of the Distributable Equity if Class J votes
to accept the Plan, and all Eligible Holders shall be entitled to participate in a Rights Offering
for the remaining 95.0% of New Visteon Common Stock, or 93.1% of New Visteon Common Stock if Class
J votes to accept the Plan.49 Each Non-Eligible Holder, (i.e., a Note Holder not permitted
to participate in a rights offering under section 4(2) of the Securities Act,) shall also receive
the lesser of (i) its Pro Rata share of $50.0 million in Cash or (ii) 40.0% of the amount of such
holders Allowed Claim in Cash, on account of the value of the Subscription Rights which such
Non-Eligible Holder would have been entitled to had such Non-Eligible Holder been an Eligible
Holder. Holders of the 12.25% Senior Notes Claims will receive additional consideration on
account of the Domestic Subsidiary Guarantees in the form of their Pro Rata share of warrants to
purchase New Visteon Common Stock on terms described in the Warrant Agreement attached as
Exhibit B to the Plan. The Cash Recovery Backstop Investors shall fund the aggregate Cash
Amount provided to Non-Eligible Holders and, therefore, such Cash distribution will have no impact
on the Debtors Cash availability. The Equity Commitment Agreement entered into by the Debtors and
Investors in connection with the Rights Offering Sub Plan provides that any shares of New Visteon
Common Stock that are not purchased through the Rights Offering, or distributed to holders of the
12.25% Senior Notes Claims, as described above, shall be purchased by those Investors that are
party to the Equity Commitment Agreement, subject to the conditions therein.
Holders of General Unsecured Claims against VIHI will be paid in full in Cash, subject to a
$20.0 million cap, given VIHIs interest in valuable foreign stock holding companies and position
in the Debtors corporate structure, which makes direct Claims against VIHI structurally superior
to other General Unsecured Claims.50 Each remaining holder of a General Unsecured Claim
will receive a Cash recovery equal to the lesser of (x) such holders Pro Rata portion of
$141.0 million in Cash or (y) 50.0% recovery of the amount of such holders Allowed Class H
Claim.
Allowed Class J Interests are not entitled to receive a distribution and would deemed
automatically cancelled under the Rights Offering Sub Plan, provided, however, if Class J votes to
accept the Plan, each holder of an Allowed Class J Interest shall receive its Pro Rata portion of
2.0% of the Distributable Equity and Old Equity Warrants to purchase shares of New Visteon Common
Stock at an exercise price of $58.80 per share. Thus, only if Class J Interests accept
|
|
|
49 |
|
Under the Rights Offering Sub Plan, Note Holders shall
receive 4.9% of New Visteon Common Stock if Class J votes to accept the Plan or
5.0% of New Visteon Common Stock if Class J votes to reject the Plan. The 4.9%
or 5.0% of New Visteon Common Stock distributed to the Note Holders shall be
subject to dilution from the Management Equity Incentive Program, and if
applicable, the Old Equity Warrants and the 93.1% or 95.0% of New Visteon
Common Stock offered through the Rights Offering shall be subject to dilution
from the Guaranty Equity Amount and the Management Equity Incentive Program,
and if applicable, the Old Equity Warrants. |
|
50 |
|
The Debtors estimate that there will be a total of $3.4
million in Allowed General Unsecured Claims against VIHI. If however, Allowed
General Unsecured Claims against VIHI exceed $20.0 million, then holders of
such Claims shall receive their Pro Rata share of $20.0 million in Cash. |
68
the Plan as a Class will Class J Interests receive a distribution. The Rights
Offering Sub Plan also contemplates Reorganized Visteons entry into a new $300.0 million working
capital facility, which is projected to be undrawn upon emergence from chapter 11.
|
2. |
|
The Claims Conversion Sub Plan |
The Plan shall toggle from the Rights Offering Sub Plan to the Claims Conversion Sub Plan in
the event sufficient capital is not raised under the Rights Offering Sub Plan to satisfy the Term
Loan Facility Claims in full in Cash. Under the Claims Conversion Sub Plan, Reorganized Visteon
shall issue New Visteon Common Stock to the Term Loan Lenders and the Note Holders in the following
percentages based on their relative priorities and positions in the Debtors capital structure:
84.9% to 86.2% the holders of the Term Loan Facility Claims; 6.3% to 6.5% to the holders of the
12.25% Senior Notes Claims; and 7.5% to 8.6% to the holders of the 7.00% Senior Notes Claims and
8.25% Senior Notes Claims. Under the Claims Conversion Sub Plan, holders of General Unsecured
Claims will receive the same recovery provided under the Rights Offering Sub Plani.e., the lesser
of (a) such holders Pro Rata portion of $141.0 million in Cash or (b) 50.0% recovery of the amount
of such holders Allowed Class H Claim. General Unsecured Claims against VIHI also will be paid in
Cash in full, subject to a $20.0 million cap.
Under the Claims Conversion Sub Plan, holders of the Term Loan Facility Claims would receive
the highest percentage of New Visteon Common Stock based on the first Lien they hold against the
Debtors most valuable assets, including certain Debtor Foreign Stock Holding Companies and at
least 65% of the Foreign Stock Holding Companies equity interests in their foreign subsidiaries.
After the Term Loan Facility Claims are satisfied in full (including postpetition default interest
and fees),51 the Note Holders shall receive the remaining shares of New Visteon Common
Stock. Holders of 12.25% Senior Notes Claims will receive a higher percentage of New Visteon
Common Stock than holders of 7.00% Senior Notes Claims and 8.25% Senior Notes Claims on account of
the Domestic Subsidiary Guarantees. Holders of Class J Interests will not receive a recovery under
the Claims Conversion Sub Plan and shall be deemed to reject the Plan if the Debtors pursue
Confirmation of the Claims Conversion Sub Plan. The Claims Conversion Sub Plan contemplates
Reorganized Visteons entry into a new $150.0 million working capital facility, which is projected
to be undrawn upon emergence from chapter 11.
The Term Loan Lenders believe the proposed agreements (i) contain no definitive date by which
the new capital must be delivered, (ii) excuse the Investors from any liability for breach of their
commitments, and (iii) would likely suspend confirmation in the event the Investors or Note Holders
litigate regarding the toggle. The Debtors believe the Term Loan Lenders completely misinterpret the Equity Commitment Agreement and Plan Support Agreement and disagree with the
Term Loan Lenders assertions.
|
|
|
51 |
|
The estimated Allowed amount of the Term Loan Facility
Claims is $1.629 billion, including postpetition interest at the default
rate. To the extent Class E votes to reject the Plan and the Debtors
succeed in reinstating the Term Loan Facility Claims, the Allowed amount
of the Term Loan Facility Claims may be calculated at the base interest
rate in lieu of the default interest rate.
|
69
C. |
|
Administrative and Priority Claims |
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims,
Professional Claims, DIP Facility Claims, and Priority Tax Claims have not been classified and thus
are excluded from the Classes of Claims set forth in Article VI.
Unless otherwise agreed to by the holder of an Allowed Administrative Claim and the Debtors or
Reorganized Debtors, as applicable, each holder of an Allowed Administrative Claim (other than of a
Professional Claim), including any Allowed Administrative Claim of the Notes Trustee, will receive
in full and final satisfaction of its Administrative Claim an amount of Cash equal to the amount of
such Allowed Administrative Claim either: (1) on the Effective Date, as soon as practicable
thereafter (2) if the Administrative Claim is not Allowed as of the Effective Date, no later than
30 days after the date on which an order Allowing such Administrative Claim becomes a Final Order,
or as soon as reasonably practicable thereafter, or (3) if the Allowed Administrative Claim is
based on liabilities incurred by the Debtors in the ordinary course of their business after the
Petition Date (including any reasonable fees and expenses as provided for in the Equity Commitment
Agreement), pursuant to the terms and conditions of the particular transaction giving rise to such
Allowed Administrative Claims, without any further action by the holders of such Allowed
Administrative Claims. For the avoidance of doubt, all reasonable fees and expenses of the Notes
Trustee (and its counsel, agents, and advisors) that are provided for under the Notes Indentures
shall be paid in full in Cash on the Effective Date, or as soon as practicable thereafter, without
a reduction to the recoveries of applicable holders of Allowed Claims.
|
a. |
|
Final Fee Applications |
All final requests for payment of Claims of a Professional shall be filed no later than 60
days after the Confirmation Date. After notice and a hearing in accordance with the procedures
established by the Bankruptcy Code and prior Bankruptcy Court orders, the Allowed amounts of such
Professional Claims shall be determined by the Bankruptcy Court.
|
b. |
|
Professional Fee Escrow Account |
In accordance with Article VI.C.1.c hereof, on the Confirmation Date, the Debtors shall
establish and fund the Professional Fee Escrow Account with Cash equal to the aggregate
Professional Fee Reserve Amount for all Professionals. The Professional Fee Escrow Account shall
be maintained in trust for the Professionals. Such funds shall not be considered property of the
estates of the Debtors or Reorganized Debtors, as applicable. The amount of Professional Claims
owing to the Professionals shall be paid in Cash to such Professionals by the Reorganized Debtors
from the Professional Fee Escrow Account when such Claims are Allowed by a Final Order. When all
Professional Claims have been paid in full, amounts remaining in the Professional Fee Escrow
Account, if any, shall revert to the Reorganized Debtors.
70
|
c. |
|
Professional Fee Reserve Amount |
To receive payment for unbilled fees and expenses incurred through the Confirmation Date, the
Professionals shall estimate their Professional Compensation prior to and as of the Confirmation
Date and shall deliver such estimate to the Debtors no later than 10 days prior to the Confirmation
Date, provided, however, that such estimate shall not be considered an admission
with respect to the fees and expenses of such Professional. If a Professional does not provide an
estimate, the Reorganized Debtors may estimate the unbilled fees and expenses of such Professional.
The total amount so estimated as of the Confirmation Date shall comprise the Professional Fee
Reserve Amount.
|
d. |
|
Post-Confirmation Date Fees and Expenses |
Except as otherwise specifically provided in the Plan, from and after the Confirmation Date,
the Debtors or Reorganized Debtors, as applicable, shall, in the ordinary course of business and
without any further notice to or action, order, or approval of the Bankruptcy Court, pay in Cash
the reasonable legal, professional, or other fees and expenses related to implementation and
Consummation incurred by the Debtors or Reorganized Debtors, as applicable. Upon the Confirmation
Date, any requirement that Professionals comply with sections 327 through 331 and 1103 of the
Bankruptcy Code or the Interim Compensation Order in seeking retention or compensation for services
rendered after such date shall terminate, and the Reorganized Debtors may employ and pay any
Professional in the ordinary course of business without any further notice to or action, order, or
approval of the Bankruptcy Court.
Except to the extent that a holder of an Allowed DIP Facility Claim agrees to a less favorable
treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange
for each and every Allowed DIP Facility Claim, each such Allowed Claim shall be paid in full in
Cash on the Effective Date, or as soon as practicable thereafter, provided such payments shall be
distributed to the DIP Facility Administrative Agent on behalf of holders of such Allowed Claims.
Each holder of an Allowed Priority Tax Claim due and payable on or before the Effective Date
shall receive one of the following treatments on account of such Claim (a) Cash in an amount equal
to the amount of such Allowed Priority Tax Claim, (b) Cash in an amount agreed to by the Debtor or
Reorganized Debtor, as applicable, and such holder, provided, however, that such
parties may further agree for the payment of such Allowed Priority Tax Claim to occur at a later
date, or (c) at the option of the Debtors, Cash in the aggregate amount of such Allowed Priority
Tax Claim payable in installment payments over a period not more than five years after the Petition
Date pursuant to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority
Tax Claim is not due and owing on the Effective Date, such Claim shall be paid in full in Cash in
accordance with the terms of any agreement between the Debtors and the holder of such Claim, or as
may be due and payable under applicable non-bankruptcy law or in the ordinary course of business.
71
The Plan contemplates Confirmation and Consummation through either of two mutually exclusive
sub plansthe Rights Offering Sub Plan and Claims Conversion Sub Plan. Except as otherwise
provided in Article VI.Q, to the extent that both the Rights Offering and the Exit Financing are
consummated, the Debtors will proceed with Consummation of the Rights Offering Sub Plan. To the
extent that either of the Rights Offering or the Exit Financing is not consummated, the Debtors
will proceed with Confirmation and/or Consummation, as applicable, of the Claims Conversion Sub
Plan, subject to the terms of the each of Plan Support Agreement.
E. |
|
Classification of Claims and Interests |
The Plan constitutes a separate plan of reorganization for each Debtor. Except for the Claims
addressed in Article II, all Claims and Interests are classified in the Classes set forth below
pursuant to section 1122 of the Bankruptcy Code. Classes of Claims and Interests shall be the same
under each of the Rights Offering Sub Plan and the Claims Conversion Sub Plan, provided, certain
Classes of Claims shall receive different treatment under the Rights Offering Sub Plan than under
the Claims Conversion Sub Plan, as specified below. In accordance with section 1123(a)(1) of the
Bankruptcy Code, the Debtors have not classified Administrative Claims, Professional Claims, DIP
Facility Claims, and Priority Tax Claims. A Claim or Interest is classified in a particular Class
only to the extent that the Claim or Interest qualifies within the description of that Class and is
classified in other Classes to the extent that any portion of the Claim or Interest qualifies
within the description of such other Classes. A Claim or Interest is also classified in a
particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent
that such Claim or Interest is an Allowed Claim or Interest in that Class and has not been paid,
released, or otherwise satisfied prior to the Effective Date.
Below is a chart assigning each Class a letter for purposes of identifying each separate
Class.
|
|
|
|
|
|
|
|
|
|
|
|
|
Status Under Rights |
|
Status Under Claims |
|
|
Class |
|
Claim or Interest |
|
Offering Sub Plan |
|
Conversion Sub Plan |
|
Voting Rights |
A
|
|
ABL Claims
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
B
|
|
Secured Tax Claims
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
C
|
|
Other Secured Claims
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
D
|
|
Other Priority Claims
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively
Presumed to Accept |
E
|
|
Term Loan Facility Claims
|
|
Unimpaired
|
|
Impaired
|
|
Entitled to Vote, but Conclusively
Presumed to Accept
Under the Rights Offering Sub Plan |
F
|
|
7.00% Senior Notes Claims
and 8.25% Senior Notes
Claims
|
|
Impaired
|
|
Impaired
|
|
Entitled to Vote |
72
|
|
|
|
|
|
|
|
|
|
|
|
|
Status Under |
|
Status Under |
|
|
|
|
|
|
Rights |
|
Claims |
|
|
|
|
|
|
Offering Sub |
|
Conversion Sub |
|
|
Class |
|
Claim or Interest |
|
Plan |
|
Plan |
|
Voting Rights |
G
|
|
12.25% Senior Notes Claims
|
|
Impaired
|
|
Impaired
|
|
Entitled to Vote |
H
|
|
General Unsecured Claims
|
|
Impaired
|
|
Impaired
|
|
Entitled to Vote |
I
|
|
Intercompany Claims
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively Presumed to Accept |
J
|
|
Interests in Visteon Corporation
|
|
Impaired
|
|
Impaired
|
|
Entitled to Vote |
K
|
|
Intercompany Interests
|
|
Unimpaired
|
|
Unimpaired
|
|
Conclusively Presumed to Accept |
L
|
|
Section 510(b) Claims
|
|
Impaired
|
|
Impaired
|
|
Deemed to Reject |
F. |
|
Treatment of Classes of Claims and Interests |
|
a. |
|
Classification: Class A consists of all ABL Claims. |
|
|
b. |
|
Treatment: Except to the extent that a holder of an Allowed
Class A Claim agrees to a less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
and every Allowed Class A Claim, each such holder of an Allowed Class A Claim
shall be paid in full in Cash on the Effective Date, or as soon as practicable
thereafter. |
|
|
c. |
|
Voting: Class A is Unimpaired, and holders of Allowed Class A
Claims are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class A Claims
are not entitled to vote to accept or reject the Plan. |
|
2. |
|
Class B Secured Tax Claims |
|
a. |
|
Classification: Class B consists of all Secured Tax Claims. |
|
|
b. |
|
Treatment: Except to the extent that a holder of an Allowed
Class B Claim agrees to a less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
and every Allowed Class B Claim, each such holder of an Allowed Class B Claim
shall receive, at the sole option of the Debtors or the Reorganized Debtors, as
applicable: |
|
(i) |
|
Cash on the Effective Date, or as soon as
practicable thereafter, in an amount equal to such Allowed Class B
Claim; or |
|
|
(ii) |
|
commencing on the Effective Date and continuing
over a period not exceeding five years from the Petition Date, equal
semi-annual Cash payments in an aggregate amount equal to such Allowed
Class B Claim, together with interest at the applicable non-default |
73
|
|
|
contract rate under non-bankruptcy law, subject to the sole option
of the Debtors or the Reorganized Debtors to prepay the entire amount
of such Allowed Claim; or |
|
(iii) |
|
regular Cash payments in a manner not less
favorable than the most favored non-priority unsecured Claim provided
for by the Plan. |
|
c. |
|
Voting: Class B is Unimpaired, and holders of Allowed Class B
Claims are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class B Claims
are not entitled to vote to accept or reject the Plan. |
|
3. |
|
Class C Other Secured Claims |
|
a. |
|
Class C consists of all Other Secured Claims. |
|
|
b. |
|
Treatment: Except to the extent that a holder of an Allowed
Class C Claim agrees to a less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
and every Allowed Class C Claim, each such holder of an Allowed Class C Claim
shall, at the sole option of the Debtors or the Reorganized Debtors, as
applicable: |
|
(i) |
|
have its Allowed Class C Claim reinstated and
rendered Unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, notwithstanding any contractual provision or
applicable non-bankruptcy law that entitles the holder of an Allowed
Class C Claim to demand or receive payment of such Allowed Class C
Claim prior to the stated maturity of such Allowed Class C Claim from
and after the occurrence of a default; or |
|
|
(ii) |
|
receive Cash in an amount equal to such Allowed
Class C Claim, including any interest on such Allowed Class C Claim
required to be paid pursuant to section 506(b) of the Bankruptcy Code,
on the later of the Effective Date and the date such Allowed Class C
Claim becomes an Allowed Class C Claim, or as soon as practicable
thereafter; or |
|
|
(iii) |
|
receive the collateral securing its Allowed
Class C Claim and any interest on such Allowed Class C Claim required
to be paid pursuant to section 506(b) of the Bankruptcy Code. |
|
c. |
|
Voting: Class C is Unimpaired, and holders of Allowed Class C
Claims are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class C Claims
are not entitled to vote to accept or reject the Plan. |
74
|
4. |
|
Class D Other Priority Claims |
|
a. |
|
Classification: Class D consists of all Other Priority Claims. |
|
|
b. |
|
Treatment: Except to the extent that a holder of an Allowed
Class D Claim agrees to a less favorable treatment, in full and final
satisfaction, settlement, release, and discharge of and in exchange for each
and every Allowed Class D Claim, each such holder of an Allowed Class D Claim
shall be paid in full in Cash on the later of (i) the Effective Date, or as
soon as practicable thereafter and (ii) the date such Class D Claim becomes
Allowed, or as soon as practicable thereafter. |
|
|
c. |
|
Voting: Class D is Unimpaired, and holders of Allowed Class D
Claims are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class D Claims
are not entitled to vote to accept or reject the Plan. |
|
5. |
|
Class E Term Loan Facility Claims |
|
a. |
|
Classification: Class E consists of the Term Loan Facility
Claims. |
|
|
b. |
|
Allowance: Subject to the reinstatement of the Allowed Class E
Claims by the Debtors, on the Effective Date, the Term Loan Facility Claims
shall be Allowed in the aggregate amount of $1,629.34 million, measured as of
June 29, 2010, plus, if applicable, any interest accrued on such Allowed Claims
between June 30, 2010 and the Effective Date. |
|
|
c. |
|
Treatment: Holders of Allowed Class E Claim will receive the
following treatment under the Rights Offering Sub Plan and the Claims
Conversion Sub Plan, respectively: |
|
(i) |
|
Rights Offering Sub Plan: Except to
the extent that a holder of an Allowed Class E Claim agrees to a less
favorable treatment, in full and final satisfaction, settlement,
release, and discharge of and in exchange for each and every Allowed
Class E Claim (A) if Class E votes to accept the Plan pursuant to
section 1126(c) of the Bankruptcy Code, each holder of an Allowed Class
E Claim shall be paid in full in Cash on the Effective Date, or as soon
as practicable thereafter, or (B) if Class E does not vote to accept
the Plan pursuant to section 1126(c) of the Bankruptcy Code, the
Debtors shall have the option, subject to the reasonable consent of the
Requisite Investors, to seek to reinstate the Allowed Class E Claims,
and, if successful, to thereafter pay to each holder of an Allowed
Class E Claim its Pro Rata portion of an amount of Cash, to be
determined by the Debtors (subject to the reasonable consent of the
Requisite Investors), on the Effective Date, or as soon as practicable
thereafter; provided, in the event the Debtors are unable to
successfully reinstate the Allowed Class E Claims, each holder |
75
|
|
|
of an Allowed Class E Claim shall be paid in full in Cash on the
Effective Date, or as soon as practicable thereafter. |
|
(ii) |
|
Claims Conversion Sub Plan: Except to
the extent that a holder of Allowed Class E Claim agrees to a less
favorable treatment, in full and final satisfaction, settlement,
release, and discharge of and in exchange for each and Allowed Class E
Claim, each such holder of an Allowed Class E Claim shall receive on
the Effective Date, or as soon as practicable thereafter, its Pro Rata
portion of [85.0]% of the Distributable Equity. |
|
|
|
|
Under either of the Rights Offering Sub Plan or the Claims Conversion
Sub Plan, the consideration provided under this Article VI.F.2.b
shall be the sole source of recovery for an Allowed Class E Claims,
and holders of Class E Claims shall have no recourse against any
non-Debtor Affiliates and shall have been deemed to waive any and all
claims against any non-Debtor Affiliates. |
|
d. |
|
Voting: Holders of Allowed Class E Claims are entitled to vote
to accept or reject the Plan; provided, however, that if the Debtors proceed to
Confirmation with the Rights Offering Sub Plan such holders would be Unimpaired
(and conclusively presumed to accept the Plan) in accordance with section 1124
of the Bankruptcy Code. |
|
6. |
|
Class F 7.00% Senior Notes Claims and 8.25% Senior Notes Claims |
|
a. |
|
Classification: Class F consists of the 7.00% Senior Notes
Claims and the 8.25% Senior Notes Claims. |
|
|
b. |
|
Allowance: On the Effective Date, the 7.00% Senior Notes
Claims shall be Allowed in the aggregate amount of $456.82 million, and the
8.25% Senior Notes Claims shall be Allowed in the aggregate amount of $211.41
million. |
|
|
c. |
|
Treatment: Holders of Allowed Class F Claims will receive the
following treatment under the Rights Offering Sub Plan and the Claims
Conversion Sub Plan, respectively: |
|
(i) |
|
Rights Offering Sub Plan-Non-Eligible
Holders: Except to the extent that a Non-Eligible Holder of an
Allowed Class F Claim agrees to a less favorable treatment, in full and
final satisfaction, settlement, release, and discharge of and in
exchange for each and every applicable Allowed Class F Claim, each such
Non-Eligible Holder of an Allowed Class F Claim shall receive on the
Effective Date, or as soon as practicable thereafter, (i) the Cash
Amount and (ii) its Pro Rata Allocation of 5.0% of the Distributable
Equity (or, to the extent that Class J votes to accept the Plan
pursuant to |
76
|
|
|
section 1126(d) of the Bankruptcy Code, its Pro Rata Allocation of
4.9% of the Distributable Equity). |
|
(ii) |
|
Rights Offering Sub Plan-Eligible
Holders: Except to the extent that an Eligible Holder of an
Allowed Class F Claim agrees to a less favorable treatment, in full and
final satisfaction, settlement, release, and discharge of and in
exchange for each and every applicable Allowed Class F Claim, each such
Eligible Holder of an Allowed Class F Claim shall receive its Pro Rata
Allocation of: (A) the Subscription Rights and (B) on the Effective
Date, or as soon as practicable thereafter, 5.0% of the Distributable
Equity (or, to the extent that Class J votes to accept the Plan
pursuant to section 1126(d) of the Bankruptcy Code, its Pro Rata
Allocation of 4.9% of the Distributable Equity). |
|
|
(iii) |
|
Claims Conversion Sub Plan: Except to
the extent that a holder of an Allowed Class F Claim agrees to a less
favorable treatment, in full and final satisfaction, settlement,
release, and discharge of and in exchange for each and every Allowed
Class F Claim, each such holder of an Allowed Class F Claim shall
receive on the Effective Date, or as soon as practicable thereafter,
its Pro Rata portion of approximately 9.0% of the Distributable Equity. |
|
d. |
|
Voting: Class F is Impaired and holders of Allowed Class F
Claims are entitled to vote to accept or reject the Plan. |
|
7. |
|
Class G 12.25% Senior Notes Claims |
|
a. |
|
Classification: Class G consists of the 12.25% Senior Notes
Claims. |
|
|
b. |
|
Allowance: On the Effective Date, the 12.25% Senior Notes
Claims shall be Allowed in the aggregate amount of $202.36 million. |
|
|
c. |
|
Treatment: Holders of Allowed Class G Claims will receive the
following treatment under the Rights Offering Sub Plan and the Claims
Conversion Sub Plan, respectively: |
|
(i) |
|
Rights Offering Sub Plan-Non-Eligible
Holders: Except to the extent that a Non-Eligible Holder of an
Allowed Class G Claim agrees to a less favorable treatment, in full and
final satisfaction, settlement, release, and discharge of and in
exchange for each and every applicable Allowed Class G Claim, each such
Non-Eligible Holder of an Allowed Class G Claim shall receive on the
Effective Date, or as soon as practicable thereafter: |
77
|
(b) |
|
its Pro Rata Allocation of 5.0%
of the Distributable Equity (or, to the extent that Class J
votes to accept the Plan pursuant to section 1126(d) of the
Bankruptcy Code, its Pro Rata Allocation of 4.9% of the
Distributable Equity); and |
|
|
(c) |
|
its Pro Rata portion of the
Guaranty Equity Amount. |
|
(ii) |
|
Rights Offering Sub Plan-Eligible
Holders: Except to the extent that an Eligible Holder of an
Allowed Class G Claim agrees to a less favorable treatment, in full and
final satisfaction, settlement, release, and discharge of and in
exchange for each and every applicable Allowed Class G Claim, each such
Eligible Holder of an Allowed Class G Claim shall receive: |
|
(a) |
|
its Pro Rata Allocation of the
Subscription Rights; |
|
|
(b) |
|
on the Effective Date, or as soon
as practicable thereafter, its Pro Rata Allocation of 5.0% of
the Distributable Equity (or, to the extent that Class J votes
to accept the Plan pursuant to section 1126(d) of the Bankruptcy
Code, its Pro Rata Allocation of 4.9% of the Distributable
Equity); and |
|
|
(c) |
|
on the Effective Date, or as soon
as practicable thereafter, its Pro Rata portion of the Guaranty
Equity Amount, or, if such holder exercises its Guaranty Cash
Recovery Option, the Guaranty Cash Amount. |
|
(iii) |
|
Claims Conversion Sub Plan: Except to
the extent that a holder of an Allowed Class G Claim agrees to a less
favorable treatment, in full and final satisfaction, settlement,
release, and discharge of and in exchange for each and every Allowed
Class G Claim, each such holder of an Allowed Class G Claim shall
receive on the Effective Date, or as soon as practicable thereafter,
its Pro Rata portion of 6.0% of the Distributable Equity. |
|
|
|
|
Under either of the Rights Offering Sub Plan or the Claims Conversion
Sub Plan, the consideration provided under this Article VI.F.7.c
shall be the sole source of recovery for the Allowed Class G Claims,
and holders of Class G Claims shall have no recourse against any
non-Debtor Affiliates and shall have been deemed to waive any and all
claims against any non-Debtor Affiliates. |
|
d. |
|
Voting: Class G is Impaired and holders of Allowed Class G
Claim are entitled to vote to accept or reject the Plan. |
|
8. |
|
Class H General Unsecured Claims |
|
a. |
|
Classification: Class H consists of all General Unsecured
Claims. |
78
|
b. |
|
Treatment: Except to the extent that a holder of an Allowed Class H Claim
agrees to a less favorable treatment, in full and final satisfaction,
settlement, release, and discharge of and in exchange for each and every
Allowed Class H Claim, each holder of an Allowed Class H Claim shall receive on
the Effective Date, or as soon as practicable thereafter, Cash equal to (i) the
lesser of (A) its Pro Rata portion of $20.0 million or (B) 100% of the amount
of such holders Allowed Class H Claim, if such holders Allowed Class H Claim
is held against Visteon International Holdings, Inc. or (ii) if such holders
Allowed Class H Claim is held against any other Debtor, the lesser of (A) its
Pro Rata portion of $141.0 million or (B) 50% of the amount of such holders
Allowed Class H Claim. |
|
|
c. |
|
Voting: Class H is Impaired and holders of Allowed Class H
Claims are entitled to vote to accept or reject the Plan. |
|
9. |
|
Class I Intercompany Claims |
|
a. |
|
Classification: Class I consists of all Intercompany Claims. |
|
|
b. |
|
Treatment: Holders of Allowed Class I Claims shall not receive
any distributions on account of such Allowed Class I Claims; provided,
however, the Debtors reserve the right to reinstate any or all Allowed
Class I Claims on or after the Effective Date (upon consultation with the
Requisite Investors). |
|
|
c. |
|
Voting: Class I is Unimpaired, and holders of Allowed Class I
Claims are conclusively presumed to have accepted the Plan pursuant to section
1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class I Claims
are not entitled to vote to accept or reject the Plan. |
|
10. |
|
Class J Interests in Visteon Corporation |
|
a. |
|
Classification: Class J consists of all Interests in Visteon
Corporation. |
|
|
b. |
|
Treatment: Holders of Allowed Class J Interests will receive
the following treatment under the Rights Offering Sub Plan and the Claims
Conversion Sub Plan, respectively: |
|
(i) |
|
Rights Offering Sub Plan: Allowed
Class J Interests are not entitled to receive a distribution and shall
be deemed automatically cancelled without further action by the Debtors
or Reorganized Debtors and the obligations of the Debtors and
Reorganized Debtors thereunder shall be discharged; provided, however,
if Class J votes to accept the Plan pursuant to section 1126(d) of the
Bankruptcy Code, each holder of an Allowed Class J Interest shall
receive, in full and final satisfaction, settlement, release, and
discharge of and in exchange for each and every Allowed Class J |
79
|
|
|
Interest, on the Effective Date, or as soon as practicable
thereafter, its Pro Rata portion of (A) the Old Equity Warrants, and
(B) 2.0% of the Distributable Equity, except to the extent that a
holder of an Allowed Class J Interest agrees to a less favorable
treatment. |
|
(ii) |
|
Claims Conversion Sub Plan: On the
Effective Date, Allowed Class J Interests shall be deemed automatically
cancelled without further action by the Debtors or Reorganized Debtors
and the obligations of the Debtors and Reorganized Debtors thereunder
shall be discharged. |
|
c. |
|
Voting: Class J is Impaired and holders of Allowed Class J
Interests are entitled to vote to accept or reject the Plan; provided,
however, that if the Debtors proceed to Confirmation with the Claims
Conversion Sub Plan such holders would be deemed to have rejected the Plan
pursuant to section 1126(g) of the Bankruptcy Code. |
|
11. |
|
Class K Intercompany Interests |
|
a. |
|
Classification: Class K consists of all Intercompany
Interests. |
|
|
b. |
|
Treatment: Holders of Allowed Class K Interests shall not
receive any distributions on account of such Allowed Class K Interests;
provided, however, the Debtors reserve the right to reinstate
any or all Allowed Class K Interests on or after the Effective Date. |
|
|
c. |
|
Voting: Class K is Unimpaired, and holders of Allowed Class K
Interests are conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code. Therefore, holders of Allowed Class K
Interests are not entitled to vote to accept or reject the Plan. |
|
12. |
|
Class L Section 510(b) Claims |
|
a. |
|
Classification: Class L consists of all Section 510(b) Claims. |
|
|
b. |
|
Treatment: Holders of Allowed Class L Claims shall not receive
any distributions on account of such Allowed Class L Claims. On the Effective
Date, all Class L Claims shall be discharged. |
|
|
c. |
|
Voting: Class L is Impaired and holders of Allowed Class L
Claims are deemed to have rejected the Plan pursuant to section 1126(g) of the
Bankruptcy Code. Therefore, holders of Allowed Class L Claims are not entitled
to vote to accept or reject the Plan. |
G. |
|
Special Provision Governing Unimpaired Claims |
Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors or
the Reorganized Debtors rights in respect of any Unimpaired Claim, including all rights in
80
respect of legal and equitable defenses to or setoffs or recoupments against any such
Unimpaired Claim.
H. |
|
Provisions for Implementation of the Plan |
|
1. |
|
General Settlement of Claims and Interests |
Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration
for the classification, distributions, releases, and other benefits provided under the Plan, on the
Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement
of all Claims and Interests and controversies resolved pursuant to the Plan.
|
2. |
|
New Visteon Common Stock |
The issuance of the New Visteon Common Stock by Reorganized Visteon, including options for the
purchase thereof or other equity awards, if any, providing for the issuance of New Visteon Common
Stock, is authorized without the need for any further corporate action or without any further
action by the Debtors or Reorganized Visteon, as applicable. Pursuant to the Plan, the Reorganized
Visteon Charter shall authorize the issuance and distribution on or after the Effective Date of
shares of New Visteon Common Stock to the Distribution Agent for the benefit of holders of Allowed
Claims in each of Classes E, F, and G under the Claims Conversion Sub Plan, and Classes F, G, and,
if applicable, J under the Rights Offering Sub Plan (and as required to satisfy the Debtors
obligations under the Equity Commitment Agreement), subject, in either case, to dilution by the
Management Equity Incentive Program and, if applicable, the Guaranty Equity Amount and the Old
Equity Warrants. All of the shares of New Visteon Common Stock issued pursuant to the Plan shall
be duly authorized, validly issued, fully paid, and non-assessable.
|
3. |
|
Registration Exemptions |
The offering, issuance, and distribution of any Securities pursuant to the Plan and any and
all settlement agreements incorporated therein will be exempt from the registration requirements of
section 5 of the Securities Act pursuant to section 1145 of the Bankruptcy Code, section 4(2) of
the Securities Act, or any other available exemption from registration under the Securities Act, as
applicable. In addition, under section 1145 of the Bankruptcy Code, if applicable, any Securities
issued pursuant to the Plan and any and all settlement agreements incorporated therein will be
freely transferable under the Securities Act by the recipients thereof, subject to (a) the
provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an
underwriter in section 2(a)(11) of the Securities Act, and compliance with any applicable state or
foreign securities laws, if any, and the rules and regulations of the United States Securities and
Exchange Commission, if any, applicable at the time of any future transfer of such Securities or
instruments, including restrictions contained in the Equity Commitment Agreement, and (b) the
restrictions, if any, on the transferability of such Securities and instruments, including
restrictions contained in the Equity Commitment Agreement, and (c) any other applicable regulatory
approval.
Certain holders of New Visteon Common Stock pursuant to Article VI.F will be entitled to
customary registration rights and shall be subject to customary transfer restrictions following a
81
public offering of the New Visteon Common Stock, in accordance with the terms and conditions of a
registration rights agreement by and among Reorganized Visteon and such holders. Under the Claims
Conversion Sub Plan, Reorganized Visteon shall use its commercially reasonable
efforts to obtain approval of the New Visteon Common Stock for listing on the New York Stock
Exchange as soon as reasonably practicable. Under the Rights Offering Sub Plan, Reorganized
Visteon shall not, until the earlier of the date that (a) is the three month anniversary of the
Effective Date and (b) the Securities and Exchange Commission declares effective a shelf
registration statement in connection with the resale of New Visteon Common Stock, list such stock
on the New York Stock Exchange, the Nasdaq Stock Market, or any other national securities exchange
unless pursuant to a written request of the Requisite Investors, in which case Reorganized Visteon
shall use commercially reasonable efforts to list and maintain the listing of the New Visteon
Common Stock on the New York Stock Exchange, the Nasdaq Stock Market, or any other national stock
exchange as requested by the Requisite Investors.
The classification and treatment of all Claims and Interests under the Plan shall conform to
and with the respective contractual, legal, and equitable subordination rights of such Claims and
Interests, and any such rights shall be settled, compromised, and released pursuant to the Plan.
|
5. |
|
Vesting of Assets in the Reorganized Debtors |
Except as otherwise provided in the Plan or any agreement, instrument, or other document
incorporated in the Plan, on the Effective Date, all property in each Estate, all Causes of Action,
and any property acquired by any of the Debtors pursuant to the Plan shall vest in each respective
Reorganized Debtor, free and clear of all Liens, Claims, charges, or other encumbrances. On and
after the Effective Date, except as otherwise provided in the Plan, each Reorganized Debtor may
operate its business and may use, acquire, or dispose of property and compromise or settle any
Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and
free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.
|
6. |
|
Cancellation of Notes, Instruments, Certificates and Other Documents |
On the Effective Date, except to the extent otherwise provided, all notes, instruments,
Certificates, and other documents evidencing Claims or Interests shall be cancelled and the
obligations of the Debtors or Reorganized Debtors and the non-Debtor Affiliates thereunder or in
any way related thereto shall be discharged; provided, however, that
notwithstanding Confirmation or the occurrence of the Effective Date, any indenture or agreement
that governs the rights of the holder of a Claim shall continue in effect solely for purposes of
(a) allowing holders to receive distributions under the Plan, and (b) allowing and preserving the
rights of the ABL Facility Administrative Agent, the DIP Facility Administrative Agent, the Term
Loan Facility Administrative Agent, and the Notes Trustee, as applicable, to make distributions on
account of Claims as provided in Article VI.M.
82
|
7. |
|
Issuance of New Securities; Execution of Plan Documents |
Except as otherwise provided in the Plan or the Equity Commitment Agreement, the Reorganized
Debtors shall issue on the Effective Date all Securities, notes, instruments, Certificates, and
other documents required to be issued pursuant to the Plan.
|
8. |
|
Acquisition of Assets Held by Oasis Trust |
On the Confirmation Date, Visteon Corporation shall exercise its option under that certain
Master Lease, dated October 31, 2002, as amended, to acquire from Oasis Trust all of its rights,
title, and interests in and to that property located at One Village Center Drive, Van Buren
Township, Wayne County, Michigan 48111, in accordance with the terms of such agreement and the
Plan, and free and clear of all Liens, Claims, charges, or other encumbrances and stamp tax,
transfer tax, and similar taxes pursuant to sections 1123(a)(5)(D), 1141(c), and 1146(a) of the
Bankruptcy Code.
|
9. |
|
Post-Confirmation Property Sales |
To the extent the Debtors or Reorganized Debtors, as applicable, purchase or sell any property
prior to or including the date that is one year after the Confirmation Date, the Debtors or
Reorganized Debtors, as applicable, may elect to purchase or sell such property pursuant to
sections 363, 1123(a)(5)(D), 1141(c), and 1146(a) of the Bankruptcy Code.
Each of the matters provided for by the Plan involving the corporate structure of the Debtors
or corporate or related actions to be taken by or required of the Reorganized Debtors, whether
taken prior to or as of the Effective Date, shall be authorized without the need for any further
corporate action or without any further action by the Debtors or the Reorganized Debtors, as
applicable. Such actions may include, (a) the adoption and filing of the Reorganized Visteon
Charter and Reorganized Visteon Bylaws, (b) the appointment of the New Board, (c) the adoption and
implementation of the Management Equity Incentive Program, (d) the authorization, issuance and
distribution of the New Visteon Common Stock, including, if applicable, pursuant to the Rights
Offering, and other Securities to be authorized, issued and distributed pursuant to the Plan, and
(e) and consummation and implementation of the Exit Financing.
|
11. |
|
Certificate of Incorporation and Bylaws |
The certificates of incorporation and bylaws (or other formation documents relating to limited
liability companies, limited partnerships, or other forms of Entity) of the Debtors (other than
Visteon Corporation) shall be amended in a form as may be required to be consistent with the
provisions of the Plan, and the Bankruptcy Code. Under the Claims Conversion Sub Plan, the
certificate of incorporation and bylaws of Visteon Corporation shall be amended as may be required
to be consistent with the provisions of the Plan, and the Bankruptcy Code, and the form and
substance of the Reorganized Visteon Charter and Reorganized Visteon Bylaws shall be included in
the Plan Supplement. Under the Rights Offering Sub Plan, the certificate of incorporation and
bylaws of Visteon Corporation shall be as set forth in the Reorganized Visteon
83
Charter and Reorganized Visteon Bylaws. Under either the Claims Conversion Sub Plan or Rights Offering Sub
Plan, the Reorganized Visteon Charter will among other things, (a) authorize the issuance of the
shares of New Visteon Common Stock; and (b) pursuant to and only to the extent required by section
1123(a)(6) of the Bankruptcy Code, include a provision prohibiting the issuance of non-voting
Equity Securities.
|
12. |
|
Effectuating Documents, Further Transactions |
On and after the Effective Date, the Reorganized Debtors, and the officers and members of the
boards of directors thereof, are authorized to and may issue, execute, deliver, file, or record
such contracts, Securities, instruments, releases, and other agreements or documents and take such
actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms
and conditions of the Plan and the Securities issued pursuant to the Plan in the name of and on
behalf of the Reorganized Debtors, without the need for any approvals, authorizations, or consents
except for those expressly required pursuant to the Plan.
|
13. |
|
Section 1146(a) Exemption |
Pursuant to section 1146(a) of the Bankruptcy Code, any transfers of property pursuant to the
Plan shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or
similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, or other
similar tax or governmental assessment, and upon entry of the Confirmation Order, the appropriate
state or local governmental officials or agents shall forgo the collection of any such tax or
governmental assessment and accept for filing and recordation any of the foregoing instruments or
other documents without the payment of any such tax, recordation fee, or governmental assessment.
|
14. |
|
Directors and Officers of Reorganized Visteon |
On the Effective Date, the term of the current members of the board of directors of Visteon
Corporation shall expire, and the New Board shall be appointed. The existing officers of Visteon
Corporation shall serve in their current capacities in Reorganized Visteon. On and after the
Effective Date, each director or officer of Reorganized Visteon shall serve pursuant to the terms
of the Reorganized Visteon Charter, the Reorganized Visteon Bylaws, or other constituent documents,
and applicable state corporation law; provided, under the Claims Conversion Sub Plan,
subject to the Reorganized Visteon Bylaws relating to the filling of vacancies on the New Board,
the members of the New Board as constituted on the Effective Date will continue to serve at least
until the first annual meeting of stockholders after the Effective Date, which meeting shall not
take place until at least 12 months after the Effective Date; provided further,
under the Rights Offering Sub Plan, the members of the New Board as constituted on the Effective
Date will continue to serve for a period after the Effective Date as set forth in the Board
Selection Term Sheet.
|
15. |
|
Directors and Officers of Reorganized Debtors Other Than Visteon
Corporation |
Unless otherwise provided in the Debtors disclosure pursuant to section 1129(a)(5) of the
Bankruptcy Code, the officers and directors of each of the Debtors other than Visteon Corporation
shall continue to serve in their current capacities after the Effective Date. The
84
classification and composition of the boards of directors of the Reorganized Debtors other than Reorganized
Visteon shall be consistent with their respective new certificates of incorporation and bylaws.
Each such director or officer shall serve from and after the Effective Date pursuant to the terms
of such new certificate of incorporation, bylaws, other constituent documents, and applicable state
corporation law. In accordance with section 1129(a)(5) of the Bankruptcy Code,
the identities and affiliations of any Person proposed to serve as an officer or director of
the Reorganized Debtors other than Reorganized Visteon shall have been disclosed at or before the
Confirmation Hearing.
|
16. |
|
Employee Benefits and Incentive Plans |
Unless otherwise specified in this Article VI.H.16 and except in connection and not
inconsistent with those employee benefit and incentive programs that shall be treated, without
further action of the Reorganized Debtors or the New Board, as set forth in the Management Equity
Incentive Program Term Sheet and the Employee Benefit and Incentive Programs Term Sheet attached
to the Equity Commitment Agreement, on and after the Effective Date, subject to any Final Order,
the Reorganized Debtors shall have the sole discretion to (a) amend, adopt, assume, and/or honor,
in the ordinary course of business or as otherwise provided for herein, any contracts, agreements,
policies, programs, including the Incentive Program, and plans for, among other things,
compensation, pursuant to the terms thereof or hereof, including any incentive plan, as applicable,
including health care benefits, disability benefits, deferred compensation benefits, savings,
severance benefits, retirement benefits, welfare benefits, workers compensation benefits, life
insurance, and accidental death and dismemberment insurance for the directors, officers, and
employees of any of the Debtors who served in such capacity from and after the Petition Date, and
(b) honor, in the ordinary course of business, Claims of employees employed as of the Effective
Date for accrued vacation time arising prior to the Petition Date.
As of the Effective Date, the Reorganized Debtors shall continue the Pension Plans in
accordance with, and subject to, their terms, ERISA, and the Internal Revenue Code, and shall
preserve all of their rights thereunder. All Proofs of Claim filed on account of Claims in
connection with the termination of the Pension Plans shall be deemed disallowed and expunged as of
the Effective Date without any further action of the Debtors or Reorganized Debtors and without any
further action, order, or approval of the Bankruptcy Court. Notwithstanding anything to the
contrary in Article VI.H.16, no provision in the Plan or the Confirmation Order, or proceeding
within the Chapter 11 Cases, shall in any way be construed as discharging, releasing, or relieving
the Debtors, the Reorganized Debtors, or any other party in any capacity, from any liability with
respect to the Pension Plans under any law, governmental policy, or regulatory provision, including
for breach of fiduciary duty.
On and after the Effective Date, and in accordance with applicable law and administrative
requirements, the Reorganized Debtors shall have no liability for OPEB and shall have no obligation
to provide or offer OPEB to their employees and retirees and their spouses, surviving spouses,
dependents or other beneficiaries. The cessation shall be administered on a claims incurred
basis, and the Reorganized Debtors shall retain responsibility for all claims incurred but either
unfiled or unpaid as of the date of cessation of the OPEB.
85
|
17. |
|
Employment Agreement & Change in Control Agreements |
Reorganized Visteon shall be authorized to enter into that certain employment agreement with
Donald J. Stebbins delivered by the Debtors to the Requisite Parties on the date of the filing of
the Plan with the Bankruptcy Court, effective as of the Effective Date, without any further action,
order, or approval of the New Board or the Bankruptcy Court, as applicable. Also, on the
Effective Date, Reorganized Visteon shall adopt, approve, and authorize change in control
agreements with respect to certain of Reorganized Visteons officers, in the form delivered by the
Debtors to the Requisite Parties on the date of the filing of the Plan with the Bankruptcy Court,
without further action, order, or approval of the New Board.
|
18. |
|
Intercompany Account Settlement |
The Debtors and the Reorganized Debtors, and their respective Affiliates, will be entitled to
transfer funds between and among themselves as they determine to be necessary or appropriate to
enable the Reorganized Debtors to satisfy their obligations under the Plan. Except as set forth
herein, any changes in intercompany account balances resulting from such transfers will be
accounted for and settled in accordance with the Debtors historical intercompany account
settlement practices and will not violate the terms of the Plan.
|
19. |
|
Preservation of Rights of Action |
Unless any Causes of Action against an Entity are expressly waived, relinquished, exculpated,
released, compromised, or settled in the Plan or a Final Order, in accordance with section 1123(b)
of the Bankruptcy Code, the Reorganized Debtors shall retain and may enforce all rights to commence
and pursue, as appropriate, any and all Causes of Action, whether arising before or after the
Petition Date, including any actions specifically enumerated in the Plan Supplement, and the
Reorganized Debtors rights to commence, prosecute, or settle such Causes of Action shall be
preserved notwithstanding the occurrence of the Effective Date. The Reorganized Debtors may pursue
such Causes of Action, as appropriate, in accordance with the best interests of the Reorganized
Debtors. No Entity may rely on the absence of a specific reference in the Plan, the Plan
Supplement, or the Disclosure Statement to any Cause of Action against them as any indication that
the Debtors or the Reorganized Debtors will not pursue any and all available Causes of Action
against them. The Debtors and the Reorganized Debtors expressly reserve all rights to prosecute
any and all Causes of Action against any Entity, except as otherwise expressly provided in the
Plan. Unless any Causes of Action against an Entity are expressly waived, relinquished,
exculpated, released, compromised, or settled in the Plan or a Bankruptcy Court order, the
Reorganized Debtors expressly reserve all Causes of Action, for later adjudication, and, therefore
no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue
preclusion, claim preclusion, estoppel (judicial, equitable or otherwise), or laches, shall apply
to such Causes of Action upon, after, or as a consequence of the Confirmation or Consummation.
The Reorganized Debtors reserve and shall retain the foregoing Causes of Action
notwithstanding the rejection of any Executory Contract or Unexpired Lease during the Chapter 11
Cases or pursuant to the Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, any
Causes of Action that a Debtor may hold against any Entity shall vest in the Reorganized
86
Debtors. The applicable Reorganized Debtor, through its authorized agents or representatives, shall retain
and may exclusively enforce any and all such Causes of Action. The Reorganized Debtors shall have
the exclusive right, authority, and discretion to determine and to initiate, file, prosecute,
enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Causes of
Action and to decline to do any of the foregoing without the consent or approval of any third party
or any further notice to or action, order, or approval of the Bankruptcy Court.
|
20. |
|
Restructuring Transactions |
On or prior to the Effective Date, the Debtors or the Reorganized Debtors may enter into the
following transactions and take any actions as may be necessary or appropriate to effect a
corporate restructuring of their respective businesses or a corporate restructuring of the overall
corporate structure of the Reorganized Debtors, as and to the extent provided therein, with the
consent of the Requisite Parties. The Restructuring Transactions may include the VIHI
Restructuring (to which the Requisite Investors shall be deemed to have consented by virtue of
their execution of the Equity Commitment Agreement, but subject to the terms and conditions
thereof), one or more inter-company mergers, consolidations, amalgamations, arrangements,
continuances, restructurings, conversions, dissolutions, transfers, liquidations, or other
corporate transactions as may be determined by the Debtors or the Reorganized Debtors, as
applicable, to be necessary or appropriate. The actions to effect the Restructuring Transactions
may include: (a) the execution and delivery of appropriate agreements or other documents of
merger, amalgamation, consolidation, restructuring, conversion, disposition, transfer, arrangement,
continuance, dissolution, sale, purchase, or liquidation containing terms that are consistent with
the terms of the Plan and the Equity Commitment Agreement and that satisfy the requirements of
applicable law and any other terms to which the relevant entities may agree; (b) the execution and
delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any
asset, property, right, liability, debt, or obligation on terms consistent with the terms of the
Plan and the Equity Commitment Agreement and having other terms for which the applicable parties
agree; (c) the filing of appropriate certificates or articles of incorporation, reincorporation,
merger, consolidation, conversion, amalgamation, arrangement, continuance, or dissolution pursuant
to applicable state or provincial law; (d) pledging, granting of liens or security interests over,
assuming or guarantying obligations or taking such similar actions as may be necessary to preserve
the rights and collateral interests of the secured creditors of the Debtors and their subsidiaries
at all times prior to the effectiveness and consummation of the Plan; and (e) all other actions
that the applicable entities determine to be necessary or appropriate, including making filings or
recordings that may be required by applicable law in connection with the Restructuring
Transactions.
|
21. |
|
Post-Effective Date Financing |
Unless otherwise refinanced in connection with the Exit Financing, notwithstanding any
provision in the Plan to the contrary or section 1141(c) of the Bankruptcy Code, the U.S. Bank L/C
Facility Documents and the Currency Contracts, and all rights and obligations of, and Liens held
by, the parties thereunder in connection therewith, shall survive and remain in full force and
effect on and after the Effective Date in accordance with the terms of the U.S. Bank L/C Facility
Documents and Currency Contracts, respectively, and the Final Orders entered on November 12, 2009
in connection therewith [Docket Nos. 1296 and 1297]. On the Effective Date, any and all
87
rights and obligations of the Debtors under the U.S. Bank L/C Facility Documents and the Currency Contracts
shall vest in, or become the obligations of, the applicable Reorganized Debtors.
Except as otherwise provided in the Plan, each Debtor shall continue to exist after the
Effective Date as a separate corporate Entity, limited liability company, partnership, or other
form, as the case may be, with all the powers of a corporation, limited liability company,
partnership, or other form, as the case may be, pursuant to the applicable law in the jurisdiction
in which each applicable Debtor is incorporated or formed and pursuant to the respective
certificate of incorporation and bylaws (or other formation documents) in effect prior to the
Effective Date, except to the extent such certificate of incorporation and bylaws (or other
formation documents) are amended by the Plan or otherwise, and to the extent such documents are
amended, such documents are deemed to be amended pursuant to the Plan and without any further
notice to or action, order, or approval of the Bankruptcy Court or any other court of competent
jurisdiction (other than any requisite filings required under applicable state, provincial, or
federal law).
|
23. |
|
Tax Reporting Matters |
All parties (including the Reorganized Debtors and holders of Claims and Interests) shall
report for all federal income tax purposes in a manner consistent with the Plan.
In accordance with the terms of the Rights Offering Procedures, the Debtors will deliver an
Election Form to each holder of an Allowed Senior Notes Claim to determine which holders will be
considered Eligible Holders and which holders will be considered Non-Eligible Holders. To
determine that a holder is an Eligible Holder, such holder must, in accordance with the terms set
forth in the Election Form, validly complete and return an Election Form by the Election Form
Deadline certifying that such holder is an Accredited Investor. To determine that a holder is a
Non-Eligible Holder, such holder must, in accordance with the terms set forth in the Election Form,
validly complete and return an Election Form by the Election Form Deadline certifying that such
holder is not an Accredited Investor. Only Eligible Holders shall be permitted to participate in
the Rights Offering. Only Non-Eligible Holders shall be permitted to receive the Cash Amount.
|
2. |
|
Issuance of Subscription Rights |
Each Eligible Holder shall receive Subscription Rights entitling such holder to purchase up to
its Pro Rata Allocation of the Rights Offering Shares. Each Eligible Holder shall have the right,
but not the obligation, to participate in the Rights Offering as set forth in the Plan and in the
Rights Offering Procedures.
88
|
3. |
|
Oversubscription Rights |
Each Eligible Holder that validly exercises in full its Subscription Rights shall be entitled
to elect on the Subscription Form to purchase Rights Offering Shares not otherwise subscribed for
pursuant to validly exercised Subscription Rights by indicating the number of such
unsubscribed shares such Eligible Holder desires to purchase, as set forth herein and in the
Rights Offering Procedures, and subject to the terms of the Equity Commitment Agreement.
The Subscription Rights and the Oversubscription Rights are not transferable. Any attempted
transfer is null and void and the Debtors will not treat any purported transferee as the holder of
any Subscription Right or, if applicable, Oversubscription Right. The Subscription Rights and the
Oversubscription Rights shall not be listed or quoted on any public or over-the-counter securities
exchange or quotation system.
|
5. |
|
Subscription Period and Mailing |
The Rights Offering shall commence for each Eligible Holder upon its receipt of the
Subscription Form and shall end on the Subscription Expiration Date, unless extended by Visteon
Corporation with the reasonable consent of the Requisite Investors. As soon as practicable after
the Election Form Deadline, Eligible Holders will be mailed Subscription Forms together with
instructions for the proper completion, due execution, and timely delivery of such Subscription
Forms, as well as instructions for payment.
|
6. |
|
Exercise of Subscription Rights |
Except as provided for in the Equity Commitment Agreement, each Eligible Holder may exercise
all or any portion of such holders Subscription Rights and, if applicable, Oversubscription
Rights, pursuant to the Subscription Form. To exercise its Subscription Rights and, if applicable,
Oversubscription Rights, an Eligible Holder must: (1) return a validly completed Subscription Form
to the Rights Offering Agent so that such Subscription Form is actually received by the Rights
Offering Agent on or before the Subscription Expiration Date and (2) pay to the Rights Offering
Agent on or before the Subscription Expiration Date the Purchase Price multiplied by the number of
shares of New Visteon Common Stock such Eligible Holder has elected to purchase pursuant to its
Subscription Rights and its Oversubscription Rights, in accordance with the wire instructions set
forth on the Subscription Form.
If the Rights Offering Agent for any reason does not receive on or prior to the Subscription
Expiration Date both a validly completed Subscription Form and immediately available funds as set
forth Article VI.I.6 from an Eligible Holder, such Eligible Holder shall be deemed to have
relinquished and waived its right to participate in the Rights Offering. The Debtors shall not be
obligated to honor any purported exercise of Subscription Rights or Oversubscription Rights
received by the Rights Offering Agent after the Subscription Expiration Date regardless of when the
documents relating to such exercise were sent. Once the Eligible Holder has validly exercised its
Subscription Rights and, if applicable, Oversubscription Rights, such exercise will not be
permitted to be revoked, rescinded, or modified.
89
The payments made in accordance with the Rights Offering shall be deposited and held by the
Rights Offering Agent in an escrow account. The Rights Offering Agent will maintain such account
for the purpose of holding the money for administration of the Rights Offering until the Effective
Date or such other later date at the option of the Reorganized Debtors. The Rights Offering Agent
shall not use such funds for any other purpose and shall not encumber or permit
such funds to be encumbered with any Lien or similar encumbrance. Such funds shall be held in
such escrow account and disbursed only in accordance with the procedures described in this Article
VI.I, the Rights Offering Procedures, and the Equity Commitment Agreement.
The Debtors may adopt such additional detailed procedures consistent with the provisions of
this Article VI.I.6, the Rights Offering Procedures, and the Equity Commitment Agreement to more
efficiently administer the exercise of the Subscription Rights, and, if applicable,
Oversubscription Rights.
The Investors shall be obligated to consummate the Direct Commitment on the terms and
subject to the conditions of the Equity Commitment Agreement.
The Investors shall be obligated to consummate their Backstop Commitment with respect to
unsubscribed Rights Offering Shares on the terms and subject to the conditions set forth in the
Equity Commitment Agreement. The Investors shall for the benefit of Reorganized Visteon deliver to
Visteon Corporation, in accordance with section 7.7 of the Equity Commitment Agreement, ten
Business Days prior to the date scheduled for the Confirmation Hearing funding approval
certificates.
|
9. |
|
Debtors Obligations under the Claims Conversion Sub Plan |
Notwithstanding any provision in the Plan, the Plan Support Agreement, the Equity Commitment
Agreement, or the Rights Offering Procedures to the contrary, the Debtors shall not be obligated
under the Claims Conversion Sub Plan to, and shall not, honor any purported exercise of
Subscription Rights or Oversubscription Rights or the satisfaction of the Direct Commitment or
Backstop Commitment.
|
10. |
|
Issuance of Rights Offering Shares |
Under the Rights Offering Sub Plan, Rights Offering Shares purchased by Eligible Holders shall
be issued on the Effective Date and distributed on the Effective Date or as soon as practicable
thereafter.
If the number of Rights Offering Shares elected for purchase pursuant to Oversubscription
Rights exceeds the number of unsubscribed Rights Offering Shares, then such unsubscribed Rights
Offering Shares shall be apportioned to Eligible Holders that exercised such Oversubscription
Rights (a) first, to the Lead Investors and their Related Purchasers and their respective
affiliates, (b) second, to the Co-Investors and their Related Purchasers and their respective
affiliates, and (c) last, if any unsubscribed Rights Offering Shares remain unallocated,
90
to the other Eligible Holders exercising their Oversubscription Rights, in each case pro rata
relative to the number of such shares each such Eligible Holder elected to purchase pursuant to its
Oversubscription Rights and in accordance with section 2.2(e) of the Equity Commitment Agreement.
Any payment made by an Eligible Holder shall be refunded as soon as practicable (i) upon
termination of the Equity Commitment Agreement, (ii) if such Eligible Holder has made an
overpayment, in an amount equal to such overpayment, or (iii) under the Claims Conversion Sub Plan.
Fractional shares of New Visteon Common Stock shall not be issued upon exercise of the
Subscription Rights or Oversubscription Rights and no compensation shall be paid in respect of such
fractional shares.
J. |
|
Entitlement to Funding of Cash Amount Recoveries |
|
1. |
|
Entitlement to Cash Amount Recoveries |
Under the Rights Offering Sub Plan, a Non-Eligible Holder shall be entitled to receive the
Cash Amount only if such Non-Eligible Holder validly completes and returns an Election Form
certifying that it is a Non-Eligible Holder in accordance with the terms set forth in the Election
Form. If a Non-Eligible Holder does not duly satisfy such requirements, such holder shall be
deemed to have relinquished and waived its right to receive the Cash Amount.
|
2. |
|
Source of Cash for Payment of the Cash Amount |
Each Cash Recovery Backstop Investor shall deliver to Visteon Corporation on the later of the
date that is (a) ten Business Days prior to the date scheduled for the Confirmation Hearing and (b)
five Business Days after delivery of the Purchase Notice a funding approval certificate from an
officer or a duly authorized agent of such Cash Recovery Backstop Investor certifying that such
Cash Recovery Backstop Investors credit committee (or such similar governing entity that is
responsible for approving such matters in accordance with such Cash Recovery Backstop Investors
normal operations) has approved, subject only to the terms and conditions of the Rights Offering
Sub Plan in accordance with the Plan, the funding by such Cash Recovery Backstop Investor of its
Distributable Commitment Percentage of (i) the aggregate Cash Amount, and (ii) the Purchase Price
multiplied by the number of shares of New Visteon Common Stock constituting the Cash Recovery
Subscription Equity. On the Effective Date, each Cash Recovery Backstop Investor shall pay the
applicable amounts set forth in the immediately preceding sentence to Visteon Corporation by wire
transfer of immediately available funds to an account designated by Visteon Corporation in writing
not less than three Business Days prior to the Effective Date.
Notwithstanding any provision in the Plan, the Plan Support Agreements, or the Equity
Commitment Agreement to the contrary, neither the Debtors nor the Cash Recovery Backstop Investors
shall be obligated under the Claims Conversion Sub Plan to, and shall not, honor any purported
entitlement to the Cash Amount.
91
|
3. |
|
Transfer of New Visteon Common Stock as
a Consequence of Cash Amount Distributions |
Under the Rights Offering Sub Plan, the Distribution Agent shall on the Effective Date issue,
and shall deliver, on the Effective Date, or as soon as practicable thereafter, to the Cash
Recovery Backstop Investors pro rata relative to their Allotted Portions the Cash Recovery
Subscription Equity.
K. |
|
Treatment of Executory Contracts and Unexpired Leases |
|
1. |
|
Rejection of Executory Contracts and Unexpired Leases |
Except as otherwise provided herein, each Executory Contract and Unexpired Lease shall be
deemed automatically rejected pursuant to sections 365 and 1123 of the Bankruptcy Code as of the
Effective Date, unless any such Executory Contract or Unexpired Lease: (1) is listed on the
schedule of Assumed Executory Contracts and Unexpired Leases in the Plan Supplement; (2) has been
previously assumed by the Debtors by Final Order or has been assumed by the Debtors by order of the
Bankruptcy Court as of the Effective Date, which order becomes a Final Order after the Effective
Date; (3) is the subject of a motion to assume or reject pending as of the Effective Date; (4) is
an Intercompany Contract, unless such Intercompany Contract previously was rejected by the Debtors
pursuant to a Final Order, is the subject of a motion to reject pending on the Effective Date, or
is listed on the schedule of Rejected Executory Contracts and Unexpired Leases in the Plan
Supplement; or (5) is otherwise assumed pursuant to the terms herein.
The Confirmation Order will constitute an order of the Bankruptcy Court approving such
rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date.
Counterparties to Executory Contracts or Unexpired Leases that are deemed rejected as of the
Effective Date shall have the right to assert any Claim on account of the rejection of such
Executory Contracts or Unexpired Leases, including under section 502(g) of the Bankruptcy Code,
subject to compliance with the requirements herein.
Further, the Plan Supplement will contain a schedule of Rejected Executory Contracts and
Unexpired Leases; provided, however, that any Executory Contract and Unexpired
Lease not previously assumed, assumed and assigned, or rejected by an order of the Bankruptcy
Court, and not listed in the schedule of Rejected Executory Contracts and Unexpired Leases will
be rejected on the Effective Date, notwithstanding its exclusion from such schedule.
|
2. |
|
Assumption of Executory Contracts and Unexpired Leases |
On the Effective Date, the Reorganized Debtors shall assume all of the Executory Contracts and
Unexpired Leases listed on the schedule of Assumed Executory Contracts and Unexpired leases in
the Plan Supplement and otherwise identified for assumption pursuant to Article VI.J.1. With
respect to each such Executory Contract and Unexpired Lease listed on the schedule of Assumed
Executory Contracts and Unexpired Leases in the Plan Supplement, the Debtors shall have designated
a proposed Cure, and the assumption of such Executory Contracts and Unexpired Leases may be
conditioned upon the disposition of all issues with respect to such
92
Cure. The Confirmation Order shall constitute an order of the Bankruptcy Court approving any
such assumptions pursuant to sections 365(a) and 1123 of the Bankruptcy Code.
|
3. |
|
Modifications, Amendments, Supplements, Restatements, or Other Agreements |
Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is
assumed shall include all modifications, amendments, supplements, restatements, or other agreements
that in any manner affect such Executory Contract or Unexpired Lease, and all rights related
thereto, if any, including all easements, licenses, permits, rights, privileges, immunities,
options, rights of first refusal, and any other interests, unless any of the foregoing agreements
has been previously rejected or repudiated or is rejected or repudiated hereunder.
Modifications, amendments, supplements, and restatements to prepetition Executory Contracts
and Unexpired Leases that have been executed by the Debtors during the Chapter 11 Cases shall not
be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease, or the
validity, priority, or amount of any Claims that may arise in connection therewith.
|
4. |
|
Proofs of Claim Based on Executory
Contracts or Unexpired Leases that Have Been Assumed |
Any and all Proofs of Claim based upon Executory Contracts or Unexpired Leases that have been
assumed in the Chapter 11 Cases, including hereunder, except Proofs of Claim asserting Cures,
pursuant to the order approving such assumption, including the Confirmation Order, shall be deemed
disallowed and expunged from the Claims Register as of the Effective Date without any further
notice to or action, order, or approval of the Bankruptcy Court.
|
5. |
|
Indemnification Obligations |
Each Indemnification Obligation shall be assumed by the applicable Debtor effective as of the
Effective Date, pursuant to sections 365 and 1123 of the Bankruptcy Code, to the extent such
Indemnification Obligation is executory, unless such Indemnification Obligation previously was
rejected by the Debtors pursuant to a Bankruptcy Court order or is the subject of a motion to
reject pending on the Effective Date. The Reorganized Debtors reserve the right to honor or
reaffirm Indemnification Obligations other than those terminated by a prior or subsequent order of
the Bankruptcy Court, whether or not executory, in which case such honoring or reaffirmation shall
be in complete satisfaction, discharge, and release of any Claim on account of such Indemnification
Obligation. Each Indemnification Obligation that is assumed, deemed assumed, honored, or
reaffirmed shall remain in full force and effect, shall not be modified, reduced, discharged,
impaired, or otherwise affected in any way, and shall survive Unimpaired and unaffected,
irrespective of when such obligation arose.
Each insurance policy shall be assumed by the applicable Debtor effective as of the Effective
Date, pursuant to sections 365 and 1123 of the Bankruptcy Code, to the extent such insurance policy
is executory, unless such insurance policy previously was rejected by the Debtors pursuant to a
Bankruptcy Court order, is the subject of a motion to reject pending on the
93
Effective Date, or is included in the schedule of Rejected Executory Contracts and Unexpired
Leases contained in the Plan Supplement.
|
7. |
|
Cure of Defaults for Assumed Executory Contracts and Unexpired Leases |
With respect to each of the Executory Contracts or Unexpired Leases listed on the schedule of
Assumed Executory Contracts and Unexpired Leases, the Debtors shall have designated a proposed
Cure, and the assumption of such Executory Contract or Unexpired Lease shall be conditioned upon
the disposition of all issues with respect to Cure. Such Cure shall be satisfied by the Debtors or
their assignee, if any, by payment of the Cure in Cash on the Effective Date or as soon as
reasonably practicable thereafter, or on such other terms as may be ordered by the Bankruptcy Court
or agreed upon by the parties to the applicable Executory Contract or Unexpired Lease without any
further notice to or action, order, or approval of the Bankruptcy Court. Any provisions or terms
of the Executory Contracts or Unexpired Leases to be assumed pursuant to the Plan that are, or may
be, alleged to be in default, shall be satisfied solely by Cure, or by an agreed-upon waiver of
Cure.
Prior to the Confirmation Hearing, the Debtors shall file with the Bankruptcy Court and serve
upon counterparties to such Executory Contracts and Unexpired Leases a notice of the proposed
assumption that will (a) list the applicable Cure, if any, (b) describe the procedures for filing
objections to the proposed assumption or Cure, and (c) explain the process by which related
disputes will be resolved by the Bankruptcy Court. Except with respect to Executory Contracts and
Unexpired Leases in which the Debtors and the applicable counterparties have stipulated in writing
to payment of Cure, all requests for payment of Cure that differ from the amounts proposed by the
Debtors must be filed with the Claims and Solicitation Agent on or before the Cure Bar Date. Any
request for payment of Cure that is not timely filed shall be disallowed automatically and forever
barred, estopped, and enjoined from assertion and shall not be enforceable against any Reorganized
Debtor, without the need for any objection by the Reorganized Debtors or any further notice to or
action, order, or approval of the Bankruptcy Court, and any Cure shall be deemed fully satisfied,
released, and discharged upon payment by the Debtors of the amounts listed on the Debtors proposed
Cure schedule, notwithstanding anything included in the Schedules or in any Proof of Claim to the
contrary; provided, however, that nothing shall prevent the Reorganized Debtors
from paying any Cure despite the failure of the relevant counterparty to file such request for
payment of such Cure. The Reorganized Debtors also may settle any Cure without any further notice
to or action, order, or approval of the Bankruptcy Court.
If the Debtors or Reorganized Debtors, as applicable, object to any Cure or any other matter
related to assumption, the Bankruptcy Court shall determine the Allowed amount of such Cure and any
related issues. If there is a dispute regarding such Cure, the ability of the Reorganized Debtors
or any assignee to provide adequate assurance of future performance within the meaning of section
365 of the Bankruptcy Code, or any other matter pertaining to assumption, then payment of Cure
shall occur as soon as reasonably practicable after entry of a Final Order resolving such dispute,
approving such assumption (and, if applicable, assignment), or as may be agreed upon by the Debtors
or Reorganized Debtors, as applicable, and the counterparty to the Executory Contract or Unexpired
Lease. Any counterparty to an Executory Contract and Unexpired Lease that fails to object timely
to the proposed assumption of any
94
Executory Contract or Unexpired Lease and associated Cure will be deemed to have consented to
such assumption and Cure. The Debtors or Reorganized Debtors, as applicable, reserve the right
either to reject or nullify the assumption of any Executory Contract or Unexpired Lease after a
Final Order determining the Cure or any request for adequate assurance of future performance
required to assume such Executory Contract or Unexpired Lease is made.
Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise
shall result in the full release and satisfaction of any Cures, Claims or defaults, whether
monetary or nonmonetary, including defaults of provisions restricting the change in control or
ownership interest composition or other bankruptcy-related defaults, arising under any assumed
Executory Contract or Unexpired Lease at any time prior to the effective date of assumption.
|
8. |
|
Preexisting Obligations to the Debtors
Under Executory Contracts and Unexpired Leases |
Rejection of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise shall
not constitute a termination of pre-existing obligations owed to the Debtors under such contracts
or leases. In particular, notwithstanding any nonbankruptcy law to the contrary, the Reorganized
Debtors expressly reserve and do not waive any right to receive, or any continuing obligation of a
counterparty to provide, warranties or continued maintenance obligations on goods previously
purchased by the contracting Debtors or Reorganized Debtors, as applicable, from counterparties to
rejected or repudiated Executory Contracts.
|
9. |
|
Claims Based on Rejection of Executory Contracts or Unexpired Leases |
Unless otherwise provided by a Bankruptcy Court order, any Proofs of Claim asserting Claims
arising from the rejection of the Executory Contracts and Unexpired Leases pursuant to the Plan or
otherwise must be filed with the Claims and Solicitation Agent no later than 30 days after the
later of the Effective Date or the effective date of rejection. Any Proofs of Claim arising from
the rejection of the Executory Contracts or Unexpired Leases that are not timely filed shall be
disallowed automatically and forever barred, estopped, and enjoined from assertion and shall not be
enforceable against any Reorganized Debtor, without the need for any objection by the Reorganized
Debtors or any further notice to or action, order, or approval of the Bankruptcy Court, and any
Claim arising out of the rejection of the Executory Contract or Unexpired Lease shall be deemed
fully satisfied, released, and discharged, notwithstanding anything in the Schedules or a Proof of
Claim to the contrary. All Allowed Claims arising from the rejection of the Executory Contracts
and Unexpired Leases shall be classified as Other General Unsecured Claims against the applicable
Debtor counterparty thereto.
|
10. |
|
Contracts, Intercompany Contracts, and
Leases Entered Into After the Petition Date |
Contracts, Intercompany Contracts, and leases entered into after the Petition Date by any
Debtor, and any Executory Contracts and Unexpired Leases assumed by any Debtor, may be performed by
the applicable Reorganized Debtor in the ordinary course of business.
95
|
11. |
|
Reservation of Rights |
Neither the exclusion nor inclusion of any contract or lease in the Plan Supplement, nor
anything contained in the Plan, shall constitute an admission by the Debtors that any such contract
or lease is in fact an Executory Contract or Unexpired Lease or that any Reorganized Debtor has any
liability thereunder. If there is a dispute regarding whether a contract or lease is or was
executory or unexpired at the time of assumption or rejection, the Debtors or Reorganized Debtors,
as applicable, shall have 45 days following entry of a Final Order resolving such dispute to alter
their treatment of such contract or lease.
L. |
|
Procedures for Resolving Disputed Claims and Interests |
|
1. |
|
Allowance of Claims and Interests |
After the Effective Date, each Reorganized Debtor shall have and retain any and all rights and
defenses such Debtor had with respect to any Claim or Interest immediately prior to the Effective
Date, including the Causes of Action retained pursuant to Article VI.H.19, except with respect to
any Claim or Interest deemed Allowed under the Plan. Except as expressly provided in the Plan or
in any order entered in the Chapter 11 Cases prior to the Effective Date (including the
Confirmation Order), no Claim or Interest shall become an Allowed Claim or Interest unless and
until such Claim or Interest is deemed Allowed or the Bankruptcy Court has entered a Final Order,
including the Confirmation Order, in the Chapter 11 Cases allowing such Claim or Interest. All
settled claims approved prior to the Effective Date pursuant to a Final Order of the Bankruptcy
Court, pursuant to Bankruptcy Rule 9019 or otherwise shall be binding on all parties.
|
2. |
|
Claims and Interests Administration Responsibilities |
Except as otherwise specifically provided in the Plan, after the Effective Date, the
Reorganized Debtors shall have the sole authority (a) to file, withdraw, or litigate to judgment,
objections to Claims or Interests, (b) to settle or compromise any Disputed Claim without any
further notice to or action, order, or approval by the Bankruptcy Court, and (c) to administer and
adjust the Claims Register to reflect any such settlements or compromises without any further
notice to or action, order, or approval by the Bankruptcy Court.
|
3. |
|
Estimation of Claims and Interests |
Before or after the Effective Date, the Debtors or Reorganized Debtors, as applicable, may
(but are not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim
that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any
reason, regardless of whether any party previously has objected to such Claim or Interest or
whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain
jurisdiction to estimate any such Claim or Interest, including during the litigation of any
objection to any Claim or Interest or during the appeal relating to such objection. In the event
that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest, that
estimated amount shall constitute a maximum limitation on such Claim or Interest for all purposes
under the Plan (including for purposes of distributions), and the relevant Reorganized Debtor may
elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim
or Interest.
96
|
4. |
|
Expungement or Adjustment to Paid,
Satisfied, or Superseded Claims and Interests |
Any Claim or Interest that has been paid, satisfied, or superseded, or any Claim or Interest
that has been amended or superseded, may be adjusted or expunged on the Claims Register by the
Reorganized Debtors without a claims objection having to be filed and without any further notice to
or action, order, or approval of the Bankruptcy Court.
Unless otherwise specifically provided for in the Plan, required under applicable bankruptcy
law, or agreed to by the Debtors, the Confirmation Order, or a postpetition agreement in writing
between the Debtors and a holder of a Claim, postpetition interest shall not accrue or be paid on
Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition
Date on any Claim or right. Additionally, and without limiting the foregoing, interest shall not
accrue or be paid on any Disputed Claim with respect to the period from the Effective Date to the
date a final distribution is made on account of such Disputed Claim, if and when such Disputed
Claim becomes an Allowed Claim.
|
6. |
|
Disallowance of Claims or Interests |
EXCEPT AS OTHERWISE AGREED, ANY AND ALL PROOFS OF CLAIM FILED AFTER THE APPLICABLE DEADLINE
FOR FILING SUCH PROOFS OF CLAIM SHALL BE DEEMED DISALLOWED AND EXPUNGED AS OF THE EFFECTIVE DATE
WITHOUT ANY FURTHER NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE BANKRUPTCY COURT, AND HOLDERS OF
SUCH CLAIMS MAY NOT RECEIVE ANY DISTRIBUTIONS ON ACCOUNT OF SUCH CLAIMS, UNLESS SUCH LATE PROOF OF
CLAIM IS DEEMED TIMELY FILED BY A FINAL ORDER OF THE BANKRUPTCY COURT ON OR BEFORE THE LATER OF (1)
THE CONFIRMATION HEARING AND (2) 45 DAYS AFTER THE APPLICABLE DEADLINE FOR FILING SUCH PROOFS OF
CLAIM.
All Claims of any Entity from which property is sought by the Debtors under section 542, 543,
550, or 553 of the Bankruptcy Code or that the Debtors or the Reorganized Debtors allege is a
transferee of a transfer that is avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549,
or 724(a) of the Bankruptcy Code shall be disallowed if (a) the Entity, on the one hand, and the
Debtors or the Reorganized Debtors, on the other hand, agree or the Bankruptcy Court has determined
by Final Order that such Entity or transferee is liable to turn over any property or monies under
any of the aforementioned sections of the Bankruptcy Code and (b) such Entity or transferee has
failed to turn over such property by the date set forth in such agreement or Final Order.
On or after the Effective Date, except as otherwise provided herein, a Claim may not be filed
or amended without the prior authorization of the Bankruptcy Court or the Reorganized Debtors, and,
to the extent such prior authorization is not received, any such new or amended
97
Claim filed shall be deemed disallowed in full and expunged without any further notice to or
action, order, or approval of the Bankruptcy Court.
|
8. |
|
No Distributions Pending Allowance |
If an objection to a Claim or Interest or portion thereof is filed prior to the Effective
Date, no payment or distribution provided under the Plan shall be made on account of such Claim or
Interest or portion thereof, as applicable, unless and until such Disputed Claim becomes an Allowed
Claim or Interest.
|
9. |
|
Distributions After Allowance |
To the extent that a Disputed Claim or Interest ultimately becomes an Allowed Claim or
Interest, distributions, if any, shall be made to the holder of such Allowed Claim or Interest in
accordance with the provisions of the Plan. As soon as practicable after the date that the order
or judgment of the Bankruptcy Court allowing any Disputed Claim becomes a Final Order, the
Distribution Agent shall provide to the holder of such Claim the distribution, if any, to which
such holder is entitled under the Plan as of the Effective Date, without any interest to be paid on
account of such Claim or Interest unless required under applicable bankruptcy law.
M. |
|
Provisions Governing Distributions |
|
1. |
|
Distributions on Account of Claims Allowed as of the Effective Date |
|
a. |
|
Delivery of Distributions in General |
Except as otherwise provided in the Plan, a Final Order, or as otherwise agreed to by the
relevant parties on the Distribution Date, the Distribution Agent shall make initial distributions
under the Plan on account of Claims and Interests Allowed on or before the Effective Date, subject
to the Reorganized Debtors right to object to Claims; provided, however, that (i)
Allowed Administrative Claims with respect to liabilities incurred by the Debtors in the ordinary
course of business during the Chapter 11 Cases or assumed by the Debtors prior to the Effective
Date shall be paid or performed in the ordinary course of business in accordance with the terms and
conditions of any controlling agreements, course of dealing, course of business, or industry
practice, and (ii) Allowed Priority Tax Claims and Allowed Secured Tax Claims shall be paid in full
in Cash on the Distribution Date or in installment payments over a period not more than five years
after the Petition Date pursuant to section 1129(a)(9)(C) of the Bankruptcy Code. To the extent
any Allowed Priority Tax Claim or Allowed Secured Tax Claim is not due and owing on the Effective
Date, such Claim shall be paid in full in Cash in accordance with the terms of any agreement
between the Debtors and the holder of such Claim, or as may be due and payable under applicable
non-bankruptcy law or in the ordinary course of business.
|
b. |
|
Delivery of Distributions on Account of DIP Facility Claims |
The DIP Facility Administrative Agent shall be deemed to be the holder of all DIP Facility
Claims, as applicable, for purposes of distributions to be made hereunder, and the Distribution
Agent shall make all distributions on account of such DIP Facility Claims to or on behalf of the
DIP Facility Administrative Agent. The DIP Facility Administrative Agent shall
98
hold or direct such distributions for the benefit of the holders of Allowed DIP Facility
Claims, as applicable. The DIP Facility Administrative Agent shall arrange to deliver such
distributions to or on behalf of such holders of Allowed DIP Facility Claims; provided,
however, the DIP Facility Administrative Agent shall retain all rights as administrative
agent under the DIP Facility Credit Agreement in connection with delivery of distributions to DIP
Facility Lenders; and provided further, however, that the Debtors
obligations to make distributions in accordance with Article VI.C.2 shall be deemed satisfied upon
delivery of distributions to the DIP Facility Administrative Agent.
|
c. |
|
Delivery of Distributions on Account of ABL Claims |
The ABL Facility Administrative Agent shall be deemed to be the holder of the ABL Claim, as
applicable, for purposes of distributions to be made hereunder, and the Distribution Agent shall
make all distributions on account of such Allowed ABL Claim to or on behalf of the ABL Facility
Administrative Agent. The ABL Facility Administrative Agent shall hold or direct such
distributions for the benefit of the holder of the Allowed ABL Claim, as applicable. The ABL
Facility Administrative Agent shall arrange to deliver such distributions to or on behalf of the
holder of the Allowed ABL Claim; provided, however, the ABL Facility Administrative
Agent shall retain all rights as administrative agent under the ABL Facility Credit Agreement in
connection with delivery of distributions to the ABL Lender; and provided further,
however, that the Debtors obligations to make distributions in accordance with Article
VI.E shall be deemed satisfied upon delivery of distributions to the ABL Facility Administrative
Agent.
|
d. |
|
Delivery of Distributions on Account of the Term Loan
Facility Claims |
The Term Loan Facility Administrative Agent shall be deemed to be the holder of the Term Loan
Facility Claims, as applicable, for purposes of distributions to be made hereunder, and the
Distribution Agent shall make all distributions on account of such Allowed Term Loan Facility
Claims to or on behalf of the Term Loan Facility Administrative Agent. The Term Loan Facility
Administrative Agent shall hold or direct such distributions for the benefit of the holders of the
Allowed Term Loan Facility Claims, as applicable. The Term Loan Facility Administrative Agent
shall arrange to deliver such distributions to or on behalf of the holders of the Allowed Term Loan
Facility Claims; provided, however, the Term Loan Facility Administrative Agent
shall retain all rights as administrative agent under the Term Loan Agreement in connection with
delivery of distributions to the Term Loan Lenders; and provided further,
however, that the Debtors obligations to make distributions in accordance with Article
VI.F.6 shall be deemed satisfied upon delivery of distributions to the Term Loan Facility
Administrative Agent.
|
e. |
|
Delivery of Distributions on Account of the 7.00% Senior
Notes Claims |
The Notes Trustee shall be deemed to be the holder of the 7.00% Senior Notes Claims, as
applicable, for purposes of distributions to be made hereunder, and the Distribution Agent shall
make all distributions on account of such 7.00% Senior Notes Claims to or on behalf of the Notes
Trustee. The Notes Trustee shall hold or direct such distributions for the benefit of the holders
of the 7.00% Senior Notes Claims, as applicable. The Notes Trustee shall arrange to deliver such
distributions to or on behalf of the holders of the 7.00% Senior Notes Claims;
99
provided, however, the Notes Trustee shall retain all rights as indenture
trustee under the Notes Indentures in connection with delivery of distributions to the holders of
the 7.00% Senior Notes; and provided further, however, that the Debtors
obligations to make distributions in accordance with Article VI.F.6 shall be deemed satisfied upon
delivery of distributions to the Notes Trustee.
|
f. |
|
Delivery of Distributions on Account of the 8.25% Senior
Notes Claims |
The Notes Trustee shall be deemed to be the holder of the 8.25% Senior Notes Claims, as
applicable, for purposes of distributions to be made hereunder, and the Distribution Agent shall
make all distributions on account of such 8.25% Senior Notes Claims to or on behalf of the Notes
Trustee. The Notes Trustee shall hold or direct such distributions for the benefit of the holders
of the 8.25% Senior Notes Claims, as applicable. The Notes Trustee shall arrange to deliver such
distributions to or on behalf of the holders of the 8.25% Senior Notes Claims; provided,
however, the Notes Trustee shall retain all rights as indenture trustee under the Notes
Indentures in connection with delivery of distributions to the holders of the 8.25% Senior Notes;
and provided further, however, that the Debtors obligations to make
distributions in accordance with Article VI.F.6 shall be deemed satisfied upon delivery of
distributions to the Notes Trustee.
|
g. |
|
Delivery of Distributions on Account of the 12.25% Senior
Notes Claims |
The Notes Trustee shall be deemed to be the holder of the 12.25% Senior Notes Claims, as
applicable, for purposes of distributions to be made hereunder, and the Distribution Agent shall
make all distributions on account of such 12.25% Senior Notes Claims to or on behalf of the Notes
Trustee. The Notes Trustee shall hold or direct such distributions for the benefit of the holders
of the 12.25% Senior Notes Claims, as applicable. The Notes Trustee shall arrange to deliver such
distributions to or on behalf of the holders of the 12.25% Senior Notes Claims; provided,
however, the Notes Trustee shall retain all rights as indenture trustee under the Notes
Indentures in connection with delivery of distributions to the holders of the 12.25% Senior Notes;
and provided further, however, that the Debtors obligations to make
distributions in accordance with Article VI.F.7 shall be deemed satisfied upon delivery of
distributions to the Notes Trustee.
|
h. |
|
Notes Trustee as Claim Holder |
Consistent with Bankruptcy Rule 3003(c), the Reorganized Debtors shall recognize a Proof of
Claim filed by the Notes Trustee in respect of the 7.00% Senior Notes Claims, 8.25% Senior Notes
Claims, and 12.25% Senior Notes Claims. Accordingly, any Claim, proof of which is by the
registered or beneficial holder of a Claim, may be disallowed as duplicative of a Claim of the
Notes Trustee, without need for any further action or Bankruptcy Court order.
|
i. |
|
Withholding of Shares of New Visteon Common Stock. |
Notwithstanding anything in the Plan to the contrary, Reorganized Visteon shall hold any
shares of New Visteon Common Stock to which a Contingent Holder would otherwise be entitled if it
were not a Contingent Holder until such time that such holder provides the Distribution Agent
written certification that such holder is not in violation of any laws or regulations of any
Governmental Unit. Such Contingent Holder shall not be a shareholder of Reorganized Visteon and
shall have no voting rights or other rights of a
100
shareholder of Reorganized Visteon with respect to such withheld shares. As soon as
reasonably practicable upon receipt by the Distribution Agent of a Contingent Holders written
certification that such holder is in compliance with the laws and regulations of the applicable
Governmental Units, but not earlier than the Effective Date, Reorganized Visteon shall release such
withheld shares of New Visteon Common Stock for distribution to the Contingent Holder. To the
extent that a Contingent Holder fails to provide the Distribution Agent with such certification
within 180 days of the Effective Date, Reorganized Visteon shall be permitted as agent for the
Contingent Holder to market for sale that portion of the Allowed Claim or Interest underlying such
Contingent Holders withheld shares of New Visteon Common Stock. The proceeds of any such sale
(minus any fees or expenses incurred by Reorganized Visteon in connection with such sale) shall be
distributed to such Contingent Holder as soon as such sale can be facilitated, subject to
applicable regulatory approval, if any. Under the Rights Offering Sub Plan, under no circumstance
shall a Contingent Holder have a claim for the return of any funds paid in connection with the
purchase of Rights Offering Shares, or, if applicable, be released from its obligations under the
Equity Commitment Agreement, unless otherwise provided for therein, solely on account of such
holder being a Contingent Holder.
|
2. |
|
Distributions on Account of Claims Allowed After the Effective Date |
|
a. |
|
Payments and Distributions on Disputed Claims |
Except as otherwise provided in the Plan, a Final Order, or as agreed to by the relevant
parties, distributions under the Plan on account of Disputed Claims that become Allowed after the
Effective Date shall be made on the Periodic Distribution Date that is at least 30 days after the
Disputed Claim becomes an Allowed Claim; provided, however, that (i) Disputed
Claims that are Administrative Claims with respect to liabilities incurred by the Debtors in the
ordinary course of business during the Chapter 11 Cases or assumed by the Debtors on or before the
Effective Date that become Allowed after the Effective Date shall be paid or performed in the
ordinary course of business in accordance with the terms and conditions of any controlling
agreements, course of dealing, course of business, or industry practice and (ii) Disputed Claims
that are Priority Tax Claims or Secured Tax Claims that become Allowed Priority Tax Claims or
Allowed Secured Tax Claims after the Effective Date shall be paid in full in Cash on the Periodic
Distribution Date that is at least 30 days after the Disputed Claim becomes an Allowed Claim or
over a five-year period as provided in section 1129(a)(9)(C) of the Bankruptcy Code with annual
interest provided by applicable non-bankruptcy law.
|
b. |
|
Special Rules for Distributions to Holders of Disputed
Claims |
Notwithstanding any provision otherwise in the Plan and except as otherwise agreed by the
relevant parties (i) no partial payments and no partial distributions shall be made with respect to
a Disputed Claim until all such disputes in connection with such Disputed Claim have been resolved
by settlement or Final Order and (ii) any Entity that holds both an Allowed Claim or Interest and a
Disputed Claim shall not receive any distribution on the Allowed Claim or Interest unless and until
all objections to the Disputed Claim have been resolved by settlement or Final Order or the Claims
or Interests have been Allowed or expunged. All distributions made pursuant to the Plan on account
of a Disputed Claim that is deemed an Allowed Claim or Interest
101
by the Bankruptcy Court shall be
made together with any dividends, payments, or other distributions made on account of, as well as
any obligations arising from, the distributed property as if such Allowed Claim or Interest had been an Allowed Claim or Interest on the dates
distributions were previously made to holders of Allowed Claims or Interests included in the
applicable Class; provided, however, that no interest shall be paid on account to
such Allowed Claims or Interests unless required under applicable bankruptcy law.
|
3. |
|
Delivery of Distributions |
|
a. |
|
Record Date for Distributions |
On the Distribution Record Date, the Claims Register shall be closed and the Distribution
Agent shall be authorized and entitled to recognize only those record holders listed on the Claims
Register as of the close of business on the Distribution Record Date. Notwithstanding the
foregoing, if a Claim or Interest, other than one based on a publicly traded Certificate is
transferred less than 20 days before the Distribution Record Date, the Distribution Agent shall
make distributions to the transferee only to the extent practical and in any event only if the
relevant transfer form contains an unconditional and explicit certification and waiver of any
objection to the transfer by the transferor.
The Distribution Agent shall make all distributions required under the Plan, except that
distributions to holders of Allowed Claims governed by a separate agreement and administered by a
Servicer shall be deposited with the appropriate Servicer, at which time such distributions shall
be deemed complete, and the Servicer shall deliver such distributions in accordance with the Plan
and the terms of the governing agreement. Except as otherwise provided in the Plan, and
notwithstanding any authority to the contrary, distributions to holders of Allowed Claims or
Interests shall be made to holders of record as of the Distribution Record Date by the Distribution
Agent or a Servicer, as appropriate: (i) to the signatory set forth on any of the Proofs of Claim
filed by such holder or other representative identified therein (or at the last known addresses of
such holder if no Proof of Claim is filed or if the Debtors have been notified in writing of a
change of address); (ii) at the addresses set forth in any written notices of address changes
delivered to the Distribution Agent after the date of any related Proof of Claim; (iii) in
accordance with Federal Rule of Civil Procedure 4, as modified and made applicable by Bankruptcy
Rule 7004 if no Proof of Claim has been filed and the Distribution Agent has not received a written
notice of a change of address; (iv) at the addresses reflected in the Schedules if no Proof of
Claim has been filed and the Distribution Agent has not received a written notice of a change of
address; or (v) on any counsel that has appeared in the Chapter 11 Cases on the holders behalf.
The Debtors, the Reorganized Debtors, and the Distribution Agent, as applicable, shall not incur
any liability whatsoever on account of any distributions under the Plan.
|
c. |
|
Accrual of Dividends and Other Rights |
For purposes of determining the accrual of dividends or other rights after the Effective Date,
New Visteon Common Stock shall be deemed distributed as of the Effective Date
102
regardless of the
date on which it is actually issued, dated, authenticated, or distributed; provided
however, the Reorganized Debtors shall not pay any such dividends or distribute such
other rights, if any, until after distributions of New Visteon Common Stock actually take place.
In connection with the Plan, to the extent applicable, the Reorganized Debtors and the
Distribution Agent shall comply with all tax withholding and reporting requirements imposed on them
by any Governmental Unit, and all distributions pursuant to the Plan shall be subject to such
withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary,
the Reorganized Debtors and the Distribution Agent shall be authorized to take all actions
necessary or appropriate to comply with such withholding and reporting requirements, including
liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to
pay applicable withholding taxes, withholding distributions pending receipt of information
necessary to facilitate such distributions, or establishing any other mechanisms they believe are
reasonable and appropriate. The Reorganized Debtors reserve the right to allocate all
distributions made under the Plan in compliance with all applicable wage garnishments, alimony,
child support, and other spousal awards, liens, and encumbrances.
|
e. |
|
Foreign Currency Exchange Rate |
Except as otherwise provided in the Plan or a Bankruptcy Court order, as of the Effective
Date, any Claim asserted in currency other than U.S. dollars shall be automatically deemed
converted to the equivalent U.S. dollar value using the exchange rate as of Thursday, May 28, 2009
as quoted at 4:00 p.m. (EDT), mid-range spot rate of exchange for the applicable currency as
published in The Wall Street Journal, National Edition, on Friday, May 29, 2009.
|
f. |
|
Fractional, De Minimis, Undeliverable, and Unclaimed
Distributions |
|
(i) |
|
Fractional Distributions |
Notwithstanding any other provision of the Plan to the contrary, payments of fractions of
shares of New Visteon Common Stock shall not be made and shall be deemed to be zero, and the
Distribution Agent shall not be required to make distributions or payments of fractions of dollars.
Whenever any payment of Cash of a fraction of a dollar pursuant to the Plan would otherwise be
required, the actual payment shall reflect a rounding of such fraction to the nearest whole dollar
(up or down), with half dollars or less being rounded down.
|
(ii) |
|
De Minimis Distributions |
Neither the Distribution Agent nor any Servicer shall have any obligation to make a
distribution on account of an Allowed Claim or Interest if (i) the aggregate amount of all
distributions authorized to be made on the Periodic Distribution Date in question is or has an
economic value less than $250,000.00, or (ii) the amount to be distributed to the specific holder
of an Allowed Claim on the particular Periodic Distribution Date does not constitute a final
distribution to such holder.
103
|
(iii) |
|
Undeliverable Distributions |
If any distribution to a holder of an Allowed Claim or Interest is returned to a Distribution
Agent as undeliverable, no further distributions shall be made to such holder unless and until such
Distribution Agent is notified in writing of such holders then-current address, at which time all
currently due missed distributions shall be made to such holder on the next Periodic Distribution
Date. Undeliverable distributions shall remain in the possession of the Reorganized Debtors until
such time as a distribution becomes deliverable, or such distribution reverts to the Reorganized
Debtors or is cancelled pursuant to Article VI.M.3.f(iv), and shall not be supplemented with any
interest, dividends, or other accruals of any kind.
Any distribution under the Plan that is an Unclaimed Distribution for a period of six months
after distribution shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code
and such Unclaimed Distribution shall revest in the Reorganized Debtors and, to the extent such
Unclaimed Distribution is New Visteon Common Stock, shall be deemed cancelled. Upon such
revesting, the Claim of any holder or its successors with respect to such property shall be
cancelled, discharged, and forever barred notwithstanding any applicable federal or state escheat,
abandoned, or unclaimed property laws to the contrary. The provisions of the Plan regarding
undeliverable distributions and Unclaimed Distributions shall apply with equal force to
distributions that are issued by the Debtors, the Reorganized Debtors, or the Distribution Agent
made pursuant to any indenture or Certificate (but only with respect to the initial distribution by
the Servicer to holders that are entitled to be recognized under the relevant indenture or
Certificate and not with respect to Entities to whom those recognized holders distribute),
notwithstanding any provision in such indenture or Certificate to the contrary and notwithstanding
any otherwise applicable federal or state escheat, abandoned, or unclaimed property law.
|
g. |
|
Surrender of Cancelled Instruments or Securities |
On the Effective Date or as soon as reasonably practicable thereafter, each holder of a
Certificate, except holders of Class I Claims, shall surrender such Certificate to the Distribution
Agent or a Servicer (to the extent the relevant Claim is governed by an agreement and administered
by a Servicer). Such Certificate shall be cancelled solely with respect to the Debtors, and such
cancellation shall not alter the obligations or rights of any non-Debtor third parties vis-à-vis
one another with respect to such Certificate. No distribution of property pursuant to the Plan
shall be made to or on behalf of any such holder unless and until such Certificate is received by
the Distribution Agent or the Servicer or the unavailability of such Certificate is reasonably
established to the satisfaction of the Distribution Agent or the Servicer pursuant to the
provisions of Article VI.M.3.h. Any holder who fails to surrender or cause to be surrendered such
Certificate or fails to execute and deliver an affidavit of loss and indemnity acceptable to the
Distribution Agent or the Servicer prior to the first anniversary of the Effective Date, shall have
its Claim discharged with no further action, be forever barred from asserting any such Claim
against the relevant Reorganized Debtor or its property, be deemed to have forfeited all rights,
and Claims with respect to such Certificate, and not participate in any distribution under the
Plan; furthermore, all property with respect to such forfeited distributions, including
104
any dividends or interest attributable thereto, shall revert to the Reorganized Debtors,
notwithstanding any federal or state escheat, abandoned, or unclaimed property law to the contrary.
Notwithstanding the foregoing paragraph, this Article VI.M.3.g shall not apply to any Claims
reinstated pursuant to the terms of the Plan.
|
h. |
|
Lost, Stolen, Mutilated, or Destroyed Debt Securities |
Any holder of Allowed Claims evidenced by a Certificate that has been lost, stolen, mutilated,
or destroyed shall, in lieu of surrendering such Certificate, deliver to the Distribution Agent or
Servicer, if applicable, an affidavit of loss acceptable to the Distribution Agent or Servicer
setting forth the unavailability of the Certificate, and such additional indemnity as may be
required reasonably by the Distribution Agent or Servicer to hold the Distribution Agent or
Servicer harmless from any damages, liabilities, or costs incurred in treating such holder as a
holder of an Allowed Claim or Interest. Upon compliance with this procedure by a holder of an
Allowed Claim evidenced by such a lost, stolen, mutilated, or destroyed Certificate, such holder
shall, for all purposes pursuant to the Plan, be deemed to have surrendered such Certificate.
|
4. |
|
Claims Paid or Payable by Third Parties |
|
a. |
|
Claims Paid by Third Parties |
The Claims and Solicitation Agent shall reduce in full a Claim, and such Claim shall be
disallowed without a Claims objection having to be filed and without any further notice to or
action, order, or approval of the Bankruptcy Court, to the extent that the holder of such Claim
receives payment in full on account of such Claim from a party that is not a Debtor or Reorganized
Debtor. To the extent a holder of a Claim receives a distribution on account of such Claim and
receives payment from a party that is not a Debtor or a Reorganized Debtor on account of such
Claim, such holder shall, within two weeks of receipt thereof, repay or return the distribution to
the applicable Reorganized Debtor, to the extent the holders total recovery on account of such
Claim from the third party and under the Plan exceeds the amount of such Claim as of the date of
any such distribution under the Plan.
|
b. |
|
Claims Payable by Insurance Carriers |
No distributions under the Plan shall be made on account of an Allowed Claim that is payable
pursuant to one of the Debtors insurance policies until the holder of such Allowed Claim has
exhausted all remedies with respect to such insurance policy. To the extent that one or more of
the Debtors insurers agrees to satisfy in full a Claim (if and to the extent adjudicated by a
court of competent jurisdiction), then immediately upon such insurers agreement, such Claim may be
expunged to the extent of any agreed upon satisfaction on the Claims Register by the Claims and
Solicitation Agent without a Claims objection having to be filed and without any further notice to
or action, order, or approval of the Bankruptcy Court.
|
c. |
|
Applicability of Insurance Policies |
Except as otherwise provided in the Plan, distributions to holders of Allowed Claims shall be
in accordance with the provisions of any applicable insurance policy. Nothing contained in the
Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtors or any
105
Entity may hold against any other Entity, including insurers under any policies of insurance,
nor shall anything contained herein constitute or be deemed a waiver by such insurers of any
defenses, including coverage defenses, held by such insurers.
Except as otherwise expressly provided for in the Plan or in an Accommodation Agreement, each
Reorganized Debtor pursuant to the Bankruptcy Code (including section 553 of the Bankruptcy Code),
applicable non-bankruptcy law, or as may be agreed to by the holder of a Claim, may set off against
any Allowed Claim and the distributions to be made pursuant to the Plan on account of such Allowed
Claim (before any distribution is made on account of such Allowed Claim), any Claims, rights, and
Causes of Action of any nature that such Debtor or Reorganized Debtor, as applicable, may hold
against the holder of such Allowed Claim, to the extent such Claims, rights, or Causes of Action
against such holder have not been otherwise compromised or settled on or prior to the Effective
Date (whether pursuant to the Plan or otherwise); provided, however, that neither
the failure to effect such a setoff nor the allowance of any Claim pursuant to the Plan shall
constitute a waiver or release by such Reorganized Debtor of any such Claims, rights, and Causes of
Action that such Reorganized Debtor may possess against such holder. In no event shall any holder
of Claims be entitled to set off any Claim against any Claim, right, or Cause of Action of the
Debtor or Reorganized Debtor, as applicable, unless such holder has filed a motion with the
Bankruptcy Court requesting the authority to perform such setoff on or before the Confirmation
Date, and notwithstanding any indication in any Proof of Claim or otherwise that such holder
asserts, has, or intends to preserve any right of setoff pursuant to section 553 or otherwise.
|
6. |
|
Allocation Between Principal and Accrued Interest |
Except as otherwise provided in the Plan, the aggregate consideration paid to holders with
respect to their Allowed Claims shall be treated pursuant to the Plan as allocated first to the
principal amount of such Allowed Claims (to the extent thereof) and, thereafter, to the interest,
if any, accrued through the Effective Date.
N. |
|
Effect of Confirmation of the Plan |
|
1. |
|
Discharge of Claims and Termination of Interests |
Except with respect to Claims, if any, held by Investors arising under the Equity Commitment
Agreement or as otherwise provided in the Plan and effective as of the Effective Date: (a) the
rights afforded in the Plan and the treatment of all Claims and Interests shall be in exchange for
and in complete satisfaction, discharge, and release of all Claims and Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the Petition Date, against
the Debtors or any of their assets, property, or Estates; (b) the Plan shall bind all holders of
Claims and Interests, notwithstanding whether any such holders failed to vote to accept or reject
the Plan or voted to reject the Plan; (c) all Claims and Interests shall be satisfied, discharged,
and released in full, and the Debtors liability with respect thereto shall be extinguished
completely, including any liability of the kind specified under section 502(g) of the
106
Bankruptcy
Code; and (d) all Entities shall be precluded from asserting
against the Debtors, the Debtors Estates, the Reorganized Debtors, their successors and assigns, and
their assets and properties any other Claims or Interests based upon any documents, instruments, or
any act or omission, transaction, or other activity of any kind or nature that occurred prior to
the Effective Date.
The allowance, classification, and treatment of all Allowed Claims and Interests and the
respective distributions and treatments under the Plan take into account and conform to the
relative priority and rights of the Claims and Interests in each Class in connection with any
contractual, legal, and equitable subordination rights relating thereto, whether arising under
general principles of equitable subordination, section 510 of the Bankruptcy Code, or otherwise.
Pursuant to section 510 of the Bankruptcy Code, the Reorganized Debtors reserve the right to
re-classify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable
subordination relating thereto.
|
3. |
|
Compromise and Settlement of Claims and Controversies |
Pursuant to section 363 of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration
for the distributions and other benefits provided pursuant to the Plan or any distribution to be
made on account of an Allowed Claim or Interest, the provisions of the Plan shall constitute a good
faith compromise of all Claims, Interests, and controversies relating to the contractual, legal,
and subordination rights that a holder of a Claim or Interest may have with respect to any Allowed
Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Courts
approval of the compromise or settlement of all such Claims, Interests, and controversies, as well
as a finding by the Bankruptcy Court that any such compromise or settlement is in the best
interests of the Debtors, their Estates, and holders of Claims and Interests and is fair,
equitable, and reasonable. In accordance with the provisions of the Plan, pursuant to section 363
of the Bankruptcy Code and Bankruptcy Rule 9019(a), without any further notice to or action, order,
or approval of the Bankruptcy Court, after the Effective Date, the Reorganized Debtors may
compromise and settle Claims against them and Causes of Action against other Entities.
|
4. |
|
Releases by the Debtors |
Pursuant to section 1123(b) of the Bankruptcy Code, and except as otherwise specifically
provided in the Plan, for good and valuable consideration, on and after the Effective Date, the
Released Parties are deemed released and discharged by the Debtors, the Reorganized Debtors, and
their Estates from any and all Claims, obligations, rights, suits, damages, Causes of Action,
remedies, and liabilities whatsoever, including any derivative Claims, asserted on behalf of the
Debtors, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law,
equity, or otherwise, that the Debtors, the Reorganized Debtors, their Estates, or their Affiliates
would have been legally entitled to assert in their own right (whether individually or
collectively) or on behalf of the holder of any Claim or Interest or other Entity, based on or
relating to, or in any manner arising from, in whole or in part, the Debtors, the Chapter 11 Cases,
the purchase, sale, or
107
rescission of the purchase or sale of any security of the Debtors or the
Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or
Interest that is treated in the Plan, the business or contractual arrangements between any Debtor
and any Released Party, the restructuring of Claims and Interests prior to or in the Chapter 11
Cases, the negotiation, formulation, or preparation of the Plan and Disclosure Statement, or
related agreements, instruments, or other documents, upon any other act or omission, transaction,
agreement, event, or other occurrence taking place on or before the Effective Date of the Plan,
other than Claims or liabilities arising out of or relating to any act or omission of a Released
Party that constitutes willful misconduct or gross negligence, or as otherwise provided in the
Plan.
|
5. |
|
Releases by Holders of Claims and Interests |
As of the Effective Date, the Releasing Parties are deemed to have released and discharged the
Debtors, the Reorganized Debtors, their Estates, and the Released Parties from any and all Claims,
Interests, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities
whatsoever, including any derivative Claims, asserted on behalf of the Debtors, whether known or
unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise,
that such Entity would have been legally entitled to assert (whether individually or collectively),
based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the
Debtors restructuring, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or
sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the
transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the
business or contractual arrangements between any Debtor and any Released Party, the restructuring
of Claims and Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or
preparation of the Plan, the Disclosure Statement, the Plan Supplement or Equity Commitment
Agreement, or related agreements, instruments, or other documents, upon any other act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date of
the Plan, other than Claims or liabilities arising out of or relating to any act or omission of a
Released Party that constitutes willful misconduct or gross negligence. Notwithstanding anything
to the contrary in the foregoing, the releases set forth above do not release any (a)
post-Effective Date obligations of any party under the Plan or any document, instrument, or
agreement (including those set forth in the Plan Supplement) executed to implement the Plan or (b)
Claims held by Investors arising under the Equity Commitment Agreement. For the avoidance of
doubt, nothing in this paragraph shall in any way affect the operation of Article VI.N.1, pursuant
to section 1141(d) of the Bankruptcy Code.
The Exculpated Parties shall neither have, nor incur any liability to any Entity for any
Exculpated Claim; provided, however, that the foregoing exculpation shall have no
effect on the liability of (a) any Entity that results from any such act or omission that is
determined in a Final Order to have constituted gross negligence or willful misconduct or (b) any
Debtor or Reorganized Debtor not exculpated pursuant to the Equity Commitment Agreement in
connection with Claims arising under the Equity Commitment Agreement.
108
The Exculpated Parties have, and upon Confirmation shall be deemed to have, participated in
good faith and in compliance with the applicable provisions of the Bankruptcy Code with regard to
the distributions of the New Visteon Common Stock pursuant to the Plan and, therefore, are not and
shall not be liable at any time for the violations of any applicable, law, rule, or regulation
governing the solicitation of acceptances or rejections of the Plan or such distributions made
pursuant to the Plan.
From and after the Effective Date, all Entities are permanently enjoined from commencing or
continuing in any manner, any suit, action, or other proceeding, on account of or respecting any
Claim, demand, Lien, liability, obligation, debt, right, Cause of Action, Interest, or remedy
released or to be released, exculpated, or to be exculpated pursuant to the Plan or the
Confirmation Order.
|
8. |
|
Protection Against Discriminatory Treatment |
Consistent with section 525 of the Bankruptcy Code and paragraph 2 of Article VI of the United
States Constitution, no Governmental Unit shall discriminate against the Reorganized Debtors or
deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar
grant to, condition such a grant to, discriminate with respect to such a grant against, the
Reorganized Debtors, or another Entity with whom such Reorganized Debtors have been associated,
solely because one of the Debtors has been a debtor under chapter 11, has been insolvent before the
commencement of the Chapter 11 Cases (or during the Chapter 11 Cases but before the Debtor is
granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11
Cases.
Except as otherwise provided in the Plan, all indemnification provisions currently in place
(whether in the by-laws, certificates of incorporation, articles of limited partnership, board
resolutions, contracts, or otherwise) for the directors, officers, employees, attorneys, other
professionals, and agents of the Debtors that served in such capacity from and after the Petition
Date and such directors and officers respective affiliates, shall be reinstated (or assumed, as
the case may be), and shall survive effectiveness of the Plan.
In no event shall any holder of Claims or Interests be entitled to recoup any Claim or
Interest against any Claim, right, or Cause of Action of the Debtors or the Reorganized Debtors, as
applicable, unless such holder actually has performed such recoupment and provided notice thereof
in writing to the Debtors on or before the Confirmation Date, notwithstanding any indication in any
Proof of Claim or Interest or otherwise that such holder asserts, has, or intends to preserve any
right of recoupment.
109
Except as otherwise provided in the Plan or in any contract, instrument, release, or other
agreement or document created pursuant to the Plan, on the Effective Date, all mortgages, deeds of
trust, Liens, pledges, or other security interests against any property of the Estates shall be
fully released, and discharged, and all of the right, title, and interest of any holder of such
mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the
Reorganized Debtor and its successors and assigns.
|
12. |
|
Reimbursement or Contribution |
If the Bankruptcy Court disallows a Claim for reimbursement or contribution of an Entity
pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the extent that such Claim is
contingent as of the Effective Date, such Claim shall be forever disallowed notwithstanding section
502(j) of the Bankruptcy Code, unless prior to the Effective Date (a) such Claim has been
adjudicated as noncontingent or (b) the relevant holder of a Claim has filed a noncontingent Proof
of Claim on account of such Claim and a Final Order has been entered determining such Claim as no
longer contingent.
O. |
|
Conditions Precedent to Consummation of the Plan |
|
1. |
|
Conditions Precedent to the Effective Date |
It shall be a condition to the Effective Date that the following conditions shall have been
satisfied or waived pursuant to Article VI.O.2 hereof:
|
a. |
|
the Confirmation Order shall have become a Final Order in form
and substance reasonably acceptable to the Debtors and the Requisite Parties; |
|
|
b. |
|
all guaranties (including by non-Debtors) in connection with
obligations under the Term Loan Facility, and all other obligations being
discharged under the Plan, shall have been released or otherwise addressed in a
manner reasonably acceptable to the Debtors and the Requisite Parties, and all
Liens or pledges securing obligations under the Term Loan Facility (or any
guarantee thereof) shall have been released or otherwise addressed in a manner
reasonably acceptable to the Debtors and the Requisite Parties; |
|
|
c. |
|
all actions, documents, Certificates, and agreements necessary
to implement the Plan, shall have (a) all conditions precedent to such
documents and agreements satisfied or waived pursuant to the terms of such
documents or agreements, (b) been tendered for delivery, (c) to the extent
required, been filed with and approved by any applicable Governmental Units in
accordance with applicable laws, and (d) been effected or executed; |
|
|
d. |
|
all matters relating to Ford Motor Company have been resolved
to the reasonable satisfaction of the Requisite Parties, provided, upon
resolution |
110
|
|
|
of such matters, Ford Motor Company shall be released from liability in
connection therewith pursuant to Bankruptcy Rule 9019; |
|
|
e. |
|
under the Rights Offering Sub Plan, all conditions to the
effectiveness of the Equity Commitment Agreement shall have been satisfied or
waived in accordance with the terms thereof; and |
|
|
f. |
|
under the Rights Offering Sub Plan, the Debtors shall have
entered into the Exit Financing and drawn an amount thereunder as of the
Effective Date that together with the proceeds of the Rights Offering is
sufficient to fund payment in full to holders of Allowed Term Loan Facility
Claims pursuant to Article VI.F.5.c. |
|
2. |
|
Waiver of Conditions Precedent |
Subject to the terms of the Equity Commitment Agreement, the Debtors and the Requisite Parties
may jointly waive any of the conditions to the Effective Date set forth in Article VI.O.1 at any
time without any notice to other parties in interest and without any further notice to or action,
order, or approval of the Bankruptcy Court, and without any formal action other than proceeding to
confirm or consummate the Plan.
|
3. |
|
Effect of Non-Occurrence of Conditions to Consummation |
If prior to Consummation, the Confirmation Order is vacated pursuant to a Final Order, then
except as provided in any order of the Bankruptcy Court vacating the Confirmation Order, the Plan
will be null and void in all respects, and nothing contained in the Plan or Disclosure Statement
shall (a) constitute a waiver or release of any Claims, Interests, or Causes of Action,
(b) prejudice in any manner the rights of any Debtor or any other Entity, or (c) constitute an
admission, acknowledgment, offer, or undertaking of any sort by any Debtor or any other Entity.
P. |
|
Retention of Jurisdiction |
Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date,
the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or
related to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the
Bankruptcy Code, including jurisdiction to:
|
|
|
allow, disallow, determine, liquidate, classify, estimate, or establish the
priority, secured or unsecured status, or amount of any Claim or Interest, including
the resolution of any request for payment of any Administrative Claim and the
resolution of any and all objections to the secured or unsecured status, priority,
amount, or allowance of Claims or Interests; |
|
|
|
|
decide and resolve all matters related to the granting and denying, in whole or
in part, any applications for allowance of compensation or reimbursement of expenses to
Professionals authorized pursuant to the Bankruptcy Code or the Plan; |
111
|
|
|
resolve any matters related to Executory Contracts or Unexpired Leases,
including: (1) the assumption, assumption and assignment, or rejection of any
Executory Contract or Unexpired Lease to which a Debtor is party or with respect to
which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any
Cure or Claims arising therefrom, including pursuant to section 365 of the Bankruptcy
Code; (2) any potential contractual obligation under any Executory Contract or
Unexpired Lease that is assumed; (3) the Reorganized Debtors amendment, modification,
or supplement, after the Effective Date, pursuant to 0, of the list of Executory
Contracts and Unexpired Leases to be assumed or rejected or otherwise; and (4) any
dispute regarding whether a contract or lease is or was executory or expired; |
|
|
|
|
ensure that distributions to holders of Allowed Claims are accomplished
pursuant to the provisions of the Plan and adjudicate any and all disputes arising from
or relating to distributions under the Plan; |
|
|
|
|
adjudicate, decide, or resolve any motions, adversary proceedings, contested or
litigated matters, and any other matters, and grant or deny any applications involving
a Debtor that may be pending on the Effective Date; |
|
|
|
|
adjudicate, decide, or resolve any and all matters related to Causes of Action; |
|
|
|
|
adjudicate, decide, or resolve any and all matters related to section 1141 of
the Bankruptcy Code; |
|
|
|
|
enter and implement such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of the Plan and all contracts, instruments,
releases, indentures, and other agreements or documents created in connection with the
Plan or the Disclosure Statement; |
|
|
|
|
enter and enforce any order for the sale of property pursuant to sections 363,
1123, or 1146(a) of the Bankruptcy Code; |
|
|
|
|
grant any consensual request to extend the deadline for assuming or rejecting
Unexpired Leases pursuant to section 365(d)(4) of the Bankruptcy Code; |
|
|
|
|
resolve any cases, controversies, suits, disputes, or Causes of Action that may
arise in connection with the Consummation, interpretation, or enforcement of the Plan
or any Entitys obligations incurred in connection with the Plan; |
|
|
|
|
enter and implement such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of all contracts, instruments, releases,
indentures, and other agreements or documents approved by Final Order in the Chapter 11
Cases; |
|
|
|
|
issue injunctions, enter and implement other orders, or take such other actions
as may be necessary or appropriate to restrain interference by any Entity with
Consummation or enforcement of the Plan; |
112
|
|
|
resolve any cases, controversies, suits, disputes, or Causes of Action with
respect to the releases, injunctions, and other provisions contained in Article VI.N
and enter such orders as may be necessary or appropriate to implement such releases,
injunctions, and other provisions; |
|
|
|
|
resolve any cases, controversies, suits, disputes, or Causes of Action with
respect to the repayment or return of distributions and the recovery of additional
amounts owed by the holder of a Claim for amounts not timely repaid pursuant to Article
VI.M.3.b; |
|
|
|
|
enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated; |
|
|
|
|
determine any other matters that may arise in connection with or relate to the
Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument,
release, indenture, or other agreement or document created in connection with the Plan
or the Disclosure Statement; |
|
|
|
|
enter an order or Final Decree concluding or closing the Chapter 11 Cases; |
|
|
|
|
consider any modifications of the Plan, to cure any defect or omission, or to
reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation
Order; |
|
|
|
|
determine requests for the payment of Claims and Interests entitled to priority
pursuant to section 507 of the Bankruptcy Code; |
|
|
|
|
hear and determine disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan, or the Confirmation Order, including
disputes arising under agreements, documents, or instruments executed in connection
with the Plan; |
|
|
|
|
hear and determine matters concerning state, local, and federal taxes in
accordance with sections 346, 505, and 1146 of the Bankruptcy Code; |
|
|
|
|
hear and determine all disputes involving the existence, nature, or scope of
the Debtors discharge, including any dispute relating to any liability arising out of
the termination of employment or the termination of any employee or retiree benefit
program, regardless of whether such termination occurred prior to or after the
Effective Date; |
|
|
|
|
hear and determine matters related to the Accommodation Agreements and related
agreements; |
|
|
|
|
enforce all orders previously entered by the Bankruptcy Court; and |
|
|
|
|
hear any other matter not inconsistent with the Bankruptcy Code. |
113
Q. |
|
Miscellaneous Provisions |
|
1. |
|
No Stay of Confirmation Order |
The Confirmation Order shall contain a waiver of any stay of enforcement otherwise applicable,
including pursuant to Bankruptcy Rules 3020(e) and 7062.
Effective as of the date hereof and subject to the limitations and rights contained in the
Plan (a) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy
Rules, to amend or modify the Plan before the entry of the Confirmation Order, subject to, and in
accordance with, the terms of each of the Plan Support Agreements, (b) after the entry of the
Confirmation Order, the Debtors or the Reorganized Debtors, as applicable, may, upon order of the
Bankruptcy Court, amend or modify the Plan with the consent of the Requisite Parties, in accordance
with section 1127(b) of the Bankruptcy Code or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of
the Plan, and (c) the Debtors reserve the right to modify the Plan, subject to, and in accordance
with, the terms of each of the Plan Support Agreements, to implement the sale of all or
substantially all of the assets of the Debtors pursuant to sections 363 and 1123(a)(5)(D) of the
Bankruptcy Code.
|
3. |
|
Revocation or Withdrawal of Plan |
The Debtors reserve the right, subject to, and in accordance with, the terms of each of the
Plan Support Agreements, to revoke or withdraw the Plan before the Confirmation Date and to file
subsequent chapter 11 plans. If the Debtors revoke or withdraw the Plan, or if Confirmation or the
Effective Date does not occur, then (a) the Plan will be null and void in all respects, (b) any
settlement or compromise embodied in the Plan, assumption or rejection of Executory Contracts or
Unexpired Leases effected by the Plan, and any document or agreement executed pursuant hereto will
be null and void in all respects, and (b) nothing contained in the Plan shall (i) constitute a
waiver or release of any Claims, Interests, or Causes of Action, (ii) prejudice in any manner the
rights of any Debtor or any other Entity, or (iii) constitute an admission, acknowledgement, offer,
or undertaking of any sort by any Debtor or any other Entity.
|
4. |
|
Confirmation of the Plan |
The Debtors request Confirmation of the Plan under section 1129(b) of the Bankruptcy Code with
respect to any Impaired Class that does not accept the Plan pursuant to section 1126 of the
Bankruptcy Code. The Debtors reserve the right to amend the Plan to the extent, if any, that
Confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification.
On or before the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan, subject to, and in accordance with, the terms of
each of the Plan Support Agreements. The Debtors or the Reorganized Debtors, as applicable,
114
and
all holders of Claims receiving distributions pursuant to the Plan and all other parties in
interest shall, from time to time, prepare, execute, and deliver any agreements or documents and
take any other actions as may be necessary or advisable to effectuate the provisions and intent of
the Plan.
|
6. |
|
Payment of Statutory Fees |
All fees payable pursuant to 28 U.S.C. §1930(a), as determined by the Bankruptcy Court at a
hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid for each quarter (including
any fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever
occurs first.
|
7. |
|
Dissolution of Creditors Committee |
On the Confirmation Date, the Creditors Committee shall dissolve automatically, and its
members shall be released and discharged from all rights, duties, responsibilities, and liabilities
arising from, or related to, the Chapter 11 Cases; provided, however, that the
Creditors Committee shall be deemed to remain in existence solely with respect to applications
filed pursuant to sections 330 and 331 of the Bankruptcy Code.
|
8. |
|
Role of the Oversight Committee |
The Oversight Committee shall have the right to monitor the manner and timing of the
processing of the allowance and disallowance of Class H Claims and the manner and timing of
distributions under the Plan to holders of Allowed Class H Claims, and to receive from the
Reorganized Debtors upon reasonable request information, and be heard by the Bankruptcy Court, in
connection with the foregoing. In addition, the Oversight Committee shall have the right to object
and be heard by the Bankruptcy Court with respect to any reconciliation or resolution of any
Disputed Claim that is a Class H Claim that has a face amount as filed of greater than or equal to
$2.0 million, provided such Claim is not a Trade Claim, subject to the Reorganized Debtors
business judgment to reconcile or resolve any such Claim. The Oversight Committee shall
automatically dissolve following the reconciliation or resolution and final distribution under the
Plan on account of all Class H Claims.
The Oversight Committee may retain only those advisors that are retained on terms that are
reasonably acceptable to the Reorganized Debtors or authorized to be retained by further order of
the Bankruptcy Court and the Reorganized Debtors shall compensate such advisors in the ordinary
course of business for reasonable fees and expenses incurred in rendering services to the Oversight
Committee in connection with its exercise of the objection rights contemplated in this Article
VI.Q.8.
Except as expressly set forth in the Plan, the Plan shall have no force or effect unless the
Bankruptcy Court shall enter the Confirmation Order. None of the filing of the Plan, any statement
or provision contained in the Plan, or the taking of any action by any Debtor with respect to the
Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed
115
to be an
admission or waiver of any rights of any Debtor with respect to the holders of Claims or Interests
prior to the Effective Date.
|
10. |
|
Successors and Assigns |
The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be
binding on, and shall inure to the benefit of any heir, executor, administrator, successor or
assign, affiliate, officer, director, agent, representative, attorney, beneficiaries, or guardian,
if any, of each Entity.
After the Effective Date, any pleading, notice, or other document required by the Plan to be
served on or delivered to the Reorganized Debtors shall be served on:
|
|
|
Debtors |
|
Counsel to the Debtors |
Visteon Corporation
One Village Center Drive
Van Buren Township, MI 48111
Attn.: Michael K. Sharnas, Esq.
|
|
Pachulski Stang Ziehl & Jones LLP
919 North Market Street, 17th Floor
Wilmington, DE 19899-8705
Attn.: Laura Davis Jones, Esq.
James E. ONeill, Esq.
Timothy P. Cairns |
|
|
|
|
|
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
Attn.: James H. M. Sprayregen, P.C.
James J. Mazza, Jr., Esq.
Sienna R. Singer, Esq. |
|
|
|
|
|
601 Lexington Avenue
New York, NY 10022-4611
Attn.: Marc Kieselstein, P.C.
Brian S. Lennon, Esq. |
116
|
|
|
Counsel to the Investors |
|
|
White & Case LLP
|
|
Fox Rothschild LLP |
1155 Avenue of the Americas
|
|
919 North Market Street, Suite 1600 |
New York, NY 10036
|
|
Wilmington, DE 19801 |
Attn.: Thomas E Lauria, Esq.
|
|
Attn: Jeffrey M. Schlerf, Esq. |
Gerard Uzzi, Esq.
|
|
Eric M. Sutty, Esq. |
Andrew C. Ambruoso, Esq.
|
|
John H. Strock, Esq. |
|
|
|
Akin Gump Strauss Hauer & Feld LLP
|
|
Blank Rome LLP |
One Bryant Park
|
|
1201 Market Street, Suite 800 |
New York, NY 10036
|
|
Wilmington, DE 19801 |
Attn.: Michael Stamer, Esq.
|
|
Attn.: Stanley Tarr, Esq. |
Arik Preis, Esq. |
|
|
|
|
|
Counsel to the Creditors Committee |
|
|
Brown Rudnick LLP
|
|
Brown Rudnick LLP |
Seven Times Square
|
|
City Place I |
New York, NY 10036
|
|
Hartford, CT 06103 |
Attn.: Robert J. Stark, Esq.
|
|
Attn.: Howard L. Siegel, Esq. |
|
|
|
Brown Rudnick LLP
|
|
Ashby & Geddes, P.A. |
One Financial Center
|
|
500 Delaware Avenue, 8th Floor |
Boston, MA 02111
|
|
Wilmington, DE 19801 |
Attn.: Jeremy B. Coffey, Esq.
|
|
Attn.: William P. Bowden, Esq. |
|
|
Gregory A. Taylor, Esq. |
|
|
|
Counsel to the Term Loan Lenders |
|
Counsel to DIP Facility Lenders |
Bingham McCutchen LLP
|
|
Bingham McCutchen LLP |
One Federal Street
|
|
One Federal Street |
Boston, MA 02110-1726
|
|
Boston, MA 02110-1726 |
Attn.: Michael Reilly
|
|
Attn.: Michael Reilly |
Amy Kyle
|
|
Amy Kyle |
|
|
|
One State Street
|
|
One State Street |
Hartford, CT 06103-3178
|
|
Hartford, CT 06103-3178 |
Attn.: Peter H. Bruhn
|
|
Attn.: Peter H. Bruhn |
117
|
|
|
United States Trustee |
|
Counsel to ABL Lender |
Office of the United States Trustee
|
|
McGuireWoods LLP |
for the District of Delaware
|
|
EQT plaza |
844 King Street, Suite 2207
|
|
625 Liberty Avenue, 23rd Floor |
Wilmington, DE 19801
|
|
Pittsburgh, PA 15222-3142 |
Attn.: Jane M. Leamy, Esq.
|
|
Attn.: Mark E. Freedlander |
|
12. |
|
Term of Injunctions or Stays |
Unless otherwise provided in the Plan or in the Confirmation Order, all injunctions or stays
in effect in the Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any
order of the Bankruptcy Court, and existing on the Confirmation Date (excluding any injunctions or
stays contained in the Plan or the Confirmation Order) shall remain in full force and effect until
the Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order shall
remain in full force and effect in accordance with their terms.
Except as otherwise indicated, the Plan supersedes all previous and contemporaneous
negotiations, promises, covenants, agreements, understandings, and representations on such
subjects, all of which have become merged and integrated into the Plan.
Notwithstanding anything to the contrary in the Plan (including any amendments, supplements,
or modifications to the Plan) or the Confirmation Order (and any amendments, supplements, or
modifications thereto) or an affirmative vote to accept the Plan submitted by any Investor, nothing
contained in the Plan (including any amendments, supplements, or modifications thereto) shall
alter, amend, or modify the rights of the Investors under the Equity Commitment Agreement.
|
14. |
|
Plan Supplement Exhibits |
All exhibits and documents included in the Plan Supplement are incorporated into and are a
part of the Plan as if set forth in full in the Plan. After the exhibits and documents are filed,
copies of such exhibits and documents shall be made available upon written request to the Debtors
counsel at the address above or by downloading such exhibits and documents from
http://www.kccllc.net/Visteon or the Bankruptcy Courts website at www.deb.uscourts.gov. Unless
otherwise ordered by the Bankruptcy Court, to the extent any exhibit or document in the Plan
Supplement is inconsistent with the terms of any part of the Plan that does not constitute the Plan
Supplement, such part of the Plan that does not constitute the Plan Supplement shall control.
118
If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court
to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and
interpret such term or provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be invalid, void, or
unenforceable, and such term or provision shall then be applicable as altered or interpreted.
Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and
provisions of the Plan will remain in full force and effect and will in no way be affected,
impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order
shall constitute a judicial determination and shall provide that each term and provision of the
Plan, as it may have been altered or interpreted in accordance with the foregoing, is (a) valid and
enforceable pursuant to its terms, (b) integral to the Plan and may not be deleted or modified
without the Debtors consent, and (c) nonseverable and mutually dependent.
ARTICLE VII.
SECURITIES LAW MATTERS
A. |
|
Securities Law Matters Under the Rights Offering Sub Plan |
Under the Rights Offering Sub Plan, (1) shares of New Visteon Common Stock issued in
connection with the Pro Rata distribution of 4.9% of New Visteon common stock to all Note Holders
(Pro Rata Common Stock) and (2) warrants to purchase shares of New Visteon Common Stock
issued to 12.25% Senior Notes Claims as consideration on account of the Domestic Subsidiary
Guarantees (Senior Note Common Stock) will, in each case, be issued without registration
under the Securities Act or any similar federal, state, or local law in reliance upon the exemption
set forth in section 1145(a)(1) of the Bankruptcy Code and may be resold by holders thereof without
registration, unless the holder is an underwriter (as defined in section 1145(b)(1) of the
Bankruptcy Code) with respect to such securities, subject to the terms thereof and applicable
securities laws. Other than Pro Rata Common Stock and Senior Notes Common Stock, all shares of New
Visteon Common Stock issued under the Rights Offering Plan (Rights Offering Stock) will
be issued without registration under the Securities Act or any similar federal, state, or local law
in reliance upon section 4(2) of the Securities Act or Regulation D promulgated thereunder. All
shares of Rights Offering Stock issued pursuant to the exemption from registration set forth in
section 4(2) of the Securities Act or Regulation D promulgated thereunder will be considered
restricted securities and may not be transferred except pursuant to an effective registration
statement under the Securities Act or an available exemption therefrom.
B. |
|
Securities Law Matters Under the Claims Conversion Sub Plan |
Under the Claims Conversion Sub Plan, all shares of New Visteon Common Stock issued in
connection with the Claims Conversion Sub Plan (Claims Conversion Common Stock) will be
issued without registration under the Securities Act or any similar federal, state, or local law in
reliance upon the exemption set forth in section 1145(a)(1) of the Bankruptcy Code and may be
resold by holders thereof without registration, unless the holder is an underwriter (as defined
in section 1145(b)(1) of the Bankruptcy Code) with respect to such securities, subject to
119
the terms
thereof and applicable securities laws. Pro Rata Common Stock, Senior Notes Common Stock and Claims
Conversion Common Stock, together, are referred to herein as 1145 Securities.
C. |
|
Section 1145 of the Bankruptcy Code |
Section 1145(c) of the Bankruptcy Code provides that securities issued pursuant to a
registration exemption under section 1145(a)(1) of the Bankruptcy Code are deemed to have been
issued pursuant to a public offering. Therefore, the securities issued pursuant to the section
1145 exemption may generally be resold by any holder thereof without registration under the
Securities Act pursuant to the exemption provided by section 4(1) thereof, unless the holder is an
underwriter with respect to such securities, as such term is defined in section 1145(b)(1) of the
Bankruptcy Code. In addition, such securities generally may be resold by the recipients
thereof without registration under state securities or blue sky laws pursuant to various
exemptions provided by the respective laws of the individual states. However, recipients of
securities issued under the Plan are advised to consult with their own counsel as to the
availability of any such exemption from registration under federal securities laws and any relevant
state securities laws in any given instance and as to any applicable requirements or conditions to
the availability thereof.
Section 1145(b)(1) of the Bankruptcy Code defines an underwriter for purposes of the
Securities Act as one who, subject to certain exceptions, (1) purchases a claim with a view to
distribution of any security to be received in exchange for such claim, or (2) offers to sell
securities offered or sold under the plan for the holders of such securities, or (3) offers to buy
securities issued under the plan from the holders of such securities, if the offer to buy is made
with a view to distribution of such securities, and if such offer is under an agreement made in
connection with the plan, with the consummation of the plan or with the offer or sale of securities
under the plan, or (4) is an issuer, as used in section 2(a)(11) of the Securities Act, with
respect to such securities.
The term issuer, as used in section 2(a)(11) of the Securities Act, includes any person
directly or indirectly controlling or controlled by, an issuer of securities, or any person under
direct or indirect common control with such issuer. Control (as defined in Rule 405 under the
Securities Act) means the possession, direct or indirect, of the power to direct or cause the
direction of the policies of a person, whether through the ownership of voting securities, by
contract, or otherwise. Accordingly, an officer or director of a debtor or its successor under a
plan of reorganization may be deemed to be in control of such debtor or successor, particularly
if the management position or directorship is coupled with ownership of a significant percentage of
the reorganized debtors or its successors voting securities. Moreover, the legislative history
of section 1145 of the Bankruptcy Code suggests that a creditor who owns at least ten percent (10%)
of the voting securities of a reorganized debtor may be presumed to be a control person.
To the extent that persons deemed underwriters receive securities under the Plan pursuant to
the exemption from registration set forth in section 1145 of the Bankruptcy Code, resales of such
securities would not be exempted by section 1145 of the Bankruptcy Code from registration under the
Securities Act or other applicable law. Holders of such securities may, however, be able, at a
future time and under certain conditions described below, to sell such
120
securities without
registration pursuant to the resale provisions of Rule 144 and Rule 144A under the Securities Act.
D. |
|
Section 4(2) of the Securities Act/Regulation D |
Section 4(2) of the Securities Act provides that the issuance of securities by an issuer in
transactions not involving any public offering will be exempt from registration under the
Securities Act. Regulation D is a non-exclusive safe harbor promulgated by the United States
Securities and Exchange Commission under the Securities Act.
The term issuer, as used in section 4(2) of the Securities Act, means, among other things, a
person who issues or proposes to issue any security. Securities issued pursuant to the exemption
provided by section 4(2) of the Securities Act or Regulation D promulgated
thereunder are considered restricted securities. As a result, resales of such securities may
not be exempt from the registration requirements of the Securities Act or other applicable law.
Holders of such restricted securities may, however, be able, under certain conditions described
below, to sell such restricted securities without registration pursuant to the resale provisions of
Rule 144 and Rule 144A under the Securities Act.
E. |
|
Resales of New Common Stock/Rule 144 and Rule 144A |
To the extent that persons who receive 1145 Securities are deemed to be underwriters
(collectively, the Restricted Holders), resales of such securities by Restricted Holders
would not be exempted by section 1145 of the Bankruptcy Code from registration under the Securities
Act or other applicable law. Restricted Holders would, however, be permitted to sell New Common
Stock without registration if they are able to comply with the applicable provisions of Rule 144
under the Securities Act, as described further below, or if such securities are registered with the
Securities and Exchange Commission. Any person who is an underwriter but not an issuer with
respect to an issue of securities (other than a holder of restricted securities) is, in addition,
entitled to engage in exempt ordinary trading transactions within the meaning of section
1145(b)(1) of the Bankruptcy Code.
Persons who purchase Rights Offering Stock pursuant to the exemption from registration set
forth in section 4(2) of the Securities Act or Regulation D promulgated thereunder will hold
restricted securities. Resales of such restricted securities would not be exempted by section
1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law.
Holders of restricted securities would, however, be permitted to resell New Visteon Common Stock
without registration if they are able to comply with the applicable provisions of Rule 144 or Rule
144A under the Securities Act, as described further below, or if such securities are registered
with the Securities and Exchange Commission.
Under certain circumstances, Restricted Holders and holders of restricted securities may be
entitled to resell their securities pursuant to the limited safe harbor resale provisions of Rule
144. Generally, Rule 144 provides that if certain conditions are met (e.g., that the availability
of current public information with respect to the issuer, volume limitations, and notice and manner
of sale requirements), specified persons who resell restricted securities or who resell securities
which are not restricted but who are affiliates of the issuer of the securities sought to be
resold,
121
will not be deemed to be underwriters as defined in section 2(a)(11) of the Securities
Act. Rule 144 provides that: (1) a non-affiliate who has not been an affiliate during the
preceding three months may resell restricted after a six-month holding period if at the time of the
sale there is current public information regarding the issuer and after a one year holding period
if there is not current public information regarding the issuer at the time of the sale; and (2) an
affiliate may sell restricted or other securities after a six-month holding period if at the time
of the sale there is current public information regarding the issuer, and also may sell restricted
or other securities after a one-year holding period whether or not current public information
regarding the issuer at the time of the sale, provided that in each case the affiliate otherwise
complies with the volume, manner of sale and notice requirements of Rule 144.
Rule 144A provides a non-exclusive safe harbor exemption from the registration requirements of
the Securities Act for resales to certain qualified institutional buyers of
securities that are restricted securities within the meaning of the Securities Act,
irrespective of whether the seller of such securities purchased its securities with a view towards
reselling such securities, if certain other conditions are met (e.g., the availability of
information required by paragraph (d)(4) of Rule 144A and certain notice provisions). Under Rule
144A, a qualified institutional buyer is defined to include, among other persons, dealers
registered as such pursuant to section 15 of the Exchange Act, and entities that purchase
securities for their own account or for the account of another qualified institutional buyer and
that, in the aggregate, own and invest on a discretionary basis at least $100 million in the
securities of unaffiliated issuers. Subject to certain qualifications, Rule 144A does not exempt
the offer or sale of securities that, at the time of their issuance, were securities of the same
class of securities then listed on a national securities exchange (registered as such pursuant to
section 6 of the Exchange Act) or quoted in a United States automated inter-dealer quotation
system.
Certificates evidencing 1145 Securities received by Restricted Holders and certificates
evidencing securities issued pursuant to the exemption from registration set forth in section 4(2)
of the Securities Act or Regulation D promulgated thereunder, will bear a legend substantially in
the form below:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE I wACT), OR APPLICABLE STATE
SECURITIES LAWS (STATE ACTS) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR STATE ACTS COVERING SUCH SECURITIES OR THE SECURITIES ARE
SOLD AND TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM OR NOT SUBJECT TO THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Any holder of a certificate evidencing shares of New Visteon Common Stock bearing such legend
may present such certificate to the transfer agent for the share of New Visteon Common Stock for
exchange for one or more new certificates not bearing such legend or for transfer to a new holder
without such legend at such times as (a) such shares are sold pursuant to an effective registration
statement under the Securities Act or (b) in the case of shares issued
122
under the Plan pursuant to
the exemption from registration set forth in section 1145 of the Bankruptcy Code, such holder
delivers to Reorganized Visteon an opinion of counsel reasonably satisfactory to Reorganized
Visteon to the effect that such shares are no longer subject to the restrictions applicable to
underwriters under section 1145 of the Bankruptcy Code or (c) such holder delivers to Reorganized
Visteon an opinion of counsel reasonably satisfactory to Reorganized Visteon to the effect that
such shares are no longer subject to the restrictions pursuant to an exemption under the Securities
Act and such shares may be sold without registration under the Securities Act, in which event the
certificate issued to the transferee will not bear such legend.
WHETHER OR NOT ANY PARTICULAR PERSON WOULD BE DEEMED TO BE AN UNDERWRITER OF SECURITIES TO
BE ISSUED PURSUANT TO THE PLAN OR AN AFFILIATE OF REORGANIZED VISTEON WOULD DEPEND UPON VARIOUS
FACTS AND CIRCUMSTANCES APPLICABLE TO THAT PERSON. ACCORDINGLY, THE DEBTORS AND REORGANIZED
VISTEON EXPRESS NO VIEW AS TO WHETHER ANY SUCH PERSON WOULD BE SUCH AN UNDERWRITER OR AN
AFFILIATE. IN VIEW OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR
PERSON MAY BE AN UNDERWRITER OR AN AFFILIATE OF REORGANIZED VISTEON, THE DEBTORS AND REORGANIZED
VISTEON MAKE NO REPRESENTATIONS CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN SECURITIES OF
REORGANIZED VISTEON. ACCORDINGLY, IT IS RECOMMENDED THAT POTENTIAL RECIPIENTS OF ANY SECURITIES TO
BE ISSUED PURSUANT TO THE PLAN CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE
SUCH SECURITIES.
ARTICLE VIII.
STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN
The following is a brief summary of the Confirmation process. Holders of Claims and Interests
are encouraged to review the relevant provisions of the Bankruptcy Code and to consult with their
own advisors.
A. |
|
The Confirmation Hearing |
Section 1128(a) of the Bankruptcy Code provides that the Bankruptcy Court, after notice, may
conduct the Confirmation Hearing to consider Confirmation of the Plan. Section 1128(b) of the
Bankruptcy Code provides that any party in interest may object to Confirmation of the Plan.
B. |
|
Confirmation Standards |
Among the requirements for the Confirmation of the Plan are that the Plan is accepted by all
Impaired Classes of Claims and Interests, or if rejected by an Impaired Class, that the Plan does
not discriminate unfairly and is fair and equitable as to such Class, is feasible, and is in the
best interests of holders of Claims and Interests that are Impaired under the Plan. The
following requirements must be satisfied pursuant to section 1129(a) of the Bankruptcy Code before
the Bankruptcy Court may confirm a plan of reorganization. The Debtors believe that the Plan fully
complies with the statutory requirements for Confirmation of the Plan listed below.
123
|
1. |
|
The proponents of the Plan have complied with the applicable provisions of the
Bankruptcy Code. |
|
|
2. |
|
The Plan has been proposed in good faith and not by any means forbidden by law. |
|
|
3. |
|
Any payment made or to be made by the proponent, by the Debtor, or by a person
issuing securities or acquiring property under a Plan, for services or for costs and
expenses in or in connection with the Chapter 11 Cases, in connection with the Plan and
incident to the Chapter 11 Cases, has been approved by, or is subject to the approval
of, the Bankruptcy Court as reasonable. |
|
|
4. |
|
The proponent of the Plan has disclosed the identity and affiliations of any
individual proposed to serve, after Confirmation of the Plan, as a director, officer,
or voting trustee of the Debtor, an Affiliate of the Debtor participating in a joint
Plan with the Debtor or a successor to the Debtor under the Plan, and the
appointment to, or continuance in, such office of such individual is consistent with
the interests of Creditors and holders of Interests and with public policies. |
|
|
5. |
|
The proponent of the Plan has disclosed the identity of any Insider that will
be employed or retained by the Reorganized Debtors and the nature of any compensation
for such Insider. |
|
|
6. |
|
With respect to each holder within an Impaired Class of Claims or Interests,
each such holder (a) has accepted the Plan, or (b) will receive or retain under the
Plan on account of such Claim or Interest property of a value, as of the Effective Date
of the Plan, that is not less than the amount that such holder would so receive or
retain if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such
date. |
|
|
7. |
|
With respect to each Class of Claims or Interests, such Class (a) has accepted
the Plan, or (b) is Unimpaired under the Plan (subject to the cram-down provisions
discussed below). |
|
|
8. |
|
Except to the extent that the holder of a particular Claim has agreed to a
different treatment of such Claim, the Plan provides that: |
|
|
|
with respect to a Claim of a kind specified in sections 507(a)(2)
or 507(a)(3) of the Bankruptcy Code, on the Effective Date of the Plan, the
holder of the Claim will receive on account of such Claim Cash equal to the
Allowed amount of such Claim, unless otherwise agreed; |
|
|
|
|
with respect to a Class of Claim of the kind specified in
sections 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of the
Bankruptcy Code, each holder of a Claim of such Class will receive (a) if such
Class has accepted the Plan, deferred Cash payments of a value, on the Effective
Date of the Plan, equal to the Allowed amount of such Claim; or (b) if such
Class has not accepted the Plan, Cash on the Effective Date of the Plan equal to
the Allowed amount of such Claim; and |
124
|
|
|
with respect to a priority tax claim of a kind specified in
section 507(a)(8) of the Bankruptcy Code, the holder of such Claim will receive
on account of such Claim deferred Cash payments, over a period not exceeding six
years after the date of assessment of such Claim, of a value, as of the
Effective Date of the Plan, equal to the Allowed amount of such Claim. |
|
9. |
|
If a Class of Claims is Impaired under the Plan, at least one Class of Claims
that is Impaired under the Plan has accepted the Plan, determined without including any
acceptance of the Plan by any Insider. |
|
|
10. |
|
Confirmation of the Plan is not likely to be followed by the liquidation, or
the need for further financial reorganization, of the Debtor or any successor to the
Debtor under the Plan, unless such liquidation or reorganization is proposed in the
Plan. |
|
|
11. |
|
All fees payable under 28 U.S.C. § 1930, as determined by the Bankruptcy Court
at the hearing on Confirmation of the Plan, have been paid or the Plan provides for the
payment of all such fees on the Effective Date of the Plan. |
As described above, section 1129(a)(7) of the Bankruptcy Code requires that each holder of an
Impaired Claim or Interest either (1) accept the Plan or (2) receive or retain under the Plan
property of a value, as of the Effective Date, that is not less than the value such holder would
receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code.
The Liquidation Analyses, attached hereto as Exhibit D, were prepared in connection
with the March 15, 2010 plan of reorganization but have been updated to reflect a new Effective
Date and other assumptions impacted by timing. Based on the Liquidation Analyses, the Debtors
believe that the value of any distributions if the Debtors Chapter 11 Cases were converted to
cases under chapter 7 of the Bankruptcy Code would be no greater than the value of distributions
under each Sub Plan. As a result, the Debtors believe holders of Claims and Interests in all
Impaired Classes will recover at least as much as a result of Confirmation of the Plan as they
would recover through a hypothetical chapter 7 liquidation.
Because certain distributions contemplated by each of the Sub Plans are composed of equity in
the Reorganized Debtors, the Debtors determined it was necessary to estimate the reorganized value
of their businesses. Accordingly, Rothschild has performed an analysis of the estimated value of
the Reorganized Debtors on a going-concern basis. The Valuation Analysis should be considered in
conjunction with the discussion of the risk factors contained in Article VIII. The Valuation
Analysis is dated as of April 28, 2010 and is based on data and information as of that date.
Rothschild makes no representations as to changes to such data and information that may have
occurred since April 28, 2010.
In preparing the Valuation Analysis, Rothschild has, among other things: (1) reviewed certain
recent available financial results of the Debtors; (2) reviewed certain internal financial
125
and
operating data of the Debtors, including the business projections prepared and provided by the
Debtors management to Rothschild on April 9, 2010 relating to their businesses and their
prospects; (3) discussed with certain senior executives the current operations and prospects of the
Debtors; (4) reviewed certain operating and financial forecasts prepared by the Debtors, including
the financial projections attached hereto as Exhibit C (the Financial
Projections); (5) discussed with certain senior executives of the Debtors key assumptions
related to the Financial Projections; (6) prepared discounted cash flow analyses based on the
Financial Projections, utilizing various discount rates; (7) considered the market value of certain
publicly-traded companies in businesses reasonably comparable to the operating business of the
Debtors; (8)
considered the value assigned to certain precedent change-in-control transactions for
businesses similar to the Debtors; (9) conducted such other analyses as Rothschild deemed necessary
and/or appropriate under the circumstances; and (10) considered a range of potential risk factors.
Rothschild assumed, without independent verification, the accuracy, completeness, and fairness
of all of the financial and other information available to it from public sources or as provided to
Rothschild by the Debtors or their representatives. Rothschild also assumed that the Financial
Projections have been reasonably prepared on a basis reflecting the Debtors best estimates and
good faith judgment as to future operating and financial performance. To the extent the valuation
is dependent upon the Reorganized Debtors achievement of the Financial Projections, the Valuation
Analysis must be considered speculative. Rothschild does not make any representation or warranty
as to the fairness of the terms of the Plan. In addition to the foregoing, Rothschild relied upon
the following assumptions in preparing the Valuation Analysis:
|
|
|
the Reorganized Debtors are able to maintain adequate liquidity to operate in
accordance with the Financial Projections; |
|
|
|
|
the Reorganized Debtors operate consistently with the levels specified in the
Financial Projections; |
|
|
|
|
the Plan will become effective on June 30, 2010 (the Assumed Effective
Date); |
|
|
|
|
future values were discounted to June 30, 2010; |
|
|
|
|
the Debtors shall have availability of an undrawn revolving facility up to
$300.0 million as of the Effective Date; |
|
|
|
|
general financial and market conditions as of the Assumed Effective Date will
not differ materially from those conditions prevailing as of the date of the Valuation
Analysis of April 28, 2010 (the Valuation Date); |
|
|
|
|
Rothschild has not considered the impact of a prolonged bankruptcy case and has
assumed operations will continue in the ordinary course consistent with the
Projections; and |
|
|
|
|
Rothschild did not provide a valuation or other potential outcomes under
alternative scenarios such as a prolonged bankruptcy case or a partial or full break-up
and sale of the various businesses of the Debtors. |
126
|
1. |
|
Valuation Methodologies |
The following is a summary of certain financial analyses performed by Rothschild to arrive at
its range of estimated values. Rothschilds valuation analysis must be considered as a whole.
Rothschild has assigned an equal weighting to each methodology to arrive at its value range.
|
a. |
|
Discounted Cash Flow Analysis |
The discounted cash flow analysis (the DCF) estimates the value of an asset or
business by calculating the present value of expected future cash flows to be generated by that
asset or business. The DCF discounts the expected cash flows by a theoretical or observed discount
rate. This approach has three components: (i) calculating the present value of the projected
unlevered after-tax free cash flows for a determined period of time, (ii) adding the present value
of the terminal value of the cash flows and (iii) subtracting present value of the forecasted
pension expense through 2017 (at which time current actuarial forecast indicates no excess cash
contribution required).
The DCF calculations were performed on unlevered after-tax free cash flows for the period
beginning July 1, 2010 through December 31, 2013, discounted to the Assumed Effective Date (the
Projection Period). Rothschild utilized the Financial Projections for performing these
calculations.
In performing the DCF calculations, Rothschild made assumptions for (x) the weighted average
cost of capital (the Discount Rate), which is used to calculate the present value of
future cash flows and (y) a perpetuity growth rate for the future cash flows, which is used to
determine the value of the Reorganized Debtors represented by the time period beyond the Projection
Period. Rothschild calculated the Discount Rate with a traditional cost of equity capital
calculation using the capital asset pricing model. Based on this methodology, Rothschild used a
Discount Rate range of 14.0% to 16.0% for the Reorganized Debtors, which reflects a number of
Visteon and market-specific factors, and is calculated based on the cost of capital for companies
that Rothschild deemed comparable. The DCF utilized the perpetuity growth method and thus terminal
value is estimated using a long-run growth rate for the period beyond the Projection Period (beyond
2013). The Valuation Analysis uses a perpetuity growth rate for free cash flow of 0.0% 2.0%.
The discount rate range was calculated based on assumed cost of debt and the Capital Asset Pricing
Model (CAPM) using the companies identified for the Comparable Companies Analysis as
benchmarks. Projected cash pension payments were discounted on a similar basis at the overall DCF
discount rate range of 14.0% 16.0%
|
b. |
|
Comparable Companies Analysis |
The comparable companies analysis (the Comparable Companies Analysis) estimates the
value of a company based on a comparison of such companys financial statistics with the financial
statistics of publicly-traded companies with similar characteristics. Criteria for selecting
comparable companies for this analysis include, among other relevant characteristics, similar lines
of business, geographic presence, business risks, growth prospects, maturity of businesses, market
presence, size and scale of operations. Companies used in the Comparable
127
Companies Analysis
include: Calsonic Kansei Corporation, Clarion Co. Ltd., Continental AG, Denso Corporation,
Faurecia S.A., Harman International Industries, Inc., Hyundai Mobis, JCI, Sanden Corporation, and
Valeo S.A.. The Comparable Companies Analysis establishes benchmarks for valuation by deriving
financial multiples and ratios for the comparable companies, standardized using common metrics such
as (i) EBITDAP (Earnings Before Interest, Depreciation, Amortization and Pension Expense) and (ii)
EBITDAP minus capital expenditures.
Because the multiples derived exclude pension expense, Rothschild deducted the total
underfunded status of the pension plans in order to calculate equity value.
|
c. |
|
Precedent Transactions Analysis |
The precedent transactions analysis (the Precedent Transactions Analysis) is based
on the enterprise values of companies involved in public or private merger and acquisition
transactions that have operating and financial characteristics similar to the Debtors. Under this
methodology, the enterprise value of such companies is determined by an analysis of the
consideration paid and the debt assumed in the merger, acquisition or restructuring transaction.
As in a comparable company valuation analysis, the analysis establishes benchmarks for valuation by
deriving financial multiples and ratios, standardized using common variables such as revenue or
EBITDA. Rothschild was unable to utilize an EBITDAP metric for the Precedent Transactions Analysis
due to the unavailability of pension expense information for the merger transactions analyzed.
Therefore Rothschild relied on the derived EBITDA multiples and then applied these to the Debtors
operating statistics to determine enterprise value. Different than the Comparable Companies
Analysis in that the EBITDA metric is already burdened by pension expense (as applicable),
Rothschild did not need to separately deduct pension underfunding in order to calculate equity
value. Transactions used in the Precedent Transactions Analysis include:
|
|
|
Target |
|
Acquiror |
Hyundai Autonet (from Continental)
|
|
Hyundai Mobis |
Peguform Gmbh
|
|
Polytec Holding |
Acme Radiator & Air Conditioning
|
|
Mobile Climate Control Industries |
Bosch Corp.
|
|
Robert Bosch Gmbh |
Concentric plc
|
|
Haldex AB |
Fawer Automotive Parts Company
|
|
Ningbo Huaxing Electronic Co. |
Valeo SA Connective Systems Unit
|
|
Leoni AG |
Trico Products
|
|
Kohlberg & Company |
Dana (Fluid Products Hose & Tubing Business)
|
|
Orhan Holding |
Spectra Premium Industries
|
|
Management |
Maxima Technologies
|
|
Actuant Corp. |
Metair Investments Ltd.
|
|
Coronation Capital |
Lear Corp Interiors Division
|
|
International Automotive Components |
Motorola Automotive Electronics Division
|
|
Continental AG |
ITT Industries Inc. Fluid Handling Systems
|
|
Cooper-Standard Automotive |
Unlike the Comparable Company Analysis, the enterprise valuation derived using this
methodology reflects a control premium, or a premium paid to purchase a majority or controlling
position in the assets of a company, for merger and acquisition transactions. Thus, this
methodology generally produces higher valuations than the comparable public company
128
analysis. In
addition, other factors not directly related to a companys business operations can affect a
valuation based on precedent transactions, including (i) circumstances surrounding a merger
transaction may introduce other motivations for higher premiums (e.g., a buyer may pay an
additional premium for reasons not solely related to competitive bidding), (ii) the market
environment is not identical for transactions occurring at different periods of time; and (iii)
circumstances pertaining to the financial position of the company may impact the resulting
purchase price (e.g., a company is in financial distress and may receive a lower price due to
weaker negotiating leverage).
The summary set forth above does not purport to be a complete description of the analyses
performed by Rothschild. The preparation of an estimate involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application of these methods in
the particular circumstances and, therefore, such an estimate is not readily susceptible to summary
description. The value of an operating business is subject to uncertainties and contingencies that
are difficult to predict and will fluctuate with changes in factors affecting the financial
conditions and prospects of such a business. As a result, the estimates set forth herein are not
necessarily indicative of actual outcomes, which may be significantly more or less favorable than
those set forth herein. In addition, such estimates do not purport to be appraisals, nor do they
necessarily reflect the values that might be realized if assets were sold. The estimates prepared
by Rothschild assume that Reorganized Debtors will continue as the owner and operator of their
businesses and assets and that such assets will be operated in accordance with the Debtors
business plan. Depending on the results of the Debtors operations or changes in the financial
markets, Rothschilds valuation analysis as of the Effective Date may differ from that disclosed
herein.
|
2. |
|
Variances in the Distributable Equity Value
of Reorganized Visteon Under Each Sub Plan |
The distributable equity value of Reorganized Visteon (the Distributable Equity
Value) is calculated by adjusting the total enterprise value calculated under the DCF,
Precedent Transactions Analysis, and Comparable Companies Analysis for factors that would impact
Reorganized Visteons Cash and/or debt levels. For example, the Distributable Equity Value
includes the value of the Debtors non-consolidated joint ventures, which is estimated at $195
million. This value is calculated using a discounted cash flow analysis of the dividends
projected to be received from these operations and also includes a terminal value based on the
perpetuity growth method, where the dividend is assumed to continue into perpetuity at an assumed
growth rate. This discounted cash flow analysis utilized a discount rate based on the cost of
equity range of 13.0% 21.0% and a perpetuity growth rate after 2013 of 2.0% 4.0%. The value of
the Debtors consolidated Entities is already included in the calculation of the Debtors total
enterprise value. For example, the Debtors calculate the value of Halla Korea as a consolidated
part of the Debtors climate business.
To calculate the value of non-controlling minority interests in entities in which the Debtors
hold a majority interest, which the Debtors estimate at $424.0 million, the Debtors relied on the
closing prices of the publicly-traded stock in Halla Korea and Duck Yang Industry Co. Ltd.
(Duck Yang) as of April 28, 2010 and converted such prices into U.S. dollars at the
129
exchange rate as of April 28, 2010. The values represent 30.0% of Halla Koreas common stock
and 49.0% of Duck Yangs common stock which are not owned by the Debtors.
To calculate excess Cash, Rothschild incorporated the Debtors projected Cash balance,
deducted Cash amounts that will be used under the Plan (as many of the Creditor Classes are to be
paid in Cash) and then made an adjustment for the minimum level of Cash required to maintain
operations as identified by the Debtors management. The pro forma equity value includes the full
stated amount of the remaining Cash, estimated at approximately $213.0 million to $282.0 million
(depending on which Sub Plan is executed and the amount of Allowed Class H Claims).
The calculation of Distributable Equity Value does not specifically account for the value of
the Debtors NOLs or other tax credits. The Debtors expect to utilize a significant portion of
their NOLs to shield Visteon from paying tax for the cancellation of debt income (COD
Income) that would otherwise be payable upon emergence from bankruptcy. If the Debtors NOLs
were not available to prevent this tax, the Debtors cash balance would be lowered by a
corresponding amount which would directly translate into reduced Distributable Equity
Value.52
As described above, recoveries under the Plan are calculated assuming a low and high-end
estimate for the total amount of Allowed General Unsecured Claims. Increases in the amount of
Allowed General Unsecured Claims will decrease Cash balances of Reorganized Visteon, thus
decreasing Distributable Equity Value. Entry into the Exit Financing Facility under the Rights
Offering Sub Plan will increase debt levels, thus decreasing Distributable Equity Value. If the
Debtors seek to reinstate the Term Loan Facility, the Debtors shall have the option to reduce the
Exit Financing Facility dollar-for-dollar by the amount of the Term Loan Facility permanently
reinstated under the Plan. Accordingly, the charts below illustrate the Distributable Equity Value
of Reorganized Visteon under four constructs: (a) the Rights Offering Sub Plan assuming a low-end
Claims estimate for Class H General Unsecured Claims; (b) the Rights Offering Sub Plan assuming a
high-end Claims estimate for Class H General Unsecured Claims; (c) the Claims Conversion Sub Plan
assuming a low-end Claims estimate for Class H General Unsecured Claims; and (d) the Claims
Conversion Sub Plan assuming a high-end Claims estimate for Class H General Unsecured Claims.
Under both the Rights Offering Sub Plan and the Claims Conversion Sub Plan, the low-end range of
Class H General Unsecured Claims is $107.96 million and the high-end range of Class H General
Unsecured Claims is $166.76 million.
|
a. |
|
Rights Offering Sub Plan Low-End of Estimated Claims
Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precedent |
|
|
Comparable |
|
|
|
|
|
|
|
Transactions |
|
|
Companies |
|
(In Millions) |
|
DCF |
|
|
Analysis |
|
|
Analysis |
|
Total Enterprise Value |
|
$ |
1,990.0 |
|
|
$ |
1,980.0 |
|
|
$ |
2,345.0 |
|
Plus: Value of Interest in Unconsolidated Joint Ventures |
|
|
195 |
|
|
|
195 |
|
|
|
195 |
|
|
|
|
52 |
|
The Financial Projections do not forecast taxable income
in the United States in the foreseeable future. As a consequence, any
remaining NOLs offer no tax benefit to the Reorganized Debtors. Conversely, in
the foreign jurisdictions where Visteon does project to generate profits,
Visteon forecasts paying taxes as it does not benefit from NOLs usable in those
regions. |
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precedent |
|
|
Comparable |
|
|
|
|
|
|
|
Transactions |
|
|
Companies |
|
(In Millions) |
|
DCF |
|
|
Analysis |
|
|
Analysis |
|
Less: Minority Interest |
|
|
(424 |
) |
|
|
(424 |
) |
|
|
(424 |
) |
Less: Halla Net Debt |
|
|
(82 |
) |
|
|
(82 |
) |
|
|
(82 |
) |
Less: Assumed Pension Underfunding |
|
|
|
|
|
|
|
|
|
|
(455 |
) |
Less: Visteon Foreign Debt |
|
|
(54 |
) |
|
|
(54 |
) |
|
|
(54 |
) |
Less: Exit Financing |
|
|
(400 |
) |
|
|
(400 |
) |
|
|
(400 |
) |
Plus: Excess Cash |
|
|
242 |
|
|
|
242 |
|
|
|
242 |
|
Implied Equity Value |
|
$ |
1,465.0 |
|
|
$ |
1,455.0 |
|
|
$ |
1,370.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Equity Value |
|
|
|
|
|
$ |
1,430.0 |
|
|
|
|
|
|
b. |
|
Rights Offering Sub Plan High-End of Estimated Claims Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precedent |
|
|
Comparable |
|
|
|
|
|
|
|
Transactions |
|
|
Companies |
|
(In Millions) |
|
DCF |
|
|
Analysis |
|
|
Analysis |
|
Total Enterprise Value |
|
$ |
1,990.0 |
|
|
$ |
1,980.0 |
|
|
$ |
2,345.0 |
|
Plus: Value of Interest in Unconsolidated Joint Ventures |
|
|
195 |
|
|
|
195 |
|
|
|
195 |
|
Less: Minority Interest |
|
|
(424 |
) |
|
|
(424 |
) |
|
|
(424 |
) |
Less: Halla Net Debt |
|
|
(82 |
) |
|
|
(82 |
) |
|
|
(82 |
) |
Less: Assumed Pension Underfunding |
|
|
|
|
|
|
|
|
|
|
(455 |
) |
Less: Visteon Foreign Debt |
|
|
(54 |
) |
|
|
(54 |
) |
|
|
(54 |
) |
Less: Exit Financing |
|
|
(400 |
) |
|
|
(400 |
) |
|
|
(400 |
) |
Plus: Excess Cash |
|
|
213 |
|
|
|
213 |
|
|
|
213 |
|
Implied Equity Value |
|
$ |
1,440.0 |
|
|
$ |
1,430.0 |
|
|
$ |
1,340.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Equity Value |
|
|
|
|
|
$ |
1,405.0 |
|
|
|
|
|
|
c. |
|
Claims Conversion Sub Plan Low-End of Estimated Claims Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precedent |
|
|
Comparable |
|
|
|
|
|
|
|
Transactions |
|
|
Companies |
|
(In Millions) |
|
DCF |
|
|
Analysis |
|
|
Analysis |
|
Total Enterprise Value |
|
$ |
1,990.0 |
|
|
$ |
1,980.0 |
|
|
$ |
2,345.0 |
|
Plus: Value of Interest in Unconsolidated Joint Ventures |
|
|
195 |
|
|
|
195 |
|
|
|
195 |
|
Less: Minority Interest |
|
|
(424 |
) |
|
|
(424 |
) |
|
|
(424 |
) |
Less: Halla Net Debt |
|
|
(34 |
) |
|
|
(34 |
) |
|
|
(34 |
) |
Less: Assumed Pension Underfunding |
|
|
|
|
|
|
|
|
|
|
(455 |
) |
Less: Visteon Foreign Debt |
|
|
(54 |
) |
|
|
(54 |
) |
|
|
(54 |
) |
Plus: Excess Cash |
|
|
282 |
|
|
|
282 |
|
|
|
282 |
|
Implied Equity Value |
|
$ |
1,955.0 |
|
|
$ |
1,945.0 |
|
|
$ |
1,855.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Equity Value |
|
|
|
|
|
$ |
1,920.0 |
|
|
|
|
|
131
|
d. |
|
Claims Conversion Sub Plan High-End of Estimated Claims Range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precedent |
|
|
Comparable |
|
|
|
|
|
|
|
Transactions |
|
|
Companies |
|
(In Millions) |
|
DCF |
|
|
Analysis |
|
|
Analysis |
|
Total Enterprise Value |
|
$ |
1,990.0 |
|
|
$ |
1,980.0 |
|
|
$ |
2,345.0 |
|
Plus: Value of Interest in Unconsolidated Joint Ventures |
|
|
195 |
|
|
|
195 |
|
|
|
195 |
|
Less: Minority Interest |
|
|
(424 |
) |
|
|
(424 |
) |
|
|
(424 |
) |
Less: Halla Net Debt |
|
|
(34 |
) |
|
|
(34 |
) |
|
|
(34 |
) |
Less: Assumed Pension Underfunding |
|
|
|
|
|
|
|
|
|
|
(455 |
) |
Less: Visteon Foreign Debt |
|
|
(54 |
) |
|
|
(54 |
) |
|
|
(54 |
) |
Plus: Excess Cash |
|
|
253 |
|
|
|
253 |
|
|
|
253 |
|
Implied Equity Value |
|
$ |
1,925.0 |
|
|
$ |
1,915.0 |
|
|
$ |
1,825.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Equity Value |
|
|
|
|
|
$ |
1,890.0 |
|
|
|
|
|
These estimated ranges of values are based on a hypothetical value that reflects the
estimated intrinsic value of the Debtors derived through the application of various valuation
methodologies. The implied reorganized equity value ascribed in this analysis does not purport to
be an estimate of any post-reorganization market trading value. Any such trading value may be
materially different from the Distributable Equity Value ranges associated with Rothschilds
valuation analysis. Rothschilds estimate is based on economic, market, financial, and other
conditions as they exist on, and on the information made available as of, the Valuation Date. It
should be understood that, although subsequent developments may affect Rothschilds conclusions,
before or after the Confirmation Hearing, Rothschild does not have any obligation to update, revise
or reaffirm its estimate.
In addition, the valuation of newly issued securities, such as the New Visteon Common Stock,
is subject to additional uncertainties and contingencies, all of which are difficult to predict.
Actual market prices of such securities at issuance will depend upon, among other things,
prevailing interest rates, conditions in the financial markets, the anticipated initial securities
held by Creditors, some of which may prefer to liquidate their investment rather than hold it on a
long-term basis, and other factors that generally influence the prices of securities. Actual
market prices of such securities also may be affected by other factors not possible to predict.
Accordingly, the values estimated by Rothschild do not necessarily reflect, and should not be
construed as reflecting, values that will be attained in the public or private markets.
THE FOREGOING VALUATION IS BASED UPON A NUMBER OF ESTIMATES AND ASSUMPTIONS THAT ARE
INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES BEYOND THE CONTROL OF THE DEBTORS
OR THE REORGANIZED DEBTORS. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE RANGES REFLECTED IN
THE VALUATION WOULD BE REALIZED IF THE PLAN WERE TO BECOME EFFECTIVE, AND ACTUAL RESULTS COULD VARY
MATERIALLY FROM THOSE SHOWN HEREIN.
132
THE ESTIMATED CALCULATION OF ENTERPRISE VALUE IS HIGHLY DEPENDENT UPON ACHIEVING THE FUTURE
FINANCIAL RESULTS AS SET FORTH IN THE DEBTORS FINANCIAL PROJECTIONS, AS WELL AS THE REALIZATION OF
CERTAIN OTHER ASSUMPTIONS, NONE OF WHICH ARE GUARANTEED AND MANY OF WHICH ARE OUTSIDE OF THE
DEBTORS CONTROL, AS FURTHER DISCUSSED IN ARTICLE IX OF THE DISCLOSURE STATEMENT.
THE CALCULATIONS OF VALUE SET FORTH HEREIN REPRESENT ESTIMATED REORGANIZATION VALUES AND DO
NOT NECESSARILY REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE MARKETS. THE EQUITY
VALUE STATED HEREIN DOES NOT PURPORT TO BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET VALUE.
SUCH VALUE, IF ANY, MAY BE MATERIALLY DIFFERENT FROM THE REORGANIZED EQUITY VALUE RANGES ASSOCIATED
WITH THIS VALUATION ANALYSIS. THE VALUATION ANALYSES IS BASED ON DATA AND INFORMATION AS OF THE
VALUATION DATE. NO RESPONSIBILITY IS TAKEN FOR CHANGES IN MARKET CONDITIONS THAT MAY HAVE OCCURRED
SINCE THE VALUATION DATE AND NO OBLIGATION IS ASSUMED TO REVISE THIS CALCULATION OF THE REORGANIZED
DEBTORS VALUE TO REFLECT EVENTS OR CONDITIONS THAT SUBSEQUENTLY OCCUR. THE CALCULATIONS OF VALUE
DO NOT CONFORM TO THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE OF THE APPRAISAL
FOUNDATION.
Section 1129(a)(11) of the Bankruptcy Code requires that a debtor demonstrate that
confirmation of a plan is not likely to be followed by liquidation or the need for further
financial reorganization. For purposes of determining whether the Plan meets this requirement, the
Debtors have analyzed their ability to meet their obligations under each of the Sub Plans. As part
of this analysis, the Debtors have prepared certain Financial Projections. These Financial
Projections and the assumptions upon which they are based, are attached hereto as Exhibit
C. Based on these Financial Projections, the Debtors believe that given the deleveraging
contemplated by both of the Sub Plans, they will be able to make all payments required pursuant to
the Plan and, therefore, that Confirmation of the Plan is not likely to be followed by liquidation
or the need for further reorganization.
F. |
|
Acceptance by Impaired Classes |
The Bankruptcy Code also requires, as a condition to Confirmation, that each Class of Claims
or Interests that is Impaired but still receives distributions under the Plan vote to accept the
Plan, unless the Debtors can cram-down such Classes, as described below. A Class that is
Unimpaired is presumed to have accepted the Plan and, therefore, solicitation of acceptances with
respect to such Class is not required. A Class is Impaired unless the Plan leaves unaltered the
legal, equitable, and contractual rights to which the Claim or Interest entitles the holder of such
Claim or Interest to, or the Debtors cure any default and reinstate the original terms of the
obligation.
133
Pursuant to sections 1126(c) and 1126(d) of the Bankruptcy Code and except as otherwise
provided in section 1126(e) of the Bankruptcy Code: (1) an Impaired Class of Claims has accepted
the Plan if the holders of at least two-thirds in dollar amount and more than half in number of the
voting Allowed Claims have voted to accept the Plan and (2) an Impaired Class of Interests has
accepted the Plan the holders of at least two-thirds in amount of the Allowed interests of such
Class actually voting have voted to accept the plan.
G. |
|
Confirmation Without Acceptance By All Impaired Classes |
Section 1129(b) of the Bankruptcy Code allows the Bankruptcy Court to confirm the Plan, even
if the Plan has not been accepted by all Impaired Classes entitled to vote on the Plan, so long as
the Plan has been accepted by at least one Impaired Class, excluding any Insider Classes, entitled
to vote. Section 1129(b) of the Bankruptcy Code permits the Debtors to confirm the Plan,
notwithstanding the failure of any Impaired Class to accept the Plan, in a procedure commonly known
as cram-down, so long as the Plan does not discriminate unfairly and is fair and equitable
with respect to each impaired Class of Claims or Interests that voted to reject the plan.
|
1. |
|
No Unfair Discrimination |
The test to determine whether the Plan unfairly discriminates applies to Classes of Claims or
Interests that are of equal priority and are receiving different treatment under the Plan. The
test does not require that the treatment be the same or equivalent, but that such treatment be
fair.
The Debtors do not believe the Plan discriminates unfairly against any Impaired Class of
Claims or Interests. The Debtors believe the Plan and the treatment of all Classes of Claims and
Interests under the Plan satisfies the foregoing requirements for nonconsensual Confirmation.
|
2. |
|
Fair and Equitable Treatment |
The test to determine whether the Plan affords fair and equitable treatment applies to Classes
of different priority and status (e.g., Secured Claims versus General Unsecured Claims) and
includes the general requirement that no Class of Claims receive more than 100% of the amount of
the Allowed Claims in such Class. As to a dissenting Class, the test sets different standards
depending on the type of Claims or Interests in such Class. Specifically, in order to demonstrate
that the Plan is fair and equitable, the Debtors must demonstrate that:
|
|
|
Each holder of a Secured Claim either (a) retains its Liens on the property, to
the extent of the Allowed amount of its Secured Claim and receives deferred Cash
payments having a value, as of the effective date of the chapter 11 plan, of at least
the Allowed amount of such Claim, (b) has the right to credit bid the amount of its
Claim if its property is sold and retains its Liens on the proceeds of the sale (or if
sold, on the proceeds thereof), or (c) receives the indubitable equivalent of its
Allowed Secured Claim. |
|
|
|
|
Either (a) each holder of an Impaired General Unsecured Claim receives or
retains under the Plan property of a value equal to the amount of its Allowed Claim or
(b) |
134
|
|
|
the holders of Claims and Interests that are junior to the Claims of the rejecting
Classes will not receive any property under the Plan. |
|
|
|
Either (a) each holder of an Interest will receive or retain under the Plan
property of a value equal to the greatest of the fixed liquidation preference to which
such holder is entitled, the fixed redemption price to which such holder is entitled,
or the value of the Interest or (b) the holder of an Interest that is junior to the
rejecting Class will not receive or retain any property under the Plan. |
The Debtors believe the Plan satisfies the fair and equitable requirement notwithstanding
that Classes J and L are not receiving a distribution because there is no Class of equal priority
receiving more favorable treatment and no junior Classes to Classes J and L that will receive or
retain any property on account of the Claims or Interests in such Class.
ARTICLE IX.
PLAN-RELATED RISK FACTORS AND ALTERNATIVES
TO CONFIRMATION AND CONSUMMATION OF THE PLAN
PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN, ALL HOLDERS OF CLAIMS THAT ARE ENTITLED TO VOTE
OF THE PLAN SHOULD READ AND CONSIDER CAREFULLY THE FACTORS SET FORTH IN THIS ARTICLE IX AS WELL AS
ALL OTHER INFORMATION SET FORTH OR OTHERWISE REFERENCED IN THIS DISCLOSURE STATEMENT.
The following provides a summary of important considerations and risk factors associated with
the Plan. However, it is not exhaustive. In considering whether to vote for or against the Plan,
holders of Claims and Interests that are Impaired and entitled to vote should read and carefully
consider the factors set forth below, as well as all other information set forth or otherwise
referenced or incorporated by reference in this Disclosure Statement, including the various risks
and other factors described in Visteons Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, and Visteons Annual Report on Form 10-K for the fiscal year ended December 31,
2009, the entirety of which are publicly available at the Securities and Exchange Commissions
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system, located at
http://www.sec.gov/edgar.shtml.
B. |
|
Certain Bankruptcy Law Considerations |
|
1. |
|
Undue Delay in Confirmation May
Significantly Disrupt the Operations of the Debtors |
The continuation of the Chapter 11 Cases, particularly if the Plan is not approved or
confirmed in the time frame currently contemplated, could adversely affect the Debtors operations
and relationships with the Debtors customers, vendors, and employees. If Confirmation and
Consummation do not occur expeditiously, the Chapter 11 Cases could result in, among other things,
increased Administrative Claims or Professional Claims, and similar expenses. Prolonged Chapter 11
Cases may also make it more difficult to retain and attract
135
management and other key personnel, and would require senior management to spend a significant
amount of time and effort dealing with the Debtors financial reorganization instead of focusing on
the operation of the Debtors business.
|
2. |
|
Debtors May Not Be Able to Secure Confirmation or Consummation of the Plan |
Section 1129 of the Bankruptcy Code sets forth the requirements for Confirmation of a
chapter 11 plan, and requires, among other things, a finding by the Bankruptcy Court that: (a)
Confirmation of such plan is not likely to be followed by a liquidation or a need for further
financial reorganization unless such liquidation or reorganization is contemplated by the plan; and
(b) the value of distributions to non-accepting holders of Claims and Interests within a particular
Class under such plan will not be less than the value of distributions such holders would receive
if the debtors were liquidated under chapter 7 of the Bankruptcy Code.
Furthermore, under section 1129(b)(2)(A) of the Bankruptcy Code, the Plan must provide a Class
of Secured Claims that votes to reject the Plan with: (a) retention of Liens securing the Secured
Claim to the extent of the Allowed amount of such Claims, whether the property subject to those
Liens is retained by the Debtor or transferred to another Entity, and deferred Cash payments having
a present value, as of the Effective Date of the plan of reorganization, at least equal to the
value of such holders interest in the Estates interest in such property; or (b) the realization
of the indubitable equivalent of its Allowed Secured Claim; or (c) the sale, subject to section
363(k) of the Bankruptcy Code, of any property that is subject to the Liens securing the Claims
included in the rejecting Class, free and clear of such Liens, with such Liens to attach to the
proceeds of the sale and the treatment of such Liens on proceeds in accordance with clause (a) or
(b) of this paragraph. To meet this standard, the Debtors would either have to cash out the Term
Loan Facility Claims at 100% recovery plus postpetition interest, or provide the indubitable
equivalent of the $1.629 billion Term Loan Facility Claims. The Rights Offering Sub Plan
contemplates paying the Term Loan Facility Claims in full (including postpetition interest) in Cash
or reinstating the Term Loan Facility and paying off a portion of the Term Loan Facility Claims in
Cashthus leaving the Term Loan Lenders Unimpaired.
However, in the event that (i) the representations and warranties made by the Debtors in
connection with the Equity Commitment Agreement fail to be true and correct so as to be reasonably
expected to result in a Material Adverse Effect, as such term is defined in the Equity Commitment
Agreement, or (b) the Debtors fail to materially perform or comply with any covenants contained in
the Equity Commitment Agreement, the Consenting Note Holders may terminate the Plan Support
Agreement and may challenge the Plan on any grounds, including the findings of the Debtors
Valuation Analysis. Other parties in interest may also challenge either the adequacy of this
Disclosure Statement or whether the Solicitation Procedures and voting results satisfy the
requirements of the Bankruptcy Code or Federal Rules of Bankruptcy Procedure. Even if the
Bankruptcy Court determined that this Disclosure Statement, the Solicitation Procedures, and voting
results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found
that any of the statutory requirements for Confirmation had not been met. Confirmation of the Plan
is also subject to certain conditions as described in Article XI.
136
The Debtors, subject to the terms and conditions of the Plan, reserve the right to modify the
terms and conditions of the Plan as necessary for Confirmation. Any such modifications could
result in a less favorable treatment of any rejecting Class, as well as of any Classes junior to
such rejecting Class, than the treatment currently provided in the Plan. Any less favorable
treatment could include a distribution of property to the Class affected by the modification of a
lesser value than currently provided in the Plan or no distribution of property whatsoever under
the Plan.
|
3. |
|
Parties in Interest May Object to Classification of Claims and
Interests |
Section 1122 of the Bankruptcy Code provides that a plan of reorganization may place a Claim
or an Interest in a particular Class only if such Claim or Interest is substantially similar to the
other Claims or Interests in such Class. The Debtors believe that the classification of Claims and
Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because
the Debtors created Classes of Claims and Interests, each encompassing Claims or Interests, as
applicable, that are substantially similar to the other Claims and Interests in each such Class.
Nevertheless, there can be no assurance that the Bankruptcy Court will reach the same conclusion.
|
4. |
|
Nonconsensual Confirmation |
In the event that any Impaired Class of Claims or Interests does not accept a chapter 11 plan
of reorganization, a Bankruptcy Court may nevertheless confirm such a plan at the proponents
request if at least one Impaired Class has accepted the plan (with such acceptance being determined
without including the vote of any Insider in such Class), and, as to each Impaired Class that has
not accepted the Plan, the Bankruptcy Court determines that the Plan does not discriminate
unfairly and is fair and equitable with respect to the rejecting Impaired Classes. In the event
that any Impaired Class of Claims or Interests does not accept a chapter 11 plan of reorganization,
the Debtors will request such nonconsensual Confirmation in accordance with section 1129(b) of the
Bankruptcy Code. Nevertheless, there can be no assurance that the Bankruptcy Court will find the
Plan meets the requirements of section 1129(b) of the Bankruptcy Code.
|
5. |
|
Debtors May Object to Claims Before or After the Effective Date |
Except as otherwise provided in the Plan, the Debtors and the Reorganized Debtors reserve the
right to object to the amount or priority status of any Claim under the Plan. The estimates set
forth in this Disclosure Statement cannot be relied on by any holder of a Claim. Any holder of a
Claim that is or becomes subject to an objection thus may not receive its expected share of the
estimated distributions described in this Disclosure Statement.
|
6. |
|
Risk of Non-Occurrence of the Effective Date |
Although the Debtors believe that the Effective Date may occur shortly after the Confirmation
Date, there can be no assurance as to such timing, or as to whether the Effective Date will, in
fact, occur.
137
|
7. |
|
The Debtors May Not Be Able to Resolve Ford Related Matters |
The Plan is conditioned upon the resolution of all matters related to Ford to the reasonable
satisfaction of the Requisite Investors under the Rights Offering Sub Plan and the Requisite Term
Loan Holders under the Claims Conversion Sub Plan. The Debtors cannot predict nor guarantee the
outcome of negotiations with Ford or whether such resolution will be deemed reasonably acceptable
to the Requisite Parties. The failure to either reach resolution of the matters with Ford or
obtain approval of such resolution from the Requisite Parties could prevent Consummation of the
Plan and delay the Debtors exit from chapter 11 bankruptcy.
C. |
|
Risk Factors That May Affect the Value
of the Securities to Be Issued Under the Plan |
|
1. |
|
Debtors Cannot Guarantee What Recovery
Will Be Available to Holders of Allowed Claims in Voting Classes |
No less than three unknown factors make certainty in Creditor recoveries impossible: (a) how
much money will remain after paying all Allowed Claims that are senior to the Allowed Claims in
Voting Classes or unclassified Allowed Claims; (b) the number or amount of Claims in Voting Classes
that will ultimately be Allowed; and (c) the number or size of Claims senior to the Claims in the
Voting Classes or unclassified Claims that will ultimately be Allowed.
|
2. |
|
Actual Amounts of Allowed Claims May Differ from the Estimated
Claims and Adversely Affect the Percentage Recovery on Allowed Claims |
The Claims estimates set forth in Article II.C above are based on various assumptions. The
actual amounts of General Unsecured Claims may differ significantly from those estimates should one
or more underlying assumptions prove to be incorrect. The amount of Allowed General Unsecured
Claims will impact the Cash availability of the Debtors and, in turn, the value of the New Visteon
Common Stock to be distributed to the Note Holders under the Rights Offering Sub Plan and the Note
Holders and Term Loan Lenders under the Claims Conversion Sub Plan.
|
3. |
|
A Liquid Trading Market for the New Visteon Common Stock |
There can be no assurances that liquid trading markets for New Visteon Common Stock will
develop. The liquidity of any market for the New Visteon Common Stock will depend, among other
things, upon the number of holders of New Visteon Common Stock, Reorganized Visteons financial
performance and the market for similar securities, none of which can be determined or predicted.
Therefore, the Debtors cannot provide assurances that an active trading market will develop, or if
a market develops, what the liquidity or pricing characteristics of that market will be.
138
|
4. |
|
The Reorganized Debtors May Not Achieve Projected Financial
Results or Meet Post-Reorganization Debt Obligations and Finance
All Operating Expenses, Working Capital Needs, and Capital Expenditures |
The Reorganized Debtors may not be able to meet their projected financial results. To the
extent the Reorganized Debtors do not meet their projected financial results or achieve projected
revenues and cash flows, the Reorganized Debtors may lack sufficient liquidity to continue
operating as planned after the Effective Date, may be unable to service their debt obligations as
they come due or may not be able to meet their operational needs. Any one of these failures may
preclude the Reorganized Debtors from, among other things: (a) enhancing their current customer
offerings; (b) taking advantage of future opportunities; (c) growing their business; or
(d) responding to competitive pressures. Further, a failure of the Reorganized Debtors to meet
their projected financial results or achieve their projected revenues and cash flows could lead to
cash flow and working capital constraints, which constraints may require the Reorganized Debtors to
seek additional working capital. The Reorganized Debtors may not be able to obtain such working
capital when it is required. Further, even if the Reorganized Debtors were able to obtain
additional working capital, it may only be available on unreasonable terms. For example, the
Reorganized Debtors may be required to take on additional debt, the interest costs of which could
adversely affect the results of the operations and financial condition of the Reorganized Debtors.
If any such required capital is obtained in the form of equity, the interests of the holders of the
then-outstanding New Visteon Common Stock (and options or other rights to acquire New Visteon
Common Stock) could be diluted. While the Debtors Financial Projections represent managements
view based on current known facts and assumptions about the future operations of the Reorganized
Debtors, there is no guarantee that the Financial Projections will be realized.
|
5. |
|
Estimated Valuation of the Reorganized Debtors
and the New Visteon Common Stock and the Estimated
Recoveries to Holders of Allowed Claims Are Not Intended
to Represent the Private Sale Values of the New Visteon Common Stock |
The Debtors estimated recoveries to holders of Allowed Claims are not intended to represent
the private sale values of the Reorganized Debtors securities. The estimated recoveries are based
on numerous assumptions (the realization of many of which is beyond the control of the Reorganized
Debtors), including, without limitation: (a) the successful reorganization of the Debtors; (b) an
assumed date for the occurrence of the Effective Date; (c) the Debtors ability to achieve the
operating and financial results included in the Financial Projections; (d) the Debtors ability to
maintain adequate liquidity to fund operations; and (e) the assumption that capital and equity
markets remain consistent with current conditions.
|
6. |
|
The Reorganized Debtors May Be Controlled By a Small Number of Holders |
Consummation of the Plan may result in a small number of holders owning a significant
percentage of the outstanding shares of New Visteon Common Stock. These holders may, among other
things, exercise a controlling influence over the business and affairs of the Reorganized Debtors
and have the power to elect directors and approve significant mergers, acquisitions, divestures,
and other material corporate transactions, including the sale of the
139
Reorganized Debtors. The Debtors can make no assurances regarding the future actions of the
holders of New Visteon Common Stock and the impact such actions may have on the value of the New
Visteon Common Stock.
|
7. |
|
Certain Tax Implications of the Debtors Bankruptcy
and Reorganization May Increase the Tax Liability of the Reorganized Debtors |
Holders of Allowed Claims should carefully review Article X herein, Certain Federal Income
Tax Consequences, to determine how the tax implications of the Plan and these Chapter 11 Cases may
adversely affect the Reorganized Debtors.
|
8. |
|
Impact of Interest Rates |
Changes in interest rates and foreign exchange rates may affect the fair market value of the
Debtors assets. Specifically, decreases in interest rates will positively impact the value of the
Debtors assets and the strengthening of the dollar will negatively impact the value of their net
foreign assets.
D. |
|
Risk Factors That Could Negatively Impact the Debtors Business |
|
1. |
|
The Debtors Are Subject to the Risks
and Uncertainties Associated with the Chapter 11 Cases |
For the duration of the Chapter 11 Cases, the Debtors operations and the Debtors ability to
execute their business strategy will be subject to the risks and uncertainties associated with
bankruptcy. These risks include:
|
|
|
the Debtors ability to obtain approval of the Bankruptcy Court with respect to
motions filed in the Chapter 11 Cases from time to time; |
|
|
|
|
the Debtors ability to obtain and maintain normal trade terms with suppliers
and service providers and maintain contracts that are critical to their operations; |
|
|
|
|
the Debtors ability to attract, motivate, and retain key employees; |
|
|
|
|
the Debtors ability to attract and retain customers; |
|
|
|
|
the Debtors ability to fund and execute their business plan; and |
|
|
|
|
the Debtors ability to obtain Creditor and Bankruptcy Court approval for, and
then to consummate, a Plan to emerge from bankruptcy. |
The Debtors will also be subject to risks and uncertainties with respect to the actions and
decisions of the Creditors and other third parties who have interests in the Chapter 11 Cases that
may be inconsistent with the Debtors restructuring and business goals.
These risks and uncertainties could affect the Debtors business and operations in various
ways. For example, negative events or publicity associated with the Chapter 11 Cases could
140
adversely affect the Debtors sales and relationships with their customers, as well as with
their suppliers and employees, which in turn could adversely affect the Debtors operations and
financial condition. In addition, pursuant to the Bankruptcy Code, the Debtors need approval of
the Bankruptcy Court for transactions outside the ordinary course of business, which may limit
their ability to respond timely to certain events or take advantage of certain opportunities.
Because of the risks and uncertainties associated with the Chapter 11 Cases, the Debtors cannot
predict or quantify the ultimate impact that events occurring during the reorganization process
will have on their business, financial condition, and results of operations.
As a result of the Chapter 11 Cases, the realization of assets and the satisfaction of
liabilities are subject to uncertainty. While operating as debtors in possession, and subject to
approval of the Bankruptcy Court, or otherwise as permitted in the normal course of business or
Bankruptcy Court order, the Debtors may sell or otherwise dispose of assets and liquidate or settle
liabilities for amounts other than those reflected in the condensed consolidated financial
statements included in the Form 10-K for the year ended that December 31, 2009. Further, the Plan
could materially change the amounts and classifications of assets and liabilities reported in the
historical consolidated financial statements. The historical consolidated financial statements do
not include any adjustments to the reported amounts of assets or liabilities that might be
necessary as a result of Confirmation of a Plan.
|
2. |
|
Continued Decline in the Production Levels of the Debtors Major
Customers Could Reduce the Debtors Sales and Harm the Debtors
Profitability |
Demand for the Debtors products is directly related to the automotive vehicle production of
the Debtors major customers. Automotive sales and production can be affected by general economic
or industry conditions, labor relations issues, fuel prices, regulatory requirements, government
initiatives, trade agreements, and other factors. Automotive industry conditions in North America
and Europe have been and continue to be extremely challenging. In North America, the industry is
characterized by significant overcapacity, fierce competition and rapidly declining sales. In
Europe, the market structure is more fragmented with significant overcapacity and declining sales.
Visteons business in 2008 and 2009 has been severely affected by the turmoil in the global credit
markets, significant reductions in new housing construction, volatile fuel prices and recessionary
trends in the U.S. and global economies. These conditions had a dramatic impact on consumer vehicle
demand in 2008 and 2009, resulting in the lowest per capita sales rates in the United States in
half a century and lower global automotive production following six years of steady growth.
|
3. |
|
The Financial Distress of the Debtors Major Customers and Within
the Supply Base Could Significantly Affect Their Operating Performance |
During 2009, automotive OEMs, particularly those with substantial sales in the United States,
experienced decreased demand for their products, which resulted in lower production levels on
several of the Debtors key platforms, particularly light truck platforms. In addition, these
customers have experienced declining market shares in North America and are continuing to
restructure their North American operations in an effort to improve profitability. The domestic
automotive manufacturers are also burdened with substantial structural costs, such as pension and
healthcare costs that have impacted their profitability and labor relations. Several
141
other global automotive manufacturers are also experiencing operating and profitability issues
and labor concerns. In this environment, it is difficult to forecast future customer production
schedules, the potential for labor disputes or the success or sustainability of any strategies
undertaken by any of the Debtors major customers in response to the current industry environment.
This environment may also put additional pricing pressure on suppliers to OEMs, such as the
Debtors, which would reduce such suppliers (including the Debtors) margins. In addition, cuts in
production schedules are also sometimes announced by customers with little advance notice, making
it difficult for suppliers to respond with corresponding cost reductions.
Given the difficult environment in the automotive industry, there is an increased risk of
bankruptcies or similar events among the Debtors customers. Both GM and Chrysler have sought
bankruptcy protection and obtained funding support from the U.S. federal government. While the
operations of Chrysler and GM have been sold to a third-party, the financial prospects of certain
of the Debtors significant customers remain highly uncertain. The Debtors supply base has also
been adversely affected by industry conditions. Lower production levels for the global automotive
OEMs and increases in certain raw material, commodity, and energy costs during 2009 have resulted
in severe financial distress among many companies within the automotive supply base. Several large
suppliers have filed for bankruptcy protection or ceased operations. Unfavorable industry
conditions have also resulted in financial distress within the Debtors supply base, an increase in
commercial disputes and other risks of supply disruption. In addition, the current adverse industry
environment has required the Debtors to provide financial support to distressed suppliers or take
other measures to ensure uninterrupted production. While the Debtors have taken certain actions to
mitigate these factors, those actions have offset only a portion of the overall impact on the
Debtors operating results. The continuation or worsening of these industry conditions would
adversely affect the Debtors profitability, operating results, and cash flow.
|
4. |
|
The Debtors are Highly Dependent on Ford and
Hyundai and Decreases in Such Customers Vehicle
Production Volumes Would Adversely Affect the Debtors |
Ford is the Debtors largest customer and accounted for approximately 28% of total product
sales in 2009, 34% of total product sales in 2008, and 39% of total product sales in 2007.
Additionally, Hyundai has rapidly become another one of the Debtors largest customersaccounting
for 27% of the Debtors total product sales in 2009, and such percentage is expected to increase in
the future. Any change in Fords and/or Hyundais vehicle production volumes will have a
significant impact on the Debtors sales volume and reorganization efforts.
Furthermore, the Creditors Committee, in connection with the investigatory period provided
under the ABL cash collateral order, is investigating potential Claims against Ford and/or ACH in
connection with, among other events, the Debtors spin-off from Ford in 2000 and the ACH
Transactions in 2005. The Debtors believe that Fords continued support as a key customer is
critical to their business plan and the companys emergence from bankruptcy. Protracted litigation
against Ford, including litigation by the Creditors Committee seeking derivative standing to
pursue claims of uncertain merit, could delay or prevent the Debtors emergence from bankruptcy and
put at risk future revenue from the companys relationship with Ford.
142
|
5. |
|
The Discontinuation of, Loss of Business, or Lack
of Commercial Success, with Respect to a Particular
Vehicle Model for Which the Debtors are a Significant Supplier
Could Reduce the Debtors Sales and Harm the Debtors Profitability |
Although the Debtors have purchase orders from many of their customers, these purchase orders
generally provide for the supply of a customers annual requirements for a particular vehicle model
and assembly plant, or in some cases, for the supply of a customers requirements for the life of a
particular vehicle model, rather than for the purchase of a specific quantity of products. In
addition, it is possible that customers could elect to manufacture components internally that are
currently produced by outside suppliers, such as the Debtors. The discontinuation of, the loss of
business with respect to or a lack of commercial success of a particular vehicle model for which
the Debtors are a significant supplier could reduce the Debtors sales and harm the Debtors
profitability, thereby making it more difficult for the Debtors to make payments under the Debtors
indebtedness or resulting in a decline in the value of the New Visteon Common Stock.
|
6. |
|
The Debtors Substantial International Operations Make Them
Vulnerable to Risks Associated with Doing Business in Foreign Countries |
As a result of the Debtors global presence, a significant portion of the Debtors revenues
and expenses are denominated in currencies other than the U.S. dollar. In addition, the Debtors
have manufacturing and distribution facilities in many foreign countries, including countries in
Europe, Central and South America, and Asia. International operations are subject to certain risks
inherent in doing business abroad, including:
|
|
|
exposure to local economic conditions, expropriation and nationalization,
foreign exchange rate fluctuations and currency controls; |
|
|
|
|
withholding and other taxes on remittances and other payments by subsidiaries; |
|
|
|
|
investment restrictions or requirements; |
|
|
|
|
export and import restrictions; and |
|
|
|
|
increases in working capital requirements related to long supply chains. |
Expanding the Debtors business in Asia and Europe and enhancing the Debtors business
relationships with Asian and European automotive manufacturers worldwide are important elements of
the Debtors long-term business strategy. In addition, the Debtors have invested significantly in
joint ventures with other parties to conduct business in South Korea, China, and elsewhere in Asia.
The Debtors ability to repatriate funds from these joint ventures depends not only upon their
uncertain cash flows and profits, but also upon the terms of particular agreements with the
Debtors joint venture partners and maintenance of the legal and political status quo. As a
result, the Debtors exposure to the risks described above is substantial. The likelihood of such
occurrences and their potential effect on the Debtors vary from country to country and are
unpredictable. However, any such occurrences could be harmful to the
Debtors business and the Debtors profitability, thereby making it more difficult for the Debtors to
make
143
payments under the Debtors indebtedness or resulting in a decline in the value of the New
Visteon Common Stock.
|
7. |
|
Escalating Price Pressures From
Customers May Adversely Affect the Debtors Business |
Downward pricing pressures by automotive manufacturers is a characteristic of the automotive
industry. Virtually all automakers have implemented aggressive price reduction initiatives and
objectives each year with their suppliers, and such actions are expected to continue in the future.
In addition, estimating such amounts is subject to risk and uncertainties because any price
reductions are a result of negotiations and other factors. Accordingly, suppliers must be able to
reduce their operating costs in order to maintain profitability. The Debtors have taken steps to
reduce their operating costs and other actions to offset customer price reductions; however, price
reductions have impacted the Debtors sales and profit margins and are expected to continue to do
so in the future. If the Debtors are unable to offset customer price reductions in the future
through improved operating efficiencies, new manufacturing processes, sourcing alternatives and
other cost reduction initiatives, the Debtors results of operations and financial condition will
likely be adversely affected.
|
8. |
|
Inflation May Adversely Affect the Debtors Profitability
and the Profitability of the Debtors Tier 2 and Tier 3 Supply Base |
The automotive supply industry has experienced significant inflationary pressures, primarily
in ferrous and non-ferrous metals and petroleum-based commodities, such as resins. These
inflationary pressures have placed significant operational and financial burdens on automotive
suppliers at all levels, and are expected to continue for the foreseeable future. Generally, it has
been difficult to pass on, in total, the increased costs of raw materials and components used in
the manufacture of the Debtors products to their customers. In addition, the Debtors need to
maintain a continuing supply of raw materials and/or components has made it difficult to resist
price increases and surcharges imposed by their suppliers.
Further, this inflationary pressure, combined with other factors, has adversely impacted the
financial condition of several domestic automotive suppliers, and resulting in several significant
supplier bankruptcies. Because the Debtors purchase various types of equipment, raw materials, and
component parts from suppliers, the Debtors may be materially and adversely affected by the failure
of those suppliers to perform as expected. This non-performance may consist of delivery delays,
failures caused by production issues, or delivery of non-conforming products, or supplier
insolvency or bankruptcy. Consequently, the Debtors efforts to continue to mitigate the effects
of these inflationary pressures may be insufficient if conditions worsen, thereby negatively
impacting the Debtors financial results.
|
9. |
|
The Debtors Could Be Negatively Impacted by Supplier Shortages |
In an effort to manage and reduce the costs of purchased goods and services, the Debtors, like
many suppliers and automakers, have been consolidating their supply base. As a result, the Debtors
are dependent on single or limited sources of supply for certain
components used in the manufacture of their products. The Debtors select their suppliers based on total value
(including
144
price, delivery and quality), taking into consideration their production capacities and
financial condition. However, there can be no assurance that strong demand, capacity limitations
or other problems experienced by the Debtors suppliers will not result in occasional shortages or
delays in their supply of components. If the Debtors were to experience a significant or prolonged
shortage of critical components from any of their suppliers, particularly those who are sole
sources, and could not procure the components from other sources, the Debtors would be unable to
meet their production schedules for some of their key products or to ship such products to their
customers in timely fashion, which would adversely affect sales, margins, and customer relations.
|
10. |
|
Work Stoppages and Similar Events
Could Significantly Disrupt the Debtors Business |
Because the automotive industry relies heavily on just-in-time delivery of components during
the assembly and manufacture of vehicles, a work stoppage at one or more of the Debtors
manufacturing and assembly facilities could have material adverse effects on the business.
Similarly, if one or more of the Debtors customers were to experience a work stoppage, that
customer would likely halt or limit purchases of the Debtors products, which could result in the
shut down of the related manufacturing facilities. A significant disruption in the supply of a key
component due to a work stoppage at one of the Debtors suppliers or any other supplier could have
the same consequences, and accordingly, have a material adverse effect on the Debtors financial
results.
|
11. |
|
Impairment Charges Relating to the Debtors Assets
and Possible Increases to Their Valuation Allowances May
Have a Material Adverse Effect on Their Earnings and Results of Operations |
The Debtors recorded asset impairment charges of $9.0 million, $234.0 million and $95.0
million in 2009, 2008 and 2007, respectively, to adjust the carrying value of certain assets to
their estimated fair value. Additional asset impairment charges in the future may result in the
Debtors failure to achieve their internal financial plans, and such charges could materially
affect the Debtors results of operations and financial condition in the period(s) recognized. In
addition, the Debtors cannot provide assurance that they will be able to recover remaining net
deferred tax assets, which are dependent upon achieving future taxable income in certain foreign
jurisdictions. Failure to achieve its taxable income targets may change the Debtors assessment of
the recoverability of their remaining net deferred tax assets and would likely result in an
increase in the valuation allowance in the applicable period. Any increase in the valuation
allowance would result in additional income tax expense, which could have a significant impact on
the companys future results of operations.
|
12. |
|
The Debtors Expected Annual Effective Tax Rate Could be Volatile and
Materially Change as a Result of Changes in Mix of Earnings and Other Factors |
Changes in the Debtors debt and capital structure, among other items, may impact their
effective tax rate. The Debtors overall effective tax rate is equal to consolidated tax expense
as a percentage of consolidated earnings before tax. However, tax
expenses and benefits are not recognized on a global basis but rather on a jurisdictional basis. Further, the Debtors are
in a
145
position whereby losses incurred in certain tax jurisdictions generally provide no current
financial statement benefit. In addition, certain jurisdictions have statutory rates greater than
or less than the United States statutory rate. As such, changes in the mix and source of earnings
between jurisdictions could have a significant impact on the Debtors overall effective tax rate in
future periods. Changes in tax law and rates, changes in rules related to accounting for income
taxes, or adverse outcomes from tax audits that regularly are in process in any of the
jurisdictions in which the Debtors operate could also have a significant impact on the Debtors
overall effective rate in future periods.
|
13. |
|
The Debtors Ability to Effectively Operate
Could be Hindered if They Fail to Attract and Retain Key Personnel |
The Debtors ability to operate their business and implement their strategies effectively
depends, in part, on the efforts of their executive officers and other key employees. In addition,
the Debtors future success will depend on, among other factors, the ability to attract and retain
qualified personnel, particularly engineers and other employees with critical expertise and skills
that support key customers and products. The loss of the services of any key employees or the
failure to attract or retain other qualified personnel could have a material adverse effect on the
Debtors business.
|
14. |
|
Warranty Claims, Product Liability Claims,
and Product Recalls Could Harm the Debtors Business, Results of Operations, and Financial Condition |
The Debtors face the inherent
business risk of exposure to warranty and product liability Claims in the event that their products
fail to perform as expected or such failure results, or is alleged to result, in bodily injury or
property damage (or both). In addition, if any of the Debtors designed products are defective or
are alleged to be defective, the Debtors may be required to participate in a recall campaign. As
suppliers become more integrally involved in the vehicle design process and assume more of the
vehicle assembly functions, automakers are increasingly expecting them to warrant their products
and are increasingly looking to suppliers for contributions when faced with product liability
claims or recalls. A successful warranty or product liability claim against the Debtors in excess
of their available insurance coverage and established reserves, or a requirement that the Debtors
participate in a product recall campaign, could have materially adverse effects on the Debtors
business, results of operations, and financial condition.
|
15. |
|
The Debtors Business Could be Affected Adversely by Terrorism |
Terrorist-sponsored attacks, both foreign and domestic, could have adverse effects on the
Debtors business and results of operations. These attacks could accelerate or exacerbate other
automotive industry risks such as those described above and also have the potential to interfere
with the Debtors business by disrupting supply chains and the delivery of products to customers.
146
|
16. |
|
The Debtors are Involved From Time to
Time in Legal Proceedings and Commercial or
Contractual Disputes, Which Could Have an Adverse
Effect on Their Business, Results of Operations and Financial Position |
The Debtors are involved in legal proceedings and commercial or contractual disputes that,
from time to time, are significant. These are typically Claims that arise in the normal course of
business including, without limitation, commercial or contractual disputes (including disputes with
suppliers), intellectual property matters, personal injury Claims, and employment matters. No
assurances can be given that such proceedings and Claims will not have a material adverse impact on
the Debtors profitability and financial position.
|
17. |
|
Litigation Related to Foreign Affiliates
Pension Plans Could Impact the Debtors Business |
As noted above, on October 15, 2009, the Visteon UK Pension Trustees Limited, in its capacity
as trustee of the VUK Pension Plan and on behalf of the beneficiaries of the VUK Pension Plan filed
Proofs of Claim against each of the Debtors asserting contingent and unliquidated Claims pursuant
to the UK Pensions Act 2004 and the UK Pensions Act 1995 for liabilities related to a funding
deficiency of the VUK Pension Plan. According to the Proofs of Claim, the VUK Pension Plan had a
funding deficiency of approximately $555.0 million as of March 31, 2009.
Visteon Engineering Services Pension Trustees Limited, trustee of the VES Pension Plan also
submitted Proofs of Claim against each of the Debtors asserting contingent and unliquidated claims
pursuant to the UK Pensions Act 2004 and the UK Pensions Act 1995 for liabilities related to an
alleged funding deficiency of the VES Pension Plan. According to the VES Proofs of Claim, the UK
Pensions Regulator has advised the trustee for the VES Pension Plan that it has begun investigating
funding issues related to the VES Pension Plan. As of March 31, 2009, the VES Pension Plan was
underfunded by an amount of approximately $118.1 million according to the VES Proofs of Claim.
While the Visteon UK Pension Trustees Limited has withdrawn with prejudice all Claims asserted
against the Debtors [Docket No. 3089], if the Pensions Regulator were to issue a financial support
direction or contribution notice against any affiliate of the Debtors with respect to the VUK
Pension Plan and/or the VES Pension Plan, certain of the Debtors non-Debtor Affiliates may be
required to satisfy such Claims, which may have a material adverse impact on the Debtors business
going forward to the extent any liability is established against any of the Debtors non-Debtor
Affiliates.
In addition, there are currently several pending civil actions against non-Debtor Affiliate
Visteon Deutschland GmbH (Visteon Germany) seeking damages for the alleged violation of
German pension laws that prohibit the use of pension benefit formulas that differ for salaried and
hourly employees without adequate justification. Several of these actions have been joined as pilot
cases. In a written decision issued on or about April 6, 2010, the Federal Labor Court issued a
declaratory judgment in favor of the plaintiffs in the pilot cases. To date, more than 200 current
and former employees have filed similar actions, and an additional 1,100 current and
147
former
employees who are similarly situated to the plaintiffs participate in the pension plan that is the
subject of the declaratory judgment. Visteon Corporation and Visteon Germany have
reserved certain amounts relating to the potential actions against Visteon Germany based on
their best estimate as to the potential damages that could be awarded to parties in connection with
the civil actions.
|
18. |
|
The Debtors Funding Levels of Pension
Plans Could Materially Deteriorate or the Debtors
May Be Unable to Generate Sufficient Excess Cash
Flow to Meet Increased Pension or OPEB Obligations |
Substantially all of the Debtors employees participate in defined benefit pension plans or
retirement/termination indemnity plans. Visteon also sponsors OPEB plans in the United States and
Canada. Visteons worldwide pension and OPEB obligations exposed the company to approximately
$574.0 million in unfunded liabilities as of December 31, 2009, of which approximately $388.0
million and $120.0 million was attributable to unfunded U.S. and non-U.S. pension obligations,
respectively, and $66.0 million was attributable to unfunded OPEB obligations. Visteon has
previously experienced declines in interest rates and pension asset values. Future declines in
interest rates or the market values of the securities held by the plans, or certain other changes,
could materially deteriorate the funded status of Visteons plans and affect the level and timing
of required contributions in 2010 and beyond. Additionally, a material deterioration in the funded
status of the plans could significantly increase pension expenses and reduce the companys
profitability. While the Bankruptcy Court approved termination of Visteons OPEB obligations,
there is a risk that the decision may be overturned on appeal, as described further in Article
V.F.1 herein. Visteon funds its OPEB obligations on a pay-as-you-go basis; accordingly, the
related plans have no assets. Visteon is subject to increased OPEB cash outlays and costs due to,
among other factors, rising health care costs. Increases in the expected cost of health care in
excess of current assumptions could increase actuarially determined liabilities and related OPEB
expenses along with future cash outlays. Visteons assumptions used to calculate pension and OPEB
obligations as of the annual measurement date directly impact the expense to be recognized in
future periods. While Visteons management believes that these assumptions are appropriate,
significant differences in actual experience or significant changes in these assumptions may
materially affect the companys pension and OPEB obligations and future expense. Visteons
ability to generate sufficient cash to satisfy its obligations may be impacted by the factors
discussed herein.
|
19. |
|
The Debtors Could be Adversely
Impacted by Environmental Laws and Regulations |
The Debtors operations are subject to U.S. and foreign environmental laws and regulations
governing emissions to air; discharges to water; the generation, handling, storage, transportation,
treatment and disposal of waste materials; and the cleanup of contaminated properties. Currently,
environmental costs with respect to former, existing or subsequently acquired operations are not
material, but there is no assurance that the Debtors will not be adversely impacted by such costs,
liabilities or Claims in the future either under present laws and regulations or those that may be
adopted or imposed in the future.
148
|
20. |
|
Developments or Assertions by or Against the Debtors
Relating to Intellectual Property Rights Could Materially Impact Their
Business |
The Debtors own significant intellectual property, including a large number of patents,
trademarks, copyrights and trade secrets, and are involved in numerous licensing arrangements. The
Debtors intellectual property plays an important role in maintaining their competitive position in
a number of the markets served. Developments or assertions by or against the Debtors relating to
intellectual property rights could materially impact the Debtors business. Significant
technological developments by others also could materially and adversely affect the Debtors
business and results of operations and financial condition.
E. |
|
Risks Associated with Forward Looking Statements |
|
1. |
|
Financial Information Is Based on the Debtors Books and
Records and, Unless Otherwise Stated, No Audit Was Performed |
The financial information contained in this Disclosure Statement has not been audited. In
preparing this Disclosure Statement, the Debtors relied on financial data derived from their books
and records that was available at the time of such preparation. Although the Debtors have used
their reasonable business judgment to ensure the accuracy of the financial information provided in
this Disclosure Statement, and while the Debtors believe that such financial information fairly
reflects, in all material respects, the financial results of the Debtors, the Debtors are unable to
warrant or represent that the financial information contained herein and attached hereto is without
inaccuracies.
|
2. |
|
Financial Projections and Other Forward Looking
Statements Are Not Assured, Are Subject to Inherent
Uncertainty Due to Numerous Assumptions Upon Which
They Are Based and, as a Result, Actual Results May Vary |
This Disclosure Statement contains various projections concerning the financial results of the
Reorganized Debtors operations, including the Financial Projections that are, by their nature,
forward looking, and which projections are necessarily based on certain assumptions and estimates.
Should any or all of these assumptions or estimates ultimately prove to be incorrect, the actual
future financial results of the Reorganized Debtors may turn out to be different from the Financial
Projections. The Financial Projections do not reflect emergence adjustments, including the impact
of fresh start accounting.
Specifically, the projected financial results contained in this Disclosure Statement reflect
numerous assumptions concerning the anticipated future performance of the Reorganized Debtors, some
of which may not materialize, including, without limitation, assumptions concerning: (a) the
magnitude of the potential adverse impacts of the filing of the Chapter 11 Cases on the Debtors
business, financial condition, or results of operations, including the Debtors ability to maintain
contracts, trade credit and other customer and vendor relationships that are critical to their
business and the actions and decisions of their Creditors and other third parties with interests in
the Chapter 11 Cases; (b) the Debtors ability to obtain approval of Bankruptcy Court with respect
to motions in the Chapter 11 Cases prosecuted from time to time
149
and to develop, prosecute, confirm, and consummate one or more plans of reorganization with
respect to the Chapter 11 Cases and to consummate all of the transactions contemplated by one or
more such plans or upon which consummation of such plans may be conditioned; (c) the timing of
Confirmation and Consummation of one or more plans of reorganization in accordance with its terms;
(d) the anticipated future performance of Reorganized Visteon, including, without limitation, the
Debtors ability to maintain or increase revenue and gross margins, control future operating
expenses or make necessary capital expenditures; (e) general economic conditions in the markets in
which the Debtors operate, including changes in interest rates or currency exchange rates; (f) the
financial condition of the Debtors customers or suppliers; (g) changes in actual industry vehicle
production levels from the Debtors current estimates; (h) fluctuations in the production of
vehicles for which the Debtors are a supplier; (i) the loss of business with respect to, or the
lack of commercial success of, a vehicle model for which the Debtors are a significant supplier,
including further declines in sales of full-size pickup trucks and large sport utility vehicles;
(j) disruptions in the relationships with the Debtors suppliers; (k) labor disputes involving the
Debtors or their significant customers or suppliers, or other labor disputes that otherwise affect
the Debtors; (l) the Debtors ability to achieve cost reductions that offset or exceed
customer-mandated selling price reductions; (m) the outcome of customer negotiations; (n) the
impact and timing of program launch costs; (o) the costs, timing, and success of restructuring
actions; (p) increases in the Debtors warranty or product liability costs; (q) risks associated
with conducting business in foreign countries; (r) competitive conditions impacting the Debtors
key customers and suppliers; (s) the cost and availability of raw materials and energy; (t) the
Debtors ability to mitigate increases in raw material, energy, and commodity costs; (u) the
outcome of legal or regulatory proceedings to which the Debtors are or may become parties; (v)
unanticipated changes in Cash flow, including the Debtors ability to align vendor payment terms
with those of their customers; (w) further impairment charges initiated by adverse industry or
market developments; (x) the impact and duration of domestic and foreign government initiatives
designed to assist the automotive industry; and (y) other risks described herein and from time to
time in Visteon Corporations Securities and Exchange Commission filings. Future operating results
will be based on various factors, including actual industry production volumes, commodity prices,
and the Debtors success in implementing their operating strategy.
Due to the inherent uncertainties associated with projecting financial results generally, the
projections contained in this Disclosure Statement will not be considered assurances or
guarantees of the amount of funds or the amount of Claims that may be Allowed in the various
Classes. While the Debtors believe that the Financial Projections contained in this Disclosure
Statement are reasonable, there can be no assurance that they will be realized.
F. |
|
Disclosure Statement Disclaimer |
|
1. |
|
This Disclosure Statement Was Not Approved by the Securities and Exchange Commission |
This Disclosure Statement was not filed with the Commission under the Securities Act or
applicable state securities laws. Neither the Commission nor any state regulatory authority has
passed upon the accuracy or adequacy of this Disclosure Statement, or the exhibits or the
statements contained herein, and any representation to the contrary is unlawful.
150
|
2. |
|
Reliance on Exemptions from Registration Under the Securities Act |
This Disclosure Statement has been prepared pursuant to section 1125 of the Bankruptcy Code
and Rule 3016(b) of the Federal Rules of Bankruptcy Procedure and is not necessarily in accordance
with federal or state securities laws or other similar laws. The offer of New Visteon Common Stock
to holders of certain Classes of Claims has not been registered under the Securities Act or similar
state securities or blue sky laws. To the maximum extent permitted by section 1145 of the
Bankruptcy Code, the Securities Act and other applicable nonbankruptcy law, the issuance of the New
Visteon Common Stock (including the shares reserved for issuance under the Management Equity
Incentive Program) will be exempt from registration under the Securities Act by virtue of Section
1145 of the Bankruptcy Code, section 4(2) of the Securities Act, or Regulation D promulgated
thereunder, Rule 701 of the Securities Act or a no sale under the Securities Act as described
herein.
|
3. |
|
This Disclosure Statement May Contain Forward Looking Statements |
This Disclosure Statement may contain forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements consist of any statement other
than a recitation of historical fact and can be identified by the use of forward looking
terminology such as may, expect, anticipate, estimate, or continue or the negative
thereof or other variations thereon or comparable terminology. The reader is cautioned that all
forward looking statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially from those referred to
in such forward looking statements. The Liquidation Analyses, distribution projections, and other
information contained herein and attached hereto are estimates only, and the timing and amount of
actual distributions to holders of Allowed Claims may be affected by many factors that cannot be
predicted. Therefore, any analyses, estimates, or recovery projections may or may not turn out to
be accurate.
|
4. |
|
No Legal or Tax Advice Is Provided to You by this Disclosure Statement |
This Disclosure Statement is not legal advice to you. The contents of this Disclosure
Statement should not be construed as legal, business or tax advice. Each holder of a Claim or an
Equity Interest should consult his or her own legal counsel and accountant with regard to any
legal, tax and other matters concerning his or her Claim or Interest. This Disclosure Statement
may not be relied upon for any purpose other than to determine how to vote on the Plan or object to
Confirmation of the Plan.
The information and statements contained in this Disclosure Statement will neither (a)
constitute an admission of any fact or liability by any Entity (including, without limitation, the
Debtors) nor (b) be deemed evidence of the tax or other legal effects of the Plan on the Debtors,
the Reorganized Debtors, holders of Allowed Claims or Interests, or any other parties in interest.
151
|
6. |
|
Failure to Identify Litigation Claims or Projected Objections |
No reliance should be placed on the fact that a particular litigation Claim or projected
objection to a particular Claim or Equity Interest is, or is not, identified in this Disclosure
Statement. The Debtors or the Reorganized Debtors may seek to investigate, file, and prosecute
Claims and Interests and may object to Claims after the Confirmation or Effective Date of the Plan
irrespective of whether this Disclosure Statement identifies such Claims or Objections to Claims.
|
7. |
|
No Waiver of Right to Object or Right to Recover Transfers and Assets |
The vote by a holder of an Allowed Claim for or against the Plan does not constitute a waiver
or release of any Claims or rights of the Debtors (or any party in interest, as the case may be) to
object to that holders Allowed Claim, or recover any preferential, fraudulent or other voidable
transfer or assets, regardless of whether any Claims or Causes of Action of the Debtors or their
respective Estates are specifically or generally identified herein.
|
8. |
|
Information Was Provided by the Debtors and Was Relied Upon by the Debtors Advisors |
Counsel to and other advisors retained by the Debtors have relied upon information provided by
the Debtors in connection with the preparation of this Disclosure Statement. Although counsel to
and other advisors retained by the Debtors have performed certain limited due diligence in
connection with the preparation of this Disclosure Statement, they have not independently verified
the information contained herein.
|
9. |
|
Potential Exists for Inaccuracies, and the Debtors Have No Duty to
Update |
The statements contained in this Disclosure Statement are made by the Debtors as of the date
hereof, unless otherwise specified herein, and the delivery of this Disclosure Statement after that
date does not imply that there has not been a change in the information set forth herein since that
date. While the Debtors have used their reasonable business judgment to ensure the accuracy of all
of the information provided in this Disclosure Statement and in the Plan, the Debtors nonetheless
cannot, and do not, confirm the current accuracy of all statements appearing in this Disclosure
Statement. Further, although the Debtors may subsequently update the information in this
Disclosure Statement, the Debtors have no affirmative duty to do so unless ordered to do so by the
Bankruptcy Court.
|
10. |
|
No Representations Outside this Disclosure Statement Are Authorized |
No representations concerning or relating to the Debtors, the Chapter 11 Cases, or the Plan
are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this
Disclosure Statement. Any representations or inducements made to secure your acceptance or
rejection of the Plan that are other than as contained in, or included with, this Disclosure
Statement, should not be relied upon by you in arriving at your decision. You should promptly
report unauthorized representations or inducements to the counsel for the Debtors, the counsel for
the Creditors Committee and the United States Trustee.
152
G. |
|
Liquidation Under Chapter 7 |
If no plan can be Confirmed, the Debtors Chapter 11 Cases may be converted to cases under
chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be elected or appointed to
liquidate the assets of the Debtors for distribution in accordance with the priorities established
by the Bankruptcy Code. A discussion of the effects that a chapter 7 liquidation would have on the
recoveries of holders of Claims and the Debtors Liquidation Analyses is described herein and
attached hereto as Exhibit D.
ARTICLE X.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax consequences of the
Plan to the Debtors and certain holders of Claims. This summary is based on the Internal Revenue
Code, Treasury Regulations thereunder (Treasury Regulations) and administrative and
judicial interpretations and practice, all as in effect on the date of this Disclosure Statement
and all of which are subject to change, with possible retroactive effect. Due to the lack of
definitive judicial and administrative authority in a number of areas, substantial uncertainty may
exist with respect to some of the tax consequences described below. No opinion of counsel has been
obtained and the Debtors do not intend to seek a ruling from the Internal Revenue Service as to any
of the tax consequences of the Plan discussed below. There can be no assurance that the Internal
Revenue Service will not challenge one or more of the tax consequences of the Plan described below.
This summary does not apply to holders of Claims that are not United States Persons (as such
term is defined in the Internal Revenue Code) or that are otherwise subject to special treatment
under United States federal income tax law (including, without limitation, banks, governmental
authorities or agencies, financial institutions, insurance companies, pass-through Entities,
tax-exempt organizations, brokers and dealers in securities, mutual funds, small business
investment companies, employees, persons who received their Claims or Interests pursuant to the
exercise of an employee stock option or otherwise as compensation, persons holding Claims or
Interests that are a hedge against, or that are hedged against, currency risk or that are part of a
straddle, constructive sale, or conversion transaction and regulated investment companies). The
following discussion assumes that holders of Allowed Claims hold such Claims as capital assets
within the meaning of section 1221 of the Internal Revenue Code. Moreover, this summary does not
purport to cover all aspects of United States federal income taxation that may apply to the Debtors
and holders of Allowed Claims based upon their particular circumstances. Additionally, this
summary does not discuss any tax consequences that may arise under any laws other than United
States federal income tax law, including under state, local or foreign tax law.
ACCORDINGLY, THE FOLLOWING SUMMARY OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS
FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE BASED
UPON THE INDIVIDUAL CIRCUMSTANCES PERTAINING TO A HOLDER OF A CLAIM. ALL HOLDERS OF CLAIMS ARE
URGED TO CONSULT THEIR OWN TAX
153
ADVISORS FOR THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES APPLICABLE UNDER THE PLAN.
INTERNAL REVENUE SERVICE CIRCULAR 230 DISCLOSURE: TO ENSURE COMPLIANCE WITH
REQUIREMENTS IMPOSED BY THE INTERNAL REVENUE SERVICE, ANY TAX ADVICE CONTAINED IN THIS DISCLOSURE
STATEMENT (INCLUDING ANY ATTACHMENTS) IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY
ANY TAXPAYER FOR THE PURPOSE OF AVOIDING TAX-RELATED PENALTIES UNDER THE INTERNAL REVENUE CODE.
TAX ADVICE CONTAINED IN THIS DISCLOSURE STATEMENT (INCLUDING ANY ATTACHMENTS) IS WRITTEN TO SUPPORT
THE PROMOTION AND MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED BY THIS DISCLOSURE STATEMENT.
EACH TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYERS PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISOR.
A. |
|
Consequences to Holders of Allowed Class E Term Loan Facility Claims, Class F 7.00% Senior Notes Claims and 8.25% Senior Notes Claims, and Class G 12.25% Senior Notes Claims |
Pursuant to the Plan, Allowed Class E Term Loan Facility Claims will be exchanged for New
Visteon Common Stock or Cash, while Class F 7.00% Senior Notes Claims and 8.25% Senior Notes Claims
and Class G 12.25% Senior Notes Claims will be exchanged for New Visteon Common Stock and, under
the Rights Offering Sub Plan, Subscription Rights.
To the extent that the Allowed Term Loan Facility Claims, 7.00% Senior Notes Claims, 8.25%
Senior Notes Claims and 12.25% Senior Notes Claims are treated as securities of Visteon, then the
exchange of such Allowed Claims so treated for New Visteon Common Stock and/or Subscription Rights
pursuant to the Plan should be treated as a recapitalization and, therefore, a tax-free
reorganization. In such case, each holder of such Allowed Claims should not recognize any gain or
loss on the exchange, except to the extent that a portion of the consideration received in exchange
for the Allowed Claims is allocable to Accrued but Untaxed Interest, the holder may recognize
ordinary income (as discussed in greater detail herein, Accrued but Untaxed Interest).
Such holder should obtain a tax basis in the New Visteon Common Stock and Subscription Rights
received equal to the tax basis of the Allowed Claims surrendered and should have a holding period
for the New Visteon Common Stock that includes the holding period for the Allowed Claims exchanged
therefore, provided, however, that the tax basis of any New Visteon Common Stock (or portion
thereof) treated as received in satisfaction of accrued interest should equal the amount of such
accrued interest, and the holding period for such New Visteon Common Stock (or portion thereof)
should not include the holding period of the Allowed Claims exchanged therefor.
To the extent that the Allowed Term Loan Facility Claims, 7.00% Senior Notes Claims, 8.25%
Senior Notes Claims and 12.25% Senior Notes Claims are not treated as securities of Visteon, a
holder of such Allowed Claims will be treated as exchanging its Allowed Claims for New Visteon
Common Stock and/or Subscription Rights in a taxable exchange under section 1001 of the Internal
Revenue Code. Accordingly, each holder of such Allowed Claims should recognize capital gain or
loss equal to the difference between: (a) the fair market value of
154
the New Visteon Common Stock (as of the date it is distributed to the holder) received in exchange
for the Allowed Claims and (b) the holders adjusted basis, if any, in the Allowed Claims. Such
gain or loss should be (subject to the market discount rules described below) long-term capital
gain or loss if the holder has a holding period for Allowed Claims of more than one year. The
deductibility of capital losses is subject to limitations. To the extent that a portion of the
consideration received in exchange for the Allowed Claims is allocable to Accrued but Untaxed
Interest, the holder may recognize ordinary income (as discussed in greater detail herein, Accrued
but Untaxed Interest). A holders tax basis in the shares of New Visteon Common Stock should equal
their fair market value as of the date they are distributed to the holder. A holders holding
period for New Visteon Common Stock should begin on the day following the Effective Date.
If, pursuant to the Rights Offering Sub Plan, a holder of Allowed Term Loan Facility Claims
exchanges its Allowed Claim for Cash, such holder should recognize capital gain or loss equal to
the difference between (a) the amount of Cash that is not allocable to accrued interest and (b) the
holders tax basis in the Allowed Claims surrendered therefor by the holder. Such gain or loss
should be (subject to the market discount rules described below) long-term capital gain or loss
if the holder has a holding period for Allowed Claims of more than one year. To the extent that a
portion of the Cash received in exchange for the Allowed Claims is allocable to Accrued but Untaxed
Interest, the holder may recognize ordinary income (as discussed in greater detail in Article X
herein, Accrued but Untaxed Interest).
|
1. |
|
Consequences to Holders of Allowed Class A ABL Claims, Class C Other Secured Claims, Class D Other Priority Claims, and Class H General Unsecured Claims |
Pursuant to the Plan, Allowed Class A ABL Claims, Class C Other Secured Claims, Class D Other
Priority Claims, and Class H General Unsecured Claims will be exchanged for Cash or, in the case of
certain Secured Claims, the collateral securing such Claims. A holder who receives Cash or
collateral should recognize capital gain or loss equal to the difference between (a) the amount of
Cash and/or the fair market value of any collateral received that is not allocable to accrued
interest and (b) the holders tax basis in the Allowed Claims surrendered therefor by the holder.
Such gain or loss should be (subject to the market discount rules described below) long-term
capital gain or loss if the holder has a holding period for Allowed Claims of more than one year.
To the extent that a portion of the Cash and/or collateral received in exchange for the Allowed
Claims is allocable to Accrued but Untaxed Interest, the holder may recognize ordinary income (as
discussed in greater detail in Article X herein, Accrued but Untaxed Interest).
|
2. |
|
Accrued but Untaxed Interest |
A portion of the consideration received by holders of Claims may be attributable to Accrued
but Untaxed Interest on such Claims. Such amount should be taxable to that holder as interest
income if such accrued interest has not been previously included in the holders gross income for
United States federal income tax purposes. Conversely, holders of Claims may be able to recognize
a deductible loss to the extent any accrued interest on the Claims was previously included in the
holders gross income but was not paid in full by the Debtors.
155
If the fair value of the consideration is not sufficient to fully satisfy all principal and
interest on Allowed Claims, the extent to which such consideration will be attributable to Accrued
but Untaxed Interest is unclear. Under the Plan, the aggregate consideration to be distributed to
holders of Allowed Claims in each Class will be allocated first to the principal amount of Allowed
Claims, with any excess allocated to unpaid interest that accrued on such Claims, if any. Certain
legislative history indicates that an allocation of consideration as between principal and interest
provided in a chapter 11 plan of reorganization is binding for United States federal income tax
purposes, while certain Treasury Regulations treat payments as allocated first to any accrued but
unpaid interest. The Internal Revenue Service could take the position that the consideration
received by the holder should be allocated in some way other than as provided in the Plan. Holders
of Claims should consult their own tax advisors regarding the proper allocation of the
consideration received by them under the Plan.
Holders who exchange Allowed Claims for New Visteon Common Stock and/or Subscription Rights
may be affected by the market discount provisions of sections 1276 through 1278 of the Internal
Revenue Code. Under these provisions, some or all of the gain realized by a holder may be treated
as ordinary income (instead of capital gain), to the extent of the amount of accrued market
discount on such Allowed Claims.
In general, a debt obligation with a fixed maturity of more than one year that is acquired by
a holder on the secondary market (or, in certain circumstances, upon original issuance) is
considered to be acquired with market discount as to that holder if the debt obligations stated
redemption price at maturity (or revised issue price as defined in section 1278 of the Internal
Revenue Code, in the case of a debt obligation issued with original issue discount) exceeds the tax
basis of the debt obligation in the holders hands immediately after its acquisition. However, a
debt obligation is not a market discount bond if the excess is less than a statutory de
minimis amount (equal to 0.25% of the debt obligations stated redemption price at maturity
or revised issue price, in the case of a debt obligation issued with original issue discount,
multiplied by the number of complete years remaining until maturity at the time of the
acquisition).
Any gain recognized by a holder on the taxable disposition of Allowed Claims (determined as
described above) that were acquired with market discount should be treated as ordinary income to
the extent of the market discount that accrued thereon while the Allowed Claims were considered to
be held by the holder (unless the holder elected to include market discount in income as it
accrued). To the extent that the Allowed Claims that were acquired with market discount are
exchanged in a tax-free transaction for other property (as may occur here), any market discount
that accrued on the Allowed Claims (i.e., up to the time of the exchange) but was not recognized by
the holder is carried over to the property received therefor and any gain recognized on the
subsequent sale, exchange, redemption or other disposition of such property is treated as ordinary
income to the extent of such accrued, but not recognized, market discount.
|
4. |
|
Information Reporting and Backup Withholding |
In general, information reporting requirements may apply to distributions or payments under
the Plan. Additionally, under the backup withholding rules, a holder of a Claim may be
156
subject to backup withholding (currently at a rate of 28%) with respect to distributions or
payments made pursuant to the Plan unless that holder: (a) comes within certain exempt categories
(which generally include corporations) and, when required, demonstrates that fact; or (b) timely
provides a correct taxpayer identification number and certifies under penalty of perjury that the
taxpayer identification number is correct and that the holder is not subject to backup withholding
because of a failure to report all dividend and interest income. Backup withholding is not an
additional tax but is, instead, an advance payment that may be refunded to the extent it results in
an overpayment of tax; provided, however, that the required information is timely
provided to the Internal Revenue Service.
The Debtors will, through the Distribution Agent, withhold all amounts required by law to be
withheld from payments of interest. The Debtors will comply with all applicable reporting
requirements of the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE FOREGOING
SUMMARY DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL INCOME TAXATION THAT MAY BE RELEVANT
TO A PARTICULAR HOLDER OF A CLAIM IN LIGHT OF SUCH HOLDERS CIRCUMSTANCES AND INCOME TAX SITUATION.
ALL HOLDERS OF CLAIMS AGAINST THE DEBTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION CONTEMPLATED BY THE RESTRUCTURING, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN
APPLICABLE TAX LAWS.
B. |
|
Certain United States Federal Income Tax Consequences to the Reorganized Debtors |
|
1. |
|
Cancellation of Debt and Reduction of Tax Attributes |
In general, absent an exception, a debtor will realize and recognize COD Income upon
satisfaction of its outstanding indebtedness for total consideration less than the amount of such
indebtedness. The amount of COD Income, in general, is the excess of (a) the adjusted Issue Price
of the indebtedness satisfied, over (b) the sum of (i) the amount of Cash paid, and (ii) the fair
market value of any new consideration (including stock of the debtor) given in satisfaction of such
indebtedness at the time of the exchange.
A debtor will not, however, be required to include any amount of COD Income in gross income if
the debtor is under the jurisdiction of a court in a case under chapter 11 of the Bankruptcy Code
and the discharge of debt occurs pursuant to that proceeding. Instead, as a consequence of such
exclusion, a debtor must reduce its tax attributes by the amount of COD Income that it excluded
from gross income pursuant to the rule discussed in the preceding sentence. In general, tax
attributes will be reduced in the following order: (a) NOLs and NOL carryforwards; (b) general
business and minimum tax credit carryovers; (c) capital loss carryovers; (d) tax basis in assets;
and (e) foreign tax credit carryovers. A debtor with COD Income may elect first to reduce the
basis of its depreciable assets pursuant to section 108(b)(5) of the Internal Revenue Code. The
reduction in tax attributes occurs only after the tax for the
157
year of the debt discharge has been determined. Any excess COD Income over the amount of
available tax attributes is not subject to United States federal income tax and has no other United
States federal income tax impact.
The Treasury Regulations address the method and order for applying tax attribute reduction to
an affiliated group of corporations. Under these regulations, the tax attributes of each member of
an affiliated group of corporations that is excluding COD Income is first subject to reduction. To
the extent the debtor members tax basis in stock of a lower-tier member of the affiliated group is
reduced, a look through rule requires that a corresponding reduction be made to the tax
attributes of the lower-tier member. If a debtor members excluded COD Income exceeds its tax
attributes, the excess COD Income is applied to the reduction of certain remaining consolidated tax
attributes of the affiliated group. Because the Plan provides that holders of certain Allowed
Claims will receive New Visteon Common Stock, the amount of COD Income, and accordingly the amount
of tax attributes required to be reduced, will depend on the fair market value of the New Visteon
Common Stock exchanged therefor. This value cannot be known with certainty until after the
Effective Date. However, as a result of Consummation, the Debtors expect that there could be
material reductions in NOLs, NOL carryforwards, or other tax attributes including the Reorganized
Debtors tax basis in their assets.
|
2. |
|
Limitation of NOL Carry Forwards and Other Tax Attributes |
The Reorganized Debtors may have NOL carryovers and other tax attributes at emergence. The
amount of such NOL carryovers that will be available to the Reorganized Debtors at emergence is
based on a number of factors and is impossible to calculate at this time. Some of the factors that
will impact the amount of available NOLs include: (a) the amount of tax losses incurred by the
Debtors in 2010; (b) the value of the New Visteon Common Stock; and (c) the amount of COD Income
incurred by the Debtors in connection with Consummation. The Debtors anticipate that subsequent
utilization of any losses and NOL carryovers remaining and possibly certain other tax attributes
may be restricted as a result of and upon Consummation.
Following Consummation, the Debtors anticipate that any remaining NOL carryover, capital loss
carryover, tax credit carryovers and, possibly, certain other tax attributes (such as losses and
deductions that have accrued economically but are unrecognized as of the date of the ownership
change) of the Reorganized Debtors allocable to periods prior to the Effective Date (collectively,
the Pre-Change Losses) may be subject to limitation under sections 382 and 383 of the
Internal Revenue Code as a result of an ownership change of the Reorganized Debtors by reason of
the transactions pursuant to the Plan.
Under sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an
ownership change, the amount of its Pre-Change Losses that may be utilized to offset future
taxable income generally is subject to an annual limitation. As discussed in greater detail
herein, the Debtors anticipate that the issuance of the New Visteon Common Stock pursuant to the
Plan will result in an ownership change of the Reorganized Debtors for these purposes, and that
the Debtors use of their NOL carryovers and other Pre-Change Losses will be subject to limitation
unless an exception to the general rules of section 382 of the Internal Revenue Code applies.
158
|
3. |
|
General Section 382 Annual Limitation |
In general, the amount of the annual limitation to which a corporation that undergoes an
ownership change would be subject is equal to the product of (a) the fair market value of the
stock of the corporation immediately before the ownership change (with certain adjustments)
multiplied by (b) the long-term tax-exempt rate (which is the highest of the adjusted Federal
long-term rates in effect for any month in the 3-calendar-month period ending with the calendar
month in which the ownership change occurs). Any unused limitation may be carried forward,
thereby increasing the annual limitation in the subsequent taxable year.
|
4. |
|
Special Bankruptcy Exceptions |
An exception to the foregoing annual limitation rules generally applies when so-called
qualified creditors of a debtor company in chapter 11 receive, in respect of their Claims, at
least 50% of the vote and value of the stock of the reorganized debtor (or a controlling
corporation if also in chapter 11) pursuant to a confirmed chapter 11 plan (the 382(l)(5)
Exception). Under the 382(l)(5) Exception, a debtors Pre-Change Losses are not limited on an
annual basis but, instead, are required to be reduced by the amount of any interest deductions
Claimed during the three taxable years preceding the effective date of the plan of reorganization,
and during the part of the taxable year prior to and including the effective date of the plan of
reorganization, in respect of all debt converted into stock in the reorganization. If the
382(l)(5) Exception applies and the Reorganized Debtors undergo another ownership change within
two years after Consummation, then the Reorganized Debtors Pre-Change Losses effectively would be
eliminated in their entirety.
Where the 382(l)(5) Exception is not applicable (either because the debtor does not qualify
for it or the debtor otherwise elects not to utilize the 382(l)(5) Exception), a second special
rule will generally apply (the 382(l)(6) Exception). Under the 382(l)(6) Exception, the
limitation will be calculated by reference to the lesser of the value of the debtor corporations
new stock (with certain adjustments) immediately after the ownership change or the value of such
debtor corporations assets (determined without regard to liabilities) immediately before the
ownership change. This differs from the ordinary rule that requires the fair market value of a
debtor corporation that undergoes an ownership change to be determined before the events giving
rise to the change. The 382(l)(6) Exception also differs from the 382(l)(5) Exception in that
under it, the debtor corporation is not required to reduce their NOLs by the amount of interest
deductions Claimed within the prior three-year period, and the debtor may undergo a change of
ownership within two years without triggering the elimination of its NOLs.
While it is not certain, it is doubtful at this point that the Debtors will elect to utilize
the 382(l)(5) Exception. In the event that the Debtors do not use the 382(l)(5) Exception, the
Debtors expect that their use of any remaining NOLs after the Effective Date will be subject to
limitation based on the rules discussed above, but taking into account the 382(l)(6) Exception.
Regardless of whether the Reorganized Debtors take advantage of the 382(l)(6) Exception or the
382(l)(5) Exception, the Reorganized Debtors use of their Pre-Change Losses after the Effective
Date may be adversely affected if an ownership change within the meaning of section 382 of the
Internal Revenue Code were to occur after the Effective Date. With respect to any ownership change
after the Effective Date, NOLs and other tax attributes attributable to the period prior to
159
the Effective Date are treated as Pre-Change Losses for the latter ownership change as well,
with the result that such NOLs will be subject to the smaller of the earlier annual limitation and
any later annual limitations.
|
5. |
|
Alternative Minimum Tax |
In general, an alternative minimum tax (AMT) is imposed on a corporations
alternative minimum taxable income (AMTI) at a 20% rate to the extent such tax exceeds
the corporations regular federal income tax for the year. AMTI is generally equal to regular
taxable income with certain adjustments. For purposes of computing AMTI, certain tax deductions
and other beneficial allowances are modified or eliminated. For example, except for alternative
tax NOLs generated in or deducted as carryforwards in taxable years ending in 2001 and 2002, which
can offset 100% of a corporations AMTI, only 90% of a corporations AMTI may be offset by
available alternative tax NOL carryforwards. The effect of this rule could cause Reorganized
Visteon to owe a modest amount of federal and state income tax on taxable income in future years
even if NOL carryforwards are available to offset that taxable income. Additionally, under section
56(g)(4)(G) of the Internal Revenue Code, an ownership change (as discussed above) that occurs with
respect to a corporation having a net unrealized built-in loss in its assets will cause, for AMT
purposes, the adjusted basis of each asset of the corporation immediately after the ownership
change to be equal to its proportionate share (determined on the basis of respective fair market
values) of the fair market value of the assets of the corporation, as determined under section
382(h) of the Internal Revenue Code, immediately before the ownership change, the effect of which
may increase the amount of AMT owed by the Reorganized Debtors.
ARTICLE XI.
RECOMMENDATION
The Debtors recommend the Plan because it provides for greater distributions to the holders of
Claims and Interests than would otherwise result in a liquidation under chapter 7 of the Bankruptcy
Code. In addition, any alternative other than Confirmation could result in extensive delays and
increased administrative expenses resulting in smaller distributions to the holders of Claims.
Accordingly, the Debtors recommend that holders of Claims and Interests entitled to vote on the
Plan support Confirmation and vote to accept the Plan.
|
|
|
|
|
|
Respectfully submitted,
|
|
Van Buren Township, Michigan |
By: |
|
|
Dated: |
|
Name: |
|
|
|
|
Title: |
|
|
|
|
VISTEON CORPORATION (for itself and all other Debtors)
|
160