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American LaFrance seeks permission to sell assets
By Dan McCue
Staff Writer
American LaFrance wants to sell off assets and property that is free and clear of liens, claims or other encumbrances as it moves to reorganize itself into a leaner and profitable company.
A hearing on the company’s request for permission was scheduled in the U.S. Bankruptcy Court in Wilmington, Del., earlier this month. Objections to the request had to be filed with the court by Feb. 25.
American LaFrance filed for Chapter 11 protection on Jan. 28 and has been working with a court-appointed trustee since early February to help settle its affairs with creditors.
In court documents, the company also asked U.S. Bankruptcy Court Judge Brendan Linehan Shannon to approve a repurchase agreement with Troy, Mich.-based manufacturer and distributor ArvinMeritor Inc., which supplies all the axles for American LaFrance’s emergency-vehicle and heavy-duty vocational vehicle lines.
American LaFrance owes ArvinMeritor more than $1.2 million and currently has more axles in inventory than it needs for production in the near term, according to court documents.
Under the proposed deal, Arvin would repurchase the axles already in American LaFrance’s possession for about 92 cents on the dollar, but they would remain at American LaFrance’s facilities. The emergency-vehicle manufacturer would buy them back during the next 12 months as it needed them.
The agreement anticipates that American LaFrance will repurchase all the axles on hand by the end of the 12-month period. It also anticipates that Arvin will continue to supply unspecified new products to American LaFrance on a cash-on-order basis.
As part of the deal, American LaFrance would agree to waive any challenge to claims Arvin had previously filed against the company.
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