Companies file to stop sale of glassmaker
Two companies interested in acquiring Dlubak Corp.’s bankrupt glassmaking business have stepped forward and are challenging its plan for a speedy sale of its assets.
Dlubak filed for Chapter 11 bankruptcy last week, saying its operating capital has evaporated due to a three-year decline in sales. Much of its business is from making bullet-proof glass used in combat vehicles.
In objections filed Thursday in U.S. Bankruptcy Court, New Jersey-based General Glass International and an Israeli company, Oran Safety Glass Israel, said the proposed sale process is unreasonable and unfair.
It’s unreasonable, they said, because the sale schedule, as proposed, doesn’t give them enough time to conduct their due diligence. Bids tentatively are due Sept. 3, with an auction taking place two days later. The closing would occur the following day, Sept. 6.
And it’s unfair, they said, because the rules for the sale, as proposed, seem to give the upper hand to a private equity firm that also is interested in the business. That firm, Grey Mountain Partners, has laid a $2 million stalking-horse bid on the table. As the stalking-horse bidder, Grey Mountain is setting a floor price for the business, helping ensure that bidders don’t lowball their offers.
One of the rules being criticized holds that any matching bid Grey Mountain makes against a competing offer would automatically be deemed the highest bid. So to win during the auction, Grey Mountain doesn’t have to outbid its competitors, only match them.
Another rule being called into question holds that each competing bid against Grey Mountain’s offer will automatically be reduced by $200,000, the amount of a break-up fee due to the stalking-horse should it be unsuccessful at the auction.
The companies said those conditions and others will have a chilling effect on the bidding environment.
General Glass and Oran Safety Glass aren’t the only entities taking issue with the sale process. Dlubak’s primary secured lender, First Commonwealth Bank, also has filed objections over the sales rules. And so has the branch of the Department of Justice that monitors bankruptcies.
This year apparently has been disastrous for Dlubak — through three quarters of this fiscal year, it has recorded $819,433 in total sales. By comparison, it had about $15.4 million in net sales in fiscal 2012, according to court filings.
Dlubak lists assets of about $5.1 million and liabilities of roughly $7.3 million.
Dlubak said in previous filings that it had tried to secure new capital and refinance its existing debt. But when those efforts failed, the company decided that the only option left was to begin shopping itself around. To that end, it undertook what it said was an extensive marketing effort, which led to the agreement with Grey Mountain.
But in its objection, General Glass questioned the extent of the marketing effort.
“The debtor’s marketing efforts are suspect, at a minimum, because General Glass, a logical target of marketing efforts, was not contacted directly. ...”
The case is before U.S. Bankruptcy Court’s Western District of Pennsylvania.