Three of the largest creditors of Acme Holding Co. recently submitted briefs in support of converting the bank holding company’s Chapter 11 reorganization to Chapter 7 liquidation.
The filings set the stage for a June ruling by U.S. Bankruptcy Court Judge Ben Barry that could result in the auction sale of Acme’s lone significant asset: the $107 million-asset Allied Bank of Mulberry.
Chambers Bank of Danville is first in line among debtors with a $4.5 million-plus claim secured by Acme’s ownership of Allied Bank.
Monthly interest on the delinquent loan totaling more than $240,000 has ticked away since Acme hit bankruptcy court a year ago.
Three main points Chambers made in its brief: The reorganization plan isn’t feasible, there is no adequate means to implement the plan and Acme continues to lose money.
Also supporting the conversion to Chapter 7 is C Holdings LLC, an affiliate of Chambers that holds a $1.4 million delinquent loan claim against Acme.
The third creditor favoring liquidation, Hildene Asset Management, represents the holders of trust-preferred securities with a claim of more than $3 million plus more than $236,000 in unpaid interest.
Hanging over Acme is the uncertainty of when Allied will stabilize its operations and gain regulatory approval to restart dividends.
Hildene, which was offered a zero payout in Acme’s proposed debt reorganization, believes the holding company is beyond financial rehabilitation:
“Overall, the figures provided by Acme, which reflect its actual income and losses, reflect the reality of a troubled Allied Bank. The bank is the only asset of the debtor, and the only available source of income may not realistically be available until 2017 and is completely out of the hands of the debtor.
“Acme’s projections for its future performance, which would need to be consistently positive for six months to a year before regulators would consider permitting dividends, are far too optimistic and unsupported by its history of performance or the typical realities of the banking industry.”
What happened to cause Allied Bank’s dire predicament when the lender was in outwardly profitable growth mode 10 years ago?
It was a question that was asked and answered during an April 2-3 bankruptcy court hearing in Fayetteville.
“We probably didn’t have adequate controls at that time,” said Alex Golden, Allied’s CEO.