Visteon’s trade claimants step up bankruptcy fight

* Trade claimants seek official committee

* Seek higher payout as Visteon business booms

* Join crowded field seeking stock in company

By Tom Hals and Dan Wilchins

WILMINGTON, Del./NEW YORK, June 9 (BestGrowthStock) – Holders of
trade claims of bankrupt Visteon Corp (VSTNQ.PK: ) are stepping
up their fight against the auto parts maker’s reorganization,
which they said would pay similar creditors in full while
giving them 50 cents on the dollar.

The company’s business has been booming, and speculators
have been scooping up its bonds as a way to get their hands on
Visteon’s equity when it emerges from Chapter 11.

Senior lenders, bondholders and even shareholders have been
angling for shares or the chance to buy shares in the company,
which has also attracted takeover interest from Johnson
Controls Inc (JCI.N: ), a rival.

While bond prices have blasted well above what the company
has said they would get paid, the company has proposed capping
trade claims at 50 cents on the dollar.

“What’s right about that?” said Paul Silverstein of Andrews
Kurth, the law firm representing the holders of trade claims.

Visteon’s 7.00 percent notes due in 2014, for example, are
trading at 105.5 even though the company has said those
investors could get as little as 8.1 cents on the dollar in
cash. The company also plans to give those investors stock and
subscription rights.

Creditors have said the bond trading indicates how much the
company is underestimating the value of its business and the
value of its stock.

While bond values soar along with the value of Visteon’s
business, trade claims are capped at 50 cents on the dollar in
cash, with no stock or opportunity to buy stock.

“All we want is to be let into the rights offering,”
Silverstein said.

Silverstein said the group plans to ask the bankruptcy
court for permission to form an official committee, which would
allow them to hire a financial adviser, at Visteon’s expense,
to do an analysis on the company’s numbers and financial
estimates.

If granted, a trade claims committee could potentially
delay the company’s reorganization, should the group seek
documents and witnesses from the company as part of an
investigation.

Visteon is scheduled to go to bankruptcy court on Monday to
ask for approval of its disclosure statement, which would clear
the way for the company to ask creditors to approve its plan.

The holders of trade claims created an informal group weeks
ago made up of Hain Capital Group LLC of Rutherford, New
Jersey, Liquidity Solutions Inc of Hackensack, New Jersey, and
Fulcrum Capital Holdings LLC of Austin, Texas.

Silverstein said they hold about $20 million of Visteon’s
trade claims, which the company has estimated between $107
million and $167 million.

The three buy claims against bankrupt companies at a
discount from businesses that do not want to wait months or
years for payment. Hain Capital, for example, recently bought a
$91,868 claim from Branson Ultrasonics Corp of Danbury,
Connecticut, according to court documents.

Getting 50 cents on the dollar for trade claims may have
been fair months ago, before the business really began to
recover, said one trade claim investor.

“They’re doing better than anyone expected,” said Robert
Koltai, the managing member of Hain Capital, of Visteon’s
business. He said bondholders are getting a chance to
participate in the company’s growth.

“They’re getting equity or the right to equity,” Koltai
said of the bondholders. “Our recovery is capped.”

Fulcrum declined to comment. Liquidity Solutions and
Visteon did not immediately return calls for comment.

Shares in Visteon were down 5.8 percent at $1.13 in
afternoon pink sheet trading.

The case is In re Visteon Corp, U.S. Bankruptcy Court,
District of Delaware, No. 09-11786.

Money

(Editing by Gerald E. McCormick)

Visteon’s trade claimants step up bankruptcy fight