Incora Judge Vows to Reject Revival Plan Unless Proposal Changes

(Bloomberg) -- A proposal to get Incora out of bankruptcy will be rejected by a federal court unless the aerospace parts maker changes the plan, the judge overseeing the company’s insolvency case said during a court hearing Thursday.

“When I read the plan I think it is a ‘heads I win, tails you lose’ plan,” US Bankruptcy Judge Marvin Isgur told lawyers for Incora during a court hearing held by video. If the company cannot negotiate changes with creditors and comes back to court with the current plan, “I’ll just reject it,” Isgur said.

The warning comes as creditors continue talking about how to divide the company among some of the biggest firms in the distressed debt market. Those investors include Silver Point Capital and bond giant Pacific Investment Management Co. who have been fighting disgruntled bondholders including JPMorgan Chase & Co., BlackRock Inc. and hedge fund King Street Capital Management.

Under the original plan, Incora would cut about $2 billion in debt and may be worth about worth about $1.65 billion, according to court records. 

“I understand you’re negotiating,” Isgur told dozens of lawyers and other advisers who gathered for the hearing. “I’m happy you’re negotiating.”

In July, Isgur ruled that Silver Point and Pimco wrongly stripped collateral rights from other investors as part of a $250 million rescue plan for Incora, which is backed by private equity firm Platinum Equity LLC. The ruling was a partial victory for JPMorgan, BlackRock and King Street.

Since then, Incora and its creditors have been trying to rewrite a plan.

Isgur gave Incora permission to send the current plan to a vote of creditors so that the company can return to court for a final decision in early October. The company is reviewing proposals to change the plan, Incora attorney Dennis Dunne said in court.

“Your position is both helpful and welcome, as always,” Dunne told the judge.

The case is Wesco Aircraft Holdings Inc., 23-90611, US Bankruptcy Court for the Southern District of Texas (Houston).

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